28.3. Examining evidence of honest concurrent use - the five criteria

Trade Marks Act 1995

Trade Mark Regulations 1995

When examining evidence of honest concurrent use, the first issue that needs to be considered is honesty. The honesty of the use is a threshold requirement, without which s 44(3)(a) cannot be satisfied (‘Zip Co’, [42]). Following an assessment of honesty, examiners need to consider the remainder of the criteria listed at paragraph 28.2, with no single criterion being determinative. The Office encourages applicants to supply information pertinent to all five criteria, and it may be necessary to request additional information if what the applicant provides does not give a sufficiently clear picture.

3.1  The honesty or otherwise of the concurrent use

Whether the use was honest is based on the applicant’s subjective state of mind assessed against the standards of ordinary, decent people (Zip Co, [72]). 

The applicant’s state of mind should be addressed directly by the applicant, informed by the surrounding facts and circumstances.  The applicant, seeking to establish honest concurrent use, bears the onus of proof and must establish that their use was honest. The Registrar need not be satisfied that the applicant acted dishonestly in order to conclude that the evidence of honest concurrent use is insufficient, merely that the applicant has failed to positively discharge their onus of proving honesty.

There is no fixed list of the circumstances relevant to establishing honesty. However, some relevant considerations will be:

• was the applicant aware of the conflicting trade mark?

• what enquiries did the applicant make before commencing use of the trade mark?

• if the applicant did not make enquiries, what is the reason for this (and would someone in the applicant’s position have been reasonably expected to do more)?

• if the applicant was aware of the conflicting trade mark, why did they choose to proceed with use of the trade mark? For instance, did they genuinely believe that their use of their mark was unlikely to cause confusion?

   

These factors are discussed further below.

There are a number of cases in which Australian courts have considered the circumstances of surrounding adoption and use of a trade mark. 

An important consideration is whether the applicant knew of the competing trade mark, and if they did not, why not. In Zip Co, the court said at [62] that: 

In assessing whether a person has proved their honesty, an important factor will be whether they knew of the competing mark. But mere knowledge of the competing mark will not preclude a finding of honesty. For instance, in McCormick & Co Inc v McCormick, a finding of honesty was made in circumstances in which, at the time of Mrs McCormick's application for registration, she had used her mark while aware of the competing mark but did not believe that any confusion would be caused.

A person may have an even stronger case to establish honesty if the person had no knowledge of another's mark at the date of the alleged infringing use of that other mark. The person seeking to prove honesty may have to convince a court that they did not deliberately abstain from searching the Register for fear of what it might reveal, since the use of the Register for inquiry before seeking registration of a mark is its obvious and intended function. A careless failure to search the Register will not, by itself, establish a lack of honesty. A person might therefore establish that they had honestly overlooked the importance of such an inquiry before using an adopted mark in an otherwise honest manner (footnotes omitted).

Establishing honesty will present additional difficulties if the earlier trade mark has reputation. In Tivo Inc v Vivo International Corporation Pty Ltd [2012] FCA 252, Dodds-Streeton J held at [299]:

TiVo (as discussed below) had acquired a reputation in Australia prior to 18 February 2008; the Vivo trade mark was adopted with knowledge of, and to obtain the benefit of, the TiVo trade mark’s reputation; Vivo did not undertake an adequate search, seek professional advice or take reasonable precautions in relation to its adoption of the Vivo trade mark; Vivo did not conduct significant direct advertising to establish goodwill prior to the priority date; there is evidence of post‑priority date confusion amongst sales staff; and TiVo’s post‑priority date sales (while fewer in number and of less total value than the Vivo’s sales) are nevertheless considerable, particularly given the relative expense and nature of the item; in my opinion, the discretion under s 44(3)(b) should not be exercised to permit concurrent use.

On the contrary, it is more likely that the applicant’s honest state of mind can be established where an applicant can show that they undertook reasonable due diligence, but the conflicting trade mark was not likely to have been discovered. In Sensis Pty Ltd v Senses Direct Mail and Fulfillment Pty Ltd [2019] FCA 719, Davies J said at [74]-[75]:

Mr Mina was not challenged on any of this evidence, and I accept that evidence. However, the applicant pointed to a number of factors which, it was submitted, were against a finding of honest concurrent use.

The first such factor was a claim of a lack of diligence and reasonable care in carrying out adequate searches before the mark was adopted. Whether a person does take steps that an honest and reasonable person would take to ascertain the ability to use a trade mark is a consideration: Tivo Inc at [293]; Insight Radiology at [25], but here the evidence was that Mr Mina undertook various searches before adopting the mark and ‘Sensis’ did not appear in the searches that he conducted. Moreover, it was not suggested, and the evidence did not support a finding, that Sensis would have appeared if the searches had been done competently: cf Insight Radiology. I also take into account that when the respondent did make an application for registration of its marks, the IP Australia examiner did not identify the applicant’s mark as a prior conflicting mark when the application was examined. It is reasonable to assume that had the respondent engaged an IP professional to search the Register before adopting the mark, an IP professional may also not have identified the SENSIS mark.

Given the accessibility of the Australian Trade Mark Search, and the ease with which a proposed new brand can be searched via internet search engines, it may be harder for an applicant to establish that their use was honest if they commenced use without any serious attempt to inform themselves whether someone else in Australia may have prior rights that would pose an obstacle to use of the trade mark. A deliberate abstention from searching the Australian Trade Mark Search, for fear of what it might reveal, is a factor which strongly weighs against a finding of honest use. 

Where an applicant has failed to make enquiries, they should be able to explain why, despite this, their use of the trade mark was honest. This will be more difficult to establish where the applicant’s knowledge or experience suggests they should be aware of the need to conduct proper searches of the Register when adopting a trade mark. However, carelessness and dishonesty are not synonymous (see Zip Co, [73]) and honesty must be considered based on all relevant circumstances. Recklessness or wilful blindness (either avoiding searching or deliberately ignoring certain results) will make it difficult to discharge the onus to establish honesty.

Examiners should not accept bare statements that a trade mark was used honestly or that an applicant was not aware of the earlier trade mark without any explanation as to what enquiries were made prior to commencing use, or the reasons that no enquiries were made. Even in cases where the applicant’s reasons for adopting a trade mark are not based on an attempt to take advantage of the reputation of someone else, this does not mean that ignorance or disregard of prior rights will constitute ‘honesty’. 

Mere knowledge of the prior trade mark(s) does not (without more) preclude a finding that an applicant has acted honestly (Zip Co, [62], citing McCormick & Company Inc v McCormick [2000] FCA 1335, [33]), but it will ordinarily weigh strongly against a finding of honesty (Zip Co at [70]). Where the applicant was aware of the prior trade mark(s), it will be necessary for the applicant to establish why their use of the trade mark was nevertheless honest. For example, this could be because the applicant considered that consumers would not experience confusion and had no intention to trade off the goodwill of the prior registered mark. The applicant’s case will generally be more persuasive if they provide cogent reasons for forming this belief, and/or supporting evidence. 

In Zip Co, the High Court found that honesty of use was not established where the party seeking to rely on honest concurrent use had been made aware (via citations raised in earlier IP Australia examination reports) of the likelihood of a material impediment to the use of their marks before commencing use. There was also no compelling evidence of other mitigating factors which may have assisted to discharge the onus of honesty in the circumstances, e.g. a subjective belief that there would be no confusion between the marks that would result in benefit to that party.   

Examiners should also carefully consider statements concerning an applicant’s belief that the use of their trade mark would not be likely to cause confusion. In some cases, it may be appropriate to require a detailed explanation of the basis for that belief. This may assist in assessing the applicant’s subjective state of mind, including how that belief was formed having regard to the circumstances of the particular case, such as the information available to the applicant and the searches it claims to have undertaken.

Factors that may be relevant in cases where the applicant did not make enquiries or was aware of the earlier mark include:

• the applicant’s trade mark is an existing brand or trading name extended to a new but related field of goods and services

• the applicant had a reasonable belief that the trade mark was not likely to infringe the earlier trade mark

• the trade mark was first used extensively overseas and use in Australia was a natural extension of the business.

   

When is honesty assessed?

The High Court in Zip Co considered honesty in the context of an infringement action, confirming that honesty must be considered at the time of the first infringement, as well as each subsequent infringement – in other words, at each time of use. 

In the context of an application for registration, the factors relevant to s 44(3) are determined at the filing date of the application (Zip Co, [56]). However, the honesty element by necessity (and consistently with treatment in an infringement context) must be considered from the date of first use. 

Events after first use, but prior to the filing date, may also be relevant to the question of whether there has been honest use by the applicant. It will be unlikely in most cases that an initial dishonest use by an applicant will be rendered honest by subsequent events. 

Where an initial use is honest, subsequent uses may not meet the threshold of honesty, when assessing honesty as at the filing date. For example, if soon after commencing use an applicant was put on notice of potential infringement (e.g. by being sent a letter of demand), it would be more difficult for the applicant to establish honesty of use as at the filing date. 

Paragraph 44(3)(a) provides an exception for the registration of trade marks which are likely to cause confusion and which would otherwise fail on the tests of ss 44(1) or 44(2) (see Re Alex Pirie & Son Ltd’s Application (1932) 49 RPC 195 and (1933) 50 RPC 147). As such, even a high likelihood of confusion (such as that posed by identical marks) does not bar registration under s 44(3)(a), although it is a factor to consider.

3.2 The degree of confusion that is likely between the trade marks in question

3.2.1

Factors affecting the degree of confusion:

Similarity of trade marks

The similarity of the trade marks will be a relevant consideration but not determinative. The purpose of s 44(3) is to allow for registration in circumstances where there is a likelihood of confusion. However, a close similarity between trade marks obviously must be considered when weighing up all relevant criteria (particularly, the honesty of use of the trade mark and the relative inconvenience to the trade mark applicant and the owner of the earlier trade mark).

Similarity of goods and services

The more similar the trade marks and goods/services, the greater is the likelihood of confusion amongst members of the trade or the public.

Geographical location of activities

The use of trade marks in the same geographic area is likely to increase the potential for confusion.

However, because a registered trade mark typically bestows Australia-wide rights (when not subject to a restriction), examiners should give little weight to an applicant's statement that the cited trade mark is only used in a particular area. A geographical restriction by the trade mark applicant placed on their application is a more relevant factor for consideration.

The distinctiveness of the trade mark

If the trade mark is a descriptive term or image or contains a descriptive term or image as its essential feature, purchasers are less likely to expect exclusive proprietorship. In Jean Patou Parfumeur v Crisena Corp Pty Ltd [1991] AIPC 90-388 Assistant Registrar Farquhar said that it was not surprising that more than one trader had selected the trade mark ‘Joy’. Expectations are likely to be different if the trade mark has a high degree of adaptation to distinguish. 

3.3  Whether instances of confusion have in fact occurred

It is not usual for evidence of instances of confusion to be provided to the examiner. However, the applicant should provide this information if it is available. 

In most cases, mention of this issue consists of a brief denial of knowledge of any instances contained within the applicant's declaration. Such information, when incorporated in a declaration, will be taken at face value, unless other circumstances cast doubt on its accuracy.

In the unlikely event that confusion is shown to have occurred, it will have a direct bearing on the consideration of honesty and will undoubtedly add force to the concern regarding the likely degree of confusion. However, the discovery of instances of actual confusion is not necessarily fatal to the application. (See Berlei Limited v Bali Brassiere Co Inc [1968] HCA 72 (‘Bali’)).

3.4  The extent of use in duration, area and volume

Evidence of use of the trade mark ‘as a trade mark’ (see Part 19A: Use of a Trade Mark) must show that the mark has been used before the priority date of the applied for trade mark in respect of the goods and/or services applied for, for a satisfactory term, over a satisfactory area and to a satisfactory level.

In EJOT GmbH & Co. KG v Eastcoast Fasteners Pty Limited [2017] ATMO 45, the delegate considered that in cases where likelihood of confusion was high, the evidence produced by the Applicant ‘should be substantial in terms of volume, duration and area of use’.

In assessing the evidence, the examiner must weigh the components of the use, particularly duration, volume sold, amount of promotion and the nature of the relevant market for goods and services. As indicated in GE Trade Mark [1973] RPC 297, and “Granada” Trade Mark [1979] RPC 303, the evidence ought to demonstrate real commercial value and goodwill in the trade mark.

It may be apparent that a shortfall in one of the metrics of use is compensated by the strength of another. For example, limited sales or a limited market size could be compensated by long term use with the prospect of a geographic limitation depending on the particular merits of the case.

Duration or length of use:  

Lord Hanworth MR in “Pirie’s application” H.L. (supra) said at [212]:

It must always be a matter of consideration to be weighed as to whether or not the user has been of such a length of time as would justify it being called a user... It would be impossible to say that in all cases a particular span of time must be accomplished before it can be treated as justifying a user within section 21.

Some guidance can be taken from case law, but each case will be considered on its merits. In ‘Granada’ Trade Mark [1979] RPC 303, 3 years use prior to filing was considered sufficient. In Re Alex Pirie & Sons Ltd’s Application (1932) 49 RPC 195, 6 years use was demonstrated, and in Re John Fitton & Co Ltd’s Application (1949) 66 RPC 110, the application was allowed based on use over 20 years. However, in Foodland Associated Limited v John Weeks Pty Ltd (1988) AIPC 90-466 it was found that 1-7 months was insufficient:

... the applicant's period of use had been very limited: about one month in the first instance and about seven months in the second ... I find it difficult to concede that any amount of use, no matter how great in monetary terms, in such a short period would be sufficient to meet the overall requirement that the use be substantial and of real commercial value.

As a general guide, if an honestly adopted trade mark has been used extensively for 10 years or so before its priority date, then the provisions of para 44(3)(a) can most likely be applied. Where the likelihood of confusion is not so great, evidence of considerably shorter periods of use and lower levels of turnover will suffice.

3.5  The relative inconvenience that would be caused to the respective parties if the applicant's trade mark should be registered

This consideration entails a weighing up of the inconvenience to be borne by the applicant if the registration is denied, against any inconvenience likely to be conversely imposed on the proprietor of the cited trade mark.

As with the second consideration (see 3.2) the full facts are unlikely to be available to the examiner and in the main, the assessment will need to be on the basis of the inconvenience to the applicant. However, it is fair to say that a trade mark owner who has enjoyed the marketplace to itself over a period will undoubtedly suffer some inconvenience if another player enters the same market with the same or a very similar trade mark.  

Inconvenience to the applicant will be directly related to the goodwill that exists. If this goodwill is valuable, the applicant will clearly have a strong interest in securing registration rights. If registration is not available and if continued use is liable to infringe, then the inconvenience to the applicant might include the prospect of abandoning the subject trade mark and the goodwill attached thereto.

3.6  Summary of information requirements for honest concurrent use

The following is a reminder list of information necessary for an examiner to make a decision under the provisions of para 44(3)(a):

• The applicant should explain why they adopted the trade mark and whether they were aware of the earlier trade mark at any point from their first use up to the filing date of the application. If they were not aware of the earlier trade mark, the applicant should also indicate what enquiries were undertaken to check whether anyone else owned or was using a similar trade mark. If they were aware of the prior mark, they should indicate why they nevertheless chose to use their mark.

   

• The evidence should demonstrate use in Australia before the date of priority for the applied-for trade mark. Use after the priority date may be relevant if it reflects on issues such as lack of instances of confusion.  

   

• The use should be over a commercially reasonable period of time. It is unlikely that consumers will have been exposed to both trade marks in the marketplace if the period of use is very short. This usually means the applicant has to demonstrate several years of use before the priority date, although extensive use in a shorter period may also be persuasive.

   

• The applicant should address the matter of instances of confusion. A statement within the declaration specifying lack of knowledge of any instances will be taken at face value at the examination stage.

   

• The applicant should provide clear information on the goods/services on which the trade mark was used before the priority date. As the applicant is claiming concurrent use, it is not appropriate to allow the mark to proceed for a broad range of goods/services if the evidence only supports something narrower. However, it should be noted that concurrent use only needs to be established for the conflicting goods/services.

   

• The applicant should provide a clear indication of the geographical extent of use. The examiner needs to decide whether it is appropriate to allow the trade mark to proceed for a broad geographical area, or to restrict it to a particular geographical area.

   

• Evidence for honest concurrent use needs to be detailed and complete. The examiner is trying to conceptualise where the trade mark stands within its particular marketplace. The greater the detail supplied, the easier it will be for the decision to be made.

   

• A useful summary of the type of evidence needed to support honest concurrent use is attached to this part as Annex A1.

   

The evidence must be presented in declaratory form by the applicant or by a competent member of the applicant organisation.

Supporting declarations from members of the trade are not usually necessary. However, there may be occasions when evidence from members of the trade will be the factor that turns the case in favour of acceptance. An example would be where the likelihood of confusion between the marks is very high, and where use is limited in time and turnover, but where the goods or services are specialised. In such a case the evidence within the supporting declarations could support a claim that within the context of the specialist area there has been satisfactory concurrent use.