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Delay costs Winnebago on appeal
The decision of the Full Federal Court in Knott Investments Pty Ltd v Winnebago Industries Inc  FCAFC 59 serves as a warning to brand owners not to delay when faced with infringing or misleading conduct.
Winnebago has been making and selling its mobile homes or RVs since 1959. Initially, Winnebago RVs were only sold in the USA but they eventually spread to other countries, but not Australia.
In the early 1960s, the Binns became aware of the Winnebago brand during a visit to the USA. In 1978, they started manufacturing and selling their own RVs in Australia using the Winnebago name and an identical Winnebago logo. The Binns eventually incorporated Knott Investments and this company continued to manufacture and sell the Binns’ Winnebago RVs.
In 1985, the US Winnebago company discovered that Knott was using its name and trade mark in Australia. Surprisingly, it did nothing until 1992 when the parties entered into a settlement agreement which was somewhat curious in form.
Knot continued manufacturing and selling RVs under the Winnebago name and logo and the Winnebago company allowed it to do so until 2010 (which coincided with when the Winnebago company decided to enter the Australian market) when it sued Knott for misleading and deceptive conduct and passing off.
The Winnebago company was successful at first instance.
In the Federal Court, Foster J held that even though the Winnebago company was not selling in Australia, it had sufficient ‘spillover reputation’ such that consumers were likely to be misled or deceived. While recognising that there had been an extraordinary delay by the Winnebago company in taking action, this did not necessarily preclude it from relief as it had sought to protect its position through the settlement agreement and Knott had taken a calculated risk to continue manufacturing and selling its Winnebago branded RVs.
The Court ordered that Knott and its dealers be permanently restrained from using the Winnebago marks and that they cancel all business names, domain names and corporate names that contained the Winnebago marks.
Knott appealed to Full Federal Court decision on a number of grounds. Most of these were largely unsuccessful however Knott was partially successful on one important point.
Knott argued that the Winnebago company should not have been able to bring proceedings after an 18 year delay as it was unjust. The Full Court disagreed, holding that the terms of the settlement agreement made clear that the Winnebago company wasn’t conceding its rights and Mr Binns knew that he remained at risk of being sued.
Importantly, however, the Full Court decided that Foster J’s order that Knott and its dealers be restrained from using the Winnebago marks was unjust. This was because Knott had itself developed its own reputation in the Winnebago marks and the Winnebago company had allowed this to happen by not taking action even though it knew what was going on.
The Full Court varied the order at first instance so that Knott and its dealers were only restrained from using the Winnebago marks if they used them without a disclaimer disassociating them from the Winnebago company. In other words, so long as Knott and its dealers disclaimed any association with the Winnebago company, they could continue to use the Winnebago marks.
- We say it a lot, but it’s worth saying again – if you detect infringement, take prompt action. Failing to do so can erode your rights.
- Regularly review your plans for overseas markets. Just because you’re not doing business in a country today doesn’t mean you shouldn’t be looking to protect your brand today.
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