Sydney Business
Down N’ Out in
Burger Battle
8 In the case of In-N-Out Burgers
v Hashtag Burgers 1 , the Court
upheld the primary judge’s ruling
that Hashtag’s use of Down N’ Out
infringed trade mark registrations for
In-N-Out, constituted passing off and
misleading or deceptive conduct.

At first instance, Justice Katzmann
found the directors of Hashtag,
Benjamin Kagan and Andrew
Saliba, jointly and severally liable for
their conduct before Hashtag was
incorporated – but not liable as joint
tortfeasors with the company after
its incorporation. INO successfully
cross-appealed this decision, with
the Full Court finding them to be
joint tortfeasors for trade mark
infringement and passing off.

The trial decision (discussed here)
prompted Hashtag to rename its
Sydney restaurant the ‘Nameless
Bar’, with the business appearing
to capitalise on the publicity
the court case generated.

Hashtag’s appeal contended that
the primary judge’s assessment of
deceptive similarity when comparing
the registered trade mark In-N-Out
with Hashtag’s Down N’ Out mark
was incorrect, on the basis that:
1 Hashtag’s appeal
contended that the
primary judge’s
assessment of
deceptive similarity
when comparing
the registered
trade mark In-N-
Out with Hashtag’s
Down N’ Out mark
was incorrect
a) the presence of the word BURGER
within the INO trade marks had
not been given any weight;
b) t here was a failure to assess
the effect of the arrows
within the INO mark;
c) u ndue emphasis was placed
on the ‘N-Out’ aspect of
the INO trade marks;
In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd [2020] FCA 193
d) i nsufficient weight was given to
the difference in the meaning
and ideas the marks conveyed;
e) s ignificant or dispositive weight
was placed on aural similarity and
setting aside the material visual
differences between the marks;
f) f raming the central question
as one focussed on imperfect
recollection; and
g) a pparent weight was placed
on evidence of confusion
from social media posts and
not weight on the absence of
evidence of actual confusion.

On each point, the Full Court
rejected Hashtag’s contention
that the approach was in error.

Hashtag also challenged Katzmann
J’s finding that there had been
a deliberate appropriation of
the US restaurant’s trade marks,
branding and reputation, and
that Kagan and Saliba had acted
dishonestly in relation to an email
denial sent to In-N-Out regarding
use of INO’s trade marks ‘Animal
Style’ and ‘Protein Style’.

Whilst the Full Court found that the
evidence did not support a finding
Inspire March 2021
The Sydney burger bar formerly known as
Down N’ Out looks set to remain nameless
after it lost its recent Federal Court appeal
with US burger chain In-N-Out (INO).




that the pair had acted dishonestly,
it found the evidence supported
the initial finding that it was ‘no
coincidence’ that Kagan and Saliba
had chosen the name Down N’ Out,
and that it had been selected with
full knowledge of the INO trade
marks. The Full Court identified a
number of matters that supported
this finding and which the primary
judge referred to including:
> t he concession that INO
inspired the name;
> t he acceptance that the ‘N-out’
component of the mark was
a direct lift from IN-N-Out;
> K agan and Saliba had knowledge
of the ‘legendary’ INO and Kagan
had attended a pop (up?) event
run by INO in Australia; and
> a request to make the Down
N’ Out logo like the INO logo,
with the subsequent choice of
font, colour and a yellow arrow
reflecting INO’s branding.

Finally, in a blow for Kagan and
Saliba, the Full Court found in
favour of INO on its cross appeal
that the pair were joint tortfeasors
with Hashtag. It found that each
director’s conduct went beyond
the proper role of director so
as to descend into the realm
of ‘close personal involvement’.

This was on the basis that:
a) the pair were the sole
directors of Hashtag;
b) o nly they made decisions as
to Hashtag’s management;
c) t hey alone received the
profits derived from it;
d) t here was no difference between
the individual who operated the
business prior to incorporation
and the way in which they
operated it through the corporate
vehicle after it was formed; and
e) t he pair were knowingly involved
in the company’s wrong doing.

Business owners and brand creators
must walk the fine line between
inspiration and appropriation
when developing trade marks and
branding that are based on those
of another business. Failure to
understand and appreciate the
risks, may lead to a potentially
embarrassing and costly rebrand.

This case also serves as a reminder to
company directors that courts will look
beyond the corporate veil in cases of
trade mark infringement, passing off
and misleading and deceptive conduct.

Anita Brown | Principal
BA LLB MIPLaw GAICD
anita.brown@pof.com.au Inspire March 2021
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