Federal Court of Australia

Firstmac Limited v Zip Co Limited [2023] FCA 540

ORDERS

THE COURT ORDERS THAT:

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

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

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

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

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

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

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

THE COURT NOTES THAT:

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

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

Table of Contents

REASONS FOR JUDGMENT

MARKOVIC J:

1    Firstmac Limited, the applicant, is part of the Firstmac group of companies (Firstmac Group). The Firstmac Group is Australia’s largest non-bank lender and provides a number of financial products and services including home loans, car loans and investment funds.

2    Firstmac is and has been the registered owner of trade mark no. 1021128 (Applicant’s Mark) for the word ZIP in respect of “financial affairs (loans)” in class 36 (Services) since 20 September 2004.

3    Zip Co Limited and Zipmoney Payments Pty Ltd, the first and second respondents respectively (who I will refer to collectively as the Zip Companies), operate a predominantly closed loop retail platform which is a point-of-sale unsecured line of credit product for retail consumers and a service provider, including a provider of digital payment services, to retail businesses. The platform is predominantly closed loop because it can only be used by consumers with a Zip account (Customers) to pay for goods and services from a merchant who has been accredited by, and has a contractual relationship with, Zipmoney Payments (Merchant).

4    As described below the Zip Companies promote their services under the trade mark ZIP or variants of it such as ZIP MONEY and ZIP PAY, including stylised versions of that branding. It is that fact which has led to this proceeding.

5    In summary:

(1)    Firstmac alleges that by the Zip Companies’ use of ZIP and other variants of it as a trade mark they have infringed the Applicant’s Mark contrary to s 120(1) of the Trade Marks Act 1995 (Cth) (TM Act). The Zip Companies admit that the name and trade mark ZIP is substantially identical to the Applicant’s Mark and admit infringement by use of that mark subject to their defences, their cross-claim and their application for non-use. They otherwise deny that they have infringed the Applicant’s Mark by reason of their use of the ZIP mark in its stylised forms or the variants thereof either in plain or stylised form;

(2)    in their defence, the Zip Companies plead positive defences under s 122 of the TM Act. They contend that they have not infringed the Applicant’s Mark because they used in good faith their own name (s 122(1)(a) of the TM Act) and/or they would obtain registration of the mark if one or other of them was to apply for it either on the basis of honest concurrent use or because of other circumstances it would be proper to do so (ss 122(1)(f) and (fa) of the TM Act). The Zip Companies also contend that Firstmac is precluded from obtaining relief because of estoppel, acquiescence, delay and/or laches;

(3)    by their cross-claim the Zip Companies seek rectification of the Register of Trade Marks by cancellation of the Applicant’s Mark pursuant to s 88(2)(c) of the TM Act because as at 15 August 2019, the date on which the cross-claim was filed, Firstmac’s use of the Applicant’s Mark would be likely to deceive or cause confusion as a result of the Zip Companies’ reputation and goodwill at that time; and

(4)    a (second) non-use application filed by the Zip Companies with the Registrar has been referred to the Court for determination. In that application the Zip Companies contend that Firstmac did not at any time from 22 February 2016 to 22 February 2019 (second non-use period) use the Applicant’s Mark in Australia in relation to the Services or use it in good faith.

6    On 15 July 2019 I ordered that all issues of quantum and of any pecuniary relief are to be heard and determined separately from and after all issues of liability.

Facts

The witnesses

7    Firstmac led evidence from the following witnesses:

(1)    David Gration who is the general manager, sales and operations of Firstmac. Mr Gration joined Firstmac in December 2011 by which time he had over 20 years’ experience in retail banking including in senior management roles at the National Australia Bank and Suncorp. Prior to his current role Mr Gration held the following roles at Firstmac: from about 2 December 2019 to 9 November 2013, head of legal, risk and compliance; from about 19 November 2013 to 23 November 2015, general manager sales and marketing; and from about 23 November 2015 to 19 July 2017, general manager sales and marketing. Mr Gration also acted in the position of managing director of Loans.com.au Pty Ltd, a member of the Firstmac Group, when the person who held that role was on maternity leave. Mr Gration was cross-examined;

(2)    Tiska Sudarmana who is the product manager of Firstmac. Ms Sudarmana commenced her employment with Firstmac in February 2012 in the role of customer services officer. Insofar as that role was customer-facing, she was responsible for providing support or explanation to borrowers who contacted Firstmac with inquiries in relation to, for example, changes in interest rates, different repayment types and queries about refinancing existing loans to a different lender. Since February 2016 she has had the role of product manager. In that role she oversees a small team responsible for preparing and distributing product specifications which set out details of Firstmac’s new financial products and services and updates for existing products. She is also responsible for reviewing and approving any requests from originators, brokers, aggregators or managers for product variations. Ms Sudarmana was cross-examined;

(3)    Samantha Elizabeth Pendrey who since 4 March 2019 has held the role of retail sales team leader with Loans.com.au. In that role Ms Pendrey assists in the day to day management of her team of about 23 sales staff in the promotion of the financial products and services offered by Loans.com.au. Prior to taking on her current role Ms Pendrey held the following roles: from about 27 February 2017 to 2 August 2018 she was a lending manager, which required her to speak to customers, i.e. potential or existing borrowers, to promote the financial products and services offered by Loans.com.au; and from 2 August 2018 to 4 March 2019 she was a senior lending manager, a role in which she had the same responsibilities as her previous role but with additional responsibilities. Ms Pendrey was not cross-examined; and

(4)    Jacqueline Jessica Chelabian, a solicitor in the employ of Spruson & Ferguson Lawyers Pty Ltd, Firstmac’s solicitors, who gave evidence about trade mark searches she undertook of the databases maintained by the United Kingdom Intellectual Property Office and the Intellectual Property Office of New Zealand and in relation to printouts obtained from the Wayback Machine of IP Australia’s website. Ms Chelabian was not cross-examined.

8    The Zip Companies led evidence from the following witnesses:

(1)    Peter Gray who is chief operations officer, co-founder and a director of Zip Co and a director of Zipmoney Payments. Together with Larry Diamond, Mr Gray has been and is responsible for the commercial functions and operations of Zipmoney Payments. He also oversees the day to day operational and administrative functions of the business operated by Zip Co. For much of his career, commencing in 1990, Mr Gray worked in the finance industry. Most recently and prior to founding Zipmoney Payments he worked at Australia Finance Direct for about 12 years including as general manager for four years. Mr Gray was cross-examined; and

(2)    Mr Diamond who is managing director, chief executive officer and co-founder of Zip Co and Zipmoney Payments and a director of Zipmoney Payments. Prior to founding the Zip Companies Mr Diamond worked for about 12 years in retail, information technology (IT), corporate finance and investment banking including in that period for Pacific Brands, Macquarie Capital and Deutsche Bank. Mr Diamond was cross-examined.

The Firstmac Group

9    As set out above, Firstmac is part of the Firstmac Group. That group comprises several companies and trusts including Firstmac Origination Pty Ltd, Loans.com.au and www.Loans.com.au Pty Ltd. Firstmac’s financial products and services, broadly described at [1] above, are promoted, offered and provided to customers through two distribution channels. First, by Firstmac accredited mortgage brokers who promote and offer for sale its financial products under Firstmac’s corporate branding; and secondly, by mortgage originators, such as Loans.com.au, and mortgage managers who provide a direct retail channel and promote Firstmac’s financial products under the corporate branding of the particular originator or mortgage manager.

10    Each of the mortgage brokers, mortgage managers and mortgage originators within the distribution channels work with members of Mr Gration’s team at Firstmac who, in turn, report to him. That enables Mr Gration to monitor and evaluate the success of the distribution channel in promoting and offering Firstmac’s products and to make executive decisions such as determining which of Firstmac’s products are to be offered, or are to continue to be offered, to certain distribution channels and the specifications of the products.

11    Over the last 40 years Firstmac has provided over 100,000 home loans. It currently manages $12 billion in mortgages and $250 million in cash investments. Firstmac self-funds its operations through the release of highly rated residential mortgage backed securities (RMBS) and has issued more than $20 billion in RMBS bonds since 2003. The Firstmac Group has also received international ratings agency Standard & Poor’s highest possible ranking for loan serviceability.

12    Firstmac has offices in Sydney, Melbourne and Brisbane, with its head office located in Brisbane. There are approximately 200 staff members located at Firstmac’s head office of whom around 140 are employees of Firstmac and around 60 are employees of Loans.com.au. Relevant managers at Firstmac and Loans.com.au, including those working with mortgage brokers, mortgage managers and mortgage originators ultimately report to Mr Gration in relation to the products that are promoted and marketed by Firstmac and, on its behalf, by Loans.com.au. The nature of the reports Mr Gration receives include:

(1)    the number of home loans “sold”, which is the number of home loan applications filed;

(2)    the value of those applications;

(3)    the number of applications that proceed to approval;

(4)    the quality of the applications received; and

(5)    the performance of loans, prior to and after settlement. This identifies the number of loan applications which have been correctly or falsely completed and whether there are, and if so, the details of, any default in the repayment of a loan by a borrower.

These reports allow Mr Gration to monitor and evaluate the success of Firstmac’s products.

13    In his current role as general manager of sales and operations, Mr Gration oversees the sales and operations of Firstmac’s products and services and the retail and third-party sales of those products and services through the different distribution channels. In particular:

(1)    for matters pre-settlement he provides sales and support, focusing on the processing of Firstmac’s products and services through to settlement or the establishment of new services. He also approves the structure and requirements of Firstmac’s products and the final form of any documents, such as rate sheets, sent within the Firstmac Group and to third parties and oversees and monitors all matters from the point-of-sale to approval of an application;

(2)    for matters post-settlement, he provides contact centre support which focuses on queries about Firstmac’s products and services, queries about accounts and repayments and queries about the variations to terms of Firstmac’s products and oversees loan administration and the collection teams and business functions, including monitoring and reviewing the progress of home loans and any defaults in payments; and

(3)    he oversees the IT team, which builds the systems and supports the underlying infrastructure for Firstmac to offer and provide its products and services, and the legal team.

Firstmac’s products and services

14    Firstmac’s financial products and services are promoted, funded, serviced and managed by Firstmac and, in part, depending on the distribution channel, through its originators, such as mortgage brokers, mortgage managers and mortgage originators, under origination and management agreements with Firstmac.

15    Mr Gration describes the various originators referred to in the preceding paragraph as follows:

(1)    mortgage brokers are an intermediary who broker mortgage loans on behalf of Firstmac and its competitors. The broker prepares the loan application and submits it to Firstmac for its approval. Once the loan is approved and settled the borrower’s ongoing servicing relationship for the term of the loan is directly with Firstmac;

(2)    mortgage managers promote and offer Firstmac products under their own corporate branding, process loan applications through to approval and settlement by Firstmac and then service the loan until such time as it is repaid in full. The mortgage manager remains the intermediary between the borrower and Firstmac during the term of the loan; and

(3)    mortgage originators are similar to mortgage managers in that they promote and offer Firstmac products under their own corporate branding and process loan applications through to approval and settlement by Firstmac. However, Firstmac then services the loan. It does so under the corporate branding of the mortgage originator, until such time as the loan is repaid in full. The mortgage originator relies on Firstmac to take on all aspects of the home loan process from the date of settlement. This requires a backend IT banking system which allows Firstmac to provide the funding, ongoing servicing and management of the home loans, including generating statements, and meeting compliance and reporting requirements. Borrowers are provided with various telephone numbers, depending on the nature of their query, some of which are dealt with by Firstmac employees who respond to incoming inquiries as representatives of the mortgage originator.

16    Firstmac Origination operates Firstmac’s mortgage origination program under the control and direction of Firstmac. All mortgage originators and mortgage managers enter into an origination and management agreement with Firstmac Origination.

17    Firstmac also conducts all collection activities for its mortgage managers and mortgage originators and takes on the primary role of communicating and dealing with a borrower when the borrower has defaulted on a repayment.

18    Firstmac creates, structures and funds its products. This includes setting the requirements for each product and outlining any policies to ensure that any loan application complies with those requirements and Firstmac can ensure that any credit arranged by it through its mortgage managers and mortgage originators is not unsuitable for the borrower. Mr Gration explained that credit will usually be considered unsuitable where the borrower cannot pay or can only pay the credit with substantial hardship or the credit will not meet the borrower’s requirements and objectives. Firstmac is required to approve any changes to its products and to approve any loan application filed on behalf of a borrower.

Firstmac’s ZIP home loan – 2005 to 2014

19    Mr Gration understands that Firstmac first promoted and offered home loan products and services, such as term loans and lines of credit, under and by reference to the Applicant’s Mark in early 2005 (I will refer to this product as the original ZIP home loan).

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.

24    An example of an original ZIP home loan product sheet distributed to mortgage brokers and mortgage managers appears as follows:

25    An example of a rate sheet dated 9 December 2013 distributed to originators to inform them of applicable interest rates and loan to value ratios for products is as follows:

The rate sheets were not provided to consumers.

26    In accordance with the practice described at [21] above, ZIP home loans settled by Firstmac through its mortgage brokers are managed and serviced by Firstmac. During the term of the loan Firstmac issues statements, correspondence and other information to each borrower which, according to Mr Gration, bear the Applicant’s Mark. Examples of these documents, some of which appear below, were in evidence before me.

27    Statements for interest only loans are issued by Firstmac monthly and statements for principal and interest loans are issued by Firstmac every six months. Customers with ZIP home loans, including the original ZIP home loans, receive two statements, one for the debit card loan split (for the ZIP Visa) and one for the main loan split. Depending on when the loan was written, and the particular features of the loan, the loan splits are referred to differently in the statements. An example of a statement for the “ZIP FULL DOC LOC” appears as follows (with all identifying information redacted):

28    The correspondence issued by Firstmac for original ZIP home loans settled by mortgage brokers included letters to customers confirming preliminary approval of the loan, final approval, a welcome letter and a loan document pack enclosing a copy of the loan agreement. An example of that correspondence appears as follows (with all identifying information redacted):

29    For original ZIP home loans settled by Firstmac through its mortgage managers and mortgage originators, statements, correspondence and other information was issued to each borrower. Again, Mr Gration understands that those documents bear the Applicant’s Mark. Examples of those documents, some of which appear below, were also in evidence before me.

