Trade mark licensing problems

Trident Seafoods has failed to get Trident Foods’ registrations for TRIDENT removed for non-use, but only because Gleeson J exercised her Honour’s discretion against removal.

Trident Foods has had TRIDENT registered for fish and fish products in class 29 since 1973, TM No. 266,625 and, since 1983, for meat, fish, poultry and various extracts, preservatives and pickles, TM No. 400,953.

Trident Seafoods was founded in the USA in 1973. It is apparently the largest seafood distributor in North America. It uses and has registrations all round the world – except for Australia and New Zealand – the trade marks “Trident Seafoods” and a stylised logo incorporating those words. It has been marketing its products in Australia since 2007 under the trade mark “Bountiful”, but its attempt to register “Trident Seafoods” has been blocked by Trident Foods’ prior registrations. It brought an action under s 92(4)(b) to remove those blocking registrations on the grounds of non-use. The non-use period was 7 January 2011 to 7 January 2014.

There is a good chance you have, or have had, some TRIDENT condiments on your shelf, but here’s the thing. Since at least 2000, Trident Foods did not itself manufacture and sell TRIDENT branded products. The products were manufactured and sold by Manassen Foods Australia. Trident Foods claimed Manassen’s use was use as an authorised user.[1] Gleeson J, however, rejected this claim but, as noted above, decided it was appropriate to exercise the discretion under s 101(3) not to order removal.

Manassen was not an authorised user

There was no written licence agreement between Trident Foods and Manassen until 3 November 2017.[2]

In addition to that licensing arrangement, Trident Foods relied on the corporate relationship with Manassen, the involvement in their respective businesses of two common directors and Manassen’s compliance with the Bright Food Group’s quality assurance manual.

Trident Foods is a wholly owned subsidiary of Manassen (and both are members of the same corporate group, the ultimate holding company of which is Bright “Cayman Islands”). Nonetheless, Trident Foods relied on the essentially pragmatic approach applied by the Registrar:[3]

There is nothing unusual in a large company such as Henry Schein, Inc and/or its predecessors (that is “the Company” as defined earlier) incorporating a wholly owned subsidiary in order to hold its worldwide trade mark (or, for that matter, patent or other IP right) portfolio. It is very common practice” because, inter alia, it efficiently streamlines processes for the prosecution and renewal of properties in the portfolio and it avoids the need to record name changes, mergers or assignments around the world should the parent company restructure or change names.

Gleeson J rejected this. Based on the Henschke v Rosemount and the Lodestar v Campari cases, her Honour held at [84] that “control” for the purposes of authorised use required “actual control” “as a matter of substance”.

The corporate relationship between Trident Foods and Manassen did not provide that. At [100(1)]: Gleeson J explained:

The corporate relationship between Trident Foods and Manassen does not place Trident Foods in a relationship of control over Manassen; rather, the converse is the case. The commonality of directors does not, without more, permit Trident Foods to exercise control over Manassen.

Trident Foods led evidence from a Ms Swanson, one of the two directors:

We have always maintained control over Manassen from the point of view of [Trident Foods’] as we have fiduciary obligations to act in the interest of [Trident Foods]. One of the things that has been considered, at least by me, since appointment as a director of Trident, is the quality and standard of the goods being sold under [Trident Foods’] trade mark registrations. As a director of Manassen, I appreciate the high standard of the goods that are sold by this company. As such, I have never had any cause for concern regarding the damage that could occur to the TRIDENT brand owned by [Trident Foods]. If there ever was a suggestion that poor quality goods were to be sold under [Trident Foods’] TRIDENT brand, I would be empowered and authorised to prevent such an occurrence.

Ms Swanson also gave evidence that Manassen had to comply with the Bright Food Group’s vendor quality management system (the VQM Manual) which was in place to maintain quality measures over all of the Group’s brands. In addition, she participated each month in meetings of Manassen’s “Innovation Council” which decided what products Manassen would sell, including “Trident” products, and were concerned with brand valuation and impairment to ensure that the brand was performing well and to avoid devaluation.

Gleeson J considered this was inadequate to establish actual control. Trident Seafoods argued that the directors would be in breach of their fiduciary duties to Manassen if they sought to exercise quality control over its operations on behalf of Trident Foods. Thankfully, Gleeson J did not accept this in terms. Rather, it seems Ms Swanson’s evidence was insufficient because it was at the level of assertion, without demonstrating examples of control being exercised by Trident Foods. At [100] points (2) – (6), her Honour explained:

(2) Ms Swanson’s evidence is in the nature of assertion. It does not include any particular illustration of conduct by Trident Foods amounting to actual control of the use of the “TRIDENT” trade mark.

