Key issues:
- Trident Seafoods attempted to have Trident Foods’ trade mark removed for non-use in order to register their own logo under the same class.
- The basis for this claim relied upon the fact that Trident Foods had been exclusively using the marks under its parent entity, Manassen Foods.
- Under the prior test in Lodestar, demonstrating “authorised use” of a trade mark required evidence of actual control by the registered owner of the trade mark over the authorised user’s use (such as, trade mark quality control audits being conducted by Trident Foods over Manassen’s use of the trade mark). This is a somewhat contrived process within corporate groups.
- It was held that, because the entities had the same director and a common purpose, the united purpose was suggestive of actual control.
- In introducing the unity of purpose test, it consequently established a new, less stringent, test for related companies compared with the previous test established in Lodestar.
- While this decision provides some guidance as to the standard of control required with corporate groups to constitute “authorised use” of a trade mark, uncertainty still remains in regard to:
- where the standard of control for “authorised use” falls on the spectrum from the situation in Lodestar at one end, to the unity of purpose in Trident at the other end; and
- “wrong applicant” cases within corporate groups, established by the Pham decision.
The recent Full Federal Court decision in Trident Seafoods Corporation v Trident Foods Pty Ltd [2019] FCAFC 100 provides an indication as to the standard required for “authorised use” of a trade mark within corporate groups.
This significant decision is an example of a more common sense approach by the Court - one which has regard to the realities of how businesses actually operate within corporate groups.
For example, it is extremely common practice for a business to hold its intellectual property in a non-trading holding company for asset protection purposes. This decision does go some of the way to making those structures more practically viable for trade mark rights.
But for the reasons set out further below, uncertainty still remains, particularly in respect of “wrong applicant” cases within corporate groups since the Full Federal Court decision in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd.
Background
The case of Trident Seafoods Corporation v Trident Foods Pty Ltd concerned a non-use application which was initiated by worldwide seafood distributor Trident Seafoods Corporation (Trident Seafoods) against Trident Foods Pty Limited (Trident Foods). Trident Foods, an Australian company who sold food products in Australia, owned two trade mark registrations for the TRIDENT brand in relation to goods in class 29 for meat and fish products. Trident Seafood is a United States corporation that had used TRIDENT SEAFOODS branding on fresh, tinned and frozen seafood products overseas since 1973.
Trident Seafoods applied to register their logo trade mark in class 29 but were blocked by the pre-existing trade mark registrations owned by Trident Foods. This prompted Trident Seafoods to file a non-use application in respect of the pre-existing marks owned by Trident Foods.
Trident Seafoods subsequently applied under s92(4) (b) of the Trade Marks Act 1995 (Cth) (the Act) to have Trident Foods marks removed, on the grounds that during a continuous three year period in which the trade mark was registered, the mark was not used in Australia by the registered owner.
To qualify as an authorised user of a trade mark, it must be proven by the opponent of the non-use application that the person using the trade mark in relation to goods or services was under the control of the owner of the trade mark (s8 (1)).
Prior to this decision, the leading test for whether or not a registered owner of a trade mark was Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 92).
Notwithstanding the fact that Trident Foods owned both marks, the difficulty here was that since the year 2000 and during the relevant three year period, all sales of food under the marks had been by the company’s parent entity, Manassen Foods Australia Pty Ltd.
First instance and Full Federal Court decision
At first instance the trial judge held there were no examples of “actual control” by Trident Foods over Manassen’s use of the TRIDENT marks. In being unable to prove actual control, it followed that the trade marks were not used by Trident Foods during the non-use period and were susceptible to being removed from the register.
The Full Court overturned the first instance decision and clarified that the question was not whether one company controlled the other but rather whether or not Trident Foods, even though a wholly owned subsidiary of Manassen, had control over Manassen’s use of the trade marks.
The Full Court found that Trident Foods had used the marks in Australia during the relevant period as the parent company’s use of the mark was authorised use of Trident Foods’ trade mark registrations under section 8(1) of the Act.
In reaching this decision, it was significant that the two companies had the same directors who had substantial involvement in the day to day operations of both companies. The Full Court inferred from the evidence that the two companies therefore operated with a ‘unity of purpose’. Trident Foods held the trade marks and Manassen sold products under the trade marks, thereby using them. Trident Foods controlled Manassen’s use of the marks by reason of the fact that it owned the marks and its directors, who were common to the companies, had one shared purpose - to maximise sales and enhance value of the brand. The ‘unity of purpose’ was considered suggestive of the existence of actual control vested in Trident Foods.
Significance of this decision
This decision is significant because it appears to welcome a more relaxed legal approach to proving the standard of control required for a valid trade mark within corporate groups. The Full Court introduced a ‘unity of purpose’ test, whereby it may infer that the trade mark owner has controlled use of the marks if the evidence shows that both owner and parent company have operated with a ‘unity of purpose’. Prior to this decision, case law required more formal evidence of the control mechanisms being exercised .This included a preferred approach of implementing a trade mark licence that permitted the registered owner to exercise control over the licensee’s use of the trade mark. Additionally, there needed to be an active compliance programme to evidence actual control. That may include detailed product / service specimens of us, and provision of product samples, at regular intervals for inspection and approval by the licensor (see Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 92).
This therefore highlights an easing of the standard required in relation to corporate groups where there is a unity of purpose between the actions of those in the corporate group.
However, the Full Court was clear in noting that the circumstances of this case were drastically different to past cases in which there was no relationship between the owner of the trade marks and the using entity beyond the licence. Following from this, using entities that do not have a relationship with the owner of the trade mark ought to be aware that they should still record evidence that can be used to show that actual control is being exercised over the licensee’s use.
Uncertainty remains
Within corporate groups, the Trident decision has shed light on the requirements surrounding “authorised use”. However, while the case provided guidance on “authorised use”, uncertainty still remains surrounding “wrong applicant” instances within corporate groups.
This was recently discussed in detail in the 2017 Pham decision. Prior to the Pham case, a number of court decisions had led to great confusion and uncertainty in relation to trade mark ownership and in particular, the time at which ownership is tested. The Pham decision attempted to clarify this, holding that trade mark applications made in the name of an entity that was not entitled to claim ownership at the date the application was filed, will be invalid and unenforceable. One such case that has subsequently considered and followed the position in Pham was the decision in Laminar Air Flow Pty Ltd v Registrar of Trade Marks [2017] FCA 1447. In that case, the owner was incorrectly filed. It was argued, relying on the reasoning in Pham, that even if the owner was wrongly entered, there was no right to transfer those registrations. The Full Court in Trident did not expressly address the “wrong applicant” principles established by the Full Court in Pham. While it is arguable that some of the base principles of trade mark use set down in Trident could be applied to wrong applicant cases, significant uncertainty remains, and it is advisable to still consider the Pham principles, even in respect of ownership among corporate groups ( at least for key trade marks within a portfolio).
One final area of uncertainty that still remains following the Trident decision is in relation to determining the level of control required for cases that fall between the circumstances in Trident and Lodestar. The Lodestar case clarified that where one party is an unrelated registered owner and the other an authorised user, evidence of actual control needs to be shown (often through a trade mark licence and an active compliance programme). Conversely, as was the case in Trident where it can be inferred that there is a united purpose between the two entities, this may be enough to suggest the existence of actual control. Although providing clarity for cases that are factually similar to these, for cases that seem to fall between the circumstances of the two decisions, figuring out what level of connection is required to satisfy the unity of purpose test is still uncertain. Whether this be that the companies are just related entities, or that the entities must have the same directors remains unanswered.
For more information or discussion, please contact HopgoodGanim Lawyers’ Intellectual Property team.