Australia | Brand Clearance Searches: The New Non-negotiable

Three months after the High Court of Australia clarified the meaning of honesty as a defence to trade mark infringement, the implications for day-to-day brand strategy are starting to come into focus.

The Zip Co Limited v Firstmac Limited (Firstmac) case, which resulted in a win for Firstmac, reinforced the protections available to registered trade mark owners against concurrent users who cannot demonstrate honesty at the relevant time. Spruson & Ferguson represented Firstmac at all stages during the case, including its successful High Court appeal – see our previous article for further information.

Obtaining professional trade mark clearance advice before committing to a brand is always a good idea for any business. Many expensive and time-consuming rebrands and infringement cases could be avoided entirely if businesses were aware of existing rights before selecting and starting to use a new brand.

In simple terms, “honest concurrent use” recognises that two businesses can sometimes end up using similar trade marks independently and in good faith. If a business adopted and used its brand honestly, without intending to mislead customers, the law may in some circumstances allow both marks to coexist. However, Australian courts are increasingly expecting businesses to show they did their homework before adopting a brand, including taking reasonable steps to check for existing trade mark rights.

In the post-Firstmac landscape, it’s clear that searching is more important than ever. Not only does the decision highlight the limits of the infringement defences relating to honest concurrent use, IP Australia is now applying the same reasoning to tighten acceptances on applications under the honest concurrent use provision. Even businesses that are not involved in any dispute with an earlier mark owner might struggle to register their trade mark if they cannot satisfy the honesty requirements.

The Firstmac decision clarified that parties who fail to identify and resolve impediments before starting to use their mark, and continue to use the mark even after receiving an adverse examination report identifying obstacles, can face significant difficulties in establishing the first element of ‘honest concurrent use’: honesty. Although awareness of a competing registered mark does not automatically disqualify business from showing honest concurrent use, a business which decides to proceed regardless must be able to affirmatively explain why their conduct remained honest.

Recent revisions to the Trade Marks Examiners Manual confirm that this reasoning has been incorporated into examination. The following matters are now expressly listed as relevant considerations:

• Was the applicant aware of the conflicting trade mark?
• What enquiries did the applicant make before commencing use?
• If no enquiries were made, what is the reason for this (and would someone in the applicant’s position have been reasonably expected to do more)?
• If the applicant was aware of the conflicting mark, why did they choose to proceed? For instance, did they genuinely believe that their use of the mark was unlikely to cause confusion?

Following Firstmac, if an applicant did not undertake a search, or can’t explain why it decided to proceed in the face of potential problems, its case for overcoming a prior mark with honest concurrent use will be impaired.

What next in trade marks practice

It is easy to imagine situations where the relevant evidence is not readily available; not all applicants will be commercially sophisticated and able to access professional trade mark services; some may have conducted their own internet searches but not kept records; and institutional knowledge about the circumstances surrounding adoption can be lost over time with personnel movement.

We anticipate seeing some flexibility applied in these scenarios, with more rigorous searches and detailed record-keeping likely to be reasonably expected of established companies than of sole traders or very small businesses.

We are also curious about whether this will result in an increase in decisions to accept applications under the alternative discretionary basis in section 44(3)(b). That provision allows examiners to accept the application if they consider that doing so is proper “because of other circumstances”.

In some situations, such as where an Examiner considers that honest concurrent use would have been established but there is a lack of evidence relating to the time the mark was chosen, there may still be room to accept the application under this alternative basis.

Takeaways for brand owners

The key points for businesses to remember include:

1. Search as early as possible, before using and ideally before investing. All marketing teams and internal legal departments should be aware of the need for pre-launch clearance searches. Searches should include marketplace searches (generally conducted by the business itself, including general search engine results) and professional trade mark, business and domain name register searches conducted by a professional services firm like Spruson & Ferguson. The sooner searches are conducted, the more chance you have to avoid wasting resources on untenable brand options.

• Keep records. It is critically important to keep accurate, dated records surrounding branding decisions, such as file notes, email chains and copies of professional advice. A subjective belief that ‘confusion is unlikely’ may be helpful in establishing honesty, but should be backed up by evidence from the time the mark was chosen, and must be reasonable in the circumstances.

• File promptly to keep search results fresh. Businesses should file their trade mark application as soon as possible after receiving a clear search report to avoid a scenario where a conflicting mark is filed during the delay.

• Remember that honesty is an ongoing requirement. The relevant date for determining honesty is the filing date of an application. However, events occurring after the filing date can be relevant to establishing the position at the time of filing. From the perspective of both registering a mark and obtaining an infringement defence, it is important to engage with the contents of the examination report and ensure that use remains honest in the face of any obstacles identified by the examiner.
  
  If a business ran its own searches and a later relevant result is identified during examination, it will be necessary to explain how the decision to continue using the mark remained honest. Evidence of steps taken to overcome the obstacle, such as non-use removal proceedings, consent requests, legal submissions, or evidence that the applicant genuinely did not consider confusion was unlikely, should assist the position.

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.