We are all familiar with the concept of use it or lose it when it comes to actions for removal of trade mark registration rights. A recent decision of the full Federal Court has applied the same principle to the right to control authorised use: if this right is not exercised it will be exorcised.
The Requirements for Control – Terms and Action
As a result of Lodestar Anstalt v Campari America LLC, trade mark registration rights for WILD GEESE are to be removed for non-use because the only use made of this mark was by a licensee whose use was not authorised, that is, not under the control of the owner of the trade mark. The mere fact of a licence is not in itself sufficient to establish control. Permission is not control.
In drafting a licence agreement care must be had to ensure terms are in place that provide a connection between the registered owner and the user of the trade mark. For example, terms that place restrictions on quality control, and which have a practical effect on the way the authorised user conducts its business. Importantly, even if such terms are included in a licence, if the owner does not monitor them the requisite control may still not be established. In the WILD GEESE case, no exercise of control was shown.
Facts of the Case
The dispute concerned competing interests for the trade marks WILD GEESE and WILD TURKEY for distillers of Irish whiskey and bourbon respectively. In question was the trade mark WILD GEESE and its use in respect of wine, through which the Wild Turkey bourbon distiller claimed priority in the name WILD GEESE over the interests of the Irish Whiskey distiller. The application for this registration had been filed by a third player, a wine maker, and was later assigned to Wild Turkey bourbon distiller. The trade mark continued to be used by the wine maker under licence.
Sales of wine under the WILD GEESE trade mark by the wine maker during the relevant period were established. The wine maker was aware of its obligations under the terms of the licence agreement, but these obligations, in practical terms, had no effect on the way it conducted its business. The licence did not impact on the way its wine was made. The owner did not take any steps to monitor the activities of the wine maker or to ascertain as to whether it was complying with the terms of the licence until after the relevant non-use period. The parties to the licence were unrelated companies and no financial control was exerted. In the circumstances, authorised use during the relevant non-use period was not found. An appeal against the decision for the registration to remain on the Register was allowed.
Consumers Come First
Unusually, this appeal was heard by the full bench of the Federal Court. Besanko J delivered the main judgement, with which the other judges agreed. As stated by Besanko J:
Control involves questions of fact and degree as does the notion of a sufficient connection. There must be control as a matter of substance. For example, I do not think that it could be suggested that the mere fact that the registered owner granted a licence or revocable authority to use the trade mark would be sufficient without more established control.
This case is an example of courts putting the interests of consumers before rights holders. It cautions against the implementation of illusory quality control measures that could result in confusion in the marketplace as to origin of goods.
Additional comments regarding use in “good faith” were made, although the appeal was not decided on this basis. Good faith in the context of use to defend a non-use application has generally been held to be “real commercial use”, “ordinary and genuine use”, and not “some fictitious or colourable use”. It is a consideration to which registered owners and authorised users should be mindful, and may be a basis on which to press a non-use action.
Link to Decision
The full decision of the Court may be read at Lodestar Anstalt v Campari America LLC [ 2016] FCAFC 92. The deadline for application for special leave to appeal to the High Court was 26 July 2016. No application appears to have been made.