Nick Weston, the principal of law firm and trade marks attorneys, Nicholas Weston, comments on this month's High Court decision in which brewing giant Lion Nathan has been forced to change one of its trademarks.  

An Australian brewing giant has been forced to change the name of an entire beer range after losing a trade mark infringement case in the High Court of Australia brought by a US wine giant. Mmmm, beer.

Reminds me of that famous exchange between the then High Court judges and counsel during argument in Joslyn v Berryman (2003) 214 CLR 552; [2003] HCA 34:

CALLINAN J: Mr Jackson, it seems to me that clearly the people at the party, including Ms Joslyn and Mr Berryman, went out with the intention of getting drunk.

MR D F JACKSON QC: It would be a big night, your Honour, big night.

CALLINAN J: With the intention of getting drunk and they fulfilled that intention.

MR JACKSON: Well, your Honour, young people sometimes——

KIRBY J: I just think “drunk” is a label and I am a little worried about—it is not necessary to put that label. It is just that they were sufficiently affected by alcohol to affect their capacity to drive.

MR JACKSON: Yes.

KIRBY J: “A drunk” has all sorts of baggage with it.

HAYNE J: Perhaps “hammered” is the more modern expression, Mr Jackson, or “well and truly hammered”.

MR JACKSON: I am indebted to your Honour.

KIRBY J: I do not know any of these expressions.

McHUGH J: No, no. Justice Hayne must live a very different life to the sort of life we lead.

KIRBY J: I have never heard that word “hammered” before, never. Not before this very minute.

Anyhoo, I digress (and Justices Kirby, McHugh and Callinan have since retired). Back in 2008, US wine company E. & J. Gallo Winery (Gallo) brought Australian brewer Lion Nathan National Foods (Lion Nathan) before the Federal Court of Australia, claiming that Lion Nathan's "Barefoot Radler" brand of beer infringed Gallo Winery's "barefoot" trademark, used by Gallo on a range of budget wines.

The Australian Trade Marks Law Blog reported that first instance decision HERE.

When the matter came before the Full Court, it was uncontroversially held that the offer for sale and selling, by an Australian retailer, of the bottles of wine which bore the registered trade mark constituted "use" of the trade mark in Australia within the meaning of s 7(4) of the Trade Marks Act 1995 (Cth) but on the question of whether this use was by the registered owner as a consequence of use by the retailer as authorised user found against Gallo. (The Full Court also held that beer and wine are ‘goods of the same description’, overturning the first instance finding and suggesting, like Justice Kirby, that Their Honours need to get out a bit more, but that issue was not agitated before the High Court). The Australian Trade Marks Law Blog reported the Full Court decision HERE.

So the principal issue that did come before the High Court in E. & J. Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15 (19 May 2010) turned on whether that use was use by the registered owner in circumstances where 60 cases of the branded wine had been sold to a German company with the manufacturer having no intention or awareness of its on-sale to Australia. The High Court found that the registered owner’s ‘intention’ was beside the point and held [using the sama paras] that:

42. “Whilst that definition (section 17) contains no express reference to the requirement, to be found in s 6(1) of the Trade Marks Act 1955 (Cth) that a trade mark indicate "a connexion in the course of trade" between the goods and the owner, the requirement that a trade mark "distinguish" goods encompasses the orthodox understanding that one function of a trade mark is to indicate the origin of "goods to which the mark is applied”. Distinguishing goods of a registered owner from the goods of others and indicating a connection in the course of trade between the goods and the registered owner are essential characteristics of a trade mark. There is nothing in the relevant Explanatory Memorandum to suggest that s 17 was to effect any change in the orthodox understanding of the function or essential characteristics of a trade mark.

43. “In Coca-Cola Co v All-Fect Distributors Ltd[19] a Full Court of the Federal Court of Australia said:

"Use 'as a trade mark' is use of the mark as a 'badge of origin' in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods ... That is the concept embodied in the definition of 'trade mark' in s 17 – a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else."

"That statement should be approved.”

51. “The capacity of a trade mark to distinguish a registered owner's goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market. It depends on the goods being in the course of trade in Australia. Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act. A registered owner who has registered a trade mark under the provisions of the Trade Marks Act can be taken, in general terms, to have an intention to use that trade mark on goods in Australia. It is a commonplace of contemporary international trade that prior to consumption goods may be in the course of trade across national boundaries.”

65. “A commercial quantity of wine, some 144 bottles, was imported and offered for sale under the registered trade mark by Beach Avenue during the statutory period. Some 41 sales during that time were proven by reference to invoices and tax paid. There was no suggestion in the evidence that the offering for sale and selling either overseas or in Australia was for any purpose other than making profit and establishing goodwill in the registered trade mark. It was not contended that the use was fictitious or colourable. In all the circumstances the use was genuine and sufficient to establish use in good faith for the purposes of Lion Nathan's application for removal.”

69. “… The addition of the device to the registered trade mark is not a feature which separately distinguishes the goods or substantially affects the identity of the registered trade mark because consumers are likely to identify the products sold under the registered trade mark with the device by reference to the word BAREFOOT. The device is an illustration of the word. The monopoly given by a registration of the word BAREFOOT alone is wide enough to include the word together with a device which does not substantially affect the identity of the trade mark in the word alone. So much is recognised by the terms of s 7(1), which speak of additions or alterations which "do not substantially affect the identity of the trade mark". Except for a situation of honest concurrent use, another trader is likely to be precluded from registering the device alone while the registered trade mark remains on the Register. The device is an addition to the registered trade mark that does not substantially affect its identity. Accordingly, the use of the registered trade mark with the device constitutes use of the registered trade mark in accordance with s 7(1).”

So what?

Following the result, a Lion Nathan spokesman released a statement that said: “We are disappointed by today’s High Court ruling, which represents a substantial change to Australian trade mark law.”

It does not. It correctly recognises that an overseas owner can maintain registration of its Australian trade marks and protect them from ‘non-use’ applications even where they hardly use the relevant trade mark in Australia or are unaware the trade mark was being used in Australia. Overseas owners can probably run their Australian trade marks portfolios, even while 'hammered', and let the parallel importers handle distribution. Nothing new in that.

The decision also provides useful guidance on when to register a ‘device’ or logo separately from a word mark, and underscores the point that, when selecting a mark, a search must cast its net widely to scrutinise related classes, trade channels and potential uses.

Nicholas Weston says of his firm: “Founded in 2005, my firm Nicholas Weston has been ranked three years running (2008, 2009 and 2010) by Managing Intellectual Property Magazine’s World Survey. Attached is a copy of this year’s result; in trade marks prosecutions ranked at the same level as Minters and Gilbert + Tobin and in trade marks disputes jammed there between Middletons and Norton Rose.”