Dunlop Aircraft Tyres Limited v The Goodyear Tire & Rubber Company  FCA 1014 (11 July 2018)
The Goodyear Tire & Rubber Company (Goodyear USA) owns various registrations for DUNLOP and Flying D Logo trade marks and alleged Dunlop Aircraft Tyres Limited (Dunlop UK) and its authorised Australian entities (collectively Dunlop) infringed these registrations and that Dunlop’s conduct of selling aircraft tyres and providing aircraft tyre re-treading services under or by reference to these trade marks constituted misleading or deceptive conduct under the Australian Consumer Law and passing off.
Dunlop cross claimed seeking removal or cancellation of the relevant trade mark registrations owned by Goodyear USA insofar as they related to aircraft tyres and related goods and services on the grounds of non-use and invalidity. The relevant non-use period is that three year period from 24 June 2012 to 24 June 2015.
The parties also appealed from an earlier Registrar’s decision upholding Goodyear USA’s opposition to registration by Dunlop UK of trade mark applications filed on 23 January 2009 for the DUNLOP and the Flying D Logo trade marks for aircraft tyres and tubes in class 12 and aircraft tyre re-treading services in class 37. The Registrar’s decision is reported here
Dunlop’s cross claim was successful in restricting Goodyear USA’s trade mark registrations and, as a result, the infringement action failed. The actions under the Australian Consumer Law and passing off also failed. However, Dunlop UK’s appeal from the Registrar’s opposition decision failed and so it could not achieve trade mark registration.
The background is quite complex. Essentially, Australian sales of aircraft tyres bearing the DUNLOP and Flying D Logo trade marks commenced around 1925 and aircraft tyre re-treading services provided under these trade marks commenced in 1953. These trade marks were used by various Dunlop entities controlled by Ansell.
Ansell acquired the Goodyear Australia tyre business in 1980 and subsequently, in 1987, a partnership called South Pacific Tyres was formed between Pacific Dunlop Tyres Pty Ltd (a subsidiary of Ansell) and Goodyear Tyres Pty Ltd (a subsidiary of Goodyear USA). Around that time, Ansell ceased manufacturing aircraft tyres in Australia and imported these tyres from Goodyear UK. In 2006, Goodyear USA acquired Ansell’s interest in the partnership and the relevant Australian trade mark registrations were assigned from Ansell to Goodyear USA. The Australian new aircraft tyre manufacturing facility was closed at the end of 2008, while the Australian re-treading facility was closed in early 2009 and Goodyear Australia then shipped used aircraft tyres to Thailand for re-treading by Goodyear Thailand.
On 1 January 2012, Goodyear USA granted Goodyear Australia a non-exclusive licence to use the registered DUNLOP and Flying D Logo trade marks on and in connection with the manufacture, marketing and sale of products and services in Australia.
During 2008/2009 there were negotiations for Dunlop UK to obtain a licence to use the Australian registered DUNLOP and Flying D Logo trade marks owned by Goodyear USA, but the various Goodyear entities indicated they were not interested in licensing these trade marks. Dunlop UK subsequently filed the Australian trade mark applications.
In 2009, Dunlop UK established a business in China to distribute UK manufactured Dunlop branded aircraft tyres and operate a re-treading facility. In 2013, Aero Parts was appointed the Australian distributor for Dunlop UK with aircraft tyres sourced from this Chinese business. From April 2013 to March 2015, Dunlop UK continued to supply Dunlop branded aircraft tyres to Goodyear Australia. These tyres were first sent directly from the UK, then from the Chinese business and finally through Aero Parts. At the end of March 2015, Dunlop UK directed Aero Parts to not supply Goodyear Australia with Dunlop banded aircraft tyres and, since around mid-2015, Goodyear Australia has been unable to supply Dunlop branded aircraft tyres to its customers.
