10. Circumstances that were an obstacle to the use of a trade mark

Date Published

In relation to satisfying the onus of showing why a trade mark has not been used during the three year period specified in an application for removal under section 92(4)(b), paragraph 100(3)(c) says that an application for removal is rebutted if:

the opponent has established that the trade mark was not used by its registered owner in relation to those goods and/or services during that period because of circumstances (whether affecting traders generally or only the registered owner of the trade mark) that were an obstacle to the use of the trade mark during that period.

This should be compared with subsection 23(4) of the Trade Marks Act 1955, where an application for removal for non-use could be defeated if the Registrar found that the failure to use the trade mark was shown to be due to "special circumstances in the trade" and not merely an intention not to use or to abandon the trade mark in relation to the goods or services in question.

Several court decisions have discussed what were, or were not, special circumstances and whether the circumstances which prevented use should apply to the registered proprietor personally or whether they should affect the whole of the particular trade. In the case of Aktiebolaget Manus v R.J. Fulwood and Bland Ltd (1949) 66 RPC 71, Lord Evershed rejected the proposition put by Sargent J in James Crean and Sons Ltd’s trade mark, 38 RPC 155, that in order to get within subsection 26(3) of the 1938 UK Act (UK) (the equivalent of subsection 23(4) of the 1955 Australian Act), the non-user must be due to circumstances affecting the whole of the trade and not to special circumstances attaching to and belonging to the trader personally. The point made by Lord Evershed was carried by Kitto J in Carl Zeiss Pty Ltd's Appn (1969) 122 CLR 1.

Lord Evershed, in "Manus", supra, used, as examples of what might be regarded as a "special circumstance", the destruction of a factory by fire or act of war, or the imposition of a prohibitive tariff. Implicit in Lord Evershed’s words was the notion that the victim of the circumstance should have been in no way to blame for its predicament. The circumstances should have been such that, by normal commercial standards, would have been completely beyond the ability of any trader to foresee or control, as distinct from one which might have, for example, arisen from the making of bad or unwise commercial judgements.

To examine the reasons why the 1995 Act has widened this particular defence against a removal action to include, "...circumstances (whether affecting traders generally or only the registered owner of the trade mark) that were an obstacle to the use of the trade mark...", as opposed to, simply, "...special circumstances in the trade...", it is necessary to consider the report of the Working Party to Review the Trade Marks Legislation of July 1992, Recommended Changes To The Australian Trade Marks Legislation. At page 35 of the Discussion Paper it says in relation to its consideration of "special circumstances":

In order to accommodate the somewhat wider terms of Article (19) [now 21] of the Uruguay Round draft agreement it is suggested that the reference to "special circumstances" in subsection 23(4) be amended to "circumstances which constitute an obstacle to the use of the trade mark, whether applicable to traders generally, or specific to the proprietor of the mark". For example, regulatory delay for pharmaceuticals, import restrictions or circumstances of war could constitute special circumstances affecting a specific trader rather than all traders in a particular field (emphasis added).

It adds that, "The Registrar’s authority to exercise discretion in determining these matters should be retained, as appropriate."

The Working Party’s recommended changes appear to go beyond Article 21 (previously 19) of the Draft Agreement On Trade-Related Aspects Of Intellectual Property Rights (TRIPS Agreement) which says on the topic that:

Circumstances arising independently of the will of the owner of the trademark which constitute an obstacle to the use of the trademark, such as import restrictions on or other government requirements for goods or services protected by the trademark, shall be recognised as valid reasons for non-use (emphasis added).

All of the above seems to indicate that, despite the change in wording of paragraph 100(3)(c) of the Trade Marks Act 1995 (compared, that is, to subsection 23(4) of the Trade Marks Act 1955) the circumstances which prevent use need to be of some serious weight (e.g. government intervention, acts of war or a similar external force). They may not, however, have been caused by the registered owner itself.  It will be necessary, however, to preclude claims of adverse circumstances such as unfavourable economic conditions, or a temporary lack of capital. This prospect notwithstanding, it appears that there is an intention to recognise legitimate and compelling reasons for non-use.

Drummond J made an interpretation of paragraph 100(3)(c) in Woolly Bull Enterprises Pty Ltd v Reynolds [2001] FCA 261; 51 IPR 149. In comparing the new wording with the provisions in section 23(4) he says, at para 46:

It can be accepted that the wording of s 100(3)(c) was deliberately adopted to give the sub-section a wider operation than the narrowly worded provision contained in s 23(4) of the 1955 Act. It is now not necessary to show unusual or abnormal, as opposed to normal or usual, trading conditions (a difficult concept to comprehend and apply) before s 100(3)(c) can operate. Ordinary incidents of the trade cycle commonly encountered by traders, as well as abnormal ones, are now within the provision. Further, it is clear that a circumstance of a trading nature that has an impact only on the registered owner can also now be relied on to justify non-use of the mark.

While Drummond J goes on to point out that the "circumstances" must arise from or comprise events external to the registered owner in the sense of not having been brought about by the voluntary act of the owner, he also notes that they must be circumstances of a trading nature. This precludes financial "impecuniosity" or illness of the registered owner as being circumstances which would excuse non-use for the purposes of paragraph 100(3)(c).