Branding for WET

The need for trade marks

When the Wine Equalisation Tax (WET) Act^[1] was amended with effect from 1 July 2018 to introduce additional eligibility criteria to claim the WET producer rebate, amongst other things, it imposed on producers a requirement that their product be packaged for retail sale and branded with a trade mark. Whereas in the past the disposal of unbranded bulk wine could attract the benefit of the rebate (subject, of course, to other eligibility criteria being satisfied), from 1 July 2018 this is no longer the case.

These provisions were initiated to support the Australian wine industry by ensuring that wine producers who build brands are the beneficiaries of the rebate, and not wine traders and retailers.

Whilst the packaging requirements are generally understood, we do not believe that the branding requirements (potentially of economic significance) are fully appreciated by producers, in particular by new producers who, though retailing their product for retail sale under their own brand, have yet to formally register that brand by way of a registered trade mark.

WET branding requirements

In broad terms, in order for a producer to satisfy the eligibility branding requirements of the WET producer rebate,^[2] the container must be branded with a trade mark that satisfies each of the following conditions, that is it:

1. is a “trade mark” within the meaning of the Trade Marks Act 1995 (TMA);
2. “identifies”, or is “readily associated with”, the producer;^[3]
3. is owned by the producer (or a connected entity of the producer); and
4. satisfies one of the following:
   • is registered with IP Australia;
   • an application for registration with IP Australia has been lodged but is pending; or
   • is unregistered, but has nevertheless been in use by the producer since 1 July 2015, as evidenced by for example:
     • details of specific goods or services sold using the trade mark;
     • advertising and marketing material, photos, or signage, or other images;
     • historical context; or
     • details of any confusion or dispute about the use of the trade mark.

Therefore, ineligible trade marks include:

• a mark that is incapable of registration as a “trade mark”;
• a mark not legally owned by the actual producer or an entity that is connected with the producer; and
• an unregistered mark that has only been used after 2015.

Consequently, any wine sold under a brand in any of the above situations will not attract the producer entitlement to the WET producers rebate.

Against this background we at DW Fox Tucker Lawyers have received multiple queries from existing (or would be) producers for clarification of the above rules and for further guidance as to registering their brands.

Trade mark requirements

A trade mark under the TMA is a sign used to distinguish goods, in this case wine, of one trader from the same or similar goods of other traders. A sign can be a word or logo or even a shape^[4] and is often recognised in the trade mark sense as being a brand.

As the branding requirements of the WET rebate require the trade mark to be branded on the wine bottle, the label on the wine will guide what sign needs to be registered as a trade mark in order to satisfy the requirements. It may be the business name of the producer or a logo which identifies or is readily associated with the producer. If both appear on the wine label then either may be the subject of a trade mark registration in order to satisfy this portion of the WET producers rebate requirements. Of course, a registered trade mark also affords the owner certain protections and other benefits.^[5] Thus, from a trade mark perspective, the best protection is obtained by registering both the name and the logo.

A registered business name, company name or domain name is not the same as a trade mark and having these things in place and appearing on a wine label, without having a registered trade mark,^[6] will not satisfy the WET requirements. These names will also not afford the same benefits and protections which are provided by owning a registered trade mark.

Distinguishable

Importantly, in order for a sign to be registered as a trade mark it must be capable of distinguishing. This means it cannot be a phrase which describes the goods to which it relates, in this context being wine, or is in common use in relation to wine. Instead it needs to be a unique indicator of the producer of the wine. Particular to wine, there are also restrictions on use of geographical indications, grape varieties and traditional expressions, but discussion of these aspects are outside the scope of this article.

If a trade mark is descriptive or otherwise not distinguishable it will not be capable of registration. It also may not be considered to be a “trade mark” within the meaning of the TMA. For example, PREMIUM WINE is likely to be seen as descriptive of the goods, therefore not capable of distinguishing and not capable of registration by the Trade Mark Office. Accordingly, the WET producers rebate will not be available. It is therefore important to ensure a trade mark is a unique word, phrase or other sign and not obviously related to the goods or services for which it is to be used.

Conflicting trade marks

A trade mark will also not be able to be registered if it is substantially identical with, or deceptively similar to, a trade mark that has already been registered or applied for in relation to similar goods or services or closely related goods or services. These concepts have been the subject of much analysis with recent cases tending to ignore aspects of a trade mark that are not distinguishable in making a comparison. Certainly, registered trade marks that are the same or closely resemble the one being applied for will be a cause for concern, but so may those which leave an overall impression of being similar or confusing.

Demonstration of substantial prior use of the trade mark being applied for may be one way to overcome these concerns. Of course, for new trade marks, it is best to consider these issues in the development stage of the brand and choose a unique and distinctive mark from the outset.

