High Court “Zips” Up Honest Concurrent Use

In a decision with major implications for brand strategy, the High Court of Australia has upheld a high bar for traders to adopt a brand name “honestly”.

The High Court has handed down its decision in Zip Co Limited v Firstmac Limited,¹ unanimously dismissing the appeal and critically finding that the “honest concurrent use” defence to trade mark infringement is to be assessed at the time of each potentially infringing act, and that “honesty” is a positive onus for alleged infringers to discharge.

Background

Firstmac Limited (Firstmac) registered “ZIP” as a trade mark in 2004 for services relating to financial affairs (Firstmac Mark). Since 2013, Zip Co Limited and Zipmoney Payments Pty Ltd (together, Zip), used signs containing the word “ZIP” as trade marks for point-of-sale credit and digital payment services.

Overturning the trial judgement,² the Full Court held that Zip’s marks infringed the Firstmac Mark, and that Zip had failed to establish honesty “in all the circumstances” for the purpose of the honest concurrent use defence.³ Zip was granted special leave to appeal to the High Court.

Time of Assessment

Rejecting Zip’s argument that honest concurrent use should be assessed at the date on which the defence was filed (2019) or the date of the hearing before the trial judge (2022)⁴, the High Court considered that “since every occasion of the use of a mark in trade in Australia… can be a separate potential infringement”, the defence applies separately to each such occasion.⁵

However, the High Court endorsed the Full Court’s statement that “the failure to establish honesty at the date of first potential infringement in November 2013 was fatal… because no subsequent event could otherwise establish honesty.” ⁶

Meaning of “Honesty”

The High Court confirmed that the issue was not whether Zip was dishonest, but whether it had “discharged [its] onus of positively proving honesty.”⁷ The High Court confirmed “honesty” to be a subjective inquiry assessed from a person’s state of mind by reference to the standards of ordinary, decent people.⁸

Relevantly, Zip received adverse examination reports from IP Australia in October 2013 which identified the Firstmac Mark as an obstacle to registration. Zip nonetheless proceeded to launch use of “ZIP” in November 2013. While knowledge of a competing mark will not preclude a finding of honesty, Zip did not prove honesty in circumstances where it was aware of “the likelihood of a material impediment” to use of ZIP and chose not to engage with the adverse report.⁹

Importantly, the High Court distinguished and implicitly endorsed the finding of honesty in McCormick & Co Inc v McCormick ¹⁰ in which honesty was made out despite knowledge of a competing mark as the concurrent user genuinely believed there would be no confusion. Their Honours noted that Zip did not lead evidence sufficient for such a finding.¹¹

Their Honours also cautioned against “incorrectly substituting carelessness for dishonesty”¹², and considered that, consistent with Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd ¹³, a person could establish they had honestly overlooked the importance of inquiring with the Register before adopting the mark in an otherwise honest manner. However again, their Honours considered that Zip did not lead sufficient evidence for a finding that Zip was not reckless in its failure to consider the adverse report.

Ultimately the High Court considered that these “gaps in the evidentiary record” precluded a finding that Zip had provided its honesty.¹⁴

Key Takeaways

Businesses should:

1. Be mindful of the evidentiary burden that comes with establishing “honesty”;
2. Prioritise clearance searches before commencing use of a mark; and
3. Seek legal advice upon receiving an adverse examination report.

Footnotes

^{1 [2026] HCA 16 (HCA Judgment).}

^{2 Firstmac Limited v Zip Co Limited [2023] FCA 540.}

^{3 Firstmac Limited v Zip Co Limited [2025] FCAFC 30 (FCAFC Judgment) at [65] (Katsmann and Bromwich JJ, Parram J agreeing).}

^{4 HCA Judgment at [46].}

^{5 Ibid at [56].}

^{6 Ibid at [68].}

^{7 Ibid at [69].}

^{8 Ibid at [61], [72].}

^{9  Ibid at [62], [69]-[70].}

^{10 (2000) 51 IPR 102.}

^{11 HCA Judgment at [70].}

^{12  Ibid at [73].}

^{13 (2016) 118 IPR 239 at 260 [118].}

^{14  HCA Judgment at [70].}

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.