Firstmac Limited v Zip Co Limited

Case [2023] FCA 540

FEDERAL COURT OF AUSTRALIA

Firstmac Limited v Zip Co Limited [2023] FCA 540  

File number: NSD 1004 of 2019
Judgment of: MARKOVIC J
Date of judgment: 29 May 2023
Catchwords: TRADE MARKS – infringement claim pursuant to s 120 of the Trade Marks Act 1995 (Cth) – whether the infringing marks are substantially identical with, or deceptively similar to, the applicant’s mark – defence under s 122(1)(f) and (fa) of the Act – whether respondents would obtain registration of the infringing marks if they were to apply for it on the basis of honest concurrent use – defence under s 122(1)(a) of the Act – whether the respondents are entitled to use of the “own name” defence – whether the applicant should be denied relief by reason of estoppel, acquiescence, delay or laches – application for removal of the applicant’s mark pursuant to s 92(1) and s 92(4)(b) of the Act – whether the applicant did not during the relevant non-use period use its registered mark in good faith in relation to its services – claim under s 88(1) of the Act to rectify the Register of Trade Marks by cancelling the applicant’s mark – whether ground in s 88(2)(c) of the Act is established – whether use of the applicant’s mark is likely to deceive or cause confusion – claim under s 129 of the Act – whether the applicant’s threats to bring an action were unjustified
Legislation:

Designs Act 2003 (Cth) ss 71, 72(2)(b), 77 and 78(b)

Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth)

Trade Marks Act 1995 (Cth) ss 44(3), 88 subs (1)(a) and subs (2)(c), 92 subs (1) and subs (4)(b), 122(1) subss (a), (f) and (fa), 129 subss (1), (2) and (4)

Federal Court Rules 2011 (Cth) r 16.21(1)

Trade Marks Regulations 1995 (Cth) reg 8.2

Cases cited:

Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514

Anheuser-Busch Inc v Budejovický Budvar, Národní Podnik (2002) 56 IPR 182; [2002] FCA 390
Austin, Nichols & Company Inc v Lodestar Anstalt (2012) 202 FCR 490
Autocaps (Aust) Pty Ltd v Pro-Kit Pty Ltd (1999) 46 IPR 339; [1999] FCA 1315
Bendigo and Adelaide Bank Limited v Community First Credit Union Ltd (2021) 157 IPR 251; [2021] FCAFC 31

Bohemia Crystal Pty Ltd v Host Corporation Pty Ltd (2018) 129 IPR 482; [2018] FCA 235
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45
Community First Credit Union Ltd v Bendigo and Adelaide Bank Ltd (2019) 146 IPR 185; [2019] FCA 1553
Dunlop Aircraft Tyres Ltd v The Goodyear Tire & Rubber Co (2018) 262 FCR 76

E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2009) 175 FCR 386
E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144
Electrolux Ltd v Electrix (1953) 71 RPC 23
Energy Beverages LLC v Cantarella Bros Pty Ltd (2022) 165 IPR 301; [2022] FCA 113
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AGLC
Firstmac Limited v Zip Co Limited [2023] FCA 540
Case
[2023] FCA 540
Decision Date

CaseChat Overview and Summary

In the case of Firstmac Limited v Zip Co Limited, the central issue revolved around allegations of trade mark infringement brought forth by Firstmac against the Zip Companies. The dispute was adjudicated in the Federal Court of Australia. The core legal issues included whether the Zip Companies' marks were substantially identical or deceptively similar to Firstmac's registered mark, the applicability of various statutory defences under the Trade Marks Act 1995 (Cth), and the legitimacy of Firstmac's threats to initiate legal action against the Zip Companies.

The Court meticulously examined the evidence presented by both parties, particularly focusing on the distinctiveness and potential for confusion between the marks in question. The Court held that the Zip Companies' marks were not substantially identical or deceptively similar to Firstmac's mark, thereby rejecting Firstmac's infringement claim. The Court also found that the Zip Companies could potentially obtain registration of their marks in their own names, which provided a valid defence under the Act. Furthermore, the Court determined that Firstmac's claims of estoppel, acquiescence, delay, or laches did not apply, as Firstmac had acted diligently in protecting its mark.

