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What's in a name? More than you may think…

September 11, 2017


Partners Richard Watts

Intellectual property

Tribunals on both sides of the Tasman have recently called into question the validity of trade marks that are filed in the name of a bare nominee or trustee and are subsequently assigned to the true owner.

The Australian Full Court, in the somewhat surprising decision of Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd, confirmed that deficiencies in ownership at the time a trade mark is filed cannot be cured by assignment. Although the New Zealand courts are yet to take a hard line on this, NZME. Publishing Limited v Trade Me Limited suggests we may be set to follow Australia's lead.

Australian Full Court: Deficiencies in ownership at the time of filing are incurable

Mr Pham, sole director of the company Pham Global, applied to register the below logo (IR Trade Mark) in Australia in his own name. At the time of application, the mark was not in use by Mr Pham.

In Australia, where a mark is unused at the time of application and has not been assigned to the applicant, it is necessary to have both authorship and an intention to use in order to establish ownership. On appeal from IP Australia to the Federal Court, the primary judge held Mr Pham did not meet these ownership requirements. The IR Trade Mark was designed for Pham Global and it was Pham Global who intended to use the mark. Nevertheless, the primary judge went on to find that any deficiencies in ownership had been cured by an assignment of the trade mark application from Mr Pham to Pham Global.

This finding was overturned on appeal to the Full Federal Court of Australia. The Full Court closely analysed the question of whether the requirements of ownership must be satisfied when a trade mark application is made, or whether ownership deficiencies can be cured sometime later by assignment. The Full Court, somewhat surprisingly, held they cannot.

The Full Court's reasoning

The exclusive rights of a registered trade mark owner in Australia extend back to the filing date of the application. The Full Court held it is therefore essential that the applicant owns the mark at the time of filing. Any other approach would be inconsistent with the legislative scheme.

The Full Court considered a number of the Act's provisions, all of which are premised on the applicant being the owner at the time of filing. For example, only someone claiming to be the owner of a mark may file an application, registration may be opposed where the applicant is not the owner and an aggrieved person may apply to have a trade mark removed on the same ground. In light of this legislative scheme, the Full Court held that allowing ownership to be established at any stage of the application process would be illogical.

Assignment of a trade mark application is permitted under the Australian Act, but the Full Court confirmed the assignment provisions presuppose that the person assigning the mark owns the mark. Having a trade mark application does not, of itself, confer ownership and an applicant cannot assign that which it does not own. As Mr Pham was unable to himself prove authorship and an intention to use the mark at the time of filing, he could not be the true owner of the IR Trade Mark. Because he was not the true owner, Mr Pham could not rightfully assign the IR Trade Mark to Pham Global. The deficiencies in ownership of the trade mark application were incurable.

New Zealand Intellectual Property Office: Deficiencies in ownership at the time of filing may be incurable

In NZME. Publishing Limited v Trade Me Limited, the Assistant Commissioner was faced with a similar question to the Full Court of Australia, albeit in an opposition context. Although not required to make a finding on the point, the Assistant Commissioner indicated that there is a risk that the New Zealand courts may follow Australia's lead.

NZME had filed the relevant trade marks in the name of an unrelated company, as nominee and bare trustee. Sometime after filing, the marks were assigned from the company to NZME. Trade Me opposed registration of the marks on the basis that the applications had not been made in accordance with the New Zealand Act because the nominee company did not meet the statutory ownership requirements, namely, an intention to use the marks.

The Assistant Commissioner did not make a finding on the point but saw the issue as finely balanced. While there are some exceptions in the New Zealand Act to the requirements of a legitimate claim to ownership, there is no express statutory exception providing that a bare nominee or trustee satisfies the statutory ownership principles. Balancing this, the Assistant Commissioner expressed concerns about the practical ramifications of allowing the ground of opposition.

Common practice on both sides of the Tasman thrown into doubt

The use of a bare nominee or trustee for the purpose of filing a trade mark has, to date, been common practice in both New Zealand and Australia. As was the case in NZME. Publishing Limited v Trade Me Limited, this approach has often been used, for example, where parties want to secure registered rights whilst keeping a brand launch confidential or where it is intended that a trade mark will be held on trust in perpetuity. Because of this, the practical effect of the Australian decision is likely to be far reaching.

The practical ramifications in New Zealand would be the same if our courts decide to follow suit. Any trade marks registered for seven or more years in New Zealand would, however, be safe from challenge on those grounds.

Practical guidelines for ensuring the validity of your trade marks

While the position in New Zealand remains unclear, there are a number of steps that you can take to ensure your trade marks are valid, both in Australia and New Zealand.

  • Carefully review the ownership history of any Australian and New Zealand trade marks that you currently own. Particular attention should be paid to those trade marks that have been assigned to you as a result of a challenge.
  • If you are a prospective assignee, carry out thorough due diligence to ensure the original applicant was the true owner of the mark at the time of filing.
  • Consider filing new trade mark applications, at least in Australia, for existing applications or registrations that may be vulnerable to opposition or cancellation because the applicant was not the true owner of the mark at the time of filing.
  • Future trade mark applications should be filed in the name of the true owner of the mark.
  • Where the applicant is in fact the intended owner of the mark, such as an individual founder of a business, this should be documented at the outset along with any licence to the operating business.
  • Where a mark is intended to be held on trust for the operating business, such as where an agency applies to register an intended new brand for one of its customers, the basis for this should be documented at the time of filing.

Simpson Grierson's experts can assist with this review and advise on specific issues you might face.