Not quiet on the WESTON front – estate agency mark still valid despite rebranding
Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 4) [2016] FCA 138
Trade marks – non-use application – limited use following rebranding – website redirection and promotion of the fact of the rebranding sufficient – infringement – “own name” defence – whether good faith use of own name
Contracts – whether substantial rebranding by a franchisor a repudiation of franchise agreement
This “regrettable litigation” concerned competing claims to entitlement to use of the well-known “Roy Weston” brand in respect of real estate services in Western Australia. In 1957, the eponymous Mr Weston started using the mark in respect of his real estate business and, later, that of Roy Weston & Co (later Roy Weston Ltd). In 1983, Mr Weston’s company commenced franchising, such that use of the “Roy Weston” name became more widespread, through the franchisee network.
The respondent (RWN) was registered in March 1996. Its shareholders were Roy Weston Ltd and a Mr Taylor. It also operated a real estate business in Western Australia by reference to the “Roy Weston” name, but outside the Roy Weston Ltd franchise network. In March 1997, Mr Taylor and his wife bought out Roy Weston Ltd’s shares in RWN. RWN’s use of the “Roy Weston” name up to this time was asserted by RWN to be without any conditions. Shortly thereafter, however, RWN became a franchisee of Roy Weston Ltd, and in May 2002 it renewed its franchise agreement for another five years (2002 franchise agreement).
The parent company of the applicant (Harcourts WA) acquired the business of Roy Weston Ltd in January 2004, at which point Roy Weston Ltd was renamed Harcourts WA. By that stage, Roy Weston Pty Ltd (now Harcourts WA) was the proprietor of registered trade mark 921651 for ROY WESTON, registered with effect from 29 July 2002. Harcourts WA also registered the business name “Roy Weston”, and domain names incorporating the brand such as royweston.com.au.
In March 2006, Harcourts WA announced to its then 50-strong network of franchisees that it would be rebranding its network from “Roy Weston” to “Harcourts”. Some of the franchisees obtained legal advice to the effect that the rebranding amounted to a repudiation of their franchise agreements (although the advice did not go as far as to suggest that the franchisees themselves were entitled to register marks incorporating “Roy Weston”, and instead would lose the right to use that name). Around 20 franchisees left the network as a result of the proposed rebranding, including RWN.
On 9 January 2007, RWN applied for the mark “ROY WESTON NOMINESS THE TRUSTED NAME IN REAL ESTATE” (RWN mark). By that stage RWN also had obtained a variety of domain names based on the “Roy Weston” and “Roy Weston Nominees” brands. Soon after, Harcourts WA’s lawyers sent RWN various letters of demand asserting breach of the franchise agreement and trade mark infringement of Harcourts WA’s ROY WESTON mark. That correspondence extended over a period of some 18 months. During that time, RWN did not stop using the “Roy Weston” brand and instead continued to use the brand in its domain names, advertising, signage and stationery.
In parallel, the rebranding from “Roy Weston” to “Harcourts” was effected around March and April 2007. From that time, Harcourts WA’s position in the proceeding was that it nevertheless continued to make use of the ROY WESTON mark and continued to be the rightful owner of the “Roy Weston” brand and any reputation therein. For example, it introduced the “Roy Weston Medal” and set up the “Roy Weston Medallist ‘Wall of Fame'” in the reception of its main office. It also made reference to the “Roy Weston” brand (although mainly in a historical sense) in presentations to potential franchisees and in internal promotional publications. The royweston.com.au domain name and other, similar domain names remained active, but featured banner advertisements announcing the rebranding or diverted visitors to Harcourts WA’s group website. A White Pages entry also was maintained in the 2008/2009 edition distributed in October 2008, again so as to redirect customers to the “Harcourts” listing.
During the period in which Harcourts WA’s then solicitors were sending letters of demand, RWN was having trouble getting the RWN mark past the Examiner (unsurprising, given Harcourts WA’s existing ROY WESTON mark). On 12 February 2009, however, Mr Taylor filed a statutory declaration attesting to what was said to be RWN’s honest concurrent use of the “Roy Weston” name (described as the “substantive part” of the RWN mark). Among other things, Mr Taylor attested that around March 2007, Harcourts WA’s then CEO (a Mr Kempton) had “informed [him] that Roy Weston Pty Ltd would not stop [him] trading under the name Roy Weston Nominees“, and that around the same time Harcourts WA ceased use of the “Roy Weston” name. He also attested to RWN’s use of the name from March 1996 up to the date of his statutory declaration (that is, for the period before, during and after RWN’s being a franchisee). That evidence was sufficient to enable the RWN mark to proceed to registration, without any formal opposition from Harcourts WA.
