The ability to use dormant brands and trademarks should be taken into account when considering the purchase and negotiating the purchase price when entering into a commercial agreement.
In brief: Awakening a dormant brand may come back to bite with Sportsbet Pty Ltd (Sportsbet) obtaining an interlocutory injunction to prevent Crownbet (Crownbet) using the name SPORTINGBET.
What you need to know:
An interlocutory injunction is an injunction pending the hearing and determination of a case.
In this instance, the injunction was provided because:
- Sportsbet had made out a prima facie case; and
- If Crownbet started to commence trading using a SPORTINGBET trademark then a substantial amount of betters would likely be lead into error and assume a trade association between SPORTINGBET and Sportsbet.
The facts
- Sportsbet, an online betting service, owns a number of trademarks for SPORTSBET.
- Crownbet offers betting services under the name CROWNBET.
- Crownbet proposes to commence offering betting services under the name SPORTINGBET in August 2018. This is because:
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- As part of a commercial agreement, Crownbet must cease using the CROWNBET brand on or before 26 August.
- Crownbet acquired William Hill Australia Pty Ltd which also offers betting services and allowed Crownbet to acquire the name SPORTINGBET.
- As part of the commercial agreement, Crownbet must cease using the WILLIAM HILL brand by 22 October.
- The trademark and brand SPORTINGBET had been used from 2002 to 2015.
- In February 2015, all customers of SPORTINGBET were moved to the WILLIAM HILL brand.
Sportbet's arguments:
By using the brand SPORTINGBET, Crownbet is engaging in conduct which is misleading and deceptive (or likely to mislead and deceive) and in breach of Australian Consumer Law.
Crownbet's arguments:
- Crownbet has paid for the SPORTINGBET brand and intellectual property and goodwill associated with the brand.
- As Crownbet will have to stop using the name CROWNBET on 26 August, if the interlocutory injunction is granted, they will have to adopt a different brand whilst they wait for the final hearing.
- SPORTINGBET is still widely recognised in the Australian online wagering market and was used extensively for 13 years.
The Court:
The Court in ordering the interlocutory injunction stated that:
- There was a similarity between SPORTSBET and SPORTINGBET.
- If Crownbet were to commence trading as SPORTINGBET then a substantial number of betters would likely be led into error.
- Sportsbet have made out a strong prima facie case and the brand recognition of SPORTSBET has increased markedly during the last 3 years.
- The balance of convenience is in favour of Sportsbet.
Comment
When entering into commercial agreements, the ability to use dormant brands and trademarks should be taken into account when considering the purchase and negotiating the purchase price.
Given the Court's comments as to the strength of Sportbet's case (which they said was a strong prima facie case), we will watch with interest if this matter proceeds to a final hearing or settles prior to trial.
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.
