Riskier business?  Game changing increases to IP Australia's cost awards in trade mark proceedings

What you need to know 

• IP Australia has recently reviewed its fees and scale of costs for trade mark proceedings and proposes to introduce the changes with effect from 1 October 2020.
• In addition to increases to filing fees for trade mark applications, there will be significant increases to costs that may be awarded to a successful party in trade mark proceedings.
• This will be a game changer, as trade mark owners will need to carefully consider the cost consequences of commencing a weak trade mark opposition or non-use removal action or defending a weak trade mark right.

What you need to do

• Trade mark owners need to watch this space. If the changes are implemented as proposed, the costs exposure for the unsuccessful party in trade mark oppositions and non-use removal proceedings will substantially increase.
• Monitor when the changes will take effect and consider timing any action accordingly. For example, potential opponents may be able to file an opposition before the new costs rules apply, whereas trade mark applicants may wish to delay finalising their applications until after the changes come into effect to deter any potential opponents who would be subject to the new costs rules. 

IP Australia's 2019-2020 Fee Review

IP Australia has been conducting a fee review over the course of 2019-2020. In December 2019, IP Australia released a draft paper which outlines its proposed new fees, as well as higher costs which may be awarded to the successful party in trade mark, design and patent proceedings.

The proposed changes take into account the recommendations from the Productivity Commission's Inquiry into Australia's intellectual property arrangements, as well as issues raised in submissions from the public during the consultation period which included: simplifying fee structures; aligning fees and costs across trade mark, design and patent services; and streamlining IP Australia's workflow, for example, by encouraging trade mark applicants to file Headstart applications or use IP Australia's "pick list" of goods and services.

Of interest to trade mark owners is the significant changes to costs awarded in trade mark proceedings. For example, if the changes are implemented, an opponent who is unsuccessful in a trade mark opposition may be required to pay up to $24,100 of the trade mark applicant's legal costs. This is more than five times the current maximum costs award for a trade mark opposition. Further, these costs do not include any expenses and allowances for the applicant's travel and accommodation to attend the hearing for which an unsuccessful party may also be liable.

As such, the potential for an unsuccessful party to pay much higher costs may act as a deterrent to trade mark opponents or non-use removal applicants considering bringing such actions, or to trade mark applicants or owners considering defending such actions.

Increases to trade mark proceeding costs

IP Australia's proposed new scale of costs for trade mark opposition or non-use removal proceedings is set out below. For comparison purposes, we have included the current scale costs for each item in brackets.

The most substantial increases to the scale of costs are for the evidence preparation and hearing stages of a proceeding. The proposed costs amounts would allow a successful party to recover an amount closer to the actual costs they incur, particularly for hearings and reply evidence.

It is unclear whether the changes to costs will apply only to new proceedings commenced after 1 October or also to proceedings already on foot at that date, but this should be clarified once IP Australia completes its fee review process and well before the changes are implemented.

Increases to trade mark application fees

IP Australia is also proposing moderate increases to the fees for standard trade mark applications and Madrid applications to $400 per class. Currently, standard trade mark application fees are $330 per class while Madrid applications are $350 per class.

IP Australia is not proposing to change the fees for pick-list or Headstart applications, reflecting its desire to encourage trade mark applicants to use these services and help to streamline IP Australia's workflow.

What's next for these proposed changes?

IP Australia has indicated that the changes to fees and costs will be implemented from 1 October 2020.

However, it remains to be seen whether the impact of the COVID-19 pandemic prompts IP Australia to consider delaying the changes.

Authors: Ivy Keane, Lawyer; Joanna Lawrence, Counsel; and Kellech Smith, Partner.