(3) The fact that Ms Swanson considered it unnecessary to give directions, whether by reason of the existence of the VQM Manual or otherwise, is not relevant to the question of whether Manassen had obligations to Trident Foods in relation to the use of the “TRIDENT” trade mark.

(4) Any control that Ms Swanson might personally exercise by virtue of her membership of the Innovations Council (which was asserted but not demonstrated) does not prove control by Trident Foods.

(5) The identification of Trident Foods as trade mark owner on products supplied by Manassen does not prove use of the trade mark under the control of Trident Foods.

(6) Assuming that the VQM Manual is owned by Trident Foods jointly with other corporate entities in the Bright Group, Trident Seafoods did not demonstrate that the VQM Manual conferred any relevant control on Trident Foods over Manassen.

Finally, Gleeson J was not prepared to find there had in fact been an unwritten licence agreement in place as claimed in the recitals to the 2017 document. The claim was inconsistent with the evidence of how things had actually operated.

It is not possible to tell from the judgment what the contents of the VQM Manual were. One must wonder, however, whether much would really be gained by requiring the directors of Trident Foods to have met and formally adopted the relevant parts of the VQM Manual (assuming there were any) as the quality standards that Manassen needed to comply with and, further, to meet formally as directors of Trident Foods and approve changes to any applicable quality standards or even to meet at regular intervals to consider whether Manassen was complying with quality standards they had prescribed. Unless a subsidiary can never exercise control of its parent or a related body corporate that was not a subsidiary, nonetheless, it would seem that level of formalism is required.

Her Honour’s approach may be compared to that of Nicholas J in Dunlop v Goodyear at [88] and [121]. Of course, in that case the trade mark was owned by the parent, not the subsidiary; there seem to have been numerous written agreements in place and some evidence of head office (i.e., the parent) issuing instructions about the business and the use of the trade marks in the business.

As already indicated, Gleeson J went on to exercise the discretion not to remove Trident Foods’ registrations. In what is already an overly long post, that and some other points of interest will have to await consideration another day.

Trident Seafoods Corporation v Trident Foods Pty Limited [2018] FCA 1490


  1. As you know, under s 7(3), authorised use of a trade mark by a person is taken to be use of the trade mark by the registered owner. And, under s 8 a person is an authorised user of a trade mark if that person uses the trade mark under the control of the trade mark owner. Section 8(3) and (4) provide that “control” may be “quality control” or “financial control”, although s 8(5) does provide that s 8(3) and (4) do not limit the meaning of “under the control of”.  ?
  2. The recitals stated that there had been an unwritten licence agreement between them since 2000 and this document reflected the parties’ wish to reduce the terms of their licence to writing. Apparently, in reliance on Film Investment Corporation of New Zealand Ltd (Receiver Appointed) v Golden Editions Pty Ltd [1994] FCA 11; (1994) 28 IPR 1 at 15; Black & Decker Inc at [147] and [148]; Allam at [430] and [431].  ?
  3. HS TM, LLC v Schein Orthopadie-Service KG [2016] ATMO 63 at [23]; heard before Lodestar, but decided afterwards.  ?

What constitutes authorised use of a trade mark?

In the latest round of the worldwide war between Wild Turkey bourbon[1] and Wild Geese Irish whisky[2], Perram J has reluctantly found that actual control of the licensee is not necessary and potential control will suffice for authorised use[3] under the Trade Marks Act 1995.

Mr Sullivan QC, a barrister in South Australia, has a winery there under the name Wild Geese Wines. When he sought to register it as a trade mark, he discovered the war between Wild Turkey and Wild Geese Irish whisky. Deciding discretion was the better part of valor, in 2007 he sold his trade mark rights to Wild Turkey bourbon and received a perpetual, exclusive licence back for the princely sum of $1.00 plus he agreed to a number of quality control provisions:

  • his wine had to be of sufficient quality to obtain continuing export approval from the Australian Wine and Brandy Corporation;
  • on request from the licensor, he had to supply up to 3 bottles of his wine to the licensor each year and, if the licensor required, supply 4 bottles to the Australian Wine and Brandy Corporation for testing;
  • if his wines did not meet the Australian Wine and Brandy Corporation’s requirements, the licensor could terminate the licence;
  • he was not allowed to use the trade mark outside Australia and he could use the trade mark only on Australian wine;
  • as is typcial, he was not allowed to use the trade mark in some altered or abbreviated form or in any scandalous fashion;
  • he also had to maintain insurance; and
  • he was not allowed to represent in any way that he was a licensee of Wild Turkey.

