Section 52 opposition – s43, 58, 59, 60, and 62A grounds – s62Aestablished – registration refused. Costs awarded against applicant. - Section 55(1) of the Act provides: (1) Unless the proceedings are discontinued or dismissed, the Registrar must, at the end, decide: (a) to refuse to register the trade mark; or (b) to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application; having regard to the extent (if any) to which any ground on which the application was opposed has been established.- Jewelscan Pty Ltd, the Opponent, has established a ground of opposition under the Act. As a result the Applicant is unsuccessful in its trade mark application and I refuse to register trade mark application 1321700.

Jewelscan Pty Ltd v Phenix Jewellery Pty Ltd [2012] ATMO 85 (26 September 2012)

Last Updated: 11 October 2012

TRADE MARKS ACT 1995

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONS

Re: Opposition by Jewelscan Pty Ltd to registration of trade mark application 1321700(9,36,42,45) – JEWELSCAN, JEWELSCAN.COM.AU and DEVICE - filed in the name of Phenix Jewellery Pty Ltd.

DELEGATE:	Nicole Worth
REPRESENTATION:	Opponent: Greg Beaumont, Director of Jewelscan Pty Ltd. Applicant: Gillian Dempsey of Counsel, instructed by Shaun Creighton of Buchanan Law.
DECISION:	2012 ATMO 85 Section 52 opposition – s43, 58, 59, 60, and 62A grounds – s62Aestablished – registration refused. Costs awarded against applicant.

Background

1. On 21 September 2009 Phenix Jewellery Pty Ltd (‘the Applicant’) applied to register a trade mark, relevant details of which appear below:

Application No: 1321700
Priority Date: 21 September 2009
Goods/Services: Class 9: Computer programs for use in insurance; computer software.
Class 36: Administration of insurance claims; appraisals for insurance purposes; brokerage advisory services relating to insurance; consultancy services relating to insurance; estimates for insurance purposes; information services relating to insurance; insurance.
Class 42: Advisory services relating to computer software; design of computer software; development of computer software; development of computer software application solutions.
Class 45: Licensing of software
Trade Mark:

2. As it may not be visible on all devices by which this decision is reproduced or viewed, it is the domain name ‘jewelscan.com.au’ that appears below the word ‘Jewelscan’ in the trade mark.
3. The application was examined and subsequently advertised as accepted for possible registration on 1 April 2010. On 29 June 2010 Jewelscan Pty Ltd (‘the Opponent’) filed a notice of opposition to registration, nominating grounds under sections 43, 58, 59, 60 and 62A of the Trade Marks Act 1995 (‘the Act’). Evidence was filed and served by the parties, as detailed below, following which I heard the matter as the Registrar’s delegate in Canberra on 7 June 2012. Gregory Beaumont, the Managing Director of the Opponent, made submissions on its behalf. Submissions for the Applicant were made by Gillian Dempsey of Counsel, instructed by Shaun Creighton of Buchanan Law.

Evidence and submissions

4. Evidence was filed and served by the parties as follows:

Declarant	Position	Date	Exhibits
Evidence in support
Gregory William Beaumont ‘Beaumont 1’	Managing Director, Jewelscan Pty Ltd	27/9/10	4 to 39
Evidence in answer
Shaun William Creighton ‘Creighton’	Attorney with Buchanan Law.	24/1/11	SWC-1 to SWC-3
Evidence in reply
Gregory William Beaumont ‘Beaumont 2’	Managing Director, Jewelscan Pty Ltd	20/4/11	1, 2, 3, 5, 12, 14, 16, 18, 20, 31, 32, 34

5. As a preliminary matter I will address first the Applicant’s objection to what it claims is ‘tendency evidence’ in the Opponent’s Evidence in Reply.

