Swole Gym Wear Group Pty Ltd v Swole O'Clock Ltd [2019] FCA 685 | Case summary

Background 2 On 23 June 2015, the applicant applied under the Trade Marks Act 1995 (Cth) (the "Act") to register a trade mark consisting of the word "SWOLE". That application was accepted and the trade mark was registered, the details of which are as follows: Trade Mark No: 1702160 Trade Mark: SWOLE Owner: Swole Gym Wear Group Pty Ltd Filing Date: 23 June 2015 Specification of Goods: Class 14 Alarm watches; Bands for watches; Bracelets and watches combined; Bracelets for watches; Chronographs (watches); Clocks and watches, electric; Containers especially adapted for presentation and display of Jewellery or watches; Divers' watches; Electronic watches; Faces for watches; Mechanical watches with automatic winding; Mechanical watches with manual winding; Pendant watches; Pocket watches; Quartz watches; Sports watches; Stop watches; Table watches; Watches; Watches bearing insignia; Watches for nurses; Watches for sporting use; Watches made of gold; Watches made of plated gold; Watches made of precious metals; Watches made of rolled gold; Wrist straps for watches; Wrist watches; Wristlet watches 3 The applicant's Statement of Grounds and Particulars ("SGP") below relevantly stated: In August 2014 I researched jewellery and watches as possible products for sale. Subsequently, I was sent a number of emails from Alibaba.com sending me specific product information relating to jewellery and watches based on my enquiries. This shows forethought and intent to sell a product in class 14, further evidence that there was not bad faith in my registration of Swole in class 14 ... Believing that the owner of Swole O'Clock had understood that I had prior use of the mark, I decided it was a practical decision to further protect my product and brand by formally registering the trade mark SWOLE 1702160 in class 14 which includes wristbands made from rubber or silicon … I have evidence of prior use and I did not apply for the trade mark SWOLE 1702160 in bad faith. Whilst my product and the Swole O'Clock watches are not similar, they fall in the same class and I have prior use to class 14 as evidenced by the stock of wristbands I hold … While Section 27 of the Trade Marks Act 1995 states that a person who is registering a trade mark must either use or intend to use the trade mark, which I have every intention to do so, Section 92 further states that the owner of the trademark has three years in which to make use of it. It has only been two years for Swole 1702160 class 14 and I still have stock of Swol wristbands. 4 On 29 June 2017, the respondent applied for the removal of the trade mark "SWOLE" from the Register pursuant to s 92(4)(a) of the Act. Following a hearing at which Mr Derrick Murphy represented the applicant (the sole owner and director of the applicant), the delegate ordered that trade mark registration 1702160 be removed from the Register. 5 The applicant had 21 days within which to file a notice of appeal from that decision: s 104 of the Act and r 34.24 of the Federal Court Rules 2011 (Cth) (the "Rules"). The applicant did not file a notice of appeal within this period of time. Instead, on the last day of that period he filed, perhaps surprisingly, an application for an extension of time to file a notice of appeal and a "(Draft) Notice of appeal (intellectual property)". The draft set out the following proposed ground of appeal: The Appellant believes that a key piece of evidence, previously believed to be inadmissible, can in fact be used. The Appellant did not have legal representation during the hearing with the Delegate of the Registrar and based the inclusion of certain evidence on information retrieved from the Trade Marks Act 1995. The Appellant has since been advised by an experienced trade mark attorney that the evidence is valid and should have been used. 6 Two affidavits were affirmed by Mr Murphy in support of the application for an extension of time. In the first, affirmed on 6 September 2018, Mr Murphy explained why he had not filed a notice of appeal from the delegate's decision, even though he was still within time to do so. Mr Murphy deposed as follows: I have elected to request an extension of time to file an appeal, so that I may have time to find and retain appropriate legal representation to assist me with my case. Neither the Act nor the Rules provide for the making of an "election" to seek an extension of time in lieu of the filing of a notice of appeal. Nonetheless, this is what the applicant chose to do. 7 The respondent was served with the application for an extension of time, together with Mr Murphy's first affidavit, on 17 October 2018. Both should have been served on 5 October 2018. 