A recent case warns of the dangers of filing for a trade mark in the name of the wrong entity, particularly given the defect cannot subsequently be cured by an assignment.
Failure to file a trade mark application in the name of the “owner” not only exposes the mark to opposition during the registration process, but also makes any registration effected in the absence of opposition vulnerable to revocation on the same grounds. This issue may lay dormant for years until enforcement action is required, at which time an infringer is likely to look for grounds to attack the registered trade mark.
Where a trade mark is used within a corporate group, careful analysis will be required to determine who is entitled to be the “owner” for the purposes of the Trade Marks Act. Simply nominating the IP holding company as the applicant may not be enough. A trade mark that has already been used in the course of trade prior to filing will be owned by the entity that first used it. Otherwise ownership can be claimed by reason of authorship, filing of the application and an intention to use or authorise use.
Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd  FCAFC was an appeal from Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd  FCA 1406 which was in turn an appeal from the decision of the Australian Trade Marks Office in Insight Clinical Imaging v Insight Radiology Pty Ltd  ATMO 85.
The original Australian Trade Marks Office hearing concerned Insight Clinical Imaging Pty Ltd’s opposition to the registration of a trade mark application that had been filed with IP Australia in the name of Mr Alan Pham personally.
Insight Clinical Imaging Pty Ltd was ultimately successful in its opposition (and also its action claiming trade mark infringement, misleading and deceptive conduct and passing off).
One of the ultimately successful grounds for opposition was that the applicant, Mr Pham, was not the owner of the trade mark he applied for. Mr Pham was the sole director of Insight Radiology Pty Ltd, the company that had actually used the mark in the course of its trade. Mr Pham and his wife owned all of the shares in the company.
Section 58 of the Trade Marks Act 1995 (Cth) provides that:
The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.
Section 59 of the Trade Marks Act 1995 (Cth) provides that:
The registration of a trade mark may be opposed on the ground that the applicant does not intend:
(a) to use, or authorise the use of, the trade mark in Australia; or
(b) to assign the trade mark to a body corporate for use by the body corporate in Australia;
in relation to the goods and/or services specified in the application.
The evidence showed that neither Mr Pham nor his company had used the trade mark in the course of trade prior to the date that Mr Pham filed his trade mark application, and that only his company had used the trade mark after the application had been filed.
The Full Court noted that at common law, ownership of a trade mark is established by use, however the Trade Marks Act 1995 (Cth) allows a trade mark applicant to obtain title to a trade mark prior to use if the requirements in section 27(1) are met.
Section 27(1) of the Trade Marks Act 1995 (Cth) provides that:
A person may apply for the registration of a trade mark in respect of goods and/or services if:
- the person claims to be the owner of the trade mark; and
- one of the following applies:
– the person is using or intends to use the trade mark in relation to the goods and/or services;
– the person has authorised or intends to authorise another person to use the trade mark in relation to the goods and/or services;
– the person intends to assign the trade mark to a body corporate that is about to be constituted with a view to the use by the body corporate of the
trade mark in relation to the goods and/or services.
Accordingly, in the case of a trade mark that has not yet been used in the course of trade as at the date of filing of the trade mark application, the applicant must be able to claim ownership by reason of authorship, filing of the application and an intention to use or authorise use, or an intention to assign the mark to a company that is about to be incorporated.
Mr Pham gave evidence that at the time of filing the trade mark application in his personal name he intended to licence his company to use the trade mark, presumably on terms that made the company his authorised user. However a formal licence agreement was not ever signed and there was no other evidence of Mr Pham in his personal capacity exerting any quality control or other control over his company’s use of the mark.
It was held that Mr Pham did not intend to use or authorise Insight Radiology Pty Ltd to use the mark, rather he only intended that Insight Radiology Pty Ltd would use the mark.
It was also held that on the facts Mr Pham was not the author of the trade mark, rather it was his company Insight Radiology Pty Ltd that was the author of the mark.
Mr Pham did subsequently assign the trade mark to Insight Radiology Pty Ltd, but only after he had received a letter from the lawyers acting for Insight Clinical Imaging Pty Ltd placing him on notice of their client’s reputation in a similar trade mark, and of their client’s intention to oppose his application. The subsequent assignment did not cure the defect in Mr Pham’s application given at the time of making the application he personally wasn’t the “owner” of the mark.
What does this mean where trade marks are held in the name of an IP holding company?
Where the use of an IP holding entity is being considered, careful analysis is required with respect to the assignment of existing trade marks from the trading company to the IP holding entity. If the trading company is using any unregistered (common law) trade marks, consideration should be given to filing applications for these marks in the name of the trading company prior to assigning the trade mark portfolio to the IP holding entity. Of course the capital gains tax implications of the assignment would also need to be taken into account.
Once an IP holding entity is established and the existing trade mark portfolio assigned to it:
- a licence should immediately be put into place between the IP holding entity and the trading company on appropriate terms, and the IP holding entity should be in a position to demonstrate that it exercises actual quality or financial control, such that the trading company falls within the definition of an “authorised user” under section 8 the Trade Marks Act 1995 (Cth);
- any “new” trade marks should be filed in the name of the IP holding entity before they are “launched” or otherwise used in the course of trade by the trading entity; and
- with a view to establishing that the IP holding company is the “author” of the relevant mark, graphic design costs and any other expenses incurred with respect to the development of any “new” trade mark should be paid by the IP holding entity, not the trading company. Similarly, instructions in relation to the development of any “new” marks should come from the IP holding company.
For further information or assistance, please contact Katrina Chambers at email@example.com.
 Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd  FCAFC 83 at 18.
 Ibid at 32