Tendency Evidence

6. Broadly, tendency evidence is evidence which shows how a person has acted on an occasion other than that in question, used by an opposing party to demonstrate how the person acted on the subject occasion (hence the name ‘tendency evidence’, in that it is evidence showing a tendency or a disposition of a person to act in a certain way)[1]. Such evidence is not admissible before a court unless proper notice has been given of an intention to adduce it and the court thinks it will have significant probative value.
7. In paragraphs 8 to 17 of Beaumont 2 Mr. Beaumont describes how he had on another occasion established a separate company that provided services to the same clientele as that of the Applicant, whilst still a Managing Director of the Applicant and apparently with its full knowledge. The Applicant does not deny the statements nor provide its own explanation, but objects to this evidence on the grounds that:

...such evidence is not properly probative of permission nor ratification of Mr. Beaumont establishing and being a director of a company dealing with cognate services to Phenix [the Applicant] whilst at the same time remaining director of Phenix. Normally tendency evidence is only admissible in circumstances where particulars have been provided of the date, time, place and circumstances at or in which the conduct was alleged to have occurred and where the names of each person who saw, heard or otherwise perceived the conduct and the address of each person so named are provided to the party against whom the evidence is sought to be led [the Applicant refers here, by footnote, to Order 33 rule 18 and Form 146 of the Federal Court Rules (now repealed) which related to notice of intention to adduce tendency evidence].

8. Proceedings before the Registrar are different to proceedings before a court. As acknowledged by the Applicant the Registrar is not bound by the rules of evidence[2] but may inform herself of any matter before her in any way believed to be reasonably appropriate. The observation of Finkelstein J in Malibu Boats West Inc v Catanese[3] is relevant here:

The only question that arises in relation to the rejection of evidence is whether the decision maker acted with procedural propriety or fairness having regard to the task at hand. Generally speaking, it would not be proper or fair for an administrative decision-maker to ignore relevant material while discharging his or her statutory duty. As a result, when the Registrar is required to decide whether a mark qualifies for registration, the Registrar is not entitled to disregard evidence which bears upon that question.

9. I therefore do not intend to reject Mr. Beaumont’s statements out of hand. The Applicant does not specifically state why Mr. Beaumont’s statements are not properly probative, although I note the absence of the sorts of particulars required to adduce tendency evidence before a court. I note also that Mr. Beaumont does not submit documentary evidence which may support his statements, such as ASIC records or declaratory statements from those involved[4]. However there is no apparent reason to doubt his statements – significantly the Applicant does not refute them, and they are somewhat corroborated by references to the business elsewhere in the Opponent’s evidence[5]. Given these factors I shall treat that material as evidence in so far as it is relevant.

Chronology

10. A chronology of relevant events as described in the evidence is below. I preface it with an acknowledgement that at times the Opponent’s evidence as to some factual matters requires me to draw significant inferences or else it amounts to opinion only, or it is unsupported by documentation. It appears also that there are some gaps in the information presented. At the same time it is the only usable version of events before me. The Applicant’s evidence is scant: it neither refutes the Opponent’s statements nor provides its own version of events (with one exception, being the sending of a letter, described further in paragraph 18). Nor does it provide any clear evidence that it uses the trade mark itself in respect of the specified services. Rather it appears to rely largely on its submissions that:

“Under Australian law the ownership of intellectual property created by an employee in the course of employment vests with his or her employer”[6]
And
“There are two fiduciary duties: the ‘no conflict’ or loyalty rule and the ‘no profit rule’. The ‘no conflict’ rule required, in this instance, that Mr. Beaumont not act in conflict of his personal interest (by establishing the Opponent) and his duty to Phenix by virtue of his capacity as a director. The ‘no profit’ rule required that Mr. Beaumont, whilst director, should not take the business opportunity open to Phenix and appropriate that opportunity for himself by virtue of establishing the Opponent...
the nature of the fiduciary relationship between Mr. Beaumont and Phenix is such that the business opportunity, thereby, the mark, properly belonged to Phenix. Mr. Beaumont’s intentions as to whether there was a conflict of interest or not are entirely irrelevant to the characterisation of the Mark and the use thereof as Phenix’s mark. All of the evidence of use of the mark by the Opponent sought to be adduced by Mr. Beaumont can only be characterised as use of the mark by Phenix.”[7].

11. As to the chronology: Mr. Greg Beaumont, now the Managing Director of the Opponent, founded the Applicant in 2002. The Applicant is a supplier of jewellery to insurance companies, supplying replacement jewellery in the settlement of insurance claims. Mr. Beaumont was its Managing Director until 4 July 2007, after which he remained as a director until 31 December 2007.
12. During 2006 Mr. Beaumont claims he began to develop a model for a business which would deal with insurance claim validation (being the validation of the claimed value of lost or damaged jewellery items). The name given to the business was Jewelscan (which I will refer to as ‘the Jewelscan business’ in order to differentiate it from the Applicant). There is no evidence of precisely when, how or why the name was chosen.
13. The Jewelscan business was to trade separately from the Applicant. A separate business appears to have been necessary because the policy of the Applicant’s clientele (being insurance companies) was not to accept both jewellery supply services and claim validation services from the one entity, due to a perceived conflict of interest when those services come from the same source.
14. What Mr. Beaumont means by ‘develop’, in respect of his activities in 2006, is not explained. I note in that year he held a number of discussions regarding the model for the Jewelscan business. The first was in August 2006 with a representative of Insurance Australia Group (‘IAG’), at which the CEO of the Applicant was also present. The representative confirmed that IAG would not accept the proposed Jewelscan business if it was operated by the Applicant as it would be considered a conflict of interest. The other discussions were with a number of the Applicant’s directors[8], in September and October of 2006. The precise subject of the discussions is not clear, it is only declared by Mr. Beaumont that “the Board members agreed that [the Jewelscan business] would be a good business model to encourage...All agreed that it was something that [the Applicant] could never undertake itself”.
15. Mr. Beaumont further claims that at various times he discussed his intention to commit full time to the Jewelscan business and that the Applicant’s directors expressed support and wished him well in establishing it. He explains that his eventual resignation from, and sale of his shares in, the Applicant was required because the Jewelscan business would not be used by his target market of insurers should a connection with the Applicant remain.
16. According to Mr. Beaumont the Applicant had previously been involved in the establishment of a separate entity for the purpose of claims validation. He describes an occasion in 2004 where he and the Applicant’s Board of Directors agreed that another company would be established in order to tender for the provision of claims validation services, given the Applicant could only tender for jewellery supply services. Mr. Beaumont oversaw the commencement of the business, eventually incorporated as Claims Advisory Services Pty Ltd, and four months later handed it to one of the Applicant’s former shareholders to operate and expand[9]. A key point in Claims Advisory Services Pty Ltd securing a contract for claims validation services was that it had no financial, operational or management links with a supplier of jewellery. With this information Mr. Beaumont seeks to establish that the Applicant had a prior history of allowing its Manager Director to develop independent business models that dealt with insurance companies but did not compete with the Applicant’s core business.
17. During 2007, after his resignation as Managing Director but whilst still a director of the Applicant, Mr. Beaumont began to promote the Jewelscan business to insurers, referring to it as ‘Jewelscan’ in emails to them, in a Powerpoint® presentation, and presumably verbally in face to face meetings. It is not explicitly stated so, but I have presumed that such references to Jewelscan are what the Opponent intends to rely upon as its evidence of use of the trade mark Jewelscan (and, by extension, what the Applicant relies upon in claiming that Mr. Beaumont’s activities were on its behalf).
18. In respect of those activities which took place in 2007, the first is the purported sending of a letter. The Applicant exhibits what it says is a true copy of the letter, dated 8 May 2007 and alleges “the Opponent sent a letter on the Applicant’s letterhead to Mrs Lynn Parker of Vero Insurance providing an overview of [the Applicant’s] new valuation software named JEWELSCAN. At this time the Opponent was an employee, director and significant shareholder in the Applicant. Exhibit SWC-2 [of Creighton] contains a true representation of this letter clearly establishing ownership of the Mark by the Applicant”. Mr. Beaumont vigorously contests the authenticity of the document and claims he never sent it.
19. Although not strictly within the confines of a chronology, I make some comments necessary to clarify my stance, as decision maker, in relation to this letter. I note that it is typed upon the Applicant’s letterhead paper and that Mr. Beaumont’s name is given as the signatory, although the letter is unsigned (perhaps unsurprisingly, given it is a representation and not apparently the actual letter that was sent). Its contents are a description of the Jewelscan business that incorporates the software referred to above, under the heading “Re: Jewelscan”, and written apparently on behalf of the Applicant (for example, “...we will introduce a system where all specified jewellery items, both current and future policies, will be scanned to produce an exact image of the insured item...”). It does not make any specific proposal to Vero insurance, nor mention any specific plan to roll out the services. It may be the case, given it is simply a description of an intended business model, that it is a letter following up some other discussion held in respect of the Jewelscan business. Mr. Beaumont is identified as “Managing Director” at the bottom of the letter.
