Australia: E-Alert: Protecting trade marks – Understanding ownership of trade marks and authorised use

Last Updated: 11 April 2018
Article by Peter Bolam

Structuring of ownership of IP assets is a good thing. The traditional approach is for IP assets to be held by an IP asset company that does not trade and for the use of the IP assets to be licensed to a trading company. This way the IP assets are insulated from the trading risk that will be incurred by the trading company.

This is all very well but when it comes to considering the application for registration of a trade mark and use of trade marks, there are some trade mark law peculiarities that need to be kept in mind or else the registration of the trade marks could be revoked.

There are two issues. Firstly, which individual or entity must be the applicant for registration of the trade mark. Secondly, what control must the owner of a registered trade mark exercise over the trade mark to establish that the trade mark is being used under the control of the registered trade mark owner and therefore not subject to removal for non-use.

The case studies at the conclusion of this article are intended to explore the practicalities of these topics. If you have any queries or concerns flowing from the case studies, please feel free to contact Peter Bolam on (07) 3223 9139 or

Before we can discuss the practicalities of these issues we need to spend a little time on the legal principles that will impact. These are: (1) understanding use of a trade mark 'as a trade mark', (2) the significance of 'authorised use' and (3) the importance of trade mark ownership when applying to register a trade mark.

Use of a trade mark "as a trade mark"

Integral to an understanding of Australian trade mark law is the concept of the use of a trade mark "as a trade mark". This means the trade mark must be used to indicate that the goods and/or services associated with a trade mark are connected in the course of trade with the registered owner of the trade mark.

A good example is swing tags and labels on clothing. The trade mark on swing tags and labels is being used as a trade mark as it is indicating a connection in the course of trade between the item of clothing and the trade mark owner.

However, there are times that the use of the trade mark is not by the trade mark owner but is by a party that has been authorised by the trade mark owner to use the trade mark. Franchises are a good example. Ordinarily, the trade mark is owned by the franchisor and it licenses franchisees to use the trade mark.

Authorised use of a trade mark

The Trade Marks Act 1995 contemplates that a registered trade mark may be used by authorised users as well as by the registered trade mark owner. The Act provides that authorised use is to be taken as use by the owner. It does this because if a trade mark is not used for 3 years by the owner, it is liable to be removed from the Register of trade marks for non-use. However, if the trade mark is used by an authorised user, that use is taken to be use of the trade mark by the owner and will be sufficient to establish that the trade mark has been used and should remain on the Register.

Importantly, for authorised use, the connection in the course of trade between the registered trade mark owner and the goods or services being sold by the authorised user must be maintained. Otherwise, the public could be misled by the use of the trade mark. For example, the use of a Pierre Cardin trade mark on clothing that Pierre Cardin has had no association with in the course of trade may well mislead consumers.

In the past, it has been accepted that the registered trade mark owner has a connection in the course of trade with the goods or services if the registered owner has theoretical control (even if it has not exercised actual control) over the goods or services. Licence agreements between the trade mark owner and user would be adequate if they allowed the trade mark owner to exercise quality control, say, by the taking of samples, even if actual control was not exercised because samples were never called for nor tested. That is no longer the legal position in Australia.

The Full Court of the Federal Court of Australia1 has now determined that for a trade mark owner to authorise the use of its trade mark, it must exercise actual control; not mere theoretical control.2 The connection between the trade mark owner and the goods or services may be slight, such as by selection or quality control of the goods or services, but the control cannot be slight.3 Control involves questions of fact and degree and there must be control as a matter of substance.4

Toothless licence agreements or agreements the provisions of which are not enforced will no longer be sufficient to establish the authorised user relationship. For example, the provisions of a trade mark licence agreement that permitted the trade mark owner to call for samples of goods for testing were not sufficient if the provisions were not activated.5

While control can be as to the quality of the goods or services, the manufacturing process of the goods or financial control, 'control' is not restricted to these elements.

We now have some guidance as to what will not be adequate. The following are insufficient for 'actual control' or 'control in substance'.

  • Licence provisions that simply restrict the right to use the trade mark.6
  • As stated above, licence provisions that permit sampling and testing but which are not put into practice.7
  • The ability for the trade mark owner to revoke the licence to use the trade mark.8
  • Quality control provisions in a licence agreement that in practical terms had no significance on the way the licensee operated its business.9 For example, if the licence agreement specified a standard for the quality of goods or services that was imprecise or not exacting this will not be sufficient.10

Conversely, a licence agreement that sets out in detail a quality standard to be achieved by the user may well be sufficient as the detail in the agreement may not require the trade mark owner to give directions or instructions from time to time to the user.11 For example, a licence agreement that requires the trade mark user to meet a specific Australian quality standard may be sufficient.

Quite separately from quality control, the trade mark owner may exercise actual control over a user if the user is a subsidiary or an associated entity and the trade mark owner owns or controls a majority of the shares of the user entity or if for some other practical reason it controls the user, financially or otherwise.12 This is unlikely to be the case for users that are at an 'arm's length' from the trade mark owner.

The importance of trade mark ownership

Only last year the Full Federal Court of Australia in the Pham decision13 made clear that trade mark ownership is critical when applying to register a trade mark.

Mr Pham was the sole director of Insight Radiology Pty Ltd (then called AKP Radiology Consultants Pty Ltd) and in 2011 he applied to register a trade mark "Insight Radiology". In doing this, he claimed to be the owner of the trade mark and that he intended to authorise the company to use the trade mark. But on the facts found by the Court, the company commenced to use the trade mark alone in 2012, it was always intended that it was to use the trade mark and this it did without any authority from Mr Pham. Mr Pham seemed to have simply wanted to register the trade mark in his own name. Was he entitled to be registered?

The person (individual(s) or entity) that claims to be the owner of a trade mark is entitled to apply to register the trade mark. But, who is the owner of the trade mark? There are two grounds on which a person can claim to be the owner of a trade mark. 14

  1. Firstly, by being the author of the trade mark and having used or authorised the use of the trade mark.
  2. Secondly, by authorship of the trade mark, filing the application for its registration and intending to use or intending to authorise another person to use the trade mark.

One of the two alternatives must exist at the time of making of the application.15 Once the application to register the trade mark is lodged, the trade mark (including the application) can be assigned to another party.16 Importantly, if the application is lodged by a party that does not qualify as being the owner of the trade mark, the application cannot be saved by a subsequent assignment to the party that was the owner of the trade mark and therefore the correct applicant.17

As to the requirement of authorship; it is not difficult to satisfy. The trade mark need not be invented or original; just that the claimant has adopted it as a trade mark. A trade mark used outside Australia could be copied and authored in Australia.18

In the result, while Mr Pham may have been the author of the trade mark, he was not its owner because at the time of the trade mark application, he had not used the trade mark or authorised the company to use it and on the facts of the case it was found that he did not intend to do either of these.

Trade mark ownership case study

Smith commenced operating a business as a sole trader in 2010 using an unregistered trade mark. In 2015 Smith incorporated a company of which was the sole shareholder and which commenced to operate the business adopting use of the trade mark. It is now proposed to register the trade mark.

Who should be the applicant for registration of the trade mark?

What would be the position if the company was not wholly owned by Smith?

Would the position be different if the trade mark proposed to be registered has substantial additional elements to the original 2010 trade mark?

If the applicant for registration of the trade mark is incorrect, can the application be corrected by assigning the application to the correct applicant before registration?

Authorised user case study

Franchisor LLC is a US incorporated entity that is the registered owner of trade marks registered in Australia. Franchisor LLC licenses the use of the registered trade marks to franchisees in a franchise network in Australia. The licence restricts the use of the trade marks to franchise products in Australia and requires the payment of a licence fee to Franchisor LLC.

The franchise network in Australia is operated by Franchisor Pty Ltd and it is owned in equal shares by Franchisor LLC and an Australian entity. Franchisor Pty Ltd enters into a franchise agreement with each franchisee in the network that permits regular sampling and testing of the products sold by the franchise stores. Franchisor Pty Ltd regularly conducts testing of franchise products and requires franchise owners to undergo training if product quality is inadequate.

Franchisor LLC commences trade mark infringement proceedings in the Federal Court of Australia against Competitor Pty Ltd for infringement of its registered trade marks in Australia and Competitor Pty Ltd cross-claims for revocation of the registered trade marks for non-use.

Is the use of the trade marks by the members of the franchise network as authorised users of Franchisor LLC and therefore use of the trade marks by Franchisor LLC.

What would be the position if Franchisor LLC also operated one store in Australia through a wholly owned Australian subsidiary company that used the registered trade marks?


1Lodestar Anstalt v Campari America LLC [2016] 92 ("Lodestar")
2 Lodestar [97]
3 Lodestar [95]
4 Ibid
5 Lodestar [108]
6 Ibid
7 Ibid
8 Ibid
9 Lodestar [103]
10 Lodestar [107]
11 Lodestar [98]
12 Lodestar [95]
13Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 ("Pham")
14 Pham [19]
15Pham [29]
16 Ibid
17 Pham [32]
18 Aston v Harlee Manufacturing Co (1960) 103 CLR 391

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Peter Bolam
Similar Articles
Relevancy Powered by MondaqAI
Corrs Chambers Westgarth
Pointon Partners
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Corrs Chambers Westgarth
Pointon Partners
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions