Simpsons Solicitors

OZEMITE: Use it or lose it?

October 10th 2016

Simpsons successfully assisted Dick Smith to retain his OZEMITE trade mark, in the face of a decision from the Trade Marks Office to remove the mark for non-use – an action brought by the owner of the AUSSIE MITE trade mark.

This recent battle, in the long running war between the sound-alike yeast spread brands, was an appeal to the Federal Court of Australia against the non-use decision.  Justice Katzmann allowed the appeal on the grounds that OZEMITE had in fact been used during the statutory non-use period, and, in any event, would have exercised the court’s discretion to leave OZEMITE on the register.  The judgment is available here.

Use it or lose it?

A common mantra in relation to trade mark protection is ‘use it, or lose it!’ – but how much use is necessary to safeguard a trade mark from removal?  Following this decision, there may now be scope for maintaining a registration in circumstances where use is very limited and before the availability of any product bearing the mark.

Dick Smith did not sell, or offer for sale, a single jar of OZEMITE during the 3-year non-use period, nor any in the 5-odd years preceding the non-use period.  It was argued that earlier High Court authority, E&J Gallo Winery v Lion Nathan Australia[1], required at the very least a sale of a product bearing the trade mark but Justice Katzmann found that actual sales of a product were not required.  This decision now stands as a post-Gallo precedent that a trade mark owner can defeat a non-use action even where no sales of a product bearing the mark have been made. However, the launch and development of OZEMITE involved a unique set of facts and caution should be exercised in relying on this decision in other circumstances.

Post-OZEMITE recommendations to trade mark owners

  • The best way to protect a trade mark registration is still to use the trade mark on the product or service for which it is registered as soon as commercially possible.
  • Before the launch of the product or service, retain complete records of development process, including any pre-launch marketing or publicity for the branded product or service – evidence of such development and use will be crucial to defeating a non-use claim.

The background

In 1999, Australian philanthropist, adventurer, businessman and ‘National Living Treasure’ Dick Smith AC announced his intention to launch an Australian spread to compete with Vegemite, then owned by US food giant, Kraft.  The spread, called OZEMITE, would be Australian-made and owned.  Dick Smith’s ability to gain media attention led to a blaze of publicity for OZEMITE at the time of the announcement. At various points during the following years, there were other bursts of publicity.

Shortly afterwards, another Australian businessman, Mr Ramsey, decided that he too would create an Australian-made and owned yeast spread and call it AUSSIEMITE.

Oppositions were filed against each other’s applications but ultimately both mark proceeded to registration.

Dick Smith continued to develop his OZEMITE product, but due to problems sourcing the right ingredients and then formulating to an acceptable taste, OZEMITE did not hit supermarket shelves until mid-2012, nearly 9 years after the mark was registered.

The non-use case

The Trade Marks Act provides for the removal of a trade mark for non-use if it has not been used for a continuous 3-year period.  The policy behind the provisions is to ensure that the register does not get clogged up with old marks, which are no longer used and which may prevent new marks being used or becoming registered.

In mid-2011 Mr Ramsey filed an application for removal of OZEMITE on the grounds of non-use.  The relevant 3-year non-use period was therefore from mid-2008 to mid-2011, in which period no OZEMITE spread had been sold or been available for sale.

Mr Ramsey succeeded before the trade marks office and OZEMITE was to be removed from the register unless a successful appeal was made to the Federal Court of Australia.

The appeal

The appeal was fought on 3 grounds:

  • That the OZEMITE trade mark had in fact been used in the non-use period;
  • That, if the OZEMITE trade mark had not been used, there were circumstances that were an obstacle to the use of the trade mark during the non-use period; and
  • That, even if the two above grounds were not satisfied, the court should exercise its discretion not to remove the OZEMITE trade mark.

