Anchorage Capital Partners Pty Limited v ACPA Pty Ltd  FCAFC 6 (2 February 2018)
This was a largely unsuccessful appeal by Anchorage Capital Partners Pty Limited (appellant); although it was partly successful on the issue of costs. There was also a successful cross-appeal by ACPA and its US parent company (respondents).
The decision of the primary judge is reported at here
In that decision, the applicant failed to make out its allegations that the respondent and its US parent, Anchorage Capital Group LLC infringed its registered trade mark rights, or engaged in misleading or deceptive conduct, by using names containing the word ANCHORAGE in the financial field.
The appellant is an Australian company which commenced operations in Sydney in 2007 and its business involves raising money from professional investors to acquire a controlling interest in struggling businesses, fix them up and then to on-sell those businesses at a profit. It obtained trade mark registrations for ANCHORAGE, ANCHORAGE CAPITAL and ANCHORAGE CAPITAL PARTNERS with effect from 26 May 2011 for “Acquisition for financial investment; administration of financial affairs; advisory services relating to financial investment; conducting of financial transactions; financial advisory services for companies; asset management; financial fund management; financial investment management services; financial transaction services; all the aforementioned services targeted towards special situations and mismanaged or underperforming companies to help improve their financial performance”.
The second respondent is a US company, Anchorage Capital Group LLC, which commenced operations in New York in June 2003 and its business also involves raising money from professional investors, but for the purpose of acquiring distressed debt or equity positions at a discount to their true value and then disposing of them at a profit when the true value is later realised. In June 2011, it set up the first respondent, ACPA Pty Limited as its Australian subsidiary.
The evidence also disclosed that the second respondent had, in early 2007 and prior to the appellant commencing business, made limited attempts to raise funds in Australia.
Complications arose when the appellant moved offices in June 2013 to the very same building as the first respondent which already had signage in the lobby showing ‘ACPA a subsidiary of Anchorage Capital Group LLC’. The first respondent subsequently agreed to remove this signage and this was done in September 2013.
The appellant alleged that the respondents infringed its registered trade marks through use of the names ANCHORAGE, ANCHORAGE CAPITAL and ANCHORAGE CAPITAL GROUP (the ‘US ANCHORAGE names’) and email addresses of the form @anchoragecap.com and acpa.anchoragecap.com (the ‘ANCHORAGE email addresses’) in the provision of financial services in Australia.
At first instance, Perram J dismissed the appellant’s claims and found that the appellant was not the owner of the ANCHORAGE and ANCHORAGE CAPITAL marks because the second respondent had used them in Australia in January 2007. The relevant use relied upon involved use of the US ANCHORAGE names in relation to funds management services in a slide presentation attached to emails sent to potential institutional investors. His Honour subsequently ordered cancellation of those two trade mark registrations, but not the registration for the ANCHORAGE CAPITAL PARTNERS mark. The primary judge also found that the respondents had not used any of the US ANCHORAGE names in relation to the services covered by the appellant’s trade mark registrations after their date of registration on 26 May 2011.
The appellant contended the primary judge should not have cancelled any of its registered trade marks and infringement should have been found. It also contended that the primary judge should not have ordered the appellant to pay any part of the respondents’ costs on an indemnity basis. There was no challenge to the findings of the primary judge’s rejection of the estoppel defence or rejection of the appellant’s allegations of passing off and misleading or deceptive conduct under the Australian Consumer Law.
The respondents contended, in a cross-appeal, that the primary judge should have also ordered cancellation of the ANCHORAGE CAPITAL PARTNERS mark and postulated a slightly different costs order.
This summary will not discuss the costs issues and will be confined to the trade mark aspects of the case.
On the issue as to whether the second respondent’s slide presentations in January 2007 could be relied upon to defeat the appellant’s claim to ownership of the ANCHORAGE and ANCHORAGE CAPITAL trade marks, there was a focus on whether the second respondent’s use was in relation to the same kind of services as those covered by the appellant’s registrations, particularly having regard to them being limited to “services targeted towards special situations and mismanaged or underperforming companies to help improve their financial performance” (the ‘turnaround proviso’).
The Full Court considered it was entitled to look at other materials in evidence and not just the slide presentation by itself for the purpose of determining what services were being offered to its recipients. These other materials made it clear the second respondent was, at the relevant time in 2007, engaged in the management of funds used to acquire investments that included debt or equity investments in special situations involving mismanaged or underperforming companies. Such services were the same kind as some of those services covered by the appellant’s trade mark registrations.
The appellant also contended that the second respondent did not intend to provide such services in Australia in 2007 because it did not have an Australian financial services licence as required under s911 of the Corporations Act. The Full Court did not have to decide whether the second respondent was carrying on a financial services business in Australia because, its activity would have been covered by an exemption which did not require a licence where the service is provided to wholesale clients only.
