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Top 10 Trade Mark Developments of 2016: Australia, New Zealand & International

From use to non-use, overseas suppliers, parents and subsidiaries, here are our top trade mark developments for 2016.

Search Engines & Use of a Competitor’s Mark

1. Google® AdWords, descriptive or infringing? - Veda Advantage Limited v Malouf Group Enterprises Pty Limited (No 2) [2016] FCA 470

In May 2016, the Federal Court of Australia considered the legality of advertisers utilising competitors’ trade marks as Google AdWords.

Veda Advantage Limited (‘Veda’) is an Australian provider of credit reports on individuals and companies. Veda has a number of registered Australian trade marks including a trade mark for ‘VEDA’ covering financial services.

Malouf Group Enterprises Pty Limited (‘Malouf’) bought a set of search engine words (keywords), including ‘veda’. The intention being that Google’s search engine would display Malouf’s ad when ‘veda’ was entered as a search term.

Veda claimed that such action by Malouf breached its trade mark rights. Katzmann J concluded that the use of a competitor's trade mark as a keyword did not constitute use as a trade mark. Important to her Honour's decision was the fact that the keywords were not visible to customers who viewed the sponsored links and therefore cannot be perceived as a badge of origin.

Foreign distributor liable

2. Overseas suppliers watch out - Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited (No 2) [2016] FCA 478

In May 2016, the Federal Court of Australia found that an overseas company which does not undertake any direct commercial activity in Australia can still be held liable for misuse of an Australian trade mark.

Playgro Pty Ltd (‘Playgro’) was the owner of the registered trade mark ‘PLAYGRO’ in Australia as a word mark and a device covering games and play things.

Playgo Art & Craft Manufactory Limited (‘Playgo’) is a company based in Hong Kong that manufactures and wholesales toys under the PLAYGO device trade mark. These toys were sold to a Hong Kong agent of two large Australian retailers. These retailers subsequently advertised and sold the PLAYGO branded toys to their own customers in Australia.

Playgo did not control the Australian retailers’ activities and it never actively promoted or sold any of its PLAYGO branded toys in Australia.

After finding that the trade marks were deceptively similar, the judge held that Playgo had infringed the PLAYGRO trade marks.  His honour held that Playgo continued to use its PLAYGO mark on its goods in Australia because they were still “in the course of trade” (through unrelated Australian retailers) until they reached the end consumer.

Authorised Use – Control Needs to be Real to Avoid Non-Use

3. The Wild Turkey can’t hold onto its Wild Geese - Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 118

In June 2016, the Full Court of the Federal Court of Australia held that failing to demonstrate actual control over a trade mark utilised by licensees exposes owners to cancellation for non-use.

Lodestar Anstalt challenged the registered trade marks ‘Wild Geese’ and ‘Wild Geese Wines’, owned by Campari America, maker of Wild Turkey Bourbon, for non-use.

Campari had an agreement with Wild Geese Wines Pty Ltd who uses the trade mark on wine that it manufactures and distributes in Australia. Campari argued that this was ‘use’ or ‘authorised use’ of the trade mark by a third party, under the ‘control’ of the registered owner.

The Federal Court concluded unanimously that 'actual' control is necessary to prove trade mark use.

Hence it is recommended that owners of trade marks have written licence agreements with all licensees (including subsidiaries).  These agreements should include appropriate control mechanisms such as review and authorisation, sampling and reporting.

Too Much Control:

4. Australian Parent Controlling Foreign Subsidiary: Bywater Investments & Ors v FCT [2016] HCA 45

On the topic of control, foreign parent entities need to be careful to ensure that they do not control the board of an Australian subsidiary.

In a unanimous decision, the High Court found that foreign corporations can be Australian resident companies for tax purposes.  This was the case where the foreign boards had abrogated their decision making to an Australian controlling entity.

Hence, whilst it is important that control is exercised between a parent and subsidiary from a trade mark perspective (to avoid a non-use threat), the board of the subsidiary should still be independent to in order to avoid potential taxation issues (as well as shadow director issues).

Non-Use: Mite not be so easy

5. OZEMITE v AUSSIE MITE - Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939

Pursuant to s 100(3)(c) of the Trade Marks Act 1995 (Commonwealth of Australia), a trade mark can be removed for non-use if it hasn’t been used for a period of 3 years.

In this case the Federal Court decided that the trade mark should not be removed for non-use even though it hadn’t been used on the applicable products.

This case concerned a long-running war between traders over the registration as trade marks of the homophones, OzEmite and Aussie Mite, which, since mid-2012, have competed in the Australian marketplace with the iconic Vegemite brand, once quintessentially Australian, but now owned by an American conglomerate. 

