Australia: Accept no substitutes – Assignment will not cure defective trade mark filing

The Full Court of the Federal Court has issued a significant decision in relation to trade mark ownership, which reconfirms the position in relation to the assignment of trade mark applications which have been filed in incorrect applicant names. The decision in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 clarifies the standing of the widely cited and followed decision in Crazy Ron's Communications Pty Limited v Mobileworld Communications Pty Limited [2004] FCAFC 196. Statements made by the Full Court in the Crazy Ron's decision have been relied on by some brand owners and attorneys as authority for the position that the requirement that the applicant be the owner of the trade mark can be satisfied at any time during the application process. The Full Court in Pham Global has finally given some clarity to brand owners and attorneys alike that these statements are 'plainly wrong'.

The takeaway

Brand owners and their attorneys must make certain that applications are filed in the name of the mark's actual owner. Ownership can arise in one of two ways: first by reason of authorship and prior use; and secondly by reason of authorship, the filing of the application, and an intention to use the mark.

Critically, mistakes as to ownership cannot be cured after filing by assignment to the rightful owner. This means that applications filed in the wrong name are vulnerable to revocation or opposition on the ground that the applicant at the time of filing was not the owner of the trade mark. Withdrawing and refiling the application in the rightful owner's name will be the only real means of resolution in such cases.

Prospective assignees and purchasers of trade marks must also ensure that ownership history is reviewed in pre-transaction investigations. Where there is any doubt about a mark's original ownership, appropriate indemnities or warranties should be obtained.

Background

Pham Global Pty Ltd, which subsequently changed its name to Insight Radiology Pty Ltd (IR) appealed to the Full Court against a decision by a single Federal Court judge that held, among other things, that IR's trade mark should be refused registration because it was substantially identical to a mark registered to Insight Clinical Imaging Pty Ltd (ICI).

The IR trade mark	The ICI trade mark

Although the Full Court dismissed IR's appeal on all grounds, it devoted considerable attention to the primary judge's rejection of several of ICI's grounds of opposition, chief of which was ICI's opposition based on ss 27(1)(a) and 58 of the

Section 58 provides that the registration of a trade mark may be opposed on the ground that "the applicant is not the owner of the trade mark". Section 27(1)(a) states that a trade mark application must be in the name of a person who "claims to be the owner of the trade mark".

ICI argued that the application for the IR trade mark was invalid because it was filed in the name of Mr Pham, who did not own the trade mark, rather IR owned the trade mark. ICI argued that the later assignment of the application to IR did not cure this mistake. IR agreed that it was the owner of the trade mark but argued that, further to assignment, it was now also the named applicant on the application, therefore section 58 did not apply. The primary judge rejected ICI's contention that the initial designation of Mr Pham as applicant was fatal to the application. Her Honour instead decided (relying on statements in Crazy Ron's, among other cases) that the requirement that the applicant be the owner of the trade mark could be satisfied at any stage of the application, not only at the filing date.

Ruling on question of ownership

The Full Court unanimously ruled that ICI's opposition in relation to ss 27(1)(a) and 58 should have been allowed. In summary, their Honours held:

• The Act provides for registration of ownership and not ownership by registration.
• Any support that can be gained from Crazy Ron's for the view that the requirement of ownership can be satisfied at any stage of the application process is "plainly wrong".
• If the requirement of ownership could be satisfied at any stage of the application process, there would be nothing to stop applicants filing trade mark applications for marks that they did not own, on the basis that the marks could be validly assigned to their rightful owners at some undefined future point.
• A registered trade mark owner's rights extend back to the application's filing date. It is therefore essential that the initial applicant be the rightful owner as at that date.
• The broad definition given to "applicant" in section 6(1) of the Act and the use of the present tense in section 58 make it tempting to conclude that ownership can be determined as at the time of the opposition proceedings. However, the Act's overall scheme and well-established common law principles mean that this approach cannot be accepted. In the context of section 58 "Applicant" must be interpreted as being the person in whose name the application was originally filed.
• Both the broad definition of "applicant" and the use of present tense in s 58 are necessary because of ss 106-111 of the Act, which allow assignment of a trade mark whose registration is still being sought.
• While trade marks can be assigned in the application stage, the assignment is of the trade mark itself, not only the application. The assignor must actually own the trade mark in order to validly assign it (along with any registrations or applications to register the trade mark). Filing an application, or even having a registration for a trade mark does not, of itself, confer ownership.
• Only the true owner of a trade mark can validly file an application to register the trade mark. If an application is filed in the wrong name, assignment of the application to the rightful owner does not resolve the issue. As mentioned above, an assignment relates to a transfer in ownership of the trade mark not just the application for registration. If the initial applicant is not the owner of the trade mark, they are not capable of assigning the trade mark or application because it cannot assign that which it does not own.
• Mr Pham was not the owner of the IR mark, therefore he could not assign the IR mark to the true owner, IR. As a result, there was nothing that could be done to cure the deficiency in the ownership of the application for the registration of the IR mark and the grounds of opposition under section 58 had been established.

The author would like to acknowledge the contribution of Lauren Holz in preparing this post.