Ownership

As mentioned above, the trade mark needs to be owned by the producer, or an entity connected with the producer. Although a registered trade mark is personal property and the person holding the trade mark registration is generally considered the owner, this is not conclusive evidence of ownership of the mark. An application for a trade mark may only be made by a person who claims to be the owner. Ownership can be subject to challenge by other persons who assert ownership of the registered, or applied for, trade mark. Ownership will ultimately be made out by demonstrating authorship and establishing first use of the trade mark.

It can be common to licence the right to use a trade mark. This often occurs between companies in a corporate group or as a way to keep intellectual property assets separate from a trading entity, such as a producer. Although it might be assumed that such an arrangement will mean the trade mark owner is an entity connected with the producer this should be thought through and confirmed. Where the relevant connection is not present, or if a producer licences a trade mark from an entirely unconnected entity, the ownership requirements will not be satisfied and the WET producers rebate will be unavailable.

Process and timing of trade mark registration

The priority date of a trade mark, when the rights attached to a trade mark commence, is generally the date of its application. Although prior use may be recognised where there is a conflict between trade marks or in support of an assertion of distinguishability, trade marks cannot be retrospectively registered. It is not possible to, upon making an application, choose an earlier date of effectiveness of the registration, as can be done, for example, with GST registration.

The trade mark registration process can be quite lengthy, with a minimum seven and a half month wait for registration to occur from the date of filing the application. An application will generally follow this course:

1. A trade mark application is made identifying the trade mark and the goods or services to which it will apply;
2. The trade mark application is examined by IP Australia, which can take three to four months. During this time the application will be pending and a producer will satisfy the branding requirements of the WET rebate;
3. If no issues are identified during the examination the application will be accepted:
   • Shortly after acceptance the trade mark will be advertised in the Australian Official Journal of Trade Marks;
   • Interested third parties will have a period of two months from advertisement to oppose the registration:
     • If the trade mark is opposed this will need to be addressed either by negotiation or, eventually, a hearing before the Trade Mark Registrar and, possibly, Court proceedings;
     • If the opposition is successful the trade mark will not be registered;
4. If there are no oppositions, or once any opposition has been dealt with or determined in favour of the applicant, the trade mark will be registered;
5. If the examiner identifies issues with the application he or she will issue an Examination Report outlining those issues:
   • The applicant will be allowed 15 months from the date of the Examination Report to respond and overcome to the satisfaction of the examiner all of the issues raised. This might be by providing evidence of the use of the trade mark, or making legal submissions about the issues raised;
   • If a response is not made the application will eventually lapse. Importantly from a WET perspective, this will change the status of the application from ‘pending’ to ‘lapsed’ meaning at this point the WET branding requirements will no longer be satisfied;
   • If the issues are not able to be overcome, the applicant may withdraw the application or request a hearing. The application may also be rejected or refused by the Trade Mark Registrar. If none of these actions are taken the trade mark will simply lapse once the time for response and a brief grace period expires;
   • If all issues can be overcome the application will be accepted and continue on the path as outlined in paragraph 3 above.

Brands used prior to 1 July 2015

It is clear that any producer that only began producing wine after 1 July 2015 will need to mark their wine with an Australian registered trade mark^[7] in order to obtain the rebate.

Whilst a producer who has used a brand before 1 July 2015 may not need to actually apply to have its trade mark registered, it will still need to satisfy other eligibility branding conditions to obtain the WET producer rebate. This includes the requirement for wine bottles to be branded with a trade mark which is used to distinguish (so as to be within the defined term under the TMA) and is owned by the producer (or a connected entity).

It will also need to be in a position to evidence its continuous use of the trade mark from before 1 July 2015 to the present, or future, time and retain such evidence for this entire period. The necessity to retain evidence such as this can be cumbersome.

By making an application to register a trade mark, wine producers with brands in use from before 1 July 2015, will, upon registration, more readily be able to satisfy the Commissioner that their mark is a “trade mark” as defined (since it has been registered as such) and that they are the owner, as well as dispensing with the need to have continuously used their trade mark and to have retained substantial evidence of this. In addition, there will be less risk of infringement issues arising and, if they do, the registered trade mark can be used as a defence to such a claim as well as having better protection of the brand and other benefits of being a registered trade mark owner.

Benefits of a registered trade mark

Once a wine producer has a registered trade mark it will have the exclusive right to use and licence the trade mark. These rights can provide a competitive advantage. In addition, registered trade marks can use the ® symbol to put others on notice of the trade mark holder’s rights in relation to the trade mark. It is an offence to use this symbol with an unregistered trade mark.

A trade mark owner will also have legal protection against others who, without authorisation, use the trade mark or a trade mark that is substantially identical or deceptively similar in relation to the goods to which it applies. These rights against infringement can be simpler to enforce than common law trade mark rights such as passing off because no evidence of reputation in or use of the trade mark is required; the mark as registered can simply be relied on.

A registered trade mark will also now enable a producer, in circumstances where the other requirements are satisfied, to obtain the WET rebate.