New South Wales Supreme Court CITATION : Guttershield v LBI Holdings [2005] NSWSC 113 HEARING DATE(S) : 23 February 2005 JUDGMENT DATE : 23 February 2005 JURISDICTION : Equity JUDGMENT OF : Campbell J DECISION : Trademarks fall within "intellectual property" within the meaning of "all intellectual property developed by the Alliance" in a particular agreement CATCHWORDS : CONTRACTS - construction of particular agreement - whether trademarks fall within "intellectual property" within the meaning of "all intellectual property developed by the Alliance" in a particular agreement LEGISLATION CITED : Trademarks Act 1995 CASES CITED : Guttershield v LBI Holdings [2004] NSWSC 941 Guttershield Systems Australia Pty Ltd - First Plaintiff/First Cross-Defendant Guttershield Pty Ltd - Second Plaintiff/Second Cross-Defendant PARTIES : LBI Holdings Pty Ltd - First Defendant/First Cross-Claimant Leafbusters Pty Ltd - Second Defendant/Second Cross-Claimant Bruce Wickett - Third Cross-Defendant FILE NUMBER(S) : SC 5724/02 G Grinter - Plaintiffs/Cross-Defendants COUNSEL : S Reuben - Defendants/Cross-Claimants John Brent & Co - Plaintiffs/Cross-Defendants SOLICITORS : Denes Ebner - Defendants/Cross-Claimants LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST CAMPBELL J WEDNESDAY 23 FEBRUARY 2005 5724/02 GUTTERSHIELD SYSTEMS AUSTRALIA AND ANOR v LBI HOLDINGS PTY LTD & ANOR JUDGMENT – Ex Tempore 1 HIS HONOUR: This is a matter concerning which I gave judgment on 25 October 2004: Guttershield v LBI Holdings [2004] NSWSC 941. On 24 November 2004 I made an order for the determination of a separate question, namely whether trademarks fell within the scope of the expression "intellectual ... property developed by the Alliance" in Clause 3 of the Agreement of the Alliance dated 10 March 1999. 2 My earlier judgment set out the terms of the agreement of the Alliance at paragraph [17]. I will not repeat them here. At paragraphs [42] – [44] I set out the argument concerning construction, and conclusions which I had arrived at. 3 It is common ground that, before the Alliance was entered into, the three members each carried on their own businesses, and had their own business names and trademarks connected with those businesses. The present dispute does not relate to the trademarks which the Alliance members had when the Alliance began, it relates to trademarks which were developed after that date. 4 Mr Grinter, counsel for the plaintiff, submits that, in some ways, a trademark is not well suited to be called "intellectual property". The Trademarks Act 1995 defines a trademark in section 17 as: "A trademark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person." 5 At common law, a trademark is, in broad terms, a mark which distinguishes goods or services from similar goods or services, and identifies them with some entity associated with the goods or services in the course of their production, distribution, or provision, or with whose approval the goods or services are produced, distributed or provided. An indicator of a trade connection does not, he implies by this submission, sound very much like "property", nor is there anything intellectual about it. In the course of submission Mr Grinter accepted that the word "trademark" has come, however, in common usage, to be part of "intellectual property". There was no submission that in the context of this particular agreement "intellectual property" had any narrower meaning than this common usage. Thus, I do not need to deal further with whether trademarks are capable of falling within "intellectual property" in Clause 3. 6 In my view, trademarks are capable of being "intellectual property developed by the Alliance", within the meaning of Clause 3. The agreement, in Clause 2, sets out the activities in relation to which the Alliance members will cooperate, including: "D. Legal challenges by the Alliance that are required to protect the Alliance members rights due to breach of material supply contracts, infringement of trade marks, patents, intellectual property or common law rights of the Alliance members. E. Research and development of new meshes, fastening systems or any development that will improve the function of the Alliance members businesses within the Alliance. F. All costs associated with the development of contracts, patents, trade marks or any intellectual property developed by the Alliance." 7 Clause 2D specifically contemplates that legal challenges required to protect Alliance members' rights due to infringement of trademarks will be part of the scope of the joint venture. That is capable of applying both to trademarks which members had developed before the Alliance came into operation, and trademarks which came into existence after the Alliance came into operation. Clause 2F expressly contemplates that trademarks might be "developed by the Alliance" as part of the joint venture. 8 Clause 2E, lying as it does between Clauses 2D and 2F, each containing specific reference to trademarks, should be construed so that "research and development of new meshes, fastening systems or any development that will improve the function of the Alliance members' businesses within the Alliance" can extend to development of trademarks. I say "can" extend to, because it will be a question of fact in each case whether the development of a particular trademark is one which will improve the function of the Alliance members' businesses within the Alliance. 9 It seems to me that whether the development of a trademark is one which will improve the function of the Alliance members' businesses within the Alliance needs to be decided bearing in mind the objective of the Alliance to obtain an exclusive product or products they could all use. That was the principal purpose of the Alliance, but even in relation to development of a trademark for a product which was not exclusive, but which they could all use, and which fell within the type of product the Alliance dealt in, it seems to me that the agreement applied. There may be some trademarks which, as a matter of fact, are intrinsically unsuited to be used by all three of them. It may be that a trademark which is a composite which includes the individual name of one of them, or includes an existing trademark already associated with just one of them, falls into such a category. It is not necessary to decide that today. 10 I initially had some difficulty in dealing with how a trademark, which from its intrinsic nature ought show a connection with a single source, can be common property. However, in this agreement, drafted as it was by lay people, it may be that the expression "common property" has a meaning, when applied to trademarks slightly different to the meaning it has when applied to patents. 11 In paragraph [45] of my earlier judgment I expressed the view that common property in Clause 3 refers to an actual right of property, not a mere right of use. If the legislation dealing with registered trademarks is such that it is necessary for there to be a single registered owner, or registration by several people is allowed only under certain circumstances, nonetheless the intent of Clause 3 could, it seems to me, be carried through by recognising that it gives rise to an obligation on the part of the registered owner of a trademark to grant a royalty free license to those whose "common property" that trademark is. I make this remark in the context where attention has not been paid to the requirements of registration and licensing under the Trademarks Act in the course of argument, and where this judgment is given ex tempore. I make the remarks for the purpose of making clear that I do not see the need for a trademark to indicate a single source of goods or services as being a reason which precludes trademarks from being "intellectual ... property developed by the Alliance", within the meaning of Clause 3. 12 I declare that trademarks, both common law and registered, are "intellectual property" within the meaning of "all intellectual … property developed by the Alliance" within the meaning of Clause 3 of the Agreement of the Alliance dated 10 March 1999. 13 I order that the costs of today's application be costs in the cause. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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