Foreign companies planning to do business in Australia are sometimes surprised to learn that a local (would be) competitor has already adopted their distinctive name or get-up. Surprise turns to frustration when they learn that the legal path to ‘re-claiming’ their property will be long, expensive and difficult. But the alternative, of introducing a new brand for the local marketplace, will not be without risk or substantial cost.
The general problem faced by any company whose name or get-up is not registered on the Australian Trade Marks Register (ATMR), is that Australian law does not recognise any property right as such in an unregistered trade mark. Although a measure of protection is provided for unregistered marks under passing off or consumer protection laws, those laws cannot be invoked unless the unregistered mark is shown to have a pre-existing reputation in this country. If a brand is distinctive (e.g. an invented or fanciful word, or a ‘striking’ logo), and even limited sales or advertising has taken place, Courts will readily find that the brand has acquired a reputation here. However, difficulties arise with brands which are relatively descriptive, or where goods or services have not yet been supplied here. The problem is felt perhaps most acutely by foreign companies who have invested considerable sums in building a strong, internationally recognised brand, but are yet to turn their attention to the Australian market or take any definitive steps to commence operations here. It is quite possible that those companies may confront a determined would be usurper of their rights.
Earlier in 2008, we wrote about the case of Hansen Beverage Company v Bickfords1, which is an important decision of the Federal Court of Australia in this area. In that case, Hansen had a successful ‘MONSTER ENERGY’ drink in the United States and had spent many millions of dollars in advertising its brand globally. However, it had not made any sales of this product in Australia, and did not own a registered trade mark here. The judge held that, although Bickfords had deliberately adopted Hansen’s MONSTER ENERGY name and (with minor variations) its get-up, Hansen could not establish passing off or a breach of the Trade Practices Act 1974 (Cth). This was despite the fact that Hansen’s brand was found to be ‘striking and memorable’ and that there was evidence that this brand had achieved significant exposure in this marketplace. For example, Hansen had sponsored extreme sports events held or broadcast in this country in which the MONSTER ENERGY branding appeared prominently, albeit that the brand was not explicitly identified in the sponsorship as being linked to an energy drink.
The decision was appealed by Hansen. On 16 November 2008, the Full Court handed down its judgment allowing Hansen’s appeal. The Full Court held that the trial judge had asked himself the wrong question in assessing the relevance of the evidence Hansen had led about the recognition of its brand in Australia. The Full Court clarified the relevant legal principles for cases in this area. In short, in order to show the required reputation under for purposes of consumer protection laws, Hansen has to show that a ‘not insignificant’ number of persons in the Australian community were aware of its MONSTER ENERGY product and, in fact or by inference, were misled by Bickford’s conduct.
Further, the Full Court emphasised that, even without local sales or direct advertising in a country, it is possible that a sufficient reputation may result from advertising activities directed at a particular market segment (in this case, the sponsorship of the extreme sports events), such that the relevant people misled might only be extreme sports enthusiasts. Further, the court considered that it was permissible to consider brand advertising that is not explicitly or directly linked to a particular product. Indeed, one of the three judges in the Full Court noted that such advertising could potentially be more powerful than more traditional forms of product advertising. This is a welcome, albeit implicit, recognition that the legal practice in this area needs to catch up with marketing practice.
The Full Court has remitted the case back to the trial judge for re-consideration based on the evidence already led in the case. Although Hansen will get some comfort from the Full Court’s approach, there can be no guarantee that the trial judge will decide the case differently when it applies the test formulated by the Full Court to the available evidence.
Register and maintain your trade mark locally
Of course, obtaining a local trade mark registration is always the best insurance against the kind of ‘sharp practice’ that occurred in the Hansen v Bickfords case. Unlike in some foreign territories, use is not a pre-requisite for securing Australian trade mark protection. Usually, protection can initially be achieved relatively inexpensively through a targeted international filing program under the Madrid protocol.
A diligently executed registration program is not enough. After the five year grace period following the initial application has lapsed, an Australian registration will be vulnerable for removal from the ATMR if it has not been used in Australia in good faith in the three years prior to the filing of the non-use application (other countries of course have similar principles). As the expiry of that five year period approaches, if the company has not yet launched operations in Australia but still intends to do so, it would be sensible for it to consider:
- filing a fresh Australian trade mark application, which will not have the benefit of the earlier application’s priority date but will secure a new five year grace period, and/or
- investigating the Australian marketplace to ascertain whether its trade mark rights are being infringed, and if so, to ensure that effective trade mark enforcement action is taken to clear the market of third-party users of similar marks, before the trade mark registration has become vulnerable for removal for non-use.
Endnotes
1. Who has the energy for Monster litigation?
This article was written by Campbell Thompson, Partner and Roanne De Menezes, Senior Associate, Melbourne.
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