The main point of interest about these provisions is that Wild Turkey did not actually seek to exercise any of them until April 2011, that is, four years down the track. By this time, however, Lodestar Anhalt had filed its non-use action and so Wild Turkey had to show it had used its Wild Geese Wines trade mark as a trade mark in the period September 2007 to September 2010. Its only way to do so was in reliance on Mr Sullivan’s use as an authorised user.[4]

The Wine and Brandy Corporation conditions are interesting for at least 2 reasons. The first was that Mr Sullivan proposed them so that he was not at the mercy of the licensor’s potentially subjective whim about whether or not his wine was of an acceptable quality. Secondly, while Mr Sullivan had no idea what standard was required for export approval, apparently over 99% of wine submitted to the Australian Wine and Brandy Corporation qualified for export approval.

Perram J had no trouble finding that Wild Turkey had not exercised actual control over Mr Sullivan’s use of the Wild Geese Wines trade mark. The question was whether the potential for such control was enough.

First, Perram J considered that a trade mark licence under the 1955 Act would be valid only if control was actually exercised over the licensee.

Secondly, his Honour considered that what needed to be shown under the 1955 Act was a connection in the course of trade. This was different to what was required under s 17 of the 1995 Act and the requirements for authorised use under s 7 and s 8.[5]

Left to his own devices, Perram J considered that the requirements for authorised use still required that control actually be exercised over the licensee. However, his Honour considered he was bound by the Full Court’s decision in Yau Entertainment to find that the potential to exercise control was sufficent. As Wild Turkey had that potential through the terms of the licence agreement, Mr Sullivan’s use qualified as authorised use and so his sales under the trade mark in the relevant period, while small, were sufficient to defeat the non-use action.

If his Honour had found that potential control had not been sufficient, he would not have exercised a discretion against removal.

Skyy Spirits LLC v Lodestar Anstalt [2015] FCA 509


  1. For this round of the dispute owned by Skyy Spirits, part of the Campari group. Previously, the relevant entity had been Austin Nichols.  ?
  2. Still held by Lodestar Anhalt, a Lichtenstein corporation. More wild geese. ?
  3. Authorised use counts as use by the trade mark owner: s 7(3).  ?
  4. One can imagine that the impending removal action may have been the trigger for Wild Turkey’s “sudden” interest in exercising control. Things are perhaps not so clear as that: in fact, from 2007 to 2010, Mr Sullivan was only offering for sale a merlot he had bottled in 2004. It was not until 2010 that he bottled a pinot noir, which did not go on the market until later in 2011. The reported reasons do not indicate whether anyone on the Wild Turkey side ever tasted the merlot as part of the “licensing” process although, as Wild Turkey had the onus to rebut the non-use allegation, one might expect it would have to have led evidence to establish that – if it wished to rely on it.  ?
  5. On one view, paragraph 42 of the High Court’s Gallo decision tells us that the definition of “use as a trade mark” provided by s 17 of the 1995 Act means the same thing as the definition in s 6(1) of the 1955 Act, notwithstanding that s 17 no longer refers to “a connexion in the course of trade”.  ?

High Court allows appeal in Barefoot case

E & J Gallo owns TM No 787765, BAREFOOT, for “wines” in class 33. It had acquired ownership of the trade mark by assignment in 2005 from a Mr Houlihan.

Lion Nathan introduced a new beer into Australia under the trade mark BAREFOOT RADLER (with a barefoot device):

The Full Federal Court found that Lion’s beer infringed Gallo’s trade mark as goods of the same description, but ordered the trade mark removed because it had not been used for the 3 year statutory period prescribed by s 92(4) – in this case between 7 May 2004 and 7 May 2007.

Neither Gallo nor Mr Houlihan had ever sold, or specifically authorised the sale of, any wine under the BAREFOOT trade mark in Australia. If that were all, it would have been an end to the matter. However, there was a complication. Wine made by Mr Houlihan’s company, Barefoot Cellars, in California had actually found its way into Australia and been offered for sale.

Barefoot Cellars had sold a shipment of 60 cases of its wine to a distributor in Germany in 2001. Some of the consignment to the German distributor was imported into Australia by a liquor wholesaler, Beach Avenue. In the 3 years relevant to the non-use claim, Beach Avenue imported 144 bottles of the wine; at least 41 of which were actually sold during the period (and a further 18 were given away).

Lion Nathan argued, and the Full Federal Court had accepted, that there had been no use of the trade mark as a trade mark because neither of the trade mark owners had intended to project their goods into the Australian market.

There was use in the course of trade

The High Court rejected this argument.

51  The capacity of a trade mark to distinguish a registered owner’s goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market. It depends on the goods being in the course of trade in Australia. Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act. A registered owner who has registered a trade mark under the provisions of the Trade Marks Act can be taken, in general terms, to have an intention to use that trade mark on goods in Australia. It is a commonplace of contemporary international trade that prior to consumption goods may be in the course of trade across national boundaries.

