Deceptive Similarity in a Craft Beer Trade Mark Dispute

Deceptive Similarity in a Craft Beer Trade Mark Dispute

A trade mark that distinguishes one trader’s goods from another is a valuable asset, however a recent Federal Court case concerning craft beer has demonstrated that registered trade marks are not always protected from cancellation in a trade mark dispute.

In the case of Urban Alley Brewery Pty Ltd v La Siréne Pty Ltd [2020] FCAFC 186, Urban Alley Brewery Pty Ltd’s (Urban Alley) appeal was dismissed and their trade mark “Urban Ale” was cancelled under section 88(1)(a) of the Trade Marks Act 1995 (Cth). This was an important case which determined that a trade mark registration must be cancelled or rejected if it is deceptively similar to another registered trade mark.

Facts

  • Urban Alley was a craft brewery in Melbourne which produced a beer product called “Urban Ale”.
  • La Siréne also operated as a craft brewery in Melbourne and produced a beer product under a similar name “Urban Pale”.
  • La Siréne first sought orders to cancel the Urban Alley’s registered trade mark under the Trade Marks Act 1995 (Cth) s 88(1)(a).

Significance of the Case

This case demonstrated the importance of adopting a trade mark which is sufficiently distinctive from other existing trade marks and ahead of prevailing trends. Further, difficulties may arise when descriptive words are used. It was concluded that the terms “urban” and “ale” were too descriptive of beer to be distinctive from other goods or services. Therefore, the key terms of Urban Alley’s trade mark had become descriptive as a result of prevailing trends, causing Urban Alley’s trade mark to be deemed invalid for lack of distinctiveness and deceptive similarity.

As there was no factual distinctiveness, they upheld the primary judge’s finding that Urban Alley’s trademark should not have been registered, and thus it was cancelled.

Trade Marks Distinguishing Goods or Services

The key point is that a trade mark must be capable of distinguishing an applicant’s goods or services. It was found that Urban Ale was not “inherently adapted” to be capable of distinguishing its beers from those of other producers. This decision was based on evidence that the term “urban” was commonly associated within the industry with beer products and breweries.

The court considered the following factors:

  • The term “urban” is not significant regarding the beer style or flavour, and has been used by numerous Australian businesses, including in La Siréne’s “urban pale” without improper motive. Instead it is used to describe the location of the brewery, as used by many other traders and journalists.
  • On Appeal, it was found that the terms “urban” and “ale” were descriptive of the goods (beer) and should be interpreted with their common meaning.
  • Urban Alley could not produce sufficient evidence that they had established a reputation based on the “urban ale” trade mark.

The Test for Deceptive Similarity

The relevant test for deceptive similarity is to compare between a trade mark and the recollected impression retained of another previously registered trade mark. A side by side comparison of trade marks may not convey the same meaning or idea, however, they may when imperfectly recalled under this test. Furthermore, the trademark must be viewed in its entirety, unlike the substantially identical which requires the examination of individual trade mark elements.

Etheringtons Solicitors can assist you with enforcing your trade mark

Etheringtons Solicitors can advise you throughout the development and adoption of your trade mark to ensure that it is distinguishable from other goods and services and to avoid future trade mark disputes.

We can assist you with registering a trade mark in Australia and advise on whether your trade mark includes any descriptive qualities which could affect its validity. We may advise you to consider securing other versions of trade marks which have the potential to cause a challenge risk.

If you need further advice or assistance regarding trademarks or other intellectual property matters, please contact one of our experienced solicitors on (02) 9963 9800 or via our contact form.

Registering a Trade Mark in Australia

Registering a Trade Mark in Australia

The advantage of registering a trade mark is that it confers far more benefits than registering a business name, company name or domain name. Marketing is an important business tool, and a registered trade mark is crucial in allowing you to protect any value or credibility which you have built on your brand. 

What is a trade mark?

A trade mark identifies a product or service, distinguishing it from the goods or services of other entities in the same sphere. A registered trade mark protects any branding element within a business including letters, numbers, words, phrases, sounds, smells, shapes, logos, pictures and aspects of packaging. Registration alone of a business name, company name or domain name does not give you that kind of protection.

