Choosing and protecting a brand is a perennial problem for Australian business owners .In the recent case of Hemmes Trading Pty Limited v Establishment 203 Pty Ltd [2024] FCA 1100, the Federal Court has re-established the importance of due diligence when deciding a brand, and the significance and benefits of trade mark registration.
What was the case?
Hemmes Trading Pty Limited (Hemmes) (part of the Merivale group of companies) is the owner of the trade mark ESTABLISHMENT, and the operator of the prominent Sydney-based restaurant, bar and hotel of the same name.
Establishment 203 is a Brisbane-based abattoir which was assigned the establishment number ‘203’ in 1997 by the Government. When Establishment 203 opened a Brisbane-based restaurant in 2023, it did so under the trade mark ESTABLISHMENT 203.
On 20 September 2024, the Federal Court delivered judgment in favour of Hemmes, ruling that, despite the geographical separation, the addition of “203” did not sufficiently differentiate the two marks. As a result, ESTABLISHMENT 203 was found to be deceptively similar to Hemmes’ trade mark, leading to trade mark infringement and constituting misleading conduct under the Australian Consumer Law.
What can businesses learn from the ruling?
- The value of trade mark registration: Registering a trade mark provides robust legal protection against unauthorised use by others. Hemmes’s registered trade mark enabled it to enforce its rights and prevent Establishment 203 from using a confusingly similar name in a different city and state. This highlights how a registered trade mark, together with long-established use, can safeguard a brand’s identity and reputation.
- The importance of due diligence: Although Establishment 203 did not intend to confuse and was unaware of Hemmes’ existing trade mark when it selected its brand, the court found that Establishment 203 did not conduct adequate trade mark searches or seek legal advice before adopting its brand. This failure to exercise reasonable diligence meant that Establishment 203 did not act in ‘good faith’ in choosing its brand and could not avail itself of that defence. Businesses should always perform comprehensive trade mark searches and consult with legal professionals to ensure their branding decisions do not infringe established marks.
- The nationwide impact of reputation: Hemmes’ “ESTABLISHMENT” mark was found to have a significant reputation that reached beyond its immediate geographical location, and into Brisbane. This was based on a number of factors, including national promotion and media coverage; consumer perception of the possibility of brand expansion; and the scale of the Sydney-based restaurant.
What next?
Ultimately, the success of the Hemmes case serves as a timely reminder for Australian businesses to reassess their own branding due diligence and consider the benefits of trade mark registration.
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