20. I note that the letter, and the statements regarding it being sent, are part of a sworn statutory declaration and therefore have the benefit of prima facie status as fact. Where that prima facie status is seriously challenged the onus may shift to the Applicant to establish it statements or exhibits further. Here, however, there is little to substantiate Mr. Beaumont’s challenge. He does not, for example, corroborate his story with the purported recipient of the letter. At the same time neither does the Applicant, and there is no explanation as to how the letter came into the possession of the Applicant’s attorney Mr. Creighton, nor who it was within the Applicant that made the claim the letter was sent.
21. In the end, although I approach the exhibit with caution I take it at face value. However I do not consider that it clearly establishes ownership of the trade mark by the Applicant. Given it contains no specific offer to trade I believe it plausible that at the time the letter was sent, the Applicant was merely investigating whether insurance companies would be amenable to it supplying claim validation services as well as jewellery supply services, and it did not yet have any fixed resolve to use the trade mark.
22. On 4 July 2007 Mr. Beaumont resigned as the Applicant’s Managing Director, but remained as a director. There appear to be a number of reasons for him remaining as director, including that the Applicant had requested he remain to provide guidance to its new management and that there were unsettled debts of the Applicant owed to Mr. Beaumont. According to Mr. Beaumont, once he resigned as Managing Director he had no managerial duties with the Applicant, but acted merely as a consultant to it.
23. Over the days of 25 to 27 July 2007 Mr. Beaumont pitched the Jewelscan business to several major insurance companies including Suncorp, IAG, Allianz and Vero, and in his follow up emails to them he made clear that there was no association with the Applicant. It is not clear whether the Applicant was aware at this time that Mr. Beaumont was promoting the Jewelscan business as one entirely separate to it.
24. On 27 July 2007 the Opponent was incorporated and Mr. Beaumont established the email address Jewelscan@optusnet.com.au. I note further that upon establishing the email address Mr. Beaumont immediately wrote to the General Manager of the Applicant and another unidentified party, expressing delight at setting up the new address and directing that all emails now be sent to it. The General Manager responded“Nice mate! Will do”[10].
25. During September and October of that year Mr. Beaumont continued to make preparations for the Jewelscan business including holding further meetings with potential clients, engaging a software developer and a marketing advisor, and purchasing specialised equipment.
26. It appears that in November 2007 several issues relevant to this dispute came to a head. Mr. Beaumont discovered that he could not register the domain name jewelscan.com.au because it had already been registered on 10 August 2007 by a company named Absoft Group Pty Ltd (‘Absoft’). Absoft is a provider of software services to the Applicant. An employee of Absoft (Ms Leanne Kemp) had formed a consortium with two of the Applicant’s management staff to provide needed funds to the Applicant in return for a 49.5% holding. This was approved at a meeting of the Applicant’s Board of Directors on 10 August 2007 and Ms Kemp, as part of the consortium, became a majority shareholder of the Applicant. That same day, unbeknownst to Mr. Beaumont (nor apparently to the other two members of the consortium) Ms Kemp allegedly registered the domain name in Absoft’s name.
27. That same month Mr. Beaumont lodged a complaint with auDA (.au Domain Administration) which was ultimately denied because “Absoft Pty Ltd provided extensive information relating to their business model which incorporates jewellery scanning services”[11]. On this basis auDA determined that the registration complied with their eligibility criteria for registrants of domain names, consequently they denied the complaint. The Applicant exhibits screen shots of the webpage at jewelscan.com.au which display the trade mark as applied for in order to support its claim of continuous use since 2006. The screen shots are, however, undated and there is no other substantiating material, such as from the Internet Archive’s Wayback MachineTM, which could verify the use of the applied-for trade mark upon the website from a particular date.
28. In December 2007 Mr. Beaumont obtained an assessment of the registrability of the Jewelscan trade mark[12], and discovered that a trade mark application featuring the word Jewelscan had been filed in the name of Absoft on 5 November 2007[13]. In response to these discoveries Mr. Beaumont contacted a number of the Applicant’s directors and management staff. He also apparently attempted to contact Ms Kemp via telephone (referred to in his emails to the Applicant) to no avail.
29. Responses from staff of the Applicant[14] indicate that at that time the Applicant denied any accountability in the registration of the domain name or the application for the trade mark. Emails from the General Manager of the Applicant, Mr. Ben Riley (also a member of the consortium with Ms Kemp), state

