Recent decision raises trade mark validity questions

The Full Federal Court of Australia’s recent decision in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379 (Pham Global) means it may be impossible to  remedy a defective trade mark application where the mark was initially applied for in another name.

In this case, the mark initially registered in Mr Pham’s own name and transferred to his company, was removed altogether.

Background

To file an Australian trade mark application under section 27(1) of the Trade Marks Act 1995 (Cth), the person making the application must claim to be the owner of the trade mark and meet one of the following three requirements:

• 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 relevant goods and/or services; or
• The person intends to assign the trade mark to a body corporate that is about to be constituted with a view to the body corporate using the trade mark in relation to the goods and/or services.

In 2011, the sole director of Insight Radiology Pty Ltd (Insight Radiology), Mr Pham, filed a trade mark application under section 27(1) of the TMA in his own personal name. In his application, Mr Pham claimed to be the owner of the trade mark and an individual who intended to authorise Insight Radiology to use the trade mark in relation to the radiology services it provided.

On 1 July 2013, having become aware that the trade mark was likely to be opposed, Mr Pham executed an assignment of the trade mark to Insight Radiology.

The Decision

This case looked at the issue of whether the applicant of the trade mark was the owner of the trade mark it had applied to register.

The Full Court found in favour of Insight Clinical Imaging Pty Ltd’s notice of contention concerning ownership under section 27 and 58 of the TMA and held:

• Although trade mark applications are capable of being assigned, an initial deficiency in ownership cannot be remedied by assignment even if the application is assigned to the true owner. The reasoning for this is two fold:
• an applicant’s claim to ownership is determined at the time the application was made; and
• only the true owner of a trade mark is entitled to assign the application.

The main factors for the Full Court deciding the applicant wasn’t the owner of the trade mark were:

1. Mr Pham filed the application in his personal capacity, not as the director of Insight Radiology;
2. Insight Radiology was already “using” the trade mark as at the date of the application; and
3. There was no licence between Mr Pham and Insight Radiology authorising Insight Radiology to use the trade mark.

Practical Impacts

This decision is likely to have a significant effect on the owners of registered trade marks where it is uncertain whether the applicant was the owner of the trade mark at the time of registration. This is especially critical when the trade mark has been used prior to application.

The situation may come to light when an owner of a trade mark may wish to enforce its rights against third parties. The third party is likely to closely inspect the trade mark ownership history. The registration may subsequently be considered invalid if the applicant was not actually the owner pursuant to section 27 of the TMA.

It is likely that the question of ownership will be particularly relevant for applicants with several entities within a corporate structure. It will be important for these applicants to form an understanding of whether the applications were made using the correct parent company or subsidiary in order to determine whether the registration is valid today.

In the Pham Global case, if Insight Radiology:

1. was the applicant;
2. hadn’t used the trade mark prior to the application being filed; or
3. there was a licence authorising use between Mr Pham and Insight Radiology in existence prior to the filing of the application, the trade mark application would have been held to be valid.

It’s evident that this potential issue can be overcome (or even avoided) with sound intellectual property advice.

If you think your registered trade mark could be vulnerable to being deemed invalid, we recommend you ask us to  conduct a thorough analysis of your portfolio.

If you identify a registered trade mark that is or may be invalid, it is prudent to immediately refile the relevant application with the correct owner’s name. This will protect you against the significant costs that may be incurred in attempting to enforce your rights against an infringing third party where a trade mark is invalid.

Our Intellectual Property team has extensive expertise in this area. To discuss this recent decision and how it may impact on you, please contact our Intellectual Property team.

This article was written by Paul Kirton, Legal Practice Principal – Commercial and Stella Gehrckens, Lawyer – Employment, Safety and Migration.