Lion Nathan National Foods' (Lion Nathan) application to the High Court of Australia to use the name "Barefoot Radler" for its range of light beer products has failed. The High Court found that the sale of 41 bottles of wine bearing the registered trade mark "Barefoot" was sufficient to show "use" of the trade mark, as set out in section 7 of the Trade Marks Act 1995 (Cth) (Act). The decision highlights the importance of making proper inquires before selecting and investing in any brand name.
E. & J. Gallo Winery (Gallo), an American company, produces a brand of wines known as Barefoot Wines. Gallo owns the word mark, "Barefoot" (trade mark) in Australia that is registered in respect of wines.
In 2008, Lion Nathan commenced selling a range of light beer under the brand "Barefoot Radler". Gallo commenced proceedings in the Federal Court of Australia alleging that Lion Nathan had infringed its trade mark. That is, Gallo alleged that Lion Nathan used on the beer bottles, a sign that was substantially identical with, or deceptively similar to, the trade mark in relation to goods of the same description.
Lion Nathan denied the allegation and cross claimed against Gallo that there had been "non-use" of the registered trade mark within the terms in section 92(4)(b) of the Act and, on that basis, sought an order that the trade mark be removed from the Trade Marks Register.
Gallo's infringement case - goods of the same description
In order for Gallo's infringement claim to be successful, it needed the Court to find that beer and wine are goods of the same description. At first instance, the Federal Court surprisingly found that beer and wine are not goods of the same description and accordingly, dismissed Gallo's infringement claim. Gallo appealed to the Full Court of the Federal Court.
The Full Court unanimously overturned the Federal Court's decision that Gallo's wine and Lion Nathan's beer were not goods of the same description within the meaning of s 120(2)(a) of the Act. The High Court affirmed the Full Federal Court's finding by refusing to allow Lion Nathan to appeal on this point.
Lion Nathan's case - non-use
Lion Nathan argued that as Gallo had neither used the trade mark in Australia nor used the trade mark in good faith in Australia during the non use period, pursuant to section 100 of the Act, Gallo bears the burden of rebutting the allegation of non-use.
Evidence in the proceedings indicated that Gallo did not actively market or sell the Barefoot brand of wines in Australia during the alleged non-use period. The only evidence of use of the trade mark was the sale of 41 bottles by a wholesaler in Victoria who had purchased the bottles from Germany - Gallo was apparently unaware of these sales. Lion Nathan argued that these sales were not sufficient to show use of the trade mark.
The Federal Court allowed Lion Nathan's non-use claim, finding that the trade mark had not been "used" within the terms of section 92(4)(b) of the Act, as the wine bottles were distributed in Australia without Gallo's knowledge. Accordingly, the Federal Court ordered that the trade mark be removed from the Register. On appeal, the Full Court of the Federal Court agreed that the trade mark should be removed from the Register for non-use.
The High Court, however, accepted that while there had not been substantial use of the trade mark, there was no evidence to suggest that the use had been for a purpose other than for deriving a profit and establishing goodwill in the trade mark. As such, the High Court held that "each occasion of trade in Australia... is a use for the purposes of the Trade Marks Act"
Even though the wine bottles bearing the trade mark were sold in Australia without Gallo's knowledge and the quantity of wine bottles sold were relatively small, the High Court held that Gallo had used the trade mark during the non use period simply because the bottles of wine had been sold in Australia.
Previously, in Woolly Bull Enterprises Pty Ltd v Reynolds the Federal Court had held that in some circumstances, even a single bona fide use of a mark in the relevant period is sufficient to answer an application for removal. In Gallo's case, the High Court indicated that while a single act of sale may not be sufficient to prevent removal, in the case of genuine use, a relatively small amount of use may be sufficient to constitute "ordinary and genuine" use judged by commercial standards.
Lessons learned - avoiding a hangover
An owner of a registered trade mark holds a strong hand. This case demonstrates that use of a trade mark no longer requires a registered owner of a trade mark to intend or be aware that goods bearing the trade mark are being offered for sale within Australia. It also demonstrates that an application for the removal of a registered trade mark on the basis of non-use is likely to be overcome by demonstrating some commercial use of the trade mark in Australia, such as use in the course of trade.
The decision is also a timely reminder that proper inquiries should always be made prior to selecting and investing in any brand name.
For more information, please contact:
t (02) 9931 4755
t (02) 9931 4955
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.