O’Callaghan J has awarded “The Practice” $200,000 in damages against The Practice Business Advisers & Tax Practitioners for trade mark infringement.
The Practice has been the owner since 2016 of Registered trade mark No 1757523:
for tax, accounting and business management services in class 35 and financial advisory and tax services in class 36. It had been using this trade mark since 2014, having adopted it in place of two rather more stylised logos in use from 1999.
The Respondent was incorporated in January 2017 and began providing business advisory and accountancy services under this logo:
In addition to the logo and in perhaps something of a differentiation from The Agency case, the evidence showed the Respondent’s website also featured:
(i) “At the Practice, our purpose is to Open New Possibilities and Add Value to Your Business”;
(ii) “The Practice can help you with: >> Taxation Advice >> Tax Planning >> Tax Effective Structures”;
(iii) “The Practice has the best business advisory accountants to guide you through this process.”;
(iv) “Contact The Practice”;
(v) “The Practice offers a full suite of financial and administration solutions for business such as small business bookkeeping in Melbourne and preparing sample small business financial statements”;
(vi) “Whether you need big or small business succession planning, The Practice is here to help.”;
(vii) “The Practice: Experts in Tax Compliance for Small Business”; and
(c) The following statements on the Respondent’s social media accounts:
(i) “The Practice can provide the tax solutions you need.”;
(ii) “The Practice’s Main Purpose is to open new possibility and add value to your business”;
(iii) “Here at The Practice, we tailor our services to meet the unique needs of your business”; and
(iv) “Let The Practice provide tax and business solutions for you!”
(d) On invoices sent to clients the words “THE PRACTICE” are shown in different coloured font to the rest of the invoice, with “THE” in light blue and “PRACTICE” in dark blue.
(e) Mr Hassan’s email signature has the words “The Practice” in bold font above the italicised words Business Advisers and Tax Practitioners.
(the emphasis was added by O’Callaghan J).
Perhaps the most interesting aspect of the case is that the Respondent sought to rely on the use of own name in good faith (s 122(1)(a)) and honest concurrent user (s 44(3) via s 122(1)(f) and (fa) as defences to infringement.
In rejecting both defences, O’Callaghan J considered at [61] and [88] that a person would not be acting in good faith (or honestly) if they did not take the steps that an honest and reasonable person would take to ascertain the ability to use the trade mark; they had in effect taken a risk.
The basis of these defences were searches that Mr Hassan, the sole director of the Respondent, claimed to have made. These claims were rejected. They came under sustained attack as “recent invention”. But O’Callaghan J also pointed out, Mr Hassan claimed to have searched terms like “The Practice Business Advisers and Tax Practitioners”; no where did he claim simply to have searched “The Practice”. Moreover, while Mr Hassan did claim to have undertaken a trade mark search, that was only back in 2001 when he was adopting a different version of the name.
O’Callaghan J did not accept the argument that the Respondent was only a one man company, not a large multinational (at 71] to [72]):
I cannot accept that submission. In my view, a person in the respondent’s position acting honestly and reasonably would have conducted far more extensive and thorough searches than Mr Hassan says he did to ensure that his chosen name did not conflict with a registered trade mark. In those circumstances it is unnecessary to consider the veracity of Mr Hassan’s evidence about his searches in 2013, 2014 and 2017.
The onus was on the respondent to prove that it had used reasonable diligence to ascertain that a chosen name did not conflict with a registered trade mark and in my view, the respondent has not discharged that onus for the reasons I have given.
The $200,000 damages were comprised of $100,000 compensatory damages and $100,000 additional damages. The judgment doesn’t disclose the scale of the Respondent’s business or its impact on the applicant’s business – other than it was a one man company.
The Practice Pty Ltd v The Practice Business Advisers & Tax Practitioners Pty Ltd [2024] FCA 1299
The attempt by global online sports merchandise retailer, Fanatics LLC, to expand its operations directly into Australia has resulted in the cancellation of its FANATICS registrations in class 35[1] (but not class 42[2]) and findings that it had infringed FanFirm’s competing registrations in class 25[3]. FanFirm’s own registrations in classes 9, 16, 24, 32 and 38, however, were cancelled for non-use.
The case runs through the gamut of issues: ownership, first use, similarity of goods / services, cancellation under s 88, removal for non-use, honest concurrent user, infringement, defences under s 122(1) and ACL / passing off. Rofe J’s judgment runs to 497 paragraphs so I am not going to try to tackle everything. Rather, I want to pick out three or four issues which I found particularly interesting. In particular, when the US-based respondent sought to expand its business in Australia, it was forced (unsuccessfully) to try to read down the scope of FanFirm’s registered trade marks as mere adjuncts to its tour operator business.
