Full Court reels in the control test

In 2018, Lavan published an article addressing the impact of the Federal Court of Australia’s decision in Trident Seafoods Corporation v Trident Foods Pty Limited [2018] FCA 1490.

The decision involved use of the trade mark “TRIDENT” by Manassen Foods Australia Pty Ltd (Manassen), the parent company of Trident Foods Pty Ltd (Trident Foods).

Under the Trade Marks Act 1995 (Cth), a registered trade mark can be removed from the register if its owner fails to use the mark for three consecutive years.¹

Although Trident Foods owned the “TRIDENT” mark, the Court found that it had failed to use the mark, as it did not control Manassen’s use of the same.  

Although both companies shared common directors, that alone did not evidence that Trident Foods controlled Manassen’s use of the “TRIDENT” trade mark. Something more, such as a written licence agreement between the related companies, was required to evidence sufficient control over Manassen’s use.

Recently, the Full Court of the Federal Court of Australia considered an appeal of the primary decision.²  The appeal considered whether the primary judge applied the right test to determine control over use of a trade mark.

The Full Court held that Trident Foods did, in fact, control Manassen’s use of the “TRIDENT” mark for the following reasons:

• both companies shared common directors;
• the evidence showed that both companies, and their common directors, operated with a “unity of purpose”;³
• the companies and their common directors worked towards “one common purpose, being to maximise sales and to enhance the value of the [TRIDENT] brand”;⁴ and
• it was commercially unrealistic not to infer that Trident Foods controlled Manassen’s use, as the common directors intended to maintain and enhance the value of the “TRIDENT” brand.⁵

Lavan comment

On appeal, the Full Court has softened the position in respect to the sufficient control test. The appeal decision endorses a “common purpose/unity of purpose” test, where the relevant parties share common directors.

The Full Court acknowledged that it may be “commercially unrealistic” to demand related corporate entities to properly license use (to each other) of trade marks, where such use is directed to maintaining and enhancing the value of those marks.

However, to avoid the issue entirely, related corporate entities should still prepare license agreements (in writing), to easily dismiss any suggestions of non-use.

Trade mark license agreements are inexpensive, and may evidence control, where the “common purpose/unit of purpose” test is unavailable.

If you require advice or assistance in protecting your trade marks, please do not hesitate to contact Iain Freeman or Andrew Sutton.