Registering a trade mark allows the owner of the trade mark to commence legal action to stop others using it. Trade marks can be used to help build market position and stop others from imitating your brand. The registration of a trade mark is effective for 10 years and can be renewed for further 10 year periods thereafter.

Registration of a trade mark covers the entire Commonwealth of Australia. For worldwide protection, an application can be filed with each country in which the trade mark will be used, or a single international application can be filed through IP Australia nominating the countries in which protection is required.

Applying for a trade mark 

Trade marks are registered in specific classes relevant to the description of the goods or services for which the mark will protect. The application for registration must nominate one or more classes of goods or services for which the mark is intended to be used and associated. If the mark applies to more than one class, the wider the protection that mark has once the trade mark is registered.

Before making an application to register your trade mark, the following should be considered:

  • Identify the relevant class of goods or services for which the mark will apply. Schedule 1 of the Trade Marks Regulations 1995 prescribes the available classes and describes the types of goods of services specific to each class. A search should be carried out before applying to register a trade mark to check that a similar trade mark is not already registered in that class.  An application to register your trade mark could be rejected if there is an identical or similar trade mark already registered which covers similar goods or services. 
  • Only minor changes can be made to a trade mark once an application has been filed and published.
  • A trade mark registration is for the goods and services you actually trade in or intend to trade in in the near future. Once an application is filed and registered, goods and services cannot be added. Therefore, you should clearly define the marketplace you trade in to ensure the best possible protection.
  • Your trade mark must be something that is capable of distinguishing your goods and services. Exclusive rights are difficult to register over everyday language, names and descriptions of products and services 

Once you are happy with your trade mark, you can apply to register it through the IP Australia website. You can also request an assessment of the likelihood of your trade mark achieving registration through TM Headstart.

The cost of applying for a trade mark will vary depending on the scope of the application. Generally, the minimum cost to apply is $120 for each class of goods and services. In Australia there are 45 different classes of goods and services and each additional class costs an extra $300. 

The application process

Once your trade mark is accepted, it will be advertised in the Australian Official Journal of Trade Marks and the application is open to opposition for a period of 3 months (which can be extended by an opponent for a further 3 month period where there has been an error or omission).

If your application is not challenged, your trade mark will be registered once the registration fee is paid (payment must be made within 6 months from the date acceptance is advertised or your application will lapse).The registration of a trade mark in Australia takes at least 7 months after an application is filed.

Seek legal advice

When applying for an Australian trade mark it is important to ensure your trade mark description and classes accurately reflects of the goods or services you intend to use your trade mark on. By investing in protecting your brand today, you can avoid the costly and uncertain exercise of preventing unauthorised use of your unregistered trade mark in the future. We are experienced in intellectual property matters and can work with you to ensure your trade mark is registered in the appropriate class or classes, and to respond to any opposition to the proposed registration. We are also able to assist with trade mark and copyright disputes.   

If you or someone you know wants more information or needs help or advice regarding trade marks, please contact us on (02) 9963 9800 or via our contact form.

Self-Managed Super Funds with Only One Member

Self-Managed Super Funds with Only One Member

A self-managed super fund (SMSF) is a private superannuation where the members are usually also the trustees. Members of the SMSF run it for their benefit and are responsible for complying with the relevant laws.

A SMSF can have up to four members but it is quite common to have just one. But what happens if the sole member loses legal capacity, dies or leaves the country? In this blog, we review common issues that arise in relation to SMSFs when legal advice is not sought prior to the establishment of the SMSF.

Who is a SMSF trustee?

A SMSF trustee is the person responsible for ensuring SMSF is maintained for the purpose of providing retirement benefits. The trustee can be a company or an individual. For a single member SMSF, the member must either be the sole director or have two directors. This other director is either related to the member or another person who is not an employer of the member.

For a single member SMSF, there must be two individual trustees, the other trustee must either be related to the member or be another person who is not an employer of the member.

What are some issues in relation to SMSFs?