30    Statements issued for loans originating from a mortgage manager or mortgage originator, including for the original ZIP home loans, appear on the mortgage manager’s or mortgage originator’s letterhead but are generated and sent by Firstmac. That is to ensure that the statements are issued in a consistent format and in accordance with the frequency, depending on the type of repayment, of the terms of the original ZIP home loans set by Firstmac. An example of a statement issued by Resicom to a borrower (with identifying information redacted) is as follows:

31    Loans introduced by mortgage managers (unlike mortgage brokers) have post-settlement documents, including statements and correspondence, issued on the letterhead of the mortgage manager. An example of that correspondence (with identifying information redacted) for an original ZIP home loan is as follows:

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.

The September 2014 Origination Agreement

33    In September 2014 Loans.com.au entered into a mortgage origination and management agreement with Firstmac Origination (September 2014 Origination Agreement). Loans.com.au does not have its own home loan portfolio. Loans.com.au is an online lender which promotes Firstmac’s financial products and services.

34    Under the September 2014 Origination Agreement, Loans.com.au acts as a mortgage originator exclusively for Firstmac’s products and services and is responsible for the promotion of those products and services. Loans.com.au has a dedicated sales team which promotes Firstmac’s financial products and services (including ZIP home loans) to customers who have made an inquiry, takes customers through the loan application process and obtains the information required to enter into a loan agreement with Firstmac, after which Firstmac takes over the arrangements in the manner set out at [15(3)] above. The changeover between Loans.com.au and Firstmac occurs closer to settlement of the property the subject of the home loan once Firstmac approves the home loan application and arranges for it to be settled. Loans.com.au is involved in this process to the extent that it sends correspondence to the borrower to keep the borrower informed of the status of the progress of the borrower’s home loan application. The arrangement between Firstmac and Loans.com.au is reflected in credit guides issued by Loans.com.au to consumers.

35    Since September 2014 and under the September 2014 Origination Agreement Firstmac regularly issued product rate sheets to Loans.com.au which set out new products and services on offer by Firstmac and any changes (such as changes to interest rates) to any existing products and services. Mr Gration is responsible for approving the requirements of these products and services, and also approving the rate sheets which are prepared by the Firstmac product manager and circulated to Loans.com.au. Loans.com.au then, at its own cost, introduces the new products and services by updating its website located at www.loans.com.au, updating comparative websites, generating relevant posts on its social media pages and creating relevant material such as credit guides.

36    The marketing team, which is staffed by Firstmac employees, creates promotional material, such as brochures, for Loans.com.au for publication on its website and social media pages and designs and updates Loans.com.au’s website and social media pages. The costs of those marketing activities is reimbursed by Loans.com.au. Mr Gration approves the changes to be made to the Loans.com.au website in relation to the requirements of Firstmac’s products and services, which are then reported to Loans.com.au via email from the product manager at Firstmac. The in-house legal team and Marie Mortimer, the managing director of Loans.com.au are also involved in the approval process.

Re-introduction of the ZIP home loan in 2018

37    On 15 June 2018 Mr Gration sent an email to, among others, Ms Sudarmana, Celia Powell and Duncan MacFarlane, also of Firstmac, in which he wrote:

Tiska and Celia

Would you please consider the product and legal requirements to launch a new product, working title zip home loan, with the following spec

-    home loan = redraw loan + visa debit account for up to $7500

-    redraw loan at rate 3.72%

-    visa debit account at rate 0%

-    min loan amount and balance $190k

-    standard valuation, credit, LVR, etc conditions apply to the total loan amount

-    standard upfront fees val + settlement + government

-    no ongoing fees

Target launch date in say 3 weeks on Monday 9 July.

Duncan...to celebrate reaching the massive $10 billion, being the largest non bank in Australia, plus being the fastest, smartest and more.... LCA is now providing a Visa card for up to $7,500 at 0% interest “forever” as part of its new zip home loan. That’s zip, zero, zilch forever! T&Cs apply

38    Ms Sudarmana recalls having conversations with Mr Gration in early to mid 2018 about campaigns (i.e. products and services) to be launched in around Spring that year which included a new home loan under the name ZIP. On 26 July 2018 Mr Gration sent a further email to Ms Sudarmana which she described as setting out at a high-level the requirements of the ZIP home loan (26 July Email). The email provided:

39    Mr Gration was cross-examined about the 26 July Email. Relevantly, senior counsel for the Zip Companies, Mr Bannon SC, had the following exchange with Mr Gration:

Mr Bannon:    And then under that you say, “Zip, zero, zilch interest on ZIP Saver Account,” do you see that?

Mr Gration:    Yes.

Mr Bannon:    And that was your description of the reference to the fact that there would be no interest payable on the ZIP Saver Account?

Mr Gration:    Yes.

Mr Bannon:    And you’re using expressions well known to you of “zip, zero, zilch” to indicate nothing?

Mr Gration:    Yes.

Mr Bannon:    And that was your explanation, may we take it, to Tiska of how – or part of your explanation as to how this loan operated, correct?

Mr Gration:    Yes. At the time, yes.

Mr Bannon:    When you say “at the time” the fundamental structure of this didn’t change, did it, when it was launched?

Mr Gration:    There were elements that changed.

Br Bannon:    The fact that “zip, zero, zilch interest” on the ZIP Saver Account never changed, did it?

Mr Gration:    No, that didn’t change.

Mr Bannon:    And the amount – the percentage amount accessible on the ZIP Saver Account, did that change?

Mr Gration:    Yes.

Mr Bannon:    All right. But not by a significant order of magnitude, I take it?

Mr Gration:    No, it was set at $5000.

Mr Bannon:    All right. Instead of a percentage of the home loan?

Mr Gration:    Yes.

Mr Bannon:    Yes. And then there’s a reference under there to “no offset.” Is that a shorthand for saying there – in this particular loan there wouldn’t be an account into which the borrower could deposit funds thereby from time to time reducing the amount of the principal and thereby from time to time reducing the amount of interest payable on the loan?

Mr Gration:    Reducing the ..... of interest, yes.

Mr Bannon:    Yes. And the way it reduced interest was on a from time to time basis if moneys were put into an offset account – I will start again. In terms of an explanation of an offset account generally, not speaking about this one, it’s an account which permits a borrower to put moneys in and take them out again from time to time?---

Mr Gration:    Yes.

Mr Bannon:    And usually the monthly balance of that amount will be offset against the principal?

Mr Gration:    Yes.

Mr Bannon:    And resulting in a reduction in the amount of the interest payable?

Mr Gration:    Yes.

…

Mr Bannon:    And may we take it that it was important for you to explain to Ms Sudarmana the features of the loan having regard to her role as a product manager?

Mr Gration:    Yes.

Mr Bannon:    So that she could explain it in similar terms to anybody she dealt with?

Mr Gration:    Yes.

40    In response to the 26 July Email, as product manager, Ms Sudarmana:

(1)    prepared a product specification in the form of a rate card for the ZIP loans. The rate card was generated based on a template setting out the form rate cards are typically issued to Loans.com.au for Firstmac’s portfolio of products, with the logo of Loans.com.au on the front. The use of the logo in this way also assists Ms Sudarmana in identifying the channels (i.e. the originators, brokers, aggregators or managers and/or the specific person in that organisation) to which the rate card has been sent. On 25 September 2018 Ms Sudarmana sent the rate card by email to a number of people at Firstmac and Loans.com.au. Ms Sudarmana was also responsible for preparing and circulating subsequent rate cards with any varying interest rates for the ZIP loans. The rate cards were marked for “internal use only” and were to be used internally within Firstmac and Loans.com.au;

(2)    co-ordinated the preparation of product brochures for the ZIP loans using personnel in the marketing department at Firstmac, which prepares marketing material for Loans.com.au. They were then made available for download from the website of Loans.com.au; and

(3)    prepared and gave a PowerPoint presentation which set out the features of the ZIP loans to:

(a)    personnel at Firstmac as the “Delegate Lending Authority”, which means that it is and continues to be responsible for the final assessment of ZIP loans, making the ultimate decision as to which borrowers Firstmac would lend to under the ZIP loans; and

(b)    the team leaders at Loans.com.au to educate them about the nature of the ZIP home loan, its specification, its requirements, and how to prepare and submit loan applications using Firstmac’s Loan Application Wizard (a software application for mortgage groups to submit home loan applications). The team leaders were then expected, in turn, to educate the members of their respective teams to ensure they are trained to handle inquiries.

A copy of the PowerPoint presentation which was presented by Mr Sudarmana was in evidence before me. The Applicant’s Mark is used a number of times in it.

41    Ms Sudarmana described that ZIP loan conceived at this time as having two main parts: the ZIP home loan; and the ZIP Visa debit card (I will refer to this product as the 2018 ZIP home loan).

42    By September 2018, the 2018 ZIP home loan was ready to be offered as part of the portfolio of products offered by Firstmac through Loans.com.au. It was re-introduced as a term loan (rather than a line of credit) with a $5,000 interest free Visa debit card (rather than as initially envisaged the limit of the credit card being at 1% of the loan amount capped at $10,000) to provide transactional capability. According to Mr Gration this was a unique product offering in the industry. At the time there was fierce competition for home loans on internet comparison sites and Loans.com.au wanted a home loan product with a point of difference not likely or easily to be matched by the banks. The original ZIP home loan provided a platform and brand for this new product offering through Loans.com.au.

43    In cross-examination Mr Gration agreed that the key distinguishing feature of the 2018 ZIP home loan was the attached zero interest Visa debit card and that another feature of the product was the ability to eliminate debt “as quickly as possible”.

44    According to Mr Gration since September 2018 Loans.com.au has used the Applicant’s Mark to promote the 2018 ZIP home loan on behalf of Firstmac pursuant to the September 2014 Origination Agreement as follows:

(1)    on its website. In September 2018, Mr Gration, who is responsible for approving changes to the Loans.com.au website where they concern the requirements of Firstmac’s products and services, reviewed proposed changes to the website identifying the 2018 ZIP home loans before they went live. Mr Gration is familiar with the Loans.com.au website and refers to it regularly for a range of reasons, including to ensure that he continues to be comfortable with the content published on it. The 2018 ZIP home loans have been promoted on the Loans.com.au website since September 2018 and continue to be promoted. Screenshots of the website, as at the time Mr Gration swore his affidavit, May 2020, and dating back to October 2018 were in evidence before me. Mr Gration gave evidence that those screenshots were consistent with his recollection of the Loans.com.au website on and around the dates shown in them. By way of example a screenshot of the site as at October 2018 is as follows:

(2)    on its social media pages. Loans.com.au has Facebook, Twitter and Instagram accounts. A selection of posts on those pages was in evidence before me and include:

(a)    a Facebook post as at 28 February 2019:

(b)    a Twitter post as at 28 February 2019:

(c)    an Instagram post as at 19 December 2018:

(3)    in its promotional material. The marketing team at Firstmac creates promotional material for the 2018 ZIP home loan which is used by Loans.com.au on its website, as a brochure which can be downloaded by customers, and on its social media pages;

(4)    in its correspondence. For a single loan there are a number of documents sent by Loans.com.au to the borrower which have been approved in content and layout by Mr Gration and his team. They include a preliminary approval, a final approval, a loan document pack, a mortgage document pack, a “home loan pack” and a welcome letter. A set of these documents sent by Loans.com.au to a particular borrower in October 2018 was in evidence before me. The welcome letter did not itself use the Applicant’s Mark but it enclosed a loan summary which provided (with identifying information redacted):

(5)    on its statements. Once a new ZIP home loan has been approved and settlement is complete, Firstmac co-ordinates the issue of regular statements to each borrower, which are branded Loans.com.au, for the life of the loan. As is the case with the original ZIP home loan, for principal and interest loans, statements are issued every six months and for interest only loans, statements are issued every month. Firstmac also issues statements, again branded as Loans.com.au statements, for the debit card loan split i.e. the ZIP Visa. A bundle of statements was in evidence before me each of which bore the Applicant’s Mark as part of the “product description”.

45    The number of 2018 ZIP home loans settled by Loans.com.au and their total approximate value for the period September 2018 to April 2020 was in evidence before me. Given the confidential nature of the evidence I do not intend to reproduce it here.

46    The 2018 ZIP home loan has also appeared in third-party publications and on comparative websites, which permit borrowers to compare home loans being offered against a comparison rate by various institutions. The latter included websites operated by Mozo, Canstar and RateCity.

47    From time to time Ms Sudarmana obtains Google Analytics data for the product pages of the Loans.com.au website. She explains that as Loans.com.au is an online retailer Google Analytics is a useful resource to identify the traffic onto those product pages as an indicator of the level of interest in the relevant product. Ms Sudarmana obtained the Google Analytics results for three webpages for the 2018 ZIP home loans on the Loans.com.au site for the periods 1 June 2018 to 22 February 2019 and 23 February 2019 to 20 April 2020. The information for each period is divided into two tables: the first provides a general summary of the number of views to the three webpages and the second provides a breakdown according to the source of the traffic to the webpages e.g. from Facebook ads, the Google search engine, aggregator comparison websites such as Mozo, Canstar and Finder. The first general summary table for each period is as follows:

48    Since 22 February 2019, Loans.com.au has continued to act as mortgage originator and to promote and settle the 2018 ZIP home loans on behalf of Firstmac. As at May 2020 there was no intention on the part of Firstmac Origination to terminate the September 2014 Origination Agreement or on the part of Firstmac to remove the 2018 ZIP home loan as a product and service offering to Loans.com.au.

49    Towards the end of 2019 Firstmac decided to launch the ZIP home loan to third-party broker channels in addition to Loans.com.au. The re­opening of the third-party broker channels does not impact, and has not impacted, Firstmac’s offering of the 2018 ZIP home loans to Loans.com.au, and the continued promotion of that product by Loans.com.au. The form of the ZIP home loans offered to these mortgage brokers is fundamentally the same as that offered to and by Loans.com.au.

50    Since February 2020 Firstmac has launched the 2018 ZIP home loans to over 8,000 of its accredited mortgage brokers across Australia. In Mr Gration’s view, the 2018 ZIP home loan would be more effectively sold by an intermediary broker presenting the full value and benefits of its unique proposition to the customer. In doing so, Firstmac reverted to the initial arrangement of promoting, offering and settling the 2018 ZIP home loans to borrowers through a broader range of originators. The mortgage brokers include aggregator mortgage broker groups including Fast, Choice, PLAN, Loan Market and Connective who can select to promote, through their respective different channels, third-party financial products and services, including the 2018 ZIP home loan, on behalf of Firstmac. The 2018 ZIP home loans need to be competitive so that they are taken up as a product and promoted by these aggregator broker groups.

