Sunday, December 15, 2013

The WinnebagoTrade Mark Dispute in Australia: Delay and Spillover Reputation

Back in 1978, Mr Binns and his wife started manufacturing and selling their own line of recreational vehicles (RVs) in Australia under the 'Winnebago' name and logo.

Both the name and logo were copied from an American company that has been manufacturing and selling RVs under the brand name and logo in the USA, the UK, and Canada since 1959.

Binns formed a company called Knott Investments Pty Ltd in 1982, which became the corporate vehicle for the business.

In 1985 Winnebago became aware of Knott's activities in Australia, but did nothing about it until 1992 when both parties came to an agreement about the use of the brand. Knott continued manufacturing and selling its own RVs under the Winnebago brand and even registered the logo as a trade mark in Australia.

Winnebago was aware of Knott's activities, but did nothing to prevent the marks from being registered and used in Australia. The rationale for this was that they were not selling their products into Australia and had no plans to do so. A letter to their Australian lawyers also revealed that Winnebago were expecting Binns to go out of business, as he was suffering from financial difficulties.

Unfortunately for Winnebago, Knott didn't go under and continued making and selling Winnebago-branded RVs in Australia.

In 2010 the US-based Winnebago decided to enter the Australian market. Winnebago commenced proceedings, alleging misleading or deceptive conduct as well as passing off in an effort to get Knott's registration for the Winnebago name and logo revoked.


Classic Winnebago RV

On the face of it, Winnebago’s case was strong: the court found that Knott was engaging in misleading or deceptive conduct and passing off. Interestingly, the court found that US Winnebago brand had a spillover reputation in Australia in 1978, despite not having an actual presence in the country at that point. The court also agreed that the initial settlement agreement did not authorise Knott to use any of Winnebago's brands or trade marks in Australia.

However, delay proved fatal to the claim. It took Winnebago 25 years after first learning of Knott's activities, and another 18 years after the initial agreement, to commence proceedings. According to the court, Knott's 'Winnebago' has managed to establish its own identity and customer goodwill using their own vehicle during that long period of time.

The court prohibited Knott from using the marks in situations that do not appropriately disclaim any trade association with the actual Winnebago company. In Allsop CJ's words:

This limitation of relief can be seen to reflect not only the balancing of the respective interests of Knott and Winnebago in the reputation developed by Knott’s expenditure, in the context of Winnebago’s extraordinary delay, but also the erosion of the reputation of Winnebago ….

and

The evidence reveals sufficient to conclude that at least some of Knott’s reputation in the use of the name and marks was the development of its goodwill and reputation; that not all of the development of its business involved the taking advantage of Winnebago’s reputation in Australia. In normal circumstances, this would not matter; it would be something that the party passing off would have to accept as a consequence of its wrongdoing. Here, however, Winnebago has contributed to this by standing by, informed of the position, for 25 years while Knott expended money and built a business, part at least of which was its own reputation.

Spillover reputation in Australia is notoriously hard to establish. The concept of spillover reputation is concerned with the idea that, notwithstanding no trading presence in a country, the notoriety of a brand is so strong that it “spills over” into the country in cloudy ways, such as through exposure to the brand by travellers, advertisements in internationally circulated magazines and trade journals, television mentions, and visits to websites referring to the brand.

In Australia, the door to spillover reputation was opened in the 1992 Federal Court decision of ConAgra Inc v McCain Foods where Lockhart J recognised “the sophistication of communications which are increasingly less limited by national boundaries, and the frequent travel of residents of many countries for reasons of business, pleasure or study” – but even then, while it was conceptually accepted, in that case spillover reputation was not found by the court. Decisions dealing with spillover reputation since then have followed a similar pattern of wrestling with evidence of spillover reputation, notably:

a. Aviva Group International Inc v Advance Buying Corporation – spillover reputation in fashion brand AVIA was essentially discounted;

b. Westin Hotel Company v Unico Trading Pte Ltd - no evidence of spillover reputation of WESTIN in Australia;

c. Cowparade Holdings Corporation v Bentley – a claim to spillover reputation in “COW PARADE” was rejected on a lack of evidence;

d. Home Box Office Inc v Florenca - where spillover reputation was found for “Sex in the City”, but not for “absofuckinglutely”

e. Maxims Caterers Limited v Magnona Pty Ltd – the Chinese characters “Mei-xin”, meaning “Maxims” were opposed, and while spillover reputation was found, the reputation was not sufficient enough to establish confusion;

f. Ferdinando Giordano SpA v Walton International Ltd – no spillover reputation of “GIORDANO” in Australia as a result of Australians travelling through Asia or the Middle East;

g. MGM Grand Hotel LLC v Surfside Estates Pty Ltd – spillover reputation in “Studio 54” was rejected on the basis of a lack of evidence;

h. Next Retail Limited v Gordon Simpson agencies Pty Ltd – “the spillover effect of reputation for the opponent [for the brand NEXT], by reason if international tourism, is extremely difficult to quantify”, but spillover reputation was found on the basis of a “very considerable reputation” in the United Kingdom, publication of advertisements in magazines with international circulation, and a very considerable degree travel by Australians between the united Kingdom and Australia;

i. Next Retail Limited v Retain Management Consultants Pty Ltd – the spillover reputation of “NEXT HOME” was not of the same “ilk “ as “WALLMART” or “MARKS & SPENCER” and so should be discounted in the absence of “confirmative evidence”;

j. Q Dance Australia Pty Ltd v Avant Media Pty Ltd – spillover reputation in the mark “DEFQON” from the Netherlands in the niche music market was insufficient;

k. The White Company (UK) Limited v White Homewares Pty Ltd – while the opponent’s brand enjoyed a sizeable reputation in the UK, there was no evidence of activities aimed at Australians or the Australian market and therefore no spillover reputation.

Winnebago’s establishment of spillover reputation in that relatively bleak landscape is therefore significant.

The key lesson here otherwise for brand and trade mark owners is it is never a good idea to delay any opportunity to enforce trade mark rights. Had Winnebago done something when they first became of Knott's activities, the outcome of the case would have been very different.

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