FEDERAL COURT OF AUSTRALIA

Firstmac Limited v Zip Co Limited [2025] FCAFC 30

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The parties confer and within 28 days, or such further time as may be allowed, furnish by email to the associates to Justices Perram, Katzmann and Bromwich agreed or competing draft declarations and orders to give effect to these reasons.

3.    If there is any need for further evidence or written submissions, agreed or competing procedural orders to facilitate compliance with order 2, they should be furnished within the same period of time as for order 2.

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

REASONS FOR JUDGMENT

PERRAM J:

1    I have had the advantage of reading in draft the joint reasons of Katzmann and Bromwich JJ with which I agree. However, I wish to state my own views on the defence of honest and concurrent use under ss 122(1)(f) and (fa) when read with s 44 of the Trade Marks Act 1995 (Cth) (‘the Act’).

2    The Appellant is the registered owner of the trade mark ZIP. In November 2013, the Second Respondent for the very first time used as a trade mark the wordmark ZipMoney by making the Respondents’ credit and payment services available to the customers of Chappelli Cycles under that name. As Katzmann and Bromwich JJ have explained, the use of the word ZipMoney in that fashion infringed the Appellant’s trade mark ZIP.

3    In their defence, the Respondents relied upon the defence of honest and concurrent use. In an infringement suit, the time at which that defence is to be assessed is the date of the alleged infringement, here November 2013: Killer Queen, LLC v Taylor [2024] FCAFC 149; 306 FCR 199 (‘Killer Queen’) at [193] per Yates, Burley and Rofe JJ; Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd [2018] FCAFC 6; 259 FCR 514 at [217] per Nicholas, Yates and Beach JJ. Further, it is the party asserting the defence, here the Respondents, who must show that their use was an honest one: Killer Queen at [198]. The nature of that legal onus of proof carries with it the prospect that the Respondents may fail to show that their use of the word ZipMoney was an honest use without any corresponding finding by the Court that the use was in fact dishonest. The Court, in other words, must be affirmatively satisfied that the use was an honest one and its failure to be so satisfied does not necessarily entail that it is affirmatively satisfied that the use was dishonest.

4    Mr Gray was chief operations officer, co-founder and a director of the First Respondent (Zip Co) and a director of the Second Respondent (Zipmoney Payments). In early 2013, well before the use as a trade mark of the word ZipMoney in November 2013, he had conducted internet searches in relation to the name ZIP. None of these searches revealed the existence of the Appellant’s registered trade mark, ZIP.

5    It was following this, in June 2013, that Mr Gray and Mr Diamond, who was the Respondents’ managing director, chief executive officer and co-founder and a director of Zipmoney Payments, had then decided to use the words ZIP and ZIPMONEY for their business. Following that decision, it appears that the Respondents took steps to prepare for the launch of the business. These steps included the preparation of artwork for logos, an application to the Australian Securities and Investments Commission for a credit licence, and the applications for the registration of trade marks involving the word ZIP.

6    Although the word ZIP was used in each of these activities, it was not used as a trade mark because none of these uses involved the provision of its services by reference to that word. These uses did not therefore involve any trademark use of the word ZIP.

7    The trial judge was satisfied that at the time Mr Gray and Mr Diamond decided that they would use the word ZIP in June 2013 they did not know of the Appellant’s registered trade mark, ZIP. However, counsel for the Respondents below made a beguiling submission to her Honour which had two elements. First, it was clear that the Respondents’ initial use of the word ZIP must have been honest since nothing in the internet searches Mr Gray had conducted had indicated the existence of the Appellant’s mark, ZIP. Secondly, it was difficult to see that a use which had started off as plainly honest (when Mr Diamond and Mr Gray decided to use the ZipMoney mark for their business in June 2013) could have become dishonest by the time the word ZipMoney came to be used as a trade mark in November 2013.

8    The difficulty with this submission is that it involves a deft misdirection. The misdirection is that the Respondents had used the word ZipMoney as a trade mark prior to November 2013 whereas in fact they had never used the word ZipMoney as a trade mark before that time at all. Rather, the Respondents’ first use of the word ZipMoney as a trade mark occurred when partnering with Chappelli Cycles in November 2013 to make their credit and payment services available to its customers. The submission therefore invited the trial judge to assess the honesty of the Respondents’ use of the word ZipMoney as a trade mark at a time when they were not using it as a trade mark.

9    As I have already mentioned, after Mr Gray and Mr Diamond decided to use the word ZipMoney for the Respondents’ business in June 2013 but before they did in fact use it in November 2013, the Respondents applied for the registration of their own trade marks based on the word ZIP. Two applications were lodged towards the end of August 2013. These trade mark applications received adverse examination reports in October 2013 which explicitly drew to the Respondents’ attention the existence of the Appellant’s registered ZIP trade mark and the obstacle to registration it posed.

10    The case does not present therefore as one in which the Respondents had commenced using the word ZipMoney as a trade mark and only then to discover that it was also someone else’s trade mark. Rather, it is one in which the Respondents were on notice from the time of the adverse examination reports in October 2013 of the existence of the Appellant’s registered trade mark but, even so, decided to launch their services and start using the trade mark ZipMoney anyway in November 2013.

11    Of course, that does not necessarily mean that the Respondents’ use in November 2013 could not have been an honest use of the ZipMoney mark. For example, in some cases a Respondent may have genuinely believed, despite the existence of the known anterior mark, that its own use of its mark was unlikely to lead to confusion: McCormick & Company Inc v McCormick [2000] FCA 1335; 51 IPR 102 at [32]-[33] per Kenny J and the cases there collected.

12    Whilst the concept of honest use is in terms of a subjective inquiry, this Court has accepted that it has an objective element. In particular, it has been accepted by this Court that use will not be honest use within the meaning of the provision if the allegedly infringing party does not take steps that an honest and reasonable person would take to ascertain its ability to use the trade mark and has in effect taken a risk. So much was explained by Beach J in Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235; 118 IPR 239 (‘Flexopack’) at [111] in relation to s 122(1)(a) (honest use of a person’s name) of the Act and there is no reason to think that this reasoning does not apply to ss 122(1)(f) or (fa) (honest use where registration would be granted). Subsequently, the observation of Beach J was applied by the Full Court in the context of s 122(1)(a) in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83; 251 FCR 379 (‘Pham’) at [103].

13    On the question of honest use, the facts found by the trial judge were these:

(1)    Mr Gray had undertaken internet searches in the first part of 2013 for the name ZIP and the Appellant did not lead evidence to contradict that;

(2)    Mr Gray and Mr Diamond had decided to proceed with the business using the word ZIP in June 2013;

(3)    Mr Diamond had applied to register the Respondents’ trade marks in August 2013;

(4)    Adverse examination reports were received in October 2013 which drew to the Respondents’ attention the existence of the Appellant’s trade mark;

(5)    Mr Diamond was aware of the contents of the examination reports and hence of the Appellant’s trade mark;

(6)    Mr Diamond and Mr Gray did not decide to get any legal advice about the adverse reports;

(7)    Mr Diamond did, however, seek extensions of time for both trade mark applications which were granted through to February 2015;

(8)    At the time of the adverse reports, Mr Diamond was distracted with establishing the business and consequently did not give the adverse reports and the question of the registration of the Respondents’ marks much attention;

(9)    Mr Diamond gave no evidence for why he let the trade mark applications lapse; and

(10)    As at November 2013, so far as Mr Diamond and Mr Gray were aware, there was no other trader conducting the same business as the Respondents using the word ZIP.

14    The trial judge drew the inference that the use of the word ZipMoney in November 2013 was an honest use. In my respectful opinion, her Honour was led into error in this regard by the Respondents’ submission that it was difficult to see how a use which had been honest in June 2013 could cease to be such in November 2013. If there had been an honest trademark use in June 2013 I would be disposed to see the force of this contention. On that view of affairs, once it was shown that there had been a use of ZipMoney as a trade mark in June 2013 and that the use was an honest one then it would be difficult to see how a subsequent trademark use in November 2013 could lack that quality. But those were not the facts. There was no honest trademark use in June 2013 because there was no trademark use at all.

15    Like Katzmann and Bromwich JJ, I nevertheless agree that these earlier events were not irrelevant to the factual determination the trial judge had to make viz whether the use in November 2013 was an honest one. But where the events in June 2013 had not included any use of the word ZipMoney as a trade mark these earlier events could not quarantine the analysis from the subsequent event of the adverse reports which occurred before that use.

16    Error being established the question then becomes what inference this Court should now draw. I am unpersuaded from the facts set out above that an inference should be drawn that the Respondents acted honestly in using the word Zip and the variants of it as trade marks in November 2013. This is not to say that I am affirmatively persuaded that the Respondents’ use was dishonest. Rather, what is involved is a failure by the Respondents to discharge their onus of proving the defence. In particular, in terms of Flexopack and Pham, I am unpersuaded that it is not the case that they failed to take steps that an honest and reasonable person would take to ascertain their ability to use the trade mark and in effect took a risk.

17    I agree with orders proposed by Katzmann and Bromwich JJ.

Associate:

Dated:    19 March 2025

REASONS FOR JUDGMENT

KATZMANN AND BROMWICH JJ:

INTRODUCTION

18    This is an appeal by Firstmac Limited from orders made by a judge of this Court by which her Honour dismissed an originating application seeking relief against related respondents, Zip Co Limited and Zipmoney Payments Pty Ltd, alleging trade mark infringement contrary to s 120(1) of the Trade Marks Act 1995 (Cth) (TM Act or Act). The primary judge also:

(a)    upheld an application by Zipmoney Payments for removal of Firstmac’s mark from the Register of Trade Marks for non-use of that mark, ordering that the mark be removed from the Register; and

(b)    allowed part of a cross-claim by which the respondents sought rectification of the Register and cancellation of Firstmac’s trade mark, making orders to that effect; and

(c)    awarded costs to the respondents.

19    By its notice of appeal, Firstmac seeks:

(a)    to have the primary judge’s orders set aside and instead to have declarations of infringement made;

(b)    to have injunctions granted that restrain the respondents from using the “ZIP” word mark in relation to certain services, or any mark or sign that is substantially similar in Australia, orders to deliver up various domain names;

(c)    dismissal of both the respondents’ cross-claim and non-use application

(d)    costs; and

(e)    remittance of the matter to the primary judge for an inquiry and determination as to damages.

20    For the reasons below, the appeal succeeds. The relief sought by Firstmac should be granted.

Overview

21    In these reasons:

(a)    all references to legislative provisions will be to those in the TM Act unless indicated to the contrary;

(b)    references to a “Trade Mark” will be a reference to a mark registered under the TM Act; and

(c)    references to “trade marks” or “marks” will be references to trade marks or marks of trade which are not necessarily registered.

22    Since 2004, Firstmac has been the registered owner of Trade Mark 1021128 (Firstmac Mark) for the word “ZIP” in respect of “financial affairs (loans)” in class 36 (Services). Firstmac is part of a group of companies referred to as the Firstmac Group. The Firstmac Group is Australia’s largest non-bank lender, providing a range of financial products and services, including home and car loans, and investment products.

23    Since 2013, the respondents have operated what is commonly known as a buy now pay later (BNPL) service. That service provides unsecured loans in the form of credit facilities to customers buying products and services from a range of retailers who have agreed to payment by that means. The respondents provide the BNPL service using the trade mark “Zip” or “ZIP”, either on its own, or in connection with another word, such as “money”, “pay”, “trade” or “business”, both as plain words and in stylised formats, as well as using a number of domain names including that word.

24    The use of the word “zip” connoted different things in their usages by the parties, meaning “nothing” in the sense of Firstmac’s use and “speedy” in the sense of the respondents’ use. In the case of Firstmac’s use, it referred to a central feature of its loan product whereby there was no cost to the customer of an associated debit card facility. In the case of the respondents’ use, it referred to the speed of the service provided.

25    The marks used by the respondents at issue on Firstmac’s case were conveniently identified in Annexure A to the primary judge’s reasons, and are extracted and included as Annexure A to these reasons, being essential to understanding both judgments. Those marks fell into two categories:

(a)    Stylised Zip Marks which contain only the word “ZIP”, stylised in various colours and fonts, which were not the subject of any real contest as to deceptive similarity in light of her Honour’s reasoning and conclusions, being items 1 to 6 in Annexure A; and

(b)    ZIP Formative Marks which each include the word “ZIP” and another ordinary English word, to make word combinations such as “ZIP PAY” and “ZIP MONEY”, and were also largely stylised, which was the substance of the real contest on deceptive similarity, being items 7 to 25 in Annexure A.

26    Domain names owned by one or the other of the respondents comprising or including the word “ZIP” were also in issue, being items 26 to 29 in Annexure A.

27    At the hearing before the primary judge:

(a)    Firstmac alleged that the respondents had infringed the Firstmac Mark in breach of s 120(1);

(b)    the respondents relied upon defences of honest concurrent use, and use of own name in good faith;

(c)    by the respondents’ cross-claim, they sought cancellation of the Firstmac Mark under s 88(2)(c), as well as removal for non-use;

(d)    the respondents also claimed common law rights in the trade mark “ZIP” and variants such as “ZIP MONEY” and “ZIP PAY”;

(e)    the respondents admitted that the name and trade mark “ZIP” is substantially identical to the Firstmac Mark, and, subject to defences they advanced, their cross-claim and their application for non-use, admitted their conduct was otherwise infringing.

28    The primary judge dismissed Firstmac’s originating application, and ordered that the Firstmac Mark be removed from the Register pursuant to s 92(4)(b) and cancelled pursuant to s 88(2)(c). The order removing and cancelling the Firstmac Mark is stayed until the conclusion of this appeal. Firstmac has entered into an undertaking to the Court not to threaten any person with claims of, or proceedings for, infringement of the Firstmac Mark during the stay.

Grounds of Appeal

29    The notice of appeal contains the following six grounds:

1.    The primary judge erred in failing to find that each of the Zip Formative Marks and domain names held by the respondents were not deceptively similar to the Firstmac Mark.

