The recent case of Hemmes Trading Pty Limited v Establishment 203 Pty Ltd [2024] FCA 1100 reminds businesses of the benefits of trade mark registration, the importance of building a strong brand reputation and of carrying out due diligence to ensure a brand’s availability before use.
What happened in this case?
Hemmes Trading Pty Limited (Hemmes) is the owner of the registered trade mark ESTABLISHMENT, which is used in connection with its multi-level restaurant, bar, and hotel on George Street in Sydney’s CBD. Hemmes and its related entities have used the ESTABLISHMENT mark since 2000, with the trade mark application filed on 23 May 2001.
The respondent, Establishment 203 Pty Ltd (Respondent), operated a restaurant in Brisbane’s Fortitude Valley under the name ESTABLISHMENT 203, which opened in November 2023. Prior to this, the premises functioned as an abattoir and was given the establishment number ‘203’ by the Australian Government around 1997.
Hemmes commenced proceedings in the Federal Court of Australia, claiming that the Respondent infringed its trade mark rights under section 120 of the Trade Marks Act 1995 (Act) and was in breach of sections 18 and 29 of the Australian Consumer Law. Hemmes argued that the trade marks were deceptively similar and that the Respondent’s use of the ESTABLISHMENT 203 mark in connection with restaurant services was likely to mislead consumers into believing that the two businesses were related.
The Respondent sought to rely on the good faith defence against trade mark infringement under section 122 of the Act, claiming that the term ESTABLISHMENT 203 was adopted and used in good faith as it was related to the business’ previously assigned abattoir number.
The Respondent also filed a cross-claim to cancel Hemmes’ trade mark on two grounds:
- the ESTABLISHMENT mark was not capable of distinguishing Hemmes’ services from those of other traders in the restaurant industry as at the filing date, due to the term’s common meaning
- Hemmes was not the owner of the trade mark at the filing date.
What was the Federal Court’s decision?
The Federal Court ruled in favour of Hemmes, finding that the Respondent infringed Hemmes’ trade mark rights due to the deceptive similarity between the marks. The Court determined that the addition of the ‘203’ element in the Respondent’s overall trade mark was insufficient to distinguish the marks in the marketplace.
The Court also found that the Respondent could not rely on the good faith defence under section 122(1)(a) of the Act. A key consideration was whether the Respondent had taken ‘reasonably diligent’ steps to confirm the trade mark was available for use.
As for the cross-claim, the Court acknowledged that the word ESTABLISHMENT was of a descriptive nature but ultimately dismissed the claim because Hemmes demonstrated a strong brand reputation linked to the term, backed by extensive national media coverage, public recognition and significant patronage since 2000 and before the priority date.
Given Hemmes’ strong reputation associated with the ESTABLISHMENT mark and brand, the Court concluded that the Respondent’s use of the ESTABLISHMENT 203 mark was likely to mislead or deceive consumers into believing that the two businesses were related, accordingly finding the Respondent in breach of sections 18 and 92(1)(g) and (h) of the Australian Consumer Law.
Key learnings for businesses
1. Conduct trade mark searches and due diligence
In this case, the Respondent did not conduct any trade mark searches before adopting the ESTABLISHMENT 203 name and chose not to seek legal advice from the company’s in-house lawyers. The Court concluded that an “honest and reasonable person in the Respondent’s position” would have taken these steps before adopting the name, noting that “reasonably diligent” searches of the Australian trade marks register would have revealed the existing ESTABLISHMENT mark owned by Hemmes.
While good faith can be a defence against trade mark infringement, the Court determined that the Respondent failed to meet the necessary requirements for this defence. The Court considered the fact that the Respondent failed to conduct the appropriate trade mark searches or consult a lawyer, despite having the resources to do so. Additionally, the Respondent continued to use the ESTABLISHMENT 203 mark after being put on notice of Hemmes’ rights and registration of the ESTABLISHMENT mark.
Businesses should conduct thorough searches of the marketplace and trade mark register before adopting and using a trade mark. Reasonably diligent searches can help identify any third parties with prior rights to a trade mark, which could pose an issue to your use and registration of the mark.
2. Establish a strong brand reputation
The Court held that Hemmes’ extensive use of the ESTABLISHMENT mark for over two decades had gained significant consumer recognition and reputation in the Australian market. This established reputation supported Hemmes’ claims under the Australian Consumer Law and led the Court to dismiss the Respondent’s cross-claim that the mark should not have been accepted when Hemmes applied for registration in 2001.
This case highlights the value of strong brand reputation in the market, achieved through widespread and consistent use of the trade mark over time. Hemmes was able to demonstrate this formidable reputation and recognition through significant evidence of the trade mark’s use in connection with the registered goods and services.
For businesses, this emphasises the significance of maintaining consistent branding and messaging, actively engaging with consumers, and keeping thorough records of milestones and customer testimonials. These practices not only help track the business’ position in the market but also provide crucial support if there is ever a need to enforce the brand.
3. Prioritise trade mark registration
Trade mark registration grants exclusive and nationwide rights to an owner. In this case, it allowed Hemmes to enforce its rights and prevent the Respondent from using a confusingly similar name, even in a different city or state.
Additionally, trade mark registration enhances brand protection, making it easier to take legal action against potential infringers and providing a stronger position in brand disputes. Without the registration, Hemmes would not have been able to pursue a claim for trade mark infringement, which could have significantly affected the case’s outcome. Together with continuous, consistent, and widespread use of the trade mark, registration serves as the ultimate safeguard for a business’ brand and reputation.
Conclusion
Businesses at all stages need to invest in their brand protection strategy. Those in the development phase should, with the help of a legal professional, conduct due diligence searches to ensure that your business name and other key brand elements are available to use and do not inadvertently infringe the trade mark rights of another company.
For established and growing businesses, robust brand protection measures and trade mark registration can help safeguard brand identity and reputation. Additionally, regularly monitoring the trade mark register and marketplace is vital for taking swift action against potential infringers, helping to preserve rights and prevent brand dilution. Brands should also conduct ‘health checks’ to maintain the health of their brand names and trade marks.
If you have any questions about this case or need assistance with due diligence and trade mark registration for your business, please get in touch with our team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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