White SW Computer Law
|Intellectual Property, Information Technology & Telecommunications Lawyers|
Melbourne Office - PO Box 452, COLLINS STREET WEST Victoria 8007 Australia
Sydney Office - GPO Box 2506, SYDNEY New South Wales 2001 Australia
Telephone: Melbourne Office - +61 3 9629 3709 Sydney Office - +61 2 9233 2600
Facsimile: Melbourne Office - +61 3 9629 3217 Sydney Office - +61 2 9233 3044
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The Constitution empowered the Commonwealth to make laws in relation to trade marks1). In exercise of this power, the Trade Mark Act 1995 (Cth) (“TMA”) provides that a registered trade mark is personal property2) and regulates the registration and enforcement of trade marks. However, for centuries, trade marks have been ‘created’ merely by a trader using a sign to distinguish his or her goods or services from those of other traders.
Australia has a first to use trade mark system, which acknowledges that trade marks are created by use, regardless of whether they are registered or not. However, the TMA will allow registration of a trade mark where the applicant intends to use, but has not as at the filing date actually used the trade mark. This leads to some similarity between Australia’s first to use trade mark system and the first to register systems of countries such as China and Japan.
Essentially, a trade mark identifies that goods or services originate from a particular trader, with some commentators describing trade marks as “symbols of goodwill”3).
As described by the US Supreme Court, “…the aim [of a trade mark owner] is … to convey through [a trade] mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trademark owner has something of value.”4). The Court goes on to describe “the commercial magnetism” of a trade mark.
If a trader successfully creates and uses a trade mark in relation to his or her goods or services, he or she will have, subject to making out the requirements of the tort of passing off, a common law right to take action against other traders who subsequently use that trade mark, without permission, in relation to the same goods or services.
However, if the unauthorised use does not amount to a misrepresentation which is actionable as passing off or as conduct likely to mislead or deceive under Pt V of the Trade Practice Act 1974 (Cth) (“TPA”) or the Fair Trading legislation of the states and territories, the other party is free to use the name5). This might occur where the unauthorised use occurs in a different state or region. The scope of protection of common law trade marks will generally be limited to the geographic area in which the trade mark owner sells their goods or services or any areas where the reputation of the mark has been established.
A person does not acquire any exclusive right to use the name, word or unregistered mark merely because he or she was the first to use it6). However, a person who claims to be the owner of a trade mark who uses or intends to use the trademark in relation to goods or services may apply for registration of the trade mark7). In general, a person who can show that he or she is the first person to have used a trade mark in Australia is entitled to claim to be the owner of it8). This may occur even if the use made of the mark is minimal9). It is not necessary to show that the use made of the mark is such as to establish reputation in the mark; the applicant will be entitled to claim to be the owner of a mark for the purposes of registering a trade mark even if he or she would not be able to bring an action for passing off or contravention of Pt V of the TPA10).
Although it is not necessary to register a trade mark to use it, registration enhances the protection available at common law by providing an exclusive right to use, license or sell that particular trade mark. Registration is the source of the owner’s title to exclusive use of the mark rather than it being mere evidence of the rights acquired through use and hence it is not necessary to prove the reputation required in other causes of action to be successful.
However, registration does not give a trade mark owner absolute certainty as to their rights or monopoly over the trade mark. For example:
These types of exemptions reduce the strength of a first to file owner’s trade mark protection. For example, the criteria to be taken into account when applying subsection 44(3) include: the degree of confusion likely between the trade marks in question; whether instances of confusion have in fact occurred; the honesty or otherwise of the concurrent use; the extent of use in duration, area and volume; and the relative inconvenience that would be caused to the respective parties if the applicant's trade mark should be registered or not registered15). These factors act to strengthen the protection afforded to an actual user at the expense of the usual monopoly enjoyed by a registered trade mark owner.
The United States is also a first to use system and rights to a trade mark can be acquired by either being the first to use the mark in commerce or being the first to register the mark16). However, in general in the US, proof of use of the trade mark must be supplied before a registration can issue. This is not a requirement in Australia.
