Trade mark owners.
What do you need to do?Use your trade marks to preserve them.
Scott Bouvier
Partner
T +61 2 9296 2472
Sydney
Scott Bouvier
Maurice Gonsalves
Katrina Rathie
Melbourne
Natalie Hickey
Brisbane
John Swinson
Lion Nathan succeeds in “Barefoot” trade mark litigation
The Federal Court recently handed down its decision in a landmark trade mark case involving E&J Gallo Winery and Lion Nathan. The decision is a timely warning to international trade mark owners to use their trade marks in Australia or risk losing them.
The Federal Court found in favour of Lion Nathan in the case of E&J Gallo Winery v Lion Nathan [2008] FCA 934 in both its defence to infringement and its counter-claim to have E&J Gallo’s trade mark removed from the register for non-use.
The decision also resolved that beer and wine are not goods of the same description and involved a rare and successful application of the defence to infringement under s 120(2) of the Trade Marks Act 1990 (Cth).
The background
In 2007 Lion Nathan began to develop a new full strength, carbon neutral beer with a lemon and lime twist. Partly inspired by a horse named “barefootonbondi” featured in the weekly racing form guide, Lion Nathan conceived of the new product name “Barefoot Radler” in February 2007.
Before Lion Nathan launched “Barefoot Radler”, a trade mark search revealed the existence of a prior registration for “Barefoot” for wine, owned by E&J Gallo Winery. Based in California, it is the second largest wine-producing company in the world. Its “Barefoot” wine is a highly successful wine brand in the USA.
Lion Nathan commissioned some investigations of Gallo’s use of the Barefoot mark. No evidence of any use of the Barefoot mark in Australia was found. Accordingly, in May 2007, Lion Nathan filed a removal for non use action in the Australian Trade Marks Office. Upon receipt of the removal action, and seeing Lion Nathan’s own trade mark applications incorporating “Barefoot”, Gallo brought an action against Lion Nathan for trade mark infringement. As part of its defence, Lion Nathan brought the removal action into the Federal Court from the Trade Marks Office. Ultimately the entire matter (infringement and removal) were heard together in the Federal Court in April. Mallesons acted for Lion Nathan.
Gallo’s infringement case
Justice Flick decided that Lion Nathan’s mark “Barefoot Radler” was deceptively similar to Gallo’s mark. However, infringement was not made out as Justice Flick considered that beer and wine were not goods of the same description. Lion Nathan introduced extensive evidence about the characteristics of the production, distribution, sale and consumption of beer and wine. While Justice Flick noted that there were a number of similarities, he relied on the different origins and production methods, the different ways they are sold (albeit through the same outlets) and consumed, and the separation of beer and wine distribution within Lion Nathan and Fosters.
In addition, Justice Flick also upheld the rarely invoked defence to infringement under s120(2) - that the manner in which the Barefoot Radler sign was used was not likely to deceive or cause confusion. In making that finding, his Honour accepted the relevance of differences in the circumstances and environment in which Gallo and Lion Nathan used their marks.
Lion Nathan’s non-use case
The Trade Marks Act provides for removal of a trade mark that has not been used in good faith for a 3 year period (once registered for at least 5 years). Only use by the trade mark owner or its authorised user in Australia is relevant.
Neither Gallo nor the prior owner of the Barefoot mark had exported Barefoot wine directly to Australia until after the non use period. Gallo did not assert any reputation in Australia associated with its Barefoot brand. However, Gallo discovered that a handful of sales were made in Australia by a Melbourne wholesaler during the non use period. That wine made it to Australia from Barefoot wine that had been exported from the USA to Germany.
The Court found that because Gallo had not projected those products into Australia, those sales were not use by Gallo of the Barefoot trade mark in Australia. Further, because Gallo had not exercised control over the sale of the wine by the Melbourne wholesaler, Gallo’s argument that the Melbourne wholesaler was an authorised user was rejected.
In addition to the handful of sales, Gallo sought to rely on steps taken during the non use period with McWilliams Wines to launch a Barefoot wine in Australia. The Court rejected those steps as only negotiations at that stage and found that the only concrete step taken was the allocation of wine production, which was a step taken by McWilliams and not Gallo.
Gallo also argued that a prior trade mark registration of a footprint logo by Logan Wines was an obstacle to its use of its Barefoot word mark (because its Barefoot wine was always sold in association with a footprint). This argument was rejected as it was not an obstacle nor was it in fact the reason why Barefoot wine was not sold during the non use period. Finally, the Court refused to exercise its discretion to preserve Gallo’s Barefoot registration as there were no public interest grounds.
Take away
This case is an important reminder that the global trade mark system operates on a national basis. If you want to preserve your trade mark registrations for global brands in Australia, you need to use them in Australia.