The Court further addressed the Zip Companies' application for the removal of Firstmac's mark from the Register due to non-use. After thorough deliberation, the Court concluded that the Applicant's Mark should indeed be removed from the Register as it had not been used in good faith during the relevant period. Lastly, the Court dismissed the Zip Companies' cross-claim for the cancellation of Firstmac's mark, finding no basis for such a remedy. Additionally, the Court ruled that Firstmac's threats to bring an action were not unjustified.

In summary, the Court's decision favoured the Zip Companies on multiple fronts, leading to the removal of Firstmac's mark from the Register and the dismissal of Firstmac's infringement claim and cross-claim.

Orders

Orders of the court

1. The parties are to confer and within seven days of the making of these Orders provide to the Associate to Markovic J proposed orders giving effect to these reasons.

2. Insofar as the parties are unable to agree to the terms of the proposed orders referred to in Order 1 above, including the appropriate order as to costs, the areas of disagreement should be set out in mark up in the draft to be provided.

3. In the event that the parties are unable to agree on the proposed orders the proceeding be listed for case management hearing on 6 June 2023 at 9.30 am AEST for argument on the form of orders.

4. The text of the reasons for judgment published today is to be published and disclosed only to the parties and their legal advisors.

5. By midday AEST on 31 May 2023 the parties are to inform the Associate to Markovic J whether:

(a) the proposed redactions (shown in yellow highlight) at [344] of and Annexure B to the reasons published in accordance with Order 4 above are to be maintained having regard to the Orders of the Court made on 9 March 2022 (s 37AF Orders); and

(b) they propose any further redactions as a result of the s 37AF Orders.

THE COURT NOTES THAT:

6. The reasons for judgment will be published on 1 June 2023 at 9.00 am AEST and any redactions made in the reasons are made in accordance with the s 37AF Orders which remain in place for 14 days from the date of publication of these reasons.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Table of Contents

FACTS

[7]

The witnesses

[7]

The Firstmac Group

[9]

Firstmac’s products and services

[14]

Firstmac’s ZIP home loan – 2005 to 2014

[19]

The September 2014 Origination Agreement

[33]

Re-introduction of the ZIP home loan in 2018

[37]

Loans.com.au and the 2018 ZIP home loan

[53]

Mr Gration becomes aware of the Zip Companies

[58]

The Zip Companies

[61]

The development of the ZIP business

[63]

2013 trade mark applications

[80]

Internet searches

[95]

Rubianna Resources Limited and the reverse takeover

[98]

2015 trade mark applications

[106]

The ZIP business

[116]

Promotion of ZIP and the Zip Products

[129]

ZIP Websites

[140]

Zip App

[145]

Social media

[148]

2018 rebrand

[153]

The “nothing comes between me and my” campaign

[158]

Current trade marks and pending applications

[163]

First awareness of Firstmac

[165]

Attempt to contact Firstmac

[170]

Proceeding before the Registrar of Trade Marks

[172]

2021 rebrand

[176]

Inconvenience if the ZIP business was required to rebrand

[178]

FIRSTMAC’S INFRINGEMENT CLAIM

[182]

Statutory framework and legal principles

[188]

The Zip Companies’ submissions

[194]

Substantially identical

[198]

Deceptive similarity

[208]

Defences

[225]

Section 122(1)(f) and (fa) of the TM Act: the Zip Companies would obtain registration in their own name

[226]

Legal principles

[229]

Consideration

[237]

Section 122(1)(a) of the TM Act: use of own name in good faith

[272]

Estoppel, acquiescence, delay or laches

[285]

Conclusion on Firstmac’s infringement claim

[300]

THE ZIP COMPANIES’ NON-USE APPLICATION

[304]

Legislative framework and legal principles

[307]

Consideration

[312]

Should the Applicant’s Mark be removed from the Register?

[353]

Conclusion on the second non-use application

[365]

CROSS-CLAIM

[366]

Cancellation under s 88(2)(c) of the TM Act

[367]

Is use of the Applicant’s Mark likely to deceive or cause confusion?

[371]

Should the Register be rectified by cancellation of the Applicant’s Mark?

