Australia: 2012 Down Under – A sample of Interesting Cases for Brand Owners

Last Updated: 19 May 2013
Article by Karen Hayne

Parallel imports, overseas brands and the registrability of building names came under scrutiny from the Australian courts last year. As some of these cases demonstrate, the application of even long-established trademark protection principles can evolve

The Australian courts were busy considering a number of key issues for rights holders throughout 2012. This article covers some of the most significant and discusses their likely impact.

Parallel imports

The Full Federal Court of Australia considered the issue of parallel importation of goods and trademark infringement in several cases. The following decisions should serve as a warning to importers and assist rights holders in an area that has in the past proved difficult to police in Australia.

Round 1 – shark attack

Paul's Retail Pty Ltd v Sporte Leisure Pty Ltd ([2012] FCAFC 51) involved the use of the trademarks GREG NORMAN and SHARK on clothing imported and offered for sale in Australia by Paul's Retail. The marks were owned by Great White Shark Enterprises and licensed to Greg Norman Collections, which licensed an Indian company to manufacture and sell goods bearing the marks in India.

Paul's Retail purchased goods bearing the marks from the Indian manufacturer, arguing that the marks had been applied with the rights holder's consent. It sought to rely on the defence to infringement set out in Section 123 of the Trademarks Act 1995, which provides that there is no infringement "if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the mark".

The primary judge and the Full Court determined (Sporte Leisure Pty Ltd v Paul's International Pty Ltd (No 3) [2010] FCA 1162) that the marks had been applied to goods which were offered for sale outside the designated territory, and that the rights holder had not consented to this use. As a result, the goods were not "genuine" and Paul's Retail was unable to rely on Section 123.

Paul's Retail sought special leave to appeal the decision of the Full Federal Court to the High Court of Australia. However, this was refused.

Round 2 – enter Lonsdale

Lonsdale Australia Ltd also commenced proceedings in 2012 against Paul's Retail for trademark infringement (Lonsdale Australia Limited v Paul's Retail Pty Limited [2012] FCA 584). Lonsdale owns the Lonsdale trademarks in Australia. Lonsdale Sports Limited (LSL) owns the Lonsdale trademarks in Europe (both are part of the Lonsdale Group).

Paul's Retail purchased Lonsdale-branded goods. LSL's marks (or substantially similar marks) had been applied to the goods by a licensee of LSL in Europe, which was licensed to use the LSL marks in Europe. When Paul's Retail imported the Lonsdale goods into Australia, they were seized by Customs and Lonsdale subsequently commenced proceedings for trademark infringement.

Paul's Retail again relied on Section 123 (among others), arguing that goods bearing a trademark that had been applied with the consent of the rights holder should not be prohibited from entering into Australia. The primary judge determined that the proper question to be asked was whether Lonsdale's rights in the Lonsdale marks had been infringed by Paul's Retail. Paul's Retail bore the onus of proving that the marks used by the licensee had been applied with the consent of Lonsdale and was unable to establish this.

Paul's Retail appealed to the Full Court (Paul's Retail Pty Limited v Lonsdale Australia Limited [2012] FCAFC 130) on the grounds that the marks had been applied to goods with the consent of LSL, a related entity of Lonsdale.

The Full Court dismissed the appeal. In so doing it found that the consent provided by LSL to its European licensee was limited to Europe. The sale of the relevant goods in Australia amounted to unauthorised use of the Lonsdale marks.

The risks of adopting overseas brands

Winnebago – 25 years too long?

Winnebago Industries Inc, which is based in the United States, has manufactured recreational vehicles (RVs) since the 1960s. It has the following registered trademark in the United States:

In 1982 Knott Investments Pty Ltd commenced manufacturing and selling RVs in Australia under the trading name Winnebago and used the Winnebago US mark.

In 1985 Winnebago first became aware that Knott was using the Winnebago US mark to promote the sale of RVs in Australia. However, it was not until 1991 that Winnebago made contact with Knott, which resulted in a settlement agreement under which Knott agreed not to register WINNEBAGO in Australia and Winnebago agreed not to sue Knott in the United States. Further, Winnebago reserved its rights to take action in the future against Knott in Australia.

Despite the settlement agreement, in 1997 Knott registered the mark WINNEBAGO in Australia.

In 2010 Winnebago decided to enter the Australian market and demanded that Knott cease using the WINNEBAGO mark. When Knott refused to do so, Winnebago commenced proceedings against it for passing off and misleading and deceptive conduct. Winnebago had no registered trademark in Australia on which to rely (Winnebago Industries, Inc v Knott Investments Pty Ltd (No 2) [FCA] 785).

A key question in the proceeding was whether Winnebago had a sufficient reputation in Australia as of June 1 1982, when Knott commenced carrying on the business of Winnebago. There was no doubt that the Winnebago brand had gained an extensive reputation in the United States and other territories by that date.

Winnebago submitted that many Australians travelled to the United States and other relevant territories before June 1 1982 (and after). Due to the significant reputation of the Winnebago brand in those territories, Australians would have become aware of the Winnebago brand.

Winnebago also established that a considerable number of international publications, in which Winnebago's RVs and brand appeared or were referred to, were accessible in Australia before and after June 1 1982.

In cross-examination, Mr Binns, a director of Knott, stated that: "I chose the name because they [Winnebago] were a respected company in America and they produced a good product."

The above statement and other evidence led the court to conclude that Knott "intentionally hijacked the WINNEBAGO marks in Australia in a bold attempt to pre-empt Winnebago opening its doors here".

The court was satisfied that Australians were aware of the Winnebago brand as of June 1982 and that the public was likely to be confused into thinking Knott was related to Winnebago.

