New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd - [1990] HCA 60 - HCA 1978 case summary — Zoe

CTHHCA

New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd

[1990] HCA 60

High Court of Australia|1978-11-01|Before: McHugh JJ

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Source facts

Court

High Court of Australia

Decision date

1978-11-01

Before

McHugh JJ

Source

Original judgment source is linked above.

Judgment (177 paragraphs)

[1]

For the reasons stated by the Chief Justice, I am of the opinion that s. 61(1)(b) of the Trade Marks Act 1955 Cth ("the Act") applies if, at the time when the validity of the original registration of a trade mark is attacked, the mark "offends against the provisions of section 28" and that s. 28 has a continuing operation after original registration: see Berlei Hestia Industries Ltd v Bali Co Inc [46] . As s. 28 has a continuing operation after registration, a registered trade mark which offends against its provisions might constitute, for the purposes of s. 22(1)(b), an entry "wrongly remaining in the Register". However, though s. 28(a) is expressed in absolute terms, I would not hold that a registered trade mark is necessarily remaining wrongly in the register merely because its use has become likely to deceive or cause confusion by reason of circumstances occurring after registration.

[2]

Paragraph (a) of s. 28 prohibits the original registration of a mark the use of which would be likely to deceive or cause confusion (albeit the prohibition is qualified by the concurrent use provisions: s. 34) but, after registration, par. (a) operates in a different regime. Upon registration, the proprietor acquires the statutory right to the exclusive use of the mark "subject to any conditions or limitations to which the registration is subject": s. 58(2). In that regime, to hold that a registered trade mark is "wrongly remaining in the Register" whenever the use of the mark becomes likely to deceive or to cause confusion would be to expose the registered proprietor's statutory right to destruction at the hands of any person who creates the likelihood of deception or confusion. A premium would be placed on what Windeyer J. called "the assiduous efforts of an infringer": Re Bali Brassiere Co Inc's Registered Trade Mark and Berlei Ltd's Application [47] . On the other hand, to hold that a trade mark, validly registered, can never be expunged if its use becomes likely to deceive or cause confusion by reason of circumstances occurring since registration would empower the registered proprietor himself to create that likelihood with impunity. Neither of these constructions accords with the objects of the Act which seeks both to give some protection to the public against the deceptive or confusing use of trade marks (Eno v Dunn [48] ; Radio Corporation Pty Ltd v Disney [49] ) and to confer on a registered proprietor for the time being a species of property in a trade mark (see ss. 57, 82) entitling him to the rights conferred by s. 58 and allowing permitted users the derivative benefits to which s. 77 refers.

[4]

In an application for original registration, there is only one object to which effect must be given but, in an application after registration, effect must be given to both objects. The operation of s. 28(a) therefore depends on whether it is applied to an application for original registration or to an application for expunction of an entry which is attacked in s. 22 proceedings as wrongly remaining in the register. If it be right to say that, in s. 22 proceedings, s. 28(a) sometimes does and sometimes does not authorize the removal of a registered trade mark when its use has become likely to deceive or cause confusion, it is necessary to ascertain the condition upon which liability to removal depends. In my opinion, the Act does not contemplate that a registered proprietor should continue to enjoy the rights which s. 58 confers if he has produced the circumstances which make the further use of the mark likely to deceive or cause confusion: s. 58 cannot be understood as conferring rights which might be exercised by the holder to frustrate an object of the Act. But, where the registered proprietor has not produced those circumstances and where no provision other than s. 28(a) warrants expunction of the registered trade mark, there is no reason apparent on the face of the Act why the registered proprietor should not continue to enjoy the rights which registration of the trade mark confers. The Act does not make the avoidance of deception or confusion absolute, even in the case of an application for original registration: see, e.g., s. 34. It strikes a balance between the public interest in avoiding deception or confusion and the private interest of the person entitled to use the trade mark. The view that a registered proprietor may, by his conduct, become disentitled to claim the benefit of the rights conferred by s. 58 arises simply from the need to give to s. 28(a), when it is invoked in proceedings under s. 22 to expunge a registered trade mark on the ground that it is "wrongly remaining in the Register", an operation which will give effect to the provisions of s. 58 except to the extent necessary to deny to the registered proprietor the capacity to frustrate with impunity the statutory object of protecting the public against deception and confusion. A similar view would be reached if pars. (a) and (d) of s. 28 were so read as to make par. (d) govern par. (a) but I do not rest my view on par. (d) of s. 28. Paragraph (d) is not expressed to relate to the conduct of the applicant for original registration or of the registered proprietor after registration but to the character of the mark itself: a "mark which would otherwise be not entitled to protection in a court of justice". In this respect the Act differs from s. 11 of the Trade Marks Act 1938 UK which, though generally similar to the Act, speaks of a mark " the use of which would, by reason of its being likely to deceive or cause confusion or otherwise, be disentitled to protection in a court of justice".

