Trade marks are important tools used by businesses to distinguish the origin or provenance of their goods. Successfully registering a trade mark in the name of your business affords protection, which can be enforced against others. However, if you—the registered owner—do not use the trade mark and control the qualities of the goods and services to which it attaches, then you lose it.
Recently, the Federal Court found that where a parent company uses a trade mark owned by a subsidiary, the use will be a sufficient ‘authorised use’ to defend an application for removal of a trade mark due to non-use. This raises interesting questions for use of trade marks in corporate groups.
Lessons in trade marks use by parent companies
In the case of Trident Seafoods v Trident Foods Pty Ltd, Trident Foods owned two trade marks for the word ‘TRIDENT’, the first registered in 1973 and the second in 1983, both for food products. Trident Foods more recently became a wholly owned subsidiary of Manassen Foods Australia Pty Ltd. In 2014, Trident Seafoods applied to have those trade marks removed from the Register on the grounds of non-use after their own application to trade mark the logo of ‘Trident Seafoods’ was blocked.
Section 92(4)(b) of the Trade Marks Act (the Act) provides that an application may be made to remove a trade mark from the Register if the trade mark has remained registered for a continuous period of 3 years and at no time during that period was the trade mark used by the registered owner in Australia. Here, the delegate of the Registrar was not satisfied that Trident Foods had used the ‘TRIDENT’ trade marks during the relevant 3 year period. This was despite Trident Foods arguing that Manassen as the parent company had used the trade marks before, during and after the relevant period. Neither the delegate nor the primary judge in the first instance was satisfied by this because Manassen’s activities were not ‘under the control’ or ‘actual control’ of Trident Foods. Indeed, as a parent company the opposite was true.
On appeal, Trident Foods contended that use of the marks by Manassen was authorised by Trident Foods via an unwritten licence and consequently that it had been subject to ongoing use under the control of Trident Foods. Section 8 of the Act provides that this question turns on the meaning of control. The relevant case here is Lodestar Anstalt v Campari America LLC which held that control over the use of a trade mark means ‘actual control in relation to the trade mark from time to time’ and that this was ‘a question of fact and degree’. There could be an unwritten licence where the user’s obedience to the owner was ‘so instinctive and complete that instruction was not necessary’.
The unity of purpose trade mark test
The Full Federal Court sided with Trident Foods because at all times the directors of both Manassen and Trident Foods were the same. It was thus inferred that ‘the two companies operated with a unity of purpose’. The idea that Trident Foods acquiesced to Manassen’s use of their trade marks was a fallacy because the directors of both entities being one and the same had an obligation to ‘ensure the maintenance of the value in the marks’.
This decision may make it easier for corporate groups to establish the existence of requisite control to maintain trade mark registration. As the Full Federal Court held, ‘it is commercially unrealistic…not to infer that the owner of the marks controlled the use of the marks because the common directors’ were required to ensure they retain value.
It remains to be seen how this ‘unity of purpose’ test will be further developed and if/how it could apply to commercially at arm’s length operations.