Karoun v Karoun: use of mark and obstacles to use reviewed

The Australian Trademarks Office decision of Karoun Dairies SAL v Karoun Dairies Inc ([2013] ATMO 28, 13th May 2013) has confirmed what will not amount to use and what will not amount to a relevant obstacle to use, in the context of a removal action.

The applicant for removal was Karoun Dairies Inc. In June 2009 it applied for the removal of Australian Trademark Registration 1000910, for the word mark KAROUN, covering various dairy foods and other foods in Class 29.

The opponent for removal (the registered owner) was Karoun Dairies SAL. The opponent was a Lebanese business, formed in the 1930s, which produced a range of Lebanese dairy goods. It incorporated in 1972 and from that date sold KAROUN-branded dairy products in Lebanon and other countries (but not in Australia). In 2006, due to political instability in Lebanon, its production and business activities halted for a time.

In the opposition, the opponent sought to establish:

• Use in the relevant period.
• A relevant obstacle to use during the relevant period.

Asserted use
In support of its submission that there was use in the relevant period, the opponent submitted the declaration of its chief executive officer and chairman, Ara Baghdassarian.

Baghdassarian's declaration stated that the opponent had visited Australia in 2004 with the intention of selecting an Australian distributor for its KAROUN-branded products. However, given the political landscape of Lebanon at the time, his plans to locate documentation for the potential distributors had been "seriously hampered".

The opponent also relied on what it termed a "trade enquiry" in September 2006 via its website, allegedly from Lion Nathan. The email was from Caroline Habak, who had made the following email inquiry: "Hi, I would like to know if you have a distributor of your products in Australia, and if not do you export to Australia? Thank you Carol."

The hearings officer indicated that while a single good-faith use of the trademark on the goods during the relevant period may be sufficient to rebut a removal application, the facts here showed no convincing proof. Further, the hearings officer clarified that Habak's enquiry appeared to be simply a query from a member of the public who happened to be working at Lion Nathan, and could not be seen to be a trade enquiry by Lion Nathan itself.

The hearings officer stated:

"[T]here is no mention of the Trade Mark or to the relevant products. There is no better or further evidence surrounding the email and certainly no evidence that it resulted in the sale of any Goods. In short, [the exhibit] does not constitute use in the relevant period."

The hearings officer’s finding is reasonable. Presumably, even mention of the KAROUN trademark in Habak’s email would have been insufficient in the absence of a response from the opponent about the availability of KAROUN products in Australia at the time, or at the very least about plans to make KAROUN products available in Australia in the near future. 

Asserted obstacles to use
The opponent argued that its plans to export KAROUN dairy products to Australia were blocked and then delayed because of circumstances outside of its control (ie, political turmoil in Lebanon during the relevant period). 

The opponent pointed to US legal proceedings between the applicant and Baghdassarian’s Canadian company, stating that this was an obstacle to use of the mark in Australia.

The hearings officer concluded that even if there was indirect evidence of the trial taking up the time and energy of the opponent's employees, this fell short of a real obstacle to use. The hearings officer referred to Austin Nichols & Company Inc v Lodestar Anstalt (No 1) (2012 FCR 490), in which Justice Cowdroy confirmed that involvement in a worldwide litigation did not excuse non-use in the relevant period.

As to the political turmoil in Lebanon, the hearings officer referred to books about the Arab-Israeli conflict, in which the 2006 hostilities in Lebanon were described as short-lived. 

The applicant's evidence suggested that the turmoil ended in August 2006. Consequently, there was no plausible reason why the short-lived conflict prevented use for a further two years and eight months. Further, Baghdassarian's Canadian business continued during the relevant period, suggesting there was no real reason for failure to resume business or distribution plans in Australia at that time. The applicant stated that “there is nothing in the evidence to suggest that what Mr Ara Baghdassarian did in Canada could not have been done in Australia”.

The hearings officer agreed. He stated that there was no real link between the 2006 Lebanon turmoil and non-use in Australia. The opponent had not discharged its onus of proof and had not tended evidence to excuse the non-use within the meaning of the act.

Comment
The opponent has since refiled an application for its KAROUN word mark, but the applicant's KAROUN word mark application (currently pending) has priority. Whether the applicant will now attempt to stop the opponent from entering the market remains to be seen.

This case makes it clear that a long-term intent to use is not enough to protect a registration from removal on the basis of non-use.

Companies with marketing plans for a potential brand in Australia should be vigilant about their trademark registrations. They should consider finalising and executing marketing and sales plans towards the end of the non-use grace period, or at least refiling their marks toward the end of that period, with a view to preserving their trademark rights.