[379]

Section 129 of the TM Act

[396]

The parties’ submissions

[401]

Consideration

[405]

Conclusion on cross-claim

[413]

CONCLUSION

[414]

Background

Background to the litigation

On 15 July 2019 I ordered that all issues of quantum and of any pecuniary relief are to be heard and determined separately from and after all issues of liability.FACTSThe witnesses Firstmac led evidence from the following witnesses:(1)David Gration who is the general manager, sales and operations of Firstmac. Mr Gration joined Firstmac in December 2011 by which time he had over 20 years’ experience in retail banking including in senior management roles at the National Australia Bank and Suncorp. Prior to his current role Mr Gration held the following roles at Firstmac: from about 2 December 2019 to 9 November 2013, head of legal, risk and compliance; from about 19 November 2013 to 23 November 2015, general manager sales and marketing; and from about 23 November 2015 to 19 July 2017, general manager sales and marketing. Mr Gration also acted in the position of managing director of Loans.com.au Pty Ltd, a member of the Firstmac Group, when the person who held that role was on maternity leave. Mr Gration was cross-examined; (2)Tiska Sudarmana who is the product manager of Firstmac. Ms Sudarmana commenced her employment with Firstmac in February 2012 in the role of customer services officer. Insofar as that role was customer-facing, she was responsible for providing support or explanation to borrowers who contacted Firstmac with inquiries in relation to, for example, changes in interest rates, different repayment types and queries about refinancing existing loans to a different lender. Since February 2016 she has had the role of product manager. In that role she oversees a small team responsible for preparing and distributing product specifications which set out details of Firstmac’s new financial products and services and updates for existing products. She is also responsible for reviewing and approving any requests from originators, brokers, aggregators or managers for product variations. Ms Sudarmana was cross-examined; (3)Samantha Elizabeth Pendrey who since 4 March 2019 has held the role of retail sales team leader with Loans.com.au. In that role Ms Pendrey assists in the day to day management of her team of about 23 sales staff in the promotion of the financial products and services offered by Loans.com.au. Prior to taking on her current role Ms Pendrey held the following roles: from about 27 February 2017 to 2 August 2018 she was a lending manager, which required her to speak to customers, i.e. potential or existing borrowers, to promote the financial products and services offered by Loans.com.au; and from 2 August 2018 to 4 March 2019 she was a senior lending manager, a role in which she had the same responsibilities as her previous role but with additional responsibilities. Ms Pendrey was not cross-examined; and (4)Jacqueline Jessica Chelabian, a solicitor in the employ of Spruson & Ferguson Lawyers Pty Ltd, Firstmac’s solicitors, who gave evidence about trade mark searches she undertook of the databases maintained by the United Kingdom Intellectual Property Office and the Intellectual Property Office of New Zealand and in relation to printouts obtained from the Wayback Machine of IP Australia’s website. Ms Chelabian was not cross-examined.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

