Court clarifies discretion to remove trade marks from register

In a recent Full Court of the Federal Court of Australia judgment in Austin, Nichols and Co Inc v Lodestar Anstalt [2012] FCAFC 8 the Court clarified the matters to be considered, by the Court or Registrar in exercising discretion under s101(3) of the Trade Marks Act 1995.

s101(3) – If satisfied that it is reasonable to do so, the Registrar or the court may decide that the trade mark should not be removed from the Register even if the grounds on which the application was made have been established.

In the first instance, Justice Cowdroy exercised this discretion to keep a trade mark on the Register even though it had not been used during the non-use period. The fundamental reason behind the decision was that, among other things, the removal of the WILD GEESE (‘WG’) mark from the Register would result in public confusion.

On appeal, this decision was overturned by the Full Court on account that Cowdroy J erred in finding that WG’s reputation in Australia alone, without the existence of any deceptively similar marks, would result in public confusion if it were removed from the Register.

The Full Court found that, in the first instance, consideration was given to the relevant matters in the exercise of the s101(3) discretion although discretion was miscarried in establishing reputation. The relevant considerations can loosely be described as public and private interests, nonetheless, the difficulty lies in balancing these interests when exercising discretion. Although the appellants submitted that Cowdroy J attached too much weight to the likelihood of confusion, the importance attached to each consideration by the Court or Registrar is not a ground for appeal. Accordingly, the Courts or Registrar may be likely to exercise discretion in following circumstances:

Use of the trade mark

If at the time the application for non-use is filed or after the relevant non-use period, there was use of the trade marked provided the use was in good faith and not colourable.

Not abandoned

Any further evidence that the trade mark has not been abandoned such as promotional material used during and after the non-use period.

Period of non-use

Where the period of non-use is not substantial and that there has been has been use of the trade mark soon after the non-use period.

Obstacles to use

It has been held obstacles to use are those that arise externally or non-voluntarily of the registered owner. These obstacles may include financial impecuniosity, illness of the registered owner or a falling out between joint registered owners of a trademark that disrupts the use.

Private commercial interest

Where there is a likelihood of legal and financial consequences in relation to brand development, labelling, production and distribution if the mark was removed from the Register.

Likelihood of public confusion

Where the removal of a trade mark from the Register with an established reputation in Australia would result in public confusion where deceptively similar marks exist.

The integrity of the register

The public interest in the integrity of the register has been described as the guiding principle behind discretion. This was succinctly demonstrated in CA Henschke & Co v Rosemont Estates Ltd (1999) 47 IPR 63 where the respondents (removal applicants) sought the removal of the HILL OF GRACE mark from the Register on non-use grounds. In consideration of the relevant factors, Finn J found that

‘there was no evidence the public has been deceived; the legal title of the executors was unimpeachable; all beneficial owners had acquiesced in the use by the partnership; no public interest had been adversely affected; no useful purpose was served by removing the trade mark from the Register…’

As appropriately addressed in Henschke, public and private considerations are weighed up and if the Court or Registrar is ‘satisfied that it is reasonable’ not to remove the mark from the register, the s101(3) discretion will be exercised.