51    Firstmac also continues to manage and service the original ZIP home loans arranged before and up to 2014 by Firstmac through its originators. As at 3 February 2020, there were 127 existing original ZIP home loans which continued to receive monthly statements. Firstmac estimates that the monthly statements for these existing loans will continue (assuming the loans are not terminated or discharged earlier) until 2044.

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.

Loans.com.au and the 2018 ZIP home loan

53    As set out at [33]-[34] above, Loans.com.au is an online lender which promotes Firstmac’s financial products and services, acts as a mortgage originator exclusively for Firstmac’s products and services and promotes Firstmac’s financial products, including a range of ZIP home loans, and services.

54    Ms Pendrey recalls that she first became aware of the 2018 ZIP home loans in late 2018 when she was either in the role of lending manager or senior lending manager. While she had the roles of senior lending manager and then retail sales team leader, the 2018 ZIP home loan was one of the products that she and her team promoted and continue to promote, including by reference to the information and material set out on the “how it works” page on the Loans.com.au website. Both as a senior lending manager and retail sales team leader Ms Pendrey has relied on the Loans.com.au website to relay information to customers over the telephone.

55    Ms Pendrey estimates that in her role as lending manager and, to some extent, as senior lending manager, she referred customers to the Loans.com.au website on a daily basis and, in some instances, walked them through the website while on the telephone with them. She also refers to the website if she needs to confirm or check a detail about a product offered by Loans.com.au. Based on her observations of her team members and the way in which they interact with customers over the telephone, Ms Pendrey is aware that they have used, and continue to use, the Loans.com.au website in the same way as she does.

56    Ms Pendrey obtained screenshots of the Loans.com.au website, including from the Wayback Machine. According to Ms Pendrey those screenshots are consistent with her recollection of how the website has appeared since the time she held her role as senior lending manager and on around the dates of each screenshot. She has observed minor changes to the website over time such as the change in the length of time that Firstmac has been operating. By way of example the screenshot obtained as at 22 October 2018 which refers to the 2018 ZIP home loan is as follows:

57    Since September 2018 ZIP home loans have been continuously promoted, and continue to be promoted and offered, by Loans.com.au with generally the same specification and terms but with varying interest rates.

Mr Gration becomes aware of the Zip Companies

58    Mr Gration became aware of Zipmoney Payments in about late August or September 2016 after an application for removal of the Applicant’s Mark on the grounds of non-use (see [172]-[175] below). Firstmac opposed that application. At the time, Mr Gration considered that:

(1)    by responding to and opposing the first non-use application, it was clear that Firstmac wanted to retain registration of the Applicant’s Mark and the associated exclusive rights given to Firstmac under the legislation;

(2)    given the significant costs of litigation, it was prudent and desirable to defend the Applicant’s Mark before taking enforcement steps, although he did not then realise the length of time that would take; and

(3)    while he had a general appreciation that “Zipmoney” had entered the market, he did not monitor what “Zipmoney” was doing and he had no insight or foresight into its commercial operations and plans.

59    Mr Gration expected that, if Firstmac was successful in defending its registration of the Applicant’s Mark, “Zipmoney” would stop using ZIP and it would have a contingency plan in place to cover such a situation.

60    Firstmac has not authorised or granted any licence or permission to the Zip Companies to use the Applicant’s Mark or any version of a trade mark including the word ZIP, nor have those companies asked Firstmac for permission to use the Applicant’s Mark or any version of a trade mark including ZIP, or for Firstmac’s consent or permission to register any trade marks for or including ZIP.

The Zip Companies

61    On 24 June 2013, when first incorporated, Zipmoney Payments had the name Zipmoney Pty Ltd. On 14 June 2015, it changed its name to its current corporate name, Zipmoney Payments.

62    The Zip Companies have a related company, Zipmoney Holdings Pty Ltd, which was also incorporated on 24 June 2013. Zipmoney Payments is a subsidiary of Zipmoney Holdings and Zip Co is the ultimate holding company of both Zipmoney Payments and Zipmoney Holdings.

The development of the ZIP business

63    In about mid-2012 Mr Diamond began to think about establishing a business based on digital/online short term lending to consumers. He was interested in creating a business that would disrupt traditional lenders and the credit card market and which used the point-of-sale experience as the point of origination of new customer credit accounts. He considered that an important feature of such a business would be the ability for retail customers to obtain credit quickly (in real time) and without a lengthy application process. At the time, Mr Diamond did not believe there to be a product offering of that type in Australia. For example, GE Money products were promoted on the retail sales floor, but still involved a traditional finance application.

64    Throughout the second half of 2012, Mr Diamond researched businesses operating as short term lenders, particularly in the United Kingdom (UK). He recalls that two of the businesses he looked at as part of his research were VirginMoney and GE Money (which was subsequently taken over by Latitude Financial). He also looked at the Swedish business Klarna and the UK business Wonga. He undertook this research around his other commitments. At the time Mr Diamond was providing consulting services to other businesses such as Prospa Advance, which focussed on digital lending to small businesses, Money in Advance, a digital short term lender in the UK, and Live TaxiEpay, which provided a payment platform for taxis. Through the combination of his research and consulting work, Mr Diamond began to develop an understanding of how he might be able to make his digital/online short term lending business work.

65    During the second half of 2012, although he does not now recall exactly when, it also occurred to Mr Diamond that the names ZIP or ZAP might be good brands for a digital short term consumer lending business. He liked those names because he thought they were short and catchy. The name ZIP seemed to evoke fast movement successfully, which was consistent with Mr Diamond’s idea of providing finance in “real time”. He was also aware at the time that, from a marketing perspective, a domain name with three letters was desirable. Three letter words are easily remembered and there is limited scope for misremembering short names. Mr Diamond considered that the names ZIP and ZAP also met this criterion, but he preferred the name ZIP because of the way it brought to mind fast movement.

66    When Mr Diamond started thinking about using the brand ZIP for the business, he also decided that it would be a good idea to also use the word “money” i.e. ZIP MONEY. This was because other finance businesses (such as VirginMoney and GE Money) used the word “money” in their names and because the word “money” indicates very clearly what the business is about. Mr Diamond considered that incorporating the word “money” into the brand helped to place the product into its category. His plan was to develop ZIP as a brand, but to use additional words like “money” to help position the brand in the financial sector, placing it alongside Visa, MasterCard and the like.

67    Mr Diamond liked the brand ZIP a lot, but it was not the only potential brand that he considered. As set out above, he also considered the name ZAP as well as some other options, although he could no longer recall what they were.

68    In about November 2012 Messrs Gray and Diamond met to discuss potential business opportunities, including Mr Diamond’s idea of a short term digital lending business. Mr Diamond recalls that at about this time he told Mr Gray that he had the brand ZIP or ZIP MONEY in mind for the business. Mr Diamond explained that when he referred to the names ZIP and ZIP MONEY as brands he meant that those names were to function not merely as a name but also as an identifier of the business and its products. To like effect Mr Gray recalls that in one of these early discussions Mr Diamond mentioned that he had the names ZIP and ZIP MONEY in mind for a proposed online retail consumer lending business, which was one of the business opportunities they discussed.

69    At about the time of his meeting described in the preceding paragraph, Mr Diamond decided that he should try to register a suitable domain name based on the brand ZIP. He looked at a number of domain names by typing the unique uniform resource locator (URL) into a web browser, although he does not now recall all of those he considered at the time. He does however recall that in the course of undertaking this process he discovered that the domain name www.zip.com was owned by Bank of America but, when he visited that domain name, it was not an active website. At the time, Mr Diamond was aware that Bank of America did not have any operations in Australia.

70    The upshot of this process was that Mr Diamond registered the domain name www.zipmoney.com.au. He considered that domain name to be suitable because it was consistent with his idea to use the names ZIP and ZIP MONEY for a business in Australia.

71    Following their initial discussions, Messrs Gray and Diamond decided to work on the digital short term lending business together.

72    Mr Gray recalls that in early 2013 shortly after his initial discussions with Mr Diamond described at [68] above, he undertook some internet searches in relation to the name ZIP. He undertook these searches reasonably frequently during this period because online research was part of the process of scoping out and identifying the opportunity for the online retail consumer lending business. Mr Gray does not recall all of the search results but does recall that some of them related to zip taps, which he has seen in use in offices, and that none of the searches generated any reference to Firstmac or any products provided by it.

73    During the first half of 2013 Messrs Diamond and Gray worked on developing the preliminary business model for the business, including developing the product they intended to offer and the technology required to support that product. Mr Diamond explained that this required a great deal of work by both of them. Between them they focussed on pitching the potential business to retailers (such as Kogan and Zuji), working out how to build a real time credit platform, seeking out seed capital and loan book funding, developing the economic model for the business and identifying key staff for recruitment.

74    Mr Gray also recalls that up until June 2013 he and Mr Diamond had been using the names ZIP and ZIP MONEY for the business and that while they had discussed some other names he regarded ZIP and ZIP MONEY as the preferred option.

75    By about June 2013, Messrs Diamond and Gray decided that they definitely wanted to use the names ZIP and ZIP MONEY for the business. Mr Diamond thought that they had progressed far enough with planning for the business to create a corporate structure. For that purpose, on 24 June 2013, he arranged, through his accountant, Quantum Partners, for the incorporation of Zipmoney Pty Ltd, now Zipmoney Payments, and Zipmoney Holdings. Mr Diamond said that the use of the words ZIP and MONEY as a part of these corporate names followed on from his and Mr Gray’s plan to use the names ZIP and ZIP MONEY for the business.

76    At about the time of the incorporation of the companies referred to in the preceding paragraph Mr Gray undertook some further internet searches in relation to the name ZIP. While he could not recall all of the results that came up in these searches, and did not keep records of them, he does recall that he did not see any reference to Firstmac or any products provided by it at the time.

77    In the preliminary phase of building and establishing the ZIP business, Mr Gray also applied to the Australian Securities and Investments Commission on behalf of Zipmoney Pty Ltd for an Australian Credit Licence to permit Zipmoney Pty Ltd to engage in credit activities. On 3 September 2013 Zipmoney Pty Ltd obtained credit licence no. 441878.

78    In late November 2013 Zipmoney Pty Ltd partnered with its first Merchant, Chappelli Cycles, and sometime after that it began offering credit and payment services to customers of Chappelli Cycles in Australia.

79    A screenshot of part of the www.zipmoney.com.au website as at 25 January 2014 obtained from the Wayback Machine appeared as follows:

Mr Gray accepted that, while he would need to check the Zip Companies’ records, it was likely that the five Merchants shown there were those who had signed up as at late January 2014.

2013 trade mark applications

80    Once Messrs Gray and Diamond had decided to use the names ZIP and ZIP MONEY, they commissioned the design of logos that could be used for the business. Mr Diamond commissioned a designer in Sri Lanka (whose name he cannot now recall) to design them. They also used a business called 99 Designs for alternative ideas. Ultimately Messrs Gray and Diamond settled on the logo designs presented by the Sri Lankan designer which were as follows:

The branding of the ZIP business has evolved over time and these logos are no longer used.

81    On 19 and 20 August 2013 Zipmoney Pty Ltd filed trade mark applications no. 1575528 and no. 1575717 for the logos set out above (2013 trade mark applications). Prior to filing the applications Mr Diamond did not do a search of the trade mark register and Zipmoney Pty Ltd did not seek any legal advice about registering these logos as trade marks. At the time, Mr Diamond thought it would be a straight forward process to register a trade mark. He was also very conscious about how they spent money as they had limited funding to get the business off the ground and he was keen to avoid any unnecessary outgoings. Legal advice about trade marks fell into that category at the time.

82    Mr Diamond does not recall what prompted Zipmoney Pty Ltd to file the 2013 trade mark applications but does recall he filed the applications himself. But in cross-examination he accepted that the 2013 trade mark applications were made to protect their rights, i.e. use of the trade marks, for when the business which they were focussed on building, was operational.

83    In cross-examination Mr Diamond also accepted that between June and mid-August 2013 he took some steps to inform himself about trade marks and their registration and he made the applications because he understood that trade marks could be registered. Relevantly, senior counsel for Firstmac, Mr Webb SC, had the following exchange with Mr Diamond:

Mr Webb:    You agree, don’t you, with this proposition: knowing that trade marks were capable of registration, or that there was a registration system for them, and that registration gave protection in respect of them, at that time you understood it would be prudent business practice to seek registration of a trade mark you intended in future to use in a business?

Mr Diamond:    Yes.

84    At some time later in 2013, Zipmoney Pty Ltd received adverse examination reports from IP Australia in relation to the 2013 trade mark applications (2013 Adverse Reports). Those reports were sent to the address PO Box 1501, Bondi Junction, NSW, 1355, which was a post office box that Messrs Gray and Diamond used for the business at the time. Mr Gray was responsible for clearing the PO Box. He recalls collecting the 2013 Adverse Reports from the PO Box. 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. 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, although he does not recall taking in that the 2013 Adverse Reports referred to Nationale Limited, which he now knows to be a former name of Firstmac, or the Applicant’s Mark.

85    As Mr Gray was not the person responsible for the 2013 trade mark applications, he provided the 2013 Adverse Reports to Mr Diamond.

86    The 2013 Adverse Reports were dated 1 and 16 October 2013 respectively and included:

(1)    in relation to application no. 1575528 for ZIP MONEY logo under the heading “What are the problems with your trade mark?”:

Your trade mark is identical to or closely resembles trade mark number 1021128. This trade mark has an earlier priority date and is for the same or similar goods or services.

•    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 because you have claimed a variety of services in Class 36 relating to advice in relation to credit and the provision of credit and the earlier mark has claimed financial affairs (loans) in Class 36.

I have enclosed details of this trade mark.

(2)    in relation to application no. 1575717 for the ZIP logo under the heading “What are the problems with your trade mark?”:

Your trade mark is identical to or closely resembles the following trade marks. These trade marks have earlier priority dates and are for the same or similar goods or services:

879664, 1021128

Trade mark number: 879664

•    Your trade mark /closely resembles the earlier trade mark because the prominent and memorable element of both trade marks is the word ZIP.

AND

•    The services are similar because you have claimed various general financial and financial advisory services in Class 36 and the earlier mark claims “advertising; business management; business administration; office functions; the activities may be carried out on-line via the Internet” in Class 35. General financial and financial advisory services are often provided incidentally with the types of business administration and management services claimed by the earlier trade mark.

