Unhappy little vegemites
Monday 21 September 2015
Amanda Scardamaglia, Swinburne University of Technology
This article first appeared in Inside Story.
Use it or lose it. Every trade mark lawyer and attorney knows this is true when it comes to trade mark registration. Or is it? Well-known Australian business identity Dick Smith has found himself embroiled in what has been described as an ill-willed dispute over a trade mark his company registered but failed to use. It’s a dispute that cast light on this very question and the integrity of the trade mark registration system.
It all started in 1999 when Smith applied to register the word OzEmite as a trade mark for use on his Vegemite alternative. The mark was accepted for registration in 2001, but Smith didn’t use it until 2012, when he presented the product to major Australian retailers. The intervening years, he said, had been spent on “development.”
Enter Roger Ramsey. With his daughter Elise, Ramsey runs a small family business in Adelaide that manufactures and sells Aussie Mite, a name they sought to register in 2001. Not surprisingly, Smith opposed the application at the time; although the marks are visually different, they are phonetically the same, they carry the same meaning and idea, and they are used on essentially the same product. In the end, Smith was unsuccessful and Ramsey’s application was approved and entered on the trade mark register in 2006.
Both products were born out of a desire to provide an alternative to the now US-owned Kraft Vegemite – and the race had been on to be first to market. Ramsey succeeded on that front, but that wasn’t the end of the matter.
Over the ensuing years, customers became confused about the origin of Ramsey’s Aussie Mite and mistakenly associated it with Dick Smith. More confusing was the fact that Smith’s product was not yet available for sale. Eventually, in June 2011, Ramsey applied to have Smith’s mark removed for non-use. Smith opposed the application and launched his OzEmite brand not long after, in 2012.
Under the Trade Marks Act, all trade mark owners are given an initial period of five years from the date of application to begin using their trade mark. After that, any mark that isn’t used within a three-year period may be exposed to a non-use application, which is what Smith received from the Ramseys.
The registrar of trade marks (or, if appealed, the court) must consider various factors. First, has the trade mark been used genuinely and commercially for a continuous three years during the period? Discussions with potential distributors, or the existence of letterheads, business cards, brochures or licensing agreements aren’t enough, alone, to establish that the mark has been in use.
If that threshold isn’t met, the mark can be removed from the register. But the registrar can also consider a second factor: whether any valid obstacle – external to the trade mark owner and of a trading nature – prevented it from using the mark during that three-year period. If there was an obstacle, the registrar can decide to dismiss the non-use application.
Even if no valid obstacles existed, the registrar may choose to leave a mark on the register if there are reasonable grounds to do so – if removing the mark could lead to confusion in the marketplace, for example. Above all, the registrar’s decision must reflect the public interest in maintaining an accurate register; in practice, though, private commercial interests can be taken into account and the interests of consumers and traders must be balanced and recognised.
The rationale for the non-use provision is clear. But there’s another reason for strong controls: compared to other intellectual property rights, trade mark rights are strong. While the initial term of trade mark protection is ten years (compared to twenty years for patents and five years for designs), trade marks can be renewed perpetually so long as they are still in use. Patent and design registrations can’t be extended beyond twenty-five years and ten years respectively.
This is the background to the hearing of the claim against Dick Smith which went before a delegate of the registrar of trade marks in February 2014. The Ramseys were present, but Smith had chosen not to brief lawyers or appear himself.
After hearing the evidence, the delegate found that while Smith had publicised his intention to use the mark, he hadn’t used it commercially during the relevant three-year period (or indeed in the preceding nine years). The onus was on Smith to rebut the allegation, the delegate observed, but he had failed to do so. Commercial use of the OzEmite mark had commenced only after Ramsey’s non-use application was initiated.
The delegate declined to exercise discretion and allow the mark to remain on the register. With the existence of the two trade marks having already caused sufficient confusion, the delegate determined that Smith’s OzEmite mark should be removed from the register.
It was at this point that the matter took an interesting turn. Despite holding back from the delegate’s hearing, Smith appealed the decision. The matter will now head to the Federal Court.
It remains to be seen whether Smith will regret his failure to engage with the non-use hearing. Rather than providing any written submissions or evidence, he simply wrote a letter to the registrar of trade marks declaring that the case lacked merit and that he had decided not to spend money on lawyers to defend it.
Smith’s about-face after the hearing is risky. The Ramseys argue that he will use his relative financial advantage to wear them down, but on the facts at hand it will be difficult for Smith to establish commercial use and, more critically, genuine commercial use.
As for the gold standard of trade mark law – use it or lose it – well that remains inviolable, at least for the time being. After all, regardless of the merits of this case, the integrity of the trade mark system demands it.