52  An overseas manufacturer who has registered a trade mark in Australia and who himself (or through an authorised user) places the trade mark on goods which are then sold to a trader overseas can be said to be a user of the trade mark when those same goods, to which the trade mark is affixed, are in the course of trade, that is, are offered for sale and sold in Australia. This is because the trade mark remains the trade mark of the registered owner (through an authorised user if there is one) whilst the goods are in the course of trade before they are bought for consumption[29]. As affirmed by Gummow J in Wingate Marketing Pty Ltd v Levi Strauss & Co[30],
“whilst a trade mark remains on goods, it functions as an indicator of the person who attached or authorised the initial use of the mark”.
During the trading period, the trade mark functions as an indicator of the origin of the goods, irrespective of the location of the first sale.

That is, what is required is that (1) there be some sign which functions as a trade mark – a badge of origin – and (2) the sign be used in the course of trade in Australia.

The sale in England by the English manufacturer to retailers for resale in Estex was sufficient for this, but awareness that the retail markets in Australia was the intended destination was not necessary.

As the High Court’s references to Champagne Heidsieck v Buxton (a case, if not exactly dear to my heart, certainly engraved on it!) show, any other conclusion would be inconsistent with the cases establishing that parallel imports do not infringe trade marks and which have been enshrined in s 123.

In context, therefore, the last sentence of [50], noting that the goods had been sold to the German trader without any limitation on resale should not be determinative.

Was there enough use?

Lion’s first fall back position was to rely on the insubstantiality of the 144 bottles imported compared to the size of the market for wine in Australia. The High Court rejected this attack:

65  A commercial quantity of wine, some 144 bottles, was imported and offered for sale under the registered trade mark by Beach Avenue during the statutory period. Some 41 sales during that time were proven by reference to invoices and tax paid. There was no suggestion in the evidence that the offering for sale and selling either overseas or in Australia was for any purpose other than making profit and establishing goodwill in the registered trade mark. It was not contended that the use was fictitious or colourable. In all the circumstances the use was genuine and sufficient to establish use in good faith for the purposes of Lion Nathan’s application for removal.

That is, the High Court adopted a qualitative rather than quantitative approach. It is also worth noting the careful reservation that it was not called upon to decide whether or not a single use would suffice.

What trade mark was used?

Lion’s next attack argued that use of BAREFOOT with a representation of a bare footprint on the wine bottle label was not use of the trade mark as registered – BAREFOOT.

The High Court did not reject this argument on the grounds that there was use of BAREFOOT alone.

Rather, at [68] it distinguished the Colorado case (a case from which special leave was refused) on the grounds that the word COLORADO had no inherent capacity to distinguish because of its geographical significance and so the mountain peak device used with the word element was “not a mere descriptor but a distinguishing feature”. In this case, however, at [69] the device element was an addition which did not substantially affect the trade mark’s identity: consumers were likely to identify the mark by reference to the word, the device merely illustrated the word and, except in the case of honest concurrent use, the device alone would not be registrable in the face of the word mark.

An evidential issue about authorised use

Lion’s last attack, arguing that Barefoot Cellars was not an authorised user when it applied the trade mark to the wine, also failed. The potential problem for Gallo here was that neither Mr Houlihan nor anyone else involved in the production of the wine gave evidence about what quality control, if any, Mr Houlihan had exercised. There were 2 strands to this attack.

The first strand was to contend that some assertions of quality control recorded in a consultancy  agreement were not in fact statements of fact. This failed as a matter of interpretation of the document. In a separate concurring judgment, Heydon J explained that the consultancy agreement constituted a “business record” and the statements were therefore admissible as an exception to the hearsay rule.

The second argument that there was no quality control by Mr Houlihan because he was only a joint principal in Barefoot Cellars and in addition a third person was the winemaker. This was not, however, sufficient to preclude the exercise of quality control by Mr Houlihan.

E. & J. Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15 (19 May 2010)

Update: should have added links to report on Full Federal Court and first instance (here and here).

Some things the High Court didn’t deal with:

  1. The Full Federal Court’s finding that, notwithstanding the order to remove the trade mark for non-use, Lion still had to pay damages for infringement until the judgment.
  2. Whether or not Gallo’s negotiations with McWilliams Wines to introduce a BAREFOOT wine into Australia constituted use of the trade mark or warranted an exercise of discretion to leave the trade mark on the Register. The negotiations culminated in the grant of a licence to McWilliams and the sale of products under the trade mark in September 2007, some 4 months after the expiry of the relevant 3 year period.
  3. Whether beer and wine are goods of the same description.

The first question, of course, did not arise as a result of the High Court’s principal ruling. The third question was part of the “evaluative findings” which did not raise general questions of public importance. See [72]