Winnebago Industries, Inc v Knott Investments Pty Ltd (No 2) [2012] FCA 785

Back in 1985, Winnebago Industries, Inc became aware that Knott Investments Pty Ltd was using its "Winnebago" trade mark in Australia for recreational vehicles (RVs). 25 years later, Winnebago sued Knott and its dealers for passing off, breaches of the Trade Practices Act and Australian Consumer Law and copyright infringement. Winnebago also sought cancellation of Knott's trade mark registration for the Winnebago name.

Justice Foster of the Federal Court found that Winnebago had a sufficient "spill over" reputation in Australia at the time the conduct began (in 1982) to establish passing off and breaches of the TPA/ACL. Knott was found to have intentionally adopted the Winnebago name to trade on that reputation. His Honour rejected the Respondents' defence that Winnebago had consented to the use of the marks, or that it should be estopped, or denied relief on the ground of delay. His Honour also ordered the cancellation of Knott's trade mark registration. However his Honour found that there was insufficient evidence as to the creation of the Winnebago mark to sustain the copyright claim.

The use of the Winnebago mark

Winnebago first sold RVs using the name "Winnebago" in the US in the early 1960s, and expanded its operations to the UK, Europe and Canada. In 1963, the director of Knott (Bruce Binns) saw Winnebago RVs overseas and in the late 1970s, Knott began using the Winnebago marks on its RVs in Australia. Winnebago became aware of Knott's conduct in 1985. In 1991, Winnebago demanded that Knott stop using the Winnebago marks in Australia. In 1992, the parties executed a Settlement Agreement which provided, amongst other things, that Knott would not use the Winnebago marks outside Australia.

Key findings of the case

The time to assess whether Knott's conduct was misleading

Justice Foster held that Knott's conduct should be assessed at the time it commenced. His Honour rejected Winnebago's argument that the relevant time was the date the proceedings commenced or the date of the trial.

Winnebago's reputation in Australia

There was no dispute that Winnebago had established a significant reputation in the Winnebago brand overseas since the 1960s. Justice Foster referred to the Full Court decision in ConAgra Inc v McCain Foods and accepted Winnebago's submission that by June 1982, it had a "spillover" reputation amongst a substantial number of persons who would be potential customers if Winnebago's goods or services were marketed in Australia. His Honour found that Australians travelling overseas, and overseas visitors to Australia, had created an awareness of the Winnebago brand. Justice Foster found the most telling evidence to be that of Binns himself who, his Honour found, had "intentionally hijacked" the Winnebago marks to trade off its reputation.

Passing off and breaches of the Trade Practices Act and Australian Consumer Law

His Honour held that a substantial number of potential customers looking to buy or rent RVs in Australia were aware of Winnebago in 1982 and were likely to be deceived into believing that Knott's business was connected with Winnebago. The Respondents had therefore engaged in passing off, and misleading and deceptive conduct and the making of false representations under the TPA (for conduct up to 1 January 2011) and ACL (for conduct thereafter).

No consent or representation by Winnebago that Knott could use the Winnebago name in Australia

Binns gave evidence that in 1991, a Winnebago representative at a trade fair told him that Knott could use the Winnebago marks in Australia. Knott relied on that conversation and the Settlement Agreement to submit that Winnebago had consented to Knott using the Winnebago in Australia, and that Winnebago should be estopped from bringing its claims.

Justice Foster found that Binns had "invented" the conversation. His Honour held that the Settlement Agreement, properly understood, did not make any representation that Knott was permitted to use the Winnebago marks in Australia. The Settlement Agreement simply left matters as they stood in Australia, until such time as Winnebago might wish to exercise its rights in respect of the Winnebago marks.

Delay not sufficient to deny Winnebago relief

The Respondents argued that Winnebago had stood back with full awareness and allowed Knott to develop its business using the Winnebago marks. They submitted that the Court should refuse relief under the TPA and ACL and for passing off. Winnebago relied on World Series Cricket Pty Ltd v Parish1 as authority for the proposition that mere delay would rarely disentitle an applicant from relief for the statutory causes of action. Justice Foster recognised that there had been "extraordinary delay" on the part of Winnebago in taking action. However his Honour found that Winnebago had taken some steps to protect its position through the Settlement Agreement. Further, Binns and Knott had taken a "calculated risk" to gain as much revenue and advantage as possible from using the Winnebago marks, knowing that they might need to rebrand if Winnebago decided to enter the Australian market. His Honour held that in the "very special circumstances" of this case, the delay did not provide any proper basis for refusing relief.

Insufficient evidence of copyright in the Winnebago mark

Justice Foster found there was insufficient evidence as to the creation of the Winnebago logo to prove its originality for the purposes of copyright subsistence. His Honour also held that there was insufficient originality in the name Winnebago (being the name of a US county) to justify copyright protection.

Cancellation of Knott's registered mark

Section 88(2) of the Trade Marks Act 1995 (Cth) set outs the grounds on which the Court can order the cancellation of a trade mark registration, including that the use of the mark is likely to deceive or cause confusion based on the circumstances existing at the time when the application for rectification was made. Based on the findings as to Winnebago's reputation in Australia, his Honour ordered the cancellation of Knott's trade mark registration.

Knott's dealers also liable

Justice Foster found that the other Respondents, being Knott's dealers, had also committed the tort of passing off and contraventions of the TPA and ACL. Knott was held to be an accessory to the contravening conduct of its dealers.

Remedies awarded to Winnebago

On 6 September 2012, his Honour made orders to give effect to his reasons for judgment. The orders included the following suspended orders which will take effect after 3 September 2013:

  • that Knott and the dealers be permanently restrained from using the Winnebago marks or any substantially identical or deceptively similar marks;
  • that Knott's trade mark registration be cancelled; and
  • that Knott and the dealers cancel all business, corporate and domain names containing the Winnebago name or any substantially identical or deceptively similar name.

His Honour also made orders with immediate effect for Knott and the dealers to publish a prominent notice online, at their dealerships and in their promotional material, stating that their RVs are not made by or associated with Winnebago.

The proceeding had been bifurcated and his Honour ordered an inquiry into the quantum of any pecuniary relief.

Finally, Knott and the dealers were given leave to appeal, on condition that:

  • the Notice of Appeal be filed within 14 days;
  • they apply to the Court for the expedited hearing of the appeal during or before the February-March 2013 Full Court sittings;
  • they prosecute any appeal with due diligence.

Lessons for trade mark owners

Justice Foster's decision confirms that mere delay is generally not sufficient to bar relief, and something more is usually required, such as a positive representation that the applicant consents to the infringing activity. This case demonstrates the importance of putting alleged infringers on notice of the trade mark owner's claims, and, if proceedings are not issued shortly thereafter, making it clear that the owner does not consent to the infringing conduct and reserves all right to take action at some later time.

This case is significant for the length of the delay, during which the respondent incurred a considerable sum (more than $6 million) in advertising its products under the infringing mark. In other cases involving delay, such as Mobileworld Communications Pty Ltd v Q&Q Global Enterprise2 where the owner of the "Crazy John's" mark took 6.5 years to take action against the user of the "Crazy Ron's" mark, the Court has been willing to order the payment of some sum (in that case $50,000) as some reparation for the delay.

In this decision Foster J emphasised the "special circumstances" of the case, perhaps to indicate (particularly to overseas parties) that they will not necessarily be granted relief on their claims if they sit back and allow the infringing use of their marks to continue until such time as they wish to enter the Australian market. Each case will depend on its facts, and the evidence as to the alleged infringer's adoption of the mark and the circumstances in which it continued to use the mark, will be critical.