The risks associated with the non-use of a registered trade mark are highlighted in a recent decision of the Full Court of the Federal Court of Australia in Austin, Nichols & Co Inc v Lodestar Anstalt  FCAFC8.
The statutory framework
In Australia, following a period of five years from the filing date, a trade mark can be cancelled on grounds of non-use if it is not being used and has not been used in the preceding three year period ending one month prior to an application for removal for non-use being filed. If a non-use application is filed, the registered owner will generally need to demonstrate relevant use of the mark in Australia in order to maintain the registration. However, in circumstances where the registered owner is unable to demonstrate relevant use of the mark or that the non-use was due to obstacles which prevented use of the mark, the Registrar (or a Court on referral or appeal) may exercise the discretion not to remove the mark from the Register if satisfied that it is reasonable to do so.
The facts and legal findings
Lodestar Anstalt was the owner of the registered mark 'WILD GEESE', covering various alcoholic and non-alcoholic drinks, which had been registered since 8 December 2000. Austin, Nichols & Co Inc (who made and sold bourbon whiskey under the 'WILD TURKEY' mark) and another third party filed applications seeking removal of the 'WILD GEESE' mark from the Trade Marks Register on the basis of non-use. It was accepted by the parties that there had been no use of the mark in Australia during the relevant three year non-use period. The issue for determination by the Federal Court was whether the registered owner had demonstrated that reasonable grounds existed for retaining the registration, despite the non-use.
At first instance, a single judge of the Federal Court found that no causal link had been demonstrated between the obstacles preventing use relied upon by Lodestar and the non-use of the mark in Australia. However, His Honour exercised the discretion to allow the mark to remain on the Register on the basis that the 'WILD GEESE' product had attained "some degree of reputation and profile" in Australia and that removal of the mark from the Register "may cause a degree of confusion to the public". Austin Nichols challenged the exercise of the discretion on appeal.
On appeal, the Full Court of the Federal Court accepted that the discretion to retain a registration in circumstances where relevant use has not been demonstrated is broad and that exceptional circumstances did not need to be shown before it could be invoked. However, the Full Federal Court found that the exercise of the discretion by the judge at first instance had miscarried as it was based on a finding of fact (namely that the 'WILD GEESE' mark had acquired a reputation in Australia) that was unsupported by the evidence. In deciding to remove the registration the Full Federal Court relied on the following:
- Lodestar had not commenced use of the 'WILD GEESE' mark in Australia until three years after the non-use applications had been filed (which was almost eight years after it had been registered);
- Use of the mark in Australia had been limited (comprising few sales and no extensive promotion); and
- Lodestar had not filed evidence which demonstrated that confusion would, or at least, could result from removal of the mark.
This decision demonstrates the importance of making use of a trade mark in Australia in respect of the goods and/or services covered by a registration in order to maintain the registration. If a trade mark has been registered for a period of five years from the filing date but has not been used in Australia, the registration may provide false security for the registered owner.
If faced with a non-use removal action, the owner may be able to defend the action by demonstrating that it is reasonable in the circumstances not to remove the mark from the Register. However, as this recent Full Federal Court decision clearly highlights, the exercise of the discretion needs to be justifiable on the facts and by reference to the position in Australia. Relying on the exercise of the discretion in favour of retaining the mark on the Register (where relevant use cannot be demonstrated) is a risky strategy.
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.