Valuating IP: Reputation in Trade Marks and Section 60 Evidence?

Nylon Films Pty Ltd v Nylon Studios Pty Limited [2008] ATMO 81 (25 September 2008)
TMO Site last Updated: 23 October 2008
http://www.austlii.edu.au/au/cases/cth/ATMO/2008/81.html

In a recent decision of the Trade Mark Office, Delegate Murray found against an applicant’s trade mark titled, NYLON. The trade mark was found to contravene s 60 of the Act when compared with the common law trade mark, NYLON FILMS. In reasoning the section 60 ground, the Hearing Officer reiterated factors that go to establishing reputation. At pars [21]-[22], the Delegate said:

“The courts have recognised that, for the purposes of section 60, an opponent's reputation can have accrued from a variety of sources. Kenny J in McCormick & Co v Mary McCormick (2001) 51 IPR 102, at page 129, quoted with approval the following discussion, by Hearing Officer Iain Thompson, of how reputation can be developed:

[I]t is true that the assessment of the reputation of a trade mark goes far beyond mere examination of sales or turnover of goods sold under that trade mark and contemplation of the advertising and promotional figures.

As regards a trade mark, its reputation derives both from the quantum of sales under that mark and also the esteem, or image, projected by that trade mark. The quantum of sales, advertising and promotion contributes to the `recognition' component of the trade mark's reputation. The credit, image and values projected by a trade mark attaches to the `esteem' component of the reputation as do the public events and other trader's marks with which [the] owner of the trade marks in question chooses to associate the trade marks via sponsorships, cross-promotions, `contra deals' and so forth.

It follows that a trade mark used in relation to goods with comparatively low sales may have a high and strong reputation by virtue of the high credit or esteem in which it is held or, conversely, that a trade mark which has very high sales may have a strong reputation notwithstanding the lack of esteem that attaches to it. The particular popular images, or sets of values, that attach to the trade mark are also, therefore, important parts of the reputation of the trade mark and may be as strong an associative force in the minds of the public as the association of the trade marks with the goods or services themselves.[5]

In conclusion, I accept Ms Niehus’ claims to a significant reputation within the highly specialized, close-knit industry in which her television commercial production company operates in this country. I also accept her claims to having considerable first-hand experience of the deception and confusion caused to members of that industry by the applicant's use of its trade mark on its sound production services, in the face of that reputation. I find the opponent's ground of opposition under section 60 to be successful.”

In light of recent IP valuation blogs both here and elsewhere(see http://duncanbucknell.com/blog/457/Exploding-the-Intangible-Asset-Market-Cap-myth and http://www.iproo.net/2008/09/australias-national-innovation-review.html), the decision is a timely reminder of how IP can be valued and the type of evidence that is required to succeed under s 60 of the Act. With factors such as commercial success applying in other IP fields, such as patents, it will be interesting to take stock of future trends in how financial data and qualitative brand factors will be used by IP owners in litigation.