Trade mark infringement – the good faith defence

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To build a brand, its vital for businesses to be aware of their rights with respect to using the intellectual property of others to avoid inadvertently infringing on someone else’s rights.  Where a person honestly and accidentally infringes another’s trade mark (Infringer) a defence that may be available is that the the mark in question was being used  in good faith.  The circumstances in which this defence is available is set out in  section 122 of the Act and is the subject of this article.

Section 120 of the Trade Marks Act 1995 (Cth) (Act) provides that:

“a person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered”.

Good faith defences to trade mark infringement

Pursuant to section 122 of the Act the good faith defence will be available for trade mark infringement when the Infringer:

• uses a name, place of business or predecessor in good faith – section 122(1)(a);
• uses a sign in good faith to indicate a characteristic of goods or services – section 122(1)(b); or
• uses the trade mark in good faith to indicate the intended purpose of the goods or services they are providing.

In this context, good faith means acting honestly.  In both cases, the party seeking to rely on the defence will bear the onus of proving the use was done in good faith.^[1]

The Courts will consider various principles when determining whether a good faith defence arises on the facts or otherwise.  Some of these principles include:

• an infringement may not be in good faith even if there was no fraudulent intention or conscious dishonesty on the part of the infringer;^[2]
• there must be no ulterior motive or intention to take advantage of the goodwill which exists in the infringed trade mark to wrongly divert business;^[3] and
• there should exist an honest belief, subjectively assessed,^[4] in the mind of the infringer that no confusion will arise between the marks.^[5]

An example of this could be if you named your business ‘Brisbane Grocery Shop’ as the business is based in Brisbane, and didn’t realise that another party had registered the trade mark ‘Brisbane Grocery Shop’.  In this example, the good faith defence would likely apply as the Infringer acted honestly when naming and advertising the business with respect to its geographical location.   Notwithstanding that the name is somewhat descriptive and not distinctive.  For these good faith defences to apply, it must be demonstrated that the mark was not used by the Infringer with the intention of benefitting from the reputation of the owner of the mark in question.

In Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153, the Applicant argued that the trade mark ‘DIGITAL POST AUSTRALIA’ infringed on its own trade mark ‘AUSTRALIA POST’.  The Respondent sought to rely on s122(1)(a) and s122(1)(b)(i) of the Act, claiming the defence of good faith.

The court held that the trade mark had been used in good faith to describe the intended purpose of the service and there was no desire of the Respondent to be associated with or leverage off Australia Post, and because the use of the name involved ‘honest use without ulterior motive, no intention to deceive, or to make use of the goodwill acquired by another trader’.^[6]

Reliance on a supplier’s representations

In a case where a client sold re-worked fashion products, they suddenly found themselves facing the prospects of action for alleged trade mark infringement.  Having purchased what they thought were designer items for the purposes of re-working them into accessories, they had advertised goods for sale utilising the designers brand description in the name of the products.

The client was adamant that they had passed on what had been represented to them by the suppliers they purchased goods from.  On investigation of the client’s claims, it was found that the suppliers had advertised the goods as genuine brand products, and our client relied on that when purchasing and advertising the goods on their own site.

They sought to rely on s122(1)(a) and s122(1)(b)(i) of the Act, claiming the good faith defence.

Takeaways

The good faith defence can be powerful barrier to an action seeking infringement of a trade mark.  However, it will only be available in genuine cases.  The Courts have established tests for assessing that only honest cases of accidental infringement enjoy the benefits of this defence.  If there is any notion that the infringement was anything other than honest and done in in good faith then the defence will not be available.

Links and further references

Legislation

Trade Marks Act 1995 (Cth)

Cases

Anheuser-Busch Inc v Budejovicky Budvar [2002] FCA 390

Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153

Bob Jane Corp Pty Ltd v CAN 149 801 141 Pty Ltd [2013] FCA 1255

Nature’s Blend Pty Ltd v Nestle Australia [2010] FCAFC 117

Further information about trade mark infringement

If you need advice on trade mark infringement, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Nature’s Blend Pty Ltd v Nestle Australia [2010] FCAFC 117.

[2] Anheuser-Busch Inc v Budejovicky Budvar [2002] FCA 390 [201] – [219].

[3] Australian Postal Corp v Digital Post Australia [2013] FCAFC 153 [73] – [74].

[4] Bob Jane Corp Pty Ltd v CAN 149 801 141 Pty Ltd [2013] FCA 1255 [123].

[5] Anheuser-Busch Inc v Budejovicky Budvar [2002] FCA 390 [216].

[6] Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153.

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