Thinking | 15 October 2020

Making Your Mark – a guide for SMEs and advisors: fatal cracks in the foundations? Trade mark ownership in the spotlight

By Ben Hamilton and Alicia Bray

In the second article of our series looking at some of the key issues for trade mark owners, and their advisors, operating in and entering the Australian market, we consider the risks associated with defective trade mark ownership.

Registered trade mark owners wishing to preserve their rights should ensure that the entity (or individual) identified in the application was the ‘true’ owner of the mark. Although you may have successfully secured registration of your trade mark initially, this does not mean it is immune from challenge in the future if the application was made by a person who was not the true owner.

Some years later, your registration may be vulnerable to cancellation under the Trade Marks Act 1995 (Cth) (TMA), including if the applicant was not entitled to claim ownership at the time the trade mark application was made.[1]

This is particularly important if you are looking to take enforcement action, either now or in the future, with the registration being potentially vulnerable to challenge based on defective ownership claims, which can threaten the validity of the registered mark. To illustrate this further, think of an analogy where your registered mark is a building - if it was not built on strong foundations from the outset, latent and hidden defects may later expose weaknesses which go to the heart of the structural stability.

Generally, the entity (or individual) that first uses an unregistered trade mark will accrue rights in respect of that mark and is entitled to register that mark. Accordingly, identifying the ‘true’ owner of a trade mark for the purposes of applying for a registration of that mark requires some analysis of the surrounding circumstances, particularly where a corporate group is involved.

Under the TMA, a person claiming to be the owner of a trade mark may only apply for registration if that person:

  • is using (or intends to use) the trade mark in relation to the relevant goods and/or services;
  • has authorised (or intends to authorise) another person to use the trade mark in relation to the relevant goods and/or services; or
  • intends to assign the trade mark to a body corporate which is about to be constituted with a view to using the trade mark in relation to the relevant goods and/or services.[2]

Recent case law demonstrates the strict approach being taken by the courts in relation to ownership[3], with the decision in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd[4] confirming that filing a trade mark application in the incorrect entity name is fatal, and cannot be remedied at a later stage by a subsequent assignment or amendment to the ‘true’ owner. This can be the case even if the relevant entities are part of the same corporate group. Accordingly, careful consideration should be given to the issue of ownership, both when applying for a trade mark and reviewing your portfolio of existing registrations.

In the case of a corporate group, if a trading entity first used the trade mark, filing an application in the name of another entity (such as an intellectual property holding company), may be fatal and expose the registration to a subsequent cancellation action. In these circumstances, a new registration in the name of the trading entity may be required, with appropriate arrangements subsequently put in place to give effect to the intended structure (which may include assigning the trade mark or putting a licence agreement in place).

Trade mark owners should review their registrations to identify potential invalidity issues, and consider filing new applications immediately where necessary to address vulnerabilities in relation to defective ownership.

[1] Section 88 of the Trade Marks Act 1995 (Cth).

[2] Section 27(1) of the Trade Marks Act 1995 (Cth).

[3] Crazy Ron’s Communications Pty Limited v Mobileworld Communications Pty Limited [2004] FCAFC 196; Global Brand Marketing Inc. v YD Pty Ltd [2008] FCA 605; Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83.

[4] [2017] FCAFC 83.

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