[9]

In the present case, the Full Court of the Federal Court acquitted the respondent of any blameworthy conduct. Their Honours were able to reach this conclusion by treating the non-use of the Moo mark while the Moove mark was in use in respect of flavoured milk (a period commencing in January 1979 and continuing until mid-August 1988) merely as a matter going to non-use of the mark - presumably, as a matter relevant only to an application for removal for non-use under s. 23. I am respectfully unable to accept that conclusion. If a proprietor of a registered trade mark abstains for a time from using it in respect of a class of products so that the mark loses its distinctiveness, and he permits another during that time to use a different mark so as to foster in the public mind a connexion between the latter mark and products of the relevant class to the exclusion of any connexion between the former mark and such products, with the result that any further use of his own mark would be likely to deceive or cause confusion, the conduct of the registered proprietor is, in my opinion, blameworthy in the relevant sense. Such conduct would be a cause of any deception or confusion which would be likely to follow the further use of his own mark. Section 58 could not support that further use for the conduct of the registered proprietor would have converted the statutory right to exclusive use of a registered trade mark into an instrument of likely deception or confusion. In evaluating the conduct of a registered proprietor in such a case, much depends on what he knew or ought to have known of the other person's use of a trade mark in respect of the relevant class of products, the length of time during which the registered proprietor remained supine, the opportunities for objection and the scale of the deception or confusion that is likely to result from the further use of his registered trade mark. It may be going too far to say that the registered proprietor must, in all circumstances, protect his statutory right by applying for an injunction; some other objection may suffice in particular circumstances.

[27]

The construction of s. 28 which confines the directive that a "mark shall not be registered as a trade mark" to the act of entering it in the register is, on balance, more in accordance with my own understanding of the basic notions and underlying policy of trade mark law than is a construction which reads that directive as extending to require expungement from the register of a trade mark which was duly registered in conformity with applicable statutory provisions at the time of registration. If the use of an unregistered mark is likely to deceive or cause confusion, one can see compelling reasons of policy why, subject to some limited exceptions (see, e.g., ss. 34, 36), registration of it should be denied. If, on the other hand, the use of an unregistered mark is not likely to deceive or cause confusion, registration as a trade mark should itself provide some protection for any goodwill attaching to the registered mark notwithstanding that subsequent events or circumstances may bring about a situation in which original registration of the mark would be precluded. It is true that there are considerations of policy which favour removal from the register of any registered mark whose use is likely to deceive or cause confusion. Those considerations are, however, modified by the availability of ordinary criminal or civil procedures to prevent dishonesty, fraud and passing-off and by the fact that registration of a trade mark does not ordinarily constitute a licence for what would otherwise be unlawful conduct: see, e.g., Lyle and Kinahan Ltd's Application [63] ; Van Zeller v Mason, Cattley & Co [64] ; and note the narrowness of the trade mark exception in s. 51(3)(c) of the Trade Practices Act 1974 Cth). On balance, it appears to me that the policy considerations favouring a construction of s. 28 which would make the section directly applicable to prohibit the continued registration of any duly registered mark which was brought within par. (a) by subsequent events are outweighed by the considerations militating against the lessening of the effective protection of a mark which due registration was, in my view, intended to provide.

