In response to a claim by E. & J. Gallo Winery (Gallo) that Lion Nathan Australia Pty Ltd's (Lion Nathan) use of the words BAREFOOT RADLER infringed Gallo's registration of the trade mark BAREFOOT for wine, Lion Nathan applied to cancel Gallo's trade mark registration on the grounds of non-use. In proceedings before the Full Federal Court, the Court concluded that whilst Lion Nathan had infringed the registered trade mark, Gallo was not able to satisfy the Court that the trade mark BAREFOOT had been in use in Australia. On that basis the Court ruled that the trade mark registration should be removed from the trade marks register. Gallo successfully obtained High Court leave to appeal specific issues related to whether or not the trade mark BAREFOOT had been effectively used in Australia.
On 19 May 2010 the High Court delivered its judgement. In response to a key question put to the High Court, the Court ruled that an overseas manufacturer who has registered a trade mark in Australia and who himself (or through an authorised user) places the trade mark on goods which are then sold to a trader overseas can be said to be a user of the trade mark when those same goods, to which the trade mark is affixed, are in the course of trade, that is, are offered for sale and sold in Australia. This is because the trade mark remains the trade mark of the registered owner (through an authorised user if there is one) whilst the goods are in the course of trade before they are bought for consumption. During the trading period, said the Court, the trade mark functions as an indicator of the origin of the goods, irrespective of the location of the first sale. It followed that use of the trade mark BAREFOOT in Australia by Gallo was genuine and sufficient to establish use in good faith. Furthermore, the High Court found that Gallo's wine under the BAREFOOT label was properly in the course of trade when imported into Australia.
The result of the High Court judgement is that Lion Nathan's application to cancel the registered trade mark BAREFOOT has been rejected. Furthermore, Lion Nathan's advertising, offer for sale and selling beer under the name BAREFOOT RADLER infringed Gallo's registration for the trade mark BAREFOOT. Lion Nathan was ordered to pay Gallo's costs of the proceedings at first instance, the costs of the appeals to the Full Court of the Federal Court of Australia and the costs of the appeal and the application for special leave to cross appeal to the High Court.