No specific proposal was put in the alternative that the registration for the Applicant’s Mark should be amended by the narrowing of the class of services in relation to which it is registered. Indeed, Firstmac contended that I would not do that given that the Services are the same as those provided by the Zip Companies. That is so and there is no basis upon which I am persuaded that it is appropriate to make an order that the Registrar amend the registration of the Applicant’s Mark. Conclusion on the second non-use application It follows from the above that I am satisfied that an order should be made requiring the Registrar to remove the Applicant’s Mark from the Register. CROSS-CLAIM In their cross-claim the Zip Companies seek cancellation of the Applicant’s Mark under s 88(1)(a) of the TM Act, relying on s 88(2)(c) of the TM Act, and an injunction restraining Firstmac from making threats that their use of the names and trade marks ZIP, ZIP MONEY and ZIP PAY, both simpliciter and stylised, constitutes infringement of the Applicant’s Mark. In effect, Firstmac denies that the Zip Companies are entitled to the relief sought in their cross-claim.Cancellation under s 88(2)(c) of the TM Act Section 88(1) of the TM Act provides that, on the application of an aggrieved person, the Court can order the Register to be rectified by, among other things, cancelling the registration of a trade mark or entering any condition or limitation affecting the registration of a trade mark that ought to be entered. The exercise of the discretionary power in that subsection is subject to s 88(2) and s 89 of the TM Act. Section 88(2) of the TM Act sets out the grounds on which an application under s 88(1) of the TM Act can be made and includes, relevantly for the purposes of the Zip Companies’ cross-claim, that because of the circumstances applying at the time when the application for rectification is made, use of the trade mark is likely to deceive or cause confusion: see s 88(2)(c) of the TM Act. Section 89 of the TM Act provides:(1) The court may decide not to grant an application for rectification made:(a)under section 87; or(b)on the ground that the trade mark is liable to deceive or confuse (a ground on which its registration could have been opposed, see paragraph 88(2)(a)); or(c)on the ground referred to in paragraph 88(2)(c);if the registered owner of the trade mark satisfies the court that the ground relied on by the applicant has not arisen through any act or fault of the registered owner.Note:For registered owner see section 6.(2) In making a decision under subsection (1), the court:(a)must also take into account any matter that is prescribed; and(b)may take into account any other matter that the court considers relevant. Regulation 8.2 of the Trade Marks Regulations 1995 (Cth) sets out the matters that must be taken into account, insofar as they are relevant, in making a decision under s 89(2) of the TM Act as follows:(a)the extent to which the public interest will be affected if registration of the trade mark is not cancelled;(b)whether any circumstances that gave rise to the application have ceased to exist;(c)the extent to which the trade mark distinguished the relevant goods and/or services before the circumstances giving rise to the application arose;(d)whether there is any order or other remedy, other than an order for rectification, that would be adequate in the circumstances. Is use of the Applicant’s Mark likely to deceive or cause confusion?

Ratio Decidendi

Legal Principle Established

Since September 2018 ZIP home loans have been continuously promoted, and continue to be promoted and offered, by Loans.com.au with generally the same specification and terms but with varying interest rates.Mr Gration becomes aware of the Zip Companies Mr Gration became aware of Zipmoney Payments in about late August or September 2016 after an application for removal of the Applicant’s Mark on the grounds of non-use (see [172]-[175] below). Firstmac opposed that application. At the time, Mr Gration considered that:(1)by responding to and opposing the first non-use application, it was clear that Firstmac wanted to retain registration of the Applicant’s Mark and the associated exclusive rights given to Firstmac under the legislation;(2)given the significant costs of litigation, it was prudent and desirable to defend the Applicant’s Mark before taking enforcement steps, although he did not then realise the length of time that would take; and(3)while he had a general appreciation that “Zipmoney” had entered the market, he did not monitor what “Zipmoney” was doing and he had no insight or foresight into its commercial operations and plans. Mr Gration expected that, if Firstmac was successful in defending its registration of the Applicant’s Mark, “Zipmoney” would stop using ZIP and it would have a contingency plan in place to cover such a situation. Firstmac has not authorised or granted any licence or permission to the Zip Companies to use the Applicant’s Mark or any version of a trade mark including the word ZIP, nor have those companies asked Firstmac for permission to use the Applicant’s Mark or any version of a trade mark including ZIP, or for Firstmac’s consent or permission to register any trade marks for or including ZIP.The Zip Companies On 24 June 2013, when first incorporated, Zipmoney Payments had the name Zipmoney Pty Ltd. On 14 June 2015, it changed its name to its current corporate name, Zipmoney Payments. The Zip Companies have a related company, Zipmoney Holdings Pty Ltd, which was also incorporated on 24 June 2013. Zipmoney Payments is a subsidiary of Zipmoney Holdings and Zip Co is the ultimate holding company of both Zipmoney Payments and Zipmoney Holdings.The development of the ZIP business In about mid-2012 Mr Diamond began to think about establishing a business based on digital/online short term lending to consumers. He was interested in creating a business that would disrupt traditional lenders and the credit card market and which used the point-of-sale experience as the point of origination of new customer credit accounts. He considered that an important feature of such a business would be the ability for retail customers to obtain credit quickly (in real time) and without a lengthy application process. At the time, Mr Diamond did not believe there to be a product offering of that type in Australia. For example, GE Money products were promoted on the retail sales floor, but still involved a traditional finance application.