Australia: When is unauthorised use of a trade mark not an infringement of the trade mark owners rights?

Last Updated: 30 April 2017
Article by Brigid O’Dwyer

The owner of a registered trade mark has an exclusive right to use that trademark. But what happens when you use a trade mark without the permission of the trade mark owner? The Trade Marks Act provides protection to users of a trade mark in limited circumstances where their use does not infringe the trade mark owner's rights.

Trade mark infringement

Under s 120 of the Trade Marks Act 1955 (Cth) (the Act)1 the registered proprietor of a trade mark is granted the exclusive right to:

  • use; and
  • authorise others to use that trade mark in relation to the goods and services in which it is registered.

You will infringe a trade mark owners' rights if you use as a trade mark a sign which is substantially identical with, or deceptively similar to, the registered trade mark, in relation to the specified goods and services of the trade mark.2

Section 122 of the Act allows some limited, specified exceptions to this rule by permitting third party use in certain circumstances.

When is a trade mark not infringed?

Use of own name

Section 122(1)(a) allows you to use your own name or the name of your business (or the name of your predecessor in business) in good faith.

Good faith requires an "honest belief that no confusion would arise by reference to the earlier trade mark's reputation, and the absence of an intention to take advantage of the reputation acquired by another trader".3 Whether or not you are acting in good faith is determined objectively.

In 2013, the Federal Court of Australia restrained Bob Jane (via his associated entities)4 from using his own name to sell tyres, wheels, batteries, accessories for auto motive vehicle parts and services relating to their installation.5

Following an acrimonious departure from Bob Jane Corporation Pty Ltd (a major component of the business being Bob Jane T-Mart), Bob Jane commenced trading using marks such Bob Jane Global Type Corporation Limited and Bob Jane Southern Motors.

As Bob Jane was using his own name, the court considered a possible defence under section 122(1)(a). As he had previously allowed his name to become part of the Bob Jane Corporation Pty Ltd trade marks, and was aware of their continuing use, it was found that the respondents commenced use of similar names with the intention that consumers would associate them with Bob Jane Corporation Pt Ltd. Further, Bob Jane and the respondents communicated with the suppliers of Bob Jane Corporation Pty Ltd which misled at least one to believe that they were dealing with Bob Jane Corporation Pty Ltd.6 Accordingly, the 'own name' defence was held not to be available based upon the evidence before the court.

In Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235 Justice Beach noted that:

  1. it may aid in the defence if you have adopted honest business practices in relation to your commercial or industrial matters;7 and
  2. it may be evidence of good faith if you have acted diligently in ensuring your chosen name does not conflict with a registered trade mark.8

Accordingly, when selecting a company name, it is important that you research the existence of prior registrations, including trade mark registrations. This will help to avoid selecting a name that infringes a registered trade mark, and may assist in establishing that you have acted in good faith if your use of the name is later challenged.

Descriptive use

Section 122(1)(b) allows you to use another person's registered trade mark in good faith to indicate the kind, quality, intended purpose, value, geographical origin or some other characteristic of goods or services.9

In Wellness Pty Ltd v Pro Bio Living Waters Pty Ltd (with Corrigendum dated 23 April 2004) [2004] FCA 438, it was held that the use of the words 'Living Water' on bottled water by the respondents, including Pro Bio Living Waters Pty Ltd (Pro Bio) went beyond descriptive, and constituted use as a trade mark.10 The Court noted that the words were "not used as descriptive of the goods and that their use is not reasonably necessary for the adequate description of the goods".11 Accordingly, Pro Bio's use of this term was found to infringe the trade mark 'LIVING WATER' which was owned by Wellness Pty Ltd.12

Intended purpose

Section 122(1)(c) allows use another person's trade mark in good faith to indicate the intended purpose of your goods or services – the classic example being production or supply of compatible spare parts and accessories.

This defence enables parties to "make a fair reference to the registered trade mark in circumstances which do not create a mistaken or misleading impression".13

Frequently the producers of the primary goods in question, such as cars or phones, are very well resourced and take a dim view of unauthorised third parties seeking to benefit from spare parts/after market accessory manufacture and supply. Accordingly, anyone seeking to operate in this sphere should be vigilant in ensuring that all of their branding, marketing and other promotional material strictly adheres to the parameters of this section of the Act.

