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Federal Court of Australia Finds No Bad Faith in Trademark Application Despite Deliberate Adoption of Similar Mark

Monday, February 27, 2012
Fry Consulting Pty Ltd v. Sports Warehouse Inc (No 2) [2012] FCA 81 (Federal Court of Australia, Feb. 13, 2012) The Federal Court of Australia dismissed an opposition to the registration of a trademark, holding that the application had not been made in bad faith despite a lower court's finding of improper motive in the use of the mark. The court allowed the applicant to proceed with its appeal.

Mutual Trademark Oppositions

Applicant Fry Consulting Pty Ltd. and respondent Sports Warehouse Inc. are competitors selling tennis goods. Sports, which was incorporated in California in 1994, is based in the United States and primarily sells there, almost entirely online. Sports also makes some international sales, including to Australia. Fry is a more recently established Australian-based company, which sells in Australia both online and through retail stores. In December 2006, Fry filed application no. 115371 to register a trademark, which Sports opposed. The composite mark, for "retailing of goods (by any means)," consisted of the phrase TENNIS WAREHOUSE AUSTRALIA to the right of a drawing of a tennis ball. In December 2009, the Register of Trade Marks upheld the opposition. Registration was refused under Section 44 of the Trade Marks Act 1995 (the "Act"), among others, on the ground that the mark was deceptively similar to the Sports mark TENNIS WAREHOUSE, which Sports had applied to register with a priority date of February 23, 2005. Fry successfully opposed Sports's application, after which Sports amended its complaint to oppose Fry's registration under Sections 41, 60, and 62A of the Act (which apply to unregistered marks). Sports claimed that Fry's TENNIS WAREHOUSE AUSTRALIA & Device mark was not inherently distinctive under Sections 41(2) and (5)(c) of the Act, was likely to cause deception or confusion with the Sports mark under Section 60, and had been applied for in bad faith, under Section 62A.

Deliberate Choice of Similar Designations

In 1994, Sports began operating an online retail business selling tennis products from its website under the domain name www.tennis-warehouse.com, and later www.tenniswarehouse.com. From 1995 to 2006, Sports sold over US$190 million of tennis goods internationally, of which US$1.14 million was in Australia. The Sports website displayed banners showing the stylized mark TENNIS WAREHOUSE, sometimes adjacent to the letters "TW" inside an oval. Fry's director Wesley Fry testified that when he began his business, he was aware of the Sports website, and knew that Sports sold goods in Australia. Fry adopted the name "Tennis Warehouse" after visiting Sports's Tennis Warehouse website, and he registered the business name "Tennis Warehouse" and the domain name www.tenniswarehouse.com.au. He conceded that consumers might confuse the two websites and that he chose the name partly for this reason. After receiving a warning letter from Sports in December 2004, Fry expressed willingness to change the name if Sports provided evidence of its "international" trademark. Fry then added the word "Australia" to "Tennis Warehouse" in his mark. Sports agreed to send Fry the requested evidence, but never did so. In December 2005, Fry added the tennis ball design to his mark. In upholding Fry's opposition to Sports's application to register TENNIS WAREHOUSE, the lower court had considered whether the mark was inherently distinctive or descriptive, based on whether "other traders actuated only by proper motives would wish to use the mark or one closely resembling it." Fry at

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