On 28 June 2016, the Full Federal Court, consisting of five judges, handed down its decision in Lodestar Anstalt v Campari America LLC  FCFA 92 (“Lodestar”). The court unanimously held that a mere licence agreement authorising use of a trade mark was not sufficient to show that the licensee was an authorised user of the trade mark. This decision has significant implications for registered owners who do not use a trade mark themselves, but license it to other trading entities for use.
In order for a trade mark to remain registered, the registered owner must continue to use it as its trade mark in Australia. Use by a licensee of the trade mark will be deemed use by a registered owner only where the licensee is an “authorised user” within the meaning of section 8 of the Act.
Section 8(1) of the Act provides that a person is an authorised user of a trade mark if the person uses the trade mark in relation to goods or services under the control of the owner of the trade mark. “Control” is not defined in the Act, but it does state that control over the quality of the goods or services, or financial control over the person’s trading activities may be sufficient forms of control. The decision in Lodestar basically turned on the meaning of “control” within section 8 of the Act.
In Lodestar, the court held that in order for a licensee to be an authorised user, the registered owner must exercise actual control (as opposed to theoretical control) over the licensee’s use of that trade mark. This means that a mere licence agreement empowering the registered owner to control the use of the trade mark was not sufficient to make the licensee an authorised user of it. As a result, the court held that the trade mark had not been used by the registered owner and accordingly should be removed from the register.
This case serves as a reminder of the potentially dire consequences that can ensue from not having a properly implemented licensing arrangement. In order to avoid a Lodestar situation, you should take the following actions:
If you require advice or further information in relation to any of the matters discussed in this article, please contact our Corporate & Commercial team on 03 5273 5263.
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