A trade mark licence requires actual control

The Full Federal Court has held that the licensor must actually exercise control over the licensee for a trade mark licence to be a valid licence.

The decision is part of a long running global battle between WILD TURKEY and WILD GEESE. The WILD TURKEY interests own and use WILD TURKEY around the world for bourbon whiskey; the WILD GEESE interests use, or want to use, WILD GEESE around the world for Irish whiskey. Instead of the usual battle about who was first to file and whether or not WILD TURKEY was confusingly similar to WILD GEESE or vice versa, there was an unusual twist in this fight: WILD TURKEY tried an end run, tacking on to a registration for WILD GEESE WINES.

Some background

A Mr O’Sullivan QC (and his partners) had established a winery in South Australia under the name WILD GEESE WINES (WGW) in 2000. In due course, WGW set out to register their trade mark. However, the WILD GEESE interests had already registered their trade mark in Australia for whiskey. It was cited against the WGW application and in 2005, WGW brought an application against the WILD GEESE interests’ registration to remove it for non-use. The WILD TURKEY interests had also brought a non-use action against the WILD GEESE interests’ registration.

Mr O’Sullivan (and partners) quickly came to the realisation that they did not to become embroiled in the intergalactic war being waged between WILD TURKEY and WILD GEESE whiskey. Instead, in 2007 WGW assigned its trade mark application and the benefit of its non-use application to the WILD TURKEY interests in return for an exclusive licence to use the trade mark in Australia for wine.

The non-use applications against the WILD GEESE interests’ trade mark was successful and the (now) WILD TURKEY interests registered the WILD GEESE WINES trade mark for wine and spirits that WGW had assigned to them.

In a case of sauce for the goose potentially being sauce also for the turkey, the WILD GEESE interests then brought an application to remove the WGW trade mark for non-use. The WILD TURKEY interests sought to defend that claim on the basis that the use of the trade mark by WGW was authorised use under the Act and so constituted use in the relevant period by the WILD TURKEY interests[1] as registered owner sufficient to defeat the non-use application.

As the removal application by the WILD GEESE interests was filed on 27 September 2010, the three year period in which the WILD TURKEY interests had to show use as a trade mark in good faith ran from 27 August 2007 to 27 August 2010.

Unfortunately for the WILD TURKEY interests, there were a few wrinkles.

WGW produced a merlot under its trade mark in 2004. Due to adverse climate conditions, it did not produce another vintage until 2011. However, wine from the 2004 vintage was for sale (and was sold) in relatively small batches during the non-use period.

Mr O’Sullivan (and his partners) realised that a valid trade mark licence required that the licensee’s use be under the licensor’s control. To that end, Mr O’Sullivan proposed quality control ‘conditions’ for inclusion in the licence:

  • WGW’s wines had to be of sufficient quality to qualify for an export licence from the Australian Wine and Brandy Corporation;
  • WGW had to supply samples of their wine to the WILD TURKEY interests if requested to do so.

Notwithstanding this, the licence arrangements did not have any practical effect on WGW’s operations and the WILD TURKEY interests never requested samples until after the WILD GEESE interests brought their non-use application.

The Registrar upheld the removal application. On appeal, Perram J considered that the Full Court’s decision in Yau Entertainment bound him to find that the possibility of control being exercised was sufficient for a valid licence and so, very reluctantly, allowed WILD TURKEY’s appeal.

The Full Court’s decision

All five judges considered that Yau Entertainment did not rule that the potential for the exercise of control by the licensor was sufficient for authorised use under the Act.

Control

Besanko J gave the leading judgment with which Allsop CJ and Nicholas J agreed.

After a detailed review of the legislative history and the case law, Besanko J concluded at [95] – [98] that “control” for the purposes of s 8 meant actual control. At [95]:

The meaning of “under the control of” in s 8 is informed by the principle stated by Aickin J in Pioneer, that is to say, that the trade mark must indicate a connection in the course of trade with the registered owner. The connection may be slight, such as selection or quality control or control of the user in the sense in which a parent company controls a subsidiary. It is the connection which may be slight. Aickin J was not saying the selection or quality control or financial control which may be slight. I think the principle stated by Aickin J informs the meaning of “under the control of” ….

