In its report, the Australian Government’s Productivity Commission (“The Commission”) Draft Report has made a number of recommendations to the current trade marks system. The overall objective of these recommendations is to improve the effectiveness of the system by striking a balancing between a system that incentivises businesses to invest in their branding, and one that reduces anti-competitive behaviour.
The Commission’s draft report included statistics showing the strong growth in the number of registered trade marks over the last decade in Australia. This indicates that the current system has encouraged businesses to build and maintain their brand and reputation. However, The Commission believes it has also led to anti-competitive conduct such as trade mark cluttering.
Trade mark cluttering
Trade mark cluttering is defined in the report as businesses ‘registering trade marks over a wider range of elements and classes than is necessary’. This conduct often makes it harder for new businesses to establish a brand and it makes the process more expensive.
The Commission found the current operations of sections 41 and 44 of the Trade Marks Act 1995 insufficient to prevent trade mark cluttering. It has therefore recommended the following:
- restoring the power of the Trade Marks Office to apply mandatory disclaimers to trade marks and to allow the disclaimers to be searchable on the Australian trade marks register;
- amending section 43 of the Trade Marks Act so that the presumption of registrability does not apply to the registration of trade marks that could be misleading or confusing;
- increasing the fees for trade mark applications that cover multiple classes and/or entire classes of goods and services; and
- repealing part 17 of the Trade Marks Act to abolish defensive trade marks.
In particular, the report discusses in detail the recommendation to restore the power of the trade mark examiner to apply mandatory disclaimers to trade marks so that some elements of a trade mark will be ‘disclaimed’ in order for the entire trade mark to proceed to registration. The Commission has taken the view that mandatory disclaimers will reduce the range of goods or services that can be registered. Conversely, the drawback of mandatory disclaimers is that they may increase costs due to the added complexity of trade mark examination. This may inturn discourage businesses from registering a trade mark. On balance, however, The Commission has recommended the application of mandatory disclaimers.
The Commission also considered changing from an ‘intent to use’ criteria to a ‘demonstrated use’ criteria, but it ultimately did not recommend such a change.
Reducing confusion among users of trade marks and consumers
The Commission found that businesses, particularly small businesses, may struggle to understand the concept of trade mark protection. For example, businesses may confuse trade mark protection with business name registration. The report also indicated that there is consumer confusion in relation to the use of geographic terms in trade marks.
To reduce confusion, The Commission has recommended linking the Australian trade marks register with ASIC’s business registration system so that users will be warned if a registration may infringe an existing trade mark.
Further, The Commission has also recommended that the Trade Marks Office return to its previous practice of routinely objecting to trade mark applications that contain contemporary geographical references, under section 43 of the Trade Marks Act, where the goods are not produced in the geographical area. This recommendation aims to align trade marks law with Australian consumer law.
Parallel importing occurs where legitimately trade marked goods are imported from overseas into e.g. Australia without the consent of the trade mark owner.
The Commission has taken the view that the law in relation to parallel imports has become ‘unclear and unworkable’, which results in a less efficient trade marks system.
In light of the above, The Commission has recommended that section 123 of the Trade Marks Act be amended to expressly allow for the parallel importation of goods where the trade marked goods have been brought to market elsewhere by the owner of the trade mark or its licensee.