2.    The primary judge erred in finding that a defence under s 122(1)(f) or (fa), of honest concurrent use, was made out.

3.    The primary judge erred in holding that a defence under s 122(1)(a) of good faith use of corporate name was made out.

4.    The primary judge erred in holding that Firstmac had not used the Firstmac Mark in relation to the registered services in the period from 22 February 2016 to 22 February 2019, and also in failing to exercise the discretion against removal of the Firstmac Mark.

5.    The primary judge erred in holding that the Firstmac Mark should be cancelled by finding that the ground in s 88(2)(c) was made out, and erred by failing to exercise the discretion not to cancel the Firstmac Mark.

6.    The primary judge should have found that the respondents had infringed the Firstmac Mark.

30    Firstmac identified and addressed four main issues arising from the six grounds of appeal, being those concerned with deceptive similarity, the defences, non-use and cancellation of the Firstmac Mark. Firstmac submits that ground 1, being the challenge to the finding that there was no deceptive similarity in relation to the ZIP Formative Marks, is an essential step in the infringement analysis including as to the operation of the use of corporate name defence, and so has significance in relation to the other grounds and would also have an impact on the scope for relief. Firstmac accepts that it needs to succeed on both grounds 4 and 5 to reverse the primary judge’s removal and cancellation orders. Ground 6 has no independent life, but rather flows from the preceding grounds.

31    The respondents contend that ground 1 (and thus ground 6) are only of any significance if Firstmac succeeds on its case in relation to the defences in grounds 2 and 3.

Chronology of key events

32    Each of the parties provided a chronology of relevant events for the purposes of this appeal. The following key events were either not in dispute between the parties, or are otherwise the subject of findings by the primary judge that are not challenged on appeal, and as such serve to summarise succinctly the sequence of events and, when considered with Annexure A, provide much of the historical factual context necessary for the consideration of the grounds of appeal:

DECEPTIVE SIMILARITY

33    The substance of Firstmac’s case on deceptive similarity is that the primary judge correctly stated the law, but then misapplied it, essentially at the practical level.

34    The relevant legal principles can be shortly stated, as they emerge succinctly from the restatement in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 277 CLR 186 (Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ). In the following key paragraphs the references to goods may be taken to have equivalent operation in relation to the present situation involving financial services (footnotes omitted):

[22]    There are two separate and essential elements to establish infringement under s 120(1): (1) that the person has “use[d] as a trade mark” a sign in relation to goods or services; and (2) that the trade mark was “substantially identical” or (as alleged in this case) “deceptively similar” to a trade mark registered in relation to those goods or services.

[Paragraphs 23-25 are reproduced below in relation to ground 4]

Deceptive similarity to the registered mark

Nature of the inquiry

[26]    Section 10 of the TM Act, headed “Definition of deceptively similar”, provides that a trade mark is taken to be deceptively similar to another trade mark if it “so nearly resembles that other trade mark that it is likely to deceive or cause confusion”. The essential task is one of trade mark comparison; the resemblance between the two marks must be the cause of the likely deception or confusion. In evaluating the likelihood of confusion, the marks must be judged as a whole, taking into account both their look and their sound.

[27]    The principles for assessing whether a mark is deceptively similar to a registered trade mark under s 120(1) are well established. In Australian Woollen Mills Ltd v F S Walton & Co Ltd, Dixon and McTiernan JJ explained the task in these terms:

“But, in the end, it becomes a question of fact for the court to decide whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained.”

In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part.”

[28]    The question to be asked under s 120(1) is artificial – it is an objective question based on a construct. The focus is upon the effect or impression produced on the mind of potential customers. The buyer posited by the test is notional (or hypothetical), although having characteristics of an actual group of people. The notional buyer is understood by reference to the nature and kind of customer who would be likely to buy the goods covered by the registration. However, the notional buyer is a person with no knowledge about any actual use of the registered mark, the actual business of the owner of the registered mark, the goods the owner produces, any acquired distinctiveness arising from the use of the mark prior to filing or, as will be seen, any reputation associated with the registered mark.

[29]    The issue is not abstract similarity, but deceptive similarity. The marks are not to be looked at side by side. Instead, the notional buyer’s imperfect recollection of the registered mark lies at the centre of the test for deceptive similarity. The test assumes that the notional buyer has an imperfect recollection of the mark as registered. The notional buyer is assumed to have seen the registered mark used in relation to the full range of goods to which the registration extends. The correct approach is to compare the impression (allowing for imperfect recollection) that the notional buyer would have of the registered mark (as notionally used on all of the goods covered by the registration), with the impression that the notional buyer would have of the alleged infringer’s mark (as actually used). As has been explained by the Full Federal Court, “[t]hat degree of artificiality can be justified on the ground that it is necessary in order to provide protection to the proprietor’s statutory monopoly to its full extent”.

(Emphasis added.)

35    It is convenient to begin with the respondents’ defence of the primary judge’s reasoning and conclusion on the topic of deceptive similarity.

36    The respondents effectively conceded that the primary judge erred by comparing the impression the notional buyer would have of the respondents’ marks as actually used with the impression the notional buyer would have of Firstmac’s mark as actually used, rather than as notionally used on all services covered by the registration. Nevertheless, the respondents contended that the outcome would be no different if the correct approach were taken because her Honour’s other reasons supported the same conclusion and this Court would be satisfied that there was no risk of confusion.

37    None of the arguments for the respondents were compelling, especially as they did not engage with the substance and detail of the ground of appeal and submissions in support of it. Thus, the fate of this ground largely turns on an examination of the primary judge’s reasons and an evaluation of Firstmac’s arguments.

38    The respondents also submit that, if this ground is upheld, while it may add to the infringing conduct of the respondents, it is only of significance if grounds 2 and 3, addressing the defences, are also upheld. That is plainly correct as a matter of logic, but the question of whether the primary judge erred on this ground of appeal as a threshold matter remains unavoidable for it is only necessary to consider the defences if ground 1 succeeds.

39    It is not in doubt that the respondents used the word “ZIP” in the provision of financial services, that is, in the same category in which the Firstmac Mark is protected, albeit that the sector of the financial services market which each side occupied was quite different. The respondents admitted that the name and trade mark “ZIP” taken alone is substantially identical to the Firstmac Mark. They could hardly do otherwise, and the limited contrary arguments advanced before the primary judge justifiably received short shrift from her Honour. This encompassed conclusively the stand-alone use of the word “Zip”, in upper or lower case (items 1 to 6 in Annexure A), and the sole use of “Zip” as the substantive domain name (item 26 in Annexure A), which were correctly characterised by her Honour as substantially identical to the Firstmac Mark.

40    However, when turning to deceptive similarity, her Honour found that items 7 to 25 of Annexure A, being the ZIP Formative Marks, as well as domain names of the respondents containing the word “ZIP” accompanied by other words, in items 27 to 29 of Annexure A, were not deceptively similar to the Firstmac Mark: PJ [198]-[207], [223]-[224]. In reasoning to this conclusion, the primary judge correctly identified the relevant question as “whether the ZIP Formative Marks so closely resemble the [Firstmac] Mark for financial affairs (loans) in class 36 that they are likely to deceive or cause confusion about the source of the services”: PJ[212]. Her Honour also articulated the test as one which concerns the notional buyer’s imperfect recollection of the registered trade mark, used in relation to the full range of services to which the registration extends, by comparing the impression (imperfectly recollected) of that mark against the impression of the alleged infringer’s mark as used: PJ [212]. Her Honour formed the view that there was “no real tangible danger of deception or confusion occurring from use of the ZIP Formative Marks”: PJ[213].

41    The primary judge found that the similarity between the Firstmac Mark and each of the ZIP Formative Marks begins and ends with the use of the word “ZIP”. Because the respondents’ ZIP Formative Marks include an additional word (or words) attaching to “ZIP”, being ordinary English words, her Honour found they operated to distinguish the ZIP Formative Marks from the Firstmac Mark both visually and aurally to the notional buyer: PJ[214]-[215]. These words include “money”, “pay” “business”, “trade”, “card” and others that are used in conjunction with the word “ZIP”. Her Honour did not accept that the essential feature in each of the ZIP Formative Marks was the use of the word “ZIP”, instead giving each of the two words in the ZIP Formative Marks, “ZIP” and one of those ordinary English words, equal weighting, and finding that neither took prominence: PJ[216].

42    The primary judge found that, as the ZIP Formative Marks each use additional ordinary English words which serve to distinguish those ZIP Formative Marks visually and aurally from the Firstmac Mark, the word “ZIP” is not an essential feature of each of the ZIP Formative Marks as it has equal weighting to the other word/s in the ZIP Formative Marks, with “ZIP” being absorbed into the made-up merged word (such as ZIPPAY and ZIPMONEY): PJ [214]-[217]. The primary judge held that the stylised ZIP Formative Marks, which have been used since 2018 by the respondents, have distinctive elements and a use of colour which visually distinguished them from the Firstmac Mark.PJ [218-219]) The primary judge also referred to her own judgment in Gain Capital UK Ltd v Citigroup Inc (No 4) [2017] FCA 519; 123 IPR 234 in relation to the mark “CITYINDEX” and Halley J’s judgment in Energy Beverages LLC v Cantarella Bros Pty Ltd [2022] FCA 113; 165 IPR 301 in relation to the mark “MOTHERSKY” in support of this conclusion.

43    The primary judge next considered “whether the notional buyer would be caused to wonder whether the services came from the same source”: PJ[220]. The context her Honour identified for this enquiry was in relation to home loan products for the Firstmac Mark, and for ZIP, contrasting online use for home loans and related features by Firstmac with in-person retail short term small loan products by the respondents. Her Honour found that “[i]n those circumstances, there is no real tangible danger of confusion or deception between the [Firstmac] Mark on the one hand and the ZIP Formative Marks on the other”: PJ[221]. Her Honour also referred to there being no evidence of actual confusion among customers having occurred in relation to the marks: PJ [222].

44    Firstmac submits that, despite identifying the reasoning process required, especially by reference to Self Care v Allergan, the primary judge failed to apply it correctly.

45    Firstmac challenges the finding by the primary judge that the ZIP Formative Marks were not deceptively similar to the Firstmac Mark upon the bases that:

(a)    the question for this Court is what is the correct, or proper, impression an ordinary consumer would take from the respondents’ various marks all of which include the word “ZIP”;

(b)    the “dominant cognitive cue” in each case is the word “zip” operating as a “badge of origin” in order to distinguish the services it provided from those provided by others, citing the use of that phrase in Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2017] FCAFC 56; 124 IPR 264 (Greenwood, Besanko and Katzmann JJ) at [206]; see also [223] and [258]-[259];

(c)    in relation to loan or credit and payment services the word “zip” is wholly distinctive and not descriptive, whereas the words that accompany “ZIP” in each of the ZIP Formative Marks (such as “money”, or “it”, “bills” etc) should be read in the context of the respondents’ admission that they are all words in relation to financial affairs and loans, and are words of plain and ordinary meaning which are descriptive in nature and do nothing to distinguish them from the Firstmac Mark;

(d)    “ZIP” then serves the function of signalling to the consumer that ZIP is the provider of those services.

46    The practical thrust of Firstmac’s argument on appeal was captured in its reply submissions to the evocative effect that the matters of impression involved in deceptive similarity in the area of financial affairs and loans is that a hypothetical person with an imperfect recollection of the Firstmac Mark may be caused to wonder whether, for example, Zip Pay or Zipmoney is a kind of loan, and be led to think that it was something additional from the people who provided the Zip home loans, or another offering being made by them.

47    The resolution of this ground ends up turning on the evaluative exercise carried out by the primary judge being replicated by this Court on appeal in order to discern the presence or absence of error. This Court is at no disadvantage to her Honour in that respect. The only real issue is whether or not the respondents’ marks in items 7 to 25 in Annexure A had sufficient resemblance to the Firstmac Mark to be deceptively similar, to be assessed by reference to the notional full use of the Firstmac Mark and the actual use of the ZIP Formative Marks.

48    Respectfully, the primary judge may be seen to have erred in a number of independent and important respects, which individually and in combination have produced an erroneous conclusion.

49    First, it was incorrect to treat the services being provided by Firstmac and the respondents as being relevantly different when regard is had to the requirement adverted to in Self Care v Allergan at [29] to consider the notional use by a Trade Mark owner across the full range of services to which that mark could be applied and compare that to the actual use by the alleged infringer. BNPL services were within the range of services able to be covered by the Firstmac Mark, such that confining consideration to how that mark had in fact been used only for loans brings to bear the wrong comparison in the sense of being incomplete. In these particular circumstances, that full range could readily apply to extended financial services, such as BNPL, of the kind provided by the respondents. It is not stretching the concept of a full range to contemplate a home loan provider such as Firstmac also providing BNPL services. That is the required mindset for the comparative exercise required to be carried out. Thus, the full notional use by Firstmac, including BNPL, needed to be compared with the actual use by the respondents for BNPL.

50    That “ZIP” was a mark in fact used for home loans does not diminish the significance of its potential use for consumer loans. This is all the more significant when consideration is given to the admission by the respondents that they used certain marks containing the word “ZIP” in relation to credit and payment services, admitting broadly that the respondents’ services are services in respect of “financial affairs (loans)”, the category in which the Firstmac Mark is registered.

51    Second, the assessment by the primary judge that the word “ZIP” as used by the respondents was equal in prominence to each of the other words used with it failed to have regard to the distinction between the former as being distinctive and non-descriptive, and each of the latter as being non-distinctive and descriptive. Moreover, her Honour also treated the usage of “ZIP” as being substantially the same as the usage of the other words, whereas that usage clearly differed with the former being emphasised, especially in the logo usage, by use of a range of visual devices for “ZIP” as depicted by a number of the items within the ZIP Formative Mark range from items 7 to 25 in Annexure A, such as colour, a stylised use of the “Z”, bolder lettering, or the other word being used as part of the word “ZIP”, including in place of the “i”,. To express this evocatively, the image conveys that “ZIP” is the kind of, or provider of, the pay, money, payments, trade or business, in the sense of a badge of origin.

