Groundless threats: Stone & Wood bitter over failed appeal

Australian brewery, Stone & Wood, is a craft beer producer, most famous for its “Pacific Ale”.

In 2015, Thunder Road Brewing Company (Thunder Road) launched “Thunder Road Pacific”, a craft-beer of similar ilk.

Stone & Wood commenced proceedings against Thunder Road for its use of the word “pacific” in the marketing of the new product. 

Thunder Road counterclaimed, alleging that Stone & Wood had made groundless threats of legal proceedings.  Thunder Road was successful and Stone & Wood’s claim was defeated.

On appeal, Stone & Wood challenged the Federal Court’s decision to declare that Stone & Wood had made groundless threats.¹

Groundless threats

Section 129 of the Trade Marks Act² permits an aggrieved party to bring an action against a person who threatens to commence a “groundless” trade mark infringement claim. 

A court is empowered to:

• declare that the defendant had no grounds to make the threat;
• restrain the defendant from continuing to make the threat; and
• order that the defendant pay damages sustained as a result of the threat.

The damage is likely to be restricted to damage caused by the threat, prior to proceedings being filed; damage caused by the proceeding itself is not compensable.

This provision aims to dissuade people from making threats casually or recklessly.³

Despite threatening proceedings for trade mark infringement, Stone & Wood only commenced proceedings for passing off and misleading and deceptive conduct.

It was only after Thunder Road notified the Court of the trade mark infringement issue that Stone & Wood took steps to amend its pleadings to include the trade mark claim.

The primary judge stated that “it [was] doubtful whether the trade mark infringement claim would have been brought at all” but for the Thunder Road’s cross-claim.⁴

As a result, Stone & Wood was unable to rely on the defence that it had brought the infringement claim with “due diligence”.

The primary judge gave weight to Stone & Wood’s failure to explain its delay in bringing the infringement claim, and that the claim was only added after Thunder Road brought it to the Court’s attention.

Accordingly, Stone & Wood was ordered to pay Thunder Road’s legal costs of the cross-claim.

Lavan comment

A party should always take steps to protect its intellectual property.  However, one may inadvertently threaten proceedings that are later revealed to be “groundless”.

Accordingly, before contacting the “infringing party” it is imperative to seek legal advice to ensure that you do not contravene the prohibition on making groundless threats.

Alternatively, if you receive threatening correspondence, it is important to document any and all damage suffered as a direct result of those threats.  Therefore, if you successfully defend the infringement claim, you can seek to recover that loss.

If you require assistance to enforce, or defend, your intellectual property rights, do not hesitate to contact Iain Freeman or Andrew Sutton.