His Honour acknowledged at [98] that whether there was actual control was a question of fact and degree, but “there must be control as a matter of substance.”

His Honour recognised that this conclusion was different to the conclusion reached under the Trade Marks Act 1994 by the House of Lords in Scandecor. That however was because UK law had taken a different course under the influence of EU law. Similarly, the CJEU’s decision in Ideal-Standard [2] was directed to a very different issue: exhaustion of rights.

WILD TURKEY did not actually exercise control

Besanko J went on to find that the WILD TURKEY interests did not actually exercise control over WGW’s use of the trade mark. Bearing in mind that it was a question of fact and degree, his Honour considered the most significant factor was that the licence arrangement had no practical effect on how WGW conducted itself.

At [107]:

The quality control provision in the Licence Agreement is that the wine be of a sufficient standard to obtain the approval for export of the AWBC. There was no evidence of the precise content of that standard. It was not an exacting standard as the approval rate shows (at [51] above).[3] The primary judge considered that the standard involved no more than a rejection of what he called truly undrinkable wine (at [55]). It is plain that the standard had no effect on Mr O’Sullivan’s wine making practices. He was interested in making good to high quality wine. At no time during the relevant period did [WILD TURKEY] contact Mr O’Sullivan about the wine he was making or selling or both. There was never any request by [WILD TURKEY] for samples under cl 3.1 or for the product to be supplied to the Australian Wine Research Institute under cl 3.2. [WILD TURKEY] never asked Mr O’Sullivan for any information about the use of the trade marks or Mr O’Sullivan’s wine making operations generally. There was no monitoring by [WILD TURKEY] and nothing to suggest that [WILD TURKEY] took steps to ascertain whether the terms in cl 3 were being complied with. I do not think s 8(3) was satisfied by the existence of cl 3 in the Licence Agreement.

The conditions in the licence that WGW could use the trade mark only for wine it manufactured and only on wines sold in Australia were restrictions, but they were not restrictions that went to the quality of what was produced necessary to maintain the connection in the course of trade with the (putative) licensor. At [108], his Honour explained:

…. These are restrictions but not ones like controls on quality or manufacturing process which might suggest a connection between the registered owner and the use of the trade marks in connection with the provision or dealing with goods in the course of trade. There is no evidence that [WILD TURKEY] monitored or informed itself as to whether WGW was only selling Australian wine in Australia. These requirements do not give rise to control. WGW was not permitted to amend or abbreviate the trade marks or use them in a scandalous fashion. These provisions seem to me to be standard provisions to be expected in a licence agreement for trade marks. There is no evidence of monitoring by [WILD TURKEY] of these provisions and they do not amount to control within s 8. Finally, the provision about standard liability insurance and [WILD TURKEY]’ ability to terminate the Licence Agreement for a material breach is not sufficient to constitute control under s 8 of the Act.

Thus, the use by WGW was not authorised use and the registrations for WILD GEESE for wines should be removed for non-use.

Some other points

Nicholas J agreed with Besanko J’s reasons. Nicholas J also pointed out that the use which would defeat a non-use application under s 92 had to be use as a trade mark in good faith. His Honour considered that the failure by the WILD TURKEY interests to exercise actual control over WGW would be a factor disqualifying that use from being use in good faith. As this line of attack was not actually argued by the WILD GEESE interests, his Honour did not decide the case on this basis. nonetheless at [132], his Honour said:

However, in considering whether or not the registered owner has exercised sufficient control over another person’s use of a mark so as to defeat an attack on the grounds of non-use, it is important to recognise that the boundary between “use” and “use in good faith” by the registered owner cannot be defined by a bright line. This is because the question whether there has been any use by the registered owner may itself depend on whether the control it is said to have exercised was real or genuine control as opposed to something that was merely token or colourable.

Allsop CJ agreed with both Besanko J and Nicholas J.