52    Third, the primary judge’s reliance on Gain Capital and Energy Beverages was misplaced. Her Honour referred to her reasons in Gain Capital at PJ[107]-[108] to support her conclusion that neither word used in the ZIP Formative Marks could be characterised as the essential feature of the mark as “neither takes prominence”. Whatever the position may have been in Gain Capital where the competing marks were CITYINDEX and CITI, in our view, the same reasoning does not apply to the ZIP Formative Marks.

53    The relevant passage in Energy Beverages did not survive an appeal: Energy Beverages LLC v Cantarella Bros Pty Ltd [2023] FCAFC 44; 407 ALR 473at [161]-[166] (Yates, Stewart and Rofe JJ). The primary judge referred to Energy Beverages at PJ[217]. There, her Honour noted that Halley J had found that the use of the trade mark MOTHERSKY in relation to coffee was not deceptively similar to the registered trade mark MOTHER “which covered beverages”, amongst other things because he found that the MOTHERSKY mark comprises a single invented word, where the word “mother” is completely absorbed within MOTHERSKY and the emphasis and impression conveyed is not on the word “mother”. Her Honour considered that “the same may be said in relation to ZIP when compared to ‘ZIPPAY’, ‘ZIPMONEY’ and ‘ZIPTRADE’.

54    In its judgment in the Energy Beverages appeal, however, the Full Court relevantly observed at [167] that, although “mother” might be a commonly used word, it was not at all descriptive of the relevant goods (non-alcoholic beverages); rather it was inherently distinctive. Their Honours added (at [168]) that it was important that the word “mother” was wholly incorporated within the MOTHERSKY mark because the word “mother” does not lose its identity by the simple addition of the suffix “sky”.

55    Finally, the absence of any evidence of actual confusion, referred to by the primary judge at PJ[222], was of no moment in this case and in any event does not overcome the problems in reasoning already identified. If such evidence is available, it may help the case for the Trade Mark owner, especially when the resemblance is more at the margin, but in a case such as this where the use of the word mark is stark and undeniable, the absence of such evidence does not weaken the outcome of a proper comparative exercise.

56    It follows that ground 1 must succeed. The use of “ZIP” by the respondents in conjunction with other words as set out in items 7 to 25 of Annexure A was deceptively similar, not confined as the primary judge did to items 1 to 6 and 26.

DEFENCES

57    Grounds 2 and 3 concern the defences run by the respondents before the primary judge of honest concurrent use and good faith use of a business name.

58    As to appeal ground 2, concerning the defence of honest concurrent use under s 122(1)(f) and (fa), the primary judge found that if, contrary to her Honour’s primary finding, there had been infringing conduct in relation to the ZIP Formative marks, the respondents would have made good those defences. That is, her Honour found that, to the extent that there had been infringement of the Firstmac Mark at all, the s 122(1)(f) and (fa) defences succeeded, so that there was no infringing conduct at all: PJ[171].

59    As to appeal ground 3, concerning the defence of use of own name in good faith under s 122(1)(a), the primary judge found that in respect of ZIP MONEY for the period 7 September 2015 to 7 December 2017 this additional defence had also been made out, relying upon the findings of honesty for honest concurrent use in relation to ground 2. It follows that the success of both these grounds turns on establishing error in her Honour’s finding that honest concurrent use had been established by the respondents. The parties appeared to approach ground 3 in this way.

Honest concurrent use

60    It is convenient to extract s 122(1)(f) and (fa) and also s 44(3), which is commonly deployed to give content to the hypothetical Trade Mark registrations contemplated by those provisions, and was so deployed in this case:

(a)    s 122(1)(f) and (fa) provide:

122    When is a trade mark not infringed?

(1)    In spite of section 120, a person does not infringe a registered trade mark when:

…

(f)    the court is of the opinion that the person would obtain registration of the trade mark in his or her name if the person were to apply for it; or

(fa)    both:

(i)    the person uses a trade mark that is substantially identical with, or deceptively similar to, the first-mentioned trade mark; and

(ii)    the court is of the opinion that the person would obtain registration of the substantially identical or deceptively similar trade mark in his or her name if the person were to apply for it;

…

(b)    s 44(3) provides:

44    Identical etc. trade marks

…

(3)    If the Registrar in either case is satisfied:

(a)    that there has been honest concurrent use of the 2 trade marks; or

(b)    that, because of other circumstances, it is proper to do so;

the Registrar may accept the application for the registration of the applicant’s trade mark subject to any conditions or limitations that the Registrar thinks fit to impose. If the applicant’s trade mark has been used only in a particular area, the limitations may include that the use of the trade mark is to be restricted to that particular area.

…

61    Thus, while s 44(3) is dealing with an actual application for registration of a trade mark, it provides a mechanism for giving content to the hypothetical application for registration contemplated by s 122(1)(f) and (fa), ordinarily, and in this case, to be assessed at the first date of the infringing conduct: see Killer Queen, LLC v Taylor [2024] FCAFC 149 (Yates, Burley and Rofe JJ) at [193], adopting the reasoning in Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd [2018] FCAFC 6; 259 FCR 514 (Nicholas, Yates and Beach JJ) at [217]; see also Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd (No 3) [2023] FCA 1258 (Yates J) at [631]. Here, the undisputed time of first infringement is November 2013, being the date of first use by the respondents.

62    The cornerstone of the primary judge’s reasoning in upholding the honest concurrent use defence was her finding that the respondents’ adoption of the ZIP and ZIP MONEY marks, which took place before August 2013 when the respondents applied to register those marks, and therefore before they became aware of the Firstmac Mark, was both honest and concurrent, having followed extensive internet searches which had not revealed the use of the Firstmac Mark. Her Honour attached determinative weight to those internet searches, having regard to the limited challenge in cross-examination to the sufficiency of those searches. Her Honour placed little weight on the absence of any search of the Register or on the adverse examination reports from IP Australia which Zipmoney received in October 2013, the month before they proceeded to use the ZIP and ZIP MONEY marks.

63    The honesty required to be established by the respondents for the defences to apply was not merely an absence of dishonesty, but the presence, objectively ascertained, of honesty: see, by analogy with good faith, Anheuser-Busch Inc v Budějovický Budvar, Národní Podnik [2002] FCA 390; 56 IPR 182 (Allsop J) at [217]-[218]; see also Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd [2016] FCA 235; 118 IPR 239 (Beach J) at [110]-[111], [118]. An absence of sufficient care and diligence can be sufficient to find the evidence relied upon is inadequate to establish either honesty or good faith: Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83; 251 FCR 379 (Greenwood, Jagot and Beach JJ) at [103], expressly applying Flexopack reasoning. There, the Full Court relevantly held that the primary judge was “correct to reject the contention of honest concurrent use given the unchallenged finding that there had been a ‘lack of diligence and reasonable care in carrying out adequate searches before the marks were adopted for use by Insight Radiology’ (at [125]), based on the reasoning in Flexopack”. The respondents did not submit that the Full Court was plainly wrong in this respect.

64    With the above in mind, there are a number of errors in the primary judge’s reasoning.

65    First, it was not for Firstmac to show that the respondents’ internet searches were inadequate. The onus was on the respondents to establish that using the unregistered trade marks “ZIP” and “ZIP MONEY” on the basis of its internet searches alone was sufficient in all the circumstances to establish honesty for the purpose of honest concurrent use. In our respectful opinion that onus was not discharged.

66    In August 2013, prior to the relevant use by the respondents of “ZIP” or “ZIP MONEY” in November 2013, Zipmoney Payments (using its then name, Zipmoney Pty Ltd) applied to register “ZIP” and “ZIP MONEY” as Trade Marks. In October 2013, Zipmoney received adverse reports refusing each application. Each adverse report not only included details of the relevant existing registered Trade Marks (ZIP and ZIPFUND respectively), but expressly said that each proposed trade mark was identical to, or closely resembled, the existing registered Trade Mark, with an earlier priority date. Those adverse reports each stated (with only slight variation in wording):

•    Your trade mark closely resembles the earlier trade mark because the prominent and memorable feature of your trade mark is the word ZIP and the earlier trade mark is for the word ZIP.

AND

•    The services are similar ....

…

PLEASE NOTE:    I have taken into account any differences between this trade mark and your trade mark. I consider, however, that confusion between them is still likely to occur.

And then under the section titled “HOW TO SUPPLY EVIDENCE OF HONEST CONCURRENT USE…” which dealt with s 44 applications, each report said:

HONEST CONCURRENT USE: The evidence must show that your trade mark was chosen honestly and was then used for a significant time concurrently with any conflicting trade mark.

67    Knowledge of the existence of an earlier registered trade mark is not necessarily fatal to a finding of honesty, but a finding of knowledge will ordinarily weigh strongly against a finding of honesty: R Burrell and M Handler, Trade Mark Law in Australia, 3rd ed., LexisNexis Australia, 2024 (Burrell and Handler), [8.9], citing Flexopack at [130]–[140] and [177] and Henley Arch Pty Ltd v Henley Constructions Pty Ltd [2021] FCA 1369; 163 IPR 1 at [699]-[703] (Anderson J).

68    The primary judge inferred that Mr Diamond of the respondents had read the adverse reports, a conclusion that is not challenged. PJ[257] But even if that inference had not been drawn or the inference was directed to a later point in time (her Honour’s reasons do not include a finding about when he read them), Mr Diamond, and through him the respondents, knew that registration had been applied for and refused, and were fixed with the means of knowing why registration had been so refused. It would simply be untenable for a party relying upon the defence to infringement of honest concurrent use to rely upon a failure to consider why such a material event as refusal of registration had taken place as a virtue rather than a vice.

69    In any case, the primary judge had earlier, at PJ[84], referred to evidence from Mr Gray, who was the respondents’ chief operating officer and a director of both respondents, that he collected the 2013 adverse reports from a post office box and that “while he has no recollection of reading them in detail, he does recall understanding from them that the 2013 trade mark applications had not been accepted for registration”. Her Honour observed that:

He understood that this was a potentially important matter for the business, and that the reason why the application had been unsuccessful was because there was another trade mark that was close to the one applied for …

70    Having applied for registration and being aware that it had been refused, it can readily be inferred that the respondents were aware of the likelihood that there was a material impediment to the legitimate use of the respondents’ marks: see, by analogy, Pereira v Director of Public Prosecutions [1988] HCA 57; 82 ALR 217 at 219-220 (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ); see also Kural v The Queen [1987] HCA 16; 162 CLR 502 at 505 (Mason CJ, Deane and Dawson JJ); Saad v The Queen [1987] HCA 14; 70 ALR 667 at 669 (Mason CJ, Deane and Dawson JJ).

71    The adverse reports also advised of the options available to overcome the problems with the respondents’ application, including identifying the sorts of evidence required, and pointed out the difficulties in successfully doing so (an extension of time to make such an application was sought and granted, but never acted upon). Having received the adverse reports, the respondents were squarely on notice of the registered priority marks, including the Firstmac Mark, and they were also aware that IP Australia considered that their marks so nearly resembled the earlier registered marks such that using their marks was likely to cause confusion. Due to concerns with other business matters, the respondents chose not to engage with the adverse reports or their findings, including by not seeking legal advice which might have assisted in proving honesty (see the reasoning in relation to good faith by Beach J in Flexopack at [112]). In those circumstances, it was not to the point that a more thorough exploration in cross-examination of the process of conducting internet searches was possible; the cases in which internet searches or other steps had been challenged to a greater extent relied upon by the respondents and addressed by the primary judge were not reasonably capable of being determinative on their own.

72    It follows that the primary judge’s reliance on the extent of the cross-examination on the internet searches was misconceived insofar as it contributed to a finding that the defence of honest concurrent use had been established: PJ[246]. The fact of conducting those searches was not sufficiently material to the defence to lend any real support to the honesty of the use that the respondents relied upon. It did not address the fact that before the first use of their marks the respondents were fixed with knowledge of the Firstmac Mark as a barrier to registration. It follows that the respondents were unable to establish honesty in relation to the use of later variations of their marks, all of which incorporated the Firstmac Mark.

73    This conclusion is not intended to provide any incentive not to apply for a trade mark to be registered. Failing to apply for the Trade Marks, and hence not receiving the adverse reports, which would be a failure to engage with the Register at all, would not have been any better. As mentioned above, the respondents had the onus to prove the defence, and hence to prove honesty. In circumstances such as these, one would expect an honest trader to do more than the respondents did.

74    Second, it is apparent from the primary judge’s focus on honesty at the time of the decision to adopt the marks of “ZIP” and “ZIP MONEY” ahead of their use, which took place by June 2013, and her finding that no subsequent events were sufficient to infect or displace that conclusion of honesty, that her Honour asked the wrong ultimate question, or applied the wrong test, when it came to honest concurrent use. That is not because prior adoption was an irrelevant contextual circumstance. Nor is it because subsequent events may not also have had contextual relevancy, including the internet searches that were carried out in early 2013. Rather it is because the question of whether there is honest concurrent use is to be assessed as at the date that the first infringing conduct, being use, took place: Anchorage Capital at [217], in the context of [209]-[216]. Her Honour referred to the principle and to the relevant paragraphs in Anchorage Capital at PJ[236] but did not apply them.

75    As the Full Court said in Anchorage Capital at [217], “if the court is not satisfied that the respondent would obtain registration of the relevant trade mark with effect from that date, then the defence fails”. If honest concurrent use cannot be established as at the time of first use, a prior or subsequent state of affairs could not ordinarily assist, and did not do so in the present case. By the first instance of infringing conduct, there was an objective lack of entitlement to use the unregistered marks, with the respondents by then having been given express written notice of that state of affairs. This, too, undermines the primary judge’s finding of honesty.