Even though the relevant Dunlop branded aircraft tyres sold in Australia by Goodyear Australia during the relevant non-use period (24 June 2012 to 24 June 2015) were imported from or through Dunlop UK, Nicholas J considered it was not appropriate to focus solely on the 1 January 2012 Licence Agreement between Goodyear USA and Goodyear Australia. While Goodyear USA could not have had control over the manufacturing or quality control standards of the relevant tyres sourced through Dunlop UK during this period, it was also relevant to have regard to the financial and managerial control exercised by Goodyear USA over Goodyear Australia’s business operations. The idea that Goodyear USA did not know and approve of Goodyear Australia’s importation and sale of aircraft tyres that Goodyear Australia continued to acquire through Dunlop UK was contrary to the objective facts. His Honour drew the inference that any use Goodyear Australia made of the relevant trade marks in the non-use period was a use by Goodyear Australia that Goodyear USA knew of and approved. Given that fact, and notwithstanding the terms of the Licence Agreement, his Honour was satisfied that Goodyear Australia’s use of these marks was under the control of Goodyear USA.
However, Nicholas J had greater difficulty with the issue as to whether the use by Goodyear Australia was trade mark use, namely that it distinguishes the goods of the registered owner and indicates a connection in the course of trade between the registered owner and the relevant goods. His Honour considered that, by importing and selling new Dunlop branded aircraft tyres, Goodyear Australia was using the DUNLOP and Flying D Logo marks as trade marks. However, different considerations applied to the re-treading service which were provided through Goodyear Thailand. His Honour took the view that the Dunlop/Flying D marks that appear on the re-treaded tyres are not used by Goodyear Australia, Goodyear Thailand or Goodyear USA to indicate any relevant trade connexion between any of those companies and the re-treading services provided by Goodyear Australia and Goodyear Thailand. Reliance was also placed on use of the following branding on invoices and dockets relating to the re-treading services:
However, Nicholas J considered this was use of a composite mark and not independent use of the DUNLOP word mark or the Flying D Logo mark. Further, use of this composite mark could not be relied upon to substantiate use of any of the registered DUNLOP and/or Flying D Logo marks with additions or alterations not substantially affecting their identity due to the presence of the Goodyear name.
Nicholas J then considered with Goodyear USA had made out a case for an exercise of discretion, but his Honour did not think it would be reasonable to not order the removal of the relevant registered marks in so far as they relate to aircraft tyre re-treading services.
With one exception, all of the registered DUNLOP and Flying D Logo trade marks were registered in Part A under the 1955 Act and taken to be valid unless one of the grounds specified in s234(2)(c), (d) or (e) is made out.
Dunlop UK contended that the original registrations were obtained by fraud and fell within the exception under s234(2)(c) because the statements as to Ansell’s intention to use were false, but Nicholas J did not agree with that contention.
Dunlop UK also relied on the s234(2)(e) exception and contended that, at the time of commencing the rectification proceedings, the relevant trade marks did not distinguish the goods or services of the registered owner from the goods or services of other persons. Nicholas J agreed that none of the registered marks distinguished aircraft tyres and related parts to which such marks were applied from the goods of Dunlop UK as at the date of the filing of the cross-claim. Similarly, none of the registered marks distinguished the re-treading, wholesaling or retailing services in so far as they relate to aircraft tyres from services provided by Dunlop UK. Hence, s 234 did not protect any of the registered marks against an order for rectification under s 88(1) of the Act.
Under s88, an application for rectification may be made on any of the grounds on which registration of the trade mark could have been opposed.
The evidence was to the effect that the market for aircraft tyres is highly specialised and that, for many years, purchasers of such tyres in Australia have known that the aircraft tyres supplied by Goodyear Australia by reference to the DUNLOP/Flying D Logo marks have been made in the United Kingdom by Dunlop UK or its predecessors in business and that Goodyear are re-sellers of these tyres.