Trade mark number: 1021128

•    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 because you have claimed a variety of services in Class 36 relating to advice in relation to credit and the provision of credit and the earlier mark has claimed financial affairs (loans) in Class 36.

I have enclosed details of these trade marks.

87    Mr Diamond recalls being aware in about late 2013 that Zipmoney Pty Ltd had received the 2013 Adverse Reports but at the time he gave them only cursory attention. He did not focus his attention on understanding or addressing the issues raised in them and he does not recall reading them in any detail. At the time:

(1)    his time was dominated by a number of commercial issues;

(2)    the second half, and particularly the last quarter, of 2013 was a hectic time for him and Mr Gray;

(3)    they were in the middle of launching the ZIP business, which involved a number of urgent commercial challenges; and

(4)    Mr Diamond was heavily focussed on building and testing the Zip Money product; developing relationships with potential retailer Customers; and securing funding for the loan book that would underpin the business. The latter was a particularly critical issue at the time as some of the early shareholders who had committed to provide funding had pulled out and there was an urgent need to find alternate funding.

88    Following receipt of the 2013 Adverse Reports, Zipmoney Pty Ltd did not seek any legal advice in relation to the 2013 trade mark applications. It did not occur to Mr Diamond to do so.

89    Similarly, throughout 2013 and 2014 Mr Gray was occupied with launching the ZIP business and with issues that were urgent and commercially critical including for example:

(1)    creating a business plan;

(2)    developing the suite of business policies and procedures that would underpin the ZIP business;

(3)    developing the credit decision technology which is the “engine” that sits behind the Zip platform;

(4)    developing the interface between the ZIP business and online retail platforms;

(5)    securing seed capital and loan book funding;

(6)    strategic hiring of key personnel;

(7)    building awareness of the ZIP business and building the Merchant base; and

(8)    managing regulatory filings (most notably the credit licence, which was a substantial undertaking), registration and reporting.

90    At the time, given his focus on commercial issues, Mr Gray did not treat the 2013 Adverse Reports as an important commercial issue and did not take any steps to respond to them. During 2014 and early 2015 he focussed his energy on building the ZIP business which was beginning to make progress in the market. The issue of obtaining trade mark registrations did not seem commercially significant or pressing to him at the time.

91    In cross-examination Mr Diamond gave the following evidence about the 2013 Adverse Reports and the steps taken after their receipt:

Mr Webb:    Yes. And you knew that what it was saying was there was an obstacle to the registration on your application and it was the trademark that’s referred to at page 2980?---

Mr Diamond:    We knew that there was a, you know, potential issue, but, again, we felt that we had done extensive research and felt that we had sort of satisfied that, and we were very focused on the business at the time.

Mr Webb:    And by that do you mean to say that you received the report, understood it was adverse, and were happy to go ahead and adopt or start using Zip Money in the business once established, in any event?

Mr Diamond:    No, I would frame it more we had done an extensive online research to – to – to satisfy ourselves that – that – that no one else was using this particular name, and we were very focused on trying to get a business off the ground, given our limited funding, and – and that was really concerning most of my time, to ensure that we could, I guess, continue the viability of the business. So, you know, that – that really was the – the primary focus.

Mr Webb:    So because of the demands on your time, I take it from what you’ve just said, you decided not to bother with pursuit of the application for registration of Zip Money. Is that correct?

Mr Diamond:    The – the commercial needs of the business were more focused on trying to stand up a business, more so than focusing on trademarks at that point in time.

92    Throughout 2014 and early 2015, Mr Diamond was focussed on establishing and building the ZIP business. It was an exciting and challenging period for him. New commercial opportunities and challenges were arising frequently and he was fully occupied addressing them. Mr Diamond explained that funding the business remained a critical and time-consuming issue. In 2014, the business had more or less run out of money and a number of people in the business were working for free. The majority of Mr Diamond’s time was consumed by trying to raise funding to keep the business afloat. In those circumstances, Mr Diamond did not regard obtaining trade mark registrations as a commercial priority.

93    Despite this, Mr Diamond noted that he has been subsequently informed by the Zip Companies’ then lawyers, Corrs Chambers Westgarth, that on 8 December 2014 Zipmoney Pty Ltd applied for an extension of time to respond to the 2013 Adverse Reports, an application for extension of time was made and an extension of one month was granted by IP Australia in respect of each trade mark application. The applications for extension of time were made in Mr Diamond’s name but he has no recollection of seeking the extension or why he did so. In cross-examination Mr Diamond explained that it was a very tense time and he was focussed on difficult commercial and viability matters with the business needing funding. As a result the 2013 trade mark applications did not get a lot of his attention.

94    Ultimately, Zipmoney Pty Ltd did not respond to the 2013 Adverse Reports and on 1 and 16 February 2015 respectively the 2013 trade mark applications lapsed.

Internet searches

95    In the course of planning and developing the ZIP business, Mr Diamond searched the internet on a number of occasions in relation to the name ZIP, although he cannot now recall the dates he undertook those searches and he did not keep a record of them. Mr Diamond recalls that his searches often turned up references to zip hot water and filtered taps.

96    Once the ZIP business had been launched, Mr Diamond regularly did searches for the name ZIP to see how the ZIP business was being referred to on the internet, which he considered to be an important way of tracking the progress of the business. While Mr Diamond cannot say precisely when he did those searches, his evidence was that they were a common part of his working week in the early days of the ZIP business. In undertaking those searches he does not recall ever seeing a reference to Firstmac or any use by it of the name ZIP.

97    From at least 2013 and throughout 2014 and 2015 Mr Gray also regularly undertook internet searches for ZIP and ZIP MONEY to see whether the ZIP business was being mentioned on internet pages. This was a day to day activity for Mr Gray and one of the ways he tracked the progress of the business. In the course of undertaking those searches and looking at the results Mr Gray did not recall seeing any search results which referred to Firstmac or any products provided by it.

Rubianna Resources Limited and the reverse takeover

98    On 8 April 2015 Rubianna Resources Limited, a mining and resources company listed on the Australian Stock Exchange (ASX), announced an option agreement to acquire Zipmoney Pty Ltd via the acquisition of all the issued shares in its parent company, Zipmoney Holdings.

99    On 4 June 2015 Rubianna Resources announced to the ASX that it had exercised its option to acquire 100% of the issued shares in Zipmoney Holdings and its subsidiaries.

100    The following exchange took place between Mr Webb SC and Mr Gray during cross-examination in relation to the rationale behind the transaction with Rubianna Resources:

Mr Webb:    Yes. So that in June 2015 there was an agreement between Rubianna and the second respondent and companies associated with it for the acquisition of the business?

Mr Gray:    Yes.

Mr Webb:    Yes. And what I want to suggest to you – that the existing facility as at that date, that is, the making of that agreement by exercise of the option in June 2015 was $5 million. The existing facility was $5 million?

Mr Gray:    Yes.

Mr Webb:    You agree with that?

Mr Gray:    Yes.

Mr Webb:    Thank you. And, so, it was as part of the steps taken towards the reverse listing that the total facility was increased to 20 million?

Mr Gray:    Yes.

…

Mr Webb:    All right. I mean what the listing agreement involved was a movement from that current facility to an institutional funding agreement or facility with Columbus. You remember that?

Mr Gray:    Yes.

Mr Webb:    Yes. Which was properly described a warehouse facility?

Mr Gray:    Yes.

Mr Webb:    Yes. So there was a step taken – I’m sorry, I withdraw that. So what was happening in this process was you were severe – the Zip Money companies were severely constrained by their ability to grow the business through to June 2015 because they only had $5,000,000 of funding for their loan book?

Mr Gray:    No, we weren’t severely constrained; it was a function of our size at the time. We’ve always had the ability … the increase our facilities as and when it has been required.

Mr Webb:    And you wanted to grow the business and you needed more funding to do that?

Mr Gray:    Yes.

Mr Webb:    For your loan book?

Mr Gray:    Yes.

Mr Webb:    Yes. So what you did was pursue this backdoor listing to achieve an ability to grow?

Mr Gray:    Generally, yes.

Mr Webb:    Yes. And it was a staged process where you used the fact of the agreement for the backdoor listing to top up the five to 20,000,000 and built into the listing agreement an arrangement to shift to a warehouse facility of an equivalent amount?

Mr Gray:    Yes.

101    From mid-June 2015 drafts of the prospectus were circulated.

102    On 28 July 2015 Mr Gray was appointed chief operating officer and a director of Rubianna Resources.

103    On 11 August 2015 Rubianna Resources issued the prospectus for a public offering of 20 million shares at an issue price of $0.20 per share to raise a minimum of $4 million, with the ability to raise a further $1 million up to a maximum of $5 million.

104    On 19 August 2015 Zipmoney Holdings and Zipmoney Payments raised $5 million in capital as part of the reverse takeover of Rubianna Resources.

105    On 7 September 2015 Rubianna Resources was renamed Zipmoney Limited, on 21 September 2015 Zipmoney Limited reverse listed on the ASX and on 7 December 2017 Zipmoney Limited was renamed to Zip Co.

2015 trade mark applications

106    On 24 June 2015 John Winters, a private wealth advisor with Shaw & Partners, advisor to Rubianna Resources in relation to the transaction, sent an email to James Omond of Omond & Co, trade mark attorney, with subject “In confidence – zipMoney IP report/audit” and three attachments described as “DRAFT IP Report.pdf”, “20150526 Letter to Rubianna Resources.pdf” and “20150526 IP Audit Report zipMoney.pdf”.

107    On 25 June 2015 Omond & Co filed four trade mark applications on behalf of Zipmoney Payments (2015 trade mark applications) for registration of the following marks in class 36 for “Electronic payment services; Financial payment services; Payment administration services; Payment transaction card services; Loan services; Provision of loans; Advice regarding credit; Consumer credit services; Credit (financing); Financial credit services; Provision of credit; Provision of credit information; Provision of trade credit”:

(1)    application no. 1703059 for:

(2)    application no. 1703060 for:

(3)    application no. 1703102 for the word ZIP; and

(4)    application no. 1703103 for the word ZIPMONEY.

108    On 21 July 2015 the Trade Marks Office issued adverse examination reports for applications no. 1703059, no. 1703060 and no. 1703102 and on 22 July 2015 the Trade Marks Office issued an adverse examination report for application no. 1703103. In each case the Trade Marks Office reported that the application did not meet the requirements of the TM Act because it was similar to other trade marks, citing s 44 of the TM Act. The other trade marks were, in the case of applications no. 1702059 and no. 1703103, registered trade mark no. 1021128 owned by Nationale (i.e. the Applicant’s Mark) for the word ZIP and, in the case of applications no. 1703060 and no. 1703102, registered trade mark no. 1021128 owned by Nationale (i.e. the Applicant’s Mark) for the word ZIP and registered trade mark no. 879664 owned by Creative On-Line for the word ZIPFUND.

109    Part 1.3 of the prospectus, titled “Key Risks”, included in relation to “Registering trademarks”:

zipMoney has applied to IP Australia for the registration of its trademarks and awaits confirmation. The Proposed Directors note there are a number of prior trademarks with regard to similar trademarks. There is a risk that the owners of these trademarks may assert rights against zipMoney in relation to the use of the zipMoney trademarks and/or oppose the trademark applications made by zipMoney

This was further explained in part 8 of the prospectus titled “Risk Factors” as follows:

(i)    Registering trademarks

zipMoney does not currently own its trademarks and has applied for registration of these with IP Australia. The Proposed Directors note there are a number of prior marks with regard to similar trademarks. There is a risk that the owners of these trademarks may assert rights against zipMoney in relation to the use of the zipMoney trademarks and/or oppose the trade mark applications made by zipMoney.

110    Mr Gray and Mr Diamond were each cross-examined about this disclosure in the prospectus:

(1)    Mr Gray gave the following evidence:

Mr Webb:    Yes. I want to suggest to you that you applied for trademarks at that time so that you could say that you had made an application as part of designing this statement for inclusion in the prospectus. Do you accept that?

Mr Gray:    I didn’t make the applications, I couldn’t accept that.

Mr Webb:    Is it the case that questions of trademark were outside your responsibility as at August 2015?

Mr Gray:    My direct area of focus would have been on other things, yes.

Mr Webb:    Yes. But you were in fact a director of Zip Money at all times up to August 2015, weren’t you?

Mr Gray:    Yes.

Mr Webb:    Yes. And by July 2015 you had also been made a director of the resources company, hadn’t you? And that was part of the process of?

Mr Gray:    Correct.

Mr Webb:    listing?

Mr Gray:    Yes.

Mr Webb:    And you were one of the directors making the statement in this section of the risk in relation to registration trademarks?

Mr Gray:    I was a director at the time, yes.

Mr Webb:    Yes. And the answer to my question is what?

Mr Gray:    Sorry, what’s the question?

Mr Webb:    You were one of the directors making this statement to the market about risk in August 2015, weren’t you?

Mr Gray:    Yes.

Mr Webb:    Yes. And you informed yourself as to the appropriateness of that statement for the purpose of agreeing to the issue of the prospectus, didn’t you?

Mr Gray:    Yes.

Mr Webb:    Yes. And what did you do to satisfy yourself as to that matter?

Mr Gray:    I don’t recall.

Mr Webb:    You don’t recall what you did?

Mr Gray:    As I’ve indicated, it’s one of numerous risks here and my direct area of focus was on some significant other risks that are outlined here as well.

Mr Webb:    It was an important matter, wasn’t it?

Mr Gray:    One of many important matters.

…

Mr Webb:    It was a very important matter, wasn’t it?

Mr Gray:    It was one of the many risks called out in the prospectus.

Mr Webb:    Are you unwilling to agree with the proposition that the securing of registered trademarks was a very important matter for both the second respondent and the first respondent at this time?

Mr Gray:    Important matter, and it’s called out in the risks.

(2)    Mr Diamond gave the following evidence:

Mr Webb:    You’re aware of the note in the prospectus as to risk?

Mr Diamond:    Yes.

Mr Webb:    In respect of that matter, without seeing it now. I’m just asking whether you feel comfortable with agreeing with me without looking at the prospectus to confirm it?

Mr Diamond:    I – I recall that that was a risk in the prospectus.

Mr Webb:    Yes. And you know, don’t you – or you knew by at least June 2015 that that risk arose because of the two registered trademarks which were cited in the adverse reports we looked at a little while ago?