76    The parties made submissions on appeal as to the correct time for assessment of honesty for the purpose of the honest concurrent use defence. Having found that honesty was not established, it is not strictly necessary to determine whether it would be possible to establish, in any circumstances, honest concurrent use where the first infringement is the first use, due to an inability to establish concurrent use. It is likely that an inability to establish any concurrency of use would also have been fatal to any attempts to establish the defence, at least for the respondents’ use of the “ZIP” mark simpliciter: see Killer Queen, LLC v Taylor [2024] FCAFC 149 at [215]-[216]. However, there is some complexity arising out of the subsequent uses of variations of the mark by the respondents, for which the concurrency issue was not as clear-cut as the honesty issue. The failure to prove honesty at first use infects the findings in relation to subsequent uses as well.

77    Third, the primary judge erred in discounting the significance of the respondents’ knowledge of the prior registration of the Firstmac Mark. In this respect, her Honour’s analysis focused on statements made in Re Alex Pirie & Sons Ltd’s Trademark Application (1933) 50 RPC 147 at 159 (as cited by Nicholas J in Dunlop Aircraft Tyres Ltd v Goodyear Tire and Rubber Company [2018] FCA 1014; 262 FCR 76 at [266]) and McCormick & Company Inc v McCormick [2000] FCA 1335; 51 IPR 102 (Kenny J) at [30] and [32]. As the following discussion demonstrates, the facts of each of those cases is materially different from the facts of the present case, calling for caution in the application of the principles upon which the respondents relied.

78    Alex Pirie was an actual registration case, rather than a hypothetical registration case of the kind created by the use of s 44(3) to address the question of registrability for the purposes of s 122(1)(f) or (fa). Registration was allowed by the Registrar, overturned by a single judge, and restored by the Court of Appeal, with that restoration being upheld by the House of Lords. There had been a substantial period of concurrent use of a similar product name by companies in the USA (being registered) and in the UK (seeking registration). The presence of undoubted honesty was not in issue, giving rise to the seminal statement by Lord Tomlin that “[k]nowledge of registration may be important where the honesty of the user of the mark sought to be registered is impugned, but … once the honesty of the user has been established the fact of knowledge loses much of its significance …”. Consequently, Alex Pirie is of no assistance in the present case.

79    In McCormick, the delegate found the respective marks had co-existed in the market for a long time and there was no suggestion of any improper motive in the small-scale individual trader who was the respondent seeking registration. The case was not concerned with the hypothetical situation in s 122(1)(f) or (fa). Registration was allowed in all the circumstances, but confined to the home State of Queensland where the respondent’s mark was used, with adverse findings as to conduct being rejected. Again, the facts in that case limit the applicability of the principles stated.

80    Dunlop was again an actual registration case, in which there had been a long period of prior use under a legal and factual regime which had ceased to apply, and honesty overtly was not in issue, such that there was a parallel to Alex Pirie, which was applied in the same way. By contrast, here the respondents were on notice of the Firstmac Mark before their use of the marks commenced, were on notice that this was a problem because their registration application was rejected, and they had the benefit of the views of IP Australia about how the problem might be addressed, including how they might go about proving honest concurrent use. Further, once Firstmac became aware of the respondents’ BNPL service, as the primary judge found, it gave a clear signal that it intended to “preserve and defend its rights”, which would act to “dispel any assumption that [the respondents] may have had that they could continue to conduct their business based on the state of affairs that had prevailed since 2013”: PJ[295].

81    Firstmac correctly draws a closer parallel with In Re Parkington & Co Ltd’s Application (1946) 63 RPC 171, which also described and thereby distinguished Alex Pirie (see Parkington at 183). Although not on all fours with this case, in Parkington at 183 Romer J said:

The applicants in Pirie’s case had a mere knowledge little more than subconscious, one gathers from the report, of the opponents’ mark when they started to use their own and that knowledge had nothing to do with the creation of their mark in its inception. Parkingtons not only knew in the present case of Robinsons mark; they knew that Robinsons were actively and jealously preserving that mark and the full monopoly which its registration gave them. Parkingtons must further have known, and I am sure they did know, that Robinsons, in furtherance of what they believed to be their own interests, would (in the absence at all events of stringent conditions) never have permitted the use, far less the registration, of a mark so similar to their own that, in the absence of the most rigid safeguards, confusion. and deception would almost certainly result. In knowledge of all this Parkingtons secretly adopted their mark and secretly put it to commercial use. I should be sorry for it to be thought that such conduct is, in the view of this Court, commercially, honest. I am abundantly clear that it is not, and that traders who obtain the use of a name by hoodwinking those who would have interfered had they known the truth, cannot some years later come to the Court and found a claim for relief .on the footing of honest concurrent user. Perhaps, however, it is sufficient for me to say in brief that the onus is on the Applicants to establish their case in this as in other respects and that in my judgment they have signally failed to discharge it.

82    There is a material distinction between it being difficult to displace a taint attaching to the commencement of concurrent use, and initial honest conduct prior to use not necessarily being beyond impeachment by the circumstances prevailing at the relevant time of first infringing use, especially when new information comes to hand in the intervening period. Again, in the present case, application of the correct approach tells convincingly against the availability of a conclusion of honesty in the relevant sense.

83    Fourth, Firstmac’s case was not one of positively establishing dishonesty, but rather resisting the respondents’ attempts to discharge their onus of positively proving all the features of honest concurrent use as at the relevant time of first infringement of the Firstmac Mark. That is, contrary to PJ[259]-[260], the stance that Firstmac took was to challenge the establishment of honest concurrent use, rather than seeking to establish active dishonesty. Additionally, in relation to subsequent applications for registration of later versions of the respondents’ marks no separate attempt was made to meet the necessary test, and for those marks the circumstances did not improve as to honesty.

84    Firstmac’s approach accords with the history of the development of the defence of honest concurrent use, as described by Dawson and Toohey JJ in New South Wales Dairy Corporation v Murray Goulburn Co-Operative Co Ltd [1990] HCA 60; 171 CLR 363 at 405-407; see also Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45 at [51]-[52]. That reasoning includes the notion that something more than mere deception or confusion was needed to disentitle a Trade Mark to protection. The proposition advanced by Firstmac is that what is required for honest concurrent use is not just use that is honest, but “the legitimate acquisition of goodwill through trade over a period of time”, consistently with what the tort of passing off is intended to protect and therefore “of sufficient length, volume and scope, geographically or otherwise, such as to found valuable goodwill”, “honestly acquired”. The evident point of this argument is to point out that the respondents did not fall within the category of subsequent user that historically ought to be able to dilute, let alone displace, the protections afforded to a registered owner and user of a Trade Mark. The necessary evaluative inquiry is objective, but may be informed by subjective considerations.

85    Having found that there was honest concurrent use, the primary judge proceeded to consider “the other factors that inform the exercise of the discretion under s 44(3)”. The factors that her Honour identified were “relative inconvenience” and the absence of evidence of confusion.

86    As we are not satisfied that there had been honest concurrent use, the first alternative basis for the exercise of the discretion does not arise. The question then is whether, because of other circumstances, it is proper to accept the application for registration, conditionally or unconditionally. Neither party addressed this question on the appeal. We are not satisfied that the two factors identified by the primary judge as a basis for the exercise of discretion were circumstances that would have made it proper for the registrar to accept an application for registration of the respondents’ marks.

87    First, lack of proven actual confusion has no real work to do given that the relevant date was prior to any relevant use by the respondents having taken place, but in any event that only has real work to do when there is a direct comparison to be made. In this case, while the services were in the same area and it might have been thought that the respondents’ services could have come from Firstmac, there was little likelihood of direct confusion at that time. As Mason J pointed out in Berlei Hestia Industries Ltd v Bali Co Inc [1973] HCA 43; 129 CLR 353 at 363, even if there is no evidence of actual confusion, there may nonetheless be a likelihood of confusion.

88    Secondly, relative inconvenience was dealt with by reference to the respondents’ position from 2013 to the period leading up to 2019 (see PJ[264]-[266]). This may be relevant for some of the later marks, but it was in any event the product of the respondents deciding to plough on with use of their marks despite being fixed with knowledge of the existing registered Firstmac Mark and the risk of confusion.

89    The respondents commenced infringing use in circumstances where they were taking a risk of being in breach of the TM Act, with all that would entail.

90    It follows that grounds 2 and 3 succeed and the defences fail.

91    Further, as ground 1 (deceptive similarity) succeeded, it also follows ground 6 succeeds. The primary judge should have found that the respondents had infringed the Firstmac Mark.

NON-USE

Introduction

92    Zipmoney Payments filed two non-use applications under s 92(1) and s 92(4)(b), the first on 19 August 2016, and the second on 22 March 2019. Each application sought removal of the Firstmac Mark from the Register upon the ground that it had not been used, or not used in good faith, in Australia during the three-year period ending one month before each application was made. The first application was refused by a delegate of the Registrar and there was no appeal from that decision. The second application was referred to this Court and granted by the primary judge. The relevant use required to be proven by Firstmac before the primary judge in order to successfully oppose the application was use of the Firstmac Mark as a trade mark. The good faith aspect was never in issue before her Honour. Nor was there any issue of abandonment.

93    While s 100(1)(c) imposed a burden on Firstmac as the opponent to the application to rebut any allegation of non-use or non-use in good faith, it is well-established that the threshold to defeat a non-use application is low, because establishing a single bona fide use of a trade mark in the alleged non-use period is sufficient: McD Asia Pacific LLC v Hungry Jacks Pty Ltd [2023] FCA 1412; 175 IPR 397 (Burley J) at [155] and the cases there cited. The primary judge found that Firstmac had not discharged that burden, but this largely turned on the objective evaluation of the documentary material in evidence. To the extent that testimonial evidence was also relied upon, no question of credit was at stake. It follows that, before considering whether the primary judge erred in making this finding, it is useful to make some observations about the nature of this part of the appeal and the Court’s function in determining the question.

94    In GLJ v Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; 414 ALR 635, the High Court unanimously affirmed the distinction between questions to which an appeal court must apply the correctness standard, and those discretionary decisions to which the principles in House v The King (1936) 55 CLR 499 must apply: see in particular [16]-[17] (Kiefel CJ, Gageler and Jagot JJ), Steward J agreeing at [95], Gleeson J agreeing at [161]. Questions in the former category admit of only one legally correct answer, often distinguished by the fact that only binary choices are available. Of course, a primary judge’s answers to these questions are built on findings of fact and interpretations of evidence, which themselves are subject to processes of evaluation and inference on which reasonable minds may differ. Due deference must be paid to those findings, bearing in mind any advantages a primary judge enjoyed in the particular case. But while answering the question of whether use was made of the Firstmac Mark “as a trade mark” necessarily involves a process of evidence evaluation in which reasonable minds may differ, the question is an objective one with only one legally correct answer: see, GLJ at [17]; see also the discussion of the appellate standard of review in deceptive similarity cases in Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd [2024] FCAFC 156 at [134] (Katzmann, Wheelahan and Hespe JJ). As Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ observed in Minister for Immigration and Border Protection v SZFW [2018] HCA 30; 264 CLR 541 at [49]:

The line is not drawn by reference to whether the primary judge’s process of reasoning to reach a conclusion can be characterised as evaluative or is on a topic on which judicial minds might reasonably differ. The line is drawn by reference to whether the legal criterion applied or purportedly applied by the primary judge to reach the conclusion demands a unique outcome, in which case the correctness standard applies, or tolerates a range of outcomes, in which case the House v The King standard applies. The resultant line is not bright; but it is tolerably clear and workable.

95    Applying that standard, it is for this Court to determine the correct outcome. As this component of the case was wholly documentary, this Court is not at any apparent disadvantage in: see Moore (A Pseudonym) v The King [2024] HCA 30; 98 ALJR 1119 at [14], citing Warren v Coombes [1979] HCA 9; 142 CLR 531 at 552 and Fox v Percy [2003] HCA 22; 214 CLR 118 at [23]; see also Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; 261 FCR 301 at [47]-[51] (Perram J, with whom Allsop CJ and Markovic J agreed). The respondents did not suggest otherwise. However, a finding of error remains indispensable if this ground is to succeed.

96    If error is found, the resolution of the issue of use as a trade mark remains evaluative. In large measure, the question can be approached with fresh eyes as the appeal is in the nature of a rehearing, albeit limited in scope. It comes down to the correctness of the final conclusion of the primary judge having regard to the available evidence, with this Court being influenced but not constrained by her Honour’s reasoning. A strong enough difference of opinion, rising above mere disagreement with a conclusion based on sound reasoning, will suffice to establish error.

Legal principles

97    The principles in relation to use as a trade mark were succinctly restated in Self Care v Allergan, which post-dates the primary judgment, in the following passages also reproduced at PJ[310] (omitting footnotes):

[23]    Use of a trade mark in relation to goods means use of a trade mark upon, or in physical or other relation to, those goods, and so can include use of the mark on product packaging or marketing such as on a website. There is a distinction, although not always easy to apply, between the use of a sign in relation to goods and the use of a sign as a trade mark. A trade mark is a sign used, or intended to be used, to distinguish goods dealt with by one trader from goods dealt with by other traders; that is, as a badge of origin to indicate a connection between the goods and the user of the mark.

[24]    Whether a sign has been “use[d] as a trade mark” is assessed objectively without reference to the subjective trading intentions of the user. As the meaning of a sign, such as a word, varies with the context in which the sign is used, the objective purpose and nature of use are assessed by reference to context. That context includes the relevant trade, the way in which the words have been displayed, and how the words would present themselves to persons who read them and form a view about what they connote. A well known example where the use was not “as a trade mark” was in Irving’s Yeast-Vite Ltd v FA Horsenail (t/as The Herbal Dispensary), where the phrase “Yeast tablets a substitute for ‘Yeast-Vite’” was held to be merely descriptive and not a use of “Yeast-Vite” as a trade mark. Therefore, it did not contravene the YEAST-VITE mark.

[25]    The existence of a descriptive element or purpose does not necessarily preclude the sign being used as a trade mark. Where there are several purposes for the use of the sign, if one purpose is to distinguish the goods provided in the course of trade that will be sufficient to establish use as a trade mark. Where there are several words or signs used in combination, the existence of a clear dominant “brand” is relevant to the assessment of what would be taken to be the effect of the balance of the label, but does not mean another part of the label cannot also act to distinguish the goods.

98    In Halal Certification Authority Pty Limited v Flujo Sanguineo Holdings Pty Ltd [2023] FCAFC 175; 300 FCR 478 (Nicholas, Burley and Cheeseman JJ), in the course of reviewing a different set of conclusions associated with use of a trade mark, their Honours referred to Self Care v Allergan on the topic of use as a trade mark, quoting [24], reproduced above. Their Honours also reproduced an earlier Full Court summary of the practical application of the principles regarding whether something is being used as a trade mark or not, and added some observations grounded in well-established authority that are pertinent to this appeal:

[82]    The primary judge referred to the summary of the relevant principles concerning use “as a trade mark” in Nature’s Blend Pty Ltd v Nestlé Australia Ltd (2010) 272 ALR 487 (Stone, Gordon and McKerracher JJ) which was a case in which the words “luscious Lips” were used on packaged confectionary which included lip shaped lollies. The Full Court summarised the relevant principles as follows at [19]:

1.    Use as a trade mark is use of the mark as a “badge of origin”, a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else: Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107; 47 IPR 481; [1999] FCA 1721 at [19] (Coca-Cola); E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 265 ALR 645; 86 IPR 224; [2010] HCA 15 at [43] (Lion Nathan).

2.    A mark may contain descriptive elements but still be a “badge of origin”: Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347-8; 101 ALR 700 at 723; 21 IPR 1 at 24 (Johnson & Johnson); Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 135 ALR 192; 33 IPR 161; Aldi Stores Ltd Partnership v Frito-Lay Trading Co GmbH (2001) 190 ALR 185; 54 IPR 344; [2001] FCA 1874 at [60] (Aldi Stores).

3.    The appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of the brand: Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 422; [1963] ALR 634 at 636; 1B IPR 523 at 532 (Shell Co).

4.    The purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is use “as a trade mark”: Johnson & Johnson at FCR 347; ALR 723; IPR 24 per Gummow J; Shell Co at CLR 422; ALR 636; IPR 532.

5.    Consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or “context”) of the impugned words: Johnson & Johnson at FCR 347; ALR 723; IPR 24; Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182; [2002] FCA 390 (Anheuser-Busch).

6.    In determining the nature and purpose of the impugned words, the court must ask what a person looking at the label would see and take from it: Anheuser-Busch at [186] and the authorities there cited.

[83]    The fact that a mark considered as a whole is largely or predominantly descriptive does not preclude a finding that it is also acting as a brand. Similarly, the fact that a product may bear more than one brand does not mean that only one of them is used as a trade mark. As the High Court said in [Self Care v] Allergan at [25]:

… Where there are several words or signs used in combination, the existence of a clear dominant “brand” is relevant to the assessment of what would be taken to be the effect of the balance of the label, but does not mean another part of the label cannot also act to distinguish the goods [Anheuser-Busch (2002) 56 IPR 182 at 228 [191]].

[84]    In Anheuser-Busch, Allsop J observed at [191]:

It is not to the point, with respect, to say that because another part of the label … is the obvious and important “brand”, that another part of the label cannot act to distinguish the goods. The “branding function”, if that expression is merely used as a synonym for the contents of ss 7 and 17 of the TM Act, can be carried out in different places on packaging, with different degrees of strength and subtlety. Of course, the existence on a label of a clear dominant “brand” is of relevance to the assessment of what would be taken to be the effect of the balance of the label.

99    An important point to draw from the approach outlined in the cases cited above is the potential importance of context, and the use and constraints on the use of the concept of a dominant brand, being features present in this case.

100    As the respondents point out in the application of principle, for the use of “ZIP” to be trade mark use, it would have to represent a brand on its own; it is not sufficient if it has to be read with the Firstmac logo and the other descriptors of the product. The respondents used the example of “Nutri-Grain”, which is itself recognisable as a brand, without needing to be accompanied by the head-brand “Kellogg’s”.

101    The respondents further argue that for “ZIP” to be used as a trade mark it must be used in the form in which the Trade Mark has been registered. The argument is that where Firstmac has trademarked only “ZIP” and not “ZIP home loan” or any other variant, use of “ZIP” as “Zip home loan” is not sufficient to substantiate trade mark use, as the combination of words is not the mark, and so the use within that phrase means that “ZIP” is not being used as a badge of origin, rather it is only a descriptor.

102    Further as to principle, s 7(3) provides that “authorised use” of a trade mark by a person is taken to be use of the trade mark by its owner, with s 8(1) defining an “authorised user” as a person using the trade mark in relation to goods or services under the control of the owner; s 8(2) defining use of a trade mark as authorised use only to the extent that this takes place under the control of the owner; and s 8(3) and (4), when read with s 8(5), providing non-exhaustive circumstances of quality control or financial control in which s 8(1) is taken to be satisfied.

103    The primary judge at PJ[347] found that the requirement of authorised use so as to engage s 7(3) was met in relation to Firstmac’s related company, Loans.com.au Pty Ltd. Loans.com.au, was a member of the Firstmac group of companies through which the second iteration of the Zip home loans product, relaunched in September 2018, was initially sold and marketed. That finding was not challenged by way of a notice of contention. It follows that any trade mark use by Loans.com.au was use authorised by Firstmac.

The non-use applications

104    For the first, unsuccessful, non-use application made on 19 August 2016, the relevant period during which use was required to be established was 18 July 2013 to 18 July 2016 (first non-use period). A certificate of use was issued to Firstmac regarding use during that period by the Registrar under s 105. That certificate is evidence, but not necessarily conclusive evidence, of the facts stated in it: s 105(2)(a).

105    For the second, successful, non-use application on 22 March 2019, the relevant period during which use was required to be established was 22 February 2016 to 22 February 2019 (second non-use period). That second application was referred to the Federal Court on 21 August 2019. The second non-use application was made after Firstmac sent a letter to the respondents on 8 March 2019 demanding that it cease use of the Firstmac Mark and its variants, or Firstmac would commence legal proceedings: PJ [296].

106    There was an overlap of the non-use periods for the two applications of almost five months, between 22 February 2016 and 18 July 2016 (overlap period).

107    In allowing the second non-use application, the primary judge found that at no time during the second non-use period, between 22 February 2016 and 22 February 2019, did Firstmac use the Firstmac Mark in Australia as a trade mark, and that Firstmac had not adequately rebutted the application: PJ[352]. Her Honour determined the non-use application upon the basis of non-use as a trade mark simpliciter, without reference to good faith or abandonment. The sole issue was therefore whether the undoubted use that did take place was use as a trade mark.

108    While the Court, if satisfied that the grounds of a non-use application have been established, may order the Registrar to remove the trade mark from the Register in respect of the goods or services to which the application relates, the Court may also decide that it should not be removed even if those grounds have been established: s 101(2) and (3). The primary judge ordered removal. Firstmac challenges that exercise of discretion, but the substance of its case turns on challenging the finding on use.

The non-use evidence overview

109    The case advanced by Firstmac to rebut the allegation of non-use relied upon three categories of evidence:

(1)    the s 105 certificate of use issued in relation to the first non-use period (and thus the overlap period with respect to the second non-use period);

(2)    evidence of continuing use of the Firstmac Mark arising from the first iteration of Firstmac’s Zip home loan product, and in particular the continued management and servicing of home loans that were made before that financial product was discontinued in 2014, but which had not been discharged by the commencement of the second non-use period; and

(3)    evidence of use in respect of Firstmac’s revised Zip home loan product, relaunched in September 2018 initially through an associated company, Loans.com.au (a member of the Firstmac Group), and from February 2020 through over 8,000 brokers.

110    It is convenient to deal first with the s 105 certificate and then seriatim, but together, the other two categories of evidence adduced by Firstmac to rebut non-use. That is because, even though that latter evidence deals with the issue of use with two different iterations of Firstmac’s Zip home loan product, those two pieces of evidence were both relied upon for the second non-use period, and the first in time evidence of continuation of use is contextually relevant to the evidence of use arising from the relaunch of that product second in time. Moreover, the respondents mainly address the second relaunch phase, saying little more about the first phase involving continuation of use beyond defending the primary judge’s conclusion in general terms.

First category: The s 105 certificate evidence

111    Before the primary judge, Firstmac relied upon a certificate issued under s 105 which confirmed the finding of use by the Trade Marks Office during the first non-use period. The primary judge reproduced the text of the relevant certificate at PJ[175]:

A certificate of use issued pursuant to s 105 of the TM Act by the Acting Deputy Registrar of the Trade Marks Office on 9 September 2019 (s 105 Certificate) provides:

In compliance with the requirements of section 105 of the Trade Marks Act 1995 and in relation to proceedings brought by Zipmoney Payments Pty Ltd, I certify that the Registrar has found that trade mark number 1021128 registered in class 36 in the name of Firstmac Limited, has been used with respect to the specified services in the registration during the three year period ending on 18 July 2016.

112    The primary judge observed at PJ[315] that the reference in the certificate to trade mark use “during the three year period ending on 18 July 2016” did not state whether there was continuous use or when within the period that use occurred, and in particular whether it occurred in the overlapping non-use period for the two applications of 22 February 2016 to 18 July 2016. The effect of her Honour’s finding is that the certificate did not on its face state that any of the use found to have taken place occurred during that period, being the only period which was relevant to the second non-use application, rather than the earlier period from 18 July 2013 to 21 February 2016, which preceded the non-use period for that second application. Her Honour further observed that the certificate was evidence to be weighed in the balance and was not determinative: PJ[316]. Later, at PJ[363], her Honour observed that the arguments raised before her were not ventilated before the delegate, and in light of the conclusion reached in relation to ongoing use of the Firstmac Mark in connection with the original home loan product would not place much, if any, weight upon the certificate.

113    The thrust of Firstmac’s argument, based upon that conclusion, appears to be that the primary judge did not place any weight on the certificate, which is certainly within the spectrum of weight attributed to it, and at least implicitly asserts that her Honour erred in not giving it any weight. This argument has little work to do in this appeal. That is because success on either of the other two issues directly addressing use without reliance on the s 105 certificate means that success on this ground does not make any material difference, and failure on both those issues means that a favourable result on this issue alone would not be enough, on its own, to enable the decision of the primary judge to be overturned. Nevertheless, the argument should be addressed for completeness.

114    The problem for Firstmac is that, at best, the certificate might have provided some, rather vague, evidence of use in the relevant overlap period of 22 February 2016 to 18 July 2016 and, at worst, it was only evidence of use before the second non-use period, so of no probative value at all. In those circumstances, it is plain that her Honour did not err. Indeed, her Honour would still have been right to go further and overtly give the certificate no weight at all because in its terms it was too ambiguous to provide any evidence of use during the only period that was relevant.

Second category: Evidence of continuation of use for the first Zip home loan product

115    The primary judge summarised Firstmac’s original Zip home loan product and the way in which those loans were serviced going into the second non-use period as follows:

[20]    The original ZIP home loan comprised a suite of home loan products including ZIP Fulldoc LOC, ZIP Fulldoc Term Loan, ZIP LoDoc LOC, ZIP LoDoc Term Loan, ZIP NoDoc LOC and ZIP NoDoc Term Loan. The terms “Fulldoc”, “LoDoc”, “NoDoc”, “LOC” and “Term Loan” are descriptive of the type of loan product being offered and are, as explained by Mr Gration, common terms in the trade. Fulldoc, LoDoc and NoDoc mean “full documentation”, “low documentation” and “no documentation” loans respectively and LOC and Term Loan mean “line of credit” or standard time based “term” loans respectively.

[21]    The original ZIP home loans require ongoing management and servicing, including the maintenance and operation of borrowers’ accounts for the loan and the direct debit card loan. The original ZIP home loans have a maximum term of 30 years and, for the line of credit options, a ZIP Visa account (with a ZIP Visa debit card) which can be used by the borrower, for example, to pay off regular bills and living expenses, and a redraw option, which means that the borrower has the option to pay off the loan more quickly, plus redraw up to the loan balance limit for the term of the loan. These features require an ongoing commercial relationship between Firstmac, the mortgage manager/mortgage originator and the borrower, where the originator is a mortgage manager or mortgage originator, and an ongoing relationship between Firstmac and the borrower directly, where the originator is a mortgage broker.

[22]    The pricing and terms of ZIP home loans are reviewed by Firstmac to remain competitive for potential new borrowers, for current borrowers to avoid them seeking to refinance the loans with another institution and for originators to encourage them to take on and market the ZIP home loans.

[23]    The original ZIP home loans were promoted up until early 2014 to originators such as Certified Mortgage Services Pty Ltd and Allied Mortgage Corporation by means of product rate sheets, product brochures and product training PowerPoint presentations.

116    This summary is uncontroversial.

117    The primary judge then considered an apparently representative sample of documents in evidence concerning the servicing of the loans from the original home loan product. No issue is taken with the sampling process, with the challenge by Firstmac turning on the characterisation of the use that took place arising from that representative sample.

118    The primary judge reproduced images of those sample documents at PJ[24]-[31], concluding at PJ[32]:

In early 2014 Firstmac sought to streamline its product offerings and stopped offering, through its originators, the original ZIP home loans for further promotion to new customers in that form. However, Firstmac and its originators continued to manage and service original ZIP home loans held by existing customers. As part of its management and servicing Firstmac continued to issue statements for each original ZIP home loan created through a mortgage broker for the term of the loan and continued to issue statements on behalf of mortgage managers/originators for original ZIP home loans created through them. Throughout, Firstmac remained the contact for its mortgage originators and in some instances borrowers for original ZIP home loans that were created before 2014.

119    Firstmac’s case for use of the Firstmac Mark as a trade mark in the overlap period, being the first five months of the second non-use period, turned upon the manner in which documents displayed or otherwise made use of the word “ZIP”. This arose in relation to statements issued by Firstmac which used the Firstmac Mark to identify its home loan product, and statements issued by Firstmac using mortgage originator or manager branding which also used the Firstmac Mark to identify the home loan product: PJ[319]. As the primary judge succinctly put it at PJ[320], the question was whether the inclusion of the Firstmac Mark in statements and other documents of this nature was use as a trade mark. Her Honour concluded that it was not, for reasons given at PJ[325]-[334]. Those reasons were also adopted in relation to the third category of evidence considered below (PJ[348]-[352]), and therefore constitute the assessment of both categories of evidence beyond the s 105 certificate. As will be seen, her Honour erred by applying the reasoning from the second category of evidence to the third category of evidence, because of material differences between those two sets of evidence.

