Last week the Federal Court handed down its judgment in Lodestar Anstalt v Campari America LLC  FCAFC 92, which was an appeal from the decision in Skyy Sprits LLC v Lodestar Anstalt  FCA 509.
The judgment clarified how the Full Federal Court’s decision in Yau’s Entertainment Pty Ltd v Asia Television Ltd  FCAFC 78 (Yau) should be understood. It also provided guidance as to the interpretation of s 8 of the Trade Marks Act 1995 (Cth) (the Act).
Wild Geese v Wild Turkey – long running disputes
The appellant (Lodestar) produces and sells Wild Geese Rare Irish Whiskey (Wild Geese). The respondent (Campari) is the producer and vendor of Wild Turkey Bourbon (Wild Turkey) and owns the ‘WILD TURKEY’ trade mark. The parties have been involved in international disputes for almost 15 years.
In 2000, the owners of Wild Geese at the time registered the word mark ‘WILD GEESE’ as a trade mark in Australia.
Around the same time, another party, Wild Geese Wines Pty Ltd (WGW), began selling wines in South Australia under the name “Wild Geese Wines”.
In 2005, WGW sought to apply to register the word marks ‘WILD GEESE’ and ‘WILD GEESE WINES’ as trade marks. After discovering Wild Geese’s existing ‘WILD GEESE’ trade mark, the owner of WGW sought to remove it for non-use, based on his belief that Wild Geese whiskey had never been sold in Australia.
Unbeknownst to WGW, the owners of Wild Turkey at that time had also filed an application to remove the ‘WILD GEESE’ trade mark. Once the owner of WGW found out, he contacted Wild Turkey, who accused him of infringing their ‘WILD TURKEY’ trade mark by selling wines under the ‘WILD GEESE WINES’ mark.
However, those two parties subsequently reached an agreement and in 2007 executed various documents including a Licence Agreement. WGW assigned its trade marks and the application to remove Wild Geese’s trade marks to Wild Turkey, who then registered the trade marks under its name. Wild Turkey then licenced the trade marks back to WGW.
In 2010, Wild Geese – who had started selling their whiskey in Australia – brought an application to remove the ‘WILD GEESE WINES’ and ‘WILD GEESE’ trade marks for non-use. Although Wild Turkey had not used the trade marks during the relevant period, it nonetheless opposed the application on the grounds that WGW’s use of the trade marks pursuant to the Licence Agreement with Wild Turkey was an “authorised use” under s 8 of the Act and therefore constituted a use by Wild Turkey under s 7(3).
However, a Delegate of the Registrar of Trade Marks granted the application for removal, so Skyy Spirits (then the owner of Wild Turkey) appealed the decision to the Federal Court.
Image extracted from paragraph 38 of the judgment
Decision of the single judge of the Federal Court
The primary judge (Perram J) agreed that WGW had used the trade marks to produce and sell wine in Australia during the relevant period, but found that despite the Licence Agreement, Wild Turkey did not appear to exercise any actual control over the way WGW used the trade marks.
However, the primary judge held that the decision of the Full Federal Court in Yau meant that for the purpose of s 8(1) of the Act, “a mere theoretical possibility of contractual control was sufficient to constitute authorised use.” Therefore, Perram J set aside the decision of the Delegate and ordered that the application to remove the trade marks be refused.
Appeal to the Full Federal Court
Lodestar appealed the primary judge’s decision on the basis that either the primary judge misinterpreted the decision in Yau, or, if his Honour’s interpretation was correct, that Yau was wrongly decided. The appeal also raised questions as to the proper construction of s 8 of the Act and whether the sale of wines under the trade marks by WGW was an “authorised use” of the trade marks.
Decision of the Full Federal Court
The Full Federal Court, which was constituted of five judges because of Lodestar’s submissions as to Yau, unanimously allowed the appeal. The appeal from the Delegate was dismissed, the orders of the primary judge were set aside, and Campari was ordered to pay Lodestar’s costs of the appeal.
Besanko J (with whom Allsop CJ and Nicholas J agreed) found that although it was possible to interpret some of the observations of Gyles J in the two decisions which lead to the appeal in Yau as supporting the idea that a contract alone may be sufficient to establish the requisite control over the trade marks, the focus should be on the Full Court’s decision, and the Full Court did not indicate that contractual control was enough to satisfy the requirements under s 8 of the Act: at  to .
In relation to the meaning of “control” under s 8 of the Act, Besanko J noted that there must be a connection with the registered owner of the trade marks: see Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670. The connection may be slight – e.g. selection or quality control – but the control must be “actual control in relation to the trade mark from time to time.” Therefore, it is unlikely that a mere licence to use a trade mark would be sufficient without “more established” control: at .
In finding that the use of the trade marks by WGW was not an “authorised use” under s 8 the Act, Besanko J said that Wild Turkey did not exercise the requisite control over WGW’s use of the trade marks. This was because Wild Turkey did not monitor the use of the trade marks and although the Licence Agreement had a provision whereby the wine produced by WGW had to be of a certain quality – i.e. of a standard to obtain export approval from the Australian Wine and Brandy Corporation (AWBC) – this had no effect upon the way the WGW business was run: at . Likewise, the ban under the Licence Agreement on WGW exporting wine did not constitute sufficient control over the trade marks by Wild Turkey for the purposes of s 8 of the Act: at .
Katzmann J agreed with Besanko J’s reasons in relation to the interpretation of Yau. In terms of s 8 of the Act, his Honour noted that although a mere licence to use a trade mark may be inadequate to meet the requirements of control, if there were certain conditions imposed by the licence which meant that the registered proprietor maintained a connection with the trade marks, control could still be found to have been exercised: at . However, on the evidence in the instant case, Wild Turkey had not exercised any control over the use of the trade marks by WGW: at .
Greenwood J also agreed with the reasons of Besanko J. However, his Honour suggested that the evidence before the primary judge did not show that the Licence Agreement was not intended by the parties “to deliver anything but the appearance of control” to Wild Turkey, because the owner of WGW thought the AWBC protocol was an appropriate assessment standard for the quality of the wine: at .
Impact of the Decision
The Federal Court’s decision affirms the importance of careful drafting of Trade Mark Licence Agreements. It also highlights the need for registered proprietors of trade marks who authorise others to use the trade marks to maintain a connection with and actual control over the use in order to avoid the trade marks being removed.
If you are contemplating entering into a trade mark licence agreement or any other form of IP licence agreement, please contact us to discuss.
Ben Coogan | Partner | +61 7 3338 7503 | email@example.com