Australia: Dispute between Dunlop and Goodyear highlights importance of maintaining control over use of marks

Last Updated: 30 August 2018
Article by Sean McManis
  • Dispute between Dunlop and Goodyear over use and registration of DUNLOP and 'flying D' device mark
  • Use by Goodyear Australia was under control of registered owner, Goodyear US
  • Goodyear Australia's use of marks constituted use for purposes of defending non-use action

The dispute in Dunlop Aircraft Tyres Limited v The Goodyear Tire & Rubber Company ([2018] FCA 1014, 11 July 2018) concerned the use and registration of DUNLOP and the 'flying D' device (depicted below) in Australia:

Background

The owner of trademark registrations for DUNLOP and 'flying D' device in Australia is Goodyear Tire & Rubber Company ('Goodyear US'), which has a wholly-owned Australian subsidiary, Goodyear & Dunlop Tyres (Aust) Pty Limited ('Goodyear Australia'). Dunlop Aircraft Tyres Limited ('DATL') produces and sells aircraft tyres using the DUNLOP and 'flying D' device trademarks in the United Kingdom. It owns registrations and sells those products in numerous countries, but is not the owner in Australia.

The matter has a long history going back to the 1890s, when the UK company Dunlop Holdings Limited ('Dunlop Holdings') established a tyre distribution outlet in Melbourne, Australia. In 1899 Dunlop Holdings sold its Australian tyre business to Dunlop Pneumatic Tyre Company Co of Australasia ('Dunlop Australia'), which registered the DUNLOP trademark in 1910. In 1920 Ansell was incorporated and took over Dunlop Australia's tyre business.

Prior to the 1930s, Ansell imported aircraft tyres bearing the DUNLOP mark from Dunlop Holdings and in the early 1930s established a manufacturing facility. It then commenced manufacturing tyres, including aircraft tyres, branded with the DUNLOP mark, and later the 'flying D' device. It continued to import some models of tyres from Dunlop Holdings. In 1953 Ansell started providing retreading services for aircraft and other tyres at its premises in Essendon, Victoria. In 1965 the 'flying D' device was registered by Ansell in Australia in respect of all rubber goods in Class 12.

In 1987 a partnership known as South Pacific Star Tyres ('SPT') was formed between a subsidiary of Ansell and Goodyear Tyres Pty Limited (a subsidiary of Goodyear US). Around 1987, Ansell ceased manufacturing aircraft tyres in Australia, but SPT continued to market and sell DUNLOP and 'flying D' device-branded aircraft tyres purchased from Dunlop Holdings and later DATL.

In 2006 Goodyear US purchased Ansell's interest in SPT and the Australian registered marks were assigned from Ansell to Goodyear US. In February 2009, the retreading facility in Essendon was closed and Goodyear Australia began shipping tyres offshore for retreading at Goodyear Thailand.

On 1 January 2012 Goodyear US and Goodyear Australia entered in a licence agreement pursuant to which Goodyear Australia was granted a non-exclusive non-transferrable licence to use the registered trademarks on and in connection with the manufacture, marketing and sale of products and services in Australia.

Between January 2008 and March 2009, DATL communicated with Goodyear Australia seeking a licence to use DUNLOP and the 'flying D' device in Australia but no licence was granted.

DATL applied for registration of DUNLOP and 'flying D' device and was successful in securing acceptance on the basis of evidence of honest and concurrent use. An opposition to registration was upheld, principally on the basis that DATL was not the true owner of the trademark.

Federal Court decision

The issues before the Federal Court concerned:

  1. whether the Australian registered trademarks should be removed from the register for non-use in respect of aircraft tyres and related goods and services;
  2. whether the Australian registered trademarks should be cancelled in respect of aircraft tyres and retreading services;
  3. whether DATL was entitled to register the DUNLOP and 'flying D' device marks, in respect of aircraft tyres and aircraft tyre retreading services; and
  4. whether use of the DUNLOP and 'flying D' device trademarks by DATL infringed any Australian registrations.

Non-use

The non-use issue turned upon whether Goodyear Australia's sale of DATL's products bearing the DUNLOP and 'flying D' device trademarks constituted use of those trademarks by Goodyear US.

Under Australian law, use of a registered trademark by a wholly-owned subsidiary of the owner is considered an authorised use of the trademark. However, there still needs to be actual control exercised by the registered owner.

In the present case, although Goodyear US did not itself exercise quality control over the goods that were being traded by the Australian company, given the relationship between the companies and the court's finding that Goodyear US knew of and approved of Goodyear Australia's activities, the judge (Nicholas J) found that the use by Goodyear Australia was under the control of the registered owner, Goodyear US.

Nicholas J then needed to decide whether that was trademark use by Goodyear Australia and found that, notwithstanding the fact that all control over production of the goods was exercised by DATL, Goodyear Australia used the trademarks in its dealings with those products, which constituted use for the purposes of defending the non-use action.

