Originally published in World Trademark Review

Lodestar Anstalt v Campari America LLC [2016] FCAFC 92 is important because it clarifies what constitutes ‘control’ in determining whether use of a trademark by a licensee is ‘authorised use’. It is the latest, in Australia, in the ongoing battle concerning the WILD GEESE trademarks. It is a unanimous decision of the Full Bench (five judges) of the Court of Appeal of the Federal Court on appeal from a single judge on appeal, in turn, from the registrar of trademarks.

The matter concerned an application under Section 92 of the Trademarks Act by Lodestar to remove fromthe register on the ground of non-use two trademarks incorporating the words ‘Wild Geese’ registered, at the time of the delegate’s decision, in the name of Skyy Spirits LLC (the ‘Wild Turkey interests’). Wild Geese Wines Pty Ltd (WGW), a company controlled by Adelaide barrister and winemaker Patrick O’Sullivan QC, had registered two trademarks comprising the words WILD GEESE. In settlement of a dispute between WGW and the Wild Turkey interests, the marks were assigned to Austin Nichols & Co Inc and then, by a series of assignments and merger, to Campari America LLC, the respondent in these proceedings. As part of the settlement the trademarks were licensed back to WGW. Under the terms of the licence, WGW granted a perpetual exclusive licence to use the trademark in respect of Australian wine sold in Australia. The licence provided that the wine would be “of a quality at least sufficient to obtain a continuing approval of the wine for export by the Australian Wine and Brandy Corporation” (AWBC). It further provided that, if requested by the licensor, WGW would provide samples during any 12-month period and, if requested, provide further samples for analysis and submit the wine to the AWBC for its continuing approval. If continuing approval were not given, WGW was required to withdraw the wine from sale. The licence also contained a provision prohibiting WGW from identifying itself in any way as a licensee of Austin Nichols or representing in any way that the product was sponsored or authorised by, or affiliated with, Austin Nichols.

The point at issue was whether use of the marks by WGW in the relevant period constituted authorised use under Section 8 of the Trademarks Act. That section provides, among other things, that use of a trademark is authorised use if the owner of the trademark exercises quality control over the goods on which the mark is used.

The registrar’s delegate held that the evidence showed that no actual control was exercised over the use of the marks and ordered their removal.

On appeal to the Federal Court the primary judge, Justice Perram, reluctantly allowed the appeal on the basis that he felt bound to do so by an earlier decision of the Full Court of the Federal Court in Yau's Entertainment Ltd v Asia Television Ltd, 54 IPRI. The judge made it clear that he disagreed with that decision, but considered that he was bound by it to find that the possibility of control provided by the licence was sufficient to satisfy the requirement for ‘authorised use’. He concluded that there was not “a jot of evidence” of the Wild Turkey interests being interested in what O'Sullivan was doing or in any way supervising what was done under the marks.

In the lead judgment issued by Justice Besanko, with which the other judges concurred, the court undertook extensive analysis of the origins of the authorised use provisions of the act and the jurisprudence and Article 19(2) of the Agreement on Trade-Related Aspects of Intellectual Property Rights, on which it was based. Like the primary judge, the court placed great importance on the holding of Justice Aickin in Pioneer K K v Registrar of Trademarks, [1977] HCA 56, that the trademark must continue to indicate a connection in the course of trade with the registered owner. The court held that “control in s 8 means actual control in relation to the use of the trade mark and it means actual control in relation to the trade mark from time to time I think (as the primary judge did) that that is the primary meaning of the word”.

The court considered that the primary judge had erred in concluding that he was bound by the decision of the Full Court in Yau's and held that the use relied upon by WGW to defeat the non-use application was not authorised use. The appeal was therefore allowed and the decision of the registrar to remove the marks was restored.

Unless overturned on appeal to the High Court, the decision stands as a valuable lesson to trademark owners and practitioners that the mere possibility of control by the registered proprietor is not enough. Control must be exercised in fact and it is at least highly desirable that in use of the trademark, the licensee acknowledges the ownership of the mark and that its use is under licence from the owner.

In the authors’ view, this case may also have implications outside the field of non-use and have implications for applications under Section 88 of the act on the ground that the mark is no longer distinctive of the registrant’s goods.

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