8 In his second affidavit, affirmed on 26 April 2019, Mr Murphy gave another explanation for the filing of his draft notice of appeal. He deposed as follows: The second last paragraph of the Delegate of the Registrar of Trade Mark's Decision stated that a period of one month from the date of the decision was available to submit a notice of appeal. This conflicted with information given on the IP Australia website which indicated that it was in fact only 21 days. As a result, the Applicant had less time than anticipated to retain legal representation. 9 Mr Murphy deposed that he had sought to obtain legal representation for the applicant. Before me, he explained that he did not know how to represent the applicant. He still wanted to obtain legal representation, but had failed to do so. 10 Mr Murphy's second affidavit contained new material relating to his intentions in June 2015 about the trade mark he ultimately had registered. He deposed as follows: In August 2010 the Applicant registered the Trade Mark SWOL 1379762 in class 25. In March 2014 the Applicant registered the Trade Mark SWOLE 1610881 in class 25. In March 2014 the Applicant registered the Trade Mark Strength With Out Limits 1629144 in class 25. On 23 June 2015 the Applicant registered the Trade Mark Swole 1702160 in class 14. Copies of these documents have been printed from the IP Australia Website and are annexed to this affidavit and are marked DLM1. In June 2014 the Applicant ordered rubber/silicon wristbands bearing the words "SWOL - STRENGTH WITH OUT LIMITS". First use of the wristbands was on 3 July 2014. Copies of confirmation emails are annexed to this affidavit and are marked DLM2. The Applicant researched in 2014 the potential manufacture of class 14 goods via the Alibaba manufacturing portal. A number of targeted emails in response from Alibaba can confirm this intention. The Applicant was inspired by an American company called Swoll Swagg Watches. Copies of targeted Alibaba emails are annexed to this affidavit and are marked DLM3. The Applicant had continuously used the mark since July 2014 and commenced proceedings to register Swole 1702160 in class 14 on 23 June 2015. The registration of the mark went unopposed. On 21 November 2017 the Applicant initiated contact via the Alibaba manufacturing portal with the Shenzhen Originalset Silicon Watch Co Ltd to order the manufacture of 500 watches. Sample products were manufactured and were received in early December 2017. After confirming their suitability, the manufacture of 650 watches was agreed and invoiced in January 2018. The products arrived in February 2018. Copies of selected emails and an invoice are annexed to this affidavit and are marked DLM4. 11 The respondent read and relied upon the following affidavits: (a) an affidavit of Mr Siren who is the sole director of the respondent. In that affidavit Mr Siren deposed that the respondent has since early 2015 promoted and sold a range of watches and jewellery under and by reference to the trade marks "SWOLE" and "SWOLE O'CLOCK". He described his dealings with Mr Murphy, which, where relevant I have set out below; (b) an affidavit of Ms Pryor who is a registered trade marks attorney. She gave evidence relating to the origin of the proceedings before the delegate below; and (c) an affidavit of Mr Muscat who is the sole director of a company which trades as "Jymlocker" in Australia. He gave evidence that this business promoted and sold the respondent's goods in Australia, until, following communications with Mr Murphy, such trading ceased.