You might recall watching a sporting event where there were some raucous crowd members wearing green and gold curly wigs. It turns out the original fanatic, a Mr Livingstone, attended the US Open in 1997 where his “enthusiastic support” earned him an invitation to attend a post match celebration with the winner, Pat Rafter.
Beginning with a Davis Cup match in October 1997, Mr Livingstone parlayed this beginning into a business promoting tours to sporting and, eventually, cultural events and selling merchandise. Those attending the tours often wore merchandise such as “FANATICS”- branded t-shirts and caps. In 2004, Mr Livingstone incorporated the applicant and it took over the business which has continued to grow and expand so that, by the time of the trial, there were some 160,000 members in its customer database.
Meanwhile, in 1995, the respondent started life in the United States as Football Fanatics Inc. It formally became Fanatics Inc only in 2010.
The respondent operates around the world selling licensed sports merchandise such as NBA, NFL, F1 and Premier League products and, since 2018, third party merchandise which it manufactures and brands with its FANATICS Marks.
Before 2010, the respondent’s business was operated through a series of audience-specific brands and websites such as www.footballfanatics.com (1997), www.fastballfanatics.com (2006), www.fastbreakfanatics.com (2007), www.faceofffanatics.com (2007), www.fightingfanatics.com (2008), www.surffanatics.com (2008), www.fanaticsoutlet.com (2008), www.kidfanatics.com (2009) and www.ladyfanatics.com (2009).
In 2009, it acquired the domain name <fanatics.com> which initially redirected to the Football Fanatics website. From 2011, however, it became the respondent’s primary website.
It appears the respondent had been making some sales to customers in Australia from its Football Fanatics website since 2000. The respondent also provided what were described in the judgment as modest sales figures from its www.fanatics.com website to Australians beginning in 2014 through till 2020.
In 2020, the respondent’s Australian operations expanded significantly. It began operating the Essendon Football Club’s online store as “A Fanatics Experience” and began selling its FANATICS branded merchandise nationally through Rebel Sports stores.
The trade marks
FanFirm relied on two trade marks of which, TM 1232983, was for FANATICS in classes 9, 16, 24, 25, 32, 38 and 39 which was registered with effect from its filing date on 2 April 2008. (The respondent had unsuccessfully opposed registration back in 2010.)
The respondent also had two registrations for FANATICS, another for FANATICS and Flag device and registrations for FOOTBALL FANATICS and SPORTS FANATICS. The earliest registrations, for FANATICS and FOOTBALL FANATICS, dated from 10 September 2008. That first FANATICS registration was achieved on the basis of continuous prior use under s 44(4).
The respondent’s Flag device:
Who used first (in Australia) and for what
Rofe J’s first crucial ruling was the determination of who was the first user of FANATICS as a trade mark in Australia – and for what.
Her Honour found that FanFirm had been using FANATICS in relation to goods – the merchandise – from its website at www.thefanatics.com from 2004.
Her Honour also found ([151] and [158]) that FanFirm’s use on its website was use in relation to the class 35 services of on-line retail services of sports related clothing and merchandise, order fulfilment services and product merchandising.
In reliance on the CHIFLEY Hotel case, the respondent contended (at [152]) that FanFirm’s sales from its website were neither use in respect of clothing nor retail sales as they were merely an adjunct to FanFirm’s core business of providing tour and event services.
Rofe J rejected this characterisation. At [153], her Honour pointed out that merchandise could be purchased from FanFirm’s website even if no tour or event booking was made. Thus, there was no necessary relationship between tours and events on one hand and, on the other, the merchandise. Her Honour also noted that Markovic J in the Katy Perry case had found that the sale of merchandise at and in conjunction with Katy Perry’s concerts was use in relation to the goods and retail services. Rofe J explained at [155]:
Markovic J’s findings on this issue were not challenged on appeal and I respectfully agree with her Honour. Using a trade mark on goods does not cease to be “use as a trade mark … in relation to goods” for the purposes of s 120(1) of the Act simply because the sale of the relevant goods is “closely tied” or an adjunct to some service offered by the applicant which is their primary or core business. In any event, I do not consider that the sale of merchandise on the applicant’s website to be merely an adjunct to its main business of providing tour and event services.
and at [158]:
…. The applicant’s website provided an online retail service from at least 2004 because customers could visit the website, select a product and then purchase that product. It therefore also provided order fulfillment services and product merchandising within the meaning of the respondent’s class 35 registration. ….
As FanFirm’s use was before the respondent’s earliest use in Australia in 2010 or 2011 (at [144] – [145]), her Honour’s conclusions ultimately led to orders for the cancellation of the respondent’s registered trade marks in class 35.
