Bourbon trade mark lacks liquidity
The Federal Court has considered the extent to which registered Australian trade marks constitute assets within Australia for the purposes of defeating an application for security for costs in Austin, Nichols & Co Inc v Lodestar Anstalt [2009] FCA 1228.
Lodestar sought an order that applicants give security for costs, on the basis that they were ordinarily resident outside Australia. Lindgren J noted that when considering whether such an order should be made “great weight should be given to the fact that a party against whom the order for security is sought is a foreign resident without assets within the jurisdiction”. As such, the application for security raised the question of what constitutes “assets within the jurisdiction”.
In addition to the benefit of a distribution agreement said to exist in Australia, the applicants pointed to 17 Australian trade marks relating to the WILD TURKEY brand as constituting valuable assets within Australia. His Honour noted that these trade marks would be very valuable to the registered proprietor, however the relevant question, as set out by Greenwood J in NV Sumatra Tobacco Trading Company v British American Tobacco Australia Services, was whether they represented assets “of sufficient liquidity so as to constitute a realistic fund against which a successful respondent might enforce an order for costs”.
The applicants sought to distinguish NV Sumatra on the basis that in that case there was no evidence of use of the trade marks in Australia, whereas in this instance there was ample evidence of such use. Lindgren J found that these submissions “fail to grapple with the critical question whether the bare trade marks would be readily convertible into cash by sale to satisfy an adverse order for costs.” While there was evidence of a recent transaction involving the trade marks this was “not evidence of a sale of the trade marks as items of property distinct from a sale of the underlying business.”
His Honour concluded that “[i]t may be that a receiver would eventually be able to sell the trade marks but the course of doing so would or might well be fraught with considerable difficulty and delay.” As none of the other matters relied upon by the applicants were considered sufficient to overcome the “great weight” attached to a lack of assets within the jurisdiction, an order for security was made.
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