Non-use of mark - Action to rectify Register to remove trade mark for non-use - Equitable defence of acquiescence.

Assignment of trade mark - Assignment without goodwill.

Trade Practices - Misleading or deceptive conduct - Whether intentional elements of conduct may render it deceptive conduct even though the conduct viewed objectively would only be confusing.

Trade Practices Act 1974: s. 52

Counsel and Solicitors for applicant: Mr T.Simos QC and Mr R. Kaye

Counsel and Solicitors for respondent: Mr J.M. Ireland

The appeal be adjourned to Friday 16 February 1990 for further hearing and that the appellant then bring in short minutes of order to give effect to the Court's reasons for judgment.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

This is an appeal and cross-appeal from orders of Gummow J. in proceedings in which the respondent claimed injunctive and ancillary relief directed to the marketing by the appellant of milk drink products under or by reference to the trade mark MOO. The respondent alleged infringement of its trade mark MOOVE, a contravention of s.52 of the Trade Practices Act 1974 ("the TPA"), and passing off. By cross-claim the appellant alleged trade mark infringement by the respondent of its MOO mark. Separate proceedings brought by the respondent under s.23 of the Trade Marks Act 1955 ("the Trade Marks Act") before the Registrar of Trade Marks to remove the MOO mark for non-use were referred to the Court and determined at trial. His Honour held that the claims for removal in respect of flavoured milk and cheese under s.23 of the Act, for contravention of s.52 of the TPA, and for passing off each failed. He held that the appellant's use of the MOO mark in the course of trade and in relation to milk and flavoured milk is, and was at the date of the institution of the proceedings, likely to deceive or cause confusion within the meaning of para 28(a) of the Trade Marks Act, and ordered that the entry in the Register of Trade Marks be rectified by limiting the goods in respect of which the MOO mark is registered to "cheese". The mark had hitherto been registered in respect to dairy products as goods included in Class 29. An order was made that, upon rectification of the Register, the appellant be restrained from infringing the respondent's MOOVE mark, in relation to flavoured milk or milk, by using as a trade mark the name MOO. The appellant's cross-claim was dismissed.

2. The following is a summary of the facts of the case which are set out in more detail in the judgment of Gummow J.

3. The respondent is the statutory marketing authority in the State of New South Wales under the Dairy Industry (Amendment) Act 1983 (N.S.W.). It is the successor in name and title to the Dairy Industry Authority of New South Wales and the Dairy Industry Marketing Authority, bodies constituted under earlier legislation. In January 1979 the Dairy Industry Authority of New South Wales "launched" MOOVE flavoured milk. Since 1979 MOOVE flavoured milk has been extensively promoted, advertised, marketed, offered for sale and sold in New South Wales and the Australian Capital Territory. Its sales in these areas are substantial. In the years 1979 to 1983 there were also substantial sales of MOOVE in Western Australia, and some sales in Queensland, South Australia and Victoria. MOOVE flavoured milk is produced and distributed by various regional co-operatives, is stocked by large supermarket chains, and is also made available to smaller retailers supplied by the warehouses of Davids Holdings Pty Ltd. It is available in four flavours: chocolate, strawberry, iced coffee, and in some areas, vanilla. At various times there have been other flavours available. The colouring on the containers is two tonal, that is white and one other tone indicative of the colour and flavour of the contents. The MOOVE product is distributed both in the form of fresh milk and long life (UHT) milk. The fresh milk is packaged in 300ml and 600ml gable topped cartons and in labelled 2 litre plastic bottles. The UHT milk is sold in 250 ml brick shaped Tetra paks. A feature of all the packaging and labelling is that the word MOOVE is printed within a slightly curved block reflecting a theme of activity, a theme which is emphasised in television advertising. The UHT product accounts for between 2% and 4.5% of the total MOOVE sales, but in the year ending 30 June 1988 this amounted to 350,000 litres.

4. The respondent has planned and executed advertising for MOOVE to encourage purchases by people aged between 13 and 17, with secondary target groups of children in their immediate pre-teen years and people aged between 17 and 25.

5. The appellant was incorporated in Victoria in 1960. It receives supplies of milk from the dairying areas of Victoria and the southern Riverina of New South Wales. It manufactures and supplies under the "house" name "Devondale" a large range of dairy products including butter, a range of milk powders, cheeses and creams, and UHT and fresh milk. The packaging of many of the products in the Devondale range has displayed representations of cows grazing in pasture. The principal retail outlets are the major supermarket chains throughout Australia, including those in which the MOOVE product is stocked. Stocks are also held by Davids Holdings Pty Ltd.

6. In September 1986 the appellant was anxious to expand the market for its products. It briefed market research consultants to research unutilised opportunities that might exist for cheese products, and to undertake comparison tests between full cream milk and UHT milk with children as the target group. Later, milks of different flavours were developed and further evaluation tests conducted. Advertising agents were engaged to advise on aspects of a marketing programme. By August 1987 briefs had been prepared for the marketing of a children's cheese product and a school milk product. On 21 August 1987 at a meeting of representatives of the appellant, its marketing research consultants, and its advertising agents, product names were discussed. The advertising agency suggested "MOO milk". On 26 August 1987 patent and trade mark attorneys instructed by the appellant conducted a trade mark search of the name "MOO" and ascertained that there was such a trade mark owned by a company called Healthway Dairy Products Pty Ltd ("Healthway"). The registration was due to run out that day. The patent and trade mark attorneys also acted for Healthway, and at the instigation of the appellant the registration was renewed by Healthway and later assigned to the appellant by deed expressed to be made on 29 September 1987 for a nominal consideration of $10. This assignment was registered on 24 February 1988.

7. The MOO trade mark had been registered with effect from 26 August 1966 in respect of "dairy products" as goods included in Class 29. For some seven years preceding March 1974 the trade mark was used by Healthway in relation to a reduced fat cream product sold in Victoria, and for a short time in the metropolitan area of Sydney. By 1974 Healthway was losing sales and the company ceased to market the product. Thereafter the MOO trade mark was not used until after it was assigned to the appellant. The learned trial Judge found that whatever the strength of the common law rights in respect of the MOO trade mark built up by Healthway as a result of its trade up to 1974, those rights had wasted away in the years that followed. The MOO trade mark by August 1987 was no longer distinctive of the products of Healthway because it had been withdrawn from public use for many years.

8. The respondent's MOOVE trade mark was registered with effect from 1 November 1978. It was registered in respect of all goods in Class 29. Neither the trade mark of the appellant nor that of the respondent was registered for a representation in any particular style or manner. The registrations were simply for MOO and MOOVE.

