There are more than 2000 wineries in Australia, all jostling for their wines to find a place on dinner tables and wine racks.

For most consumers, deciding which to buy will often come down to which wine label they like best – be it the name on the label, the picture, or the description of what’s inside the bottle.

This is why protecting a wine’s brand, which is reflected on the label, and its associated trade marks is so critical to wine makers. Just look at the efforts the makers of Penfolds, arguably one of Australia’s most iconic wine makers, has taken to protect its trade marks in China.

The importance of wine labelling is also reflected in the Government’s recent proposal for a wine export label directory, which would require wine exporters to submit their labels prior to export and make the labels accessible to the public so that registered brand owners can see any copy-cat labels and seek to protect their own interests (the period for this proposal has now closed.

Another issue for wine makers to consider when it comes to protecting their trade marks is “bad faith”, as seen in Ceravolo Premium Wines Pty Ltd v MA KIRKBY (TRPL) PTY LTD [2018] ATMO 43, a recent case decided by the Australian Trade Marks Office.

In this case, Ceravolo opposed an application by MA KIRKBY for the trade mark OCHRE EARTH CHILD in class 33 for various types of alcoholic beverages including wines (OCHRE EC Mark). Pursuant to s 62A of the Trade Marks Act 1995 (Cth), Ceravolo argued that the application had been made in bad faith. A determination of bad faith in filing a trade mark application arises in circumstances where “persons adopting proper standard would regard the decision to register as in bad faith, or that reasonable and experienced persons in the field would view such conduct as falling short of acceptable commercial behaviour”.

Relevantly, Ceravolo owns the prior registered trade mark RED EARTH in class 33 for wines. On 16 September 2015, Ceravolo’s attorneys had sent a letter of demand to a business known as Topper’s Mountain Wines (Topper’s), that was selling wine bearing the mark RED EARTH CHILD (RED EC Mark) in Australia and Korea.

Following this letter, the parties entered into settlement negotiations. On 22 October 2015, during the course of the negotiations and without informing Ceravolo, MA KIRKBY filed the application for the OCHRE EC Mark. Mr Kirkby is a director of MA KIRKBY and Topper’s.

It was not until 30 November 2015 that Mr Kirkby gave undertakings to Ceravolo, on behalf of himself and Topper’s, to cease and forever desist from using the RED EC Mark, or any other term deceptively similar to the RED EARTH trade mark in relation to wines and other products in class 33.

In all the circumstances, Ceravolo submitted that the application for the OCHRE EC Mark, being an obvious variation of the RED EC Mark that was filed shortly after receipt of the cease and desist letter and before the settlement, was an attempt to circumvent the undertakings given by Mr Kirkby/Topper’s. Mr Kirkby denied this, and gave evidence that he did not consider the OCHRE EC Mark to be deceptively similar to the trade mark RED EARTH.

The Hearing Officer did not consider the act of filing the OCHRE EC Mark in the face of the cease and desist letter alone as sufficient to establish bad faith. He also held that it is not a requirement that a trade mark deceive or confuse for it to be lodged in bad faith.

However, the Hearing Officer did find that there were additional relevant circumstances in this case which pointed to bad faith. In particular, he referred to the timing of the application, the “conceptual closeness” of the OCHRE EC to the disputed RED EC mark, and the scarcity of evidence from MA KIRKBY demonstrating any marketing or branding plans featuring the OCHRE EC mark. The Hearing Officer found that these matters supported Ceravolo’s allegation that the application had been concealed from negotiations in an attempt to circumvent any subsequent agreement that could have been reached between the parties.

More particularly, the Hearing Officer held that at the time of filing the mark, MA KIRKBY was aware that future use of the OCHRE EC Mark (or a variant of it) was likely to be objected to by Ceravolo. Despite this, MA KIRKBY applied for the OCHRE EC Mark, and chose not to disclose the application to Ceravolo whilst concurrently negotiating with Ceravolo for it to desist from legal action in relation to the previous use of the RED EC Mark.

The Hearing Officer was therefore satisfied that in proceeding to file the OCHRE EC Mark in the circumstances, a reasonable and experienced observer would consider that such conduct falls short of “acceptable commercial standards”. Accordingly, he held that the Ceravolo had, on the balance of probabilities, established that the application had been made in bad faith and refused to register the OCHRE EC Mark.

Opposing trade mark applications on the ground of bad faith is a relatively new ground. However, this case shows that wine brand owners should bear in mind that it can be a powerful ground if you are dealing with the underhanded or unscrupulous behaviour of another party in relation to your brand.