This recent Federal Court decision highlights the importance of ensuring clients give proper consideration to the corporate entity in which they own and use their IP assets. As we explain in this update, companies can too easily lose their valuable trade mark assets if those assets are not used correctly, including by or under the control of the actual registered owner. The case is also important for its application of a little-known general discretion available to the Trade Marks Office and the Courts to allow a trade mark to remain on the Register notwithstanding the establishment of a case for the removal of a trade mark.
The case involved two appeals by Trident Seafoods Corporation (Trident Seafoods) from decisions made by delegates of the Registrar of Trade Marks. The other party to the appeal: Trident Foods Pty Ltd (Trident Foods). Trident Seafoods is a large international seafood distribution business. The Trident Seafoods trade mark, depicted below, is used globally in respect of its various seafood products.
Trident Seafoods appears to be planning its launch into the Australian market hence its recent interest in securing registered trade mark rights to its brand including by challenging certain trade marks owned by Trident Foods.
So, this brings me to Trident Foods and the TRIDENT brand. You might know of the brand, which has been around since the early 1970s as it is rather synonymous with Asian flavours and ingredients. Here’s a representation to jog your memory.
So, how did a trade mark that is well known and still in use become vulnerable to removal?
Well, the problem started when the original owner of the TRIDENT brand, Trident Foods became a wholly owned subsidiary of Manassen Foods Australia Pty Ltd (Manassen) in around 2000. The sales of TRIDENT branded products from that point were undertaken by Manassen and not by the registered owner, Trident Foods. Consequently, two of Trident Foods’ registered trade marks (including the one above) became vulnerable for removal on the basis they were not being used by the owner or an authorised user: a vulnerability that Trident Seafoods quickly seized upon.
Trident Seafoods, who was trying to secure registration of their brand in Australia, was blocked by the existence of the earlier registered TRIDENT trade marks, which were regarded as too similar to the TRIDENT SEAFOODS brand. Fair enough really. Trident Seafoods pursued the strategy common to those of us in the trade mark world of seeking a letter of consent from Trident Foods to the use and registration of the Trident Seafoods brand. The consent was not forthcoming. Trident Seafoods upped the ante by pressing their claim for removal on grounds that Trident Foods was not using the mark.
The Delegate agreed with Trident Seafoods finding grounds for removal existed but exercised her discretion to not remove the marks. On appeal to the Federal Court, Her Honour Justice Gleeson also found that Trident Foods had not used the relevant trade marks (TM numbers 266625 and 400953) in relation to fish or fish products during the relevant non-use period.
Trident Foods naturally sought to prove that Manassen had been an authorised user of the Trident trade marks, an argument which, if successful, would be regarded as use by Trident Foods.
However, Her Honour found:
- Manassen was not under the control of Trident Foods (in fact the converse was true)
- Trident Foods was not exercising control over Manassen merely by virtue of a commonality of directors between the companies.
- Labelling of the goods supplied by Manassen with details of Trident Foods as the trade mark owner also did not prove the requisite use of the trade mark under the control of Trident Foods.
Trident Foods and Manassen also attempted to show that an agreement, signed in 2017, was intended to formalise the terms of an unwritten licence they claimed existed between them for the use of the trade marks since 2000. This attempt to retrospectively confirm an authorised user relationship was ineffective as the evidence did not support the level of control claimed by Trident Foods.
Her Honour had no trouble concluding that Trident Foods had not used either of the Trident trade marks in respect of seafood products and that Trident Seafoods had established grounds of non-use. However, and this is where it gets even more interesting, Justice Gleeson exercised her discretion under section 101(3) of the Trade Marks Act which allows a Court, upon determining it is reasonable to do so, to allow a trade mark to remain on the Register notwithstanding having found that grounds for removal exist.
In exercising the discretion in favour of Trident Foods and the retention of TM numbers 266625 and 400953 on the Register, her Honour relevantly noted:
- Trident Foods’ long history of use and residual reputation (i.e. notwithstanding the marks were not used by the registered owner during the non-use period).
- There was a risk of consumer confusion arising by the co-existence of the competing Trident brands.
- There had been use by the registered owner after the non-use period i.e. after Trident Foods had been put on notice of the potential non-use action. The Court was satisfied despite the timing of this use (i.e. after the non-use period) that the use did not lack good faith.
- There existed no evidence of Trident Foods having abandoned the trade marks. In fact, Trident Foods had developed a clear intention to use the trade marks on certain tinned seafood products.
We believe there are two lessons that emerge from this case.
- Holistic approach to IP Asset Protection and Corporate Structure
This, and other cases, highlight the importance of considering corporate structural and licensing issues when registering and commercialising your trade mark assets. The owning entity need not necessarily be the consumer-facing entity responsible for actual use of the trade marks. There may be valid asset protection or tax strategies associated with insulating the IP assets. However, the entity using the marks must use the trade marks as an authorised user (within the parameters of the legislation) and under the control of the registered owner. This case highlights the important limitations associated with the meaning of an authorised user under the Trade Marks Act and the need to ensure the user is genuinely under the financial control of the owner or is otherwise clearly exercising quality control over the actual use of the marks, ideally under the terms of a written agreement. The case further demonstrates the importance of “real”, not artificial, licensing arrangements being in place and the difficulties of trying to rely on a retrospective agreement.
- Beware the judicial discretion in non-use actions
Notwithstanding a seemingly open and shut case for the removal of a competitor’s trade mark on grounds of non-use, parties and their advisors need to be mindful of the discretion under section 101(3) of the Trade Marks Act and referred to above. Applicants in a non-use action will be well-served to consider whether there are any other circumstances making it reasonable for the Registrar or a Court to retain a trade mark on the Register regardless of there being a case for removal.
Finally, the case involves interesting discussion on a range of technical trade mark issues including the meaning of good faith and the interpretation of claimed goods within a specification of claimed goods. Those issues are beyond the scope of this case note but worthy of consideration at another time. In the meantime, and returning to Trident, we do not believe Trident Seafoods will be able to sell their seafood products in Australia under the Trident Seafoods brand given the obstacles presented by Trident Foods and their registered trade mark assets. Another win for a business relying upon its registered trade marks to block a competitor.
This update is provided by way of general information only and is not legal advice. Always obtain your own independent legal advice tailored to your business’ particular circumstances before making decisions relating to the legal issues referred to above. In this regard, we’re here to help. You can contact us on (03) 9596 8495 or at email@example.com.