High Court calls last drinks on Lion Nathan’s Barefoot Radler

The High Court has allowed Gallo’s appeal against a finding of non-use of its BAREFOOT trade mark in E. & J. Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15, resulting in a finding that the trade mark is both valid and infringed by Lion Nathan’s “Barefoot Radler” beer.

At first instance Gallo’s allegation of trade mark infringement was rejected while Lion Nathan’s claim for revocation based on non-use was allowed. On appeal the Full Court overturned the finding regarding non-infringement but upheld the decision on non-use.

On the facts, there was no dispute that bottles of wine bearing Gallo’s BAREFOOT trade mark had been sold in Australia during the three year non-use period. Equally, there was no dispute that Gallo was not aware of those sales taking place in Australia. Accordingly, the question was whether sales of wine in Australia bearing the BAREFOOT trade mark constituted use of that trade mark in Australia by Gallo.

Gallo submitted that in assessing whether there was use of the trade mark it was necessary to consider three basic propositions:

a)      that use means use of the trade mark as a badge of origin indicating a connection between the goods and the trade mark owner;
b)      that use of the trade mark was to be determined objectively without reference to the subjective trading intentions of the trade mark owner; and
c)      that goods relevantly remain in the course of trade until they are acquired for consumption.

The High Court considered that each of these propositions were consistent with long standing authority.

Lion Nathan sought to uphold the Full Court’s decision by reference to Estex Clothing Manufacturers v Ellis and Goldstein (1967) 116 CLR 254, and in particular statements made in that decision about the need for a trade mark owner to project their goods into the course of trade in Australia in order for there to be the necessary trade mark use. The High Court found that Lion Nathan’s contention that it was a necessary condition to establish a use in Australia that an overseas manufacturer knowingly “projects” his goods into the course of trade in Australia was a misreading of the judgment in Estex.

The High Court stated that:

The capacity of a trade mark to distinguish a registered owner’s goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market.  It depends on the goods being in the course of trade in Australia.  Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act.

Further:

An overseas manufacturer who has registered a trade mark in Australia and who himself (or through an authorised user) places the trade mark on goods which are then sold to a trader overseas can be said to be a user of the trade mark when those same goods, to which the trade mark is affixed, are in the course of trade, that is, are offered for sale and sold in Australia.  This is because the trade mark remains the trade mark of the registered owner (through an authorised user if there is one) whilst the goods are in the course of trade before they are bought for consumption.

Accordingly, on the facts of this case, there was use of the registered trade mark on vendible products offered for sale and sold in Australia sufficient to defeat the non-use application.