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.  ?

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”.  ?

Wild Geese survive Wild Turkey attack

Anita Brown, over at IPanz, reports on Cowdroy J’s exercise of discretion to leave the Wild Geese trade mark for whiskey on the Registrar, even though non-use throughout the relevant statutory period was proved, on the basis of the perceived risk of public confusion.

His Honour also addressed the standing requirement for a non-use action.

His Honour’s reasons in full:

Austin, Nichols & Co Inc v Lodestar Anstalt [2011] FCA 39