This conclusion did not extend to the respondent’s class 42 services – setting up, managing and operating an online store for a third party – as her Honour at [159] found such services were not the same kind of thing as online retail services or the class 25 goods.
The respondent’s use infringed FanFirm’s class 25 registration
Next, Rofe J found that the respondent’s sales of clothing merchandise from its fanatics.com website to Australians infringed FanFirm’s registration in class 25.
Some of the goods sold were the respondent’s own products branded with its Fanatics and/or Fanatics Flag mark. The respondent, however, contested that the sales of third party merchandise (i.e., not branded FANATICS) from its website and some products where FANATICS appeared only on the swing tag (or similar) involved use as a trade mark in relation to goods.
The third party merchandise
FanFirm argued that the sale of NBA, NFL and other third-party clothing manufactured by the likes of Adidas and Nike from the respondent’s website constituted not just use of FANATICS in relation to online retail services in class 35 but also use in relation to the goods themselves.
An example is this webpage:
The respondent argued (at [215]) that this was only use of FANATICS in relation to online retail services just as use of REBEL on REBEL SPORTS stores was use in relation to retail services and not the goods themselves.
Rofe J held, however, that this use constituted use in relation to the clothing goods themselves, not just in relation to retail services. In doing so, her Honour relied on the decisions in Sports Warehouse, [Solarhut][sol], [Flexopack][flex], Edgetec and Bob Jane. At least some of these cases involved the sale from the infringer’s website of goods which were not manufactured by (or for) the infringer. Accordingly, her Honour concluded at [220]:
The respondent invites consumers to visit its website at www.fanatics.com. At that website, goods are available for purchase under the name FANATICS as part of the domain name, displayed in page headings and in references to products. I consider that this constitutes use of the FANATICS Marks as trade marks in relation to the goods for which the applicant’s FanFirm Marks are registered, including clothing, sportswear and headgear.
The swing tag use
From 2020, the respondent was offering for sale from sites such as “www.aflstore.com.au” and “www.rebelsport.com.au” shirts and other apparel for 11 AFL teams and also some of its own branded clothing. At least some of the AFL clothing did not bear FANATICS on the labelling or otherwise. The “only” use of FANATICS was on the swing tag:
In addition to the swing tag, the FAQ also stated:
15.1 “When you make a purchase, you are purchasing from rebel. The order is simply being sent from a Fanatics warehouse.”
15.2 “Products shipped by Fanatics will only be available online and will be shipped direct from a Fanatics distribution centre to customers. Rebel does not hold these products in Australia.”
15.3 “Click and Collect is not available for products shipped by Fanatics as they are not stocked in our stores. They will be available for delivery only”
Further, there were other goods on which the respondent’s trade mark had been embroidered or printed on the label (albeit a small proportion of the total).
As with the third party merchandise from the respondent’s own website, the respondent argued this use on the swing tag was only use in relation to retail services, not the goods themselves. Rofe J also rejected this argument in the context of this case.
Given that s 7 defines use as use upon or in physical or other relation to the goods, the fact that the use was on the swing tag and not on the goods themselves was hardly determinative.
At [198], Rofe J considered:
It would be apparent to any reasonable Australian consumer that the Hawthorn Football Club (or any sporting club) does not manufacture clothing, and that the Hawthorn indicia are part of the design of the shirt material. The use of the FANATICS Marks in these instances are being used as “a badge of origin” to distinguish the respondent’s relevant good from goods manufactured by other sports clothing manufacturers such as Nike or Adidas: E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 at [41]–[42] (per French CJ, Gummow, Crennan and Bell JJ).
In any event, her Honour pointed at at [200]:
In this case, the FANATICS Marks on the FANATICS branded goods are being used as a badge of origin and thus the use constitutes trade mark use. The fact that other marks are present on the clothing, such as the logo of the relevant sporting team or league, does not matter. Dual branding is “nothing unusual” and does not have the effect that one of the marks is not being used as a trade mark: see Allergan Australia Pty Ltd v Self Care IP Holdings Pty Ltd (2021) 162 IPR 52 at [66] (per Jagot, Lee and Thawley JJ) and the cases there cited (these comments were not disturbed on appeal in Self Care). See also Anheuser at [189] and [191] (per Allsop J).
Thus, subject to the respondent’s numerous defences, FanFirm’s trade mark for clothing etc. in class 25 was infringed.
Some issues raised by the defences
The respondent raised a number of defences against a finding of infringement – in addition to its unsuccessful attempt to have FanFirm’s trade mark cancelled.
The respondent was exercising a right to use the trade mark given by registration
The respondent’s first line of defence was s 122(1)(e) – the exercise of a right to use a trade mark given to the user under the Act. That is, someone does not infringe another person’s registered trade mark if the “someone” has registered their own trade mark and is using it within the scope of that registration.
