Austin, Nichols & Co Inc v Lodestar Anstalt [2011] FCA 39

“…or the battle of the birds”

If you are advising your clients in relation to removal for non-use proceedings then this Federal Court decision is one to read. The take home lessons are:

• After Health World, the Court is taking a liberal approach to the relationship an applicant to a removal action must have to the mark’s registered proprietor in order to be an aggrieved person.
• The reasons a client has for not using the mark must be real obstacles and not just the consequences of a marketing strategy.
• Even if you are 100% sure there has been no use of a registered trade mark during the relevant non-use period, this does not mean the Court will exercise its discretion in your favour. The court’s discretion is unlimited and a party should be prepared to argue this point no matter how strong its case appears.

Lodestar Anstalt (Lodestar) successfully registered the trade mark WILD GEESE (WG mark) in relation to:

• Class 32: Beers, mineral and aerated waters and other non-alcoholic drinks; fruit drinks and fruit juices; syrups and other preparations for making beverages.
• Class 33: Alcoholic beverages (except beers)

The registration was effective from 21 June 2000. Wild Geese Whiskey has only been distributed and sold in Australian retail outlets since late 2008.

Austin Nichols & Co Inc (Austin Nichols) sold bourbon whiskey under the WILD TURKEY mark. On 27 June 2005, Austin Nichols filed an application for removal of the WG mark under s 92(4)(b) of the Trade Marks Act 1995 (Cth) (TMA) for non-use. On 26 July 2005, Wild Geese Wines Pty Ltd (WG Wines) applied for registration of WILD GEESE and WILD GEESE WINES in class 33: wines (WG Wines marks). The application was not immediately successful because of the WG mark registration and WG Wines filed a non-use application for partial removal of the WG mark relating to class 33: Alcoholic beverages (except beers). WG Wines sold its rights to the applications to Austin Nichols, which was subsequently bought out by Rare Breed Distilling LLC (for the purpose of this case note, the applicants will be referred to as Austin Nichols).

Although the non-use periods were slightly different the Court considered that non-use during the period 28 May 2002 to 6 August 2005 (non-use period) would satisfy both applications for removal and the facts were considered in this light.

The Registrar refused the first application but the second one was partially successful resulting in an amended specification for each class. On appeal to the Federal Court, Cowdroy J considered the following three issues:

Was Austin Nichols a “person aggrieved”? The Registrar had answered this in the negative; however, this was before the High Court judgment in Health World Ltd V Shin-Sun Australia Pty Ltd [2010] HCA 13. Austin Nichols argued that Health World required a liberal approach to the question of standing and that a person is aggrieved if they operate in the “same trade” as the owner of the challenged mark. Once it is determined that the parties are in the “same trade” or “trade rivals” no further analysis of the contested goods’ description needs to be made. That is, it is the identity of the parties not their goods that should be emphasised. Lodestar sought to rely on Crennan J’s judgment arguing that Austin Nichols must be a trade rival in respect of goods of the same description in order to have standing.

Cowdroy J applied the majority approach in Health World which held that the definition of an “aggrieved person” is “to be liberally construed”. This meant that Austin Nichols did not need any intention to use its trade mark in the production of non-alcoholic class 32 goods nor did it need to prove disadvantage because of Lodestar’s registration. Cowdroy J considered that the parties were in the same trade and were trade rivals and that this rivalry should encompass alcoholic and non-alcoholic drinks. The applicant had standing in relation to both applications.

Did Lodestar have obstacles under s 100(3)(c) of the TMA? Essentially, Lodestar argued that it always intended to use the mark in relation to whiskey but the following obstacles had prevented it from actually doing so during the non-use period:

• the significant time and legal costs spent in defending challenges by Austin Nichols to its registration in a number of jurisdictions around the world – Cowdroy J held that Lodestar had not demonstrated any causal link between its involvement in the international legal proceedings and non-use of its trade mark in Australia;
• difficulties in sourcing the whiskey to be sold under the WG mark – Cowdroy J accepted Austin Nichol’s submission that Lodestar had adopted a commercial strategy of establishing other markets before the Australian one and that on Lodestar’s own evidence, it did have a source of whiskey available from early 2003;
• difficulties in promoting and selling the Wild Geese Whiskey at trade fairs particularly one in Cannes – this was rejected for want of a causal link.

Should the court exercise its discretion to remove the mark? Having established a prima facie case for removal of the mark, it might be thought that the removal would follow as a matter of course. Weighing heavily against Lodestar was the fact that it had not used the mark in Australia until three years after the non-use period and it had not been used at all before the non-use period started. Balanced against this were the facts that Lodestar had clearly not abandoned the WG mark, there had been international publicity and sale of the Wild Geese Whiskey product overseas, the product had a limited profile in Australia with some use of the WG mark in Australia and the non-use period was not substantial. Given the overriding principle to keep the register “pure” and whether it was in the public interest to remove the mark if this would lead to confusion, Cowdroy J held that the WG mark should remain on the register. This was subject to the amendment to the Class 33 specification ordered by the Registrar.

The decision is a reminder that the court’s discretion in these circumstances is unlimited and that a party should be prepared to argue this point no matter how strong the case for removal because of non-use is.