Application for an Extension of Time 18 In Donzenac Pty Ltd v MCV Enviroworks Pty Ltd [2015] FCA 361, Greenwood J summarised the principles concerning the Court's power to extend time pursuant to r 34.25. At [44]-[45], his Honour said: In Kabushiki Kaisha Universal v Aristocrat Leisure Industries Pty Ltd BC9800472, 26 February 1998; [1998] AIPC 91396, Branson J observed, when construing the term "special circumstances" in Order 58, r 4(3)(b) that it contemplated circumstances that "take the case out of the ordinary" so as to justify departure from the general rule that an appeal is to be instituted within 21 days from the date of the decision. Branson J also observed that for the purposes of Order 58, r 4(3)(b), the power conferred by that rule to grant an extension of time is a grant of a flexible discretionary power which, although only exercisable in a particular case when circumstances subsist justifying departure from the usual rule, the exercise of the power was not otherwise confined except by the dictates of the justice of the case. The grant of the power contemplated by r 34.25 is also a broad flexible discretionary power unconstrained, however, by any reference to "special circumstances". In the context of Order 58, r 4(3)(b) conditioned, of course, by reference to the phrase "special circumstances", Branson J considered that the factors appropriate to be taken into account in the exercise of the discretion included these matters: (a) the length of the delay; (b) the explanation for the delay, and in particular, whether the plaintiff is personally blameless for the delay; (c) any prejudice to the respondent or to other persons, arising out of the delay; (d) actions taken by the applicant to alert the respondent to the fact that the decision is, or may be, contested; (e) the merits of the proposed appeal; (f) alternative avenues of relief, if any, available to the applicant; and (g) questions of public interest, if any, in the subject matter of the appeal. [citations omitted] Although r 34.25 makes no reference to "special circumstances" and, in particular, r 34.25(3) sets out the matters that must be addressed by an applicant in an affidavit in support of an extension application, it seems to me that the factors identified by Branson J as appropriate matters to be considered in the exercise of the discretion remain, in a relevant case, matters to be taken into account in the exercise of the discretion under r 34.25. Plainly enough, r 34.25 contemplates the exercise of a discretion to enable an appeal to be brought outside the ordinary circumstances of an appeal normally commenced within 21 days. Although the circumstances are not taxonomically described as "special", circumstances must nevertheless be made out which demonstrate that the discretion is to be exercised in favour of enabling an appeal to be brought outside the ordinary 21 day period for the filing of a notice of appeal. However, there is no utility in seeking to exhaustively define the considerations which would be relevant. I respectfully adopt those reasons. 19 Applying the factors identified by Greenwood J, neither the delay here nor the issue of prejudice would preclude the extension sought by the applicant. There was no delay in filing an application in this Court, and the delay in serving the papers on the respondent (12 days) was minimal. I accept that the respondent has suffered some prejudice. It is the applicant for two pending trade mark applications, both of which have been held in abeyance because of this proceeding: (1) Trade mark application 1834779 filed on 29 March 2017 for the mark "SWOLE O'CLOCK plus device" in class 14 - Mr Murphy commenced an opposition to the registration of the trade mark on the basis of the applicant's ownership of the registered trade mark in this proceeding. The hearing of this opposition remains deferred; and (2) Trade mark application 1873842 filed on 18 September 2017 for the mark "SWOLE" in class 14 - The applicant's registered trade mark "SWOLE" was raised as a conflicting mark under s 44 of the Act during examination of this application. Consequently, the respondent filed a request for deferment of acceptance of this trade mark application in light of its request to remove the applicant's trade mark from the Register. This application remains deferred. 20 In addition, the respondent, generally speaking, has faced ongoing trading uncertainty in Australia. This has included suspension of the respondent's business with Jymlocker. However, the applicant has also faced similar trading uncertainty, and its ability to resist the respondent's two trade mark applications is also dependent upon the outcome of this proceeding. 21 I am less willing to accept the applicant's excuse for not filing a notice of appeal within time. His explanation that he needed time to find appropriate legal representation is unconvincing. This dispute commenced on 29 June 2017 when the respondent filed its application to have the trade mark "SWOLE" removed from the Register. That is almost two years ago. The applicant remains unrepresented. There was no evidence before me concerning the financial condition of the applicant. Assuming it owns a profitable business, any number of solicitors and barristers could have given advice to the applicant and have represented it below and before me. 22 It was not suggested that there were alternative avenues of appeal which were available, nor that the proposed appeal raised questions of public interest. 