This is the third in a series of articles focusing on some of this year's Federal Court cases, exploring what makes a good trade mark, how registering a trade mark can help and what a Court case can achieve in terms of court orders and remedies.
Topic 3: If you get it right and win - court outcomes
The most common form of relief in passing off and trade mark cases is an injunction restraining the offending conduct (i.e. the use of the offending name or mark) and either an account of profits or damages. There are also usually orders made for delivery up of any goods or printed materials that use the offending marks. Orders along those lines were made at trial in Winnebago Industries v Knott Investments [2011] FCA 625 following the trial judge's findings of passing off and misleading conduct. But on appeal in Knott Investments v Winnebago Industries [2013] FCAFC 59) the Full Court dissolved the trial judge's orders and Knott Investments was permitted to keep on using the Winnebago mark in Australia indefinitely, provided only that it added an appropriate disclaimer when it did so. The Winnebago case therefore makes an interesting starting point for a discussion of what the "usual relief" is in trade mark proceedings and when it might and might not apply.
Mr Binns of Knott Investments had travelled to America in the 1960's, and noticed Winnebago campervans. In the 1970's he was involved in a campervan manufacturing business in Australia which failed. He tried again, and in the new business he adopted the Winnebago name and logo for his campervans. The business thrived, whether because of the use of the Winnebago brand or because of other factors.
In 1985 Winnebago was not trading in Australia but it was told that Knott Investments was selling caravans there under the Winnebago name. It did nothing, however, until 1991, when it wrote a demand letter. In 1992 the parties entered into a "stand still agreement", with Winnebago asserting rights in Australia but not acting on them. Roll on to 2010, and Winnebago decided to enter the Australian market and to commence proceedings in Australia against Knott Investments.
The proceedings focused on Winnebago's reputation in the 1970s and 1980s. The Applicant's evidence included a trawl through local newspapers and magazines locating references to Winnebago, the results of which were sufficient for the Court to make findings of passing off and misleading conduct by Knott Investments. The trial judge made orders of the kind commonly made in such cases restraining Knott Investments from using the Winnebago name. The appeal court, however, were troubled that the orders resulted in Winnebago being able to trading off the goodwill that Knott Investments had established under that name in Australia since 1992, and that Winnebago's delay in bringing proceedings had substantially improved their position. The Court therefore permitted Knott Investments to continue to use the Winnebago name provided it did so in a way that demonstrated a clear distinction between the two companies and their rival products.
One of the issues underlying the Winnebago appeal decision is that a trade mark is only one factor in achieving a sale or in the development of a business's good will.
That leads to the necessity of assessing the importance of your trade mark to the profit of your business, in conjunction and comparison with all the other factors that make your business tick.
The critical nature of knowing your trademark's value to your organisation stands out when a you make a "lost sales" claim. That is, you assert that sales infringing your trade mark have been made by another, and that but for that infringement you would have made those sales. Of course, just how important a trade mark is in making a particular sale and hence the quantum of damages awarded depends on the circumstances. In Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd [2013] FCA 375, for example, the Respondent's customers gave evidence, accepted by the Court, that the reason that they purchased from the Respondent had more to do with difficulties in their past dealings with the Applicant and with price than anything to do with which trade mark was being used. Accordingly no "lost sales" damages were awarded.
There are other types of damage that an Applicant can seek, such as damage to reputation. These types of damages, as well as additional damages (now available in trade mark cases courtesy of last year's legislative amendments) are discussed in detail in relation to a claim made under the Designs Act 2003 in Review 2 Pty Ltd v Redberry Enterprise Pty Ltd (2008) 173 FCR 450; (2008) 79 IPR 214; [2008] FCA 1588. The amounts awarded, however, remain relatively small. In Kismet, for example, $5,000 was awarded.
The individual cases provide a useful reference point against which to assess branding strategies, trade mark portfolios and decisions about whether and when to commence court proceedings. Nothing radical here, but some of the messages you might take from the cases discussed in this series include:
- Be aware that there are difficulties in using descriptive names as trade marks;
- Remember there can be significant benefits in registering trade marks;
- The main reason to commence proceedings is to force a respondent to cease particular conduct, as the payouts in trade mark cases have so far generally been relatively low; and
- If you have rights that you see as being infringed don't wait too long to move to enforce them.
Susan Gatford is barrister on Gordon & Jackson's list at the Victorian Bar. She practices out of Owen Dixon Chambers in Melbourne and is also a registered trade mark attorney. [susangatford@vicbar.com.au] © Susan Gatford 2013
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.
