How to establish ownership: Federal Court provides guidance in ANCHORAGE decision

The Full Court of the Federal Court has determined a case involving competing claims to ownership, in Australia, of the trade mark ANCHORAGE for financial services.

 

The Australian company, Anchorage Capital Partners Pty Ltd (Anchorage) was incorporated in August 2007.  It held a financial services licence allowing it to carry on a funds management business raising money to improve and later sell struggling businesses.

In May 2011, Anchorage obtained registration of ANCHORAGE, ANCHORAGE CAPITAL and ANCHORAGE CAPITAL PARTNERS (registered marks). Each was registered in class 36 for a range of financial services all of which were “targeted towards special situations and mismanaged or underperforming companies to help improve their financial performance”.

Anchorage Capital Group. LLC (the US company), which had used a number of ANCHORAGE names, incorporated an Australian subsidiary, ACPA Pty Ltd (ACPA) in 2011 to provide financial services in Australia.

In June 2011, ACPA opened for business in Sydney using a sign saying “ACPA a subsidiary of Anchorage Capital Group LLC”. In June 2013, Anchorage moved to the same office tower and had ACPA to remove its signage. Proceedings were then started for trade mark infringement. ACPA cross-claimed seeking to have the registered marks cancelled.

At first instance, the primary judge dismissed Anchorage’s application, finding that Anchorage was not the owner of ANCHORAGE or ANCHORAGE CAPITAL because the US company had used those, or substantially identical trade marks, in Australia in January 2007 i.e. before Anchorage’s first use. The judge ordered that the ANCHORAGE and ANCHORAGE CAPITAL registrations should be cancelled, although ANCHORAGE CAPITAL PARTNERS mark was permitted to remain on the Register.

On appeal, Anchorage contended that the primary judge should not have cancelled any of the registered marks and should have found infringement by the respondents. The respondents argued that the ANCHORAGE CAPITAL PARTNERS registration should also be cancelled.

The Court addressed a number of issues on appeal in determining the correctness of the primary judge’s findings.

Issue of ownership

The Court confirmed that in order to establish ownership, it is necessary to establish first use in Australia of the trade mark, or a substantially identical trade mark, in relation to the goods or services for which the trade mark is registered, or goods or services “of the same kind”. The Court confirmed previous decisions, stating that in order to establish ownership, it is not necessary that there be an actual dealing in Australia in the goods or services at the relevant date, provided it is possible to establish an offer to trade, or an existing intention (capable of being fulfilled) to supply the goods or services.

The Court noted that a name or sign may be used for multiple purposes and it is sufficient if one aspect of the use is to distinguish the trader’s goods or services from those provided by other traders, so as to indicate origin.  It confirmed that a mark may be used as a trade mark even if it simultaneously performs a number of functions.  The court also re-iterated the usual statement that whether or not there is use as a trade mark depends upon the context in which the use occurs.

To establish its use and ownership, the US company relied principally upon a slide presentation used in a pitch it had made in Australia.  This contained text stating that the materials provided were “for information and/or discussion purposes only and do not constitute an offer to sell or a solicitation of an offer to purchase an interest in any current or future Anchorage fund. Any such offer or solicitation shall be made only pursuant to the confidential private placement memorandum of the relevant fund …”.

In addition to claiming that this proved that there was no actual offer to trade services in Australia, Anchorage contended that the US company was not in a position to carry on financial services in Australia because it did not hold a suitable licence at the time of the presentation.  However, after discussing various regulatory requirements, the Court determined that it would have been possible for the US company to carry on the business of providing financial services in Australia either by obtaining a financial services licence or bringing itself within an exemption (which it subsequently did in 2009).

Notwithstanding the statement in the slides, the Court found that the presentation was made for the purposes of engaging in financial services, subject to an appropriate agreement being entered into.  It found that prominent use of ANCHORAGE CAPITAL GROUP and ANCHORAGE FUNDS in the slides amounted to trade mark use, because the use was intended to create a market for the US company’s services and indicated the US company’s willingness to supply those services to the Australian market.  It did not matter that the US company was not actually carrying on business in Australia at the time the trade marks were first used.

The Court also found that use of ANCHORAGE FUNDS in the slide presentation amounted to use of a trade mark that is substantially identical to ANCHORAGE, and that use of ANCHORAGE CAPITAL GROUP amounted to use of a trade mark that is substantially identical to ANCHORAGE CAPITAL.  The additional words FUNDS and GROUP were found not to substantially affect the identities of the trade marks.

The Court also found that use of ANCHORAGE CAPITAL amounted to use of a trade mark that is substantially identical to ANCHORAGE CAPITAL PARTNERS.  Consequently, it decided that the ANCHORAGE CAPITAL PARTNERS registration should also be cancelled.

The descriptions of goods in the registrations contained what was called a turnaround provision.  They concluded with the words “; all the aforementioned services targeted towards special situations in mismanaged or underperforming companies to help improve their financial performance”. In determining whether the respondent had used its trade mark in respect of those or the same kind of services, the Court stated that it was entitled to look beyond the wording of the US company’s presentation and found that the US company’s debt or equity investments in mismanaged or underperforming companies amounted to financial services of the same kind as those covered by the registered marks.

Discretion

The Court considered whether there is a discretion to be exercised in deciding whether a mark should be removed from the Register and decided that there is. However, it did not identify any error in the primary judge’s decision not to exercise that discretion.

Among other things, Anchorage claimed that due to its use of ANCHORAGE, use of that trade mark by any other business for similar services would be likely to mislead or deceive.  It also argued that the fact that its use had not been misleading should have been a reason for exercise of the discretion in its favour, irrespective of the technical issue of ownership.

None of Anchorage’s arguments were found to be persuasive and the Court commented that “the public interest in ensuring that no registration of a trade mark continues if it is found to be invalid is of considerable significance in this particular case”.  It also indicated that “if the registered trade marks were cancelled, both the appellant the respondents will be able to use their names and marks so long as they not do so in a misleading or deceptive manner or so as to engage in passing off”.

Infringement

Following the decision that the registered trade mark should be cancelled, determinations on whether use by ACPA and the US company was an infringement of Anchorage’s previous registrations was not strictly required, but the Court nevertheless expressed their views.

Regarding the defence available to a business that has used the name of its business in good faith, the Court note that the respondents’ good faith was not challenged.  It then expressed the view that use of ANCHORAGE CAPITAL GROUP would have been entitled to the defence because the first respondent’s name is Anchorage Capital Group. LLC.  However, it stated that this defence would not have extended to use of the abbreviations ANCHORAGE and ANCHORAGE CAPITAL.

A defence is also available when the Court is of the view that the defendant would obtain registration if they were to apply.  Consideration of this ground raised a previously undecided question, namely, the date at which that theoretical ‘entitlement’ should be assessed.

Arguably this could have been interpreted as the date that the action was brought, or the date of the hearing.  However, the Court concluded that it is to be assessed as at the date of the alleged infringing conduct. In the present case, this concerned conduct that occurred in the middle of 2011.

One consequence of this is that where a party may, by subsequent use, become entitled to secure registration as a consequence of honest and concurrent use, the defence of an entitlement to registration will not be available because the defendant would not have obtained registration if it had applied at the date of the first alleged infringing conduct.

Conclusion

The decision clarifies certain aspects of what is required to be established a claim of ownership, it provides additional guidance on when the “own name” defence will be available and also gives direction on how to assess the defence of a defendant’s entitlement to obtain their own registration.

This article by Shelston IP Principal, Sean McManis, first appeared in World Trademark Review, February 2018.