Businesses can inadvertently infringe on the intellectual property rights of others during its day-to-day operations. We advise business owners take proactive steps to avoid infringement as responding to a claim is costly. If, however, a trade mark owner alleges that you are infringing on their rights, a number of defences are available and discussed below.

Defences Under the Trade Marks Act

Under section 120 of the Trade Marks Act 1995 (Cth) (the Act), an individual or organisation is guilty of trade mark infringement if:

  • they use a sign as a trade mark, and
  • the sign is either identical or deceptively similar to a trade mark already on the trade mark register.

The individual or organisation must also use the sign as a trade mark in relation to similar goods and services as the registered mark. For example, if a software company were to use a fast food restaurant’s trade mark, they would unlikely infringe on the mark unless the fast food restaurant had registered their logo in a broad range of classes, including software.

However, this is rare. Most matters concerning trade mark infringement proceed to trial where a party can raise a number of defences. Broadly speaking, each of these defences falls into one of the following categories.

Category Description
Title to Trade Mark Individual claiming infringement has no title to the trade mark or the trade mark is as yet unregistered.
Invalid Registration The individual claiming infringement has registered their trade mark invalidly.
No Infringement Under the Act A provision of the Trade Marks Act 1995 (Cth) indicates that no infringement has occurred.

Use of a Name in Good Faith

Under s122(1)(a) of the Act, trade mark infringement does not occur if you use the following in good faith:

  • your name or the name of your place of business, or
  • the name of a predecessor or a predecessor’s place of business.

In practical terms, this means that if your last name were Toyota and you were to run a car dealership called Toyota, you might be able to establish that you had not infringed the vehicle manufacturer’s trade mark. However, this depends on whether or not you can convince a court that you were acting in good faith.

What is good faith?

In the context of establishing a defence against trade mark infringement, acting in good faith means acting honestly. For example, in Angoves Pty Ltd v Johnson [1982] FCA 119, the defendant had used the words ‘St Agnes Liquor Store’ in their business name as the business was located in an Adelaide suburb called St Agnes. ‘St Agnes’ was also the plaintiff’s registered trade mark. The good faith defence set out in s122(1)(a) of the Act applied because the defendant had used the name without any intent to benefit from the goodwill of the company that owned the registered trade mark.

Use of Trade Mark to Describe Goods or Services

Under s122(1)(b) of the Act, trade mark infringement does not occur if a person uses a sign in good faith to:

  • describe a characteristic of the goods or services on offer, or
  • indicate the time of production of goods or provision of services.

A ‘characteristic’ can refer to the following about the good or service:

  • type,
  • quality,
  • quantity,
  • intended purpose,
  • value, or
  • geographical origin of the goods or services.

An individual looking to rely on this defence will need to show that they are using the sign in a purely descriptive manner. In other words, that they were not using the mark in any way so as to benefit from the goodwill that another individual or organisation has accrued from the same name.

Used to Indicate the Purpose of Goods or Services

Under s122(c) of the Act, trade mark infringement doesn’t occur where an individual or organisation uses a mark in good faith to indicate the purpose of the goods.

This defence means that those who manufacture or supply accessories, spare parts or services that are intended to be used in relation to the goods or services of a registered trade mark owner can fairly reference the relevant registered trade mark.

However, this defence is only viable if the use of the relevant trade mark does not deceive customers into thinking that the company that owns the trade mark manufactured the accessories. For this reason, it is generally easier for a trader to make out this defence if language such as ‘compatible with’ prefaces the registered trade mark (e.g. ‘compatible with Apple iPhone’).

Used to Make a Comparison

Under s122(d) of the Act, trade mark infringement will not occur if the alleged infringer refers to the mark to compare goods and services. Here, a party is not using a trade mark for its purpose of distinguishing goods or services, but rather to compare goods and services with others. For example, if Apple advertises that its iPhone battery lasts longer than a Google Pixel battery, it is not using the Google Pixel to distinguish its goods from any other good. Rather, Apple is simply referring to the Google Pixel and using Apple as its trade mark.

However, individuals and businesses risk falling foul of the Competition and Consumer Act 2010 (Cth) if their comparison is misleading. Using a sign to make a comparison can also usher in claims of copyright infringement for the unauthorised use of a trade mark that is also an artistic work (e.g. an intricately designed logo).

Right to Use a Registered Trade Mark

Under s122(e) of the Act, an individual or organisation will not have infringed a trade mark where they are exercising their right to use their registered trade mark.

On rare occasions, two parties will have each registered the same mark in relation to the same classes of goods and services. When this is the case, neither can pursue the other for trade mark infringement. For a party to make out this defence, they must have registered the mark following the proper procedures.

Use of a Trade Mark that Could Obtain Registration

Under s122(f) of the Act, an individual would not infringe on a trade mark if they use an unregistered trade mark that the court believes would obtain registration if the party lodged a proper application.

This defence might initially seem counter-intuitive. After all, if a trade mark is substantially similar or identical to a registered trade mark, then it follows that it would be unable to obtain registration.

It’s true that IP Australia will generally not register a mark that is substantially similar or identical to a mark already on the register. However, exceptions may arise where the court considers that a party may obtain registration on the grounds of honest concurrent use or prior continuous use.  

Use of a Registered Trade Mark that is Subject to Limitations

Under s122(g) of Act, trade mark infringement does not necessarily occur where a person uses a trade mark that is subject to limitations or conditions. A recorded disclaimer in relation to a registered trade mark can also provide a defence to trade mark infringement.

Use of a Registered Trade Mark that Precedes Registration

In addition to all of the defences set out under s122 of the Act, there is also a defence under s124. An alleged infringer may establish prior and continuous use of a trade mark. This use must be in relation to goods or services that are closely related to the registered trade mark.  

A defendant could not rely on their prior use of a sign as a defence unless they were using the sign as a trade mark. In practical terms, this means that if a sign were used to compare goods, for instance, they would not have established prior use.

Key Takeaways

Section 120 of the Act sets out that trade mark infringement occurs where a sign that is the same or deceptively similar to a registered trade mark is used to brand goods in the same class of goods or services.

When trade mark infringement does occur, a court may order summary judgment. A summary judgment is where a party to the matter applies to have the court dispose of (i.e. ‘throw out’) their claim and seek a final decision without going to trial because they have no prospects for success or their claim has no merit.

There are, however, numerous defences to claims of trade mark infringement, including:

  • use of a name or business location in good faith;
  • descriptive use of a sign in good faith;
  • use of a trade mark for the purposes of comparative advertising;
  • use of a trade mark in rare instances where two parties have registered that trade mark;
  • use of a trade mark where the court believes that the alleged infringer would obtain registration if they make an application;
  • use of a trade mark that is subject to limitations, conditions and disclaimers; and
  • use of a registered trade mark where the alleged infringer can establish prior and continuous use.

If you have any questions or need assistance responding to an infringement notice, get in touch with our specialist IP lawyers on 1300 544 755.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Vee Naidoo

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