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Policing trade mark protection

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By Alicia Hill, Principal, MST Lawyers

In Harcourts WA Pty Ltd v Roy Weston Nominees Pty Ltd (No 4) [2016] FCA 138, litigation in the West Australian registry over trade marks claimed to be owned by Harcourts WA Pty Ltd (Harcourts) and used by a franchise system raised some issues which can be experienced by systems.

Roy Weston Pty Ltd was a well-established Western Australian real estate business since 1957. The business registered a trade mark ‘Roy Weston’, in 2002, in the category of real estate.  In 2004, Harcourts acquired all of the shares in Roy Weston Pty Ltd.

Around 2006, Roy Weston Pty Ltd instructed its franchisees that it intended to rebrand to Harcourts. In 2007, Roy Weston Pty Ltd changed its name to Harcourts WA Pty. All Roy Weston websites were redirected to Harcourts websites, the Roy Weston name was removed and all branding material was changed to reflect the new name. Harcourts first introduced a Roy Weston medal.

About 20 of the franchisees elected not to rebrand and confirmed that they would not continue as franchisees under the Harcourts system. Roy Weston Nominees Pty Ltd (RWN) was one of those franchisees.

In January 2007, RWN applied for registration of a word trade mark ‘Roy Weston Nominees the Trusted Name in Real Estate’. Harcourts’ solicitors alleged that this conduct constituted breach of the terminated franchise agreement and trade mark infringement.

RWN argued that it had initially entered into an agreement with Harcourts in 1996/97 to acquire first, a 41% shareholding in Roy Weston Nominees Pty Ltd, and then later bought the balance shares from Harcourts in order to operate a franchise branded business in Morley, WA. As such, it had the right to trade under the name Roy Weston Nominees and further, that the then CEO of Harcourts at the time said they would not stop RWN from doing so.

RWN also argued that Harcourts lack of use of the Roy Weston name in the course of trade since the Harcourts rebrand meant that the franchisor could not maintain rights to that intellectual property where the franchisee had been concurrently actively using that name in the course of trade.

A significant amount of evidence was heard by the court from people in both Harcourts and RWN over the history of the business operations and use of the Roy Weston name.

Ultimately the Court found that:

  1. RWN’s conduct in attempting to register a trade mark using the ‘Roy Weston’ name was in breach of its obligations under the franchise agreement which survived the termination of the franchise agreement that RWN refrain from using the Roy Weston identifications which included the ‘Roy Weston’ name;
  2. RWN was always in a franchise relationship with Harcourts WA (which included Roy Weston Pty Ltd) and as such, never acquired an ownership or joint venture interest in the Roy Weston intellectual property, despite having bought the shares from Harcourts WA of RWN and being permitted to trade under that name for a limited period;
  3.  RWN’s claims that Harcourts trade marks should be relinquished arising from lack of use or abandonment were rejected as:
    1. a banner advert and redirection from one website to another were found to constitute ‘use’ of the Roy Weston trade mark by Harcourts preventing provisions of the Trade Marks Act applying to require Harcourts to relinquish the trade mark;
    2. whilst the Roy Weston Medal was not usage in the course of trade and was not able to be used successfully in the defence of lapsing of the trade mark claims under the Trade Marks Act; however
    3. the other conduct was enough to dispel assertions that Harcourts had abandoned the Roy Weston name.
  4. due to the lateness in Harcourts pursuing its rights and the lack of apparent loss or damage suffered by Harcourts because of the infringing conduct, the Court considered that any relief to which Harcourts may be entitled would need to take into account its own delay and asked the parties to consider a mediated resolution to the relief to be awarded.

For more information relating to trade mark protection, contact  contact our Franchising team at franchise@mst.com.au or contact Alicia Hill on  +61 3 8540 0200.