23 This leaves a consideration of the merits of the appeal. For the purposes of assessing merit I adopt the approach taken by Mortimer J in MZABP v Minister for Immigration and Border Protection (2015) 242 FCR 585, concerning applications for extensions of time to seek judicial review pursuant to s 477 of the Migration Act 1958 (Cth). At [63] and [66], her Honour said as follows: 63 The correct approach may be expressed by the use of language such as whether a ground is "arguable", "reasonably arguable", "sufficiently arguable" or has "reasonable prospects of success" (see SZTES [2015] FCA 719 at [48]; SZRIQ at [46]-[48]). Whichever description is chosen, the approach taken under s 477(2) should not be transformed into a de facto full hearing, especially where the outcome is not subject to any appeal as of right. The subject matter of s 477(2) is whether time for bringing a judicial review application, which is to be heard and determined in the ordinary course of the processes of the Federal Circuit Court, should be extended. The subject matter is not whether the applicant will ultimately be successful in impugning the merits review decision. ... 66 ... In my opinion, unless the grounds are hopeless in the sense I have discussed above so that simply on an impressionistic reading and consideration without full argument a judge can be confident they must fail, the better approach if the Court is otherwise satisfied it is in the interests of the administration of justice to grant an extension of time would be to do so and then to consider and determine the grounds of review with a full consideration of them. There is no reason that cannot still be done in one hearing and in my opinion it reflects a more appropriate exercise of the supervisory jurisdiction of the Federal Circuit Court. 24 I have considered the delegate's decision at an impressionistic level, and in my view, any appeal from that decision would be bound to fail. The evidence of intended use was simply too thin or non-existent to enable the applicant to discharge its onus of showing that it intended to use the trade mark "SWOLE" in good faith in relation to the registered goods. I shall return to that evidence below. 25 It is accepted that any future hearing in this proceeding would be by way of an appeal de novo and that the applicant would be free to lead fresh evidence of intended use. That is important to the applicant's case. Mr Murphy deposed that he did not know at the hearing below that evidence of subsequent use of a trade mark could be received as evidence of prior intended use. 26 It was not disputed that evidence of subsequent use can be probative of a previously held intention to use a trade mark in good faith. In Food Channel Network Pty Ltd v Television Food Network GP (2010) 185 FCR 9, Keane CJ, Stone and Jagot JJ said at [74]: Mr Lawrence said that he intended to use the marks in relation to many aspects of Network's and Channel's businesses. The intention must exist at the date of application and it may be accepted that the primary judge's findings (at [108]) relating to use (or non-use) after the date of application may be relevant in drawing inferences as to the issue of intention as at the date of application (Sapient Australia Pty Ltd v SAP AG (2002) 55 IPR 638, at 645-646). … 27 The applicant relied on the evidence of Mr Murphy that 650 watches were ordered to be manufactured in China in January 2018. Mr Murphy did not depose that the disputed trade mark "SWOLE" was to be used in relation to those watches. However, in his second affidavit he exhibited an invoice dated 11 January 2018 from China next to which appeared an image of five watches. The image was blurry. However, one can just make out a word on each dial face that could be "SWOLE". I will assume, in the applicant's favour, that this is what is displayed. 28 The respondent submitted that having regard to the evidence before the delegate and having regard to this new evidence, any appeal was bound to fail. I agree with that submission. It contended that the applicant applied to register the trade mark in June 2015 to "block" any application for registration by the respondent of its trade mark "SWOLE" in respect of goods within class 14, in particular watches. 