9. In November 1987 the appellant "launched" in Queensland a packaged cheese product under the name MOO. The packaging was devised so as to appeal to children aged approximately between 4 and 10 years, and to those who purchased food for them. In February 1988 the appellant extended the sale of this product in New South Wales. By July 1988 40.8 tonnes of MOO cheese were sold nationally, divided between Queensland, New South Wales, Victoria and Tasmania. These proceedings were commenced on 5 August 1988. Shortly thereafter sales commenced of MOO Squares, a product containing individually wrapped slices of processed cheese; by 19 November 1988 (when the trial occurred) 127.1 tonnes had been sold across all States.

10. In mid-August 1988 the appellant commenced sale of MOO milk products in New South Wales. The MOO milk is UHT milk and is packaged in a 200ml brick-shaped Tetra pak. When the respondent first learned of the appellant's intention to market MOO milk it commenced the non-user application before the Registrar on 6 July 1988, and later commenced these proceedings seeking an interlocutory injunction to prevent the launch of MOO milk. An interlocutory injunction was not granted. By November 1988 a total of 135,800 litres had been sold in New South Wales. The paks of MOO milk are sold in lots of six, bundled in plastic wrapping, the intention being that the purchaser will buy a "6 pak" bundle at a time. (The respondent's UHT MOOVE milk has been sold only in single containers). The MOO milk is available in three flavours, chocolate, strawberry and banana. The colour of the MOO pak varies according to the colour and flavour of the contents. There appears on the pak the word "MOO" in large letters, in smaller letters the words "reduced fat milk" and in quite small letters the word "Devondale" as part of a device coloured green, white and red. The appellant devised the MOO milk in 200ml Tetra paks particularly with an eye to mothers aged 25 to 40 who would purchase it for inclusion in the lunches taken to school by their children.

11. At trial there was evidence that in the Jewel chain of stores most retail sales of UHT flavoured milk products, whether of MOO or MOOVE, would be to women buying on a weekly or twice weekly basis, not for immediate consumption, but to put in school lunch boxes and also to keep at home for children. As the UHT products keep for a long period without refrigeration they are kept on shelves in the Jewel stores. The fresh milk MOOVE products are kept under refrigeration, but because the UHT products taste better if consumed chilled, it is likely that in milk bars UHT products will be sold from refrigerated storage for immediate consumption.

12. The evidence also showed that by November 1988 MOO and MOOVE (in its UHT format) and UHT plain milk (sold under other brand names) were displayed side by side or in close propinquity on the shelves of supermarkets in addition to those in the Jewel chain. Both products were sold in some small grocery stores. The fresh milk MOOVE products were sold from refrigerated cabinets and thus not from the same grocery shelves as the UHT products.

13. By 19 November 1988 the appellant had spent $249,290 on television advertising of MOO milk in New South Wales, and there had been limited newspaper advertising.

14. At trial, the primary basis upon which the respondent sought to restrain the marketing by the appellant of MOO milk drink products was on the ground of the substantial identity or deceptive similarity of MOO to MOOVE, such that by the conduct complained of the appellant was infringing the respondent's trade mark, and was also passing off and in contravention of s.52 of the TPA.

15. The trial Judge held that the evidence established that by the commencement of the proceedings MOOVE had become distinctive of the milk products of the respondent to purchasers and prospective purchasers in New South Wales and the Australian Capital Territory. Further, there was some "spillover" of reputation into Queensland, South Australia and Victoria, and some reputation remaining in Western Australia as a result of the sales there between 1979 and 1983. In New South Wales and the Australian Capital Territory the respondent's reputation was at its strongest, and amongst teenagers. But the reputation extended to a substantial number of persons in their immediate pre-teen years, and also to persons who in the preceding nine years had first learned of MOOVE whilst they were teenagers and who had continued their familiarity with the product thereafter. The reputation also extended to a substantial number of persons who purchased groceries in supermarkets for their households, even if those persons were not necessarily included in one of the other groups.

16. On the issue of comparison between MOO and MOOVE, after a review of the evidence, which included evidence about the television advertising by both the appellant and the respondent, his Honour held that in all the circumstances the use by the appellant of MOO in relation to its UHT flavoured milk product was such that a substantial number of purchasers and prospective purchasers of the MOO UHT flavoured milk product, being persons who knew of MOOVE flavoured milk, including the UHT MOOVE products, would be caused to wonder whether it might not be the case that the two products came from the same source; they would entertain a reasonable doubt. This is a finding that the use of the MOO mark was likely to deceive or cause confusion. His Honour expressed his conslusions in terms which reflect the test formulated by Kitto J. in Southern Cross Refrigerating Company v. Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595, approved on appeal at 608.

17. This finding became the foundation for his Honour's conclusions on other issues in the case. In deciding whether the use of the MOO mark was likely to deceive or cause confusion for the purposes of the Trade Marks Act, the Court should have regard to the capacity of the registered proprietor of the MOO mark to apply it to merchandise of the same kind as that sold under the MOOVE trade mark even though it may not yet have done so: G.E. Trade Mark (1973) RPC 297 at 321; Berlei Hestia Industries Ltd v. The Bali Co. Inc. [1973] HCA 43; (1973) 129 CLR 353 (the Australian Berlei case) at 355. On the other hand, when considering the claims of passing off and contravention of s.52 of the TPA, the Court must be concerned with the actual use of the MOO mark in relation to the marketing of the appellant's UHT flavoured milk. The trial judge was careful to apply the different tests. His Honour held that the level of confusion likely to arise from the use of MOO in relation to the appellant's UHT flavoured milk was not, having regard to the differences in actual packaging and get up, sufficient to constitute passing off or a contravention of s.52. At trial the respondent had sought to escape this conclusion by arguing that conduct which caused confusion coupled with an intention to cause that confusion would amount to a contravention of s.52. The respondent relied on what was said by Lockhart J. in Bridge Stockbrokers Ltd and Anor v. Bridges and Ors [1984] FCA 391; (1984) 4 FCR 460 at 474-475. However, on the facts his Honour rejected that part of the respondent's case which sought to establish that the appellant had deliberately set out to cause confusion in the market place with the intention of thereby gaining a benefit from the resemblance between MOO and MOOVE.

18. On the trade mark issues his Honour held that the appellant was using upon and in relation to its UHT milk product a mark which was deceptively similar to MOOVE, but whilst the appellant's registration of the MOO trade mark for "dairy products" remained, such use was not an infringement, para 64(1)(e) of the Trade Marks Act; the use was permitted by sub-s.58(3). At trial the respondent sought to break this impasse in several ways. Firstly, the respondent contended that the MOO registration should be removed for non-use pursuant to sub-s.23(1). Secondly, the respondent sought rectification of the Register to remove the entry relating to the assignment of the MOO trade mark from Healthway (which had been joined as a respondent to the proceedings for this purpose) to the appellant. This would have rendered the registration vulnerable to removal for non-use as there had been no use by Healthway during the relevant period. Thirdly, the respondent alleged that MOO wrongly remained on the Register within the meaning of s.22 of the Trade Marks Act because at the date of the institution of the proceedings the registration contravened s.28, the mark being one the use of which would be likely to deceive or cause confusion. His Honour rejected the first two of these submissions, but upheld the third.

