Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.






Monday, July 11, 2016

Wild Geese knocks Wild Turkey off its perch

By Nadia Guadagno, Senior Associate

The tables have turned in the longstanding battle between the owners of Wild Turkey Bourbon* and the owner of Wild Geese Rare Irish Whisky, Lodestar. Lodestar has succeeded in prying the WILD GEESE marks free from Wild Turkey's claws following a significant Full Court decision which has shed light on the meaning of 'authorised use'. This concept is particularly important in applications to have a trade mark removed for non-use where the relevant user of the mark is a licensee (and not the trade mark owner).

Before turning to the Full Federal Court's decision, let's briefly remind ourselves of how Wild Turkey came to be the registered owner of WILD GEESE trade marks. For a more detailed history see our earlier post summarising the first instance decision.

Recapping…


In 2007 Wild Turkey entered into agreements with Wild Geese Wines, a company operated by Mr O'Sullivan, which operated a small vineyard in South Australia and sold wine under the name 'Wild Geese Wines'. As agreed, Wild Geese Wines assigned its interests in its WILD GEESE and WILD GEESE WINES trade marks to Wild Turkey, who in turn, licensed those same marks back to Wild Geese Wines in perpetuity for a one-off fee of $1. Wild Turkey also secured registration of those trade marks.

In 2010 Lodestar made an application to have Wild Turkey's WILD GEESE and WILD GEESE WINES trade marks removed from the register on the basis that Wild Turkey had not used the marks during the preceding three year period. This application was refused at trial and Lodestar appealed to the Full Court.


Did Wild Turkey use the WILD GEESE marks during the non-use period?


To succeed in its application, Lodestar needed to show that Wild Turkey had not used the WILD GEESE marks in Australia in relation to wine (ie the goods in respect of which the marks were registered) during the three year period. During that time, Wild Turkey had sold Wild Turkey Bourbon in Australia but it had not sold anything under the name WILD GEESE. However, recall that 'use' by a trade mark owner includes 'authorised use' which is where the trade mark is used under the control of the trade mark owner. Wild Geese Wines had made some modest sales of bottles of Merlot under the WILD GEESE WINES label during that time period, which was deemed by the trial judge to be sufficient 'use'. Was this 'authorised use'?

What extent of control is required for 'use' to be 'authorised use'?


Accordingly, the key issue in these proceedings was whether Wild Geese Wines had used the WILD GEESE marks under the control of Wild Turkey. This required an examination of the extent of control required. Was it enough that Wild Turkey had granted a licence? Was the power to control sufficient? Or was Wild Turkey required actually to exercise control over Wild Geese Wines' use of the marks?

A trade mark must indicate a connection in the course of trade with the registered owner. As such, where a mark is licensed, the trade mark owner must retain control over the goods or services of the licensee  so that the connection with the owner is maintained. Given this, the Full Court held that the trade mark owner must exercise actual control over the user of the trade mark by the licensee to constitute 'authorised use'.

Actual control will be a matter of fact and degree. However, there must be control as a matter of substance. The mere fact that a registered owner grants a licence of revocable authority to use a trade mark without exercising any form of control would not be sufficient. However, if a licence agreement sets out in detail the quality standards to be met by a licensee, it may not be necessary for the registered owner to give directions or instructions if the licensee is faithfully complying with its obligations under the licence agreement.

Did Wild Turkey exercise actual control over Wild Geese Wines' use of the marks? 


The licence agreement between Wild Turkey and Wild Geese Wines incorporated some quality control provisions including:

  1. that the wine must be of sufficient quality to obtain continuing export approval from the Australian Wine and Brandy Corporation (‘AWBC’); 
  2. if requested by Wild Turkey, Wild Geese Wines must provide Wild Turkey with three bottles of the wine in any 12 month period; 
  3. if requested by Wild Turkey, Wild Geese Wines must provide another four bottles to the Australian Wine Research Institute for testing and submission of the wine to the AWBC; and
  4. if the AWBC did not give its continuing approval, the wine was to be withdrawn and not marketed under the marks.


The Full Court noted that the mere fact that Wild Geese Wines was licensed to use the trade marks was not enough to establish the requisite control, nor was the existence of the quality control provisions. Those provisions were described by one judge as doing no more than establishing 'token' or 'colourable' quality control arrangements. The standard the wines was required to meet was not an exacting standard. The trial judge considered that the standard involved no more than a rejection of what was 'truly undrinkable wine'. It had no impact on Mr O'Sullivan's wine making practices.

In addition, during the non-use period, Wild Turkey did not seek to rely on any of those provisions. It did not monitor Wild Geese Wines' use of the trade marks and it never requested any samples of the wine or any information about the use of the marks or the wine making operations generally.  As one judge remarked, 'the degree of control [during the non-use period] seems, in fact, to have been so entirely attenuated that the commercial use of the trade marks…on the labels on the bottles of 2004 Merlot….did not operate to indicate a connection, in the course of trade, with the owner of the trade marks in suit' (emphases in judgment).

Accordingly, the Full Court found that Wild Turkey did not exercise actual control over Wild Geese Wines' use of the WILD GEESE trade marks and, as such, Wild Geese Wines' use of those trade marks was not authorised use. Wild Turkey's WILD GEESE marks will thus be removed from the register which should clear the way for Lodestar to progress the registration of its own WILD GEESE marks.

The upshot for removal for non-use applications 


The bar has been raised for trade mark owners who license their marks seeking to rebut non-use allegations. They will no longer be able merely to point to the existence of a licence, but rather will need to show that they have exercised actual control over a licensee. Such control may be shown if the trade mark owner exercises quality control over the relevant goods or services of the licensee or financial control over the licensee's relevant trading activities. In relation to the former, the licence agreement will need to contain fairly robust quality control provisions with which the licensee has complied or there will need to be evidence of the trade mark owner exercising actual control over the quality of the goods in practice, for example, through giving directions and approving the relevant goods.

*As the Wild Turkey trade mark has been owned by several different corporate groups over the years, for simplicity, this article will refer to the owners as 'Wild Turkey'. 

No comments:

Post a Comment