The appellant also argued that the slides relied upon did not show the second respondent had an existing intention at the relevant time in 2007 to offer to supply or supply relevant services in Australia, rather such activity could be characterised as mere preliminary negotiations and discussions. However, the Full Court rejected this and could not find error in the primary judge’s reasons. A finding of trade mark use may be open if the foreign supplier uses the mark to indicate a willingness to supply services conditionally or on terms to be agreed. Concepts derived from contract law are of little assistance.
The Full Court also agreed with the primary judge that the manner of use of ANCHORAGE and ANCHORAGE CAPITAL GROUP in the slide presentation was properly characterised as trade mark use and rejected the appellant’s submissions on this point.
On the respondents’ cross-appeal seeking cancellation of the ANCHORAGE CAPITAL PARTNERS mark, the Full Court was satisfied the slide presentations also included trade mark use by the second respondent of these words (seemingly in connection with the funds identified as Anchorage Capital Partners Funds). Further, the second respondent’s use of ANCHORAGE CAPITAL in the slide presentation involved use of a mark which was substantially identical with ANCHORAGE CAPITAL PARTNERS which defeated the appellant’s claim to ownership of that trade mark.
The Full Court then when on to consider whether the decision to cancel a registered trade mark under s88(1) of the Act involves a discretion and agreed with the appellant that it does, except in so far as that discretion is qualified by s89.
The Full Court did not find any error in the reasoning of the primary judge when considering discretion and confirmed that it was for the appellant to persuade his Honour that the discretion not to cancel should be exercised. The fact that the appellant had used its improperly registered trade marks without causing confusion is a relevant consideration in the exercise of discretion, but not determinative or to be given significant weight. There is a public interest in maintaining the purity of the Register and ensuring that trade mark registrations only be made in favour of applicants who are entitled to obtain them. Further, the respondents would be prejudiced in the conduct of its business if the appellant’s registrations remain.
Since there was no error by the primary judge, it did not become necessary for the Full Court to re-exercise discretion, but the Full Court indicated it would also have cancelled the appellant’s relevant trade mark registrations. The Court commented that “the public interest in ensuring that no registration of a trade mark continues if it is found to be invalid is of considerable significance in this particular case” and “if the registered marks are cancelled, both the appellant and the respondents will be able to use their names and marks so long as they not do so in a misleading or deceptive manner or so as to engage in passing off”.
Given the Full Court’s conclusion that the appellant’s registered marks should be cancelled, it was not necessary to consider infringement. However, the Full Court did provide some comments on this aspect.
The Full Court considered the primary judge had taken too narrow a view of what is required to establish infringement and was of the opinion that the respondents did use the US ANCHORAGE names as trade marks in relation to the registered services after the relevant date of the appellant’s registrations on 26 May 2011. There is still trade mark use if the relevant use is in or about the soliciting of a supply of services.
The Full Court then went on to provide comments as to whether the respondents could have availed themselves of any of the statutory defences to infringement.
Under the defence based on good faith use of a person’s name, the Full Court considered that the second respondent’s use of the name ANCHORAGE CAPITAL GROUP was within the scope of this defence, but use of the names ANCHORAGE and ANCHORAGE CAPITAL was not.
Under the defences that the person would be entitled to obtain registration of the same or similar mark as that infringed, the Full Court noted that they posit a hypothetical trade mark application by the respondent, but the relevant provisions do no provide any express indication as to the time at which the hypothetical application is taken to have been made. The Court expressed the opinion that the date this should be considered is the date of the alleged infringing conduct which, in this case, was around the middle of 2011. At that time, it was unlikely for the second respondent to obtain registration of any of the US ANCHORAGE names because it would have been unlikely for it to have successfully resisted an opposition under s60 by the appellant (based on its Australian reputation acquired through use of its trade marks and the second respondent’s use being likely to deceive or cause confusion having regard to that reputation).
Under the defence based on the respondent’s prior continuous use of the same or similar mark, the Full Court considered the second respondent would not have been entitled to this defence due to its lack of continuity of use. The relevant provision (s124) requires continuous use from a date before the date of registration of the appellant’s trade marks or any earlier use of those registered trade marks by the appellant. Here, the second respondent’s first use was in January 2007. The relevant date of the appellant’s trade mark registrations is 26 May 2011, but the appellant commenced operations in 2007. The Full Court referred to the relevant period commencing from a time before the appellant first used its registered marks to the date of the alleged infringements.
The Full Court did not discuss its findings arising from these defences in the context of the effective date of the order for cancellation of the appellant’s registered marks. While an order for removal for non – use takes effect from the date of the order and there is potentially a liability for infringement up until then, it may be inferred that an order for cancellation based on invalidity means that the relevant registration was wrongly registered in the first place (ab initio) and the registered owner is not entitled to relief. In Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd reported here Perram J, at paragraph 224, commented that “there is a debate as to whether the power to remove a mark from the register in s 88 can be utilised with retrospective effect” but it was not necessary to consider this because Clipsal Australia did not seek a retrospective removal of the CLIPSO mark from the register and infringement was considered “at the legal moment after the CLIPSO mark is removed from the register“.