Federal Court decision provides guidance on several useful aspects for practitioners

In the recent Federal Court case of Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd ([2016] FCA 1406), Insight Radiology was unsuccessful in its appeal against the registrar’s decision refusing registration of its application for trademark registration of the following composite mark:

Insightradiology

Insight Clinical enjoyed a substantial victory in its claims that Insight Radiology’s conduct constituted trademark infringement, passing off and misleading or deceptive conduct under the Australian Consumer Law.

Insight Clinical has been operating a medical imaging business in Western Australia since 2008 and now has seven clinics. It has been using the word marks INSIGHT and INSIGHT CLINICAL IMAGING, as well as the following composite mark:

insight clinical imaging

Despite its use since 2008, Insight Clinical waited until October 2012 to register the INSIGHT CLINICAL IMAGING word mark and above composite mark for radiology services in Class 44 of the Nice Classification.

Prior to that, in December 2011, Mr Pham, the sole director of Insight Radiology, applied to register the INSIGHT RADIOLOGY composite mark in his own name for radiology services in Class 44. At that time, Mr Pham’s company was known as AKP Radiology Pty Ltd and he traded under the name of Leeton Diagnostic Imaging. His trademark application included a voluntary endorsement to the effect that any registration would not confer exclusive rights to use of the words ‘insight radiology’ in the state of Western Australia.

Use of the INSIGHT RADIOLOGY word mark and the INSIGHT RADIOLOGY composite mark commenced in approximately March 2012 in New South Wales and then Tasmania. Mr Pham was alerted to Insight Clinical’s trademark application being accepted based on prior continuous use by IP Australia in December 2012 and, subsequently, in May 2013, he received a letter of demand from Insight Clinical’s attorneys.

Despite this, Mr Pham continued trading and, in June 2013, changed his company name from AKP Radiology Pty Ltd to Insight Radiology Pty Ltd. In July 2013, after acceptance of his application to register the INSIGHT RADIOLOGY composite mark and during the opposition period, he assigned this trademark application to Insight Radiology Pty Ltd.

The Federal Court proceedings involved two aspects. First, an appeal by Insight Radiology against the registrar’s decision. Second, an action by notice of contention brought by Insight Clinical for trademark infringement, passing off and misleading or deceptive conduct under the Australian Consumer Law.

With regard to the opposition appeal, Davies J disagreed with the delegate’s finding on the Section 58 ownership ground that the respective composite marks were substantially identical. Her Honour considered that the differences between the respective marks gave a total impression of dissimilarity (although they were found to be deceptively similar).

Further, despite arguments to the contrary by Insight Clinical and the court finding that Mr Pham did not himself have the requisite intention to use the INSIGHT RADIOLOGY composite mark at the time of filing his trademark application, the subsequent assignment to Insight Radiology Pty Ltd was held to be valid. That company became the applicant under the Trademarks Act and did have the intention to use this mark which effectively cured Mr Pham’s lack of intention.

However, Davies J upheld the Section 60 reputation ground of opposition finding that, while Insight Clinical only conducted its business in Western Australia, it received referrals from interstate practitioners and the evidence demonstrated that the parties operated in a national industry. This was sufficient to establish the required reputation in its trademarks outside Western Australia at the relevant date and, because of this reputation, it followed that use of the INSIGHT RADIOLOGY composite mark would be likely to cause deception or confusion.

Given this finding, her Honour held that Insight Radiology’s geographical endorsement on its application did not overcome the Section 60 ground of opposition.

Davies J also found that Insight Radiology succeeded on the Section 42(b) contrary to law ground of opposition on the basis that use of the INSIGHT RADIOLOGY word and composite marks was in contravention of the Australian Consumer Law and constituted passing off.

With regard to the second aspect (infringement, Australian Consumer Law and passing off), as Insight Radiology acknowledged that its trademarks were deceptively similar to the registered marks of Insight Clinical, it had to try and rely on one of the defences to infringement.

Mr Pham failed in his bid to rely on the own name defence because it was found that he did not act in good faith when he changed the company name from AKP Radiology Consultants Pty Ltd to Insight Radiology Pty Ltd in June 2013, and continued to use the INSIGHT RADIOLOGY trademarks in the face of knowledge of the later-filed marks of Insight Clinical and the receipt of the letter of demand.

While her Honour had found in favour of Insight Clinical on the Section 60 ground of opposition, she also considered whether Insight Radiology would hypothetically have been able to establish a defence to infringement based on honest concurrent use of the INSIGHT RADIOLOGY word mark and composite mark. Given the actions of Mr Pham in the face of knowledge of use of the INSIGHT CLINICAL marks, her Honour questioned the commercial honesty of use by Insight Radiology and determined that discretion would not have been exercised in its favour.

Finally, Davies J briefly considered Insight Radiology’s position under the Australian Consumer Law and passing off. Having found for Insight Clinical under the Section 60 ground of opposition, her Honour had little difficulty in finding Insight Radiology’s conduct was misleading and deceptive and also constituted passing off. This was not mitigated by the different geographical locations where the parties have been conducting business because they operate in a national industry and Insight Radiology had not distinguished its services by the branding it adopted.

Additionally, her Honour also found Mr Pham liable as a joint tortfeasor and for aiding and abetting Insight Radiology’s wrongful use of the trademarks.

This decision has a number of useful aspects for practitioners, including its exploration of how a questionable claim to ownership of a trademark application may be cured by assignment, as well as the threshold level of reputation required for the Section 60 ground of opposition. It also serves as a timely reminder of the need for honesty of adoption of a trademark, both for the purposes of obtaining registration of the mark and as a defence to trademark infringement.

This article was first published in January 2017 in the World Trademark Review.