120    In key aspects of those passages at PJ[325]-[334], the primary judge concluded that the use of the Firstmac Mark was as a product descriptor, subordinate to the separate trade mark “Firstmac” in the case of statements it issued, or subordinate to the mortgage manager or originator’s brand in the case of the statements Firstmac issued on their behalf in relation to the continuation of the original ZIP home loan product. While her Honour accepted that there could be multiple trade marks for the same product, she found that did not occur. That was because she characterised the word “ZIP” as entirely descriptive of the particular type of home loan, in the manner of a product description, rather thana badge of origin. Her Honour concluded that this remained true even when regard was had to the context in which the original ZIP home loan was marketed, because the word “ZIP” was used to describe the home loan product as enabling the loan to be paid off faster, in connection with which there was a zero (or zip) interest Visa debit card, that debit card itself not being part of the services. This meant that the use of “ZIP” was in a setting or context in which it “would not have appeared to a consumer as possessing the character of a brand for the purpose of indicating a connection in the course of trade”. That connection was instead being achieved by the Firstmac branding, or the mortgage managers’ or originators’ brand. It was that dominant brand that was used to distinguish the service provided from those services provided by other traders. Her Honour found that “ZIP” was not being used as an adjective as sound trade mark practice generally required, but as a noun for the home loan, and was only descriptive of the home loan products; and that the source of the services did not come from the use of the word “ZIP”.

121    The particular documents upon which the primary judge based her assessment were samples from before, during and after the second non-use period, including the overlap period, for which only key features need to be reproduced here:

(a)    in the case of loan statements and correspondence provided by Firstmac in its own name headed by a Firstmac logo:

(b)    in the case of loan statements and correspondence provided by Firstmac in the name of a mortgage manager or originator, headed by the manager or originator’s logo, with there being a number of such documents for different mortgage managers:

and mortgage originators:

122    Within each of those documents, was a reference to the loan that the customer had been given (accompanied by other account details), which appears typically as follows, or similar:

Product Description: ZIP FULL DOC LOC 100088363

123    These documents did not exist in a vacuum. Rather, they were preceded by other documents, such as loan product sheets distributed to mortgage brokers and mortgage managers, which were plainly written for customers to read, and rates sheets distributed to mortgage originators and not provided to customers, which contained information about interest rates and loan to value ratios to indicate how much could be borrowed. Firstmac’s case below and on appeal is that such documents have contextual importance for the purpose of objectively evaluating those uses of “ZIP” as trade mark use, especially because certain of those documents were also provided to customers, which then objectively informed their understanding of the ongoing loan servicing documents, such as statements and correspondence, in recognising the use made of “ZIP”.

124    Mr Gration, Firstmac’s Sales and Operations General Manager, gave evidence in cross-examination about the product information sheets. He stated that they were, to his knowledge, distributed from when he joined Firstmac in 2011 until the first iteration of the Zip home loan product was discontinued in 2014 (but continued to be serviced through the second non-use period). The contents of those documents are plainly addressed to consumers rather than the intermediary brokers, originators or managers, and it can readily be inferred that they would have been provided to consumers, being delivered in bundles as well as electronically to those intermediaries. The product information sheet is reproduced as Annexure B to these reasons.

125    Her Honour effectively dismissed the product rate sheets as irrelevant because, she said (at PJ[327]), Mr Gration’s evidence in cross-examination was that they were not provided to potential borrowers. Her Honour was mistaken in this respect.

126    The error about the document upon which Mr Gration was being cross-examined, referred to in bold in the paragraph of the primary judgment reproduced below, assumes some importance. Her Honour proceeded upon the basis that consumers did not have access to the information in the product information sheets (albeit an earlier document before the relevant period), at the time of entry into the loans prior to their discontinuance in 2014. The product information sheets had the important contextual information summarised by her Honour at PJ[327], flowing into the adverse conclusion in PJ[328] as to what would have been apparent to a consumer, which is an important test, following Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 422. Her Honour said:

[327]    Secondly, that conclusion does not change having regard to the context in which the original ZIP home loan was marketed. The product information sheets were once again prominently branded Firstmac with the branding and logo it used at the time. They were provided in hard copy or electronically to mortgage originators or brokers, either on their own or together with product sheets for other products offered by Firstmac through its intermediaries. The word “ZIP” was used to describe the home loan product in respect of which it was said that a borrower’s home loan could be paid off faster and in connection with which there was a zero (or zip) interest Visa debit card. As for the product rate sheets in evidence before me, Mr Gration’s evidence was that they were not provided to potential borrowers. [As noted above, that evidence related to the rates sheets, not the product information sheets.]

[328]    That is, the use of the word “ZIP” as applied to the original ZIP home loans was in a setting or context where it would not have appeared to a consumer as possessing the character of a brand for the purpose of indicating a connection in the course of trade. That connection was accomplished by the Firstmac branding or, in some cases, by the mortgage manager’s or mortgage originator’s branding. It was the Firstmac brand (or that of the mortgage manager or mortgage originator) that was used to distinguish the Services from those of other traders. The word “ZIP” did no more than describe or identify a particular product supplied by Firstmac directly or through the relevant mortgage manager or mortgage originator.

(Emphasis added.)

127    As the product information sheet was provided to brokers, with the apparent intention that it would be passed on to consumers, at least in the period from 2011 to 2014, potential borrowers would have been informed about the “Zip home loans” mentioned in the statements and correspondence they subsequently received. While the Firstmac logo is present at the bottom right hand side of each page of the product information sheet, the larger heading on the first page is “ZIP home loans” and the larger heading on the second page is “Zip loan specifications”.

128    The thrust of Firstmac’s argument is on its face quite simple. It is that the primary judge erred because the reference to “Zip” in relation to the home loan is to be properly understood objectively, and in context, as a reference to its badge of origin with respect to its financial affairs and loans. In the example relied upon in the appeal, a “full doc” loan (being a reference to the type of loan, namely, a full documentation loan), Firstmac argues that the word “Zip” signified the identity of the product’s source, being Firstmac as the owner of the Firstmac Mark. Firstmac says that the situation is even clearer in relation to documents issued by mortgage managers (and originators), such as Resicom, with the “Zip” reference more starkly being used as a badge of origin because it is the only reference to the provider of the product (namely, Firstmac). Rhetorically, Firstmac argues that the putative borrower (that is to say, the customer), by reference to what has been conveyed to them by these documents, in the context of the product information sheet, can objectively be taken to be able to say that they have a Zip home loan from Firstmac. Moreover, Firstmac contends that these documents are to be viewed in the context of the product information sheet, which overtly refers to ZIP home loans, which are described as a passport to a zero-interest visa card, while the reference to Firstmac’s name and thereby trade mark is plainly less prominent, being at the bottom of the page and to one side. This argument is also adopted for the quite different third category of evidence, dealt with below.

Third category: Evidence of use in respect of the relaunched Zip home loan product

129    The Zip home loan product was relaunched by Firstmac in 2018, during the second non-use period. The primary judge summarised in some detail the evidence relied upon in relation to the relaunched product at PJ[37]-[52]. That summary included Firstmac internal communications to start the relaunch process and evidence of conversations, together with screenshots of websites and social media posts, reproductions of promotional material and external correspondence, as well as loan documentation. Her Honour concluded at PJ[52]:

Mr Gration explained that at the time of launching the 2018 ZIP home loans in 2018, Firstmac’s objective was to create a home loan with distinctly unique features and name. It is Mr Gration’s understanding that the uniqueness of the home loan product is reinforced and enhanced by the use of a unique name. Mr Gration explained that the competition for home loans is crowded and fierce. Loans.com.au has a home loan product named “Essentials”. Five other lenders have a similar product with the same name. According to Mr Gration, to create a home loan with distinctly unique features and name is of tremendous value when brokers are searching in aggregator software with 30 plus lenders and hundreds of home loans. It is the platform for building a significant and sustained new business flow of home loans from brokers.

130    Loans.com.au was found by the primary judge to be an authorised user, as noted at [103] above. That conclusion is not challenged. It follows from the terms of s 7(3) that, if the Firstmac Mark was used as a trade mark by Loans.com.au, that was authorised use and therefore use as a trade mark.

131    The primary judge resolved the issue of non-use as a trade mark succinctly, placing reliance on the reasoning in relation to the second category of evidence as to continuation of use in servicing the remaining original home loans:

[348]    I turn to consider whether use of ZIP (or the [Firstmac] Mark) in relation to the 2018 ZIP home loan was use as a trade mark. Firstmac relies on Loans.com.au’s use of ZIP on its website and social media pages and in its promotional brochures, correspondence, statements and product rate sheets, examples of which are at [44] above, as evidence of use of ZIP as a trade mark.

[349]    My findings at [324]-[334] above apply equally to the use of ZIP in connection with the 2018 ZIP home loans. That is, in my opinion, the word ZIP, where it appears, is not used as a trade mark. Rather, it is used to describe the product and is subordinate to, in this case, the trade mark “Loans.com.au”. By way of example the Facebook and Twitter posts at [44(2)] above prominently display the loans.com.au logo while the word ZIP appears before the word home loan i.e. “ZIP home loan” which is accompanied by a more fulsome description of the loan product noting that it not only comes with a “super-low-rate” but with a Visa debit card “that gives you $5,000 Credit which is interest free”. The word “ZIP” identifies the particular product but does not act to identify the origin of the Services.

[350]    The 2018 ZIP home loan had, as set out above, as part of the product a Visa debit card. The examples of the promotional material used show that the words “ZIP debit” appear on the credit card as do “VISA” and “Loans.com.au”. My findings above about the use of the word “ZIP” in this context apply equally, if not more so, here given the dominance of the Visa and Loans.com.au branding of the Visa debit card. But in any event, a debit card is not encompassed in the Services. It is not a loan as that term is understood such that any use of ZIP on the debit card is not use of the [Firstmac] Mark.

[351]    Finally to the extent it is relevant, as the Zip Companies submitted, Mr Gration who conceived of the 2018 ZIP home loan accepted the descriptive quality of the word ZIP in connection with the relaunched home loan product, as is apparent from his email to Ms Sudarmana dated 26 July 2018 where he described it as a product with “Zip zero zilch interest” (see [38] above) and as he acknowledged in cross-examination (see [39] above).

[352]    Having regard to the matters set out above, Zipmoney Payments has established a ground for removal of the [Firstmac] Mark under s 92(4)(b) of the TM Act. That is, the [Firstmac] Mark remained registered throughout the second non-use period and at no time during that period did Firstmac use the [Firstmac] Mark in Australia in relation to the Services.

132    The reference at PJ[349] reproduced above, adopting the reasoning at PJ[325]-[334], means that the summary of the latter paragraphs above at [120] was also applied by the primary judge to the third category of evidence. In substance, that is the reasoning by which her Honour concluded that the references to “ZIP” were merely descriptive and were not use of that word mark as a badge of origin. Her Honour was repeating the conclusion that “ZIP” was being used as a noun, this time for the relaunched home loan, rather than an adjective, and was only descriptive of the home loan products; and that the source of the services was not derived from the use of the word “ZIP”.

133    For the third category of evidence, the usage of “ZIP Home Loan” is in a different category to the second. Given the evaluative dimension to this exercise, it is necessary to reproduce the three items of evidence relied upon by Firstmac both at first instance and on appeal.

134    The first item of evidence consists of website screenshots as at October 2018, obtained by use of the Wayback Machine, the first of which was reproduced by the primary judge at PJ[44(1)]:

Loans.com.au website image 1

Loans.com.au image 2

Loans.com.au website image 3

Fragment of Loans.com.au website image 3, cropped to enable the relevant text to be more legible.

135    The second item of evidence consists of social media posts on Facebook, Twitter and Instagram as at 28 February 2019, including but not confined to those reproduced by the primary judge at PJ[44(2)]:

(a)    Facebook:

Facebook image 1

Facebook image 2

Facebook image 3

(b)    Instagram:

Instagram image

(c)    Twitter:

Twitter image 1

Twitter image 2

136    The third item of evidence in this category is promotional material for the 2018 ZIP home loan used by Loans.com.au and made available as a brochure that could be downloaded by customers from its website (which was not reproduced by the primary judge), as follows:

Loans.com.au website brochure

137    There were also samples of statements, reproduced by the primary judge at PJ[44(4)], and of correspondence which was not reproduced by her Honour, but they do not warrant further reproduction because they were of the same kind as in the second category of evidence.

138    As noted above, neither side on appeal placed a much reliance upon the difference or similarity between the second and third categories of evidence, although senior counsel for Firstmac did point out salient features of both which has helped to inform this analysis.

Consideration of the second and third categories on appeal

139    The primary judge’s conclusion concerning the second category of evidence does not disclose appealable error, given the way the ZIP mark was deployed in the documents within that category. Her Honour’s conclusion that this is how a consumer would have likely viewed the bland reference in the statements and the like as being only descriptive may be debateable to some degree, but it is not without reasonable support visually. In those circumstances a different view of the use of the word “ZIP” in the second category of evidence as being only descriptive falls within the category for which an appellate court’s different view does not rise to the level required to establish error.

140    The same cannot be said, however, of the third category of evidence. First, in PJ[348]-[352] reproduced above, the primary judge did not refer to any of the Loans.com.au website images. While “loans.com.au” does feature there, it only does so as a homepage or entry point. The size of the letters in the phrase “ZIP Home Loans” in the drop-down page, across from the words “I am interested in …”, are only a little smaller than “loans.com.au”, but no less prominent in any other way. The use of “ZIP Home Loan” is not subordinate to “loans.com.au”, and is used in a different way from the other listed products (“Essentials”, “Offset”, “Fixed” and “Investor Smart Package”). The word “Zip” is not being used only as a noun. It is more likely that it would be read by a consumer as referring to a brand, rather than a function or description. It is “ZIP” that is the point of distinction, not the accompanying words “home loan”. “ZIP” is being used to describe the source of a home loan.

