Get it right the first time: real trade mark owner can’t be subbed into application by assignment

It has been held that only an owner of a trade mark at the time the application is made can apply for registration, and that an applicant for a trade mark which would otherwise be deceptively or confusingly similar because an existing registered trade mark has a reputation which is confined to one State, cannot avoid that consequence by disclaiming the right to use in that State

Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83

The decision of the Full Court of the Federal Court deals with two points of interest (among others):

1. If the applicant for registration of a trade mark is not the owner when the application is filed, can this be cured by the applicant assigning the trade mark to the owner after filing? (Spoiler alert: no.)
2. Can an applicant overcome opposition from an existing holder of a similar mark (whose reputation is concentrated in one state), by disclaiming the right to use in that state?  (No again.)

The facts

The parties both provided radiology services.  The Respondent was ICI (Insight Clinical Imaging Pty Ltd).  The First Appellant was, at one time, Insight Radiology Pty Ltd.  (It later changed its name to Pham Global Pty Ltd).)  Let’s call it IR.

The parties’ respective trade marks each used the word “insight” and a circular eye device.  IR got its application in first, but ICI had been using its trade mark to distinguish its radiology services since 2008.  IR’s first use was from March 2012: [3], [4].[1]

IR used the mark largely in NSW and Tasmania.  ICI operated in Western Australia: [61], [62].

Proceedings

The application for registration of IR’s trade mark was made by the Second Appellant, Mr Pham.  Of its three grounds of opposition, ICI succeeded on one, that as IR’s mark was substantially identical to ICI’s, ICI owned the mark (s 58 of the Trade Marks Act 1995 (Cth)).[2]

The matter went to Davies J on appeal from the Registrar’s decision.  Her Honour also heard ICI’s infringement claim and IR’s cross claim that ICI’s mark ought not to have been registered, or should not have been registered without a restriction precluding use in NSW and Tasmania: [7].

Davies J found in ICI’s favour on all three claims.  However, in relation to IR’s registration, Davies J rejected the s 58 basis of opposition, and held instead that ICI established prior reputation and likely confusion (s 60) and registration would be contrary to law as it involved a misrepresentation (s 42(b)).[3]

Davies J also rejected the argument that the application did not comply with s 27 because Mr Pham was not the owner, and did not intend to use the trade mark.  His assignment of the mark to IR had the effect, she said, that pursuant to s 108(2) of the Act, the assignee (who did meet the s 27 requirements) was taken to be the applicant.[4]

IR appealed in relation to the registration proceedings and the infringement proceedings, and against the consequential costs orders.  ICI contended against the findings on ss 58 and 27.

Full Court

Application by owner – s 27

The Full Court held that, to satisfy s 27, only the owner of a trade mark can file for its registration; a person cannot become the applicant for the purposes of an application on foot by assignment from a non-owner.

The Full Court rejected those authorities that supported  the proposition that an application could be made by an assignee of a trade mark under application who, by virtue of s 108(2) of the Act was treated as the applicant after assignment.  That section could not assist where the applicant who filed the application was not the owner: [41].  In particular:

• The relevant point in time at which the applicant must claim ownership of the mark under application – in this case, on the basis of authorship, filing the application and intention to use – is the time the application is made: [29], [31].  Mr Pham did not claim to be the owner.
• The effect of s 108(2) is not to overcome the requirement of ownership upon application. Its purpose is merely to facilitate assignment of trade marks still proceeding through registration: [42].
• In any event, the purported assignment was ineffective: [45].  Only an owner of a trade mark can effectively assign a trade mark, and Mr Pham was not the owner.  Section 106, permitting assignment in accordance with its terms, does not assist as it presupposes the assignor is the owner: [25].

Reputation in Australia – s 60

IR had argued before Davies J that, as ICI’s reputation was confined to Western Australia, its use of the trademark outside WA would not be confusing or deceptive.  Furthermore, it would accept a limitation not to use its marks in WA: [60].

Like Davies J, the Full Court found this unsustainable, for two key reasons:

• the fact that ICI had a reputation in WA, was sufficient to satisfy the requirement for a reputation in Australia, so s 60(a) was satisfied ([61]); and
• avoiding confusion by treating reputation as confined to particular states or territories was unrealistic, not only because of the national nature of the specialised radiology industry ([79]), but also because the widespread use of the internet, and freedom of travel, makes it (in effect) much harder to establish territorial boundaries for reputation. Accordingly s 60(b) was engaged: [81].

The upshot of these conclusions?  Things just got a little bit harder for:

• Applicants wanting to succeed based on demarcation of reputations along state lines.  Internet says no (usually).
• Applicants who realise after the application is made that they are not the owner.  Assignment is no quick fix.

[1] Paragraphs cited in the body of this post are references to the Full Court’s judgment.

[2] Insight Radiology Ltd v Insight Clinical Imaging Pty Ltd [2016] FCA 1406 (First Instance), [8].

[3] First Instance, [20], [91], [93].

[4] First Instance, [71].