[34]

The effect of this construction of s. 28 of the Act is that the appeal must be dismissed. I am conscious of the fact that, no doubt because of the statements made in two judgments in the Berlei Hestia Case in this Court, it was not argued on behalf of the respondent that the direct operation of s. 28 of the Act is confined in the sense which I have explained. That fact does not, however, avoid the need to express what I see as the correct construction of an important general statutory provision. Nor, in circumstances where my views about the proper construction of s. 28 differ from those of the majority of the Court, does it give rise to a need to consider whether the matter should be relisted for further argument. In all the circumstances, however, it seems appropriate that I indicate that I would have been in favour of dismissing the appeal even if I had been of the view that s. 28 should be construed in the manner favoured by the Chief Justice and Dawson and Toohey JJ. If I had been of that view, the question would have arisen whether the respondent's registered Moo mark had, notwithstanding its registration and the failure of the appellant's case based on alleged non-use, become disentitled to protection in the courts by reason of some blameworthy conduct on the part of the respondent or its predecessor as owner of the registered Moo trade mark. In the light of the findings of the trial judge, including the specific finding to the effect that there was no belief (or intent) on the part of the respondent that its conduct would encourage deception or confusion or involve or lead to the appropriation to itself of any of the Moove goodwill, I would have agreed with Dawson and Toohey JJ. that that question should be answered in the negative. In view of that specific finding and of the failure of the appellant to make out its claim for expungement for non-use, the fact that laches or acquiescence on the part of the respondent may have given rise to personal equities in the appellant if the respondent had brought proceedings to prevent or restrain continued registration or use of the Moove mark by the appellant does not, in my view, mean that the respondent can, in the absence of such proceedings, be said to have been guilty of blameworthy conduct or that its registered Moo trade mark can be said to be disentitled to protection in a court of justice (cf. the Act, s. 58(3)).

[49]

It is s. 22 itself which establishes that in rectification proceedings attention need not be confined to the original registration. That section speaks of the expunging or amendment, not only of an entry wrongly made, but also of an entry wrongly remaining in the register, thus drawing a clear distinction between an entry wrongly on the register because it was wrongly made and an entry otherwise wrongly on the register. An entry can only be wrongly on the register, otherwise than because it was wrongly made, as a result of changed circumstances. There is then the question of what changed circumstances will make it wrong for a mark to remain on the register. Section 56, to which we shall refer later, provides one instance of a mark wrongly remaining on the register. In certain circumstances set out in that section, an entry is deemed to be wrongly remaining on the register. But that section is not intended to be exhaustive. In relation to the United Kingdom legislation, Lord Diplock in General Electric Co v General Electric Co Ltd [69] , expressed the opinion that "an entry which was lawful at the time it was originally made can only be expunged if, at the time of the application, its continued presence on the register is prohibited by virtue of some other provision of the Act". We see no reason to doubt that view in relation to the Australian legislation, though it may be closer to the language of the legislation to say that its continued presence is not authorized by any other provision of the Act. And, if it has a continuing operation, s. 28 is such a provision. It is at this point that reference to s. 61(1) is helpful because it demonstrates that s. 28 was intended to have a continuing operation, at least for the purpose of establishing the validity of the original registration of a mark, and we can see no reason, once the continuing operation of s. 28 has been recognized to that extent, why one should not recognize its operation for the purpose of establishing whether the registration of a mark continues to be valid. When the latter section says that a mark with the characteristics specified shall not be registered as a trade mark, it means not only that it shall not be placed on the register, but also that it shall not remain on the register. The language is capable of bearing that two-fold meaning and, if nothing else, s. 61(1) indicates that such is the meaning which it should bear.

