Non-use of Registered Trade Marks to become actionable after 3 years from initial registration

IP Australia has released draft legislation for public comment that includes proposed changes to the Trade Marks Act. Notably, it proposes to change the initial period which owners of a registered trade mark are protected from an action for de-registration of a mark for non-use.

The proposed change, which is unlikely to be altered before becoming law some time in 2018, is intended to align Australia’s non-use provisions with international standards. Also, the amendment is intended to help address concerns that many trade marks are entered on the Register and yet remain unused.

According to the proposed new subsection 93(2), in conjunction with unamended subsection 92(4)(b), a non-use application can be filed on the grounds that:

  • a trade mark has remained on the register for a continuous period of 3 years ending one month before the day on which the non-use application is filed, and
  • at no time during that period the trade mark has been put to genuine use in relation to the registered goods and/or services by its registered proprietor or an authorised user,

may only be made after a period of 3 years beginning from the actual date the particulars of the trade mark registration have been entered in the Register.

One practical effect of the current subsection 93(2) is that owners of a registered trade mark have a 5 year window, commencing on the filing date of the application that led to registration of the trade mark, in which to commence using their trade mark, regardless of the time it took to secure registration.

Most trade marks gain registration between 9 to 12 months after filing, which in many cases is about the same time frame for product development and commercial launch.

From a legal risk mitigation point of view, the Trade Marks Act provides that use of one’s own registered trade mark does not constitute infringement of another’s earlier (or later) trade mark registration. Consequently, commencing use of a trade mark only after registration has been secured reflects sound commercial and legal strategy.

However, some traders do not commence use of a trade mark after its registration. There are often valid commercial reasons for such delays, like longer than anticipated product development times. The proposed changes seek to strike a balance between the interests of the trade mark owner and others, including the public, with regards to how long a newly registered mark may remain unused. The changes, in practical terms, mean that a newly registered mark will need to be put into genuine use within the three year period following actual registration, as compared to a five year period following the registration application date, to safeguard against a non-use action.

For some, the change will be welcomed. It aligns with the non-use provisions concerning trade marks that have been registered for many years. These stipulate that a lack of genuine use of such registered trade marks within a three year (plus 1 month) period preceding the non-use application will lead to de-registration, unless extraordinary circumstances apply.

Others might argue that in effect, the proposed legislation will shorten the initial five year ‘non-use grace period’ and is therefore ‘unjust’. However, as noted above, most trade mark applications are processed to registration within 1 year from their filing date, in effect giving most owners an effective ‘non-use grace period’ of four years under the proposed legislation.

Furthermore, the proposed changes will enhance protection (against non-use) of registered trade marks whose registration was secured more than two years after the application date. The latter is not an uncommon occurrence.

Registration of a trade mark application can often be delayed substantially as consequence of prolonged examination. Assuming acceptance of a trade mark registration application is secured close to the applicable 15 or 21 months period following issuance of a first (adverse) examination report, and such report issuing around six months from the application date, registration of the trade mark will in effect be achieved between 24 to 30 months after its application date, therefore squarely falling within the ambit of the proposed legislation’s 3 year ‘non-use grace period’ counted from the actual registration date. In other words, also within five years from the application’s filing date, as per current legislation.

Finally, registration can be delayed by more than the indicated 24 to 30 months after the filing date of a trade mark registration application. This is typically the case where an opposition to registration is filed by a third party. An opposition will typically add at least another 12 months delay, assuming the opposition is successfully defended, let alone further delays where an unsuccessful opposition outcome is appealed by the opponent or the trade mark applicant. As noted, use of an unregistered trade mark, even where an application for its registration is pending, can carry the risk of infringing an existing trade mark registration of a third party. Thus, some traders will be reluctant to commence use without the benefit of a registration, in particular where a trade mark registration application is being opposed by the third party.

Consequently, under the proposed legislation, owners of trade mark applications that remain pending four, five or more years after filing, can defer commencement of use of their trade mark until after its registration is secured, as compared with the current non-use provisions under which the owner must commence use within five years from the trade mark registration application date in order to safeguard against a non-use action being brought immediately after registration is achieved.

We will keep you updated about the date on which the new provisions will come into force. Relevantly, however, unless the transitional provisions are altered, the proposed non-use provisions will apply only in relation to trade mark applications and registrations having a filing date after commencement of the new legislation. In effect, all applications filed before commencement will be ‘grandfathered’ and the 5 year non-use application black out period will continue to apply.

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