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What's good for the Geese is not good for the Turkeys - implications for owners of registered trade marks

Caseflash 16 August 2016

A five-member bench of the Full Federal Court has recently handed down a unanimous decision with significant implications for owners of registered trade marks who licence their trade marks for use by third parties (Lodestar Anstalt v Campari America LLC).  As a consequence of this decision the owner of a registered trade mark who licenses it could find that any commercial gain could quickly be wiped out and the trade mark made vulnerable to cancellation unless the owner exercises real control over the use of the trade mark by a licensee.

Birds of a feather – A longstanding dispute

Lodestar and Campari have, in the guise of various corporate entities, been engaged in disputes internationally for more than fifteen years over the use of the trade marks WILD GEESE (used by Lodestar in relation to Irish whiskey) and WILD TURKEY (used by Campari for bourbon).  Although various corporate entities were involved, to simplify we have referred to any company in the Lodestar group as ‘Lodestar’ and any company in the Campari group as ‘Campari’.

The current dispute arose from an application by Lodestar to remove from the Australian trade marks register two registered trade marks owned by Campari - ‘WILD GEESE’ and ‘WILD GEESE WINES’ (the WILD GEESE trade marks).  It was clear that Lodestar wanted to have the trade marks removed so that Lodestar could make use of the trade mark ‘WILD GEESE’ for Irish whiskey in Australia (without infringing the rights held by Campari).

Once a trade mark has been registered for five years, it can be removed from the register of trade marks if the trade mark has not been ‘used’ by the registered owner for a three year period.  Use by a third party (an ‘authorised user’) qualifies as use by the registered owner.  A person is an ‘authorised user’ if the person uses the trade mark in relation to goods or services under the control of the registered owner.

At the relevant time, Campari was the registered owner of the WILD GEESE trade marks but did not use them itself.  Campari licensed them to Wild Geese Wines Pty Ltd (WGW) under an exclusive, perpetual licence.  Under the terms of the written licence agreement, WGW:

  • Could only use the WILD GEESE trade marks in relation to wine within Australia,
  • The wine had to be of sufficient quality to obtain continuing export approval from the Australian Wine and Brandy Corporation;
  • Had to provide, on request, a maximum of three bottles of wine per year to Campari to test;
  • The WILD GEESE trade marks could not be abbreviated or used in any scandalous fashion; and
  • WGW could not associate the brand with Lodestar.

One swallow does not make summer – There must be actual control

WGW had clearly used the WILD GEESE trade marks in relation to wine.  The question before the Full Federal Court was whether the above licence terms provided sufficient ‘control’ of WGW by Campari such that WGW was an ‘authorised user’.  If WGW was not an authorised user, then the WILD GEESE trade marks were not being ‘used’ and could be removed from the register.

The Court held that in order for use to qualify as ‘authorised use’ the trade mark owner had to exercise ‘control in fact’.  The mere possibility that the trade mark owner could exercise control under a licence agreement was insufficient.

In this case, the terms of the licence did not have any practical effect on the way in which WGW conducted its business.  Importantly:

  • the threshold for approval by the Australian Wine and Brandy Corporation is so low that 99% of all wines are approved; and
  • Campari never asked for any information about the use of the WILD GEESE trade marks or took any other positive steps to monitor whether the terms of the licence were being complied with.

The early bird gets the worm – Use after the fact is no good

After Lodestar commenced the non-use proceedings, Campari requested three bottles of wine from WGW and confirmed that the quality of the wine produced by WGW under the WILD GEESE trade marks was acceptable.

Unfortunately for Campari, this evidence arose after the relevant ‘non-use’ period (being one month before the action commenced) and was disregarded by the Court.

Kill two birds with one stone

Ironically, this is the second time ‘WILD GEESE’ has been successfully removed as a result of a non-use application.  In 2005, Campari successfully removed Lodestar’s registration of ‘WILD GEESE’ on the basis that no spirits had been sold in Australia during the previous three years under that brand.

Trade mark licensors and licensees need to be aware that it is necessary to show actual, and continual, control by the trade mark owner over its licensee’s use of the licensed trade mark.

In light of this decision, we strongly recommend that you take the opportunity to review your trade mark licences and practices, whether you are the licensor or the licensee, to ensure that the trade mark owner is exercising sufficient control over the trade mark.


Clare Mirabello, Special Counsel
Sydney

Ben Cameron, Associate
Sydney

Caseflash 16 August 2016
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