'Contrary to law' can include foreign law, says Federal Court

In Neumann v Sons of the Desert SL ([2008] FCA 1183), the Federal Court of Australia has allowed an appeal against a decision of the registrar of trademarks in which the latter had dismissed an opposition against the registration of the trademark EL NINO TARIFA.
The applicant before the court, Herbert Neumann, and the applicant for the trademark EL NINO TARIFA in Australia, Joseba Andoni Galdeano, owned shares in a company known as Lucky Charm. Lucky Charm was incorporated in Spain and was a vehicle for marketing casual wear and clothing under the mark EL NINO. Pursuant to a verbal agreement between the parties, it was agreed that ownership of the trademarks associated with Lucky Charm would be reflective of the ownership of the shares in the company.
Subsequently, the relationship between Neumann and Galdeano deteriorated. Galdeano, the sole owner of the respondent company, Sons of the Desert SL, successfully applied to the registrar of trademarks for the registration of a composite trademark comprising the words 'el niño tarifa' and an image described as an "alien seated atop the words" for goods in Classes 16 and 25 of the Nice Classification. Neumann unsuccessfully filed a notice of opposition to the registration, and subsequently invoked the court's original jurisdiction pursuant to Section 191 of the Trademarks Act 1995 (Cth) in appealing the delegate's decision.
The fundamental issue before the court was whether there was an agreement governing the ownership of the mark EL NINO TARIFA and providing that Neumann and Galdeano were joint owners of the mark. If the court was persuaded in the affirmative, Neumann would succeed in opposing the registration of EL NINO TARIFA.
Neumann submitted that the delegate's decision should be overturned pursuant to Section 58 of the act, which provides that the registration of a trademark may be opposed on the grounds that the applicant is not the owner of the trademark. In considering this ground, the court accepted evidence that:
  • the trademark had been applied for and registered overseas in the names of the joint proprietors of Lucky Charm; and
  • the parties had clearly contemplated that this would be the case. 
As such, the court found that there was a pre-existing agreement that the EL NINO marks would be co-owned by the shareholders of Lucky Charm. Therefore, the court concluded that Neumann's opposition should be allowed under Section 58.
Neumann also submitted that, under Sections 42 and 57 of the act, the delegate's decision should be overturned because use of the mark would be contrary to law. Although it was strictly unnecessary to consider this ground, the court nonetheless held that the phrase 'contrary to law' is not limited to breaches of statutory provisions. If use of a trademark by the proprietor is in breach of contract, then such use is contrary to law. The court accepted that exclusive use of the mark EL NINO TARIFA would be in breach of the agreements between Neumann and Galdeano establishing co-ownership of the mark and, accordingly, would be contrary to law.
Further, the court accepted affidavit evidence of a Spanish attorney that registration of the mark EL NINO TARIFA in Australia to the exclusion of Neumann would be contrary to Spanish law, which governed the relationship between the parties. On this additional ground, the court held that Neumann's submission based on Section 42 should also succeed.
Although the outcome of the case was based on the court's decision in relation to Section 58, there was some criticism of the court's finding that the term 'contrary to law' can include foreign law. It is argued that this finding:
  • significantly broadens the scope and application of Section 42 and like provisions; and
  • raises the important question of whether the registration of an Australian trademark may be affected by the law of another nation state.
Rachel Kay and Lisa Ritson, Blake Dawson, Sydney

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