Innerhealthplus

Trade mark distinctive brands, save legal costs

After a 10 year gap in trade mark cases, the High Court of Australia delivered two trade mark decisions in December 2009.

Both involved applications for removal of trade marks from the trade marks register.

The cases provide technical legal guidance and valuable practical lessons.

The first case was E & J Gallo Winery v Lyon Nathan Australia Pty Limited S189 of 2009.

We'll focus here on the second case, Health World Limited v Shin-Sun Australia Pty Limited S199 of 2009 and S200 of 2009.

This is a very long and winding dispute stretching back to 2001.

At the center was the HealthPlus trade mark, registered in the name of Shin-Sun Australia Pty Ltd. The trade mark was used by Natures Hive Pty Ltd. This is an important fact we will return to below.

The short technical point before the High Court was whether Health World Ltd was a "person aggrieved" with respect to that registered trade mark and thus had standing:

  • to seek expungement of it under section 88 of the Trade Marks Act 1995 (Cth); and
  • to seek removal for non-use of it under section 92 of the Act.

As a footnote to the technical point, the HealthPlus case arose before the 2006 amendments to the Act which removed the requirement in section 92 that the applicant for removal of a mark be a "person aggrieved".

Before the case reached the High Court on the technical "person aggrieved" point, the parties had been in several legal disputes for eight years. Here's a short overview.

  • In May 2000 Health World Ltd ("Health World") launched its Inner Health Plus probiotic product in capsule form. Only common law rights arose from its use of that brand name, no trade mark application was filed.
  • healthplus_packagingA year later, in May 2001 Shin-Sun Australia Pty Ltd ("Shin-Sun") filed its logo trade mark, no. 874755 for HealthPlus in class 5. The relevant description of goods was: "pharmaceutical products including vitamins and dietary supplements". It's product was in powder form.
  • In September 2001, Health World applied to register its word trade mark no. 889038 for INNER HEALTH PLUS in class 5. Apparently it had previously made use of that mark.
  • Then in December 2001 Shin-Sun filed a notice of opposition against registration of INNER HEALTH PLUS and this was ultimately dismissed on 12 March 2003.
  • A notice of oppostion was lodged in December 2001 by Health World against the Shin-Sun HealthPlus trade mark application. Ultimately the Shin-Sun's application was successfully registered.
  • Then in February 2006 Health World filed section 88(1) non-use proceedings for removal of the Shin-Sun trade mark. It followed this in July 2006 with a secton 92(4)(b) proceeding.
  • In September 2006 Shin-Sun filed secction 92 proceedings for removal of INNER HEALTH PLUS for goods other than probiotic goods.
  • In December 2009 Shin-Sun lost in the High Court. It was found to not be a "person agrieved". Shin-Sun's other contentions were remitted to the Federal Court for determination. That case continues.

The technical reason as to why Shin-Sun was not a person agreed can be easily stated. It was the registered proproprietor of HealthPlus but an entity separate from the user of that mark in the market, Natures Hive Pty Ltd. Further, Natures Hive Pty Ltd was not a subsidiary of Shin-Sun. There was not the level of control over the trade mark required under trade mark law even though both companies were part of the business run as an extended family business of the Shin family resident in Australia. Critically there was no written licence agreement between the companies or other documents that imposed the requisite control over the trade mark which might permit a court to treat Shin-Sun as an authorised user as opposed to having too little connection with the user.

Under section 7(3) of the Act: "An authorised use of a trade mark by a person... is taken... to be use of the trade mark by the owner of the trade mark." Under section 8 of the Act: "A person is an authorised user of a trade mark if the person uses the trade mark in relation to goods or services under the control of the owner of the trade mark."

Practical takeaway

From a practical perspective, the case is a reminder to clients, lawyers and trade mark attorneys to put in place legal risk minimisation strategies to resolve basic questions such as:

  1. is the trade mark a high quality one, hence more likely to command a wider scope of monopoly?
    • [Hands up if you consider HealthPlus or INNER HEALTH PLUS to be original, innovative or distinct brands? Our view - they are ho hum. Had the parties and their marketing and legal advisers worked towards more distinctive brands to register as trade marks this article could have been in praise of them.]
  2. who owns the registered trade mark and is it also to be the user of the trade mark?
    • [Shin-Sun was the registered proprietor but not the user. A fatal flaw was it had no appropriate documentation or licence agreement with the user, Natures Hive Pty Ltd.]
  3. what is the date of first use of a trade mark and where is evidence of use recorded and collected?
  4. what and how is the connection made and kept between the owner and its users? Better still, what documentation exists, and better still trade mark licence agreement (if any) exists, treating users as authorised users and maintaining the required level of control over their use of the trade mark?
    • [When the trade mark owner and user is not the same entity, always put in place a trade mark licence agreement and back it up with documentation and record keeping, ideally in a consolidated intellectual property register.]

From a practical perspective, the case is a reminder to trade mark owners and advisers to put in place arrangements for record keeping, legal risk minimisation and intellectaul property managent. The likelihood of this is low so long as business and IP law is treated as if it is a set of black and white rules and procedures, rather than requiring legal modelling or game play.


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