In relation to the issue of whether there was use in relation to retreading services, the goods were sent to Goodyear Thailand to be retreaded and the GOODYEAR mark was affixed to the retreaded tyres.

Notwithstanding that, Goodyear also relied upon use of artwork (depicted below) on invoices and delivery dockets issued by Goodyear Australia to its customers in relation to the sale of new tyres and its retreading services:

Nicholas J took the view that this is a composite trademark, which does not constitute use of DUNLOP or the 'flying D' device trademark "with additions or alterations not substantially affecting its identity". This is because the presence of the GOODYEAR mark substantially affects the identity of the overall trademark.

Nicholas J saw no reason to exercise his discretion not to remove registrations in respect of tyres or retreading services. In this regard, he took the view that DATL was known to produce the DUNLOP and 'flying D' device tyres being sold in Australia and it would be misleading for an unrelated party to use those marks in relation to tyres or retreading services.

Rectification

Various grounds of potential cancellation were considered by the judge, who found that:

  • evidence did not establish a lack of intention to use the trademarks for the relevant goods and services at the time registration was applied for;
  • registrations were not obtained on the basis of fraud, false suggestion or misrepresentation; and
  • use of the trademarks in respect of aircraft tyres by the owner was likely to deceive or cause confusion.

In finding a likelihood of deception or confusion, Nicholas J took the view that, in a specialised market for aircraft tyres, consumers would be aware of the origin of the products. He noted that the products that had been sold in Australia for a number of years were the products of DATL. As a consequence, what connection there may have been in the past with Goodyear had been lost and the trademarks no longer indicated any connection with the Goodyear companies. Therefore, use of the trademarks would be likely to deceive or cause confusion if not used in relation to the products of DATL.

Nicholas J saw no reason to exercise its discretion not to cancel the registrations in respect of aircraft tyres and aircraft tyre retreading services. He also found that, although rectification does not act retrospectively, the order cancelling registration deprives the registered owner of the standing that is an essential element of an action for infringement and so denies it an entitlement to any remedies in respect of cancelled goods or services.

Dunlop's applications

The appeal to refusal of registration for DATL in respect of the DUNLOP and the 'flying D' device trademarks, considered a number of issues:

  1. In relation to whether representations made to secure acceptance on the basis of honest and concurrent use were defective, Nicholas J found that, notwithstanding certain minor inaccuracies, the representations made did not amount to a material misrepresentation that resulted in the acceptance of the application.
  2. There was no ground for refusal based on any prior reputation held by Goodyear.
  3. There was no ground for refusal based on alleged bad-faith filing by DATL.
  4. There was no basis for refusal due to deception or confusion.
  5. By virtue of their first use and application, the predecessors of the Goodyear companies had established ownership of the DUNLOP and 'flying D' device trademarks for relevant goods and services. The trademarks had not been abandoned and so this justified refusal of the application.

Although DATL used the trademark and is now recognised as the producer of aircraft tyres sold under the DUNLOP and 'flying D' device trademarks in Australia, since the Goodyear companies were able to establish ownership by virtue of first use, DATL was not entitled to registration.

A claim to ownership arising from first use will remain valid unless the trademark is abandoned by the owner and in the present case, there was no evidence of abandonment of the trademarks by Goodyear US.

Infringement

Infringement can occur in Australia by unauthorised use in relation to goods or services covered by the registration, similar goods or services, or closely related goods or services.

On the issue of whether aircraft tyres and aircraft retreading services are closely related goods and services, Nicholas J found that they are because the relevant market would assume that the use of the same branding in respect of those goods and services would indicate that they were provided by the same business.

Absent rectification of the register, DATL's use would have infringed the rights of Goodyear US, so Nicholas J considered the various defences to infringement argued before him and found as follows:

DATL is not entitled to its own registration (in light of the finding regarding ownership in respect of the trademark opposition).

Consent to use by the owner was not provided.

Use by DATL was not good-faith use of the name of DATL's name because Dunlop differs sufficiently from the name Dunlop Aircraft Tyres.

Use of the trademarks was not use for the purposes of description.

The defence available in a claim based upon similar or closely related goods or services that "the use would not be likely to deceive or cause confusion" applied. Due to DATL's use and connection with products being sold under the trademarks, their use of those trademarks is not likely to deceive or cause confusion.

There was no infringement of Goodyear's rights in respect of use on any goods or services covered by the registrations because of the success of the rectification action.

Further, to the extent that there may have been any use in relation to similar or closely related goods or services, there was no infringement because there was no likelihood of deception or confusion.

Conclusion

The case demonstrates the importance of the owner of a trademark registration maintaining control over use of the trademark. It also demonstrates the significance of a claim to ownership arising from first use and no abandonment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Shelston IP ranked one of Australia's leading Intellectual Property firms in 2015.

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