“...you clearly do not believe that I or Phenix have had nothing to do with the website. I have no problem in saying that I have had no contribution what so ever to the website”
and
“...there is nothing for us or Phenix to sort out with Leanne. Both [the other member of the consortium] and myself are focused on the business of Phenix...I cannot talk or be involved for you. This is an issue for you and her to resolve”.

30. Similarly a response from ‘the Chairman of Phenix’, Mr. Les Riley, states

“I can assure you that, as the Chairman of Phenix, that Phenix is not associated with the website or the trade mark. I believe, as Ben has advised, that you should direct any further correspondence to Leanne at Absoft as it seems obvious that she is the instigator”.

31. Further still, a letter from the Applicant’s solicitors, written in respect of the settlement of loans provided by Mr. Beaumont to the Applicant, states

“In relation to the matter concerning the registration of the domain name, we have taken instructions from Mr. Ben Riley, the Chief Executive Officer of Phenix Jewellery Pty Ltd. Mr Riley instructs us that he first learned of this event when Mr. Beaumont contacted him regarding the registration of the domain name www.jewelscan.com.au and his allegation that it had been registered by Ms Kemp. We are instructed that Ms Kemp is not a director of Phenix Jewellery Pty Ltd but her company, Absoft, is a service provider to the company. We are instructed that Ms Kemp has an interest in Phenix Jewellery Pty Ltd as a shareholder. We are instructed that if this action has been taken by Ms Kemp, that it was undertaken by her without any consultation or support from Phenix Jewellery Pty Ltd. In those circumstances we fail to see how our client can assist your client in the manner requested...As to the matter of the ownership of the domain name, our client sees that as a matter between Mr Beaumont and Ms Kemp solely.”

32. On 19 December 2007, in consultation with his legal and marketing advisors, Mr. Beaumont decided to re-brand his services as ‘Jewelsure’ so that he could proceed with the business, and to try to recover the Jewelscan trade mark and Australian domain name at a later date.
33. On 31 December 2007 Mr. Beaumont resigned as a director of the Applicant, following the resolution of disputed repayments of loans owed to Mr. Beaumont by the Applicant.
34. The Applicant filed the subject application on 21 September 2009, approximately five weeks after the Opponent successfully opposed the application filed in the name of Absoft. After the subject application was accepted, the Opponent filed its notice of opposition on 29 June 2010.
35. These appear to me to be the most relevant events that I discern in the evidence.

