Understanding “Good Faith” in Australian Trade Mark Defences

Understanding “Good Faith” in Australian Trade Mark Defences

In Australian trade mark law, the concept of “good faith” is an important component for several defences against claims of infringement.

While one might assume that a simple lack of fraud or conscious dishonesty is sufficient, Australian trade mark cases have highlighted the importance of carrying out due diligence to ensure a trade mark is available before use.

The Good Faith Defence

Australian trade mark law provides a “good faith” defence to infringement when a person, in good faith, uses their own name (or business name) as a trade mark.[1] The defence can be used with or without corporate signifiers (e.g. ‘Pty Ltd’) and may include geographical distinguishing words (e.g. ‘Australia’) but does not extend to nicknames or abbreviations.

Good faith means acting honestly. It involves an honest belief that no confusion will arise, and that the user of the mark is acting as a reasonable person would.[2] However, a lack of fraudulent intent is not in itself sufficient to establish good faith.

The Federal Court case of Hemmes Trading Pty Ltd v Establishment 203 Pty Ltd provides an helpful illustration of how the “good faith” requirement is applied in practice, and the risks that can arise – even when using your own name.[3]

Hemmes, owner of the registered trade mark ESTABLISHMENT for its Sydney restaurant, sued a Brisbane restaurant operating under the name ESTABLISHMENT 203.

The Court rejected Establishment 203’s claim that it was using its own name, emphasising its lack of good faith. The decision highlights several key points:

• Failure to conduct trade mark searches: The Court noted that a reasonably diligent search of the Register of Trade Marks would have identified Hemmes’ registered trade mark ESTABLISHMENT.[4]
• Failure to seek legal advice: Establishment 203 chose not to seek advice on the proposed name before using it.[5]
• Continued use after notice: Establishment 203 continued to use its name – even after receiving a letter of demand from Hemmes alleging trade mark infringement.[6]
• Flawed reasoning for no confusion: The belief that no confusion would arise due to differences in venue and location was based on an incorrect understanding of trade mark law.[7]

An honest belief that no confusion will arise is necessary, but is not sufficient for establishing good faith. Even if a mark is initially adopted in good faith, this may change once the user is aware of the existence of a similar registered trade mark and any potential for confusion.

The Importance of Clearance Searches

The Hemmes decision highlights the importance of conducting due diligence before adopting a new name. Choosing to undertake a clearance search will help:

• Identify potential conflicts: Clearance searches can reveal existing registered trade marks or pending applications that are substantially identical or deceptively similar to a proposed mark.
• Provide evidence of good faith: Conducting and documenting a thorough clearance search can serve as evidence of good faith, which can be crucial if an infringement claim arises later on. IP Australia and ASIC also encourage searching for registered trade marks when selecting company names.
• Minimise the risk of costly disputes: Identifying potential conflicts early gives the chance to choose an alternative brand name, saving time, resources, and the potential for expensive and damaging infringement litigation.

If a clearance search does identify potential obstacles to use or registration of a trade mark, there a number of options available. A clearance search will help by providing advice for how best to overcome the citations, such as:

• Exploring commercial options: This can include reaching out to the owner(s) of any conflicting marks for consent or a co-existence agreement. There is also the option to file evidence to show that the mark has been honestly and concurrently used in the marketplace.
• Altering the claimed goods/services: Often broad goods/services in an application’s specification can raise objections with trade marks in a completely different field. By narrowing the specification to only the relevant goods and/or services, it ensures that the application will avoid any irrelevant citations being raised.
• Altering the mark: By emphasising other distinctive features of a logo mark, it may be able to remove the possibility of an already registered mark being raised against it.

General Advice for Filing Trade Marks in Australia

For businesses looking to secure their brand in Australia, it is crucial to adopt a proactive approach. We recommend first:

• Conducting thorough clearance searches: Before investing time and resources in a brand name, perform comprehensive searches of the trade mark register and the broader marketplace.
• Seeking legal advice early: Consult with local intellectual property lawyers to assess the availability of a proposed trade mark, understand potential infringement risks, and develop a robust brand protection strategy.
• Acting in good faith: Throughout the process of selecting, adopting, and using a trade mark, ensure this is all done in honesty and take reasonable steps to avoid confusion with existing brands.
• Consider trade mark registration: Registering a trade mark(s) provides the owner with exclusive rights to use that mark for its goods and services in Australia and strengthens a position in case of infringement.

For businesses seeking to establish and protect their brand in Australia, conducting thorough trade mark clearance searches before making any significant commitments is not just advisable – it is essential for reducing the chance of risks and ensuring long-term brand security.

The analysis of evidence and the thoroughness of actions taken, including any searches, will be considered based on individual facts of each case.[1] 

Please reach out if you would like our assistance with undertaking a clearance search in Australia or New Zealand, or would like to discuss any of the above information.