Removal of trade marks for non-use – a bittersweet end for "LIME"

In brief 5 min read

A recent Federal Court decision has highlighted how different factors can impact the assessment of a non-use application under section 92(4) of the Trade Marks Act 1995 (Cth).¹

The Taxiprop decision confirms that removal of a trade mark is not as simple as 'use it or lose it' – rather, in determining whether a trade mark should be removed from the Register, the court will apply the standard of good faith use and may exercise its discretion not to remove the mark.

Key takeaways

• A mark will not be removed from the Register for non-use if the owner can show that its use is real and genuine and not a mere token. Use can still be genuine if it occurs following a non-use application.
• To rely on a domain name as use of a trade mark, the domain name should not lead to a website that promotes or offers the registered services under a different trade mark.
• When determining whether there has been authorised use of a trade mark by companies in a group, the 'unity of purpose' test may be applied. However, Taxiprop leaves open the question of how the test will apply to companies without a parent/subsidiary relationship or common board members. 

Who in your organisation needs to know about this?

The developments in this case will be relevant to anyone in your organisation seeking to maintain registered trade marks or who may seek the removal of a competitor's mark for non-use, particularly in circumstances where those trade marks have been licensed.

Background

A2B Australia Ltd (A2B) operated a LIME-branded taxi business from May 2010. By July 2017, however, it had rebranded each of these taxi networks to '13CABS'. A2B operates in New South Wales via its subsidiary, Combined Communications Network Pty Ltd (CCN). The relevant intellectual property is held by another subsidiary, Taxiprop Pty Ltd (Taxiprop).

Taxiprop licenced to the A2B group the registered trade mark LIME in Class 39 in relation to transport; packaging and storage of goods; travel arrangements; and taxi, hire car, bus, coach and limousine services, amongst other things.

Neutron Holdings Inc and Lime Network Pty Ltd (together, Neutron) launched a LIME-branded bicycle-share business in Australia. Neutron applied for removal of the LIME mark from the Register for non-use.

The decision

Removal of trade mark for non-use

In defending the removal application, Taxiprop sought to rely on its use of LIME in connection with its taxi and wheelchair-accessible taxi businesses. This included use on the vehicles, in its domain name and on its drivers' uniforms. Taxiprop admitted that the mark was only ever used in relation to taxi services.

Taxis

At the time of Neutron's non-use application, A2B had no LIME-branded taxis. Following Neutron's application, CCN rebranded two of its fleet of 9,000 taxis with LIME livery. These taxis operated over a considerable period of time, making over 15,000 trips and earning over $339,000 in revenue during the alleged non-use period. Even though this use was prompted by the non-use application, it was deemed to be real and genuine, and not a mere token. This was sufficient to establish good faith use of the mark in respect of taxi services. This case reaffirms that use of a mark following a non-use application can still be genuine use of that mark.

Neutron argued that the use by CNN was not authorised because there was no evidence that Taxiprop controlled or approved the use of the LIME livery. Applying the 'unity of purpose' test, Justice O'Callaghan rejected this argument and concluded that in circumstances of a shared common director and parent/subsidiary relationship, the natural and ordinary inference was that all parties were acting with a unity of purpose.

Justice O'Callaghan rejected Taxiprop's attempt to rely on the use of the LIME mark on wheelchair-accessible taxis and drivers' uniforms on the basis of insufficient supporting evidence.

Domain name

This case is a timely reminder that the context in which a domain name is used will be critical in determining if a mark is being used as a sign to identify online services available on the website. Justice O'Callaghan was not satisfied that Taxiprop's domain name 'www.limetaxis.com.au' was use of LIME as a trade mark. Users who navigated to that domain name were immediately redirected to a 13CABS-branded website. His Honour held that a reasonable member of the public would readily conclude that the LIME mark was no longer in use and that A2B's online services were instead identified by the 13CABS mark.

Court declines to exercise discretion not to remove for other services

Taxiprop argued that, notwithstanding the LIME mark was only used in respect of taxi services, the court should exercise its discretion under s101(3) of the Trade Marks Act 1995 not to remove the mark in respect of the other services. Justice O' Callaghan declined to exercise the discretion because:

• A2B's corporate strategy did not demonstrate any intention to use the mark with respect to electric bicycle or scooter services;
• consumers were unlikely to be confused by the use of LIME by A2B and Neutron because Taxiprop had attained only negligible residual reputation from its use of the mark; and
• the mark had been registered for 15 years without use in relation to services other than taxi services.

Infringement of the LIME Trade Mark

Taxiprop asserted that Neutron's use of its signs LIME, LIME-S, LIME-E and LIMEBIKE infringed its registered LIME mark under s120(2) of the Trade Marks Act 1995.

Neutron conceded that its signs LIME, LIME-S and LIME-E were substantially or deceptively similar to Taxiprop's mark, but argued that LIMEBIKE was not. Justice O'Callaghan was not convinced, concluding that there was little substantive difference between Neutron's other signs and LIMEBIKE, making it also deceptively similar to Taxiprop's mark. However, based on differences in the nature of the goods and services, target markets and trade channels used by Neutron and Taxiprop, Justice O'Callaghan was satisfied that Neutron's use of its signs did not infringe Taxiprop's mark.

Taxiprop was also unsuccessful in its claims for misleading or deceptive conduct and passing off against Neutron.

Actions you can take now

• Particularly where the relevant mark is licensed, carefully consider if your organisation's trade marks are being used in a manner sufficient or appropriate to support ongoing validity of registration.
• In circumstances where your organisation does not use the mark itself, you should consider if licensees are using the mark in good faith.