19. On the question of non-use under para 23(1)(b) of the Trade Marks Act, his Honour held that there had been a sufficient use of the MOO trade mark by the appellant between 24 February 1988 and 6 June 1988, i.e. between the registration of the assignment and one month before the date of the application for renewal, to save the mark from removal. There had been substantial use of the mark in relation to cheese. In relation to flavoured milk, during this period the appellant had ordered Tetra paks and taken delivery of paks for three flavours. There had been a trial production run of banana flavour, and subsequently a commercial production run on 6 May 1988 of chocolate flavour. However it was not until July 1988 that the UHT milk product was actually presented to buyers as available for sale. Prior to the registration of the assignment the appellant had committed itself to the launch of milk and cheese products under the trade mark MOO, and had taken steps to that end. His Honour held that in the relevant period there had been use of the MOO mark by the appellant in relation to cheese and in relation to flavoured milk, and that such use had been bona fide.

20. The grounds of appeal challenge the decision to order rectification, and also the geographical extent of the order for expungment. On the cross-appeal the respondent challenges the decision not to order rectification of the Register by the removal of the entry relating to the assignment of the MOO trade mark to the appellant. The respondent also challenges the finding that the appellant had not engaged in conduct which contravened s.52 of the TPA.

21. The first ground of appeal argued by the appellant was that the trial judge erred in holding that, at the date of institution of the proceedings, the use by the appellant of its MOO mark in the course of trade in relation to milk and flavoured milk was likely to deceive or cause confusion within the meaning of para 28(a) of the Trade Marks Act. The appellant contended that a substantial number of persons would not be likely to be confused as to whether the relevant products might come from the same source. It was submitted that persons who have seen the respondent's television advertising, or who have purchased MOOVE products, and who have an ordinary recollection or memory would remember the whole of the respondent's trade mark, MOOVE. It is a single, short, misspelt word that is likely to command attention and be remembered in full. It was submitted that no person who remembered the trade mark MOOVE would be caused to wonder whether the product bearing the trade mark MOO came from the same source, since MOOVE and MOO have very different connotations; the former connotes movement, and the latter connotes the sound made by a cow and thus milk or milk products.

22. The decision whether the use of a mark is likely to deceive or cause confusion is in the end a question of impression and common sense: the Australian Berlei case at 357. See also "Bali" Trade Mark (1969) RPC 472 per Lord Upjohn at 497. Although it is a matter to be decided by the trial judge, it is a "jury question" on which, in a case like this, the judge is entitled to give effect to his own opinion as to the likelihood of deception or confusion and in doing so is not confined to the evidence of the witnesses called at trial: G.E. Trade Mark at 321-322. The occasion for the interference by an appeal court with the decision of a trial judge on a factual question of this nature will arise only where it is clearly demonstrated that the trial Judge fell into error. In the present case the trial Judge carefully considered a number of matters that were relevant to be taken into account. It is unnecessary to recite them all as it is not contended that his Honour either took into account irrelevant matters or omitted from consideration relevant ones. His Honour observed that the degree of resemblance between the words MOO and MOOVE is greater when they are heard than when they are seen. He held that there is a strong risk of MOO being taken for MOOVE by the listener, particularly by persons who know only MOOVE in relation to flavoured milk products and have perhaps an imperfect recollection of it (Aristoc Ltd v. Rysta Ltd (1945) AC 68 at 86). Whilst the respondent's television advertisements, which have a theme of lively adolescent behaviour and movement, stressed the visual element, the word was pronounced in such a way, and against such a musical background, that the final "v" consonant was almost inaudible. In our opinion his Honour's finding as to the phonetic similarity of the two marks was not only open but correct.

23. His Honour also considered evidence from witnesses called on the question whether the use of the marks had caused actual deception or confusion. On this topic it must be said that the evidence led by the respondent was very weak. There was one witness only who, when shown a carton of MOO flavoured milk by an employee of the solicitors for the respondent, reacted in a way which his Honour said was "fairly to be described as one of confusion". His Honour's assessment of the evidence was that it did not disclose any significant actual deception. However question of deceptive similarity, and whether a mark is likely to cause confusion, are not to be finally decided by witnesses. The roles of judge and witness were explained by Lord Evershed M.R. in Electrolux Limited v. Electrix Limited and Anor (1954) 71 RPC 23 at 31. He said:

"The question of infringement, the question whether

one mark is likely to cause confusion with

another, is a matter upon which the Judge must

make up his mind and which he, and he alone, must

decide. He cannot, as it is said, abdicate the

decision in that matter to witnesses before him.

On the other hand, equally it is true that he must

be guided in all these matters by the evidence

before him, and where the evidence is that there

has been no confusion, that is . . . a material

matter which the Judge must take into account in

deciding for himself, aye or no, whether the one

mark is likely to lead to confusion with the

other."

In the present case the trial Judge was fully alive to the weakness of the respondent's case on actual deception. He observed that, whilst the absence of evidence of such deception could not be conclusive, its absence was significant and this significance was strengthened by the circumstance that, allowing for the 6 pak UHT MOO and the single pack UHT MOOVE, there was no marked difference in the price and character of the goods or in the way in which they were displayed at the point of sale (cf the Australian Berlei case at 363.)

24. The argument that MOO and MOOVE have very different connotations was addressed to the trial Judge. He said one must be cautious against too much refinement of thought when considering the different connotations alleged. We agree with that observation. What is purchased in vast quantities by association with MOOVE are flavoured milk products. The respondent's labelling and packaging does not stress this fact in words, but it is not necessary that it should do so. Purchasers and prospective purchasers know well enough that the packaging contains a milk product. In our view the misspelling which commences the mark MOOVE with the letters M-O-O is likely to be recognised by a substantial number of those who look at the label as a misspelling intended to evoke the connotation of the sound of a cow. The MOOVE mark no doubt evokes the idea of movement but in our opinion it is also likely to convey an association with cows. There is both a phonetic similarity between the marks and a similarity in the association with cows. In our view there was ample material before the trial Judge to support his conclusion that the use of the MOO mark was likely to deceive or cause confusion. Although the decision was one for the trial Judge, his conclusion is one with which we agree. This ground of appeal fails.

25. Next, it was contended by the appellant that the trial Judge was in error in ordering the expungement from the Register of the MOO mark otherwise than for cheese because on the true construction of ss.22 and 28(a) expungement could only be ordered if, at the relevant time, the use of the appellant's mark was not only likely to deceive or cause confusion but in addition was not entitled to protection in a court of justice by reason of some relevant blameworthy conduct of the appellant.

