Many business owners operate under the assumption that securing a registration certificate from IP Australia provides absolute protection and indisputable title to a brand name. However, the Australian trade mark system is fundamentally based on proprietorship acquired through use, not merely through the administrative act of registration. This distinction becomes critically important when two entities adopt identical or substantially identical names for similar services, as demonstrated in the significant decision of the Full Court of the Federal Court of Australia in Anchorage Capital Partners Pty Limited v ACPA Pty Ltd [2018] FCAFC 6.
Background of the Dispute
The conflict involved two financial services entities operating under the “Anchorage” name. The appellant, Anchorage Capital Partners Pty Ltd, was an Australian corporation incorporated in August 2007. It obtained a financial services license in March 2008 and operated a funds management business focused on “turnaround investments”, which involved acquiring struggling businesses, improving their operations, and selling them for a profit. In May 2011, the Australian company successfully applied for and registered three trade marks in Class 36: ANCHORAGE, ANCHORAGE CAPITAL, and ANCHORAGE CAPITAL PARTNERS.
The respondents were ACPA Pty Ltd, an Australian subsidiary incorporated in 2011, and its parent company, Anchorage Capital Group LLC, a United States-based investment firm incorporated in 2003. The US firm, originally known as Anchorage Advisors LLC, specialized in acquiring distressed debt or equity positions at a discount. The dispute crystallized when the Australian company sued the respondents for trade mark infringement, passing off, and misleading and deceptive conduct after the respondents commenced business in Sydney.
In a strategic counter-move, the respondents filed a cross-claim seeking the cancellation of the Australian company’s registered trade marks. Their primary argument was that the Australian company was not the true owner of the marks because the US firm had used them in Australia first. The primary judge agreed, ordering the cancellation of the ANCHORAGE and ANCHORAGE CAPITAL marks, a decision that was the subject of this appeal to the Full Federal Court.
The Question of Ownership and “First Use”
Under section 58 of the Trade Marks Act 1995 (Cth), the registration of a trade mark may be opposed, and subsequently cancelled, if the applicant is not the owner of the trade mark. In Australia, ownership is generally established by the person who first uses the mark in the course of trade in Australia, or who is the first to file an application for registration if there has been no prior use.
The critical factual dispute in this case centered on whether the US firm had used the “Anchorage” names in Australia prior to the Australian company’s first use (which occurred around 2008) or its application date in 2011. The respondents relied on evidence showing that on 25 and 30 January 2007, the US firm had sent emails to potential institutional investors in Australia. Attached to these emails were slide presentations titled “ANCHORAGE CAPITAL GROUP” and “ACP, ACC, & ASC FUNDS OVERVIEW”.
The Full Court upheld the primary judge’s finding that this activity constituted valid trade mark use. The Court noted that the slide presentations were sent to Australian email addresses associated with well-known public companies in response to requests. Although the presentations contained disclaimers stating they did not constitute an offer to sell interests in the funds, the Court found that they were clearly sent to potential investors for the purpose of soliciting investment.
This finding is significant because it confirms that “trade mark use” does not require an actual completed transaction or a physical presence in Australia. The Court emphasized that use of a mark in relation to services can be understood as use in and about the soliciting of contracts for the supply of services. By sending the presentation, the US firm was indicating its willingness to provide funds management services to Australian entities, which was sufficient to establish a priority date for ownership.
Services of the “Same Kind”
For a claim of prior ownership to succeed, the prior use must be in relation to the same kind of services as those covered by the disputed registration. The Australian company argued that its business of “turnaround” investing, fixing up mismanaged companies, was distinct from the US firm’s business of investing in distressed debt.
The registered services of the Australian company included qualifications such as “targeted towards special situations and mismanaged or underperforming companies to help improve their financial performance”. The Australian company contended that the services described in the US firm’s 2007 slide presentation did not meet this specific description.
The Full Court rejected this narrow distinction. Upon reviewing the slide presentation and the US firm’s investor letters, the Court found that the US firm’s funds also focused on “special situations” and “underperforming companies”. The Court observed that there is little practical difference between the character of services provided by a fund manager targeting underperforming companies and one who does so to “help improve their financial performance”. Investments in such companies are almost always made with the expectation that a change in circumstances will generate a return, often involving financial improvement.
Consequently, the Court held that the services were of the “same kind,” meaning the US firm’s prior use in 2007 effectively displaced the Australian company’s claim to ownership of the marks ANCHORAGE and ANCHORAGE CAPITAL. Furthermore, in a cross-appeal, the Full Court extended this finding to the third mark, ANCHORAGE CAPITAL PARTNERS. The Court found that “Anchorage Capital” was substantially identical to “Anchorage Capital Partners” and that the US firm had used the latter phrase in its 2007 presentation as a trade mark. As a result, the Court ordered the cancellation of all three of the Australian company’s registrations.
Regulatory compliance and intention to use
An interesting argument raised by the Australian company was that the US firm could not have had a valid intention to use the marks in Australia in 2007 because it did not hold an Australian financial services license at that time. The appellant argued that the Court should not infer an intention to provide services if doing so would have been unlawful under section 911A of the Corporations Act 2001 (Cth).