The court acknowledged that there had been an extraordinary delay on Winnebago's part in taking steps to protect its brand. However, the court determined that Winnebago had taken steps to protect its position through the settlement agreement. It referred to the settlement agreement as creating a "standstill" effect, which allowed Winnebago to enforce its rights in the future, and that the conduct complained of was continuing and therefore not out of time.

The court ordered the cancellation of the WINNEBAGO mark, and that Knott and its dealers be restrained from using it.

Knott has been granted leave to appeal to the Full Court – the appeal was heard in March 2013 and judgment has been reserved. The outcome of this matter is clearly the result of a unique factual background. The primary judge placed a significant amount of weight on the settlement agreement and Winnebago's reservation of its rights, regardless of the fact that the action was commenced 25 years after the first knowledge of the infringing conduct and 18 years after the settlement agreement. It will be interesting to see how the Full Court views this matter.

Tivo and Vivo – more than a coincidence?

In another matter involving an overseas brand, the Full Court again considered spill-over reputation into Australia and the honesty of selecting a name as important factors in infringement and removal matters.

In 1999 Tivo Inc, a US-based company known for its Tivo digital video recorder, commenced selling its product in the United States and registered TIVO as a trademark in Australia. However, it was not until July 2008 that Tivo commenced selling the Tivo product in Australia. In 2007 Vivo International Corporation Pty Ltd commenced selling various home-entertainment products branded VIVO in Australia. In February 2008 Vivo successfully registered its VIVO trademark in Australia. In January 2011 Tivo commenced proceedings against Vivo seeking cancellation of the VIVO mark and an injunction (Tivo Inc v Vivo International Corporation Pty Ltd [2012] FCA 252).

As to the issue of reputation, the court was required to consider the reputation of the TIVO mark in Australia before the priority date (or use) of the VIVO mark. The evidence showed that Tivo's products had been referred to:

  • in newspapers and magazines that were widely circulated in Australia (including evidence of sales of nearly 86 million copies of those publications including a reference to Tivo before the relevant date);
  • in popular television programmes and movies;
  • on internet sites (including news and other websites); and
  • by consumers in Australia who were fans of Tivo and its products.

Notwithstanding the lack of trading by Tivo in Australia, the spillover reputation was found to be extremely significant.

The primary judge was satisfied that the director of Vivo was aware of Tivo's reputation and its brand in overseas territories, and adopted the similar VIVO mark in Australia to benefit from the spill-over reputation (similar to Winnebago). The court ordered the cancellation of the VIVO mark and injunctive relief.

Vivo appealed the decision to the Full Court (Vivo International Corporation Pty Ltd v Tivo Inc [2012] FCAFC 159), with the appeal focusing primarily on the similarity (particularly aurally) of the two marks. The Full Court also disagreed with the primary judge that a finding of an intention to adopt the VIVO mark (to take advantage of Tivo's reputation) led to a likelihood of confusion and deceptive similarity. The Full Court ultimately found that the VIVO mark infringed the TIVO mark and dismissed the appeal, agreeing that it was appropriate to cancel the registration of the VIVO mark.

The case also dealt with a number of other important aspects of trademark law, providing a helpful clarification on these issues.

These overseas brand cases again demonstrate the importance of selecting a unique name and highlight that if a brand is well known in other jurisdictions, its reputation may spill over into Australia, even though the goods or services may not currently be offered there.

What's in a name?

Part 1 – Building names can be trademarks

In Mantra IP Pty Ltd v Spagnuolo (2012, FCA 769) the Federal Court considered whether an onsite letting agent could register the name of the building as a trademark for the provision of accommodation and related services. Mantra, the onsite letting agent of the iconic Q1 residential building located on the Gold Coast, Queensland, applied to protect the mark Q1 for the provision of accommodation and related services.

Spagnuola, the owner of two apartments in the Q1 building who also provided services as a letting agent for other apartments in the Q1 building, opposed Mantra's registration. Registration was refused on the grounds that the name Q1 had geographic connotations and that owners of apartments in the Q1 building may wish to use the name of the building to market and promote the availability of their apartments.

Mantra successfully appealed the decision to the Federal Court. The court found that Q1 was a name coined by the building developer and had no inherent meaning or association with a geographical place. It thus allowed the registration of Mantra's Q1 mark. Spagnuola has been granted leave to appeal to the Full Court.

Part 2 – are you sure you own your building name?

In another battle for rights in a building name, the Federal Court has highlighted the importance of the chain of title in a trademark.

Kingsgate Hotel owns a KINGSGATE HOTEL mark for accommodation services. Kingsgate opposed the registration of the following trademark filed by Millennium & Copthorne International Ltd for related services:

Kingsgate's opposition was successful and Millennium appealed to the Federal Court (Millennium & Copthorne International Ltd v Kingsgate Hotel Group Pty Ltd [2012] FCA 1022).

A key issue considered by the court was the earlier and continuous use which Kingsgate submitted it had made of a similar mark since 2011. This included use by its predecessor. However, it was unable to prove any transfer or assignment of the similar mark to Kingsgate.

Millennium also argued that it had prior continuous use of its Millennium mark before the Kingsgate mark's priority date. Millennium was able to establish that a related entity to Millennium used the Millennium mark before the Kingsgate mark's priority date. Although it failed to establish that the rights in that mark had been transferred to it, Millennium was able to show sufficient honest concurrent use. The court therefore allowed the registration of the Millennium mark.

This case deals with various other issues, but also serves as a warning to any party acquiring a business or asset to which intellectual property may attach to ensure that all rights are properly identified and transferred to the new owner.

The above represents only a small sampling of interesting matters dealing with brand owners' rights that were decided in Australia in 2012. These cases also show that the application of long-established trademark protection principles does evolve and that these are utilised in new and interesting ways when the facts of the case allow. WT

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.

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Karen Hayne
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