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Searches a must before using a new trade mark

What you need to do

In the excitement of starting a new business, or launching a new product, you may overlook one important step – carrying out searches to see whether there are any similar trade marks out there in the same field that may prevent you using your chosen mark.

Searches can be carried out professionally or you can do it yourself.  But if it is a DIY search, it has to be thorough.  This involves at least the following:

  • Internet searches;
  • Trade Marks Register searches; and
  • ASIC searches of business and company names.

If there are any other resources that would show competitor activity, such as trade magazines or directories, you should search these as well.

A trade mark registration can be infringed by “deceptively similar” marks used on similar goods or services in different classes.  This means that your searches of the Trade Marks Register need to be wider than just checking your exact mark in the exact class.  A Headstart trade mark application can double as the trade mark part of your searches.

It is also critical to keep the records of your searches, in case they are needed years from now.

Failure to conduct these searches can have the following serious consequences.

  1. Risk of infringement

Someone else in Australia may be using a similar registered or unregistered trade mark to your mark. If they object to your use and send a letter of demand, or even sue, this may result in any one or more of the following:

  • paying compensation to the other side;
  • legal costs;
  • having to cease sale of the product under that mark;
  • disruption to the business – eg diversion of executives from their normal duties;
  • reputational damage.

A lack of searches can also come back to bite you years down the track through less obvious legal risks.

  1. Problems defending your trade mark use

You may decide not to seek trade mark registration.  You may even have used your mark for several years without problems.  But if you did not check whether you were free to use it in the first place, someone with a similar trade mark, who used their mark first, may object.  This can happen especially where the two marks were used in geographically separate parts of Australia but now start to overlap.

Honesty/good faith

If the earlier business sues for trade mark infringement, you may try to defend the action using defences in the Trade Marks Act.  There are defences involving “good faith” use of your name or the name of your place of business or a description of your product.  Alternatively, you may argue that you would have been entitled to register your unregistered mark because of “honest concurrent use”.  This refers to the situation where you have used your trade mark honestly at the same time as the other mark over a significant period. 

The catch with these defences is that the use must be “honest” or “in good faith”.  Many business people would believe that, if they were not aware of the other trader, they were using their mark honestly.  However, the Courts have taken a stricter approach.  The Federal Court said that:

If a person does not take steps that an honest and reasonable person would take to ascertain the ability to use a trade mark, and has in effect taken a risk, then they are not acting in good faith.

Recent case

In a recent case a business had used its unregistered trade mark for over 10 years in New South Wales before being sued for trade mark infringement by a company based in Victoria.  Its defences included:

  • good faith use of its own name; and
  • that it could register its own mark because of honest concurrent use.

The Judge did not believe the defendant’s director and his wife when they said that were not aware of the prior rival business.  But, even if this was true, the Judge considered that an ASIC search of company names without internet searches – which was what the director and his wife claimed happened – was unreasonable and not in good faith.  ASIC searches do not retrieve trade marks, trading names and brands.  The business was found to have infringed registered trade marks.

Thus, the Courts have made it clear that the requirement of good faith does not only catch fraud or conscious dishonesty, but also catches inadequate searches, like failing to conduct internet searches or Trade Marks Register searches.

  1. Problems with your trade mark application

If you decide to file a trade mark application and it conflicts with a prior mark on the Trade Marks Register (called a citation), your application will be rejected initially.  If you cannot prove that you used your trade mark before the filing date of the conflicting mark, another way to try to overcome the citation is honest concurrent use.  But it will be difficult to establish this if you cannot give evidence that you undertook reasonable searches.

Summary

Conducting thorough searches of the Trade Marks Register, ASIC, the internet and any other relevant sources saves both money and a world of pain if there is some trade mark out there that will conflict with your new trade mark.

I can provide trade mark advice including arranging for and advising on trade mark searches.  I can be contacted here.

This article provides general information only, and is not intended as legal advice specific to your circumstances.  Please seek the advice of a legal professional or trade marks attorney if you have any particular questions.

Searches a must before using a new trade mark