Katzmann J also found that authorised use required the licensor actually to exercise control over the licensee. That had plainly not happened in this case. Her Honour did accept that the WILD TURKEY interests’ request for samples in 2011 (after the non-use period and after the WILD GEESE interests had filed their non-use application) could lead to ‘a “‘retrospectant’ circumstantial inference”’[4] that control was actually exercised. But the inference that control had not been exercised was also open and, as the WILD TURKEY interests had not shown the inference they contended for was more probable than not, they would still lose. Her Honour pointed out that the wine show medals that the WILD TURKEY interests relied on to support the good quality of the wines did not survive scrutiny. The judges’ comments at the wine shows included:

Very disappointing class with no highlights. From this class it would appear to be unsuited to the region. No wines showed any varietal character or even just brightness of fruit and character.

Perhaps more importantly, there was no evidence that the WILD TURKEY interests had any idea that WGW’s wines had won any medals or whether the wine was of good, bad or indifferent quality.

Greenwood J also concurred in the result, but was not prepared to condemn the licensing arrangements between the WILD TURKEY interests and WGW in the strong terms used by the trial judge.

Wrap up

So, if you are acting for a trade mark licensor, make sure that it actually exercises control over its licensee(s). And, at least when the control relied on is quality control, make sure the control goes to the quality of the goods or services provided under the licence. The use won’t be authorised use otherwise. In that case, the licensor won’t be able to rely on it to defeat a non-use application as in this case. Even if that is not a risk, there will also be the danger that use which is not authorised use may render the trade mark deceptive and liable to cancellation.

If you have a comment or a question, please feel free to post it in the comments section. Or, if you would prefer, email me.

Lodestar Anstalt v Campari America LLC [2016] FCAFC 92 reversing Skyy Spirits LLC v Lodestar Anstalt [2015] FCA 509


  1. Section 7(3).  ?
  2. IHT Internationale Heitztechnik GmbH & Anor v Ideal-Standard GmbH & Anor [1994] 1 ECR 2789.  ?
  3. In the year ending 30 June 2010, only 40 wines out of 18,019 wines tested ultimately failed to receive export approval, and the figure in the following year was 43 wines out of 14,569 wines tested.  ?
  4. Referring to Heydon J at [76] in Gallo.  ?

Primary Health Care is not registrable as a trade mark

You will probably not be surprised to discover that PRIMARY HEALTH CARE is not registrable as a trade mark. You may, however, be surprised that the successful challenger was the Commonwealth of Australia.

Primary Health Care Limited (PHC) applied to register PRIMARY HEALTH CARE and

Primary Health Care logo
Primary Health Care logo

in class 35 for:[1]

Medical centre business management; medical centre business administration; service provider to medical professionals, namely provider of: administrative support services, billing and invoicing services, reception and telephone answering services, patient booking services, patient file management services including management of access to patient files, typing services, account-keeping and book-keeping services, preparation of business reports, systemisation of information into computer databases, professional business consultancy, computerised file management, business and information management services, ordering services, processing of purchase orders.

What PHC did was it bought or built a building for use as a medical practice. It set up the rooms and facilities and provided the staff such as receptionists, book keepers etc. Then it contracted with medical practitioners (mostly GPs) to work from the medical centre, using the staff and facilities PHC made available to provide their services. PHC argued that it used its trade marks only in providing those services to the medical practitioners and the trade marks were not used by it in providing medical services to the medical practitioners’ patients. Thus, it said, it was not using the trade marks for medical services, only for business management and administration services – services for which the expression PRIMARY HEALTH CARE was not an apt description. At [53]:

The applicant’s case is that the Services are all to be provided to health care professionals and are not to include clinical or medical care by those professionals to patients.