Issue 1: losing legal capacity

If the sole member loses legal capacity, then the person who holds an enduring power of attorney for the member may act as trustee of the fund in their place.

If the sole member was also the sole director of a trustee company, then the shareholder of the company will need to appoint a replacement director. If the member was the only shareholder, then the probate of the member’s will needs to be granted before a new shareholder is appointed.

Issue 2: death of a sole member

If the sole member dies, then the other trustee will be left with total control of the fund.

If the sole member was also the sole director of a trustee company, then the same consequences from the first issue will apply.

Issue 3: moving overseas

The SMSF must remain an Australian superannuation fund in order to retain its complying status. Whether the super fund is Australian predicates on satisfying the three tests:

  1. Be established in Australia
  2. Have its central management and control ordinarily in Australia
  3. Satisfy the active member requirement. The fund must have either at least 50% of the fund’s assets linked to active members who are residents in Australia or not have any active members.

Seek legal advice

If you are a single member of a SMSF, you should ensure that you have a valid enduring power of attorney. If you are moving overseas, you should speak to a solicitor about whether your SMSF would still comply with the three tests. Please contact Etheringtons Solicitors if you have any questions about your SMSF by using the contact form or calling us on (02) 9963 9800.

Important things to consider when buying a business

Important things to consider when buying a business

If you are considering buying a business there are many things you need to do from a legal, financial and general business perspective.  Getting the right advice from the start is important. The structure of and issues involved in the sale are quite different if you are buying the business assets only, compared with the shares in the company that owns the business.

Making sure you follow the right process before signing any documents is a key component of a successful business purchase.

The main things to do before signing a contract are:

  • Research
  • Get professional advice
  • Review & understand all documentation

In this article we will highlight some of the key issues to be considered.

Research

Proper research involves checking the records of the business and other information to ensure:

  • Sales are as good as the owner says they are
  • The business systems are sound and documented
  • The business does not have any problematic legal obligations or liabilities
  • All necessary information, rights and assets will be included in the sale
  • Cash flow is sustainable
  • Employees will be happy with a new owner
  • Customers will remain loyal once you take over
  • You understand the operation of and opportunities in the market/industry

Research should, where possible, be carried out before you sign any contracts.

Professional advice

You should always consider briefing and engaging legal and accounting advisers to assist you in conducting due diligence and documenting the transaction, to avoid legal and financial (including tax-related) “surprises” and arguments down the track.

You might also consider whether there are any industry specific experts that may be useful.

Review and understand the documentation

When purchasing a business there is a lot of documentation to be gathered, read and understood.

The seller may require you to sign a confidentiality agreement to stop you from using confidential information for any purpose other than buying the business. You should make sure you fully understand the agreement before you sign it.

Some of the information you should gather and review is outlined below.

Financial statements

It is sensible to obtain current and historical financial records for the business, including:

  • Profit & loss statements
  • Balance sheets to identify assets and liabilities
  • Lists of debtors and creditors
  • Copies of any BASs lodged by the business

List of plant, equipment, assets and stock

You should obtain a list of all plant, equipment, assets (including fixtures and fittings) being sold along with current valuations, proof of ownership and information on applicable warranties and guarantees.

Details of any stock sold with the business and how it will be counted and valued at settlement should be discussed and agreed with the seller.

You should also undertake thorough searches of the Personal Property Securities Register to, for example, ensure that security interests necessary for the business have been registered (such as over sale equipment leased to third parties) and to check whether any relevant security interests are held by third parties.

Lists of customers and suppliers

Customer and supplier relationships form part of the goodwill of the business and a list of all available contact details should be supplied so that you can make contact and ensure an ongoing relationship.

Employees

If the business is being purchased as a going concern and the buyer is assuming liabilities for employees then a list should be provided – setting out the employees, their job descriptions, salaries, years of service, any disciplinary issues and accrued entitlements like holidays and long service leave.

Important Contracts

Any major contracts necessary for the operation of the business should be provided and reviewed, including copies of the lease of the premises and any plant & equipment leases. Term, assignment, change of control and termination provisions, in particular, should be checked.

If any sale assets are financed the financier’s consent will be necessary.

