The High Court of Australia has recently handed down a significant decision in the case of E & J Gallo Winery v Lion Nathan Australia Pty Ltd  HCA 15. While there were a number of questions before the court, the most important one before the court was what constituted “use” of a trade mark.
In this case, Gallo Winery is an American Company who owns the registered trade mark for a brand of wines called “BAREFOOT”. In 2008 Lion Nathan begun selling a light beer called “BAREFOOT RADLER”. Gallo Winery alleged that Lion Nathan was infringing on its trade mark and commenced legal proceedings.
Lion Nathan denied infringement, and cross-claimed, seeking removal of Gallo Winery’s trade mark from the register. Lion Nathan alleged that Gallo Winery did not actively market or trade the goods in Australia and as a result of non-use over 3 years, the trade mark should be removed.
Gallo Winery itself did not actively sell the wine in Australia, however there was evidence that a wholesaler imported and sold about 41 bottles of the wine. This was done at the time without the knowledge of Gallo Winery.
Initially the Federal Court found that the Australian sales were done without Gallo Winery’s knowledge and so, they were not “using” the trade mark. The Federal Court initially ruled that the trade mark should be removed from the register for non-use.
The case was appealed and eventually found itself before the High Court. The High Court considered that even if the goods were sold in Australia without the knowledge of the owner, the owner is considered using the trade mark. It is not necessary for the trade mark owner to actively participate in selling the goods – it doesn’t even matter if they knew that the goods were being sold or not, so long as the goods are being circulated in the Australian market.
Consequently the court held that Gallo Winery’s trade mark was valid and that Lion Nathan had infringed on it.
This case demonstrates that a registered trade mark is quite powerful and little use of the trade mark does not mean non-use of the trade mark.
The more important lesson to learn is that these matters could have been avoided by doing the proper checks and searches before promoting or marketing the brand. Brand owners need to be careful in selecting a brand or a trade mark to market even if, on the surface, the trade mark is for a different good or class of goods.