29 The evidence relied upon by the respondent was as follows: (1) When Jymlocker first commenced promoting and selling the respondent's products in Australia, Mr Murphy sent the respondent the following email (on 9 June 2015): Hi, I'm sending you this message to inform you that I am the registered owner of the [trade marks] SWOLE 1610881 and SWOL 1379762 within class 25 in Australia. This gives me the exclusive right to use the marks. It also means the marks cannot be used by anyone else in any variation bearing the name SWOLE or SWOL on any apparel [in] Australia. Watches fall under this category. The only way mark can be used is if I considered a licencing agreement. Any use of the marks [without] this is a trademark infringement. Any watches bearing the SWOLE mark entering Australia will be seized at customs. It will be in your best interest to get in touch with me immediately. The respondent emphasised that this was sent before the trade mark application was filed on 23 June 2015. It also emphasised that watches did not fall within class 25; they fall within class 14. Because the applicant was not the registered owner of a trade mark "SWOLE" or "SWOL" in relation to goods within class 14 at this time, the claims it made against the respondent were misconceived. The respondent invited me to infer that the email was sent to induce entry into a licence agreement, and to obtain money. This, it was said, was the reason for the statement: "[i]t will be in your best interest to get in touch with me immediately". The respondent also noted that the email contained no suggestion that the applicant intended to manufacture or sell watches; (2) On 18 June 2015, Mr Murphy then sent the following email to Mr Muscat at Jymlocker: Hi Alex, I have made several attempts in trying to contact SWOLE O'clock. SWOLE o'clock has ignored my request and clearly has no intention of respecting my intellectual property rights for the SWOLE trademark 1610881 class 25. I've made it very clear, that no one can use the SWOLE mark without a licencing agreement. As a result of SWOLE O'clocks lack of communication with me. JymLocker has to stop the sale of the SWOLE O'clock watches and have the watches taken off your website effective immediately. This also includes the drop shipping method you mentioned in one of our previous conversations. (Errors in the original.) The respondent again emphasised the wrongful assertion of rights in relation to watches, and the absence of any statement that the applicant intended to sell watches using the trade marks "SWOL" or "SWOLE". (3) On 20 June 2015, Mr Murphy sent the following further email to Mr Muscat: There will be no further attempts from me to contact you to try to resolve the SWOLE O'clock issue. I sent an email to you on the morning of Thursday 18 June and I have received no response. Jymlocker is still advertising the SWOLE O'clock watches that I requested to have removed from your website. This clearly shows that my intellectual property rights mean nothing to you or your company. This is a very serious matter to me. I don't have to allow Jymlocker and SWOLE O'clock to illegally profit from my trademarked brand. This is not a game, you are breaking the law and I'm going to exercise my rights under the Trade Marks Act 1995. Jymlocker has until close of business on Monday 22 June to have all watches bearing the mark SWOLE removed from your website and stop any sale of these items. If not done in a timely manner there will be legal action and you will be liable to cover my legal fees. Once again, the respondent emphasised that the applicant did not have any "rights" in relation to goods within class 14 at this time. However, the "rights" the applicant next exercised was his application to register the trade mark "SWOLE" in respect of specified goods within class 14 on 23 June 2015. Notably, the goods specified in the application included watches but did not include wristbands. (4) In a letter to Mr Murphy written by solicitors acting for the respondent, and bearing the date 6 July 2015, the following observation was made: Moreover our client observes that you do not use the trademark for the goods and services listed under class 14 and that currently the only items sold on your website swolgear.com.au, are men's t-shirts and singlets bearing the name "SWOL". Our client believes that you have only applied to register SWOLE class 14 in order to prevent our client from using the trademark for his already established business. Our client believes that it is your intention to register the trademark in order to procure a licensing agreement with SWOLE O'clock to make money off his products. We note that if so, this is a contravention of section 59 of the Act. The applicant did not suggest that the contention made in this letter that it then only sold men's t-shirts and singlets bearing the word "SWOL" was incorrect. (5) On 27 July 2016, Mr Murphy sent Mr Muscat an email entitled "Breach of Swole Trade Mark - Final Request". The email threatened legal proceedings if Jymlocker did not take the respondent's goods "off" its website. Amongst other things, the email states: I have a number of variations of Swole legally registered in Australia as trade marks. I applied for Swol in 2010 and Swole in 2014. I also added the Swole trade mark (which I already owned) to class 14 in June 2015. After a lengthy period in which any person or company can object to the application, the updated Swole trade mark entered the registry [sic], unopposed, on 19 May 2016. Class 14 covers precious metals and their alloys, jewellery, precious stones, horological and chronometric instruments, ie watches. Whilst this email asserted ownership of the trade mark "SWOLE" in relation to class 14 as the basis for taking action, it notably made no mention - over a year after making the trade mark application - of the purchase of any watches as stock, or of an intention to use the trade mark "SWOLE" on watches in the future. (6) On 23 September 2016, Mr Murphy sent Mr Muscat an email entitled "Final