Mr Diamond:    Yes.

Mr Webb:    Yes. And although your initial applications for Zip Fund had lapsed in, I think, February 2015 fresh applications for those same marks were applied for in June 2015. You agree with that?

Mr Diamond:    Do I agree that trademarks were made in – fresh trademarks were made in 2015?

Mr Webb:    Yes, in June 2015?

Mr Diamond:    Yes. We were – we were – we had – by 2015, if I recall, we had also appointed a legal advisor, James Omond, who was looking after these matters.

Mr Webb:    Right. But all I’m asking you is whether you agree, firstly, that the risk identified was the risk posed to you obtaining registration by the two registered trademarks which were referred to in the adverse reports. Do you agree with that?

Mr Diamond:    Yes.

Mr Webb:    And then I want you to also tell me whether you agree that they represented a risk because they stood in the way of applications which were made by the company in June 2015?

Mr Diamond:    We identified them as a risk as part of the due diligence process.

111    On 14 August 2015:

(1)    Mr Omond undertook internet searches to establish when Firstmac stopped using the Applicant’s Mark and sent copies of the documents to Mr Diamond;

(2)    Mr Omond sent an email to Mr Diamond with subject “Trade Mark Removal actions – update”. One of the attachments to that email is described as “DRAFT Letter to FirstMac requesting consent – draft.pdf”; and

(3)    it appears that Mr Diamond sent a calendar invitation to Mr Gray and Adam Finger also of the Zip Companies with subject “ATTACK FIRSTMAC TRADEMARK ‘ZIP’ @ Mon Feb 1, 20162pm – 3pm” although Mr Diamond maintains the date of despatch must be wrong.

112    Mr Diamond accepted that he did not communicate with Firstmac in the period from 14 August 2015 to the end of 2015.

113    In August 2015 Zipmoney Payments filed an application to remove registered trade mark no. 879664 for ZIPFUND from the Register for non-use.

114    On 10 December 2015 Omond & Co filed a trade mark application on behalf of Zipmoney Payments for registration of the word mark ZIPPAY in class 36 for “Electronic payment services; Financial payment services; Payment administration services; Payment transaction card services; Loan services; Provision of loans; Advice regarding credit; Consumer credit services; Credit (financing); Financial credit services; Provision of credit; Provision of credit information; Provision of trade credit” (ZIPPAY Application).

115    On 8 March 2016 the Trade Marks Office issued an adverse examination report in relation to the ZIPPAY Application. The Trade Marks Office indicated that the ZIPPAY Application did not meet the requirements of the TM Act because the mark applied for, ZIPPAY, closely resembled trade mark registered no. 1021128, i.e. the Applicant’s Mark, and the services for the mark the subject of the ZIPPAY Application and the services for the Applicant’s Mark are similar.

The ZIP business

116    As set out at [3] above, the Zip Companies operate a predominantly closed loop retail payment platform. The Zip Companies offer products and services to both consumers and retail businesses. They offer point-of-sale line of credit products online and in-store through the website www.zip.co, the Zip mobile application (Zip App) and via Merchants, both in-store and on Merchants’ websites at checkout. The Zip Companies have two consumer credit products, namely, Zip Pay and Zip Money (together the Zip Products).

117    The Zip Money product has been available to Australian Customers since about November 2013. It allows Customers to access up to $30,000 via a revolving line of credit. There are interest free terms available on every purchase and it is generally used for larger purchases. It is a regulated credit product subject to the National Consumer Credit Protection Act 2009 (Cth).

118    The Zip Pay product has been available to Customers since about December 2015. It allows Customers to access up to $1,500 via a revolving line of credit. Zip Pay has removed the concept of interest and is always interest free. It is typically used for smaller everyday purchases.

119    The Zip Companies offer Merchants a range of services, including lead generation, marketing, a no fraud or charge back guarantee, and a digital payment platform that enables a Merchant to accept payments for its goods and services from Zip Products account holders. Similar to a credit card, Merchants receive payments directly from the Zip Companies and a debit is raised to the Customer’s account. Under a merchant services agreement between the Merchant and Zipmoney Payments, the Merchant is charged a merchant services fee for the services it receives from the Zip Companies.

120    The Zip Companies derive revenue by charging monthly account keeping fees and interest (for Zip Money only) to Customers and via the merchant services fees charged to Merchants.

121    The total number of Merchants partnering with the Zip Companies, for the financial year ended 30 June 2016 to the financial year ended 30 June 2019, as taken from the Zip Companies’ annual reports, is as follows:

122    The total number of Customers for the financial year ended 30 June 2015 to the financial year ended 30 June 2019, also taken from the Zip Companies’ annual reports, is as follows:

123    The Zip Companies also track the Total Transaction Volume (TTV) of the Zip Payment Platform which is the total amount of transactions made using Zip Products at Merchants. The TTV for the financial year ended 30 June 2015 to the financial year ended 30 June 2019, as taken from the Zip Companies’ annual reports, is as follows:

124    Revenue for the Zip Companies, as taken from the annual reports for the financial year ended 30 June 2013 to the financial year ended 30 June 2019 is as follows:

125    I make the following observations about the revenue figures recorded in the preceding paragraph:

(1)    as Zipmoney Payments only signed up its first retailer in November 2013 and as Mr Gray accepted, the revenue earned in the financial year ended 30 June 2013 was not earned from the credit facility business;

(2)    Mr Gray accepted, having regard to Zipmoney Payments’ financial statements for the financial year ended 30 June 2014, that Zipmoney Payments’ revenue from the credit facility business for that period was $4,333 rather than the amount shown above which includes “other income”; and

(3)    based on Zipmoney Limited’s annual report for the financial year ended 30 June 2016 it is apparent that for the financial year ended 30 June 2015 Zipmoney Payments’ revenue from the credit facility business was $399,585. Once again the figure disclosed above includes other income.

126    The Zip Companies have partnered with Merchants across a number of retail sectors. As at 30 June 2019 payments using Zip Products were accepted by Merchants in all states and territories of Australia including in the following retail sectors:

(1)    women’s, men’s and kids fashion;

(2)    electronics;

(3)    home improvements;

(4)    home installations;

(5)    home and office décor and appliances;

(6)    food and drink;

(7)    health and beauty;

(8)    sports and recreation;

(9)    travel, experiences and accommodation;

(10)    services;

(11)    toys and hobby;

(12)    education;

(13)    books;

(14)    music and AV; and

(15)    tools.

127    The Zip Companies also keep records of the location of their Customers and Merchants. The number of Merchants with physical stores offering Zip Products by state or territory as at 30 June 2019 was as follows:

128    Mr Gray explained that since 30 June 2019 the number of Merchants and the Customer base of the ZIP business has grown. As at 30 June 2020 it had 24,317 Merchants and 1,871,485 Customers.

Promotion of ZIP and the Zip Products

129    A summary of the Zip Companies’ approximate marketing expenditure for the financial years ended 30 June 2013 to 30 June 2019, as extracted from the Zip Companies’ financial records and annual reports, is as follows:

130    In August 2016 the Zip Companies first employed someone to formally occupy a marketing role. Since then the marketing team has grown and as at 18 February 2020 consisted of 33 employees responsible for acquiring more Customers and increasing transaction frequency across Merchants. Seventeen of those employees are employed on a fulltime basis.

131    When a Merchant partners with the Zip Companies, the Zip Companies assist the Merchant with integrating the Zip Payment solution into the Merchant’s business. This involves providing guidance to the Merchant on how to best display the Zip Products (or product) and Zip trade marks to its Customers and advertise that it now accepts payment via the Zip Products.

132    The merchant services agreement (see [119] above) requires the Merchants to display, either on their website or their premises, signs advertising Zip Payment services and promotional material supplied by ZIP.

133    The Zip Companies have published a Zip Pay best practice integration user guide for Merchants and a Zip Money best practice integration user guide for Merchants. Mr Gray explained that during “onboarding” of a Merchant online, the Zip Companies recommend as best practice that the Merchant has a Zip landing page which explains the Zip Products and features to consumers. The best practice guides illustrate how the Zip Companies guide Merchants on how to promote the Zip Products on their websites, including by displaying the relevant logos on the homepage, a landing page, the product page and the checkout page.

134    The Zip Companies also produced a Zip Pay in-store best practice guide and a Zipmoney Payments in-store best practice guide for Merchants which provide guidance on how to promote the Zip Products in a Merchant’s physical retail store and how the Zip Companies’ trade marks should be displayed to consumers.

135    According to Mr Gray, Merchants promote the Zip Products in various forms and locations across their stores and examples of Merchant promotion are collected by the Zip Companies and stored using an internal communication platform. A number of screen captures taken by Zip employees which Mr Gray caused to be retrieved from the Zip Companies’ business records, showing promotion of Zip Products across 40 Merchant store locations in calendar year 2018, were in evidence before me. By way of example they included:

136    Mr Gray also explained that in his experience it is common practice for Merchants to advertise Zip Products to their Customers via owned or paid marketing channels. Owned channels are those that a brand owns or over which it has complete control, in terms of the publishing and creation of the content that appears through them. Owned or paid marketing channels include electronic and direct marketing, social media and above the line media, which includes large format digital and print outdoor. Merchants promoting the Zip Products via Merchant owned and paid marketing channels were in evidence before me including:

137    Since 2014 the Zip Companies have tracked and recorded instances where Customers sign up to Zip Products. One of the ways they do this is by embedding URL links in Merchant websites so that when a prospective customer clicks on one of these unique URL links it directs the customer to a Zip sign up page. The redirection is recorded in the Zip Companies’ database. The number of new Customers who have signed up to a Zip Product via a Merchant, either online or in-store in each calendar year from 2014 to 2019, is as follows:

138    The Zip Companies also undertake joint marketing with select Merchants to produce advertising and promotional material that leverages association of the Zip Products and the Merchant’s brand. They focus on joint marketing with Merchants that have a large customer base and hold significant brand awareness among consumers such as, for example, Bunnings, AirAsia, Big W and Officeworks. When the Zip Companies choose to market with a Merchant the parties agree on a “go-to-market” plan and marketing materials are then created which align with the respective brand guidelines of both the Zip Companies and the Merchant.

139    The Zip Companies also engage in their own direct marketing of Zip Products to consumers for the purpose of creating brand awareness and consideration, attracting new Customers and driving frequency of usage of the Zip Products with Merchants. Mr Gray explained that the Zip Companies have increased their focus on this marketing strategy in the last few years with campaigns developed across owned channels, i.e. website, native app, emails, push notifications, SMS, social platforms, paid channels, i.e. large format digital and print outdoor and radio, and public relations, i.e. media releases. As the business has evolved it has become a core focus of the Zip Companies’ marketing strategy to build independent head brand awareness, resulting in a rebranding in 2018.

ZIP Websites

140    The Zip Companies own the following domain names:

(1)    www.zipmoney.com.au since 19 November 2012;

(2)    www.zipmoneylimited.com.au since 7 September 2015;

(3)    www.zippay.com.au since 10 October 2015; and

(4)    www.zip.co since 19 January 2017.

141    The Zip Companies previously maintained two separate websites for the Zip Products at zippay.com.au and zipmoney.com.au respectively. In 2018 the Zip Companies redirected the separate Zip Pay and Zip Money websites to www.zip.co as part of their rebranding strategy. The website at www.zip.co incorporates both Zip Products and is now the primary online presence for the Zip Companies. The websites at www.zip.co, www.zippay.com.au and www.zipmoney.com.au are referred to collectively as the Zip Customer Websites. The website www.zipmoneylimited.com.au is not included as one of the Zip Customer Websites as it is directed to investors of Zip Co.

142    The Zip Customer Websites have experienced a consistent increase in “unique user traffic” over time. Mr Gray explained that “unique user traffic” refers to the number of people visiting the particular Zip Customer Website. Based on data compiled using Google Analytics, in December 2019 the unique user traffic for the Zip Customer Websites was in excess of 3.6 million unique users.

143    The Zip Customer Websites contain “Merchant Tiles” which advertise Merchants and link users to Merchant websites. Users of the Zip Customer Websites can browse through the displayed Merchants or can filter Merchant tiles by category, by refining through filters, such as shopping available online or in-store, or with promotional offers. Customers can click on a Merchant tile and be directed to the selected Merchant website. Mr Gray explained that this is a key channel of lead generation for Merchants.

144    As at May 2020 an “apply now” button appeared on the Zip Customer Websites homepage which allow users to apply for a Zip Product account. In addition, new or prospective users can learn about Zip Products by viewing the “How it works” tab on those websites.

Zip App

145    The Zip App is available for download on iOS and Android mobile devices and has been available since its release in July or August 2018. The Zip App allows Customers to sign up to a Zip Product account, monitor their spending, adjust repayment amounts, make purchases and view monthly statements.

146    The Zip Companies use iTunes to manage the iOS Zip App version releases as well as to check statistics related to use of the Zip App on a daily to weekly basis. They use Google Play to manage the Android Zip App version releases as well as to check statistics on a daily to weekly basis.

147    Using iTunes the Zip Companies track “iOS App Download Units” which are the number of first time downloads of the app and “iOS Session Units” which are the number of times the app has been used for at least two seconds. Using Google Play the Zip Companies track “Android User Acquisitions” which is the number of people who have downloaded the Android app and installed it in the given interval. The equivalent of iOS Session Units is not available data for Android apps. Set out below are a summary of iOS Download Units, iOS Session Units and Android User Acquisitions at six monthly intervals from July 2018 to February 2020:

Social media

148    The Zip Companies have active social media presence across the following platforms:

(1)    Facebook since 2016;

(2)    Instagram since 2016;

(3)    Twitter since 2013; and

(4)    LinkedIn since 2013,

(collectively, Zip Social Media Platforms).

149    On 16 April 2020 Mr Gray visited the Zip Companies’ social media platforms and recorded the number of followers for each platform as follows:

150    As part of their social media engagement strategy, the Zip Companies include on the Zip Customer Websites links to their Instagram, Facebook, Twitter and LinkedIn accounts. According to Mr Gray there has been increasing engagement with the Zip Social Media Platforms, particularly in the last two years. For example the Zip Facebook account had 22,034 likes as at 20 January 2018 and 42,727 likes as at 16 April 2020.