Submissions

36. At the core of submissions from both parties is the issue of contested ownership resulting from an alleged breach of fiduciary duty. Mr. Beaumont, for the Opponent, claims that despite the fact he was the Applicant’s Managing Director at the relevant time, he developed the Jewelscan business as an independent enterprise with the full knowledge and blessing of the Applicant’s Board of Directors. He declares it was never part of his duties as the Applicant’s Managing Director to develop new business ventures, and further claims that the Applicant’s directors and managers had a clear understanding that the Applicant could not engage in the services to be provided under the Jewelscan trade mark, and that those services were not part of the Applicant’s business model nor under future consideration. In support of his position he cites a number of cases in which the ownership of inventions was determined on the basis of the creator’s scope of employment: where the creation of an invention fell outside the scope of the creator’s employment, ownership did not vest in the employer.
37. In respect of the Applicant’s website Mr. Beaumont submits that it is merely a ‘front’ and that text displayed upon it has been ‘lifted’ from the American website www.jewelryappraisalservices.com. In support of this claim he exhibits pages from both websites which display identical wording[15]. He also exhibits emails[16] from an associate who had attempted to access services at the Applicant’s website, to no avail, and then made an enquiry via the website. The response received was to the effect that the Applicant’s services were currently only offered to insurance companies, and were not yet available to the general public.
38. Mr. Beaumont contends that it was not until 2009, when the Applicant was in negotiations with another major insurer (Suncorp), that it became interested in the Jewelscan trade mark, due to the possibility of it being allowed to provide claim validation services to Suncorp and its wish to quell competition from the Opponent.
39. It is the Applicant’s contention that it rightly owns the trade mark by virtue of the nature of the fiduciary relationship between Mr. Beaumont and the Applicant. It cites a number of cases in support of its position, in particular Phipps v Boardman[17] and Chan v Zacharia[18]; both cases dealing with property being determined to have been held on constructive trust for the plaintiff where the defendant was in breach of its fiduciary duty because full disclosure was not given and ratification was not provided. The Applicant also contends that ratification could not have been given to Mr. Beaumont because he did not disclose his intentions regarding the Jewelscan business to shareholders in a general meeting (extrapolated from Phipps v Boardman[19]), and that knowledge on the part of its General Manager was insufficient to constitute ratification of the alleged breach of fiduciary duty. (It does not address the knowledge other managers or directors had of Mr. Beaumont’s intentions).
40. The Applicant claims that any use of Jewelscan as a trade mark by Mr. Beaumont in promoting the Jewelscan business was actually use on its behalf, and it denies any inference that the Applicant gave permission to Mr. Beaumont to establish a cognate business nor to use the Jewelscan name. The Applicant does not explain the statements made by its staff that I have quoted in paragraphs 29, 30 and 31, but provides a response in the following terms: “There also appears to be an attempt to lead evidence to the effect the Phenix had abandoned the Mark and Mr. Beaumont and the Opponent were, by virtue of such alleged abandonment free to adopt the mark.”

Grounds and Onus

41. At the hearing the Opponent pursued all of its nominated grounds of opposition. The onus is upon the Opponent to establish at least one of those grounds on the balance of probabilities.[20] The time at which the ground of opposition must be established is the date of filing of the applications[21], being 21 September 2009.
42. I consider that the grounds under sections 58 and 62A of the Act are the most relevant. I will therefore commence my discussion with those grounds.

Section 58

43. Section 58 of the Act provides:

Applicant not owner of trade mark
58. The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.
Note: For applicant see section 6.

44. It is well established in law that, in order to succeed under this ground of opposition, the Opponent must establish three factors being the use of another trade mark:

i) that is either identical or substantially so to the applied-for trade mark[22],
ii) that has been used in relation to goods and services which are ‘the same kind of thing’ as that for which registration is sought[23], and
iii) which occurred prior to the application to register or any actual use of the applied-for trade mark, whichever is the earlier.[24]

45. It appears that the Opponent relies upon use of the word Jewelscan in plain text (such as in Mr. Beaumont’s Powerpoint® presentation and in his follow up emails) in establishing that the Applicant is not the owner of the applied-for trade mark. Whilst the word Jewelscan is a major element in the applied-for trade mark the question of substantial identity must be arrived at after comparing the trade marks:

...side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison.[25]

46. The applied-for mark contains, as well as the word Jewelscan, an image of a ring with a gemstone and the domain name ‘jewelscan.com.au’. It was stressed in Carnival Cruise Lines Inc. v Sitmar Cruises Ltd[26] that in order to establish a ground under section 58, the marks in question must at a minimum be substantially identical:

When the decision is understood in this way, it does not supply any general authority for the proposition that in the case of disputed claims to proprietorship under the present statute anything less than substantial identity will suffice...It requires a total impression of similarity to emerge from a comparison between the two marks. In a real sense a claim to proprietorship of the one extends to the other. But to go beyond this is, in my view, not possible.

