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12 Dec 16
Trade mark licensing - the Lodestar decision - is everything under control?

WHO SHOULD READ THIS 

  • Holders of trade marks in Australia.  

THINGS YOU NEED TO KNOW 

  • Just because you have licensed the use of a trade mark does not mean that you have “control” over the trade mark within the meaning of section 8 of the Trade Marks Act 1995 (Cth). If you have not exercised ‘actual’ and ‘proper’ control over your trade mark, it will be difficult to attribute any use by the licensee back to yourself and your mark may vulnerable to removal for non-use.

WHAT YOU NEED TO DO 

  • When drafting a trade mark licence agreement, terms should be included to provide a real connection between the registered owner of the trade mark and the user.

The High Court’s decision not to grant special leave to Campari to appeal against the decision of the Full Federal Court in Lodestar Anstalt v Campari America LLC [2016] has significant implications for trade mark holders.

In rejecting the special leave application on 16 November 2016, the High Court said there was no reason to doubt the Full Federal Court’s decision.  Lodestar therefore remains an authoritative statement of the law in Australia.

Background
Campari had licensed the use of its trade mark, WILD GEESE, to a third party, Wild Geese Wines.  Lodestar brought a non-use application against Campari for the trade mark and Campari wanted to use the licensing agreement with Wild Geese Wines as evidence that Campari had used the trade mark.  Campari had not been using the trade mark itself.  The critical issue was whether Campari had “control” over the trade mark within the meaning of section 8 of the Trade Marks Act 1995 (Cth).

On appeal, the Full Federal Court found that Campari did not “control” the trade mark despite the licensing arrangement with Wild Geese Wines.  Lodestar therefore succeeded in having the WILD GEESE trade mark removed from the trade marks register. 

Some of the things the Full Federal Court said were important in reaching this decision were:

  • “control” in the Act means actual control of the trade mark from time to time i.e. ‘control as a matter of substance
  • just because Wild Geese Wines was licensed to use the WILD GEESE trade mark (even on a perpetual and exclusive basis) was not enough to establish actual control over the trade mark
  • while there was a quality control provision in the licensing agreement, it ‘was not an exacting standard’ and ‘involved no more than a rejection of… truly undrinkable wine’ and the licensee was not requested to provide any samples of wine pursuant to the clause, and
  • in practice, there was no monitoring by Campari and no suggestion that it took steps to ascertain whether the quality control provision was being complied with by Wild Geese Wines.

What does it mean for trademark holders? 
In practice, the ramifications of the decision are quite significant:

  • owners will not be able to point to the mere existence of a trade mark licence agreement and will need to show that they have exercised ‘actual’ and ‘proper’ control over a licensee to attribute any use by the licensee back to the owner.  Illusory control will not be sufficient
  • if the licensor is not in “control” of their trade mark within the meaning of section 8 of the Act, their trade mark is vulnerable to removal from the register for ‘non-use’ if a third party attacks it through a non-use application, and
  • when drafting a trade mark licence agreement, terms should be included to provide a real connection between the registered owner of the trade mark and the user.  The owner also has to exercise its rights so that ‘actual’ control is established as a matter of substance. 

What do you need to do? 
If you require assistance with trade mark licensing, non-use removal applications or general advice in matters relating to intellectual property, or require further information on the issues raised in this alert please contact us. 

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