151    The Zip Companies’ Facebook and Instagram accounts display examples of products and services offered by Merchants, allowing users to explore what is available to them by signing up to a Zip Product. Merchants are referred to and linked in Zip’s Facebook and Instagram posts and variants of the hashtag #ownitnowpaylater are used. Mr Gray explained that a hashtag is a method of cataloguing the contents of an image or post on a social media platform so that it can be grouped with other photos and posts that also contain that hashtag. Each of the Zip Social Media Platforms features the logo. For example a copy of the Zip Companies’ Twitter page appears as follows:

152    As at 13 March 2020 the hashtag #zippay had 189,155 posts on Instagram, which included posts by the Zip Instagram and Merchant accounts as well as by individuals who had decided to include the hashtag in their post.

2018 rebrand

153    In about December 2016 the Zip Companies engaged Christopher Doyle & Co, a marketing agency, to undertake a brand identity assessment and redesign the ZIP brand. In about June 2017 Christopher Doyle & Co presented its proposed rebrand strategy to the Zip Companies which involved renaming Zipmoney Limited to Zip Co and adopting a master brand name of “Zip” such that any products offered by the Zip Companies would be subordinate to the master brand name, such as ZIP PAY and ZIP MONEY. The rebrand also included new logos and fonts.

154    On 19 June 2018 the Zip Companies rolled out the rebrand based on the concept proposed by Christopher Doyle & Co including across all Merchants. This involved tailoring specific rebrand instructions for major Merchants, instructing them on how to implement the rebrand on their websites and in-store and how to use the head brand name “Zip”.

155    The Zip Companies also adopted the new logo and brand strategy on all of the Zip Customer Websites and their marketing. The rebrand cost the Zip Companies approximately $1,089,089.

156    Mr Gray was cross-examined about the rebrand. He had the following exchange with Mr Webb SC:

Mr Webb:    And when you decided to rebrand in around the end of 2016 or 2017, is it the case that you considered rebranding in a way which might involve changing the name of the business from ZIP?

Mr Gray:    No.

Mr Webb:    No. You didn’t instruct Christopher Doyle & Co to consider whether there was a better name for the business at that time?

Mr Gray:    Don’t believe so.

Mr Webb:    Or to test any other names at that time?

Mr Gray:    I don’t believe so.

Mr Webb:    And if you’re engaged in a rebranding at that time, can you give us any reason as to why you wouldn’t have given consideration to moving the brand to a new address which included a whole new name?

Mr Gray:    The business was growing very rapidly and those sorts of changes are significant.

Mr Webb:    Although it was growing very rapidly, it was still at risk in relation to the use of the name, ZIP, wasn’t it, by reason of the fact that there were registered trademarks which prevented it obtaining exclusive rights through registration of its own trademarks, ZIP. You agree with that, don’t you?

Mr Gray:    Yes.

157    In the 12 month period after the rebrand, from June 2018 to June 2019, 564,858 people signed up to a Zip Product account and 5,649 retail stores became Merchants.

The “nothing comes between me and my” campaign

158    In November and December 2019 the Zip Companies undertook a direct marketing advertising campaign, called “nothing comes between me and my”, to promote the Zip Products. They engaged marketing agency Avenue C to run this campaign.

159    The “nothing comes between me and my” campaign was a multimedia campaign run in Sydney, Melbourne and Brisbane which used, among other mediums: large format out-of-home billboards positioned above or near busy roads; public transport signage; retail screen displays in Westfield shopping centres; and video advertisements on YouTube, 9Now, Ten Play and Quantcast. For example, the public transport signage displayed in Sydney, Melbourne and Brisbane in November and December 2019 as part of this campaign included:

160    In October 2019 the Zip Companies commissioned Roy Morgan to conduct research into the digital payment solutions market. As part of this engagement Roy Morgan provided the Zip Companies with a report titled the “Digital Payment Solutions Currency Report” which stated that as at October 2019 awareness of the ZIP brand was 30.3% of the total population surveyed.

161    In January 2020 Avenue C conducted a follow up campaign review for the “nothing comes between me and my” campaign which found that, for the campaign, each media format had different estimated reach within the targeted demographic of people aged 18 to 39, where the term “reach” refers to the percentage of the targeted population demographic exposed to a campaign’s media. Set out below is the estimated reach for the media formats of large format billboards, public transport signage and Westfield shopping centre advertisements:

Reach data for the online video advertisements was not available but Avenue C reported that the videos were viewed (in full) 4,512,510 times and had a 75% completion rate. That is, 75% of people presented with the video completed it and did not skip ahead.

162    According to Mr Gray the Zip Companies spent about $1.4 million on the “nothing comes between me and my” campaign in the last quarter of the financial year ended 30 June 2019. The campaign had an estimated reach of 83% of 18 to 39 year olds in Sydney, Melbourne and Brisbane which amounted to an estimated 4.3 million people.

Current trade marks and pending applications

163    According to Mr Gray, as at August 2020 Zipmoney Payments was the owner of the following registered Australian trade marks in class 36 and had the following pending trade mark applications also in class 36:

164    This proceeding was commenced on 20 June 2019. There was evidence of the following further trade mark applications which were made after that date by Zipmoney Payments:

(1)    application no. 2107867 on 30 July 2020 for ZIP BUSINESS in classes 9, 36 and 42;

(2)    application no. 2108801 on 7 August 2020 for TAP & ZIP in classes 9, 36 and 42;

(3)    application no. 2165839 on 24 March 2021 for ZIP in classes 9, 35, 36 and 42;

(4)    application no. 2184229 on 4 June 2021 for in classes 9, 35, 36 and 42; and

(5)    application no. 2206801 on 31 August 2021 for CAN I ZIP IT? in classes 9, 35, 36 and 42.

First awareness of Firstmac

165    Mr Diamond believes that he was aware of Firstmac before Zipmoney Pty Ltd received the 2013 Adverse Reports (see [84] above). He does not recall when or how he first became aware of Firstmac, but thinks it is likely in one of his previous roles in finance. Mr Diamond has become somewhat familiar with Firstmac and its business as a result of this proceeding, but he was not otherwise aware in any detail of the type of business it operated.

166    When Mr Diamond decided to use the ZIP brand, he was not aware that Firstmac had offered a loan product under the description ZIP or that it had a trade mark registration for the word ZIP. Even when Zipmoney Pty Ltd received the 2013 Adverse Reports, he did not focus on those matters. Firstmac did not cross Mr Diamond’s mind during the planning or launch of the ZIP business and he did not adopt the names ZIP and ZIP MONEY in an attempt to link the ZIP business in any way to Firstmac.

167    Mr Diamond also said that in conducting the ZIP business, he has never attempted to associate it with Firstmac or its products. To the contrary, he and the team in the ZIP business have attempted to develop a strong and independent brand identity for the ZIP business, a matter which he regards as critical to the success of the ZIP business. It has never been suggested to Mr Diamond by a consumer or a member of the finance trade that the ZIP business is in any way associated with Firstmac.

168    Mr Gray does not recall when he first became aware of Firstmac. Given his background in the finance industry he believes that it is likely that he was aware of Firstmac as a mortgage provider before he started working on the ZIP business. However, he never paid particular attention to Firstmac’s business and he too has only become more familiar with it as a result of this proceeding. At the time he and Mr Diamond were in the process of planning and launching the ZIP business, Mr Gray did not come across or think about Firstmac and was not aware of the Applicant’s Mark.

169    In Mr Gray’s dealings with the Zip Companies’ investors since 2013, Merchants and Customers, they have never suggested to him that the ZIP business is associated in any way with Firstmac. Mr Gray is not aware of any instance of a consumer contacting the Zip Companies when they were in fact trying to contact Firstmac.

Attempt to contact Firstmac

170    In the meantime on 13 June 2018, in an email from Mr Diamond to Mr Gray and Philip Crutchfield QC, a director of Zip Co, Mr Diamond suggested a process by which he would seek a meeting with Kim Cannon, the owner of Firstmac. This was the first time that Mr Diamond suggested that an appropriate way forward was to seek to open a line of communication with Firstmac.

171    Mr Diamond contacted Mr Cannon and in return on 19 June 2018 he received an email from Rod Minell, executive director, Firstmac suggesting they speak. I infer that discussion took place as on 20 June 2018 Mr Minell sent an email to Mr Diamond which included:

It is our intention to maintain ownership of the trademark.

Thank you for expressing your interest.

Proceeding before the Registrar of Trade Marks

172    On 19 August 2016 Zipmoney Payments filed an application under s 92(4)(b) of the TM Act seeking removal of the Applicant’s Mark from the Register (first non-use application). Firstmac filed a notice of intention to oppose the removal and a statement of particulars. Zipmoney Payments then filed a notice of intention to defend.

173    On 27 September 2018 a delegate of the Registrar of Trade Marks heard the matter and on 4 December 2018 the delegate published his decision: see Firstmac Ltd v Zipmoney Payments Pty Ltd [2018] ATMO 195 (Firstmac v Zipmoney). At [24] the delegate found that:

The totality of the evidence demonstrates that [Firstmac] has been offering loan products under the [Applicant’s Mark] from September 2005 and February 2013. [Firstmac] has continued to manage the ZIP product since then and at least until 11 November 2016, with correspondence and loan statements bearing the [Applicant’s Mark].

174    At [27] the delegate concluded that the evidence satisfied him that there “has been genuine commercial use of the [Applicant’s Mark] with respect to the specified services in the registration during the relevant period”. The relevant period for the purposes of s 92(4)(b) of the TM Act was the three years ending on 18 July 2016.

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.

2021 rebrand

176    In August 2021 Zipmoney Payments commenced a progressive rebranding, which included for example the following:

177    Mr Gray explained in cross-examination that it was undertaken in order to unify the brand given its recent acquisition in the United States of a buy now pay later business trading under the name QuadPay and to rebrand the latter with Zip. Mr Gray gave the following evidence:

Mr Webb:    And an opportunity was available at the moment that decision was made to investigate whether you might move from Zip in both markets to some entirely different branding?

Mr Gray:    Possibly, yes.

Mr Webb:    Yes. And why didn’t you do that?

Mr Gray:    We – it wasn’t on my radar.

Mr Webb:    It wasn’t on your radar?

Mr Gray:    No.

Mr Webb:    No. And since August 2021, when this branding started, you’ve made no – you’ve held – you – by you, I mean the respondents – have held a fixed intention to stick with Zip. Is that correct?

Mr Gray:    We’ve intended to stick with Zip, yes.

Mr Webb:    Yes. To the extent that you’ve not investigated since August 2021 any possible – or made any possible – any planning for a possible move from Zip to marks that don’t include Zip?

Mr Gray:    No.

Inconvenience if the ZIP business was required to rebrand

178    Mr Gray considers that, if as a result of this dispute, the Zip Companies were required to rebrand the ZIP business it would be a very substantial and expensive exercise and would require at least the following things to occur.

179    First, it would be necessary to identify a new brand that would be suitable for the business. This would involve both internal resources as well as external branding and marketing consultants and market research to test the way potential new brands are likely to be received by Merchants and Customers. Secondly, once a new brand was selected the process of rolling it out would involve a considerable amount of work including:

(1)    the development of style guides for internal use;

(2)    the development of guides for Merchants as to how the new brand can be used (both physically and online);

(3)    securing a new website(s) for the ZIP business and re-branding existing content for that new website;

(4)    the re-development of the Zip App to reflect the new branding;

(5)    securing new social media accounts to promote the newly adopted brand;

(6)    designing and implementing an education campaign for Merchants to ensure that the transition from the ZIP brand to the new brand is effective;

(7)    designing and implementing an education campaign for Customers to ensure that they are aware that the ZIP business is on-going, but operating under a different brand;

(8)    the preparation and distribution of new in-store and point-of-sale promotional materials (such as signage, decals, brochures etc.) to physical retail stores around the country; and

(9)    providing a comprehensive support program to retailers which operate online to assist them to adjust their online references to the ZIP business and to ensure that any links on their websites point to the new website for the ZIP business.

180    Mr Gray also noted that one of the significant issues the Zip Companies would face if required to rebrand would be the loss of the very substantial goodwill they have built up over the last seven years in the name ZIP. Mr Gray believes that goodwill is a very important aspect of the ZIP business and its success and that it would be very difficult to rebrand in a manner that successfully transferred much of the goodwill to the new brand. In addition, the ZIP business now operates in three countries: Australia, New Zealand and the UK. An important part of the Zip Companies’ branding strategy is to have a single brand across those regions. Accordingly, if a rebrand was required in Australia it would also be necessary to consider how this could be implemented in New Zealand and the UK.

181    Given the variables involved in a rebranding exercise Mr Gray was not able to give a precise estimate of the time and cost that would be involved. However he said that some guidance was provided by the cost incurred when the Zip Companies updated their branding in 2018 (see [153]-[157] above) which involved costs in excess of $1 million. Mr Gray noted that the ZIP business had expanded dramatically since 2018, as at 30 June 2020 the ZIP business had 24,317 Merchants and 1,871,485 Customers in Australia, and a complete rebrand would involve a great deal more work than the 2018 brand update. Accordingly, he believes that a complete rebrand would involve costs that are several times greater than the cost of the 2018 brand update and likely to be in the many millions of dollars.

Firstmac’s infringement claim

182    Firstmac relies on an amended originating application and a further amended statement of claim (FASOC). In its FASOC Firstmac alleges that:

(1)    since at least 2013 the Zip Companies had used signs for or containing ZIP as trade marks, including in stylised forms as depicted in the FASOC (referred to as the Respondents’ Marks and reproduced in Annexure A), and the domain name www.zip.co in relation to the provision of credit services by way of loans, lines of credit, point of sale credit, interest free finance and reusable accounts (referred to as the Respondents’ Services);

(2)    each of the Respondents’ Marks is substantially identical with, or in the alternative deceptively similar to, the Applicant’s Mark;

(3)    the Respondents’ Services are services in respect of which the Applicant’s Mark is registered, namely “financial affairs (loans)”, or in the alternative are services of the same description in respect of which the Applicant’s Mark is registered;

(4)    Firstmac has not licensed or approved the Zip Companies’ use of the Respondents’ Marks; and

(5)    by reason of the matters set out above: the Zip Companies have infringed the Applicant’s Mark and they threaten to continue to engage in the conduct as alleged and, unless restrained, will do so; Firstmac has suffered loss and damage by reason of the Zip Companies’ infringement of its mark; and by reason of that conduct the Zip Companies have wrongfully made, and will continue to make, profits which it would be unconscionable for them to retain.

