Last week the Full Federal Court handed down a judgment that will have significant implications for the way brand owners think about protecting their brands in Australia. The decision illustrates the weaknesses in seeking to protect brands without trade mark registrations and how even a successful claim may not result in clear protection of an unregistered brand, particularly where there is delay.
The case was brought by Winnebago Industries Inc, the well-known US-based supplier of mobile recreational vehicles, against an Australian business, Knott, that had adopted and used the WINNEBAGO brand in Australia.
Knott went on to use the brand for over 25 years until legal proceedings were filed by Winnebago for passing off and contraventions of the Australian Consumer Law . Winnebago had decided not to take action because it had not decided to expand its business to Australia at the time. Subsequently the parties entered into an agreement to preserve their positions pending any future litigation.
The trial judge found that Knott had deliberately adopted the WINNEBAGO brand, following a visit to the US, to take advantage of Winnebago’s reputation. There was also a finding that Winnebago had a sufficient reputation in Australia to bring an action for passing off to restrain the use of the WINNEBAGO brand. The judge granted an injunction preventing Knott from using the WINNEBAGO mark and ordered that Knott’s registered trade mark be cancelled (as well as other associated non-pecuniary relief).
Knott appealed, claiming amongst other things that relief should be limited because of Winnebago’s delay in bringing the action. The Full Federal Court allowed the appeal and in a second judgment imposed its own formulation of relief, in more limited terms than the relief ordered by the trial judge.
The Full Court highlighted the fundamental difference between a claim for trade mark infringement and claims for passing off and misleading or deceptive conduct. Whereas the former is directed to preventing confusion about trade origin, the latter is directed at whether members of the public are likely to be misled. This more limited enquiry frames the way in which the Court will approach relief.
The Court decided to allow Knott to use the WINNEBAGO mark, as long as a clear and prominent disclaimer was used near the mark, making clear that the two businesses were not associated. The Court drafted the terms of the disclaimer. Knott was also ordered to require purchasers or hirers of its products to sign a disclaimer acknowledging that there was no association between the businesses.
Implications for brand owners
Since the decision is a unanimous decision of the Full Court, led by the Chief Justice, it is likely to play an important role in directing the approach of judges in similar cases.
The most immediate implication of the decision is that brand owners should seek registration of trade marks to maximise the protection of their brands. This case illustrates how differently claims based on registered marks will be treated from those based on a trader’s reputation in unregistered brands. Failing to register a brand will inevitably limit the relief available to a successful brand owner, where there are competing reputations developed by the brand owner and the competitor.
Absent a registered mark, the Court will not prevent a competitor from using a brand per se . An appropriately worded disclaimer, such as the one imposed by the Court in this case, may be enough to allow a competitor to continue use of an unregistered brand. Businesses accused of these types of claims would be able to use this decision as a guide to the type of disclaimers that would be effective.
Had Winnebago had a registered mark, the result would undoubtedly have been different and use of the brand would have been prevented. A disclaimer would not have cured the infringement. Recent cases such as Paul's Retail Pty Ltd v Lonsdale Australia Ltd 1 and E & J Gallo Winery v Lion Nathan Australia Pty Ltd 2 show that registered trade marks will continue to be enforced strongly in Australia.
The other key implication of the decision is the impact of delay in enforcement of brand rights. Winnebago was found to have allowed Knott to build up a business in Australia under the WINNEBAGO mark. Having done that over a significant period, it was not open to Winnebago to shut Knott’s business down or prevent any further use by it of the WINNEBAGO mark.
This is not the first decision in which an Australian court has refused to stop a competitor using an unregistered brand where the brand owner had allowed concurrent use of the brand. It is a reminder that non-enforcement can have dire consequences for a brand owner.