Cease and Desist Notice". Amongst other things, the email states: As previously stated I am sending you this as a final Cease and Desist notice. I require you to immediately remove from sale ANY and ALL products bearing the word Swole. Further breaches of my trade mark will result in immediate filing of this matter with the Federal Court. Your company will be liable for all legal costs incurred by me during this process. Once again this email makes no mention of plans to purchase watches and to apply the trade mark "SWOLE" to them. Action is threatened by reason of ownership of the mark and no more. (7) Finally, the applicant's SGP, relied upon in the proceedings below, stated that research had taken place into watches only "as possible products for sale". It was not stated that the applicant would sell watches of any particular type or quantity at any particular time. 30 As for the fresh evidence, I was urged by the respondent to give it no probative weight. The order for watches at the start of 2018 took place after the respondent had filed the non-use application. The applicant's order, it was said, was colourable. Moreover, there was no evidence that it had ever been carried out. 31 In order to rebut an allegation made under s 92(4) of the Act, what is required is a demonstration of genuine intent to use the mark for commercial purposes: Liquideng Farm Supplies Pty Ltd v Liquid Engineering 2003 Pty Ltd (2009) 175 FCR 26 at [56]. In that respect, counsel for the respondent agreed that the onus of demonstrating an intention to use is not high; the very act of applying for a trade mark is prima facie evidence of an intention to use it: Aston v Harlee Manufacturing Co (1960) 103 CLR 391. Nonetheless, in the circumstances here, the applicant had failed to show that in June 2015 it genuinely intended to use the trade mark "SWOLE" in relation to watches it would sell. 32 The respondent relied on the decision of the Full Court of this Court in Optical 88 Ltd v Optical 88 Pty Ltd (2011) 197 FCR 67. At first instance, the primary judge had found that the intended use of the mark in that case was "wholly speculative" and that the evidence of intention was "sparse". On appeal, Cowdroy, Middleton and Jagot JJ said at [87]-[88]: … As the primary judge found, the evidence about franchising the appellant's stores in Australia was nothing more than a "speculative possibility" (at [266]). The appellant's intention, such as it was, had "risen no higher than a general intention to expand at some future but unascertained time" (at [267]). As such, the appellant's intention was a mere "uncertain or indeterminate possibility" (at [268]). Contrary to the appellant's submissions, the primary judge's reasons do not disclose any error of principle or fact. It may be accepted that the making of the application is itself prima facie evidence of an intention to use the mark (Aston v Harlee Manufacturing Company (1960) 103 CLR 391 (Aston v Harlee) at 401). Nor is it necessary that the applicant's intention be to use the mark "immediately or within any limited time" (Aston v Harlee at 401). Nothing in Aston v Harlee suggests, however, that "general intention" to use the mark "at some future but unascertained time" might suffice. … 33 The evidence before me of intended use was also "sparse". But the applicant's SGP (dated 17 July 2017) contained a statement of its plans: it said that in August 2014 watches were "possible products for sale". In my view, given the evidence before me, until perhaps the end of 2017 or early 2018, the applicant has failed to demonstrate that its intention went beyond that possibility. No evidence was produced of any contemporaneous plans or expectations of watches being products that would be sold using the disputed trade mark. In correspondence with the respondent and Mr Muscat in 2015 and 2016, there is no assertion of any intended use of the "SWOLE" mark on watches the applicant proposed to sell. The applicant had applied the "SWOL" mark in the past to wristbands. It appeared to be in a business of selling gym clothing. There is no credible explanation for the applicant's new horological interest in 2015, other than perhaps the entry into the Australian market for the first time of the respondent's products. In my view, the delegate's decision was plainly right. 34 In my view, the fresh evidence of the purchase of watches in 2018 makes no difference. Whilst, I must accept that evidence of subsequent use can be probative of the holding of a prior intention, in the particular circumstances here, it was not evidence of any intention held in June 2015. It was too remotely connected to that period of time. There was simply no evidence from 2015 to the end of 2017 that supported the intended use contended for by the applicant. Moreover, given its production after the commencement of the non-use application, it would not be prudent to give it probative weight. 35 For the foregoing reasons, I am satisfied that any appeal from the delegate's decision would be futile. Accordingly, the application for an extension of time is refused with costs. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Steward.

Swole Gym Wear Group Pty Ltd v Swole O'Clock Ltd

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