Last month, the High Court partly
overturned a decision of the Full Federal Court, upholding Gallo
Winery's appeal. The anticipated decision has far-reaching
implications for trade mark owners, particularly in relation to
what constitutes 'use' of a trade mark in the importation context
in Australia. In summary, the court held that:
(i) An overseas
manufacturer with a registered trade mark in Australia is a user of
a trade mark when goods bearing that mark are sold to an authorised
overseas trader and then offered for sale in Australia.
(ii) Use in Australia
of a trade mark by an overseas manufacturer does not require the
registered owner to knowingly 'project' the goods into the course
of trade in Australia. Instead, the use of a trade mark to
distinguish the owner's goods depends on the goods being 'in the
course of trade' in Australia (ie, being sold or offered for sale
in Australia). The wine sold by Gallo bearing the mark was in the
course of trade when it was imported into Australia.
(iii) Although the
quantity of wine bearing the 'BAREFOOT' trade mark was relatively
small, it was a commercial quantity and the use was genuine and
sufficient to establish use in good faith.
(iv) The beer and wine in
question were goods of the same description within the meaning of
s120(2)(b) of the Trade Marks Act 1995 (Cth)
(Act), despite falling within different classes of
goods.
For these reasons, the High Court
declared that: in advertising, offering for sale and selling in
Australia, beer under the 'BAREFOOT RADLER' mark, Lion Nathan had
infringed Gallo's 'BAREFOOT' mark in respect of wine.
Background
In January 2005, Gallo, an American
wine company, acquired the Australian trade mark 'BAREFOOT'
(registered in class 33 for wine) from a US company trading as
Barefoot Cellars. Barefoot Cellars exported some of the 'Barefoot'
wine to Germany. Wine bearing the Gallo mark was then imported from
Germany by the Australian liquor wholesaler Beach Avenue
Wholesalers Pty Ltd (Beach Avenue). Between 7 May
2004 and 8 May 2007, Beach Avenue imported into Australia, and
offered for sale, a limited quantity (144 bottles) of wine under
the Gallo mark. Importantly, there was no evidence that Gallo or
its predecessor knew about these sales.
Meanwhile, between September 2007 and
December 2007, Lion Nathan lodged three trade mark applications
that incorporated the word 'barefoot'. In January 2008, Lion Nathan
launched its new beer under the registered trade mark 'BAREFOOT
RADLER' (registered in class 32). Gallo commenced proceedings
against Lion Nathan for trade mark infringement, alleging that use
of the word 'Barefoot' in respect of beer infringed Gallo's mark in
respect of wine. Lion Nathan cross-claimed and sought an order for
removal of the Gallo mark from the Register on the basis that the
Gallo mark had not been 'used' in Australia by the registered owner
for a three-year period from 7 May 2004 to 8 May 2007.
In the initial Federal Court decision,
Flick J found in favour of Lion Nathan in both its defence to
infringement and its counter-claim to have Gallo's 'BAREFOOT' trade
mark removed from the Register for non-use. In July 2008, Gallo
appealed with respect to the decision regarding: (i) alleged
non-use of the 'BAREFOOT' trade mark; and (ii) whether the goods in
question - beer and wine - were 'goods of the same
description'. Lion Nathan's cross-appeal concerned the date
upon which the removal order should commence, arguing that the date
should be 8 May 2007 rather than 27 June 2008 (the date of the
decision). The Full Federal Court held that the sale of imported
goods bearing a trade mark, in circumstances where neither the
trade mark owner nor its predecessor in title contemplated this
importation and sale, amounted to non-use for the purposes of s
92(4)(b) of the Act. The Full Court also held that beer and wine
were goods of the same description and that removal of a mark from
the Register takes effect, without retrospective operation, after
the removal order is made.
Grounds of appeal to the High Court
Gallo sought to appeal the Full Federal
Court's finding that the mere presence of goods bearing a trade
mark in the course of trade does not amount to 'use' of the mark in
Australia and that, in order to have used a trade mark, the owner
must have 'projected' its goods (ie, the owner must have engaged in
conduct that may lead to its goods being dealt with in Australia).
Gallo also sought to reverse the order that the Gallo mark be
struck off the Register.
The High Court's decision
The key issue considered by the court
was whether there was use in Australia, for the purposes of the
Act, by the registered owner (or its predecessor in title), of the
Gallo mark in relation to wine between 7 May 2004 and 8 May 2007.
It fell to Gallo to rebut the non-use claim under s100(3) of the
Act by establishing there was use by Gallo (or its predecessor in
title) of the 'BAREFOOT' mark in respect of wines in good faith
during the alleged non-use period. The case turned, therefore, on
whether Beach Avenue's use was authorised and could be ascribed to
Gallo.
1 In the course of
trade
The High Court found that whether there has been use of a trade
mark under the Act does not depend on whether the owner
intentionally 'projects' the goods into the local market. Rather,
it is dependant on the goods being 'in the course of trade' in
Australia. It was held that Beach Avenue's importing, selling and
offering for sale in Australia the trade marked goods amounted to
the goods being 'in the course of trade'. The court's decision
affirmed the principle that a trade mark operates as a badge of
origin of the goods to which it is affixed. The court stated that
'during the trading period, the trade mark functions as an
indicator of the origin of the goods, irrespective of the location
of the first sale'.
2 Authorised user
The court held that use of the registered trade mark by Barefoot
Cellars was authorised use pursuant to s8 of the Act. Consideration
was given to the fact that Gallo exercised quality control over the
wine sold under the registered trade mark by Beach Avenue.
3 Use in good faith
Lion Nathan argued that 'use in good faith' should involve
consideration of the volume of use and the state of mind of the
registered owner in respect of the use. The High Court held that,
on the facts, a commercial quantity of wine was imported and
offered for sale with the registered mark affixed. The use was
considered 'genuine and sufficient to establish use in good faith
for the purposes of Lion Nathan's application for
removal'.
For these reasons, the court held that the sale of 'BAREFOOT'
wine under the Gallo mark in Australia by Beach Avenue constituted
use of the Gallo mark during the relevant three-year period under
the Act.
Court orders
The High Court declared that
advertising, offering for sale and selling beer in Australia under
the Lion Nathan mark infringed the Gallo mark in respect of wine.
The court also issued an injunction to restrain Lion Nathan from
selling, offering for sale, advertising or promoting beer under the
name 'BAREFOOT RADLER' or any other name that is substantially
identical with, or deceptively similar to, the Gallo mark, without
being licensed or authorised to do so by Gallo. The court also
refused to grant special leave to cross-appeal to Lion Nathan.
Importance of the decision
The decision clarifies the legal
position in Australia regarding unintentional or inadvertent use of
trade marks that are registered locally, while being owned by
overseas companies. It is not necessary for a trade marked product
to be 'projected' into a particular jurisdiction by the trade mark
owner for the trade mark to operate as a 'badge of origin'. It is
more relevant that the product initially originated from the owner
or, where the trade mark is licensed, is applied to the product
with the consent of the owner on the condition that the trade
marked product meets quality specifications prescribed by the
owner. If these requirements are met, once the trade marked product
enters into the course of trade in Australia with the mark
continuing to act as a 'badge of origin', the trade mark may be in
use. It seems that trade mark owners may have greater protection
afforded to their registered marks following this decision,
particularly where their trade marks are being used on products
that pass through different jurisdictions.
Authored by: Tamsyn Hutchinson,
Cornwall Stodart