Following that success, RWN registered ROY WESTON REAL ESTATE with effect on 10 December 2009 (again, it seems, without opposition from Harcourts WA). As with RWN’s other mark, RWN secured registration on the strength of a statutory declaration that attested to, among other things, an assurance by Mr Kempton that RWN could trade using the “Roy Weston” name. RWN also registered various business names and domain names, such as royweston.net.au.
RWN then went on the offensive. On 30 March 2011, it sought cancellation of Harcourts WA’s “Roy Weston Real Estate” business name. Despite being afforded the opportunity to submit evidence of use of that name, Harcourts WA failed to do so, and on 10 July 2011 that business name was cancelled (and re-registered soon after in the name of RWN). Soon after, RWN then applied for removal of Harcourts WA’s ROY WESTON mark on the ground of non-use. Harcourts WA opposed RWN’s removal application in September 2011.
That same month, Harcourts WA’s new solicitors sent a further letter of demand alleging trade mark infringement, passing off and misleading and deceptive conduct, and seeking undertakings, cancellation of RWN’s various “Roy Weston” marks and names, and delivery up of relevant promotional and similar material. RWN responded by refusing to give the undertakings sought, and repeating statements to the effect that RWN was an honest concurrent user of the “Roy Weston” name and/or Harcourts WA had acquiesced to RWN’s use of the same and authorised registration of RWN’s mark, and that Harcourts WA in any event was not entitled to assert rights in respect of the brand as it had effectively ceased using or defending it.
The positions set out in that correspondence essentially formed the framework of the claims and defences in the proceeding. Harcourts WA succeeded on most – but not all – of its claims against RWN, for the following reasons.
On the threshold issue of whether Harcourts WA had established good faith use of the ROY WESTON mark in the three years preceding June 2011 so as to defeat RWN’s allegations of non-use, McKerracher J rejected RWN’s suggestion that by rebranding Harcourts WA had engaged in a “scorched earth policy” with respect of the ROY WESTON mark. His Honour considered that the mark had been used to distinguish Harcourts WA’s goods or services from those of other persons. Extensive use was not required. The maintenance of the “Roy Weston” websites, even if done only to feature a banner advertisement for, or redirection to, a more current website, was sufficient use. A customer visiting those websites would not conclude that the “Roy Weston” business was no more; rather visitors would conclude that Harcourt WA’s business now includes that business. Similar reasoning was applied to Harcourts WA’s maintenance of a White Page entry (also bearing in mind that in that case, “Roy Weston” was accompanied by the ® symbol). An alternative claim by RWN that Harcourts WA had “abandoned” the ROY WESTON mark inevitably failed, as in his Honour’s words, “abandonment requires more than proof of slightness of use, or even non-use“.
In contrast, the “Roy Weston Medal” was not held to be use as a trade mark, however; as his Honour observed, promoting a “medal in commemoration of a revered identity does not mean that you are trading as that revered identity“. Nor was the “Roy Weston Wall of Fame” sufficiently prominent to the public to amount to trade mark use.
His Honour also held that if he were wrong on the non-use issue, he would be inclined to exercise the discretion under section 101(3) of the Act so as to refuse RWN’s removal application, given the over 50 years of use of the name and the “clear chain of ownership of the trade mark” from Mr Weston through to Harcourts WA.
Having defended its mark, Harcourts WA then succeeded in its trade mark infringement claim. RWN’s marks “obviously” and “undoubtedly” were deceptively similar to the ROY WESTON mark. Passing off and misleading and deceptive conduct also were made out. Notably, in promoting the “Roy Weston” brand on its websites and other material, RWN directly invoked the longstanding reputation of the “Roy Weston” business, the very same business acquired by Harcourts WA. Harcourts WA’s rebranding (or even abandonment or non-use) did not afford a defence.
