Registration of a trade mark can be cancelled if the trade mark is not used. Use must be within three years of registration under section 92 of the Trade Marks Act (Cth) 1955. But what level of use is required? Many court decisions have turned on this question.

We’ll examine here the recent  High Court of Australia decision, E. & J. Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15 (19 May 2010).

Gallo Winery is a Californian company. It is one of the largest wine producing companies in the world. Gallo became the owner of Australian trade mark number 787765 for BAREFOOT in 2005. The mark was for “wines” in class 33 and was originally registered from 9 March 1999 by Michael Houlihan, trading as Barefoot Cellars.

In 2007 Gallo took legal action alleging infringement by Lion Nathan Australia Pty Ltd for use of BAREFOOT or BAREFOOT RADLER for beer.

"gallo_barefoot_bottle"Like the term “blonde”, radler is a descriptive term for certain beer or shandy beverages.

In its defence Lion Nathan argued that Gallo had not used the BAREFOOT mark in Australia within the required three year period.

The short facts relied on by Gallo were that in 2002, Beach Avenue Wholesalers Pty Ltd, a wholesaler/retainer in Australia, imported 144 bottles of Barefoot wine from Barefoot Cellars’ German distributor. The German distributor had an international distribution agreement with Barefoot Cellars. At least 41 bottles of wine had been sold during the claimed non-use period (26 of those after Gallo became the registered proprietor).

Gallo had not itself authorised, nor had any direct knowledge of, these redistribution arrangements. Gallo said this was not critical. Lion Nathan said it was, ie to legally evidence “use” acceptable under section 92.

"barefoot_beer"Gallo lost twice – in the first round (first instance) and in the second round on appeal in the Federal Court. The Federal Court’s decision was that Gallo did not have sufficient evidence of use.

Gallo went for a third round in the High Court of Australia. The High Court found the evidence of use was sufficient. Gallo won even though the facts it relied on were not a perfect hand. The High Court ruled that there is “use” of the trade mark in Australia, even though the registered proprietor had not itself used it in Australia, or specifically authorised its use in Australia.

A practical end note.  Had Gallo Winery kept records of use, say in an intellectual property register, that may have highlighted its legal weakness for early treatment. Shipping and selling a few more dozen bottles of wine directly from the United States to Australia would have been thousands of times more economical for Gallo Winery than a trail of legal processes and cases ending in the High Court. But there may be commercial strategies at play explaining the business logic for the cases by Gallo and its Australian lawyers.


Photo credit: Even as a child, co-author Samantha Waldon, appreciated valuable wine brands

Noric Dilanchian