Nicholas J agreed with Dunlop UK and was satisfied that, by the time the cross-claim was filed, Goodyear USA as registered owner no longer had any sufficient trade connexion with the aircraft tyres and related goods which Goodyear Australia supplied under and by reference to the registered marks. Consequently, use of the registered marks on aircraft tyres made by Goodyear Australia or Goodyear US that were not made by Dunlop UK would be likely to deceive or cause confusion and it follows that the use of each of the registered marks for goods in relation to aircraft tyres or their component parts is likely to deceive or cause confusion in the relevant sense.
With regard to re-treading services, the evidence was that when Goodyear Australia performs re-treading services on aircraft tyres that carry the DUNLOP/Flying D Logo marks, it affixes a Goodyear mark to the re-treaded tyre so as to indicate that the re-treading operations have been performed by Goodyear Australia. Goodyear Australia never applied the DUNLOP/Flying D Logo marks so as to indicate a connexion between Goodyear Australia or Goodyear US and the re-treading operations. Nicholas J considered that deception and confusion would almost certainly result if Goodyear were to apply either the DUNLOP/Flying D Logo marks to aircraft tyres re-treaded by Goodyear particularly if the aircraft tyre was one to which either of those marks had been applied at the time of their original manufacture. In those circumstances, application of the DUNLOP/Flying D Logo marks to used aircraft tyres would be likely to lead a person to whom re-treading services were provided to believe that the tyres had been re-treaded by or under the aegis of the original manufacturer of the tyre. Hence, for that reason, his Honour was satisfied that the use of the relevant registered mark by Goodyear would be likely to deceive and cause confusion.
With regard to wholesaling and retailing services, Nicholas J was satisfied that, applying the fair and normal use test, use of this mark by Goodyear is also likely to deceive or cause confusion. This would be likely to occur if Goodyear commenced using the DUNLOP/Flying D Logo marks in relation to retailing or wholesaling services in connection with the supply of aircraft tyres made by Goodyear.
Nicholas J then went on to consider whether Goodyear ought to be entitled to the exercise of any discretion and found that there were no circumstances justifying this.
His Honour considered the relevant registered DUNLOP/Flying D Logo marks have become deceptive as a result of the failure by Goodyear US to exercise any control over the quality of the Dunlop branded aircraft tyres supplied by Goodyear Australia. Rather, quality control was left to Dunlop UK. There was no evidence that Goodyear US or Goodyear Australia ever sought to exercise any quality control over the Dunlop branded aircraft tyres manufactured by Dunlop UK and supplied to Goodyear Australia. In the highly specialised market for aircraft tyres, it is unlikely that people interested in purchasing Dunlop branded aircraft tyres, would not know that those tyres are manufactured by Dunlop UK or, at least, by the owner or operator of the UK based business that manufactures those tyres. However, this demonstrates that the DUNLOP/Flying D Logo marks when (or if) used by Goodyear US or Goodyear Australia in relation to aircraft tyres or aircraft tyre re-treading services are failing to perform the essential function of indicating the origin of such goods and services. Further, there was no evidence to show that Goodyear would suffer any hardship or inconvenience in the event the orders under s 88(1) sought by Dunlop UK are made in relation to the relevant registered marks.
The effect of an order for rectification
Nicholas J concluded that “s 88(1) of the Act does not permit the Court to make an order that the Register be rectified with effect from a date any earlier than the date the order is made… Nevertheless, I do not agree that the trade mark owner whose mark is infringed is entitled to obtain relief for trade mark infringement once the Court orders that the trade mark be cancelled pursuant to s 88(1).”
In reaching this conclusion, his Honour observed that “an applicant in a proceeding seeking relief for trade mark infringement must establish (unless admitted) that he or she is the registered owner of the trade mark in question and that it has been infringed. A person who was once, but is no longer, the registered owner of the mark because the trade mark has been cancelled at or prior to the time of judgment in the proceeding has no entitlement to relief for trade mark infringement. This is not because the order for cancellation operates retrospectively, but because an order cancelling a trade mark registration deprives the registered owner of the standing that is an essential element of the statutory cause of action”. Further, “it would be a very strange result if a trade mark owner could obtain relief against a respondent who, for the purpose of making out a cross-claim seeking an order under s 88(1), established that the registered owner was never entitled to obtain registration of the mark in the first place”.
