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What do you need to do?Consider broadening your trade mark clearance searches. Overseas trade mark owners need to export their goods to Australia to use their trade marks in Australia.
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The Full Federal Court has ordered that E & J Gallo Winery’s “Barefoot” trade mark be removed for non-use because they did not direct their wine to Australia. However, contrary to the earlier finding, it has decided that beer and wine are “goods of the same description” for trade mark infringement purposes. This decision has important consequences for all international trade mark owners and all trade mark owners who sell a broad range of goods.
On 1 July 2008 we distributed an alert on the Federal Court decision E & J Gallo Winery v Lion Nathan [2008] FCA 934. E & J Gallo Winery sued Lion Nathan over Lion Nathan’s “Barefoot Radler” beer in the face of Gallo’s registration of “Barefoot” for wine. The Federal Court found in Lion Nathan’s favour in its defence to infringement and its counter-claim to have Gallo’s mark removed from the register for non-use.
Gallo appealed to the Full Court. The widespread implications of the Full Court’s decision ([2009] FCAFC 27) are discussed in this alert. (Mallesons acted for Lion Nathan).
Full Court confirms Gallo’s mark should be removed for non-use
If a trade mark has not been used in good faith for a three year period (the “non-use period”), it is liable to be removed from the register after it has been on the register for five 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 16 bottles were sold 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.
Both Justice Flick and the Full Court disagreed with Gallo’s proposition that an owner of a registered trade mark uses the mark in Australia simply because goods to which the owner (or an authorised user) has affixed the mark are traded in the ordinary course of trade in Australia. For there to be use in Australia of the mark by the owner, the owner of the mark must have engaged in conduct of some type which the owner might reasonably contemplate would result in dealings with its goods marked with its mark in Australia while the goods were in the course of trade.
Accordingly, the Full Federal Court confirmed Justice Flick’s order that Gallo’s Barefoot trade mark be removed.
Date of removal
The Full Court found that the removal of a mark takes effect only after the Registrar enters the removal in the Register of Trade Marks, and that the Court cannot order that the removal has retrospective effect (for example, from the end of the non-use period). Accordingly, the Court needed to consider whether there was an infringement up until the time the mark is removed.
This finding has important implications. If you decide to launch a new brand, on the assumption that a prior mark will be removed for non use, you will be at risk of an infringement finding, and possibly damages and/or an account of profits up until the date of removal. This result seems contradictory to the “use it or lose it” philosophy of the non-use provision and should be considered for legislative amendment.
Full Court finds infringement
The Full Court overruled Justice Flick and found that Lion Nathan did infringe Gallo’s Barefoot trade mark. Specifically, the Full Court overruled Justice Flick’s finding that beer and wine were not goods of the same description. Justice Flick was persuaded by the objective differences between the products, such as in their origins, production, sales methods, consumption patterns and separate distribution channels.
In contrast, the Full Court placed significant emphasis on what members of the consuming public might perceive when they were considering purchasing beer or wine. In their view, if the sale of beer and wine under the same mark by different companies is likely to lead to confusion or deception, then they will be goods of the same description. In coming to the conclusion that consumers would be confused, the Full Court relied on the evidence that Barefoot Radler beer was intended (in part) to be an appealing alternative to wine, large producers of alcoholic beverages now produce a range of products, and wine and beer are sold by the same retailers.
The Full Court also overruled Justice Flick in finding that the sale of Barefoot Radler beer was likely to deceive and cause confusion and applied a very narrow version of the defence in section 120(2). The Full Court thought that the finding that the “Barefoot” mark was deceptively similar to the “Barefoot Radler” mark informed the consideration of whether the actual use of “Barefoot Radler” was likely to deceive or cause confusion. It did not matter to the Full Court that the beer was presented differently, was sold apart from wine and was always marked with a foot image. If beer and wine so marked were in the same retail liquor outlet at all, they thought that many consumers would think of the beer and wine as originating from the same place, and that was enough to deceive and confuse.
Main implications for trade mark owners
The Full Court reinforced the take-away message on use in Australia. International trade mark owners need to export their goods to Australia to use and protect their trade marks in Australia.
Trade mark owners should also consider broadening their clearance searches and look more closely at marks in different fields. The approach of the Full Court on the question of beer and wine being goods of the same description potentially has wider implications. Arguably, the concepts of “goods of the same description” and “similar goods” have broadened, especially where goods may be alternatives (though not substitutes); well known producers are known to produce a range of products and market themselves as doing so; and goods are sold by the same retailers (potentially supermarkets, electronics/computers stores).