Technology convergence considered in PIONEER Case

In Pioneer Computers Australia Pty Limited v Pioneer KK ([2009] FCA 135, February 23 2009), the Federal Court of Australia has considered the issue of technology convergence in deciding whether to exercise its discretion in cancellation proceedings. 
Pioneer KK is an internationally famous company that is best known for its audio and visual electronic products for car, office and home use. Its related company, Pioneer Australia, distributes Pioneer KK’s products in Australia.
Pioneer Computers Australia Pty Limited was incorporated in December 1996 as a distributor of third-party computers and computer parts. In 1998 it began assembling and selling its own computers and servers under the mark PIONEER, as well as providing repair and support services for its own computers. It subsequently obtained PIONEER-branded DVD writers from Pioneer Australia and used those branded DVD writers as part of its built-to-order personal computers. As of October 2007, sales of personal computers, notebooks and servers sold under the PIONEER mark amounted to 90% of Pioneer Computers’ sales.
On January 24 2004 Pioneer Computers applied for partial cancellation for non-use of two PIONEER (stylized) trademarks owned by Pioneer KK. Cancellation was sought in respect of the following goods and services:
"computers; computer peripheral devices; computer keyboards; computer memories; printers for use with computers; data processing apparatus; CD-ROM disc drives; computer software; computer operating programs; computer game programs; installation, maintenance and repair of office machines and equipment; data processing apparatus and computers."
In proceedings before the registrar, Pioneer KK demonstrated relevant use of its trademarks on DVD writers, CD read/write players, JPEG players, DVD-ROMs, CD writers, 'write once, read many' discs and video cards. The registrar considered that these goods fell within the description of “computer peripherals”. The registrar also found that despite the fact that Pioneer KK had not demonstrated use on the full range of the goods and services for which cancellation was sought, it was not viable to limit the registrations by removing any goods or services from the register due to the “fine lines” between the goods for which use was demonstrated and those for which cancellation was sought. In concluding that there was a likelihood of confusion in the marketplace and that the public interest was best served by declining to amend the registrations under attack, the registrar took into account:

  • use prior to the relevant period when Pioneer KK had, for a short time, sold certain computers; and
  • evidence as to Pioneer KK's future plans.
On appeal, after considering the substantive issues, the court held as follows:
  • Pioneer KK's second mark had evolved from its first mark, and the differences between the first and second mark, as used, did not substantially affect their identity.
  • Computer peripheral devices are, strictly speaking, devices connected externally to a computer - even though, in practice, the term is used for both internally and externally connected devices.
  • Pioneer KK demonstrated use of its second mark within the relevant period on externally connected devices that are computer peripheral devices.
  • The computer peripheral devices for which use was demonstrated, such as optical disc drives and jukeboxes, were separately described in the goods covered by the second mark.
  • If there was no demonstrated use of the marks with respect to other computer peripherals, Pioneer KK should not be entitled to maintain the broad category where such separate provision has been made.
  • Pioneer KK had not established use of the marks in respect of other goods for which cancellation was sought during the relevant period.
  • Pioneer KK had not established use of the marks for the services for which cancellation was sought.
  • Due to the indiscriminate use of the term “computer peripheral devices” to refer to internally and externally connected devices, convergence of technologies and brand extension, together with the established use of the marks in respect of audio-visual and multimedia devices, the public would not draw a distinction between the goods for which cancellation was sought and the goods sold by Pioneer KK.
  • In the circumstances, it was appropriate to exercise the court’s discretion not to remove the goods at issue from the description of the goods for which the marks are registered, subject to conditions being agreed.
  • The same considerations did not apply to the services at issue and those services should be removed.
In reaching these conclusions, the court discussed the issue of convergence - namely, the development of technology which leads to the blending or combination of the benefits of one type of product with another type of product. This results in an expansion of the applications of the original product to create a superior product. For example, telephony, computer and media technologies have blended to produce goods such as Palm Pilot and Blackberry devices, which combine technologies from previously different fields. Media centres may incorporate a computer with internet access, which is integrated with consumer electronic products such as a hi-fi system, high-definition television and DVD player/writer, used in conjunction with still and video digital cameras and broadband wireless modems. 
Brand extension such as that of the SONY mark, which has extended from consumer electronic products to computers, was also considered.
These factors influenced the exercise of the general discretion not to remove goods for which removal was sought. However, the court was not convinced that the relationship between the services for which cancellation was sought and the goods for which the mark had been used was sufficient to justify the exercise of the discretion to leave the mark registered for those services.
Further, in light of the fact that Pioneer KK had been aware of Pioneer Computers and its activities for a number of years without taking action, the court indicated that it would not exercise its discretion in Pioneer KK’s favour unless it offered an undertaking not to take action for infringement in respect of past use by Pioneer Computers, or in respect of future use for a time reasonably sufficient to enable Pioneer Computers to re-order its affairs.
This decision provides a useful example of the type of factors that can be taken into account when exercising the general discretion to leave a mark on the register for unused goods or services, including recognition of technological development. It also indicates that even if a party is able to defend a non-use action on such a basis, it may not be able to obtain immediate relief if it has previously failed to prevent third-party use of a similar name.
Sean McManis, Shelston IP, Sydney

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