In Australia, it is possible, in some circumstances, to register a trade mark even when the applicant has no intention to use the trade mark in relation to the designated goods or services. For example:
In both the US and Australia, an applicant can file a trade mark application based on an intent to use (“ITU”). An ITU application has the effect of being deemed to be constructive use of the trade mark, which enables the ITU applicant to prevent later actual users from usurping the ITU applicant’s superior priority rights.
A finite period is provided, during which the ITU applicant must make actual use of the trade mark. Provided this requirement is met, a third party’s post-application use of the trade mark will not destroy the ITU’s priority based on the earlier filing date. In Australia, in general, a cancellation procedure can be invoked where the trade mark has not been used for a continuous period of three years18), however, a non-use application cannot be filed until a period of five years from the filing date has elapsed19).
The incorporation of ITU applications into a first to use trade mark system, makes such a trade mark system more similar to a first to file trade mark system in that in some circumstances, the first to file will have priority over a first to use party. For example, in the US an ITU applicant has been held to be entitled under §7©20) to rely upon the filing date of its application in an opposition filed by a party alleging common law rights based on use prior to any actual use which might be asserted by the applicant21).
In summary, under a first to use trade mark system, the owner of a mark is the person who was the first to use that mark in commerce. In Australia, for common law trade marks, trade mark protection only extends to the areas where marked products are sold or advertised, where their reputation is established. Registered marks are protected nationally, regardless of where they are used.
In comparison, a first to register system gives priority to the person who is the first to file an application for registration. In general, a first to file system allows the first party that files an application for registration to obtain, for example, trade mark rights, even if another trader has used a mark from an earlier date.
Although Australia’s trade mark system is a first to use system, in relation to business names, the application filed first is entitled to priority22). The registration of company names is also a first to file system. There is no procedure by which the owner of a business name can oppose the registration of a name likely to be confused with or mistaken for that name23). However, registration of a company or business name does not give any positive rights of proprietorship24) and provides no defence to an action in passing off, under Pt V of the TPA or for trade mark infringement. The registration of domain names is also a first to file system. The .com.au domain name system purports to be one in which no proprietary rights subsist25).
Many other countries have adopted a first to file system for trade marks, with one of the aims of such a system being to give greater certainty to a registered trade mark owner that their trade mark rights are protected and in turn encourage trade. However, a first to file system has the potential to allow a rogue applicant to defeat a legitimate trade mark owner's rights by filing a trade mark application, thus effectively blocking use of the trade mark in that country until the mark becomes vulnerable to removal for non-use or the registration otherwise terminates, for example through non-payment of official fees.
Some first to file systems have protection against such rogue applicants incorporated. For example, a UK application must contain a declaration that the mark is being used or that there is a bona fide intention to use the mark26). Therefore, if the applicant has made a false declaration, their application may be attacked using an argument of bad faith.
In 1994, the United Kingdom changed from a first to use to a first to file system in order to give effect to the European Trade Mark Directive of 21 December, 1988. This change was required to harmonise the UK legislation with other EU Member States.
In general, the first to file a trade mark application will now have the prior right. However, unregistered trade marks used in the course of trade prior to the date of application will be recognised where the owner of the earlier right can establish that the use has been extensive enough for a passing off action based on the unregistered trade mark to succeed27).
Many Asian countries have a first to file trade mark system, including, amongst others, the significant trading nations for Australia: China and Japan.
The first to use and first to file systems are not uniform, each having a number of exemptions from the general rules (such as the Australian provisions relating to honest concurrent use), and there are some similarities between the two systems despite their obvious differences in priority of ownership. These similarities include:
Other than the difference in priority of ownership between the first to use and the first to file, the other key differences between a first to use and a first to file trade mark systems are:
Whilst each system has pros and cons it is important to note both systems have and will continue to exist for some time.
Further sometimes the line between the two systems becomes very blurred. For instance, a first to file system can be interpreted as a first to use system, if the act of filing an application is held to be constructive use.
In any event trade marks owners and users should be well advised as the application of the each system in each jurisdiction in which they conduct business or intend to conduct business.
WHITE SW COMPUTER LAW
© White SW Computer Law 2006
This article is a guide only and should not be used as a substitute for proper legal advice, readers should make their own enquiries and seek appropriate legal advice.