Federal Court considers use by predecessors in title and corporate groups

Australia

The decision of the Federal Court of Australia in Millennium & Copthorne International Limited v Kingsgate Hotel Group Pty Ltd ([2012] FCA 1022, September 19 2012) has shed further light on how to establish continuous use of a mark by a predecessor in title.

The applicant in this case, Millennium & Copthorne International Ltd (Millennium), had sought to register a composite trademark consisting of an image made up of five vertical bars, representing the letter 'M', with the word 'Kingsgate' appearing below it, in respect of services in Classes 35 and 43 of the Nice Classification, including management of hotels and motels:

The priority date for Millennium's application was May 11 2006.

The respondent, Kingsgate Hotel Group Pty Ltd (Kingsgate), is the registered owner of a 'fancy mark' consisting of the words 'Kingsgate Hotel' in stylised lettering inside a dark shaded box:

The mark is registered for services in Class 43, including the operation of hotels and hotel management, and has a priority date of March 24 2004.

Millennium's application was accepted by the registrar of trademarks, with an endorsement under Section 44(4) of the Trademarks Act 1995 (Cth).  Section 44(1) and (2) establish that the registrar must reject an application where the mark is substantially identical with, or deceptively similar to, an earlier registered mark, in respect of similar goods or services. However, Section 44(4) provides that the registrar must not reject a mark on these grounds if the applicant and its predecessor in title have continuously used the mark from before the priority date of the other mark.

Kingsgate filed an opposition against the registration of Millennium's mark. It relied upon Section 58A, namely that registration of a Section 44 mark may be opposed if the opponent can establish that it, or its predecessor in title, first used its mark, and has continuously used its mark since. On August 1 2011, the registrar upheld Kingsgate's objection. Millennium sought to appeal this decision to the Federal Court of Australia.

Millennium argued that it, or its predecessor in title, had earlier use of its mark than Kingsgate or its predecessor in title. Upon consideration of the marks, the court found that Kingsgate had failed to prove that there existed a real tangible danger of confusion or deception between the marks required by Section 44(1) and (2), due to the apparent visual differences between the marks. Although this finding ultimately meant that Millennium's appeal would be successful, and the mark registered, the court nonetheless went on to consider which party, or their predecessors in title, had first used their mark, and whether their use had been continuous.

Millennium gave evidence of its membership in the Millennium & Copthorne Group of companies (M&C Group), and sought to establish prior and continuous use of the mark by related companies in this group. It claimed that, from 1972 to 1995, a company called Kingsgate Investments Pty Ltd (Kingsgate Investments), which was said to be part of the M&C Group, owned and operated a hotel in Sydney called the Hyatt Kingsgate Hotel.  Furthermore, it claimed promotion and sales, in Australia, for hotel services provided by the M&C Group in New Zealand under the Kingsgate brand.

Kingsgate claimed prior use of the mark, through the ownership and operation of the Kingsgate Hotel in Melbourne, by itself and its parent company Kildair Hotels (Kingsgate) Pty Ltd (Kildair) since 2000, and by its predecessor in title since 1978.

The court noted that Kingsgate was incorporated on March 16 2004, and therefore did not use the mark itself before that date. However, the court found that Kingsgate had failed to establish that the mark was transferred from Kildair to Kingsgate and, therefore, that Kildair was its predecessor in title. The court thus found that Kingsgate's use of the mark commenced only in March 2004.

Turning to Millennium's contentions as to prior use of the mark, the court dismissed Millennium's claim to prior use by Kingsgate Investments. The court found that Millennium had not proven that there had been an assignment of goodwill to Kingsgate Investments, from its supposed predecessor. Furthermore, the court found that it was not clear that Kingsgate Investments used the mark, and that if there was use, then it was not continuous.

Regarding Millennium's claims that it used the mark through sales for Kingsgate hotels in New Zealand, the court found that evidence of bookings by four individuals from Australia was sufficient to establish that there was some use, albeit slight, of the Kingsgate name in Australia prior to March 24 2004. However, the court found that Millennium had not established the precise devolution of the chain of title from the user of the mark to Millennium, so as to establish use by a predecessor in title. In particular, the court noted that this was not established by simply demonstrating a connection with the amorphous concept of a corporate group.

Millennium also sought for it mark to be allowed under Section 44(3), namely 'honest concurrent use'. The court agreed that 'honest concurrent use' had occurred here, noting the inconvenience to permit the concurrent registrations was only slight. Therefore, the court noted that, even if it had found that the marks were deceptively similar, it would have still found in favour of Millennium on the point of honest concurrent use.

Finally, the court considered Kingsgate's claim, under Section 60, that it had a mark that had acquired a reputation in Australia, and that registration of Millennium's mark would be likely to deceive or cause confusion. The court dismissed the claim on the basis that it was not satisfied that there was a real or tangible possibility of deception or confusion, again based on the visual differences between the marks.

The court allowed Millennium's appeal, setting aside the registrar's decision, and ordered Millennium's mark to proceed to registration.

Andrew Wiseman and Hamish Collings-Begg, Allens, Sydney

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