If the business is a franchise the seller is required to provide a franchisor’s disclosure statement.

Documenting the transaction

After completing your due diligence you will need to have the transaction documented with a legally binding contract. There are many issues to consider.

Structure

You will need to decide on the structure of the transaction and it is crucial to get advice on the legal, financial and taxation consequences of the structure you adopt.

The types of things that need to be considered include:

  • Whether you are buying the assets of the business or the shares in the company that owns the assets.
  • The price to be paid and when it is to be paid.
  • Who will the buyer be – an individual, company, trust or partnership?

Deciding on whether to buy the assets or the company is a critical issue when buying a business. There is no simple or right or wrong answer to this question as it will usually depend on the business being purchased and the individual circumstances of both the buyer and the seller.

Things to consider when making a decision include:

  • The amount of flexibility and control you want over what you are buying.
  • Do you require all of the assets of the business, or all of the employees?
  • Do you want to be responsible for past liabilities (known and unknown) of the business which might relate to employees, suppliers or customers?

Price and Terms of Payment

Once the price is agreed you will need to determine how and when the price will be paid.

For additional protection you may want a portion of the price to be held back for a certain period to ensure that information given by the seller is accurate or that profit projections are achieved.

You may not want to pay the price in a lump sum and may be able to negotiate to pay in monthly or annual instalments.

You will need to take into account that the business will probably be continuing right up to the sale date, which means stock, accounts receivable and other items will need to be finalised at a certain time and in an agreed manner.

Legal Contract

The main legal document is a contract for sale of business. The sale contract sets out the various terms agreed to by the parties, including for example:

  • the rights of the parties if things go wrong;
  • the seller’s representations and warranties, which are designed to ensure that:
    • the seller remains responsible for the information given to you about the business; and
    • you get what you pay for;
  • a non-competition provision which prevents the seller from creating a competing business after the sale; and
  • (if a lease or franchise is involved) the consent of the landlord or franchisor.

Conclusion

Buying a business can be a complex transaction. You need to make sure you have done adequate research, understand the risks and have received the right advice.

If you are considering buying a business and would like some help please contact us on (02) 9963 9800 or get in touch via our contact form.

What is Involved in Dissolving a Partnership?

What is Involved in Dissolving a Partnership?

Partnerships involve two or more people who are in business together and share ownership of the assets and liabilities of the business. Partnerships can come to an end for many reasons, for example:

  • Disputes of profit share;
  • Day to day control of the business; and
  • Disagreement in the direction of the business and financial circumstances.

If you are in a partnership, it’s most likely you signed a partnership agreement with your partner(s). Conversely, if there is no partnership agreement, the terms and conditions of your partnership will be determined by the state legislation. We can assist with identifying the legal requirements in your state.

Different ways to dissolve a partnership

A partnership can be dissolved when:

  • An agreement between yourself and all other partners have been reached;
  • One partner gives written notice to the other partners;
  • The life of the partnership, according to the partnership agreement, has expired;
  • Any partner dies or becomes bankrupt;
  • A court orders that the partnership ends; or
  • It becomes illegal (e.g. if one partner cannot legally own the business).

Things to consider when dissolving a partnership

The primary question is whether the business will still remain operational. If so, you need to consider what the new structure of the business will be. For example, it could be a sole trader or a company. You will also need to think about registering a new ABN, register for GST, as well as other considerations.

You also need to think about whether any partners are selling their interests. If they are, do they have any Capital Gains Tax to pay? If you are acquiring the remaining shares of another partner, who will pay the transfer duty?

Administrative factors

There are also administration factors to consider. Think about whether the partnership books, final tax return and BAS statements have been completed and filed. Tax obligations are important and should be dealt with appropriately so that you avoid issues in the future. Are all of the bank accounts for the partnership closed? Likewise, are there any outstanding personal or business loans that may be affected? You should consider insurance policies and ongoing contracts with other people, organisations and authorities. These need to be cancelled or transferred into the new name.

