In September 2005, the Federal Court of Australia identified the degree of use sufficient (and indeed insufficient) to give rise to ownership rights in a trade mark.
The decision in Shahin Enterprises Pty Ltd v ExxonMobil Oil Corporation highlights the importance of early trade mark filing when preparing the roll-out of a new brand to ensure that ownership rights remain secure.
Ownership of a trade mark
Under the Trade Marks Act, any person who claims to be the owner of a trade mark may apply for registration. A registration can be challenged on the basis that the registrant is not the true owner of the trade mark.
In the past, the courts have indicated that a claim to ownership involves an assessment of three factors:
authorship of the trade mark (namely, the first to adopt the work or design as a trade mark)
a committed intention to use the trade mark in conjunction with the goods and services, generally evidenced by prior public use of the mark, and
the act of applying for registration (which on its face displays an objective intention).
Ultimately, one person’s right as owner of a mark is dependant on whether any other person, through their earlier use or registration of the mark or demonstrated intention to use the mark, has acquired a prior right to use it as a trade mark in Australia for the goods or services in question.
The present case identifies pre-launch activities which will not be enough to evidence an intention capable of creating ownership rights in a trade mark.
Shahin Enterprises (Shahin) sought to develop and re-badge its ‘drive-thru’ convenience stores which sold, generally speaking, tobacco products and convenience merchandise. Following marketing and design consultation commencing in January 1999, Shahin settled on the mark ‘ON THE RUN’. Signage was commissioned (but not used publicly until July), site development plans were lodged with the local council and the business name ‘On the Run’ was registered. Radio and leaflet distribution advertising quotes were also obtained but not finalised. No trade mark application was filed.
In early June, Shahin printed flyers to promote awareness of the new store, which would be opening soon. Coupled with an offer for discounted beverages, these flyers were handed to each customer. In addition, an A-frame sign with the words ‘On the Run’ was displayed on the footpath.
In mid-June, Exxonmobil applied for registration of ‘On the Run’ in relation to, among other things, petrol, drinks and clothing. Shahin opposed the application, arguing that their earlier activities associated with ‘On the Run’ were sufficient to indicate a committed intention to use the trade mark and that, therefore, they were the true owner of that mark.
In a relatively short determination, the delegate of the Registrar of Trade Marks held that registration of the business name and arranging of signage was insufficient to establish a clear and committed intention to use, and therefore, they did not show prior ownership of the mark. Shahin appealed the decision in the Federal Court.
The court’s decision
The court also found that Shahin had not evidenced an intention to use the mark as a trade mark on the goods and services, making a delicate distinction between intended trade mark use and intended use of a name in the course of trade.
Use of ‘ON THE RUN’ prior to mid-June was found to merely display an intention to conduct business under that name and not to use it in a trade mark sense. While Shahin may have subjectively formed an intention to use ‘ON THE RUN’ as a trade mark in the future, the court held that there was no clear and sufficient evidence of public use to support that intention on an objective basis. Flyer distribution and display of the A-frame sign, while public use of the phrase, was not found to evidence trade mark use.
On the facts, Exxonmobil were quite lucky with the outcome of the case, particularly given Shahin’s active public promotion of the mark through distribution of flyers. Arguably, the decision could have been based on the fact that there had been no use of ‘ON THE RUN’ in relation to the goods or services directly, however, this was not borne out by the judgment.
This case provides a good illustration of the risks associated with failing to apply for trade mark registration before proceeding with significant marketing and developmental expenditure. Had Shahin applied for registration upon forming a subjective intention to use ‘ON THE RUN’, they would have obtained priority in the mark over Exxonmobil and would not have had to entertain a difficult ownership argument.
If you are planning to launch a new brand, we strongly advise applying for registration as soon as possible to protect your investment in that brand.
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