For example, in 2003, it was alleged by Nokia Corporations that a Mr Mai had, without its licence or authority, "manufactured or caused to be manufactured, imported or caused to be imported, advertised, offered for sale, distributed, supplied and sold goods bearing one or more of Nokia's trade marks".14

Mr Mai was in the business of selling Nokia mobile phone cases, neck straps and batteries. Evidence produced demonstrated that the products sold by Mr Mai contained the Nokia trade mark without Nokia's authority, knowledge or consent.15

The Federal Court of Australia held that the use of the Nokia trade mark by Mr Mai was use as a trade mark in breach of section 120. It gave a misleading impression that "the mark 'Nokia' was a badge of origin of the goods indicating a connection in the course of trade between the goods and the person who applie[d] it to the goods".16

By contrast, in 1997, the Gillette Company and Gillette Australia Pty Ltd (Gillette) sought an interlocutory injunction against Pharma-goods Australia Pty Ltd and Franklins Limited (Pharma), claiming, among other things, that Pharma's use of Gillette's trade mark "SENSOR" was an impermissible use of Gillette's trade mark.17 Pharma's packaging stated that their No Frills Moving Blades would fit Gillette's Sensor handles, and included a statement that SENSOR was "a registered trade mark of Gillette". Justice Burchett, hearing an injunction application, did not consider that a sufficient case had been made out by Gillette. His Honour noted that section 122 permits use "in good faith to indicate the... intended purpose... of goods", and found that Pharma's use of Gillette's trade mark was within those limits.18

If using a trade mark to indicate the intended purpose of goods or services it is important that you show a clear indication, through the use of specific language, that the manufactured or supplied goods are not the registered proprietor's goods. For example, the words "suitable for use with" or "suitable in" should be used.19 The greater the use and prominence of such terms, and other clear indicators that your product, while compatible with, is not made or endorsed by the original manufacturer, the more you are likely to be able to attract the section 122(1)(c) protection.

Good faith requirement

Each of sections 122(1)(a), (1)(b) and (1)(c) all require that use of a trade mark be in 'good faith'.

The courts have determined that this requires the person or business using the trade mark to act "honestly and with no ulterior motive".20 Whether an act has been done with ulterior motive is something to be decided by the "subject matter in any given context".21

As 'good faith' is a threshold requirement under both the Act and the relevant case law, it is important that you act honestly when using a registered trade mark without authorisation from the trade mark owner, whether it be use of your own name, descriptive use or to show an intended purpose.

Footnotes

1 Section numbers in the body of the article refer to the Trade Marks Act 1955 (Cth) unless otherwise specified.

2 Trade Marks Act 1955 (Cth), s 120.

3Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd [2016] FCA 1406, 97.

4 Bob Jane was (at various stages) the director, company secretary and the sole shareholder of ACN 149 801 141, Bob Jane Southern Motors Pty Ltd, Calder Park Promotions Pty Ltd (In Liq) (ACN 138 012 021) and ACN 154 904 604 Pty Ltd. He has been the director of Bob Jane Global Tyre Corporation (Hong Kong) Limited. (Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2013] FCA 1255, 7-8).

5 Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2013] FCA 1255, 1.

6Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2013] FCA 1255, 127.

7 Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235, 113

8 Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235, 116

9 Australia Postal Corporation v Digital Post Australia [2013] FCAFC 153, 89.

10 Wellness Pty Ltd v Pro Bio Living Water Pty Ltd (with Corrigendum dated 23 April 2004) [2004] FCA 438, 51.

11 Wellness Pty Ltd v Pro Bio Living Water Pty Ltd (with Corrigendum dated 23 April 2004) [2004] FCA 438, 51.

12 Wellness Pty Ltd v Pro Bio Living Water Pty Ltd (with Corrigendum dated 23 April 2004) [2004] FCA 438, 63.

13 Nokia Corporation v Mai [2003] FA 924, 46.

14 Nokia Corporation v Mai [2003] FA 924, 5.

15 Nokia Corporation v Mai [2003] FA 924, 11.

16 Nokia Corporation v Mai [2003] FA 924, 52.

17 Gillette Co & Anor v Pharma-Goods Australia Pty Ltd [1997] FCA 629.

18 Gillette Co & Anor v Pharma-Goods Australia Pty Ltd [1997] FCA 629.

19 Nokia Corporation v Mai [2003] FCA 924, 47.

20 Re Johnson and Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd [1991] FCA 310, 45.

21 Re Johnson and Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd [1991] FCA 310, 45.

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Brigid O’Dwyer
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