As discussed further below, Nicholas J found there was no infringement of the relevant trade mark registration as rectified.
Nicholas J found that, subject to rectification and any available defences, the registered DUNLOP and Flying D Logo trade marks owned by Goodyear USA were infringed as they covered the same, similar and closely related goods and services to the aircraft tyres and re-treading services provided by Dunlop UK and Aero Parts.
Although Dunlop UK and Aero Parts could not satisfy any of the defences to direct infringement under s120(1) based on use for the same goods and services covered by Goodyear USA’s registered marks, the order for rectification of those registered marks provided a complete answer to the infringement claims under s120(1).
His Honour considered that Dunlop UK and Aero Parts could avail themselves of the defence to indirect infringement under s120(2), where the use involves similar or closely related goods and services, because such use was not likely to deceive or cause confusion.
Misleading or Deceptive Conduct and Passing Off
Goodyear contended that use of the DUNLOP/Flying D Logo marks in relation to aircraft tyres and re-treading services in Australia by Dunlop UK and Aero Parts conveys a false representation that they and/or their products and services have a commercial association with Goodyear. However, Nicholas J rejected these claims.
Appeal from opposition proceedings before Registrar
The primary issue was whether Dunlop UK could rely on the honest concurrent use provision under s44(3)(a) to overcome the prior registered marks owned by Goodyear USA.
Nicholas J took the view that Dunlop UK’s use of the DUNLOP/Flying D Logo marks on aircraft tyres in Australia was honest use for the purposes of s 44(3) and his Honour was also satisfied that it is highly unlikely that any deception or confusion has occurred, or will occur in the future, arising out of the use by Dunlop UK of these marks on aircraft tyres manufactured by Dunlop UK or any other form of normal and fair use in which it may engage.
While his Honour accepted that Goodyear Australia has generated significant sales of Dunlop branded aircraft tyres and could potentially lose at least one significant customer, the real significance of the relevant registered marks to Goodyear Australia and Goodyear USA lies in their usefulness as tools with which to stop Dunlop UK entering the Australian market either directly or through another distributor whose interests are not so closely aligned with those of Goodyear US. Hence, his Honour was satisfied that it is appropriate to apply s 44(3)(a) of the Act to Dunlop UK’s trade mark applications for aircraft tyres.
Since Dunlop UK had not used the DUNLOP or Flying D Logo marks for re-treading service in Australia, it could not rely on honest concurrent use for those services. However, Nicholas J considered there is a strong public interest in ensuring that those marks when used in relation to aircraft tyre re-treading services, are only used by or under the aegis of the same entity that manufactures new aircraft tyres under and by reference to those trade marks. His Honour was also mindful that neither Goodyear USA nor Goodyear Australia have used the DUNLOP/Flying D Logo marks in relation to aircraft tyre re-treading services in Australia for many years and that Goodyear USA’s relevant marks are to be removed from the Register in so far as they cover any aircraft tyre re-treading services. Use by others at this stage (and at the priority date) would most likely cause deception and confusion. In the circumstances, his Honour considered it is appropriate to apply the “other circumstances” provision under s44(3)(b) of the Act to Dunlop UK’s trade mark applications for re-treading services.
Nonetheless, s44(3) does not provide an exception to s60 or s58 of the Act. Since Nicholas J found that Goodyear USA had not abandoned the relevant DUNLOP and Flying D Logo marks for aircraft tyres or related services in Australia, it retained a superior claim to ownership of these marks in Australia and, in reliance on s58, Goodyear USA’s oppositions must be upheld and Dunlop’s appeal against the Registrar’s decision must be dismissed.
Nicholas J rejected Goodyear USA’s oppositions based on grounds under s42(b) (contrary to law), s60 (reputation), s 62 (false representation) and s62A (bad faith).