The Full Court dismissed this line of reasoning. They noted that illegal use or a lack of regulatory compliance does not automatically negate trade mark use or the acquisition of ownership. Furthermore, the Court pointed out that it was always open to the US firm to obtain a license or bring itself within a relevant exemption, which it eventually did. The fact that the US firm might have needed to complete regulatory steps before finalizing a transaction did not alter the fact that they were soliciting business and using the mark as a badge of origin in January 2007. This reinforces the principle that trade mark rights and regulatory compliance are distinct legal issues; a failure in one area does not necessarily invalidate rights in the other.
The discretion to cancel and the purity of the register
Even when grounds for cancellation are established, the Court retains a discretion under section 88(1) of the Trade Marks Act not to cancel a registration. The Australian company urged the Court to exercise this discretion to keep its marks on the Register, arguing that it had built a reputation in Australia, had used the marks without causing deception, and that the US firm had only used the marks slightly.
The Court engaged in a detailed analysis of the “purity” and “integrity” of the Register. Citing High Court authority, the judges reiterated that the public interest requires the Register to be an accurate record of the marks that perform their statutory function. If a registered owner is found not to be the true owner, the entry is inaccurate, detracting from the integrity of the public record.
While the Court acknowledged that the absence of consumer confusion and the appellant’s established reputation were relevant factors, they were not sufficient to outweigh the fundamental defect in ownership. The Court emphasized that permitting the Australian company to maintain registrations for trade marks it did not own would be unjust, particularly as it would continue to constrain the respondents’ ability to conduct business using their own name. The respondents faced the constant risk of infringement suits merely for handing out business cards or brochures. Therefore, the Court concluded that sufficient reason had not been shown to withhold the cancellation order.
Infringement and the “Own Name” Defense
Although the cancellation of the marks effectively mooted the infringement claims, the Court provided valuable commentary on infringement and defenses. The Australian company had alleged that the respondents infringed the marks by using the names ANCHORAGE and ANCHORAGE CAPITAL GROUP.
The Court clarified that a person can infringe a trade mark even if they have not yet “dealt with” or provided services in Australia, provided they have used the mark in soliciting supply. The respondents’ use of the names in 2013 and 2014 presentations was considered infringing use (had the registrations been valid) because it functioned as a badge of origin.
However, the respondents successfully relied on the “own name” defense under section 122(1)(a)(i) of the Act regarding the full corporate name. The Court agreed that the second respondent’s use of “ANCHORAGE CAPITAL GROUP” was a good faith use of its own name. Crucially, however, the Court held that this defense did not extend to the use of “ANCHORAGE” or “ANCHORAGE CAPITAL” in isolation, as those were not the full corporate name. This distinction serves as a warning to businesses: relying on the “own name” defense is risky if the name is abbreviated or altered in marketing materials.
Indemnity costs and offers of compromise
A procedural aspect of the appeal concerned costs. The primary judge had ordered the Australian company to pay indemnity costs (a higher scale of legal costs) because it had rejected a settlement offer from the respondents in June 2014. The offer proposed that both parties discontinue their claims, with the Australian company paying a portion of the respondents’ costs.
The Full Court overturned this indemnity costs order. They found that the primary judge erred in concluding that the rejection of the offer was unreasonable. At the time the offer was made, the respondents had not yet provided full discovery or unredacted evidence of their prior use in 2007. The Australian company did not have sufficient information to assess its prospects of success or the strength of the respondents’ ownership claim. Furthermore, the offer required the Australian company to pay a substantial sum while leaving the underlying commercial dispute unresolved, as the respondents would have been free to sue for cancellation again in the future. This highlights that refusing a settlement offer is not automatically unreasonable, particularly when key evidence is being withheld.
Key Takeaways for Brand Owners
The Anchorage decision provides several critical takeaways for businesses and legal practitioners navigating the trade mark landscape:
a) Possessing a registration certificate does not guarantee ownership if another party can prove they used the mark (or a substantially identical one) for similar services in Australia first.
b) Sending a presentation to a handful of potential clients can constitute “trade mark use” sufficient to establish ownership, even if no contracts are signed and no revenue is generated immediately.
c) Courts will look at the commercial reality of services, not just their technical descriptions. Differentiating between “turnaround” consulting and “distressed debt” investment may not be enough to avoid a finding that services are of the “same kind.”
d) Businesses should be cautious about abbreviating their corporate name in marketing materials if they intend to rely on the “own name” defense against infringement claims.
e) Before adopting a brand or engaging in litigation, thorough investigations into potential prior users, i.e. including international entities that may have solicited business in Australia, are vital.
Conclusion
Thus, Anchorage Capital Partners Pty Limited v ACPA Pty Ltd illustrates the rigor with which Australian courts protect the integrity of the Trade Marks Register. It affirms that the statutory concept of ownership is rooted in the reality of the marketplace rather than the administrative race to registration. For the Australian appellant, the decision resulted in the loss of its key brand assets despite years of trading and registration. For the broader business community, it serves as a precedent that valid trade mark rights can stem from something as simple, yet commercially significant, as a slide presentation sent to a prospective client. In the digital age, where cross-border solicitations are commonplace, understanding the weight of “first use” is more important than ever.
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