This argument was predicated on PHC’s clinics/centres not being called or promoted to the public as PRIMARY HEALTH CARE centres.[2]

Jagot J rejected PHC’s contention. Her Honour accepted that PHC’s marketing was directed to health care professionals rather than the public. Her Honour also accepted that the health care professionals provided the health care services to the patient and jealously guarded their clinical independence in deciding what clinical care to provide to the patient. So PHC was not actually providing medical or health care services to the patients per se. However, it was unrealistic to treat the services PHC provided as being services provided only to the health care professionals. They were also provided to the public. Jagot J explained what her Honour had in mind by reference to the medical centre’s receiptionist – who was employed by PHC. For example at [55] – [59]:

…. the person paying for the services, the medical professional, is not the only person who receives the services or, at the least, is not the only person concerned with the services. The Services include reception and telephone answering services, patient booking services, patient file management services, information management services, billing and invoicing services, computerised file management, and ordering services, all said to be “to medical professionals”. (emphasis supplied)

Assume then a member of the public who wishes to see a GP who is contracted to and has a practice located in one of the applicant’s medical centres (leaving aside, for the moment, the issue about Idameneo and how the marks have in fact been used). The patient calls the centre and speaks to a receptionist. On the applicant’s case, in answering the call, the receptionist is providing a service only to the GP the patient might wish to see and not to the patient. This is untenable. The GP who ultimately sees the patient pays for the service but the service cannot be said to be a service to the GP only. It is also a service to the patient, the cost of which is borne by the GP, at least insofar as the GP does not seek to recoup those costs in the consultation fee. ….

As a consequence, Jagot J found:

[64] As such, the focus of the applicant’s case is off target and at odds with the evidence. The consequences of this disconnect run through every aspect of the case. First, the Services cannot be considered as if they exist in isolation because that is not how the Services are provided. Second, no matter how often the applicant repeats it, I am unable to accept that the Services are directed only to GPs and health professionals; the public and other participants in the health care sector are provided with some of the Services and are potentially concerned with all of the Services. ….

[65] … the reality is that, at least insofar as the Services are concerned, the applicant is providing services to medical professionals within its centres, to patients of those centres, and to all other participants in health care who interact with any medical professional in one of its centres. The fact that the applicant (or Idameneo) receives payment for the provision of the Services directly from the medical professional does not mean that the Services are provided only to the medical professional. Nor does the fact that medical professionals understand that they alone provide clinical or medical services to patients mean that the Services are not provided to patients. The reasoning involved seems to involve a false syllogism: (i) only medical professionals provide clinical services to patients, (ii) the Services are not clinical services, (iii) therefore, the Services are necessarily not services to patients. Propositions (i) and (ii) may be accepted, but they do not lead to proposition (iii).

Therefore, when deciding what the ordinary signification of the words PRIMARY HEALTH CARE was, the relevant public was not just the health care professionals to whom the services were promoted but all other participants in the health care system including patients and potential patients.

For the public so defined, Jagot J then went on to find that the expression PRIMARY HEALTH CARE was directly descriptive and so not inherently adapted to distinguish at all under the old form of s 41(3) or capable of distinguishing under s 41(5) or in fact distinctive under s 41(6).[3]

At first blush her Honour’s ruling that the Services were being provided to the public (other than the medical practitioners) might seem questionable because, so far as I can make out from the judgment, no member of the public (apart from the medical practitioners of course) actually sees the sign PRIMARY HEALTH CARE being used as a trade mark. For example, patients were not given bills or receipts or prescriptions with PRIMARY HEALTH CARE emblazoned on them. Nor does it seem that the receptionist (or other ancillary staff) wore uniforms with the sign on them. If keywords are not used as a trade mark because they are “invisible”, one might think that the unseen expression PRIMARY HEALTH CARE was also not being used as a trade mark for the services provided to the public. As the Commonwealth pointed out, however, PRIMARY HEALTH CARE could be used on, for example, the uniforms if the trade mark were registered. So, taking into account fair notional use renders the “invisiblity” argument untenable.[4]

Perhaps the crucial consideration is that the services being provided by the receptionist and the other “ancillary” staff are just so closely bound up with the health care services being provided by the medical practitioner to be part of those services or taking their character from the primary services being offered at the clinic. This indeed appears to be what her Honour had in mind. So for example, her Honour said at [119]:

there is an unreal distinction at the heart of the applicant’s case between the provision of the Services and the provision of clinical or medical care. The distinction is unreal because the Services are part of the overall service a patient receives when attending a medical centre and, to some extent, are also part of the medical or clinical care a patient receives. It is part of medical care that a GP be able to access clinical records for a patient. It is part of medical care to ensure new records are accessible in the future. It is part of medical care for a patient’s referral to be properly recorded, stored and managed. It is part of medical care for the centre to have available necessary medical supplies. ….

and at [121]:

in the real world context in Australia (at least) the Services are inextricably bound up with the provision of medical and clinical services by general practitioners and allied healthcare professionals, including through medical centres and medical practices – they are ‘part and parcel’ of the practice of general medicine and allied healthcare in the community, of primary health care.

That way of looking at things, with respect, seems in accord with the reasons why the Full Court in the Chifley Tower case rejected the argument that an hotel was engaged in providing property management services.

Jagot J went on to find that an additional ground for refusing registration was that the trade marks were deceptive or confusing. They were deceptive or confusing because, although they were so closely bound up with the provision of medical services, the specification of services did not include medical services. On the other hand, use of the trade marks would be congtrary to law in contravention of s 18 of the Australian Consumer Law because use of the mark misrepresented that PHC provided medical services and further that PHC was responsible for the medical services provided by the medical practitioners at the centres.

Primary Health Care Limited v Commonwealth of Australia [2016] FCA 313 (Jagot J)


  1. The “Services”. In the course of the proceeding the specification of services went through a number of revisions. This is just the starting one, but it indicates the nature of what PHC wanted registration for.  ?
  2. There was a factual dispute whether PHC used PRIMARY HEALTH CARE as the name of 3 or 7 of its medical centres, but this seems to have been regarded as essentially de minimis.  ?
  3. Putting a simple box around the words didn’t improve matters.  ?
  4. This led PHC in one of its revised specifications of services to seek to “disclaim” such use under s33(2) and s 55(1)(b).  ?

Winnebago 2: the disclaimer

Back in June, the Full Court, upheld the trial Judge’s conclusion that Knott was engaging in misleading or deceptive conduct, and passing off, by using the Winnebago “logos” to promote RVs of its (Knott’s) manufacture that had nothing to do with Winnebago USA. Because the breach was in the nature of “passing off” rather than trade mark infringement and because Winnebago USA had sat on its hands for 25 years allowing Knott to build up some goodwill of its own, however, the Full Court was prepared to grant an injunction only to restrain use of WINNEBAGO and the Winnebago logos by Knott which did not adequately disclaim association with the USA.
The Full Court has now handed down its decision about the form of that disclaimer:

without:

(f) where the name, mark or logo is used on one or more vehicles or in a document (including any print advertisement or webpage), stating in any relevant document (including any print advertisement or web page) or on any vehicle, clearly and prominently, and reasonably proximate to any name, mark or logo:

(i) (where the name, or mark or logo is used on or in relation to a single vehicle) “This vehicle was not manufactured by, or by anyone having any association with, Winnebago of the United States”; or …

In addition, radio and television commercials must have a prominent voiceover of no less than 10 seconds’ duration stating:

These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States.

Also, Knott will be required to obtain a signed acknowledgement from each purchaser, hirer etc. that he or she has been informed the vehicles was “not manufactured by, or by anyone having any association with, Winnebago of the United States.”

Given the 25 year delay, the Full Court was not prepared to countenance allowing Winnebago USA to take an account of Knott’s profits.

The Full Court did, however, remit the matter back to the trial judge on the question of damages (limited to the six years before the proceeding was brought), but with an important rider.

Winnebago USA wants to argue that its damages should be a reasonable royalty on the use of its rights. The Full Court noted that other Full Court authority [1] appeared to stand in the way of that approach, but there might be scope for that to be revisited in light of the New South Wales Court of Appeal’s consideration of remedies for the unauthorised use of property in the context of conversion.[2]

The rider: before Winnebago USA gets to try this argument, it has to satisfy the trial Judge that there is “some prospect of a substantial (that is, real) award.”

Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117


  1. Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; 157 FCR 564 at 569 [27]-[28].  ?
  2. Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 at 464–470 [166]-[186].  ?