141    The primary judge referred to some, but not all, of the second set of images for the third category of evidence, being the social media pages, in PJ[348]-[352]. By reference to Facebook image 3 and Twitter image 2, her Honour concluded that “ZIP” was used only to describe the product and was subordinate to “loans.com.au”, in a way that does not identify the origin of the services. In doing so, her consideration of the Facebook and Twitter posts was confined to those including a photograph of a family, where the loans.com.au is comparatively prominent. In the images referring to “ZIP Home Loan Features” (Facebook image 1 and 2, Twitter image 2 and the Instagram image), however, “ZIP Home Loan” dominates the posts, with “loans.com.au” in a smaller font, at the bottom of the image. While her Honour does reproduce the Instagram image, which refers to “ZIP Home Loan Features” at PJ[44(2)], she does not mention it in her analysis at PJ[348]-[352]. The appropriate conclusion for all of the social media posts, especially taking those for Facebook and Twitter as a whole, is that “ZIP” is being used as a brand rather than a description.

142    The third kind of image, the Loans.com.au website brochure was not reproduced by the primary judge. Loans.com.au is used in the middle on the right hand side as a URL at which to apply for a loan (www.loans.com.au/apply), and as a logo at the bottom of the page, both in a subordinate way.

143    The images in the third category of evidence reproduced do not fairly meet the description given to them by the primary judge at PJ[324]-[325] as ones in which “ZIP” is used as a subordinate trade mark relative to the Loans.com.au logo. While “Loans.com.au” presents as a website URL and perhaps also as the name of a business, it is, to differing degrees, visually subordinate to the use of Firstmac’s word mark “ZIP”. The latter is used more prominently in the phrase “ZIP Home Loans”. Thus “ZIP” was not subordinate to “Loans.com.au”.

144    Moreover, because Zip Home Loans were being promoted and sold by Loans.com.au, and not by Firstmac, the logo and trade mark of Firstmac is not to be seen at all, let alone in a dominant way. Indeed, as already noted, the references to Loans.com.au are largely, if not entirely, references to its website (which is also its name), or to it as the entity posting the information in the case of the social media posts. In any case, that is subordinate to “ZIP Home Loans”, bolstering the conclusion that “ZIP” is being used as a trade mark. It cannot fairly be described as only descriptive, although it may be seen to have that characteristic as well.

145    As the dominant feature is “ZIP Home Loans”, “Loans.com.au” is subordinate, and the Firstmac logo is not seen because Loans.com.au is an authorised user. It follows that the primary judge’s conclusion at PJ[349] about the use of “ZIP” in connection with the 2018 Zip Home Loans is erroneous. Her Honour should have found that this use does constitute use of the mark as a trade mark, during the relevant second use period.

146    The primary judge’s conclusion as to removal from the Register and the consequential order relied substantially upon the finding of non-use. That was the trigger for the exercise of the discretion. Once the finding of non-use is overturned, the legal and factual substratum for the order for removal falls away.

147    Ground 4 as to the finding of non-use succeeds. Firstmac did rebut the assertion of non-use in the second non-use period. The order for removal from the Register must therefore be quashed.

CANCELLATION

Introduction

148    Before the primary judge, the respondents, by way of a cross-claim, sought cancellation of the Firstmac Mark under s 88(1)(a), relying on s 88(2)(c) which permits a court to rectify the Register to remove a Trade Mark that is likely to deceive or cause confusion “because of circumstances applying at the time when the application for rectification is filed”. In this case that date is the date the cross-claim was filed, which was 15 August 2019.

149    Section 89(1)(c) provides a discretionary power not to grant an application for rectification under s 88(2)(c) if the registered owner of the trade mark satisfies the court that the ground relied on for rectification has not arisen through any act or fault of the registered owner. Section 89(2) provides that the court must take into account any prescribed matter, and may take into account any other matter it considers relevant. At the time of the primary hearing, reg 8.2 of the Trade Marks Regulations 1995 (Cth) set out the following prescribed matters, which were therefore mandatory considerations:

(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.

150    The primary judge found that the Firstmac Mark was likely to cause confusion and therefore declined to exercise the discretion not to order rectification. Both conclusions are challenged by Firstmac on appeal. Thus, if Firstmac establishes error in relation to either the finding or the decision not to exercise the discretion, this ground of appeal will be made out. Her Honour’s reasons were not extensive because she relied on the conclusions she had already reached: PJ[366]-[395].

151    The arguments advanced by Firstmac on appeal addressed both matters under the umbrella of the historic need identified in the authorities for blameworthy conduct by the owner of a registered Trade Mark before it would be liable to be removed from the Register. It is convenient to frame the primary judge’s decision and the competing argument on appeal by reference to that body of authority.

The role of blameworthy conduct in removal of a registered Trade Mark from the Register

152    Firstmac places heavy reliance upon the general proposition that a fundamental tenet of trade mark law established by authority is that the owner of a registered Trade Mark is ordinarily not liable to have it removed from the Register upon the basis of deception or confusion in the absence of blameworthy conduct on the part of that owner. The authority relied upon in support of that proposition may be succinctly reproduced as follows.

153    In General Electric Co v General Electric Co Ltd [1972] 1 WLR 729, Lord Diplock observed at 751:

If the likelihood of causing confusion did not exist at the time when the mark was first registered, but was the result of events occurring between that date and the date of application to expunge it, the mark may not be expunged from the register as an entry wrongly remaining on the register, unless the likelihood of causing deception resulted from some blameworthy act of the registered proprietor of the mark or of a predecessor in title of his as registered proprietor.

154    In HTX International Pty Ltd v Semco Pty Ltd [1983] FCA 225; 78 FLR 57, Fox J observed at 64:

… Does the likelihood of deception or confusion howsoever arising, involve invalidity or attract a liability to expungement? It seems inconsistent with the policy of the Act that the activity of a competing trader which would otherwise be regarded as infringement can bring about a situation where the proprietor's use of its mark, because of confusion, leads to its invalidity. Windeyer J. in Re Bali Brassiere Co. Inc.'s Trade Mark; Re Berlei Ltd’s Application (1968) 118 CLR 128, was clearly aware of this problem, and in the General Electric case Lord Diplock narrowed the post-registration operation of the United Kingdom equivalent of s 28(a) to situations where the confusion or deception was brought about by some blameworthy act of the registered proprietor ([1972] 1 WLR 729 at 751).

In my view, the test propounded by Lord Diplock in relation to English legislation is equally applicable here, notwithstanding differences in the legislation. If one looks to a wider test, such as whether the respondent has a greater volume of sales and a wider reputation (resulting in the confusion or deception), the problem of public policy is raised acutely. Is a rival trader, by using a registered trade mark, able to render that mark invalid? The Act acknowledges that a rival trader may unwittingly use an existing registered mark, but provides a process whereby he also may become registered. The provision concerning honest concurrent use (s 34) picks up the common law on the subject (see Kerly (1972) (supra) at 187-189).

It seems to me to be contrary to the scheme and policy of the Act to allow what Windeyer J. in the Bali Brassiere case (supra) called “the assiduous efforts of an infringer”(at p. 133) to invalidate (or render void) a registered trade mark unless, at least, there has been “blameworthy” conduct on the part of the registered proprietor. Doubtless a registered proprietor is expected to take due steps for the protection of his mark, but the infringer must also be expected to take such steps as the Act allows in order to establish an equal or superior right to the use of the mark, or to have the register appropriately rectified. While registration by no means creates indefeasibility, it gives notice, and encouragement should not be given to the trader who fails to search it, or disregards the results of a search, and creates a substantial business using the mark, to the point that the registration is to be regarded as invalid, and liable to be expunged. As I have already noted, non-use of the mark by the registered proprietor is dealt with elsewhere by the Act (s 23).

(Emphasis added).

155    In the Full Court case of Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA [1988] FCA 553; 19 FCR 569, Bowen CJ observed at 574:

The interpretation of s 28 has been considered by Fox J in HTX International Pty Ltd v Semco Pty Ltd (1983) 49 ALR 636 at 643-4. His Honour, influenced by his reading of the remarks of Lord Diplock in GE Trade Mark [1972] 1WLR 729 at 748; [1972] 2 All ER 507 at 524 upon the corresponding section of the United Kingdom Trade Marks Act 1938, came to the conclusion that the proprietor of a trade mark would only be disentitled to registration under the Act under s 28(a) if the likelihood of deception or confusion resulted from some blameworthy conduct on his part. The learned trial judge referred to this authority and followed the decision of Fox J in this respect.

… I am, I think, conscious of leaning against a construction of s 28 in regard to blameworthy conduct on the part of a proprietor which would lead to a situation described by Windeyer J where the proprietor of a mark might be denied or lose registration by reason of “the assiduous efforts of an infringer” (Re Bali Brassiere Co Inc and Re an Application by Berlei Ltd, (supra)), or to adapt the words to cover the period before registration “the assiduous efforts of a misappropriating user”. Furthermore, the trade mark law providing for registration is designed rather to clarify the position of proprietors of trade marks-and facilitate enforcement rather than to raise difficult and complex questions which would be generated by the contrary construction.

156    Also in Riv-Oland Marble, Lockhart J accepted at 598 that “the mere likelihood of deception or confusion engendered by the use of a registered mark does not necessarily result in invalidity of the mark, or render it liable to expungement” and observed at 599:

It would be an extraordinary result if this conduct, which constituted infringing conduct, could produce either the invalidity of the mark or, its liability to expungement. It is no answer to say: that a court has a residual discretion to decline to order expungement even where a mark is shown to be invalid. The fact that the infringing conduct of a rival trader, in the circumstances to which I have referred, could produce the consequence that a registered mark becomes invalid is itself so extraordinary a result that its correctness could only be accepted as a last resort.

157    In New South Wales Dairy Corporation v Murray Goulburn Co-operative Company Ltd [1990] HCA 60; 171 CLR 363 (omitting footnotes):

(a)    Mason CJ said at 386:

Furthermore, lack of distinctiveness, occasioned by blameworthy conduct on the part of a registered proprietor, if it results in the use of a mark becoming deceptive or confusing, provides a ground for rectification of the register. The Full Court of the Federal Court was in error in holding that, after lawful registration, a mark may only be removed for lack of distinctiveness pursuant to s. 23 or s. 56 of the Act.

(b)    Brennan J said at 389:

In that regime, to hold that a registered trade mark is “wrongly ... remaining in the Register” whenever the use of the mark becomes likely to deceive or to cause confusion would be to expose the registered proprietor’s statutory right to destruction at the hands of any person who creates the likelihood of deception or confusion. A premium would be placed on what Windeyer J. called “the assiduous efforts of an infringer”: Re Bali Brassiere Co. Inc.’s Registered Trade Mark and Berlei Ltd’s Application. On the other hand, to hold that a trade mark, validly registered, can never be expunged if its use becomes likely to deceive or cause confusion by reason of circumstances occurring since registration would empower the registered proprietor himself to create that likelihood with impunity.

(c)    Dawson and Toohey JJ said at 406:

The doctrine of honest concurrent user meant that a degree of confusion had to be tolerated within the system. The mere fact that the use of a mark would be likely to deceive or cause confusion was not necessarily sufficient to support an injunction restraining that use. That, Lord Diplock explained, was how s. 11 and its predecessors came to be interpreted in such a way that something more than mere deception or confusion was required to disentitle a trade mark to protection in a court of justice.

And at 409:

The use of the term “blameworthy act” is, we think, no more than a shorthand method of referring to all those circumstances which might disentitle an applicant to relief in a court of equity. It was not intended to posit an all-embracing test. As Lord Diplock said:

“It seems to me to be impossible to hold there was any such blameworthy conduct by the [appellants] as would amount to an equitable ground for disentitling them to protection for the use of the mark.”

It would, in our view, be quite wrong to use the term to erect an independent standard against which a registered proprietor’s conduct must be judged. Not only would it be an impermissible extension of the language of the section, but it would shift the focus from the true question and introduce notions of a subjective kind.

It would clearly be a most significant circumstance, in defending a trade mark against expunction from the register, that the registered proprietor would have been refused relief in proceedings brought by him for infringement because he did not come with clean hands, being himself responsible in some way for the deception or confusion. That may be blameworthy conduct but it is not the only conduct which would disentitle an applicant to relief. And, in some circumstances, it may not disentitle an applicant to relief. For example, it may be more important that equity grant a remedy in the public interest than that it does not aid a wrongdoer: see Money v. Money [No.2]. But this is merely to emphasize that in equity the remedy was discretionary, notwithstanding that it was exercised along defined lines.

158    These cases were decided under the Trade Marks Act 1955 (Cth). It contained no analogue of s 89(1). The precondition for the exercise of the discretion to order rectification of the Register by cancellation of the mark in circumstances in which s 89(1) applies is not whether Firstmac engaged in blameworthy conduct, but whether Firstmac satisfied the Court that the likelihood of deception or confusion at the relevant time did not arise through any act or fault on its part.

Error in deciding use of the Firstmac Mark by Firstmac was likely to cause confusion

159    It was common ground that the assessment of whether the use of the Firstmac Mark was likely to deceive or cause confusion was to be assessed as at the date of the filing of the respondents’ cross-claim on 15 August 2019. The primary judge also noted that the parties had agreed that the principles applicable to confusion in connection with deceptive similarity applied for the purposes of s 88(2)(c), which her Honour described as a real and tangible danger that consumers would be caused to wonder if the goods or services came from the same source. Her Honour reproduced the following guiding passages from Swancom Pty Ltd v Jazz Corner Hotel Pty Ltd (No 2) [2021] FCA 328; 157 IPR 498 (O’Bryan J) at PJ[373]:

[172]    There has been very little judicial analysis of s 88(2)(c) since its amendment by s 41 of the Trade Marks Amendment Act 2006 (Cth). JCHPL placed reliance on the statement of Jacobson J in Health World Ltd v Shin-Sun Australia Pty Ltd (2008) 75 IPR 478; [2008] FCA 100 (Health World 2008) at [176] that s 88(2)(c) is concerned with reasons for rectification of the Register which were not available as a ground for rejection or opposition to registration (ie at the time of filing). However, in that case Jacobson J was considering the pre-amendment form of s 88(2)(c). By virtue of the amendment, the question posed by the section is simply whether, by reason of the circumstances applying at the time when the application for rectification is filed (and regardless of whether those circumstances existed pre-registration), the use of the trade mark is likely to deceive or cause confusion.