Employee obligations

Employee obligations apply if your partnership had employees. Most often these are based on your employee contracts. If you need to terminate staff or make them redundant, you may need to provide them with payment in lieu of notice. The age of the employee and how long they have worked for you will determine this.

Legal advice for dissolving a partnership

Dissolving a partnership is a complex process. Therefore we recommend you seek legal advice. Our experienced lawyers can take you through the entire process. We will explore your options with you and ensure you have met all your legal obligations. Please contact Etheringtons Solicitors if you have any questions by using the contact form or calling us on (02) 9963 9800.

Debt Collection Basics For Business

Debt Collection Basics For Business

If you are owed money for goods or services, the first step in attempting to recover it is generally to send a Letter of Demand to the other party. This letter should set out the amount of money outstanding, a cut-off time to respond by, and if no response is received by you that you will take legal action with no further notice to the recipient.

Letter of Demand

The Letter of Demand is sent by you (or your lawyer) if you are owed the money (the creditor) and it warns the person owing the money (the debtor) that if they don’t pay the debt within a certain time period (such as seven days) they will be sued in court to recover the debt.

A Letter of Demand should be the last letter a creditor sends before issuing court proceedings. While Letters of Demand are not court documents they are often an effective means of forcing the debtor to take action.

It is a good idea to contact us first to ascertain whether it is prudent to proceed with court proceedings and this will usually depend on the size of the debt. Naturally, if the sum owed is small it may not be economically viable to pursue the debt by engaging a lawyer(NB: if they’re doing it themselves it usually won’t cost anything to send the letter). You must ensure however that, in enforcing your rights to recover the debt, you act within the law.

Principles of Debt Collection Fairness

When sending a Letter of Demand, you should be careful not to harass the debtor or send a letter which is designed to look like a court document.

You must not pursue a person for a debt unless you have reasonable grounds for believing the person is liable for the debt.

Time Limits

A creditor has a limited period of time to sue for a debt. In most instances, for debts owed, this will be 6 years.

If the debtor has made no payments towards the debt or has not acknowledged in writing that they owe the debt for a period of 6 years from when the debt arose, then the debt may no longer be recoverable.

Disputed Debts

The debtor has the right to dispute a debt and may do so on the grounds if:

  • it is not their debt;
  • they have already paid the money;
  • they disagree with the amount of the debt; or
  • it is an old debt and they haven’t made a payment for at least 6 years, no court judgment has been entered against them and they haven’t admitted in writing that they owe the debt in that time.

If the debt is disputed, then you, as the creditor, may have no alternative but to commence legal proceedings or to seek to negotiate a compromise with the debtor.

When Your Lawyer Becomes Involved

If you, as the creditor, are not willing to negotiate or wait for payment, you may wish to contact us to assist with pursuing the debt.

If you know the debt is due and payable, and you want to commence legal proceedings, it is prudent to have a lawyer assist you and represent you in court to recover the debt. If your lawyer advises that the size of the debt make their engagement not economically viable, then we may still be able to help you to negotiate a payment plan that is manageable to the debtor and acceptable to you.

It is not in the debtor’s interest to ignore your claim and risk the additional costs of the legal fees and interest on top of the original debt. By following the correct process we can help obtain a satisfactory result for you.

New Customer – Credit Application Process

Before you take on a new customer, you should have the correct systems in place to ensure that you are able to assess the customer’s credit position.

Do you have a credit application process for your new customers?

Your Credit Application and Terms of Trade should provide you with security over the goods which you have sold to the customer and, if the customer is a corporate entity, ensure that the directors of the company provide you with their personal guarantees. You must, however, ensure that you register any security over goods on the Personal Property Securities Register and we recommend that you speak with a lawyer to assist you with this process to ensure that the registration is not void.

If you do not have a system in place, contact us and we will help you put a system in place to protect you and provide you with security for money owed to you. It is important that you have the correct systems and documentation in place before you do or provide credit to any new customers.

Conclusion

You should contact us to discuss your legal rights and obligations if you are owed money or if you owe money to someone else who is threatening court action.

If you would like more information or require assistance or advice on how to proceed in debt recovery matters please contact us on (02) 9963 9800 or via our contact form.