[55]

No scandalous design, and no mark the use of which would by reason of its being likely to deceive or otherwise be deemed disentitled to protection in a court of justice, or the use of which would be contrary to law or morality, shall be used or registered as a trade mark or part of a trade mark. (Our italics.) Plainly the construction of s. 28 for which the respondent contends is supported by the wording of the old s. 114, if the breaking up of that section into separate paragraphs in the new s. 28 was not intended to effect a change in meaning. A committee known as the Dean Committee (the Committee Appointed by the Attorney-General of the Commonwealth to Consider What Alterations are Desirable in The Trade Marks Law of the Commonwealth) in 1954 recommended alterations in the law. It did so, having reviewed the recommendations of a previous committee, the Knowles Committee, which had proposed a Bill simply adopting the form of s. 114 of the 1905 Act with the addition of the words "or cause confusion". The Dean Committee proposed that s. 28 take its current form and commented at par. 63 that "Clause 28, while in different words, has in substance the same effect as section 114 of the present Act, but it relieves the Registrar and the Court from consideration of "morality"." It was the recommendation of the Dean Committee which was accepted. If the Dean Committee had sought to remove the requirement of disentitlement to the protection of a court where deception or confusion was relied upon, a requirement which was plainly present in the old s. 114, it is probable that they would have made their intention apparent. But they asserted the contrary. Thus, the circumstances in which the present legislation was enacted suggest that no such change was intended. Of course, it is the wording of the new s. 28 which is of primary significance, but the presence of the word "otherwise" in par. (d) creates an obvious ambiguity in the face of the otherwise disjunctive form of the section. It is in the resolution of this ambiguity that the history of the section is of assistance.

[170]

Is a mark which was valid when registered to be removed because later events, perhaps the assiduous efforts of an infringer, have created a likelihood of confusion? In HTX [43] , Fox J. said: It seems to me to be contrary to the scheme and policy of the Act to allow what Windeyer J. in the Bali Brassiere Case called "the assiduous efforts of an infringer" [42] to invalidate (or render void) a registered trade mark unless, at least, there has been "blameworthy" conduct on the part of the registered proprietor. Doubtless a registered proprietor is expected to take due steps for the protection of his mark, but the infringer must also be expected to take such steps as the Act allows in order to establish an equal or superior right to the use of the mark, or to have the register appropriately rectified. While registration by no means creates indefeasibility, it gives notice, and encouragement should not be given to the trader who fails to search it, or disregards the results of a search, and creates a substantial business using the mark, to the point that the registration is to be regarded as invalid, and liable to be expunged. In Riv-Oland [44] , Bowen C.J. said: I am, I think, conscious of leaning against a construction of s. 28 in regard to blameworthy conduct on the part of a proprietor which would lead to a situation described by Windeyer J where the proprietor of a mark might be denied or lose registration by reason of "the assiduous efforts of an infringer" , or to adapt the words to cover the period before registration "the assiduous efforts of a misappropriating user". In the same case [45] , Lockhart J. said: If s. 28(a) has an operation which is not restricted by reference to s. 28(d), then a trader who uses the registered trade mark of another trader may exploit that infringing use of the mark in the market-place to the point where it can be said that the use of the registered mark by the proprietor of the mark would be likely to deceive or cause confusion. It would be an extraordinary result if this conduct, which constituted infringing conduct, could produce either the invalidity of the mark or its liability to expungement. It is no answer to say that a court has a residual discretion to decline to order expungement even where a mark is shown to be invalid. The fact that the infringing conduct of a rival trader, in the circumstances to which I have referred, could produce the consequence that a registered mark becomes invalid is itself so extraordinary a result that its correctness could only be accepted as a last resort. 1. (1968) 118 C.L.R. 128, at p. 133. 2. (1983) 78 F.L.R., at p. 64; 49 A.L.R., at p. 644. 3. (1968) 118 C.L.R. 128, at p. 133. 4. (1988) 19 F.C.R., at p. 574. 5. (1988) 19 F.C.R., at pp. 598-599.