Cancellation actions fail as parties are not 'persons aggrieved'

In Health World Limited v Shin-Sun Australia Pty Ltd ([2008] FCA 100, February 21 2008), the Federal Court has dismissed three separate actions involving the marks INNER HEALTH PLUS and HEALTHPLUS. The court addressed questions of standing, deceptive similarity, intended use and the need for a trademark to be used by and publicly connected to the registered owner.

The case involved a dispute between Health World Limited, the makers of a probiotic capsule for the health of the digestive system sold under the mark INNER HEALTH PLUS, and Shin-Sun Australia Pty Ltd, the owner of the trademark HEALTHPLUS for natural health supplements.

Health World filed rectification proceedings seeking the expungement of the HEALTHPLUS registration (after failed opposition proceedings). It also sought the removal of HEALTHPLUS from the register on the grounds of non-use. In addition, Shin-Sun sought the partial removal of INNER HEALTH PLUS from the register on grounds of non-use.

The court considered these three separate actions. All three failed on the grounds that, at the time the actions were commenced, neither applicant was a person aggrieved. Neither party was able to establish the status of a person aggrieved as neither intended to use the other party's mark. Therefore, the court found that the marks INNER HEALTH PLUS and HEALTHPLUS are not deceptively similar. Crucial to this finding was the manner in which the INNER HEALTH PLUS trademark had been used (namely as a brand extension of Health World's Inner Health product), and the different impressions and messages conveyed by both - one being concerned with internal health and the other with general health. Consequently, the court found that neither party would be appreciably disadvantaged in a legal or practical sense if the other's trademark remained on the register.

The court nevertheless considered the actions, assuming that the parties were aggrieved. Its findings on whether use of the trademark HEALTHPLUS was likely to deceive or cause confusion and whether there had been relevant use of this mark for the purposes of a non-use action provide useful guidance for practitioners.

Shin-Sun is the owner of the registration for HEALTHPLUS, but the evidence demonstrated that packaging for goods provided under this mark bore the name of a related company, Nature's Hive Pty Ltd. Although the same family controlled both companies, and they were effectively run together, shareholdings were different and Shin-Sun did not exercise financial control over the activities of Nature's Hive. Further, there was no licensing agreement between the companies. Consequently, there was no use of the mark by the registered owner.

In relation to the court's discretion to leave a mark on the register even in the absence of use, the court indicated that it would not have exercised its discretion in the owner's favour in this case. It found that use of the mark was deceptive and that there was no public interest in leaving the mark on the register.

The packaging of the HealthPlus products made it look like Nature's Hive (rather than Shin-Sun) was the source of the products. This failure to identify the registered owner as the source of the goods meant that the use of the trademark HEALTHPLUS was likely to deceive or cause confusion. Therefore, the registration was vulnerable to rectification under Section 88(2)(c) of the Trademarks Act 1995.

The court finally turned to Shin-Sun's application for partial removal of Health World's registration on the basis of lack of use and lack of intended use. Although there was no use of the mark on the goods to which the application related, the court accepted affidavits stating that, at the time of filing, Health World intended to use the mark on all goods now covered by the registration.

The case provides a useful reminder that trademark owners should be careful to ensure that the company or person that is the registered owner of a mark exercises direct control over its use.

Michelle Cooper and Sean McManis, Shelston IP, Sydney