AJPark

Usually, a trade mark can be removed from the trade mark register if it hasn’t been used for three years.  For a trade mark owner, it’s basically—use it or lose it.  Now the High Court has ruled that a trade mark owner does not need to know whether its goods have been sold on the Australian market to establish its ‘use’ of a trade mark.

The Barefoot story

In 2008, Gallo, the world’s second largest wine producer, sued Lion for trade mark infringement because Lion was using the name ‘Barefoot’ for one of its beer brands. 

Gallo claimed that Lion’s use of Barefoot infringed its Australian trade mark registration for Barefoot, which covered wine.  In response, Lion applied to remove Gallo’s BAREFOOT trade mark on the basis that it had not been used in Australia during the relevant statutory non-use period of three years. 

Gallo was successful in its infringement claim before the full Federal Court, but was unsuccessful in preventing the removal of its BAREFOOT trade mark on the grounds of non-use.  Let’s take a look at the issue of use in the removal of an application.

Had Gallo used its BAREFOOT trade mark in Australia?

Back in 2005, Gallo acquired full rights to the BAREFOOT trade mark.  However, Gallo had not used its BAREFOOT trade mark in Australia before the beginning of legal proceedings against Lion in 2008.

To save its trade mark from removal through non-use, Gallo relied on use of the BAREFOOT trade mark by its previous owner.

The previous owner of the BAREFOOT trade mark had licensed a company he operated with the right to use the BAREFOOT trade mark.  Although the trade mark was registered in Australia, the business was based in the United States. 

In 2001, bottles of wine bearing the BAREFOOT trade mark were exported from the United States to a third party in Germany.  A year later, an Australian company imported a small number of bottles of wine bearing the BAREFOOT trade mark from the German company and sold them in Australia during the relevant non-use period.

However, the previous owner of the BAREFOOT trade mark had no knowledge about the sale of that wine in Australia during the relevant non-use period.

Was this use by the registered owner?

Gallo argued, before the full Federal Court, that the registered trade mark was used in Australia because it was applied to goods with the authorisation of the registered owner.  Those goods entered the course of trade in Australia, and the registered trade mark remained fixed to the goods as a badge of origin.

The full Federal Court rejected Gallo’s argument. Gallo appealed to the High Court of Australia on the discreet issue of whether there had been any use of the BAREFOOT trade mark. 

Enter the High Court of Australia

Rejecting the approach of the full Federal Court, the High Court unanimously stated that the question of whether a registered owner has used its trade mark does not depend on whether the owner knowingly projects the goods into the Australian market. 

Rather, it depends on whether the goods are in the course of trade in Australia.  The Court said that as long as goods sold under the trade mark remain in the course of trade, each sale in Australia constitutes use for the purposes of the Australian Trade Marks Act 1995.

What does this mean?

This is a good decision for foreign owners of trade marks in Australia. 

The decision confirms that a foreign trade mark owner, who themselves or via an authorised user, puts their trade mark on goods that are then sold, for example, to a distributor outside of Australia, will be considered to have used their trade mark in Australia if, without their knowledge, the distributor sells those goods into Australia.

In doing so, the Australian Courts have recognised that it’s commonplace in international trade for goods to cross national boundaries before their end consumption.

What about New Zealand? 

Can a trade mark owner rely on the sale of genuine products bearing the mark, imported by another person, when the owner did not know about those sales? 

The Australian High Court’s decision is likely to be viewed favourably by a New Zealand court.  We expect that the answer given for New Zealand will be the same. Which means, yes, the owner is likely to be able to rely on sales it didn’t know about to establish use of a trade mark in New Zealand.

An edited version of this article was published in FMCG magazine, August 2010

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  Matthew Hayes

  Associate