The issue here is that, as the respondent was not the owner of the trade mark for online retail services, its trade mark was not validly registered as a result of the operation of s 88(1)(a) and s 58.
On this issue, while her Honour considered it a “strange result” from a policy perspective, at [313] – [314] Rofe J followed Nicholas J’s ruling in Dunlop and held that cancellation was not retrospective but prospective only. That is, the respondent’s trade marks were not cancelled ab initio but only from the date of her Honour’s order.
While this protected the respondent from awards of damages (or an account) for its past conduct, (at [385]) this did not protect the respondent from an injunction against continued use of the infringing trade marks.
Honest concurrent user
As it had been using its trade marks in Australia since 2010 or 2011, the respondent also argued the Court should find the respondent was entitled to registration (s 122(1)(f) or (fa)) on the basis of honest concurrent user (ss 44(3)).
Ultimately, her Honour rejected this defence, finding that the respondent’s use did not qualify as honest concurrent user.
The problem for the respondent was at least three fold. First, the respondent adopted FANATICS as its corporate name and trade mark with knowledge of FanFirm and its trade mark. Indeed, it had sought to oppose registration of FanFirm’s mark. Rofe J accepted the respondent did not adopt the trade mark to take advantage of FanFirm’s reputation, however, it could not be described as “independent adoption”. Moreover, while two of the respondent’s senior executives involved in the decisions gave evidence, no-one from the respondent gave evidence of any honest belief that confusion would not result. At [331], her Honour concluded:
The adoption of the respondent’s new corporate name and mark occurred with knowledge of the applicant and its mark, and the goods for which registration of that mark was sought. Whilst I do not consider that the respondent adopted the FANATICS Marks in order to divert business or goodwill from the applicant, it cannot be described as “independent adoption”. Further, as I have said above, despite leading evidence from two senior employees of the respondent, the respondent led no evidence as to the existence of any honest belief that there would be no confusion as a result of the respondent adopting the same mark as the applicant’s existing marks. Thus, the two hallmarks of honesty are absent from the respondent’s adoption of the FANATICS Marks.
At [383] – [383], Rofe J relied on similar reasoning to reject the respondent’s contention that her Honour should exercise the discretion arising under s 89not to remove the trade marks.
The injunction issue
In her Honour’s subsequent ruling on costs and non-pecuniary remedies, Rofe J stayed the operation of the order for cancellation of the registered trade marks pending the outcome of the appeal (for which Rofe J gave leave).
Rofe J also ordered an injunction restraining infringing use but refused to stay that order pending the determination of any appeal.
A number of factors led to her Honour refusing the stay.
These included, first, that her Honour was far from convinced that the respondent had the level of reputation in Australia it claimed given the apparently small scale of its sales here.
Secondly, the respondent’s claims of the disruption to its global business seemed overstated in light of the small scale of its Australian sales compared to the global business, its apparent disregard of the Australian market in deciding to adopt FANATICS and FanFirm’s evidence about the availability and utility of geo-blocking services so that the respondent’s sales to the rest of the world would be unaffected.
Further considerations included the dilution of FanFirm’s own goodwill and the difficulties in quantifying that.
Accordingly, Rofe J considered the balance of convenience lay in favour of not staying the injunction.
Bromwich J substantially upheld her Honour’s refusal to order a stay of the injunction but modified it slightly:
to allow the respondent 28 days to implement geo-blocking of Australia; and
to enable continued use in respect of “global customer care labels” in a particular form and to allow the respondent to deal with returns.
Bromwich J, like Rofe J, also referred to a number of other considerations.
Rofe J’s key finding was that FanFirm was the first user of FANATICS in Australia for goods such as clothing and online retail services for such products. Such use was not merely an adjunct to FanFirm’s tour organisation and supply business. As a result, the respondent’s trade marks for those goods and services will be cancelled and it has been enjoined against continued use in Australia. Just because you are clear to operate under your trade mark in one country does not mean you will be able to use it in another, different market.
Class 35: Business marketing consulting services; customer service in the field of retail store services and on-line retail store services; on-line retail store services featuring sports related and sports team branded clothing and merchandise; order fulfillment services; product merchandising; retail store services featuring sports related and sports team branded clothing and merchandise ?
Class 42: Development of new technology for others in the field of retail store services for the purpose of creating and maintaining the look and feel of web sites for others, not in the field of web site hosting; computer services, namely, creating and maintaining the look and feel of web sites for others, not in the field of web site hosting services; computer services, namely designing and implementing the look and feel of web sites for others, not in the field of web site hosting services; computer services, namely, managing the look and feel of web sites for others, not in the field of web site hosting ?
Class 25: Clothing, footwear and headgear, shirts, scarves, ties, socks, sportswear ?