Unjustified threats of trademark infringement

Where a party threatens another with legal proceedings for trademark infringement the recipient of the threats may have grounds to commence proceedings for making unjust threats.  In other words where the threats are unjustified the recipient may apply to the Court for relief from the unjust threats.

Statutory framework for unjust threats of trademark infringement

Section 129 of the Trade Marks Act 1995 (Cth)(Act) provides:

  • If a person threatens to bring an action against another person (threatened person) on the ground that the threatened person has infringed:
  • a registered trade mark; or
  • a trade mark alleged by the person to be registered;

any person aggrieved by the threat (plaintiff) may bring an action (either in a prescribed court or in any other court having jurisdiction) against the person making the threat (defendant).

  • the purpose of the action is to obtain from the court:
  • a declaration that the threat is unjustified; and
  • an injunction restraining the defendant from continuing to make the threat.

The plaintiff may also recover any damages that he or she has sustained because of the defendant’s conduct.

In certain circumstances the Court may award an additional amount in an assessment of damages sustained by the plaintiff as a result of the defendant’s conduct.[1]  Prior to doing so, the Court will first take into consideration the following:

  • the flagrancy of the threat;
  • the need to deter similar threats;
  • the conduct of the defendant that occurred after the threat was made;
  • any benefit shown to have accrued to the defendant because of the threat; and
  • all other relevant matters.[2]

Mere notification of the existence of a registered trade mark does not constitute an unjust threat for the purposes of section 129.[3]

An action for relief may be brought regardless of whether the person making the threat is the registered owner or the authorised user of the trademark which has allegedly been infringed.[4]  Any action brought in response to an unjustified threat will fail if the defendant satisfies the Court that:

  • the trademark is registered; and
  • the acts of the threatened person in respect of which the defendant threatened to bring an action constitute an infringement of the trade mark.[5]

 In Australian Steel Company (Operations) Pty Ltd v Steel Foundations Ltd & Anor [2003] FCA 374 the Court held at [69]:

“These submissions expose an arguable defence to TASCO’s allegation that any threat of trade mark infringement proceedings was groundless. In my opinion, the respondents have shown enough to raise a triable issue. It may be too that, having regard to the respondents’ defence and cross-claim, the combination of s 129(5) [now repealed] and 130 of the TMA precludes summary judgment in TASCO’s favour.

This decision is significant because it shows that if an arguable defence is raised by the defendant a declaration and/or injunction under section 129 will be unavailable.  It would appear then, that if an arguable defence is available to the defendant a plaintiff’s action under section 129 may fail.

In contrast, it is not enough that a defendant shows they had a reasonable and bona fide belief that the person’s act constituted an infringement.[6]  Urban Alley Brewery Pty Ltd v La Sirene Pty Ltd [2020] FCA 82 supports this position.  In that case, O’Bryan J held at [278]:

“The text and structure of the section indicate that the section is not concerned with the question whether a person, who threatens to bring a trade mark infringement action against another person, has a reasonable basis for believing that the other has infringed. The section is concerned with the question whether the allegation is correct.”

 There is a line of authority which suggests that failing to bring an application for relief in an expeditious and timely manner may constitute grounds for dismissing such application.[7]  It appears that such an action needs to be brought before the commencement of the infringement proceedings and not as a cross-claim in the infringement action.[8]

Where a threat is only partly justified an application for relief may still be brought.  However, any relief flowing from that application must be in relation to a suffering of the plaintiff which is related the non-justified component of the threat.[9]

Counterclaim in response to unjustified threats application

Section 130 of the Act provides:

If a defendant in an action brought under section 129 would be entitled to bring against the plaintiff an action for infringement of the registered trade mark:

  • the defendant may file in the court a counterclaim against the plaintiff for any relief to which the defendant would be entitled in the infringement action; and
  • the provisions of this Act applicable to infringement actions apply in relation to the counterclaim as if it were an infringement action brought by the defendant against the plaintiff.

Thus, in circumstances where a defendant to an action believes they have a legitimate claim for infringement of a trademark, they may pursue it by cross cross-claiming.

Takeaways on unjust threats

A plaintiff may seek a declaration that a threat is unjustified and an injunction preventing the defendant from continuing to make the threat.  In certain circumstances, damages may also be sought.  Such an action will fail if it can be shown by the defendant that the trade mark under contention is registered and that the actions of the plaintiff which resulted in the threat constitute an infringement.  It also seems that the resolution of an action brought under section 129 may necessarily involves a determination of whether a trade mark has been infringed.

Links and further references

Related articles

Can you infringe a trade mark by exporting a product?

Groundless threats of copyright infringement.

Take care when alleging patent infringement.

Legislation

Trade Marks Act 1995 (Cth)

Cases

Australian Steel Company (Operations) Pty Ltd v Steel Foundations Ltd & Anor [2003] FCA 374

Norbert Steinhardt & Son Ltd v Meth (1960) 105 CLR 440.

Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd [2016] FCA 820

Urban Alley Brewery Pty Ltd v La Sirene Pty Ltd [2020] FCA 82

Urban Alley Brewery Pty Ltd v La Sirene Pty Ltd [2020] FCA 186

Further information

If you need advice on unjustified threats of trademark infringement contact me for a confidential and obligation free discussion:

Malcolm BurrowsMalcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013 (preferred)
Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au

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] Act s 129(2A).

[2] Act s 129(2A).

[3] Act s 130A.

[4] Act s 129(3).

[5] Act s 129(4)(a) and (b).

[6] Stone & Wood Group Pty Ltd v Intellectual Property Development Corporation Pty Ltd [2016] FCA 820.

[7] Urban Alley Brewery Pty Ltd v La Sirene Pty Ltd [2020] FCA 82. This decision was upheld on appeal in Urban Alley Brewery Pty Ltd v La Sirene Pty Ltd [2020] FCA 186.

[8] Urban Alley Brewery Pty Ltd v La Sirene Pty Ltd [2020] FCA 82

[9] Norbert Steinhardt & Son Ltd v Meth (1960) 105 CLR 440.

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