Ownership issues frequently arise in trade mark infringement cases. This can mean that trade mark owners attempt to enforce their rights against third parties but end up losing their trade mark registrations. This is particularly prevalent in corporate groups where trade marks are owned and used by different entities.
The Federal Court's decision in PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd [2020] FCA 1078 (PDP v Grasshopper), which traversed a wide range of IP issues, reinforces the importance of ensuring that the trade mark applicant is the owner of the trade mark at the time of applying for registration.
Ownership under the TM Act
In Australia, section 27(1) of the Trade Marks Act 1995 (Cth) (TM Act) requires that the applicant for a trade mark must claim to be the owner of the mark and, in relation to the goods and/or services specified in the application, either:
- is using or intends to use the trade mark;
- has authorised or intends to authorise another person to use the trade mark; or
- intends to assign the trade mark to a future corporation.
One of the grounds on which a trade mark can be opposed under section 58, or revoked under section 88, is that the applicant is not the owner of the trade mark.
The Court's findings in PDP v Grasshopper
PDP group manufactures and sells chilled dairy desserts and snacks in Australia under the brand WICKED SISTER. There were two PDP entities involved in the proceeding:
- PDP Fine Foods Pty Ltd, which registered a stylised WICKED SISTER trade mark (PDP Fine Foods Mark) in respect of goods in classes 29 and 30; and
- PDP Capital Pty Ltd (a related IP holding company controlled by the same director) which later registered a device mark and word mark for WICKED SISTER covering similar goods in the same classes as the PDP Fine Foods Mark (PDP Capital Marks).
The PDP Capital Marks required consent from PDP Fine Foods to achieve registration. PDP Capital then licensed PDP Fine Foods to use the PDP Capital Marks. However, the applicants' evidence showed that the PDP Fine Foods Mark was not assigned to PDP Capital because of potential CGT implications.
In the litigation against Grasshopper, PDP claimed trade mark infringement, misleading or deceptive conduct and passing off arising from Grasshopper's use of the WICKED trade marks (registered by Grasshopper in respect of goods in class 30) on its dipping sauces and other shelf stable products.
Grasshopper cross-claimed seeking cancellation of the PDP Capital Marks on the ground that PDP Capital was not the owner of the marks at the application dates.
There was no dispute that:
- the PDP Fine Foods Mark and the PDP Capital Marks are substantially identical;
- the PDP Fine Foods Mark and the PDP Capital Marks cover common categories of goods; and
- PDP Fine Foods has always been the user of both the PDP Fine Foods Mark and the PDP Capital Marks.
The applicants relied on the nexus of control recognised in Trident Seafoods Corporation v Trident Foods Pty Ltd [2019] FCAFC 100, and argued that there was a 'unity of purpose' and 'actual control' of PDP Fine Foods by PDP Capital. This argument primarily relied on the licence agreement and the fact that the two companies are controlled by the same director. Grasshopper contended that these factors are not relevant to the question of ownership and an opposition based on section 58 of the TM Act. The Court agreed with Grasshopper on this issue.
The applicants further argued that section 58 was not intended to prevent a corporate group from registering the same mark across different entities, especially if those entities have the same controlling minds, and adverse tax consequences would result from an assignment. Again, however, the Court accepted Grasshopper's arguments that assignment of trade marks within a corporate group is common, tax implications should not dictate the proper interpretation of section 58, and there are ways to assign a mark that do not trigger CGT implications.
Ultimately, the Court held that PDP Capital was not the owner of the PDP Capital Marks, and that:
- 'unity of purpose' and potential CGT implications are not relevant to the determination of ownership under section 58 of the TM Act;
- although the facts in this case are different to Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379, the ownership principles set out in that case still apply. Namely, ownership is determined either by reason of authorship and prior use, or by reason of authorship, the filing of the application and an intention to use or to authorise use; and
- when applications for the PDP Capital Marks were filed, it was clear that PDP Fine Foods (as owner and user of the PDP Fine Foods Mark) was the author of the PDP Capital Marks.
However, despite these findings, the Court ultimately decided not to exercise its discretion under section 88(1) of the TM Act to cancel the registration of PDP Capital Marks, on the basis that maintaining the status quo would not result in any confusion.
How can you protect your trade marks?
To protect your trade marks, we recommend that:
- when applying for new trade mark registrations, you identify the correct applicant who is entitled to claim ownership of the mark as at the application date, and document the basis for doing so; and
- you review your trade mark portfolio and consider whether any registered trade marks may be susceptible to revocation due to ownership issues. If you identify any ownership issues, you should consider immediately re-filing an application in the name of the actual owner of the mark.
If you are unsure about the correct applicant or have concerns about the validity of your marks, our specialised Intellectual property team can assist with a review and provide advice to best protect the validity of the registered trade marks.