OzEMite was the brainchild of the well-known Australian entrepreneur, Dick Smith AC.

In this instance his honour found that even though no products were manufactured and sold with the OzEmite trade mark, the publicity regarding the trade mark and the intended product was sufficient ‘use’ to overcome any non-use objection.

His honour also commented that even if he were not satisfied of the use, he would exercise his broad discretion to order that the mark remain on the Trade Marks Register.

Licence Interpretation: Pink Lady Apples

6. New Mark Not Included – Apple and Pear Australia Limited v Pink Lady America LLC [2016] S APCI 2015 0127

This case concerned whether a schedule to a trade mark licence included a new ‘refreshed’ mark.

The PINK LADY brand is a brand which was first used in the 1990s in connection with the Cripps Pink variety of apple that was bred in Western Australia and is now sold around the world.

The Supreme Court of Victoria took the sensible approach of deciding that the licensed trade marks were only the marks specifically listed in the schedule to the agreement.  In particular, the agreement did not extend to trade marks which may in the future be developed for use and become registered.

The result of this decision is that a trade mark later adopted internationally for the PINK LADY brand was excluded from the licence agreement (because it was not specifically listed therein).

The reminder from this case is for licensing parties to consider whether any new trade mark applications may be filed and to ensure that appropriate clauses are in place to address these within the licence.

Australian Agenda for change

7. Intellectual Property Laws Amendment Bill 2017 – exposure draft

IP Australia has published a draft of an Intellectual Property Laws Amendment Bill 2017 and the proposed accompanying regulations. This draft and regulations can be accessed here.

IP Australia has expressed that the proposed changes aim to align and simplify the administrative processes and rules relating to patents, trade marks, designs and patent breeder’s rights in order to reduce complexities and delays currently experienced by IP owners.

Anyone who wishes to comment on the draft must do so before 22 January 2017

If you like Pina Colada

8. Havana Club Holding SA and Corporacion Cuba Ron S.A. v 1872 Holdings, V.O.F. [2016] ATMO 37

1872 Holdings (‘The Applicant’) applied to register the names of MATUSALEM THE SPIRIT OF CUBA LIBRE, MATUSALEM EL ESPIRITO DE CUBA, and MATUSALEM EL ESPIRITU DE CUBA LIBRE as trade marks covering ‘rums’. The Applicant’s rum products originated from the Dominican Republic.

The applications were opposed by Havana Club Holdings SA and Corporacion Cuba Ron S.A who have been selling HAVANA CLUB RUMS, which are from Cuba, around the world for a lengthy period of time. Corporacion Cuba Ron was granted the right to use the geographical indication ‘Cuba’ for ‘Cuban rums’ by the Cuban Office of Intellectual Property.

Havana Club Holdings SA and Corporacion Cuba Ron S.A. lodged the opposition under section 61 of the Trade Marks Act 1995 (Cth) which states that the registration of a trade mark in respect of particular goods may be opposed on the ground that the trade mark contains or consists of a sign of a geographical indication of goods originating in a country, or in a region or locality in a country, other than the country in which the relevant goods originated. 

The opponents succeeded and the Australian Trade Marks Office Hearing Officer considered that Australian consumers were likely to focus on the word ‘Cuba’ found on all three trade marks and come to the conclusion that the rum originated from Cuba.

The trouble with colour in NZ

9. 7-Eleven Inc [2016] NZIPOTM 9

7-Eleven Inc applied to register its striped colours as a trade mark in relation to retail and convenience store services in New Zealand.

The New Zealand Trade Mark Office rejected 7-Eleven’s application on the basis that the Assistant Commissioner was not satisfied that the striped colours would function as a trade mark because ‘whilst some consumers may be attracted to the bright and bold stripes that comprise 7-Eleven’s device mark, I do not consider the mark to be memorable to the extent that its essence will be recalled by the ordinary consumer’.

Another determinative factor was the nature of ‘convenience store’ services.  On this point, the Assistant Commissioner noted that there would tend to be a low level of attention paid by the average consumer of the applicant’s services.

Finally, the Assistant Commissioner also noted that a significant portion of the evidence of use included use with the ‘7-ELEVEN’ word mark.  Such use fell short of establishing that the striped colours alone would be seen as a stand-alone trade mark.

10. Madrid System–Who’s new?

In 2016, Brunei Darussalam joined as the System’s 98th member.

In November 2016, Brazil’s Minister of Industry, Foreign Trade and Services announced his nation’s intention to join the Madrid System by mid-2018. In addition to Brazil, a number of significant accessions in the coming years are expected, including Canada, the remaining members of the Association of Southeast Asian Nations (ASEAN) as well as several African and Caribbean nations.

Fabiola Dos Santos and Jason Watson

9 January 2017