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

Wednesday, August 16, 2017

Calmer waters ahead for Bondi Wash after choppy waves?

By Nick Li, Associate

This is the story of a small but industrious Sydney retailer of scented fragrances, looking to expand into the US market, and coming up against the international fashion Goliath Abercrombie and Fitch before the United States Patent and Trade Mark Office. 

The story is set for a happy ending, but the struggles of our persistent protagonist serves as an example of some of the challenges faced by Australian small businesses trying to make it big. 

On 1 August 2017, the opposition period in relation to the trade mark application for 'Bondi Wash' commenced in the US. The applicant, Bondi Wash Pty Ltd, a Sydney based retailer of scented fragrances and products derived from native botanicals, had applied to register its trade mark on 1 October 2015, nearly two years ago. The reason for this delay? Abercrombie and Fitch (A&F), and its existing trade mark registrations for 'Bondi Beach', 'Bondi Beach Club' and 'GH Bondi Beach Club' (logo) (the A&F trade marks).

Each of the A&F trade marks had been registered since 2014, in respect of goods within class 3, including body lotions, body sprays and fragrances for personal use.

The USPTO cited these trade mark registrations against Bondi Wash when it applied to register the mark 'Bondi Wash' in October 2015 in respect of goods within the same class 3 and 5. In particular, Bondi Wash sought to register its trade mark in relation to 'scented hand and body products including creams, lotions, oils…', 'room sprays' and 'deodorants for personal use' within class 3. In an effort to overcome these citations, Bondi Wash applied to cancel the registrations for the A&F trade marks.

A&F opposed Bondi Wash's application to cancel the registrations for the A&F trade marks, and instead requested that registration of Bondi Wash's trade mark application be denied. A lengthy period of commercial negotiation followed, with the parties eventually reaching agreement in June this year. Whatever the commercial terms of the handshake were, Bondi Wash withdrew its application to cancel the registration of the A&F trade marks, and A&F apparently has not pressed its initial claim for Bondi Wash's trade mark application to be denied registration. A&F's statement to the media certainly suggests that it will not be opposing Bondi Wash's application in the future:

Bondi Wash remains able to use and register its mark worldwide and, in fact, continues to use its mark and sell its products in the US, Australia and elsewhere. Its US trademark application has been approved by the USPTO and is proceeding to registration.

Bondi Wash may have reached agreement with A&F, but a USPTO search reveals 36 live trade mark applications and registrations containing the word 'Bondi' – so there may yet be another shark lurking beneath the surface. Only time will tell.

What's the applicable law?

In the United States, a mark that is primarily geographically descriptive (or deceptively misdescriptive) of the goods to which it relates is not registrable. However, such marks may be registrable as certification marks. An applicant is also permitted to register the trade mark if the applicant can show that the mark is not primarily geographically descriptive through use.

A&F's trade mark registration is not as a certification mark, nor had it used the trade mark. Accordingly, it seems that the USPTO determined at the time that, to US citizens, 'Bondi Beach' was not primarily geographically descriptive. In other words, the Americans decided that an American would not think of the New South Wales waterfront locality first, when they see the words 'Bondi Beach'.

The position is different in Australia both as to the law and, of course, as to the knowledge of Bondi Beach as a location. Under section 41 of the Trade Marks Act 1995 (Cth), a trade mark comprising wholly of sign indicating a geographical location is generally not considered inherently adapted to distinguish. Accordingly, such a trade mark could only be registered in Australia if the applicant can show that, prior to the filing date, the mark had been used to such an extent that it does in fact distinguish the applicant's goods or services from that of other traders.

The relevance of the legal jargon above? In Australia, it is likely that A&F would need to show evidence of its 'Bondi Beach' trade marks acquiring a reputation through use of the trade mark before it could be registered.

How does this affect the small business and start-up landscape?

Australia is experiencing a period of growth in small business and start-ups, hitting 7th place internationally in 2016 for the number of start-up exits (being either a successful IPO or acquisition of a start-up).

Obtaining trade mark protection in relevant foreign jurisdictions is an important step for start-ups looking to expand operations into other markets, in protecting the branding of their goods and services.

Existing trade mark registrations in foreign jurisdictions, held by large foreign companies, for well-known Australian geographical locations may well present a significant obstacle for Australian start-ups whose branding is tied to such locations. The existing trade mark registrations in the foreign jurisdictions may well operate to block any application by the Australian entity seeking to register its trade marks in that jurisdiction.

More generally, although Bondi Wash's case is concerned with words having geographical significance, the story of existing trade mark registrations blocking new applications is all too familiar. Bondi Wash's experience is a cautionary tale for start-ups and small businesses to undertake adequate due diligence early, and to procure trade mark protection in relevant classes both domestically, and in foreign jurisdictions – so as to avoid headaches later.

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