In brief

The recent decision of the Federal Court in the highly publicised trade mark stoush between famous Sydney publican Justin Hemmes’ company and a Queensland restaurant over the ESTABLISHMENT trade mark has highlighted the importance of timing when it comes to filing trade mark applications. In Hemmes Trading Pty Limited v Establishment 203 Pty Ltd [2024] FCA 1100, Justice Jackman held that by using the trade mark ESTABLISHMENT 203 in relation to restaurant services, the respondent had infringed an Australian trade mark registration for ESTABLISHMENT and had contravened sections 18 and 29 of the Australian Consumer Law. The case was underscored not only by the importance of timing when filing an application which is not sufficiently adapted to distinguish, but also the importance of finding the right balance between gaining the earliest possible priority date and being able to establish sufficient reputation through evidence of use.

Facts and Hemmes’ infringement claim

Hemmes Trading Pty Limited (Hemmes) is the owner of Australian trade mark registration 876753 ESTABLISHMENT covering a range of goods and services in classes 9, 25, 41 and 42, including nightclub services, hotel services and restaurant services (the Hemmes Registration). The ESTABLISHMENT trade mark has been used by Hemmes since September 2000 for a multi-level restaurant, bar and hotel business at 252 George Street, Sydney.

Establishment 203 Pty Ltd (the Respondent), operates a restaurant in Brisbane under the name ESTABLISHMENT 203. The Respondent is part of the Stanbroke group of companies, which runs a family-owned beef business in Queensland including an abattoir. In Australia, all abattoirs are given an establishment number by the Australian Government which must be displayed on every meat product that leaves the country. In 1997, the Respondent was given the establishment number 203 and since that time, all of the meat produced by Stanbroke’s abattoir has been marked with “EST 203” or “203”. The Respondent’s ESTABLISHMENT 203 restaurant focuses heavily on beef, and the only beef it sells is that of the Stanbroke group.

Hemmes asserted that by using the name ESTABLISHMENT 203 for a restaurant, the Respondent had infringed the Hemmes Registration and had contravened sections 18 and 29 of the Australian Consumer Law. The Respondent cross-claimed seeking cancellation of the Hemmes Registration.

The Respondent’s cross-claim

Section 41

The Respondent sought to cancel the Hemmes Registration on the ground that the ESTABLISHMENT trade mark lacked distinctiveness. Due to the ordinary signification of the word ESTABLISHMENT referring to a business or a place of business, Justice Jackman accepted that the trade mark is “to some extent” inherently adapted to distinguish, but not to the extent sufficient to accept the mark for registration without evidence of use.

Justice Jackman held that the following evidence of use relied on by Hemmes sufficiently established that as at 23 May 2001 (the Priority Date), the ESTABLISHMENT trade mark distinguished Hemmes’ goods and services from those of other traders:

• the opening of the Hemmes ESTABLISHMENT restaurant coincided with the Sydney Olympic Games;
• tens of thousands of Australian and international patrons, attended the ESTABLISHMENT venue during the two week period of the Sydney Olympic Games;
• in the eight months following the Sydney Olympic Games up until the Priority Date of the Hemmes Registration, the ESTABLISHMENT venue was at capacity most weekends;
• the total patronage of the ESTABLISHMENT venue during that 8 month period was inferred to be the hundreds of thousands; and
• both before and after the opening of the ESTABLISHMENT precinct in September 2000, articles in newspapers circulating widely in Australia referred to the restaurant, bar and hotel business as “ESTABLISHMENT”.

Whilst the Respondent argued that the newspaper articles were not uses of the mark by Hemmes, Justice Jackman held that the articles confirmed third parties’ perceptions of ESTABLISHMENT as the name identifying the business and were akin to evidence from consumers, wholesalers and retailers accepted in other cases. The Respondent’s cross claim for cancellation under section 41 of the TM Act was therefore unsuccessful.

Section 58

The Respondent also sought to cancel the Hemmes Registration on the ground that Hemmes was not the owner of the Hemmes Registration. In support of this claim, the Respondent relied on the following trade marks used by businesses operating as restaurants or bars in Australia before the Priority Date:

• The Establishment Restaurant and Supper Room;
• The Establishment Club Restaurant; and
• The Establishment Cocktail Bar.

However, Justice Jackman held that none of the three earlier names are substantially identical with ESTABLISHMENT. Further, it appeared that the three prior uses were abandoned by their respective owners before the Priority Date as there was no use of any of the names between the end of 1990 and the Priority Date. The Respondent’s cross-claim under section 58 of the TM Act was therefore unsuccessful.