183    The Zip Companies rely on their defence to the FASOC in which, among other things, they:

(1)    admit use of the Respondents’ Marks and domain names set out at [140] above from the dates set out in the defence in respect of “payment and credit services”;

(2)    admit that the name and trade mark ZIP is substantially identical to the Applicant’s Mark;

(3)    deny that each of the Respondents’ Marks is deceptively similar to the Applicant’s Mark;

(4)    subject to a denial as to the extent or description of the Respondents’ Services, admit that their “credit and payment services” are services, or in the alternative are services of the same description, in respect of which the Applicant’s Mark is registered;

(5)    admit that Firstmac has not licensed or approved their use of the Respondents’ Marks but say that they do not require any licence or approval for their conduct; and

(6)    deny that they have infringed the Applicant’s Mark.

184    In answer to Firstmac’s claim the Zip Companies:

(1)    rely on the defences in subs 122(1)(f) and (fa) of the TM Act and say that they would obtain registration of the name and trade mark ZIP in one or other of their respective names if they were to apply for it;

(2)    rely upon the defence set out in s 122(1)(a)(i) of the TM Act and contend that their use of the name and trade mark ZIP MONEY, simpliciter and in stylised forms, constitutes use in good faith of each of their corporate names and that their use of the name and trade mark ZIP, simpliciter and in stylised forms, constitutes use in good faith of Zip Co’s corporate name; and

(3)    contend that Firstmac is precluded from obtaining any remedies in relation to the Applicant’s Mark by reason of estoppel, acquiescence, delay and/or laches.

185    The Zip Companies also rely on their cross-claim, which is described and addressed below.

186    Having regard to the pleadings the following admissions are made by the Zip Companies in relation to the claim against them:

(1)    they have used ZIP as a trade mark, in plain and stylised forms, since about June 2013;

(2)    they have used ZIP PAY and ZIP MONEY as trade marks in plain and stylised forms;

(3)    the word ZIP is substantially identical with the Applicant’s Mark, being ZIP;

(4)    their “credit and payment services” are services, or services of the same description, in respect of which the Applicant’s Mark is registered; and

(5)    they did not have the licence or approval of Firstmac.

187    It follows that it was not in dispute that the word ZIP simpliciter is substantially identical with the Applicant’s Mark, that the Zip Companies’ “credit and payment services” are services in respect of which the Applicant’s Mark is registered and that those services are services of the same description. Therefore, subject to the Zip Companies’ defences, the issue between the parties is whether the other marks used by the Zip Companies are substantially identical with or deceptively similar to the Applicant’s Mark.

Statutory framework and legal principles

188    Section 120 of the TM Act relevantly provides that a person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:

(1)    services in respect of which the trade mark is registered (see subs (1)); or

(2)    services of the same description as that of services in respect of which the trade mark is registered, but subject to a defence that the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion (see subs (2)(c)).

189    Section 10 of the TM Act 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”.

190    In Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 414 Windeyer J set out the test for whether two marks are substantially identical:

In considering whether marks are substantially identical they should, I think, be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison. “The identification of an essential feature depends”, it has been said, “partly on the Court’s own judgment and partly on the burden of the evidence that is placed before it”: de Cordova v. Vick Chemical Co. Whether there is substantial identity is a question of fact: see Fraser Henleins Pty Ltd v. Cody per Latham C.J., and Ex parte O’Sullivan; Re Craig per Jordan C.J., where the meaning of the expression was considered.

    (Footnotes omitted.)

191    In Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8 the High Court (Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ) considered the operation of s 120 of the TM Act. At [22] the Court observed that there were two separate and essential elements to establishing infringement under s 120(1) of the TM Act. The first was that the person has “use[d] as a trade mark” a sign in relation to goods or services; and the second is that the trade mark was “substantially identical” or “deceptively similar” to a trade mark registered in relation to those goods or services.

192    As to the test for deceptive similarity, at [26] of Self Care the High Court stated that the task was one of trade mark comparison and that the resemblance between the two marks must be the cause of the likely deception or confusion. At [27]-[29] their Honours said:

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”.

193    It is not necessary to establish actual probability of deception or confusion. However, a mere possibility of confusion is not enough. There must be a real, tangible danger of deception or confusion occurring. It is enough if the notional buyer would entertain a reasonable doubt as to whether, because of the resemblance between the two marks, the two products came from the same source or, put another way, there must be a real likelihood that some people will wonder whether the two products come from the same source: see Self Care at [32].

The Zip Companies’ submissions

194    The Zip Companies submit that, with the exception of the name ZIP simpliciter, the trade marks used by them are not substantially identical with, or deceptively similar to, the Applicant’s Mark.

195    They submit that those marks either:

(1)    incorporate distinctive graphic elements which serve to distinguish them visually from the Applicant’s Mark; or

(2)    include an additional word or words which serve to distinguish them both visually and aurally from the Applicant’s Mark; or

(3)    are distinguished from the Applicant’s Mark by their presentation as domain names (with the exception of www.zip.co) by the presence of other words, in order to function as domain names, the suffixes “.com.au” and “.co” play a critical role and it is artificial to disregard such an important feature of a domain name in the assessment of substantial identity.

196    The Zip Companies submit that the branding that was used by them between 2018 and late 2021 clearly illustrates the distinctive elements, being a prominent and memorable “Z” device and a notable use of colour, which distinguished the branding from the Applicant’s Mark, and that the same can be said of the branding that has been in use since late 2021.

197    The Zip Companies contend that Firstmac’s case in relation to deceptive similarity should fail for the fundamental reason that there is no likelihood of confusion arising from their conduct and that the Court may be confident in this because the use of ZIP and related brands by them since 2013 has not given rise to a single instance of confusion, an issue with which Firstmac does not grapple.

Substantially identical

198    The first question to resolve is whether the stylised marks of the word ZIP used by the Zip Companies are substantially identical to the Applicant’s Mark.

199    The marks in issue are:

(collectively, the Stylised Zip Marks.)

200    The Zip Companies submitted that these trade marks are not substantially identical to the Applicant’s Mark because they each incorporate distinctive graphic elements such as colour or italicised font or, in the case of one of them, an additional logo.

201    The test for substantial identicality was not in dispute. It requires that the two marks in question be compared side by side, their similarities and differences noted and the importance of these assessed having regard to the essential features of the registered mark and the total impression of resemblance or lack of it that emerges from the comparison.

202    The essential element in the Applicant’s Mark and in the Stylised Zip Marks is the word ZIP. The word is the same in the Applicant’s Mark and in each of the Stylised ZIP Marks. There are also differences: first, each of the Stylised Zip Marks appears in different colours; two of them have a triangle over the “i” in ZIP; and one of them has the addition of what Firstmac terms the “funky Z-device” appearing before the word ZIP. However, none of these alterations or additions “substantially affect the identity of the trade mark”: see s 7(1) of the TM Act.

203    As to the latter, i.e. the addition of the “funky Z-device”, in E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 the High Court considered a submission that use of a trade mark consisting of the word BAREFOOT in combination with a device, an illustration of a bare foot, was not use of the registered trade mark, BAREFOOT simpliciter. At [69] a plurality of the High Court (French CJ, Gummow, Crennan and Bell JJ) relevantly said:

… The addition of the device to the registered trade mark is not a feature which separately distinguishes the goods or substantially affects the identity of the registered trade mark because consumers are likely to identify the products sold under the registered trade mark with the device by reference to the word BAREFOOT. The device is an illustration of the word. The monopoly given by a registration of the word BAREFOOT alone is wide enough to include the word together with a device which does not substantially affect the identity of the trade mark in the word alone. So much is recognised by the terms of s 7(1), which speak of additions or alterations which “do not substantially affect the identity of the trade mark”. Except for a situation of honest concurrent use, another trader is likely to be precluded from registering the device alone while the registered trade mark remains on the Register. The device is an addition to the registered trade mark that does not substantially affect its identity. Accordingly, the use of the registered trade mark with the device constitutes use of the registered trade mark in accordance with s 7(1).

204    The same applies here. That is, the addition of the “funky Z-device” does not distinguish the services nor substantially affect the identity of the mark. Consumers are likely to identify the products sold under the mark by reference to the word ZIP. That the “funky Z-device” is separately registered (see [163] above) does not alter this conclusion.

205    In addition, the Applicant’s Mark and the Stylised Zip Marks are the same aurally. That is they sound the same when spoken and heard.

206    Finally, to the extent it is in dispute, the domain name www.zip.co is also substantially identical to the Applicant’s Mark. That is because when one considers domain names, one puts aside in the analysis “the various accoutrement of domain names such as ‘www’ and ‘com.au’”, and in this case “.co”, to which consumers pay little attention: see Solarhart Industries Pty Ltd v Solar Shop Pty Ltd (2011) 92 IPR 165; [2011] FCA 700 at [49].

207    For those reasons I am satisfied that the Stylised Zip Marks and the domain name www.zip.co are substantially identical to the Applicant’s Mark.

Deceptive similarity

208    The next question to resolve is whether the remaining marks used by the Zip Companies are deceptively similar to the Applicant’s Mark.

209    The marks in issue are those at items 7-25 of Annexure A to these reasons (for ease I will refer to these marks collectively as ZIP Formative Marks). They comprise both word and stylised marks but in each case they incorporate the word ZIP with an additional word or words and, in two cases, the addition of a word and a device. By way of example they include:

ZIP PAY

ZIP MONEY

ZIP BUSINESS

210    As to these marks, Firstmac submits that the essential feature of the mark in each case, or the dominant cognitive queue, is the word ZIP, which is identical to the Applicant’s Mark, and that the addition of words like “pay”, “money”, “bills” or “biz” add nothing. They are “mere descriptive elements, which are not apt to perform this distinguishing role in respect of the relevant goods or services”.

211    Firstmac submits that, as it comprises the totality of the registration, the word ZIP is what people will carry away and retain with them and this is the striking feature of each of the marks. It contends that, when confronted with the mark, as they are used in respect of the same services, people “will be caused to wonder whether it might not be the case that the two products came from the same source” whether arising from an association or as a brand extension, as the Zip Companies describe them.

212    The question for the Court is whether the ZIP Formative Marks so closely resemble the Applicant’s Mark for financial affairs (loans) in class 36 that they are likely to deceive or cause confusion about the source of the services. That is whether there is a real, tangible danger of deception or confusion occurring by reason of use of the ZIP Formative Marks. As set out above, that question is not to be answered by a side by side comparison of the Applicant’s Mark and each of the ZIP Formative Marks. The test assumes that the notional buyer has an imperfect recollection of the registered mark. The notional buyer is assumed to have seen the registered mark used in relation to the full range of services to which the registration extends. There is to be a comparison of the impression (allowing for imperfect recollection) that the notional buyer would have of the registered mark (as notionally used on all of the services covered by the registration), with the impression that the notional buyer would have of the alleged infringer’s mark (as actually used).

213    In my opinion, for the following reasons there is no real tangible danger of deception or confusion occurring from use of the ZIP Formative Marks.

214    The Applicant’s Mark and each of the ZIP Formative Marks use the word ZIP. But that is where the similarity begins and ends. Each of the ZIP Formative Marks includes an additional word or words which serves to distinguish them from the Applicant’s Mark in the following ways.

215    First, the ZIP Formative Marks are made up of two or more ordinary English words: “zip” and “money”; “zip” and “pay”; “zip” and “business”; “zip” and “it”; “zip” and “bills”; “zip” and “card”; “zip” and “tap”; “zip” and “trade”; “zip”, “just” and “it”; and “can”, “I,” “zip” and “it”. The notional buyer is likely to recall that fact which serves to distinguish the ZIP Formative Marks both visually and aurally from the Applicant’s Mark.

216    Secondly, contrary to Firstmac’s submission, I do not accept that the essential feature of each of the ZIP Formative Marks is the word ZIP. In my view, in each of the ZIP Formative Marks, neither of the two words – and in the case of more than two words, none of the words – used takes prominence. For example in the mark ZIP PAY, neither the word ZIP nor the word PAY can be characterised as the essential feature of the mark; neither takes prominence. I reached the same conclusion in Gain Capital UK Ltd v Citigroup Inc (No 4) (2017) 123 IPR 234; [2017] FCA 519 in relation to the mark CITYINDEX, when compared to the mark CITI. At [107]-[108] I said

[107]    Fourthly, neither the word “city” nor the word “index” take prominence in the CITYINDEX Mark. Contrary to Citigroup’s submission, I do not accept that the word “city” is the essential feature of the CITYINDEX Mark. In Coca-Cola Co v PepsiCo Inc (No 2) (2014) 322 ALR 505; 109 IPR 429; [2014] FCA 1287 (Coca-Cola) at [226] Besanko J, referring to a passage from Saville Perfumery Ltd v June Perfect Ltd (1939) 1B IPR 440; 58 RPC 147, said:

Lord Greene MR in Saville Perfumery at IPR 453; RPC 162, referred to the fact that traders’ customers often do not carry in their head the details of particular marks:

In such cases the mark comes to be remembered by some feature in it which strikes the eye and fixes itself in the recollection. Such a feature is referred to sometimes as the distinguishing feature, sometimes as the essential feature, of the mark.

[108]    Where no component of a mark is “sufficiently prominent” a mark may not have any essential features: REA Group Ltd v Real Estate 1 Ltd (2013) 217 FCR 327; 102 IPR 1; [2013] FCA 559 at [232]. In my opinion, the word “CITY” in the CITYINDEX Mark no more strikes the eye and fixes itself in recollection than the word “INDEX”. Both words are, as I have already observed, ordinary English words and neither can, in my opinion, be characterised as an essential feature of the mark.

217    In Energy Beverages LLC v Cantarella Bros Pty Ltd (2022) 165 IPR 301; [2022] FCA 113 Halley J 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. Among other things at [323] his Honour found that “the MOTHERSKY mark comprises a single invented word, where ‘Mother’ is absorbed within the word ‘Mothersky’ and the emphasis and impression conveyed is not on the word ‘Mother’”. The same may be said in relation to ZIP when compared to “ZIPPAY”, “ZIPMONEY” and “ZIPTRADE”. They are single invented words, with no established meaning, where ZIP is absorbed within the made up words, “ZIPPAY”, “ZIPMONEY” or “ZIPTRADE”, and the emphasis and impression conveyed is not on the word ZIP.