26. The order for expungement was made under para 22(1)(b) as one wrongly remaining in the Register. That paragraph contemplates that an entry which was lawful at the time when it was originally made may, as a result of subsequent events, become one "wrongly . . . remaining in the Register". An entry which was lawful at the time it was originally made can only be expunged under para 22(1)(b) if, at the time of the application for expungement, its continued presence on the Register is prohibited by virtue of some other provision of the Act: G.E.Trade Mark at 323. Gummow J. held that the MOO mark offended against s.28. Section 28 reads:

"28. A mark -

(a) the use of which would be likely to

deceive or cause confusion;

(b) the use of which would be contrary to law;

(c) which comprises or contains scandalous

matter; or

(d) which would otherwise be not entitled to

protection in a court of justice,

shall not be registered as a trade mark."

It is now established that the concluding words of s.28 prohibit not only the original registration of an offending mark, but the continuance on the Register of a mark that has become an offending mark since registration: the Australian Berlei case at 360; Riv-Oland Marble Co. (Vic) Pty Ltd v. Settef SpA (1988) 83 ALR 677 (the Riv-Oland case) at 703.

27. His Honour considered the relationship between the law as to unregistered trade marks and the legislative scheme for registration, and the concepts of deceptiveness and lack of distinctiveness which he related to the application of s.28. His Honour undertook a detailed critique of G.E. Trade Mark which he distinguished on the ground that the House of Lords was there considering a situation where there had been honest concurrent use for a substantial time by each of the proprietors of two trade marks which, after registration, had become likely to deceive or cause confusion whereas in the present case his Honour considered:

". . . there were two registered marks (not placed

upon the Register pursuant to any exercise by the

Register of his special powers under s.34

concerning honest and concurrent use) and one of

those marks had been extensively and honestly

used, the other mark had fallen into desuetude

over many years and in the six months preceding

the institution for the application for

expungement had been extensively used by the

registered proprietor in relation to goods of one

description, but very little used in relation to

goods of another description, being goods for

which the other party was extensively using its

mark."

His Honour discussed whether loss of distinctiveness was alone sufficient to provide a ground, apart from the specific provisions of s.56, for removal. He concluded:

"In my view, the words 'or otherwise' do cover

cases where trade marks have lost distinctiveness

by disuse (being marks not otherwise of strong

inherent adaptation to distinguish) at least where

the consequence is likelihood of deception or

confusion."

His Honour then, under a heading "Section 28 and the present case," summarised his conclusions:

"Thus, looking at matters as they stood at the date

of institution of the proceedings, on 5 August

1988, the case is not one where each of two

traders, by virtue of concurrent use of their

marks upon flavoured milk products, has built up a

distinct reputation. Nor would it be accurate to

describe the applicant as an assiduous infringer

of the rights of the first respondent. Rather,

the case is one where at the date of the

institution of the proceedings the first

respondent had acquired a long unused trade mark

registration, and there had been sufficient user

of it after that acquisition to keep the

registration alive in respect of flavoured milk.

But it is submitted that use in relation to milk

was likely to deceive or cause confusion within

the sense in s.28 of the Trade Marks Act. The

reason for the likely deception or confusion is

bound up in the character of the mark MOO as not

strongly inherently adapted to distinguish milk

products and the very limited user thereof, on the

one hand, and on the other the use over a

considerable period of the applicant's mark MOOVE.

The mark of the first respondent was one in

respect of which it was not entitled to relief in

equity. This was not because of any 'blameworthy

conduct' as understood when applying the maxim as

to unclean hands. Rather, there was 'otherwise'

no entitlement to such protection, both for want

of the necessary distinctiveness at 5 August 1988

and also as a consequence of the lengthy period of

use of MOOVE before the commencement of use of MOO

by the first respondent. Further, use of the MOO

mark in relation to milk was likely to cause

confusion by causing persons, in the sense I have

explained, to wonder whether the MOO and MOOVE

products might not come from the same source, and

to entertain a reasonable doubt."

His Honour's reference to "blameworthy conduct" is a reference to the language of Lord Diplock in G.E. Trade Mark. In the Trade Marks Act 1938 (U.K.) s.11 is the corresponding section to s.28 in our Act, although the two are differently worded. Section 11 reads:

"11. It shall not be lawful to register as a trade

mark or part of a trade mark any matter 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,

or would be contrary to law or morality, or any

scandalous design."

Lord Diplock, with whose speech Lord Simon of Glaisdale and Lord Kilbrandon agreed, in speaking of the status of a registered trade mark the use of which is likely to cause confusion said that under s.11 (at 334):

"If the likelihood of causing confusion did not

exist at the time when the mark was first

registered, but was the result of events occurring

between that date and the date of application to

expunge it, the mark not be expunged from the

register as an entry wrongly remaining on the

register, unless the likelihood of causing

deception resulted from some blameworthy act of

the registered proprietor of the mark or of a

predecessor in title of his as registered

proprietor."

28. Section 28 of our Act is cast in a style calculated to simplify the construction of the section. It may be questioned whether that object has been achieved. This Court considered s.28 in the Riv-Oland case. The point of contention about the construction of s.28 was whether the four paragraphs (a) to (d) should be read disjunctively so that the meaning of para (a) is uninfluenced by para (d), or whether para (d) governs the construction of para (a). If the former were the case, a registered trade mark would be ineligible for registration, or become liable to expungement if, without more, its use were likely to deceive or cause confusion. This construction has been adopted by the Court of Appeal in New Zealand in Pioneer Hi-Bred Corn Co. v. Hy-Line Chicks Pty Ltd (1979) RPC 410. In Riv-Oland, Northrop J. favoured a similar construction of s.28. Bowen C.J., however, was of the view that to hold the respondent in that case was not entitled to registration because its mark conflicted with para 28(a) "would appear to place a premium upon the 'assiduous efforts of an infringer' . . . " and rejected the conclusion of the New Zealand Court of Appeal (682, 683). That is, his Honour appeared to favour an interpretation of s.28 along the lines of that arrived at in the House of Lords in G.E. Trademark. Lockhart J. clearly favoured the G.E. Trademark construction and held that para (d) should be read as referring back to and limiting para (a) of s.28 (706).

29. It should be noted that the predecessor of s.28 has been applied by the High Court in a number of cases: examples are A. and F. Pears Ltd v. The Pearson Soap Company Limited [1925] HCA 52; (1975) 37 CLR 340 at 348, 349; Radio Corporation Pty Ltd v. Disney [1937] HCA 38; (1937) 57 CLR 448 at 453, 454; Sym Choon and Co. Ltd v. Gordon Choon Nuts Ltd [1949] HCA 54; (1949) 80 CLR 65 at 70; Re the Registered Trade Mark 'Yanx' [1951] HCA 28; (1951) 82 CLR 199 at 205, 206 and Southern Cross Refrigerating Company v. Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 594, 607, 608. In each of these cases the question argued and decided was whether there was a likelihood of deception within the meaning of s.114 of the Trade Marks Act 1905. The point decided in Riv-Oland was not argued in any of them and no reference is made to it in the judgments; but we draw attention to what was said by Dixon J. (as he then was) in the Radio Corporation case at 456, 458-9. The inference may be open, however, that in these authorities the High Court did not consider it necessary to go beyond the issue of deception in order to decide whether the registration in question was, or would if allowed, be valid. In none of them were the facts comparable with those in Riv-Oland, where the appellant had wrongfully appropriated the respondent's mark; that was the point of the references by Bowen C.J. to the undesirability of rewarding an infringer's efforts and by Lockhart J. (at 707) to the fact that "the mere likelihood of deception or confusion engendered by the use of a registered trade mark does not necessarily result in invalidity of the mark, or render it liable to expungement. If s.28 were to bear the construction for which the appellant contends in this case, anomalies and unacceptable consequences would follow." The majority in Riv-Oland took the view that, even though there was a likelihood of confusion, para (a) of s.28 did not require that the respondent's mark be expunged. The same result may have been arrived at by applying the view of Mason J. (as the Chief Justice then was), in the Australian Berlei case, that the meaning of the relevant part of para (a) is influenced by the language of para (d) (129 CLR at 361)."

30. In the present case the respondent has argued that Riv-Oland is distinguishable as that decision concerned the validity of the original registration of the trade mark, whereas the issue in this case is whether a mark which was admittedly lawfully registered has become liable to be expunged as the result of events occurring after registration. This factual difference between the cases does not, in our opinion, provide a ground for departing from the construction placed on s.28 by the majority, a construction which was essential to their decision. In any event, if this factual difference provides a material ground of distinction, the circumstances of the present case have in common with the facts of G.E. Trade Mark the original lawful registration of the mark, which makes the reasoning of the majority of the House of Lords the more persuasive here.

31. The appellant placed particular stress on the following passage from the judgement of Lockhart J. in Riv-Oland at 707:

"In my view the test propounded by Lord Diplock

with respect to s 11 of the United Kingdom Act,

namely that the operation of the section is

confined to situations where the likelihood of

deception or confusion is brought about by some

blameworthy act of the registered proprietor of

the mark, is equally applicable to s 28 of the

Act, notwithstanding the differences in the

structure and syntax of the two sections. It

follows that the mere likelihood of deception or

confusion engendered by the use of a registered

trade mark does not necessarily result in

invalidity of the mark, or render it liable to

expungement."

The appellant contended that Lockhart J. should be understood as meaning that some blameworthy act of the registered proprietor is the sole circumstance which could relevantly render a mark "not entitled to protection in a court of justice" under s.28. To so understand the above passage would be consistent with the opinion expressed by Lord Diplock in G.E. Trade Mark on s.11 of the United Kingdom Act. However the question for decision in Riv-Oland did not require investigation of the width of the expression "not entitled to protection in a court of justice". It was not contended that any ground existed which would disentitle the registered proprietor of the Riv-Oland trade mark to protection in a court of justice. If, as a matter of construction, para 28(d) governed the meaning of para 28(a), as the majority held, then s.28 did not prohibit the entry remaining in the Register. It is understandable that after lengthy argument which centred on Lord Diplock's speech in G.E. Trade Mark a member of the Court would discuss the question of construction in terms of "blameworthy conduct", which itself is a very broad expression. We do not read the judgment of Lockhart J. as intending to strictly confine the scope of para 28(a) to cases where the proprietor of the mark was "not entitled to protection in a court of justice" on account of blameworthy conduct. In our opinion Riv-Oland leaves open the question whether para 28(a) may apply where, on some other ground, the mark was not entitled to protection in a court of justice. We do not understand the majority judgments to deny the possibility that a mark may not be entitled to protection in a court of justice, for example, because the mark makes a false representation as to the nature or quality of the goods: Bass, Ratcliff and Gretton Ltd v. Nicholson and Sons Ltd (1932) AC 130 per Lord Warrington of Clyffe at 146 and the Australian Berlei case, at first instance[1968] HCA 72; , (1968) 118 CLR 128 per Windeyer J. at 142; or because the mark would impose a clog upon the means of identifying the subject matter of dealings between traders which operates in restraint of trade: Wheatcroft Bros Ltd's Trade Marks (1954) 1 Ch 210 at 222-223.

32. Lord Diplock explained in G.E. Trade Mark that the early Trade Marks Acts operated in conjunction with established principles of the common law (including equity). The early Acts were not intended to alter the basic features of trade mark protection. However, as Gummow J. has observed, the character of the legislation has not remained static either in the United Kingdom or here. For example, whilst our Act continues to provide a system for registration of trade marks in which property interests have arisen from use and reputation (s.24), the Act now provides for registration of marks which have acquired no goodwill and which would not be entitled to protection in a court of justice independently of registration under the Act (Part B marks under s.25). Section 28 is one of the provisions in part IV of the Act dealing with registration of trade marks. The primary operation of s.28 is at the stage of the application to register a mark. The operation of the section to a mark after lawful registration is secondary. In the primary operation s.28 directs attention to the status of the mark under the general law. At that stage the mark is entitled to no protection under the Act. However after registration, when s.28 assumes its secondary role, the protection to which the mark is entitled in a court of justice includes the protection afforded to it by its entry in the Register under the Act. At this stage in the development of the legislative scheme for registration and use of trade marks, it may be expected that the degree of protection afforded to a mark by registration is to be ascertained by an examination of the language of the statute rather than by reference to general law.

33. Sections 60 and 61 give a degree of indefeasibility of title to a registered trade mark. Section 61 is relevant in the present case as the MOO mark had been registered for upwards of twenty years. It reads:

"61.(1) In legal proceedings relating to a trade

mark registered in Part A of the Register

(including applications under section 22), the

original registration of the trade mark under this

Act shall, after the expiration of 7 years from

the date of the original registration, be taken to

be valid in all respects, unless it is shown-

(a) that the original registration was obtained by

fraud;

(b) that the trade mark offends against the

provisions of section 28; or

(c) that the trade mark was not, at the

commencement of the proceedings, distinctive

of the goods or services of the registered

proprietor.

(2) Paragraph (c) of the last preceding

sub-section does not apply to a trade mark

registered before the commencement of this Act

until after the expiration of 3 years from the

commencement of this Act."

Paragraph 61(1)(b) reflects the principle already mentioned that a mark after lawful registration may only be removed if its continued presence on the Register is prohibited by virtue of some other provision of the Act. Paragraph 61(1)(c) is important as it refers expressly to distinctiveness. The absence of distinctiveness at the commencement of the proceedings is a condition precedent to the rebuttal of the presumption of validity which otherwise follows from the duration of the registration. Paragraph 61(1)(c) does not in itself provide a ground which renders the trade mark liable to be removed. On the ordinary rules of construction, the separate treatment in para 61(1)(c) of the topic of lack of distinctiveness must be a strong indication that lack of distinctiveness is not within the subject matter regulated by s.28 and therefore covered by para 61(1)(b).

34. At the stage of an application to register a trade mark the requirement of distinctiveness is not regulated by s.28. That topic is dealt with by ss.24, 25 and 26. The Act recognises that, whilst a trade mark may have a degree of distinctiveness that qualifies it for registration under s.24, its distinctiveness may not be sufficient to prevent the use of the mark from being likely to deceive or cause confusion. Hence the presence of s.28, and ss.34 and 58(3) which deal with the honest concurrent user of marks which are substantially identical or deceptively similar. The characteristics of deceptiveness and lack of distinctiveness may overlap, or to use the expression of Kitto J. in Bayer Pharma Pty Ltd v. Farbenfabriken Bayer A.G. [1965] HCA 71; (1960-1965) 120 CLR 285 at 303 "tend to run into one another". Where they do, those provisions of the Act which deal with distinctiveness, and those which deal with the likelihood of deception or confusion both come into play, but it does not follow that the scope and meaning of the various sections alter. It is simply the case that the mark, if it is to gain (or retain) registration, must comply with the provisions of the Act on both topics.

35. As s.28 does not regulate the requirement of distinctiveness at the stage of registration, it would be surprising if it assumes such a function after registration. Just as other provisions of the Act deal with that topic at the registration stage, there are provisions which deal with the lack of distinctiveness of a mark after lawful registration. The lack of distinctiveness may arise where a mark which originally qualified for registration as a Part A mark "by reason of the use of the trade mark" (para 26(2)(b)) has since registration lost that distinctiveness through disuse. Or a mark registered as a Part B mark may not have become distinctive because it has not been used. These situations are dealt with by s.23. Section 23 is a long section which deals in detail with the consequences of non-use. It will be remembered that the respondent's application to have the MOO mark removed from the Register on the ground of non-use failed because the trial Judge found there had been use in good faith of the trade mark by the appellant in relation to cheese and flavoured milk within the relevant period under para 23(1)(b). As the trade mark lawfully remained on the Register notwithstanding the degree of non-use proved against the registered proprietor, it could be expected that the corollary of the finding of the trial Judge would be that the non-use did not disentitle the mark to the protection in a court of justice which the Act gives to a registered trade mark.

36. Non-use is not the only circumstance which may cause a mark, distinctive at the time of registration, to later lose that distinctiveness. Section 56 contains lengthy provisions which deem certain word marks to be wrongly remaining in the Register for the purpose of s.22. This section deals with the use of a word as a name or description which has become generic, or the use of a word which is the only practical name or description of an article, substance or service previously the subject of a patent. Section 56 made its first appearance in this country in trade mark legislation in the Trade Marks Act 1955. It was modelled on s.15 of the Trade Marks Act 1938 (U.K.). In F.H. Faulding and Co. Ltd v. Imperial Chemical Industries of Australia and New Zealand Limited [1965] HCA 72; (1964-65) 112 CLR 537 at 559-560 Taylor J. considered the case law which preceded s.15, and said:

"It was in this somewhat unsatisfactory state of

the law that s.15 of the English Act of 1938 was

enacted and I see it as a provision intended to

define exhaustively what manner of use after

registration of a registered trade mark which is a

word mark shall or shall not operate to invalidate

the mark."

Taylor J. then discussed certain provisions of s.56 and concluded:

"This is the only kind of use after registration

which is to operate to invalidate the mark on the

ground of loss of distinctiveness. Accordingly,

I am of the opinion that it was not open to the

respondent to establish independently of s.56

that, merely because the mark had lost its

distinctiveness, it wrongly remained on the

Register."

Whilst Taylor J. dissented from the other members of the court on a point of construction under para 56(2)(a), what he said about the exhaustive operation of s.56 is consistent with the judgments of the other members of the court, although they did not discuss the point.

37. In Kimberly-Clark Corporation v. Vereinigte Papierwerke Schikedanz and Co. [1967] HCA 45; (1967) 118 CLR 79 at 84 Windeyer J. considered the scope of para 28(d). He said:

"As to this, I would say first that it seems to me

that the words of s.28(d) refer to some

characteristic of the mark other than mere lack of

distinctiveness or capacity to distinguish and to

some characteristic other than a direct reference

to the character or quality of the goods. A mark

which 'would otherwise be not entitled to

protection in a court of justice' refers, I think,

to something intrinsically objectionable which

disqualifies a mark otherwise registerable: see

In re Imperial Tobacco Co.'s Trade Marks (1918) 2

Ch 207, at pp 224, 229."

Windeyer J. dealt again with para 28(d) in the Australian Berlei case [1968] HCA 72; (1968) 118 CLR 128 at 141, and there referred back to what he had said in Kimberly-Clark.

38. In HTX International Pty Ltd v. Semco Pty Ltd [1983] FCA 203; (1983) 49 ALR 636 at 645-646 Fox J., in the course of discussing the construction of s.28, and in particular para (d), referred to the observations of Windeyer J. just cited. Fox J. concluded that loss of distinctiveness is not a matter which would support a finding adverse to a registered proprietor under para 28(d) and was not therefore a ground for an application under s.22. This view would appear to accord with contemporary thinking in England. In York Trade Mark (1984) RPC 231 at 256 Lord Wilberforce said:

"There is no provision in the Act of 1938 whether

as regards Part A or as regards Part B for removal

of a mark for the reason that, through a change in

circumstances, it no longer qualifies for

registration (under the equivalents of ss.24 and

25 of the Australian Act)."

Relying upon the authority of the dictum of Lord Wilberforce, "Kerly's Law of Trade Marks and Trade Names" 11th Ed, para 11-17, says:

" . . . it is clear that a mark cannot be removed from

the Register on the ground that a change of

circumstances has made it no longer distinctive or

capable of distinguishing."

