High Court calls last orders on Lion Nathan’s “Barefoot Radler”
E. & J. Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15
The High Court of Australia has delivered a significant decision about how much “use” must be made of a trade mark to keep the trade mark alive - that is, on the Australian Trade Marks Register (the Register).
The High Court’s decision also emphasises the importance of considering whether goods or services for which a prior mark is registered, are “of the same description” as your goods or services, and shows that apparently different goods may still be found to be “goods of the same description”.
Background
Gallo, a US company, is the registered owner of Australian trade mark 787765 BAREFOOT in respect of wine in class 33. In January 2008, Lion Nathan started selling a beer called “Barefoot Radler”.
Gallo alleged that Lion Nathan was infringing Gallo’s trade mark, and commenced legal proceedings. Lion Nathan denied any infringement, and cross-claimed seeking removal of Gallo’s trade mark from the Register on the basis that Gallo had not used its mark during the statutory 3 year non-use period.
Federal Court
At first instance, the Court held that Lion Nathan had not infringed Gallo’s trade mark, because beer and wine were not “goods of the same description” as required by the Trade Marks Act. However, the Court also ordered the removal of Gallo’s mark from the Register for non use. Although some 144 bottles of wine had been offered for sale in Australia during the non-use period by Victorian liquor wholesaler, Beach Avenue Wholesalers, there was evidence only 41 bottles were sold. Beach Avenue Wholesalers had purchased the wine, without Gallo’s knowledge, from a German company which had previously purchased the wine from the US company which owned the trade mark before Gallo.
The Court found that Australian sales of BAREFOOT wine took place without Gallo’s knowledge, and that the sales accordingly did not amount to use of the trade mark by Gallo in Australia.
Full Federal Court
The Full Federal Court overturned the Federal Court’s findings on infringement and found that Lion Nathan had infringed Gallo’s trade mark (which involved a finding that beer and wine were, for the purposes of trade mark law, “goods of the same description”). However, the Full Federal Court agreed that Gallo’s trade mark should be removed from the Register for 3 years’ non use in Australia, so Lion Nathan was the winner overall. Gallo appealed to the High Court.
High Court
The question which the High Court had to determine was this: when goods bearing an Australian trade mark are sold by the foreign owner of the mark to a foreign distributor, and the distributor then offers those goods for sale in Australia without the knowledge of the trade mark owner, has the trade mark has been used by the trade mark owner in Australia? The High Court accepted Gallo’s argument that the answer to this question is “yes”.
Gallo argued that the Full Federal Court had erred in finding that it could only be use by the trade mark owner if the owner “projects” (in the sense of “propel” or “push”) the goods into the course of trade in Australia.
Lion Nathan argued that the Full Federal Court was correct in holding that to establish use of a trade mark in Australia, it was necessary for the trade mark owner to knowingly “project” the goods into the course of trade in Australia, and that there was no conduct or act by Gallo which amounted to such projection and hence use.
In finding that Gallo had used the BAREFOOT trade mark in respect of wines in good faith during the relevant 3 year period, the High Court held that:
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“use” depends upon the goods getting into the course of trade in Australia, and it does not matter how they get there (so that the trade mark owner does not need to show that they have “projected” the goods into the Australian market); and
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an overseas manufacturer who has registered a trade mark in Australia, and who places the trade mark on goods which are then sold to a trader overseas, can be said to have made use of the trade mark in Australia when those goods are offered for sale and sold in Australia.
Although Lion Nathan sought to challenge the findings of the Full Federal Court on infringement, the High Court did not overturn the finding that wine and beer are “goods of the same description”.
The consequence is that Gallo’s trade mark is valid, and that Lion Nathan has infringed it. Lion Nathan can no longer sell “Barefoot Radler” under that name. Issues of damages (or an account of profits) remain for determination.
Lessons from the case
Two important lessons emerge from the case.
The first lesson is that brand owners need to take care in assessing prior marks registered for what may on the surface, appear to be quite different goods (eg. beer and wine) and apply the principles set out in earlier trade mark cases, and endorsed by the Full Federal Court, that call for consideration of the nature and characteristics of the goods, their origin, their purpose, whether they are usually produced by one and the same manufacturer or distributed by the same wholesale houses, whether they are sold in the same shops over the same counters, during the same seasons and to the same class or classes of customers, by those engaged in the manufacture or distribution, and whether they are regarded as belonging to the same trade.
The second lesson is that quite slight use of a trade mark in Australia, even without the knowledge of the overseas owner of the trade mark, may be sufficient to maintain the registration of the mark and protect it from a non-use removal application.
For further information about what this decision means for you, please contact:
T: +61 2 8233 9554
Stuart Green | Associate
T: +61 2 8233 9586
The material contained in this publication is no more than general comment. Readers should not act on the basis of the material without taking professional advice relating to their particular circumstances.