Nor was his Honour satisfied that RWN could avail itself of the “own name” defence under section 122(1)(a)(i). Although Mr Taylor might genuinely have considered he was entitled to use the “Roy Weston” name once he acquired all the shares in RWN from Mr Weston (Harcourts WA’s letters of demand aside), the defence only extends to use of the name “Roy Weston Nominees”. RWN’s infringing conduct went well beyond use of its own name so, for example, “Roy Weston” or “Roy Weston Real Estate” could not be characterised as a permitted abbreviation of “Roy Weston Nominees”. And although his Honour did not find bad faith on the part of RWN, he observed that a “misapprehension of rights based on selective viewing of the effect of either a franchise agreement, the effect of a company name or advice in relation thereto may deprive a registrant of the good faith defence“. The authors note that in other cases appellations such as Pty Ltd to a name have been ignored for the purposes of the own name defence and it seems to us that the word “Nominees” might have fallen into the same category.
Harcourts WA’s own claims for revocation of RWN’s marks were successful, on most of the grounds invoked through section 88 of the Act. That is: RWN’s applications were “contrary to law” in the sense of being likely to mislead or deceive in contravention of the Australian Consumer Law (section 42(b)); RWN was not the owner of the marks (section 58); and notably, the RWN marks were accepted for registration on the basis of false evidence or representations (section 62(b)). On the latter point, his Honour held that the content of Mr Taylor’s statutory declarations was not correct, and it was unlikely that Mr Taylor thought that it might have been. Harcourts WA did not succeed, however, under section 60 (discussed below) or section 62A (application made in bad faith).
RWN failed to satisfy the Court that it had generated concurrent goodwill in the “Roy Weston” name prior to it becoming a franchisee, or that it otherwise had any basis to assert ownership in the brand that might save its registered marks. There was no evidence of assignment to RWN, or acquisition of ownership. The authors also note that RWN’s pre-franchise use of the brand almost certainly would have been considered to have occurred under the auspices of an implied licence from Roy Weston Ltd, although the point does not appear to have been raised in the proceeding. Further, the terms of the 2002 franchise agreement made clear that by entering into that agreement, RWN acknowledged Harcourts WA’s ownership of the “Roy Weston” indicia.
RWN’s cross-claim for removal under various sections of the Act was not developed at length before the Court and ultimately was unsuccessful. For example, his Honour held that RWN’s reliance on section 42 failed, because it was the conduct of RWN that was likely to mislead or deceive, rather than that of Harcourts WA.
The question of whether the 2002 franchise agreement had been repudiated by Harcourts WA, and that repudiation accepted by RWN, occupied some attention in the proceeding. His Honour concluded that Harcourts WA’s conduct in seeking to impose qualitatively new branding on the franchise network was a repudiation of the franchise agreement; the “Roy Weston” indicia “was the entire substratum of the Agreement“. Nothing turned on the issue, however, as the intellectual property obligations in the agreement survived its termination. If anything, RWN had breached those obligations by continuing to use the “Roy Weston” brand after the agreement ended.
Although his Honour was satisfied that Harcourts WA had used the ROY WESTON mark enough to defeat the non-use claim, that same use was insufficient to make out Harcourts WA’s claim for the purposes of revocation of RWN’s marks that the use of those marks was likely to cause confusion (for the purposes of section 60).
Self-evidently, the case contains numerous lessons for rights-holders and those who acquire trade mark rights through the acquisition of an existing business. In addition to the matters set out above, the authors also note the following points.
First, his Honour accepted RWN’s submission that use of the “Wayback Machine” – a common tool used by practitioners in demonstrating how specific websites looked at earlier points in time – as a means of proving past online conduct “could be unreliable where the archived records are incomplete“. In this case Harcourts WA was saved by the existence of corroborating evidence as to what occurred at the relevant times, but rights-holders are well-advised to maintain records of the appearance of their websites from time to time, and before any major changes are made.
Secondly, RWN also used the litigation as an opportunity to attack Harcourts WA’s failure to use another registered mark, THE HOUSE SOLD WORD IN REAL ESTATE. Harcourts WA led no evidence of use of that mark, and accordingly RWN’s removal application was successful to that extent. As at the date of writing, it remains to be seen whether this limited success will be reflected in the disposition of costs.
Thirdly, in the authors’ respectful view, much of the litigation could have been avoided if Harcourts WA had been clearer with its franchisees as to any continued use of the “Roy Weston” brand following the rebranding, or even if it had followed through earlier with its threats to litigate following its repeated letters of demand to RWN over the course of some four years. Somewhat ominously for Harcourts WA, his Honour observed that Harcourts WA had delayed pursuing its rights, and that it was not apparent that it had suffered loss or damage by reason of RWN’s conduct. Again, it remains to be seen whether this translates into costs consequences for either party or the ultimate relief that may be available to Harcourts WA.