A.  Use

The two instances of use of OZEMITE in evidence were:

  • Dick Smith’s appearance on the ABC’s Chaser programme during which he wore a t-shirt bearing the OZEMITE logo and surrounded by Dick Smith Foods products;
  • An interview on Adelaide radio during which Dick Smith referred to his commitment to bring out the OZEMITE product to compete with Vegemite.

It was not disputed that, at that time, no OZEMITE product was available to buy because, as Dick Smith said during the radio interview, he was still working on the product.

Her Honour reasoned that just one use of the OZEMITE trade mark in good faith in relation to the goods for which it is registered would be sufficient to resist removal, and use may be demonstrated by means other than a sale.  Relying on earlier Australian case law in which “preparatory steps coupled with an existing intention to offer or supply the goods in trade” could amount to “use”, Her Honour said that Gallo should not be read as excluding from “use as a trade mark” all steps leading up to a sale. The judge accepted that Dick Smith’s promotion of OZEMITE in each of the two instances of use in the evidence was “an expression of a genuine intent to use the mark for commercial purposes.” – sufficient to constitute “use” of the trade mark.

Having found “use” by Dick Smith, Her Honour did not strictly need to consider the other two arguments for the appeal, but she went on to do so in case the decision on use was found to be wrong.

B.   “Obstacle” to use

Dick Smith argued that there were two major obstacles to the use of OZEMITE during the relevant period:

  • Obtaining access to brewer’s yeast; and
  • Developing a product which had a similar taste and texture to Vegemite, as Dick Smith remembered from when he was a boy.

The judge accepted that Dick Smith was unable to access sufficient brewer’s yeast when he started on this project but that that difficulty was not obstacle during the relevant non-use period.

As to the difficulties developing the product with the right taste and texture, Her Honour found that such difficulties did not arise from events external to the registered owner or independent of its will.  It is worth noting that Her Honour cast some doubt on the correctness of the earlier authority on this point (Woolly Bull Enterprises Pty Ltd v Reynolds[2]), but ultimately did not express a concluded view as she was not required to.

C.  Discretion

Her Honour’s reasons on the discretion point are obita but do provide helpful guidance on the sorts of issues that can be taken into account.  The judge considered the following issues in exercising her discretion to keep OZEMITE on the register:

  • Delay – even though Dick Smith had not brought a product to market in the 9-odd years since registration of OZEMITE, there was credible explanation for much, if not all, of the delay. Whilst the barriers to product did not constitute an “obstacle” for the purposes of section 100(3)(c) of the Trade Marks Act 1995, they nonetheless contributed to the lengthy time it took to get product on shelves.
  • Abandonment – Dick Smith had a genuine intention to use OZEMITE at all relevant times during the development process. He had never abandoned the mark.
  • Commitment of resources – Dick Smith had invested a considerable amount of money over the years to get OZEMITE into production.
  • Residual reputation – the OZEMITE name enjoyed a reputation among some consumers more than a decade after the original announcement, which derived from the long period over which it was publicized. Dick Smith’s media presence was credited with keeping up consumer awareness of OZEMITE.
  • Substantial sales of OZEMITE after the non-use period.
  • Interests of trade mark owner favour retention of the mark, particularly given the substantial sales.
  • The conduct of Mr Ramsey. Her Honour found that Mr Ramsey chose his spread name (AUSSIE MITE) to take advantage of the inevitable association with OZEMITE and that he was motivated in part by spite in acting against the Dick Smith companies.
  • Repercussions if OZEMITE removed from register. Her Honour noted that Dick Smith would lose his defence to trade mark infringement if OZEMITE were removed from the register, and that there was every chance that goods could no longer be sold under the OZEMITE name.  There would be less likelihood of confusion if OZEMITE remained on the register, than if it were removed.

So both OZEMITE and AUSSIE MITE remain on the register and on supermarket shelves, leaving consumers to decide which is the tastier mite.

If you need advice on trade mark law or litigation, please contact Adam Simpson or Clare Young at Simpsons Solicitors.

 

[1] (2010) 241 CLR 144

[2] (2001) 107 FCR 166