218    Thirdly, since 2018 the Zip Companies have used the ZIP Formative Marks in a stylised form:

(1)    between 2018 and 2021 they used, among others, the following marks:

(2)    since 2021 they have used, among others, the following marks:

219    These stylised marks have distinctive elements and a use of colour. The notional buyer is likely to recall or be left with the impression that the appearance of the ordinary English words used in those marks is stylised, with the words appearing in different fonts and colours and in some cases with an accompanying device, serving to distinguish them visually from the Applicant’s Mark.

220    The next issue is whether the notional buyer would be caused to wonder whether the services came from the same source. As set out above, the context in which the relevant services are acquired is also relevant to the inquiry of whether the notional buyer would be caused to wonder whether the services came from the same source, having regard to the similarities, limited though they are, between the Applicant’s Mark and the ZIP Formative Marks.

221    The services offered by Firstmac under the Applicant’s Mark, financial affairs (loans), were offered online and through mortgage brokers and other intermediaries and, since the relaunch in 2018, initially only through loans.com.au, then expanded and offered through third party broker channels. The notional buyer may have a recollection of the Applicant’s Mark being used in connection with a home loan product. In contrast, the ZIP Formative Marks are used in relation to credit products for small loans offered to consumers either online or in retail stores when purchasing goods. While both services can be acquired online, they concern different types of loan products. The loans offered under the ZIP Formative Marks are short term and for smaller amounts to be applied for and approved with some speed, hence the use of the word “ZIP”. The loans offered under the Applicant’s Mark are necessarily for larger amounts and require more time and the provision of necessary information for approval and settlement. In those circumstances, there is no real tangible danger of confusion or deception between the Applicant’s Mark on the one hand and the ZIP Formative Marks on the other.

222    Finally despite use by the Zip Companies of the ZIP Formative Marks since at least early 2014, there was no evidence of any actual confusion among consumers.

223    I turn then to the domain names www.zipmoney.com.au, www.zippay.com.au and www.zipmoneylimited.com.au. While, contrary to the Zip Companies’ submission, I do not accept that the suffixes “.com.au” have a critical role to play in relation to the assessment of substantial identity or otherwise (see [206] above), my findings above apply equally to those domain names when viewed without that “accoutrement”.

224    It follows that the ZIP Formative Marks and the domain names referred to in the preceding paragraph are not deceptively similar to the Applicant’s Mark.

Defences

225    As set out at [184] above the Zip Companies rely on the defences in subs 122(1)(f), (fa) and (a) in answer to Firstmac’s claim of infringement by it of the Applicant’s Mark. I address these defences in turn below.

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

226    Sections 122(1)(f) and (fa) of the TM Act provide that in spite of s 120 of the TM Act a person does not infringe a trade mark if:

(1)    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 (subs (1)(f)); or

(2)    both the person uses a trade mark that is substantially identical with or deceptively similar to the first mentioned trade mark and 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 (subs (1)(fa)).

227    The Zip Companies have the onus of proving the application of one or other of these defences. They seek to do so by relying on s 44(3)(a) of the TM Act as the basis on which they say they would obtain registration of the trade mark ZIP simpliciter and in stylised forms and, to the extent I am found to be wrong in relation to my finding on deceptive similarity, the ZIP Formative Marks.

228    Section 44(3) of the TM Act provides:

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.

(Note omitted.)

Legal principles

229    The doctrine of honest concurrent use, as referred to in s 44(3)(a) of the TM Act, contemplates that two or more traders might be proprietors of, and have legitimate rights in, trade marks that are the same, substantially identical or deceptively similar: see Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 69-70.

230    In McCormick & Co Inc v McCormick (2000) 51 IPR 102; [2000] FCA 1335 at [30] Kenny J said the following about the operation of s 44(3) of the TM Act:

Section 44(3) gives the registrar a discretion to accept an application that would otherwise be rejected under s 44(1) in the case of honest concurrent use or other circumstances making it proper to do so. The authorities establish that the principal criteria for determining whether registration should be permitted pursuant to s 44(3) include:

(1)    the honesty of the concurrent use;

(2)    the extent of the use in terms of time, geographic area and volume of sales;

(3)    the degree of confusion likely to ensue between the marks in question;

(4)    whether any instances of confusion have been proved; and

(5)    the relevant inconvenience that would ensue to the parties if registration were to be permitted.

Her Honour noted that these factors are not necessarily exhaustive but are a useful guide, citing Re Electrix Ltd’s Application [1957] RPC 369 at 379.

231    At [32] of McCormick Kenny J said the following about the concept of “honesty” for the purposes of s 44(3) of the TM Act:

The honesty of concurrent use refers to “commercial honesty, which differs not from common honesty”: see Re Parkington & Co Ltd’s Application (1946) 63 RPC 171 at 182. In that case, Romer J said at 181–2:

[T]he circumstances which attend the adoption of a trade mark in the first instance are of considerable importance when one comes to consider whether the use of that mark has or has not been a honest user.

232    In Tivo Inc v Vivo International Corporation Pty Ltd [2012] FCA 252 at [246] Dodds-Streeton J identified the factors that might be taken into account in assessing honest concurrent use as follows:

Honesty in this context has been held to mean “commercial honesty”. Relevant authorities have taken into account a number of factors in determining whether the applicant adopted the trade mark without knowing of the earlier mark or in the honest belief that no confusion would arise or business be diverted by use of the name. They include:

(a)    whether the words which make up the trade mark are common, everyday words. If they are, it is more likely that the use will be found to be honest than would be the case if the words are “invented” or are not such as to be obviously attractive to other traders;

(b)    the subsequent conduct of the applicant;

(c)    the likelihood of confusion;

(d)    the applicant’s knowledge of the opponent’s mark; and

(e)    whether the adoption of the mark, and the continued use of it, was surreptitious.

233    In Dunlop Aircraft Tyres Ltd v The Goodyear Tire & Rubber Co (2018) 262 FCR 76 at [266] after referring to McCormick at [30] and [32], Nicholas J said:

Knowledge of the existing registration is of little importance once it is accepted that the trade mark applicant’s use has been honest. However, as Lord Tomlin explained in Re Alex Pirie & Sons Ltd’s Application (1933) 50 RPC 147 at 159:

… but when once the honesty of the user has been established the fact of knowledge loses much of its significance, though it may be a matter not to be wholly overlooked in balancing the considerations for and against registration.

234    I was referred to a number of cases in which the Court considered the effect of knowledge of an earlier conflicting mark on honesty for the purposes of s 44(3)(a) of the TM Act. In some cases, knowledge did not preclude a finding of honest concurrent use in the face of other relevant facts: see for example McCormick at [33]. In others, the Court was not satisfied that there was honest concurrent use where the party seeking to rely on s 44(3) of the TM Act was aware of the prior mark (or its evidence seeking to establish the contrary was rejected as untruthful) and there was a failure to conduct any adequate searches before adopting the mark: see for example Tivo at [293]-[294]. The question of honest concurrent use was not in issue on appeal, in relation to which see Vivo International Corporation Pty Ltd v Tivo Inc (2012) 99 IPR 1; [2012] FCAFC 159 at [111].

235    It is clear that the assessment of whether a party seeking to rely on s 44(3)(a) of the TM Act can establish honest concurrent use for the purposes of s 44(3) turns on the applicable facts in each case.

236    The application of subs 122(1)(f) and (fa) is to be assessed at the date of the alleged infringing conduct: see Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514 at [212]-[217]; Sensis Pty Ltd v Senses Direct Mail and Fulfillment Pty Ltd (2019) 141 IPR 463; [2019] FCA 719 at [43]-[65].

Consideration

237    The question to be resolved is whether use by the Zip Companies of their marks was honest concurrent use. That is to be assessed as at the date of the alleged infringing conduct. In its FASOC Firstmac alleges that the first infringing conduct took place at some time in 2013 and that it thereafter took place at various times according to dates of adoption of different marks using the word ZIP.

238    The Zip Companies submitted that their defence of honest concurrent use should be upheld for the following reasons:

(1)    since the launch of the ZIP business in 2013, the Zip Companies have acquired very extensive goodwill in the trade mark ZIP, and variants of it such as ZIP MONEY and ZIP PAY. There could be no suggestion that they set out to cause confusion with Firstmac or that they have traded in a manner that has engendered such confusion. Accordingly the purpose of the honest concurrent use defence in s 44(3)(a) of the TM Act, that is the protection of accrued goodwill, is engaged;

(2)    they adopted and have used the trade mark ZIP, and variants of it, honestly;

(3)    their use of the trade mark ZIP, and variants of it, has been ongoing since 2013 throughout Australia and on a very substantial scale such that the extent of use is plainly sufficient to found the defence;

(4)    if the defence is upheld, the likelihood of confusion arising is very low. The parties have operated their respective businesses without incident for about eight years and there is no evidence of any confusion arising from the conduct of the Zip Companies; and

(5)    if they were required to rebrand their businesses it would cause very significant inconvenience to the Zip Companies and would see them lose the very substantial and valuable goodwill that they have developed in the trade mark ZIP and variants of it.

239    Firstmac submitted that the Zip Companies are not honest concurrent users for the following reasons:

(1)    when the Zip Companies chose the names they did so with a view to using those names as trade marks. Their pursuit of trade marks shows their appreciation and understanding of the importance of registration for protecting brands;

(2)    while “zip” is an ordinary English word with an accepted meaning, there is no suggestion that it lacks capacity to distinguish. Firstmac noted that is so for its registration and, importantly, for the Zip Companies;

(3)    at the earliest adoption of the marks Messrs Diamond and Gray assert that they did extensive searches but, even on their evidence, they limited themselves to internet searches about what might be in the market and, despite an appreciation of the importance of trade marks, they did not do the one obvious, prudent and sensible search, a trade mark search. There is no good explanation for why they did not do so;

(4)    relatedly, the Zip Companies were directly on notice from almost the very beginning of Firstmac’s registrations given the 2013 Adverse Reports which Messrs Diamond and Gray read and, having done so, appreciated the simple but significant point that the Applicant’s Mark stood in their way;

(5)    up until the listing, the Zip Companies’ business was very small and they should have changed the name then, with little, if any, relative inconvenience. At that time the Applicant’s Mark had been registered for almost nine years and in use for eight. Meanwhile there was limited use by Zipmoney Payments, it had very few Customers and even fewer Merchants and it had not expended significant resources on advertising and promotion of the ZIP or ZIP MONEY brand. The Zip Companies’ conduct, including in attempting to get an extension for the 2013 trade mark applications and the filing of the 2015 trade mark applications, demonstrates an insistence on retaining the names they had chosen regardless of the rights of Firstmac, the registered owner. Assessed at the earlier time, when the infringing conduct started, the Zip Companies lack the requisite degree of honesty;

(6)    the Zip Companies lack the requisite degree of honesty a fortiori if their conduct is assessed at a later date. By at least 2016 or early 2017 the Zip Companies knew that Firstmac intended to defend its registration and was not going to abandon the field and, rather than dealing with the issue candidly, they chose to “plough on” and continue building up their business in the knowledge that their trade marks were at risk. Firstmac submitted that in choosing to conduct their commercial affairs in this way, the Zip Companies fell far short of acceptable standards of commercial behaviour and are the authors of their own misfortune.

240    I turn to consider whether the Zip Companies would be entitled to registration by reason of s 44(3) of the TM Act. In doing so it is convenient to have regard to the non-exhaustive list of categories identified in McCormick.

241    The first question is the honesty of the concurrent use. That is a necessary but not sufficient condition for a grant of registration under s 44(3) of the TM Act.

242    When Messrs Diamond and Gray adopted the trade marks ZIP and ZIP MONEY neither of them was aware of the Applicant’s Mark. As set out above, it was Mr Diamond who came up with the names ZIP and ZIP MONEY in the second half of 2012. At the time, he considered that the word “ZIP” was a good name for the business he was researching and conceptualising because it connoted speed, consistent with his idea of providing finance in real time. He also added the word “money” because other finance businesses used the word “money” in their names and because it clearly indicated what the business is about and placed the product in its category. While he considered other potential branding, he preferred ZIP.

243    In seeking to register ZIP as a domain name, which was the first step Mr Diamond undertook, he undertook internet searches (see [72] and [76] above). Those searches revealed that the domain name www.zip.com was owned by Bank of America, which Mr Diamond understood had no operations in Australia at the time. On the strength of those searches, Mr Diamond registered the domain name www.zipmoney.com.au.

244    True it is that neither Messrs Diamond nor Gray undertook any trade mark searches at the time nor prior to lodging the 2013 trade mark applications. Mr Diamond explained that at the time he believed he had conducted extensive online domain searches, that registering a trade mark would be a straightforward process and did not seek legal advice because at the time they had limited funds and he wished to avoid any unnecessary spend, which he considered legal advice of this nature to be.

245    Firstmac submitted that there is no good explanation as to why the Zip Companies failed to undertake searches of the Register and that common experience shows that internet searches can be intermittent and incomplete, given they are dependent on a range of variables including types of browsers, user history and the like. Firstmac contended that, critically, despite an appreciation of the importance of trade marks, Messrs Diamond and Gray did not undertake the one obvious and prudent search: a trade mark search.

246    There are two vices in Firstmac’s submission. First, Mr Gray clearly said that the issue of trade mark registration was not in his area of responsibility. Although he accepted that it was an important matter, there was a lot going on in establishing the business at the time and branding and trade marks was not in his area of responsibility. Indeed he was not even aware that the 2013 trade mark applications had been made. Secondly, Mr Diamond’s evidence as to why he only conducted online and domain searches was not challenged and, given the early stage of development of the ZIP business, his explanation for the types of searches he undertook is credible and I accept it.

247    Firstmac submitted that it is well established that: even if the second user did not know of the first user, the second user should have taken steps an honest and reasonable person would take to ascertain their ability to use the mark; and before adopting the mark, the second user must at least have exercised diligence and reasonable care to ensure that it did not conflict with a registered trade mark.

248    As to the first of those propositions, Firstmac relies on Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379 at [103] where a Full Court of this Court (Greenwood, Jagot and Beach JJ) upheld the primary judge’s finding that the appellant’s use was not 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’”. At first instance, in Insight Radiology Pty Ltd v Insight Clinical Imaging Pty Ltd (2016) 122 IPR 235; [2016] FCA 1406, in considering whether there had been honest concurrent use, at [124] Davies J noted that no explanation was given in the evidence as to how Mrs Pham decided upon “Insight Radiology” and why she chose the word “insight” to brand the relevant business. At [125] her Honour said: