We are often approached by business owners who have found themselves in the situation where another business is using a similar trading name, product name or packaging style and benefiting from it when there is limited or no association between the two.
We thought it useful to use a recent practical example to demonstrate how the law is applied in situations such as this.
A Federal Court of Australia case 1 recently dealt with two Mexican-inspired restaurants that both planned on using the name "Cartel del Taco"; one in Brisbane and the other in Melbourne.
The case involved a claim by the Brisbane-based restaurant that by using the name "Cartel del Taco" the Melbourne outlet had:
- breached the Australian Consumer Law (misleading and deceptive conduct); and
- was involved in passing off.
The Brisbane restaurant opened on 1 April 2022 and the Melbourne restaurant had held off opening pending the outcome of the case.
At the time the claim was made the Melbourne restaurant had, however, used the name extensively on social media and also registered the business name "Cartel del Taco".
There are many factors involved in proving misleading and deceptive conduct and passing off, however the most relevant for this case were as follows:
- That a not insignificant number of ordinary or reasonable members of the public would likely make a connection or association between the name "Cartel del Taco" and the Brisbane restaurant.
- That the connection was made at the time the respondent (the owners of the proposed Melbourne restaurant) started using the name "Cartel del Taco".
- That the proposed Brisbane restaurant had a reputation based on its name at the time the Melbourne restaurant started using the name.
- That the use of the name by the Brisbane business was recognised as distinctive of the Brisbane restaurant and that the Melbourne restaurant, by using the same name, created a misrepresentation of there being an association between the two restaurants.
The Court's decision
The Brisbane's restaurant's application failed because:
- At the time the Melbourne restaurant started using the name, neither restaurant was trading and the Brisbane restaurant had not even entered into a lease for a premises - there can have been no recognition of the name as a result of customers dining in or from signage at the premises.
- The Brisbane restaurant may not have even used the Instagram page "carteldeltaco" or used the name in any of its posts until after the Melbourne restaurant started using the name and it had registered the business name.
Essentially at the time the Melbourne restaurant started using the name "Cartel del Taco" the Brisbane restaurant had not established a reputation using the name and was not identifiable by the name.
If you wish to bring about a claim in relation to another business using the same or similar name (or packaging or signage) as yours, you have to establish (amongst other criteria) that at the time this conduct started that:
- your business had a distinctive reputation from using that name; and
- that it is likely to mislead customers into thinking that there is some association between the two businesses.
1 Los Carnales Pty Ltd, in the matter of Cartel Del Taco Pty Ltd  FCA 1053
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.