How geese have changed trade mark law

The Federal Court handed down a landmark decision in the trade mark dispute between the Wild Geese and Wild Turkey alcohol brands^[1]. In doing so, it has changed the way trade mark law operates.

Legal background

Under section 92 of the Trade Marks Act 1995 (Cth), a person may apply to have a registered trade mark removed if:

on the day on which the trade mark application was lodged, the applicant did not intend to use, license or assign the trade mark; or
the trade mark has not been used during a continuous 3-year period in Australia, with that 3-year period ending 1 month before the non-use application is lodged.

For the purpose of these provisions, in order for there to be ‘use’, the trade mark must be:

used ‘as a trade mark’, ie as a badge of origin; and
used by its owner or an ‘authorised user’.

Under section 8(1), a person is an ‘authorised user’ if they use the trade mark under the control of the owner. The recent decision impacts on what constitutes ‘control of the owner’ and therefore whether a licensee engages in authorised use of the trade mark.

A Wild Goose chase

Lodestar Anstalt won the landmark trade mark case, successfully wrestling away Campari’s rights to the Wild Geese trade marks. Campari argued that clauses relating to quality control of the licensed product ‘Wild Geese Wines’ constituted ‘use’ of the trade mark, even if they were not using it themselves.

However, the court disagreed, holding that ‘use’ had to be more than just having the ability to control a product, but actually actively controlling it.

So, what is ‘use’?

The dispute stems from this measly 3-letter word.

Prior to this case, the understanding was that an authorised use of a trade mark constituted ‘use’ by its owner. However, this decision changed the threshold.

Under the latest ruling, the notion of ‘use’ is more than just licensing the trade mark to someone. The licensor of the trade mark must also have some form of active and continual control – such as being a part of the quality control process in the licensor’s product. That does not mean control over the mere style of presentation of the trade mark (eg imposition of a trade mark style guide). It means control over the nature and quality of the goods and services in relation to which the trade mark is used.

The ‘theoretical control’ that Campari had was not enough to fulfil that threshold. It had quality control clauses in the Wild Geese Wines licence agreement, but it did not actually partake in the process. So Campari and Wild Geese Wines operated completely independently, barring the trade mark licence. This was what the court used to deem their notion of ‘use’ insufficient.

Why does this matter?

It matters because it makes licensed trade marks vulnerable to removal for ‘non-use’, even if it was previously considered safe. Indeed, ‘use’ by a licensee does not extend automatically to the trade mark licensor.

The decision highlights the importance of careful drafting of trade mark licence agreements (including between related companies) so that they contain explicit quality controls and, importantly, are regularly enforced.

It is time for businesses to check their trade marks – to see if they fulfil the new threshold – and ultimately risk-proof their trade marks against removal for non-use.

^[1] Lodestar Anstalt v Campari America LLC [2016] FCAFC 92, an appeal from the decision in Skyy Sprits LLC v Lodestar Anstalt [2015] FCA 509; see also Campari America LLC v Lodestar Anstalt [2016] HCASL 312.

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