47. In assessing the marks as a whole I consider the additional features of the applied-for trade mark preclude a finding of substantial identity. The image of a ring with a gemstone is a significant feature of the applied-for mark, as is the domain name (albeit arguably to a lesser degree). The use of the Jewelscan word trade mark is therefore not use of essentially the same trade mark as that applied for, and the ground fails at this hurdle.

Section 62A

48. Section 62A of the Act provides:

The registration of a trade mark may be opposed on the ground that the application was made in bad faith.

49. Bad faith for the purposes of section 62A must be assessed as at the date of filing the application and must relate to the making of the application. It has been found that whilst the seriousness of an allegation of bad faith “impugns the character of an individual or collective character of a business...”[27], the standard of proof remains as the balance of probabilities rather than that of beyond reasonable doubt[28].
50. Lord Hutton’s comments, in Harrisons Trade Mark[29], is of assistance in considering trade mark applications made in bad faith as contemplated by section 62A:

The words “bad faith” suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However, the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as bad faith by persons adopting proper standards.

51. Additionally, whilst an element of intentional dishonesty is present in most cases of bad faith, it has been found that the ‘reasonable man’ test may apply[30]:

In circumstances where an applicant claims that the application was not made in bad faith but, rather, as a result of its own ignorance or naivety, then the evidence would need to show that the circumstances were such that the ‘reasonable man’ standing in the shoes of the applicant, should be aware he ought not to apply for trade mark registration.

52. The UK case of William Leith New Century Marquees[31] is also relevant. It indicated that “bad faith will be established where someone has applied to register a mark which he has previously recognised as the property of another with whom that person has a course of dealing or some other relationship”.
53. These cases were taken into account in Fry Consulting Pty Ltd v Sports Warehouse Inc[32] where it was held that an application is made in bad faith if persons adopting proper standards would regard the decision to register as being in bad faith, or that reasonable and experienced persons in the field would view such conduct as falling short of acceptable commercial behavior.
54. The question before me therefore is whether persons adopting proper standards would regard the decision by the Applicant to apply for registration of the trade mark, in respect of goods and services relating to the validation of jewellery insurance claims, as being in bad faith or that reasonable and experienced persons would view the decision as falling short of acceptable commercial conduct.
55. I find that the Opponent’s evidence establishes a case that the application was made in bad faith, which the Applicant has not rebutted. In particular the Applicant does not explain its apparent acquiescence in Mr. Beaumont’s use of the name Jewelscan, as implied by the statements of its own staff which I have quoted in paragraphs 24, 29, 30 and 31. Nor does the Applicant explain why in 2007 its directors and management staff appeared to deny any accountability or contribution to the domain name registration or previous trade mark application (an unlikely response from a party with an intention to use the trade mark as its own), but then in 2009 applied for the trade mark’s registration in its own name.
56. Instead the Applicant contends that despite any knowledge its directors and managers may have had of Mr. Beaumont’s activities in respect of the Jewelscan business or trade mark, as a director himself Mr. Beaumont breached his fiduciary duty to the Applicant and ratification of his breach could only have been given by the Applicant’s shareholders at a general meeting[33].
57. I have considered the argument put forward by the Applicant, however I am not satisfied that at the time Mr. Beaumont began using the trade mark in respect of the Jewelscan business, he was doing so without the informed consent of the Applicant. Section 191 of the Corporations Act 2001 stipulates that a director of a company has a duty to notify the other directors of a material personal interest when conflict arises, and that the notice must give details of the nature and extent of the interest, the relation of the interest to the affairs of the company, and be given at a directors’ meeting as soon as practicable. I do not have before me evidence regarding the exact nature of the notice given by Mr. Beaumont to the Applicant’s directors, such as board meeting minutes or other written notification. However Mr. Beaumont declares that prior to his resignation as Managing Director in early July 2007 he discussed his intentions with the directors of the Applicant who expressed support for him in the venture. That, in combination with the responses from staff of the Applicant quoted in paragraphs 24, 29, 30 and 31 of my decision, satisfies me on the balance of probablities that Mr. Beaumont did give notice of his intentions to the Applicant’s directors and that they did, tacitly if not explicitly, agree to them.
58. Nor am I convinced that Mr. Beaumont was, in 2007, diverting business opportunities away from the Applicant and into his own interests. The establishment of the previously mentioned Claims Advisory Services Ltd indicates the Applicant itself believed, at least in 2004, that it was unable to operate in the claims validation market. Similarly there is nothing before me to show that in 2007, when Mr. Beaumont began promoting the Jewelscan business, the Applicant intended to enter that market itself. It appears that it was not until 2009, by which time the Applicant was well aware of Mr. Beaumont’s activities, that it formed an intention to use the trade mark once an opportunity to enter the market became available to it. In its written submissions the Applicant itself states:

Mr. Beaumont places considerable emphasis on the protocol of insurance companies around 2006-7 to only appoint providers of validation services with no links to suppliers of actual goods...This evidence explains a temporary halt on the use of the JEWELSCAN mark, but in no way amounts to an intention to abandon the mark.
On or before December 2009, insurance company policy had changed sufficiently that Phenix was able to offer services under the Mark.

59. I note also there is no evidence which explicitly demonstrates that the Applicant acknowledged the Jewelscan trade mark as the property of Mr. Beaumont. However its denial of any accountability in the registration of the domain name or in the previous application for the trade mark, and its wish to distance itself from those matters by referring Mr. Beaumont to Ms. Kemp alone, indicates that it did not at that time have an interest in the trade mark. Therefore whilst falling short of a recognition that the trade mark was the property of another person with whom it had a relationship, the Applicant does appear to have rejected ownership on its own behalf.
60. Whilst I acknowledge deficiencies in the Opponent’s evidence I consider that it contains sufficient material to raise serious doubts about the Applicant’s bona fides. Without explanation of the above matters or an alternative version of events from the Applicant, it appears, on the face of it, that the Applicant:
    • did not in 2007 have any fixed resolve to engage in claims validation services using Jewelscan as a trade mark;
    • knew Mr. Beaumont was establishing the Jewelscan business and using the name;
    • agreed to him doing so because at the time it could not offer those services itself;
    • deliberately distanced itself from the domain name and trade mark when it appeared a dispute was looming;
    • subsequently found it could enter the same market as Jewelscan;
    • then attempted to claim the trade mark by retrospectively asserting a breach in fiduciary duty.
61. Therefore whilst there is an element of doubt on both sides I do not consider that the reasonable man or persons adopting proper standards would have believed they could apply for the trade mark in good faith. I believe the Applicant ought to have known it should not have filed the subject application on 21 September 2009 and, on the balance of probabilities, I find that the ground of opposition under section 62A of the Act has been established.
62. As the Opponent has established one of its grounds of opposition, it is not necessary for me to discuss the remaining grounds under sections 43, 59 and 60 of the Act.

Decision and Costs

63. Section 55(1) of the Act provides:

(1) Unless the proceedings are discontinued or dismissed, the Registrar must, at the end, decide:
(a) to refuse to register the trade mark; or
(b) to register the trade mark (with or without conditions or limitations) in respect of the goods and/or services then specified in the application;
having regard to the extent (if any) to which any ground on which the application was opposed has been established.

64. Jewelscan Pty Ltd, the Opponent, has established a ground of opposition under the Act. As a result the Applicant is unsuccessful in its trade mark application and I refuse to register trade mark application 1321700.
65. Costs generally follow the event, and given there is no apparent reason to depart from this I award costs against the Applicant. The Opponent is entitled to recover the cost of the fee for filing its Notice of Opposition and the hearing fee. However given the Opponent has represented itself, and costs in proceedings before the Registrar are not generally for work which a party does on its own behalf[34], the Opponent would need to substantiate that it incurred the other costs listed in Schedule 8 in order to be able to claim them.

Nicole Worth
Hearing Officer
Trade Marks Hearings
26 September 2012