Trade mark infringement

Having rejected the Respondent’s challenge to the validity of the mark, Justice Jackman then turned to the question of trade mark infringement under section 120 of the TM Act. The only issue in dispute in relation to infringement was whether ESTABLISHMENT 203 was deceptively similar to ESTABLISHMENT. In deciding that the trade marks were deceptively similar, Justice Jackman considered the following factors:

• ESTABLISHMENT 203 was plainly differentiated from ESTABLISHMENT by the addition of “203”;
• this differentiation had significance because of the weak distinctive character of “ESTABLISHMENT”;
• the addition of a number to the mark is not in itself determinative as, simply adding “2” or “2.0” would convey to a notional consumer that the business was a second emanation of the business known as ESTABLISHMENT;
• the notional consumer might wonder if “203” had some association with ESTABLISHMENT;
• the inability of the notional consumer to give any meaning or connotation to the addition of “203” was likely to diminish the significance of that addition in their mind; and
• even though there was no evidence of confusion there was a real and tangible danger that some people would reasonably wonder if the two marks might or might not be commercially related.

As the trade marks were found to be deceptively similar, Hemmes was successful in its claim for trade mark infringement.

Good faith defence

As an alternative to its cross-claim, the Respondent relied on the good faith defence to infringement under section 122 (1)(a) of the TM Act. In support of the Respondent’s good faith defence, the Managing Director of the Respondent gave evidence pertaining to the Respondent’s adoption of the ESTABLISHMENT 203 name including that:

• in late 2021, the Stanbroke group’s marketing team was given the task of developing potential names for the restaurant concept;
• one of the options devised by the marketing team was ESTABLISHMENT 203;
• the Managing Director's view that this was the obvious choice for the restaurant as it was a name that had been deeply connected to the family business for decades and he knew that people in the beef industry would immediately recognise the name and would know it was connected with the Stanbroke Group;
• the Managing Director's view that using the establishment number given by the Australian Government created a clear connection between the restaurant and the abattoir which was the key reason why the restaurant was opened.

However, despite accepting that the Respondent did not act dishonestly and genuinely believed it could use the ESTABLISHMENT 203 name, Justice Jackman held that good faith the defence was not established, because:

• the Respondent failed to conduct any trade mark searches when it adopted the name and chose not to ask the company’s lawyers for advice on the proposal to use the ESTABLISHMENT 203 name despite those lawyers assisting the Stanbroke group for decades with trade mark matters;
• conducting trade mark searches and seeking legal advice were steps that an honest and reasonable person in the Respondent’s position would have taken and a simple search of the Register would have uncovered the Hemmes Registration;
• the Respondent’s use of the ESTABLISHMENT 203 name came after it received the initial letter of demand from Hemmes. The risk of being sued by Hemmes was therefore known to the Respondent but the Respondent still decided to adopt the ESTABLISHMENT 203 name under the flawed misconception that no one would be confused between an ESTABLISHMENT hotel/pub venue in Sydney and ESTABLISHMENT 203 fine dining restaurant in Brisbane.

The Respondent, therefore, failed to make out the good faith defence.

Contraventions of the ACL

Justice Jackman held that the only consumers possibly not confused between the trade marks were the very rare ones who were so deeply knowledgeable about the Queensland cattle industry that they would appreciate “203” was a reference to the Stanbroke’s abattoir’s registration number. Regarding the ordinary and reasonable member of the public, Justice Jackman found that there was a real possibility of being led into erroneously thinking that the Respondent’s restaurant known as ESTABLISHMENT 203 was a commercial extension of, or otherwise associated with, Hemmes restaurant, bar and hotel business known as ESTABLISHMENT or that it was using the name with the approval of Hemmes, which was not the case. Accordingly, the Court found that the Representations contravened sections 18 and 29(1)(g) and (h) of the Australian Consumer Law.

What’s next?

On 24 October 2024, the Respondent was ordered to pay Hemmes’ costs in a lump sum of $575,000. As at the date of this article, no appeal has been filed by the Respondent.

Key lessons

The unique circumstances of this case highlight the importance of timing when it comes to filing a trade mark application. In this case, the timing of the opening of the Hemmes ESTABLISHMENT precinct just before the commencement of the Sydney Olympic Games was advantageous as it resulted in higher patron numbers and more patrons visiting from outside NSW than would otherwise have been experienced. The Hemmes Registration was therefore held to have acquired sufficient distinctiveness in an eight month period which in most cases would be considered too short a period of time. The timing of the Hemmes Registration was also favourable as it coincided with the period during which the new ESTABLISHMENT precinct received a lot of hype and media attention around Australia. It is arguable that the hype eventually died down and whether the ESTABLISHMENT precinct still receives the same level of publicity, number of patrons and visitors from states outside of New South Wales is questionable.