39. In the present case Gummow J. declined to follow the opinion of Fox J. in HTX International. His Honour gave two reasons for not doing so. First he said that Fox J. had not been directed to Lord Diplock's comment in G.E. Trade Mark at 329 that the words "or otherwise" in the equivalent of s.28 may possibly have been included to cover the case of marks the title to which may have been lost by disuse. We do not think that it can be assumed that Fox J. on his reading of G.E. Trade Mark had not recognised the significance of Lord Diplock's remark. In any event, Lord Diplock's observation was made in relation to s.6 of the first Trade Mark Act which was passed in 1875. That Act made no express provision for removal of an entry in the Register for non-use. The power to remove for non-use was implicit in the common law meaning of a trade mark (Lord Diplock at 331). Even if the historical explanation of the first introduction of the words "or otherwise" into the analogue of s.28 was to accommodate the possibility mentioned, the structure of s.28 in our Act is very different to the original s.6 of the 1875 Act, and s.28 must be construed in the context of the Trade Marks Act as it now stands, with the express provision for non-use in s.23. We do not think Lord Diplock's observation is other than of historic interest. The second reason given by the trial Judge for not following the opinion of Fox J. was that his Honour was not referred to the dictum of Kitto J. in the Bayer Pharma case at 303 that issues of deceptiveness and the lack of distinctiveness could tend to run into one another. We have already commented on the possible overlap of these issues. It seems to us that Fox J. was well aware of this possibility. With respect to the trial Judge, we do not understand how the recognition of the possibility that the two issues may run together helps to resolve the construction of s.28. In our view Fox J. was correct. The issue of loss of distinctiveness is not one that is within the subject matter dealt with by s.28.

40. The notion that s.28 extends to prohibit a lawfully registered mark remaining on the Register if the mark is not entitled to protection in equity because of a lack of distinctiveness also presents difficulty in the case of marks in Part B of the Register. A mark may obtain registration under s.25 even though it is not distinctive of goods and services in respect of which registration is sought. At least at the registration stage, s.28 could not operate to disqualify such a mark from registration on the ground that, through lack of distinctiveness, it was not entitled to relief in equity. After registration, a Part Bmark may be removed for non-use under s.23, but it is difficult to see how, consistently with the spirit of s.25, such a mark could be liable to expungement on the ground that in equity the mark was not entitled to protection because of a lack of distinctiveness.

41. For all these reasons we consider that a lack of distinctiveness is not a characteristic of a trade mark to which s.28 is directed. A lack of distinctiveness or a loss of distinctiveness are issues dealt with both at the registration stage, and thereafter once a mark has been lawfully registered, under other provisions of the Act. After lawful registration, if loss of distinctiveness arises in circumstances which render the mark liable to removal under ss.23 or 56, the mark may be removed. If the loss of distinctiveness does not prohibit the mark from remaining in the Register under those sections, then the mark is entitled in a court of justice to the protection which the Act gives a registered trade mark. In our opinion it is not to the point that the mark, had it not been registered, would be not entitled to relief in equity because of the loss of distinctiveness.

42. The first of the three factual matters identified by the trial Judge as the basis for his conclusion, that the MOO mark lacked the necessary distinctiveness, is not a ground which prohibits the mark from remaining on the Register. The second of the factual matters identified by his Honour was the long period of use of MOOVE before the commencement of the use of MOO by the appellant. This matter, in our opinion, goes to non-use of the mark. The application to remove the MOO mark for non-use failed. On this ground the MOO mark was not disentitled to protection in a court of justice. The third matter identified by his Honour was that the MOO mark in relation to milk was likely to cause confusion by causing people to wonder whether the MOO and MOOVE products might not come from the same source, and to entertain a reasonable doubt. This merely restates the fact that the use of the mark would be likely to deceive or cause confusion. That fact cannot in itself be enough to bring about removal because each registered proprietor could make the same accusation against the other with equal force. The Trade Marks Act recognises that two or more registered trade marks the use of which would be likely to deceive or cause confusion may lawfully remain on the Register: ss.34 and 58(3). In the Australian Berlei case, the two marks had each been on the Register of Trade Marks for quite some years; there was no discussion of the aspect to which we have just alluded, that each mark might be said to have caused confusion by reason of its similarity to the other. The reason presumably was that the successful applicant was the proprietor of a mark lawfully registered years before the mark which was expunged. It does not appear to us that the proprietor of a mark may ordinarily use the ground in para (a) of s.28 to secure the expunction of a mark lawfully registered earlier than the applicant's mark, where the only basis is deception or confusion stemming from the applicant's having chosen a mark like the earlier one.

43. In our opinion the facts found by the trial Judge provided no ground for rectification or expungement of the MOO registration in relation to milk on the basis that the mark offended against s.28.

44. In light of the conclusion just expressed, it is unnecessary to deal with the remaining grounds of appeal. However it is desirable that we mention one of them briefly. It was contended that, even if the respondent had made out a case under ss.22 and 28 for expungment, relief should have been refused in the exercise in the discretion of the trial Judge as the respondent had acquiesced both in the appellant's use of the MOO mark in relation to cheese from the date of the launch in November 1987 up to the commencement of the proceedings, and in the knowledge which it ought to have had as from November 1987 of the appellant's MOO registration in respect of all goods in Class 29. This contention was rejected by the trial Judge who accepted, without deciding, that the equitable defence of acquiescence was applicable to the statutory remedies under the Trade Marks Act. Having regard to the effect of sub-s.58(3) and para 64(1)(e) upon the respective rights of the parties, the trial Judge said that the submission had to be reframed so as to fix upon the failure of the respondent to commence the non-use application until 6 July 1988, and the application under s.22 until 5 August 1988. We agree that the submission must be considered in this way. The difficulty with the submission is that the trial Judge found that it had not been established that the MOO packaged cheese product and the MOO UHT flavoured milk product were goods of the same description. This conclusion is not challenged. The respondent has never alleged that the use of the MOO mark on packaged cheese was wrongful. In our opinion, the submission that the respondent should have realised that purchasers and prospective purchasers of MOO cheese would have been confused as to whether or not the cheese might have come from the same source as MOOVE milk, on the basis that the manufacturer of cheese would be likely to manufacture and sell under the same or a similar trade mark other varieties of dairy products such as milk and flavoured milk, cannot be accepted. The evidence of the respondent was to the contrary. The officers of the respondent did not have such a realisation. As soon as they became aware of the appellant's intention to market a flavoured milk product steps were taken first to institute the non-use application, and then to institute the proceedings. These steps were taken before MOO UHT flavoured milk was placed on the market. The evidence fails to establish any acquiescence in any infringement of the MOOVE registration.

45. We now turn to the cross-appeal. The first contention of the respondent concerned the rejection by the trial Judge of the claim for contravention of s.52 of the TPA. This submission accepts his Honour's finding that the use of the MOO mark would be likely to deceive or cause confusion but challenges the further finding that the likelihood of deception or confusion was insufficient to satisfy the requirements of s.52. In Bridge Stockbrokers Limited v. Bridges at 473-475 Lockhart J. considered the relationship between the deception and confusion as to the source of goods with which the Trade Marks Act is concerned, and conduct that is misleading or deceptive or likely to mislead or deceive for the purpose of s.52 of the TPA. If the conduct of a corporation causes mere confusion or uncertainty in the minds of the public in a sense that they may be caused to wonder whether two products may have come from the same source, the corporation does not contravene s.52(1): Parkdale Custom Built Furniture Pty Ltd v. Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, especially at 209-210. However his Honour went on to say that there may nevertheless be circumstances in which conduct by a corporation which causes confusion or uncertainty in the minds of the public may amount to a contravention of s.52. He instanced a corporation which deliberately set out to increase its sales and market share at the expense of an established product by marketing goods in a way that was likely to cause confusion or uncertainty in the minds of potential purchasers. His Honour said at 474-475:

"This suggests to me that the presently received

doctrine in this field of consumer protection may

require some refinement especially on the question

of confusion and the role of the intent of the

alleged offender under s 52 in determining whether

conduct is misleading or deceptive. Section 52

speaks of conduct of a corporation which is

misleading or deceptive. In one sense the word

'misleading' involves the notion of deceit or

craft, but generally today it does not. But the

primary meaning of the word 'deceptive' is

cheating, ensnaring or deliberately misleading.

It seems to me that this is, at the very least,

one meaning that the word should bear in s 52

especially as the section is designed to protect

the public from improper or unfair trading

practices. Also, the two words are linked by the

disjunctive 'or'. The legislature must have

intended each word to perform work independently

of the other, notwithstanding some measure of

possible overlap. I recognise that it is now

established that the intent of the corporation is

not an essential element in the notion of

misleading or deceptive conduct; but in my

opinion there are cases where there will be

deceptive conduct only where the intention of the

corporation is established."

46. In the present case the trial Judge expressed his agreement with the remarks of Lockhart J. However on the facts he rejected the respondent's contention that the appellant had deliberately marketed its product in a way that resembled the respondent's product intending to cause confusion or uncertainty so as to gain part of the market share of the respondent.

47. The respondent now submits that what Lockhart J. said in Bridge Stockbrokers Ltd v. Bridges does not amount to an exhaustive rule of law, and that other states of affairs which satisfy para 28(a) of the Trade Marks Act may amount to a contravention of s.52. It is contended that the relevant circumstance is supplied in the present case by an awareness on the part of the appellant, through its officers, that there was a risk of confusion.

48. In our opinion this submission must be rejected. The submission does not fairly reflect the findings of fact made by the trial Judge. His Honour held that the appellant was well aware that there was a significant aural similarity between MOO and MOOVE, and that the latter was the name under which the respondent had produced flavoured milk products for a number of years. However, his Honour went on to accept the evidence of the appellant's witnesses to the effect that the appellant was not acting fraudently in the sense of choosing MOO in the hope or expectation of deriving benefit from its resemblance to MOOVE. His Honour accepted that the state of mind of the relevant officer of the appellant was that the products would be directed at different "target" markets and be promoted accordingly; the appellant was not setting out to "cash in" on the reputation of MOOVE or to sail as close to the wind as it might without attracting legal liability. The circumstance postulated by Lockhart J. which could contravene s.52 was the intentional element of the conduct which rendered it deceptive conduct, even though the conduct viewed objectively would only be confusing. The extension to the generally accepted notion of misleading and deceptive conduct encompassed by his Honour's remarks had as the essential element the ingredient of intentional conduct, conduct designed to cheat, ensnare or mislead. Here, the trial Judge has expressly rejected the allegation that the appellant's conduct was of this character.

49. The other ground of cross-appeal concerned the rejection by the trial Judge of the respondent's argument that the assignment of the trade mark by Healthway to the appellant was invalid. The deed of assignment purported to assign the trade mark "with goodwill". The trial Judge found that at the time of the assignment there was no goodwill. His Honour said that in these circumstances the assignment should be treated as if it were effected without goodwill, and cited as support for that proposition The Commissioner of Taxes (Qld) v. Ford Motor Company of Australia Pty Ltd [1942] HCA 16; (1942) 66 CLR 261. The respondent contends that this decision does not support the proposition; that the Court should not treat the assurance as effective to pass the trade mark without goodwill in the absence of a claim for rectification; and as there is no claim for rectification the assignment should be treated as invalid.

50. The Ford Motor Company case was a taxation case where the question in issue was the value of the goodwill in the company's balance sheets. A purported assignment of trade marks "with goodwill" had been executed by a Canadian company in favour of the Australian taxpayer. Since the Canadian company carried on no business in Australia there was no goodwill which could be assigned. The purported assignment was governed by the Trade Marks Act 1905-1936, s.58 of which provided:

"A trade mark when registered may be assigned and

transmitted only in connexion with the goodwill of

the business concerned in the particular goods or

class of goods in respect of which it has been

registered and shall be determinable with that

goodwill."

Latham C.J. and Rich J. at p 273 held that as the company had no goodwill in Australia the "assignment" was ineffectual to transfer any trade marks. The decision does not seem to support the proposition for which it was cited by the trial Judge. However the conclusion that the assignment in the circumstances of the present case should be treated as if it were effected without goodwill nevertheless seems to us to be correct. Under s.82 of the present Trade Marks Act a registered trade mark may, subject to the provisions of the section, be assigned and transmitted with or without the goodwill of the business. The provisions of sub.ss.82(2) to (5) inclusive which declare certain assignments without goodwill to be invalid were held by the trial Judge not to apply, and this aspect of his judgment is not under challenge.

51. Whilst his Honour has held that there was no goodwill, he has also held that the parties were not aware of the significance of the disuse of the MOO name by Healthway at the time of the assignment. It seems that the intention of the parties to the assignment was to transfer all the title of Healthway in the trade mark to the appellant. A trial judge has since held there was no goodwill, but this does not alter the intention of the parties. In our view the determination by a court that there was no goodwill does not affect the validity of the assignment.

52. In summary, we consider the appeal should be allowed. The declaration that the appellant's use of the MOO mark in the course of trade and in relation to milk and flavoured milk was likely to deceive or cause confusion within the meaning of sub-s.28(a) of the Trade Marks Act, and the order for rectification of the Register, should be set aside. The consequential injunction should also be set aside. The cross-appeal should be dismissed.

53. The respondent should pay the costs of the appellant and of Healthway Dairy Products Pty Ltd of the proceedings at first instance and the costs of the appellant of this appeal.

54. The trial Judge, on the basis of his findings that the Register should be rectified by expunging the MOO entry in relation to milk under s.22, and that the appellant had established sufficient use of the MOO mark only in respect of flavoured milk and cheese, proceeded to exercise his discretion by ordering the expungement of the balance of the MOO entry for non-use so as to achieve a result whereby the appellant retained rights only in respect of cheese. The success of the appeal by the appellant against the order for rectification under s.22 displaces the basis for the exercise of the discretion of the trial Judge. It is necessary that the discretion in relation to the non-use application be exercised afresh. We will hear the parties as to the order which should now be made on that application.