A trade mark registration can be revoked if it is over 5 years old and the trade mark hasn't been used by the owner (or an authorised user) in a continuous 3 year period beginning one month before a non-use attack.
The key to surviving a non-use attack is to ensure that the registered owner controls the use of the trade mark. The registered owner will control use of the mark if the owner exercises quality or financial control over the trading activities.
Financial control may be present where there is a parent-subsidiary relationship between the owner and user. However, it is not enough for the owner and user to simply be part of the same corporate group. In the case of Trident Seafoods Corporation v Trident Foods Pty Limited [2018] FCA 1490, where the owner was the subsidiary rather than the parent company, the court held the owner did not have financial control over the trading activities of the parent company. Nevertheless, the registrations in the Trident Case were maintained due to the court’s broad discretion not to revoke the registration. They were lucky in this particular case.
In the case of Calico Global Pty Ltd v Calico LLC [2018] FCA 2096, the court partially revoked a registration owned Calico Global Pty Ltd because the court was not satisfied that Calico Global Pty Ltd controlled use of the mark.
The registration was originally owned by Kevin Owens. Keven assigned the registration to Calico Pty Ltd. Calico Pty Ltd granted Calico Global Pty Ltd an exclusive licence to use the trade mark.
The assignment of the registration to Calico Pty Ltd was not recorded on the Register until after the non-use removal application was filed by a US company, Calico LLC.
To defeat the removal action, Calico Global Pty Ltd needed to show use of the trade mark by registered owner Kevin Owen in the pre-assignment period or by unregistered owner Calico Pty Ltd in the post-assignment period. However, the only party using the mark was Calico Global Pty Ltd.
Subsections 100(2) and 100(3) of the Trade Marks Act 1995 states that where a trade mark has been assigned but the assignment has not been recorded, use by the assignee will be sufficient to prevent the registration being removed for non-use, provided that the use was in good faith and in accordance with the terms of the assignment; and the Registrar or the court believe it is reasonable, having regard to all the circumstances of the case, to treat the use of the trade mark by the assignee as having been a use of the trade mark by the registered owner.
However in this case, the assignee, Calico Pty Ltd, had not used the trade mark, and was actually precluded from using the trade mark by the exclusive licence it granted to Calico Group Pty Ltd.
Use of the trade mark by Calico Global Pty Ltd was subject to the licence agreement with Calico Pty Ltd. However, the judge said that ‘the mere fact that the registered owner granted a licence, or revocable authority, to use the trade mark would not be sufficient, of itself, to establish control over the grantee’s use of the trade mark within the meaning of s8’."
In this case, the licence granted to Calico Global required it to:
clearly indicate in all its correspondence and dealings that it was acting as Calico Pty Ltd’s licensee; and observe any directions or instructions that Calico Pty Ltd might give it.
However, there was no evidence that Calico Pty Ltd had ever given any directions or instructions to Calico Global Pty Ltd regarding the use of the trade mark, or that Calico Global Pty Ltd had ever complied with its obligation to indicate it was acting as a licensee of Calico.
The judge stated that neither Kevin Owens, nor Calico Pty Ltd, exercised any actual or other control over Calico Global’s use of the mark at any time during the first or second periods.
With regard to financial control, even though Kevin Owens was the Managing Director of both Calico Pty Ltd and Calico Global Pty Ltd, and Calico Pty Ltd owned 64.8% of the issued shares in Calico Global Pty Ltd, the court held that neither Kevin Owen nor Calico Pty Ltd had financial control over Calico Global’s trading activities
The court does have discretion to maintain the trade mark on the Register if is reasonable in all the circumstances. However, the court determined it was not appropriate to exercise the discretion in this case, given that the use relied on by the Calico Group Pty Ltd was not made in good faith but rather to increase the likelihood of confusion in the market and pressure the respondent to come to a deal.