Australia: Curing trade mark ownership defects in Australia just became harder

IN BRIEF - PHAM GLOBAL V INSIGHT IMAGING DECISION SIGNALS RADICAL SHIFT IN TRADE MARK OWNERSHIP LAW

A recent decision of the full bench of the Federal Court of Australia in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 means that section 27 of the Trade Marks Act 1995 (Cth) is no longer a well settled law. The Court's decision means that it is essential that when filing a trade mark registration application, the initial applicant on the filing date must be the owner of the mark. Failure to ensure that this is the case may have severe consequences.

SECTION 27 OF TRADE MARKS ACT AND PREVIOUSLY EFFECTIVE PROCEDURAL STEPS TO CURE OWNERSHIP DEFECTS

In Australia, one of threshold requirements to be satisfied when applying for the registration of a trade mark in respect of goods and/or services is that the person claims to be the owner of the trade mark under section 27 of the Trade Marks Act.

This seemingly innocuous provision was thought to be well settled law, and was remarked upon by her Honour, Justice Davies, in Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd [2016] FCA 1406 (at [30]), "It is well settled law that the basis of a claim to ownership of a trade mark for the purposes of s 27(1)(a) of the Trade Marks Act depends on first use of the mark as a trade mark in Australia or, in the case of a mark that has never been used, the combined effect of "authorship" of the mark, an intention to use the mark as a trade mark and applying for registration...If there has been no prior use of the mark, the filing of an application for registration of a mark with the intention of using the mark as a trade mark founds a claim of ownership..."

Consistent with this authority, administrative practice has treated the subsequent assignment of a mark after acceptance in favour of the true owner an effective procedural step to cure a defect in ownership found in the original application. Jurisprudence has supported this view on the basis that the relevant requirements were satisfied, given that "... on and after the day on which the Registrar records the particulars of the assignment, the person to whom the trade mark has been assigned or transmitted is taken, for the purposes of the Trade Marks Act, to be the applicant for the registration of the trade mark. ..." (Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd at [70])

PHAM GLOBAL V INSIGHT CLINICAL IMAGING DECISION FOLLOWS COMMON LAW NEMO DAT QUOD NON HABET DOCTRINE

A unanimous full bench decision of the Federal Court of Australia recently handed down in Pham Global v Insight Clinical Imaging Pty Ltd has now displaced this previously held practice and found that correcting an ownership defect by assignment after application to be ineffective.

In an ominous warning, the full bench found that "...where the rights of the registered owner extend back to the filing date of the application, it is essential that the initial applicant on the filing date be the owner of the mark. Otherwise, the applicant cannot transfer ownership of the mark by an assignment in accordance with the legislative provisions on and from the filing date and can claim on becoming the registered owner an account of profits or damages for infringement when not in fact the owner of the mark." (Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd at [40])

This reasoning follows the common law Nemo dat quod non habet doctrine that states that the purchase of a possession from someone who has no ownership right to it also denies the purchaser any ownership title.

This decision had severe consequences for the appellant in this case, and was one of the reasons for the appellant's failure to secure registration of their trade mark.

OWNER LISTED IN ORIGINAL TRADE MARK REGISTRATION APPLICATION MUST BE TRUE OWNER AT TIME OF APPLICATION

This decision signals a radical shift in the law relating to the ownership of trade marks in Australia.

For those registered marks obtained after an assignment has purportedly corrected ownership on record, it may well be worth seeking legal advice as to the correct position in law, and what steps may be possible to remedy any defects. Refiling new trade mark applications in the correct name of the true owner may be an option to consider.

A similar situation may arise for group corporate structures where intellectual property assets are commonly held by a non-operating company, often by way of assignment. Equally, foreign subsidiaries seeking to own trade marks in Australia may face similar issues. Care in each case should be taken to ensure that the owner listed in the original trade mark registration application is in fact the true owner at that time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.