Decision confirms scope of registrar's power to correct erroneous entries on register

In Mediaquest Communications LLC v Registrar of Trademarks ([2012] FCA 768, July 30 2012), the Federal Court of Australia has dismissed an application by Mediaquest Communications LLC to set aside a decision by the registrar of trademarks to correct an entry made on the Register of Trademarks, pursuant to Section 81 of the Trademarks Act 1995 (Cth). The decision is significant in that it confirms the scope of the registrar's power to correct erroneous entries made on the register, as well as the importance of assignees of trademarks being able to prove valid ownership of such marks.

The dispute between Mediaquest and the executors of the estate of the late Michael Brailsford concerned Australian trademark No 741047. The mark consisted of a logo bearing the words 'peel away'. Peel Away is the trade name of a group of patented paint stripping technologies, which encompass a principle for which Brailsford obtained a patent in 1984. Coating Removal Technology Limited (CRT) is the registered owner of two trademarks in the United States in respect of the Peel Away technology, the subject of the patent. At the time the mark at issue in this case was registered (in Australia), Brailsford was the chief executive officer, president and a director of CRT.

Following Brailsford's death in 2008, Mediaquest applied to the registrar for a record of assignment of the mark from Brailsford to Mediaquest to be entered on the register. In 2010 the registrar entered Mediaquest as the registered owner of the mark in the register. Brailsford's estate sought to overturn the registrar's decision on the basis that it had not been notified. The registrar subsequently informed Mediaquest that, due to its failure to provide sufficient evidence demonstrating title to the mark, it intended to correct the register pursuant to Section 81 of the act by restoring Brailsford as the registered owner. Following a hearing, on May 26 2011 a delegate of the registrar held that the latter had incorrectly recorded Mediaquest as the registered owner of the mark and directed that Brailsford be restored as owner.

Mediaquest applied to the court for a declaration that it was the beneficial owner of the mark and that the delegate's decision to restore Brailsford as the registered owner was made ultra vires. Mediaquest contended that:

• CRT was the beneficial owner of the mark because Brailsford had acquired the mark in his capacity as a director of CRT, rather than in his private capacity; and
• it was the beneficial owner of the mark, as it had acquired CRT's beneficial ownership of the mark by assignment on CRT's bankruptcy.

On July 30 2012 the court dismissed Mediaquest's application and upheld the delegate's decision.

With regard to the beneficial ownership of the mark, the court found that there was insufficient evidence proving that Brailsford had acquired the mark by virtue of his position as a director of CRT. In fact, the court found that any opportunity CRT had acquired to exploit the Peel Away technology, the subject of the two US trademarks, was because Brailsford had chosen to make that technology available to CRT. In any event, the court held that, even though CRT was the owner of two US trademarks, this did not give rise to inconsistency with Brailsford being the registered owner of the mark (in Australia). The court found no evidence suggesting that CRT ever used or intended to use the mark in Australia.

Given that Mediaquest was found not to be the beneficial owner of the mark (therefore rendering its application to have itself recorded as the registered owner invalid), the court found that no actual or effective assignment of the mark had taken place. Accordingly, the court found that the registrar's 2010 decision to record Mediaquest as the beneficial owner was not a 'decision', as it was tainted by jurisdictional error.

The court held that it was open to the registrar to restore Brailsford as the registered owner of the mark, by correcting an error on the register, pursuant to Section 81 of the act. In doing so, the court rejected Mediaquest's argument that conferring such power on the registrar would lead to uncertainty and be antithetical to the structure of the act. On this point, the court stated that:

• a registered owner of a trademark is always susceptible to action being taken to revoke a trademark that should never have been registered or to substitute the true owner of a trademark for that of a wrongful claimant; and
• restricting the registrar's power to undo invalid action to the register would "result in disconformity between the register and reality".

Lisa Ritson and Ben Teeger, Ashurst Australia, Sydney