[173]    There seems to be little doubt that the phrase “likely to deceive or cause confusion” should be construed in a similar manner as the equivalent phrase in s 43. In that context, the word “likely” has been construed as meaning a real and tangible possibility rather than more probable than not: McCorquodale v Masterson (2004) 63 IPR 582; [2004] FCA 1247 at [35] per Kenny J, following Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365; 45 IPR 411; [1999] FCA 1020 (Registrar v Woolworths) at [43] per French J (with whom Tamberlin J agreed). Adapting the test propounded by Kitto J in respect of s 28(a) of the Trade Marks Act 1955 (Cth) in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595; [1955] ALR 115; (1954) 1A IPR 465 (Southern Cross Refrigerating), it will be sufficient if the ordinary person would entertain a reasonable doubt whether the two products come from the same source.

160    The primary judge then reasoned to the conclusion that confusion from the use of the Firstmac Mark was likely by 15 August 2019:

[375]    The Zip Companies had been using the word ZIP and different versions of the Stylised Zip Marks and of the ZIP Formative Marks for almost six years. By that time they had developed a business and an associated reputation of some significance. As set out above, for the financial year ended 30 June 2019 the ZIP business had 16,249 Merchants across a range of sectors, 1.3 million Customers, reported TTV of $1,127 million and total revenue of $84,231,132.

[376]    The ZIP business had been promoted by reference to the word or brand ZIP and the variants of it over the period of its development including through in-store and online marketing, its own websites, its Zip App which became available in mid 2018, its social media accounts and its direct marketing campaigns.

[377]    In terms of use, a normal and fair use of the [Firstmac] Mark would include the provision of credit and payment services in a retail setting (both in-store and online) of the type provided by the Zip Companies.

[378]    Firstmac was using the [Firstmac] Mark in connection with its ongoing servicing of the original ZIP home loans and the 2018 ZIP home loans. That being so, in my opinion, if Firstmac commenced providing those services, as set out in the preceding paragraph, by reference to the [Firstmac] Mark such use would cause confusion of the relevant kind. That is, there would be a real and tangible possibility that a person would have cause to wonder whether the service offered by Firstmac by reference to the [Firstmac] Mark came from the same source as that offered by the Zip Companies.

161    The substance of the primary judge’s finding is that, if Firstmac extended use of the Firstmac Mark to the provision of credit and payment services of the type provided by the respondents, which would be a normal and fair use of the Firstmac Mark, confusion was likely in the sense of there being a real and tangible possibility that a person would have cause to wonder whether the service offered by Firstmac by reference to the Firstmac Mark came from the same source as that offered by the respondents. This is perhaps in some tension with her Honour’s finding at PJ[213], when considering the ZIP Formative Marks in the context of deceptive similarity that “there is no real tangible danger of deception or confusion occurring from use of the ZIP Formative Marks”.

162    There were competing arguments on appeal as to whether or not consideration of events actually occurring after the date of the filing of the cross-claim could be taken into account in assessing whether deception or confusion (here only confusion) was likely in the sense of a real possibility. Firstmac contends that this is not permissible, having regard to the language of “is likely” in para (c) of s 88(2). The respondents contend that the application of that provision is an inherently predictive exercise, such that later actual events could have a bearing on the predictive assessment.

163    The respondents contended that since Firstmac had not raised this legal argument as to the operation of s 88(2)(c) below, leave was required to do so and should not be granted. Firstmac conceded that the particular argument had not been advanced before the primary judge, but asserted that it was properly before this Court on appeal and at least implicitly sought leave to rely upon it. It is (at best for the respondents) doubtful whether leave is required to raise a new point of law on appeal where it would not prejudice another party, for example, because it could not have been met by evidence: see, Thomas Prince, ‘Recurring Issues in Civil Appeals – Part 2’ (2022) 96 Australian Law Journal 273 at 275-281. There is High Court authority for the proposition that an appellant is entitled to do so in these circumstances: Spriggs v Federal Commissioner of Taxation [2009] HCA 22; 239 CLR 1 at [43]) (French CJ, Gummow, Heydon, Crennan, Kiefel and Bell JJ).

164    In this case, the construction point would appear to be moot as the primary judge does not seem to have relied upon anything that occurred after 15 August 2019. Her Honour’s assessment was overtly based upon the circumstances prevailing at that date, which does not seem to engage the construction point being advanced. If the construction point is wider than that, which seems to be what Firstmac is suggesting in objecting to the primary judge’s reference in PJ[378] to “ if Firstmac commenced providing those services”, then that highlights the need for caution.

165    The construction point, and the apparent wider objection flowing from that, was not the subject of argument below, and therefore was not able to be addressed by the primary judge. It raises an issue that may be of considerable importance to the operation of the TM Act in other cases. In those circumstances, the statutory construction point and any related wider argument should be left to a case in which it squarely arises, has been taken at trial and has been addressed by the trial judge, or at least been able to be addressed. Importantly, because of the findings that the primary judge should have exercised the Court’s discretion not to order rectification, any findings on this point would not be dispositive on this ground of appeal. As such, Firstmac cannot succeed on this ground of appeal upon the basis that the primary judge erred in finding that the Firstmac Mark was likely to cause confusion. The success of this ground of appeal must therefore turn on the arguments advanced on the decision not to exercise the discretion.

Failure to exercise the discretion in s 89 not to order rectification

166    The primary judge observed that the discretion not to order rectification was only available if the ground relied upon by the respondents had not arisen through any act or fault of Firstmac, a condition expressly provided by the terms of s 89(1): PJ[379]. Her Honour found at PJ[382] that the risk of deception or confusion did not arise through any positive act or fault on the part of Firstmac. Accordingly, there was no legal impediment to the exercise of the discretion. Her Honour then addressed the mandatory considerations prescribed by reg 8.2, finding that:

(a)    in the absence of infringing conduct or wrongdoing by the respondents, where there were circumstances giving rise to a real risk of deception or confusion if the Firstmac Mark was not cancelled, the public interest weighed in favour of cancellation, taking into account and accepting Firstmac’s arguments as contrary public interest considerations:

(i)    traders being able to protect their valuable property rights against infringement (relying upon Campomar at [42]);

(ii)    not rewarding infringers by allowing them to take advantage of wrongdoing; and

(iii)    ensuring that trade marks are not registered in favour of a person who is not the owner of the trade mark, noting the basis for ownership turning on first use, or alternatively first application for registration (relying upon Anchorage Capital at [163]-[164]);

(b)    the circumstances giving rise to the application for cancellation had not ceased to exist, as Firstmac was unsuccessful in its claim for infringement;

(c)    having earlier rejected Firstmac’s argument that “ZIP” was a word inherently adapted to distinguish its services, that the Firstmac Mark did not distinguish relevant services before the circumstances giving rise to the application arose;

(d)    no infringement by the respondents having been found, and in circumstances where Firstmac did not accept any limitation of registration to a particular geographic area in Australia or particular services within their category, and where the respondents did not provide details of how any limitation would operate in any event, it would not be appropriate to make other orders.

167    For completeness, it should be noted that the primary judge took into account, but gave little weight to, the absence of any evidence of actual confusion.

168    As this was a discretionary decision, to succeed on this ground Firstmac has to satisfy the Court that the discretion miscarried because the primary judge acted on a wrong principle, allowed extraneous or irrelevant matters to guide or affect her, mistook the facts, did not take into account a material consideration or that, upon the facts, her conclusion was unreasonable or plainly unjust: House v The King at 504-5 (Dixon, Evatt and McTiernan JJ).

169    The key factors which the primary judge ultimately weighed in favour of not exercising the discretion turned on conclusions that have already been found to be infected by error, most notably the finding that there was no infringing conduct by the respondents by reason of upholding the defences in s 122(1)(f) and (fa), which affects the findings summarised at [166] (a), (b) and (d) above. That was at least a serious error of fact sufficient to cause the discretion to miscarry.

170    As to [166(c)] above, being the rejection of Firstmac’s argument that “ZIP” was a word inherently adapted to distinguish its services, and the finding that the Firstmac Mark did not distinguish relevant services before the circumstances giving rise to the application arose, that too cannot stand in light of the conclusion reached about the finding of error in relation to the conclusion as to non-use.

171    It follows that it falls to this Court to determine whether the discretion should not be exercised and the Firstmac mark should remain on the Register.

172    As a result of our conclusions, a central and indispensable legal and factual foundation for the decision not to exercise the discretion not to rectify the Register has been removed, leaving intact on the other side of the ledger the public interest features that favoured the exercise of the discretion not to order cancellation and therefore rectification. Those features include the interests of traders in protecting their valuable property rights against infringement and not rewarding infringers by allowing them to take advantage of their wrongdoing, both of which the primary judge accepted were relevant public interests.

173    The respondents are right to point out that, while s 89 was introduced against the background of the authorities upon which Firstmac relied, it is a new provision which must be read according to its terms. In Anchorage Capital at [142], the Full Court observed that s 89 “covers its own particular field and is aimed at dealing with some well-known difficulties that were encountered in the construction of relevant provisions of the 1955 Act”, which were not resolved until the High Court’s judgment in Campomar (at [68]-[76]), “some five years after the 1995 Act came into force”. Those difficulties were first, the significance of the registered owner’s conduct and whether it had contributed to the deception or confusion; and second, whether it was for the person seeking rectification to prove that the deception or confusion arose because of blameworthy conduct on the part of the registered owner or for the latter to show that it was not responsible for the deception or confusion: Anchorage Capital at [145]-[146]). While the Working Party to Review the Trade Mark Legislation recommended to the Minister in July 1992 that the Act be amended to prevent the mark being removed on the ground that the use of the trade mark at the date of commencement of the rectification proceedings was liable to deceive or confuse if the circumstances did not arise through fault on the part of the proprietor (see recommendation 36A(5)), that recommendation did not find its way into the 1995 Act.

174    Burrell and Handler observe at [9.22] that there are a number of problems with s 89(1) as drafted, one of which is that “fault” is not defined. In these circumstances, the learned authors go on to say:

This might be seen as an invitation to incorporate into s 89 one or more of the competing understandings of ‘blameworthy conduct’ articulated by various members of the High Court in [Murray Goulburn] in the context of the former Act. We would suggest that given the law on this point was so unsettled at the time of the 1995 Act, that it was very much tied to the wording of former legislation, and that s 89 refers to ‘any act or fault’ (a broad concept that contemplates any conduct having a material connection with the rectification ground) rather than ‘blameworthy conduct’, the former Act case law can provide only limited guidance as to the interpretation of s 89.

175    That said, where, as here, the primary judge found that Firstmac was without fault, and we have found that the respondents did not prove that their use of the Firstmac Mark was honest, to exercise the discretion to remove the Firstmac Mark would reward “the assiduous efforts of a misappropriating user”. To pick up on what Brennan J said in Murray Goulburn at 389, it would place a premium on those efforts.

176    We are not satisfied that it would be in the public interest to remove the Firstmac Trade Mark in all the circumstances. The first mandatory consideration is therefore resolved in favour of Firstmac.

177    The second mandatory consideration is whether any circumstances that gave rise to the application have ceased to exist. As we have found that the respondents infringed the Firstmac Trade Mark, this consideration also weighs in Firstmac’s favour.

178    The third mandatory consideration is the extent to which the Firstmac Trade Mark distinguished the relevant goods or services before the circumstances giving rise to the application arose. For the reasons given above, we have found that the “ZIP” Mark did distinguish the relevant services at this time, although we accept that the word is not inherently adapted to distinguish them.

179    The fourth mandatory consideration is whether there is any order or other remedy, besides an order for rectification, that would be adequate in the circumstances. Firstmac submitted that this was a “neutral” consideration, including for its lack of clarity. The primary judge was not minded to order rectification by limiting the specification of the services as the respondents’ suggested (PJ[393]) and neither side supported this course in their submissions on the appeal.

180    The final matter to which the primary judge referred was the absence of evidence to indicate that the use of the Firstmac Trade Mark had caused any confusion. Her Honour considered that it was a matter in Firstmac’s favour but it was not entitled to “significant weight”. There was no argument to the contrary from either side on the appeal.

181    Taking into account all the various considerations, we are of the opinion that an order for rectification of the Register to remove the Firstmac mark is not justified and should not be made.

182    It follows that this ground of appeal succeeds and the order for cancellation and rectification must be set aside.

CONCLUSION

183    In light of the substantive success in this appeal by Firstmac, the primary judge’s orders must be set aside and in lieu thereof:

(a)    declarations of infringement should be made;

(b)    injunctions should be granted that restrain the respondents from using the “ZIP” word mark in relation to relevant services or any mark or sign that is substantially similar in Australia;

(c)    orders to deliver up various domain names should be made;

(d)    the respondents’ cross-claim and non-use application dated 21 August 2019 should be dismissed;

(e)    the respondents should be ordered to pay Firstmac’s costs below and for this appeal; and

(f)    the matter should be remitted to the primary judge for an inquiry and determination as to damages.

184    The parties should confer and furnish agreed or competing declarations and orders to give effect to these reasons within 28 days, or such further time as may be allowed. Any dispute should be able to be determined on the papers. If there is any need for further evidence or written submissions, agreed or competing procedural orders to facilitate that should be furnished within the same period of time.

Associate:    

Dated:        19 March 2025

ANNEXURE A

ANNEXURE B