Famous US company recovers brand after three decades
In Winnebago Industries Inc v Knott Investments Pty Ltd (No 2) ( FCA 785, July 25 2012), the Federal Court of Australia has held that the US company Winnebago Industries Inc was entitled to recover its brand after three decades of unauthorised use by an unrelated Australian company.
Winnebago has been in the business of manufacturing and selling motor homes and other recreational vehicles under the Winnebago name and logo (pictured below) since the 1960s.
Founded in Forest City, Iowa in the late 1950s, the US company took its name after the local Native American tribe, the name of the local county and the name of the river passing through the city.
Winnebago’s reputation as a manufacturer of high-quality motor homes has grown significantly since its beginnings. It remains one of leading manufacturers of RVs in the United States, having sold over 400,000 vehicles by 2007. Winnebago motor homes have been featured in popular films, including Escape to Witch Mountain (1975), Spaceballs (1987) and About Schmidt (2003). The company has been regularly referenced in popular print media, including The New York Times, The Wall Street Journal, The Times and TIME magazine, from the 1960s to the present day.
Since the 1970s, Winnebago has exported its motor homes to foreign markets, including Canada, the United Kingdom, continental Europe and Japan. The US company has never officially exported Winnebago-branded vehicles to Australia. There was, however, evidence that a small number of its motor homes had been privately imported into Australia by enthusiasts.
In 1963 an Australian, Bruce Binns, a carpenter by trade, travelled to the United States and Canada as a tourist. There he saw many recreational vehicles, including those manufactured by Winnebago. On his return to Australia, Binns began manufacturing recreational vehicles under the name Freeway.
In the late 1970s, after the Freeway business failed, Binns recommenced his business under the Winnebago name and logo. In 1982 his company, Knott Investments Pty Ltd, took over the business.
In 1985 the US company became aware of the Australian business. Winnebago took steps to prevent Knott from continuing to use the Winnebago name and logo. This resulted in a settlement agreement in 1992. However, Knott continued to exploit the Winnebago name and logo in Australia after 1992. In 1998 it registered the Winnebago logo as a trademark in Australia.
In more recent years, the US company became interested in the Australian market. In 2010 Winnebago commenced the present court case against Knott and its dealers in the Federal Court of Australia.
The US company claimed that the Australian company and its dealers had:
- passed off their businesses and products as being licensed or connected with the US company;
- engaged in misleading or deceptive conduct, and had made false and misleading representations of affiliation in contravention of the Australian Consumer Law and the former Trade Practices Act 1974 (Cth);
- infringed copyright in the Winnebago logo; and
- breached the 1992 settlement agreement.
Winnebago also sought cancellation of the Australian company’s registered trademark based on its passing off and misleading or deceptive conduct claims.
In order to make out its claims of passing off and misleading conduct, Winnebago had to show that it had acquired a reputation among a substantial number of prospective consumers of recreational vehicles in Australia in June 1982, the date when Knott began using the WINNEBAGO marks (Winnebago -, -).
Given its reputation for motor homes in the United States, the United Kingdom and elsewhere, Winnebago argued that its reputation had 'spilt over' into Australia by June 1982. The US company provided evidence of:
- its reputation in the United States, including historical sales, historical marketing spend and notable company milestones;
- historical travel statistics between Australia and the United States and the United Kingdom, countries in which it sold motor homes;
- film, television and print media references to the US company and its motor homes from the 1960s to 2000s;
- the value of exports to non-US markets;
- information about its motor homes that had been privately imported into Australia; and
- correspondence from Australian consumers between 1989 to 2000s showing a false belief of association between the US company and the Australian company.
The court also noted:
"The most telling evidence of reputation in Australia is the evidence of Bruce Binns. He intentionally hijacked the WINNEBAGO marks in Australia in a bold attempt to pre-empt Winnebago’s opening its doors here. No doubt Bruce Binns thought that, by taking such action, he could keep Winnebago out of Australia or, at the very least, hold it to ransom and extort a significant payment from Winnebago. In the meantime, he and Knott would be able to trade off its reputation." (Winnebago )
Taking all of the above evidence into account, the court found that Winnebago had proven the requisite reputation: that a substantial number of prospective consumers of recreational vehicles in Australia were aware of Winnebago and its motor homes as at June 1982, when Knott began using the WINNEBAGO marks.
With regard to the passing off and misleading conduct claims, the court considered the significant number of complaints from Australian consumers to the US company in which they expressed a false belief of association between Winnebago and Knott. For example, one Australian consumer wrote to Winnebago: “I understand that Winnebago is also built in [Australia], which I assume is under licence from the USA. We don’t seem to get the trendy models with all the spiffy features that I have just seen on your site.” The judge also noted a newspaper article in which the Australian company’s marketing manager is reported to have said: “A lot of people confuse us with the US company.”
There was also evidence of an advertisement by Knott in which it referred to itself as “Winnebago, the world’s most respected name in luxury motorhomes”. Similarly, in a presentation given to its dealers, the Australian company was described itself as Winnebago, “the name synonymous with motor homes and is regarded by the world as the best.”
In his cross-examination, Binns repeatedly denied any intention to associate the Australian company’s business with that of Winnebago. The judge rejected Binns’ denials, describing these attempts as “asserting that black was white”. The court found that Binns had intended to gain the benefit of Winnebago’s reputation by adopting the Winnebago name and logo in connection with the Australian business.
In the circumstances, the court held that Knott Investments and its dealers had engaged in passing off. The court also held that the respondents had engaged in misleading or deceptive conduct and made false representations of affiliation contrary to the Australian Consumer Law and the former Trade Practices Act.
The Australian company also argued that the US company was estopped from pursuing its claims for two reasons.
The first estoppel was said to arise from an alleged conversation between the founder of Winnebago, the late John K Hanson, and Binns at an RV trade show in November 1991. Binns gave evidence that Hanson had consented to Knott’s use of the Winnebago brand. This evidence was not supported by contemporaneous documents, including correspondence between the parties’ respective Australian lawyers. The court rejected Binns’ evidence in this regard and, accordingly, held that estoppel was not made out on this basis.
The second estoppel was said to arise from the settlement agreement between the parties made in 1992. The substantive parts of the settlement agreement provided:
"1. Binns and Australian company hereby agree: not to use the proprietary marks in the United States of America, or in any country other than Australia; not to apply for registration of the proprietary marks in any country; and not to associate themselves or related entities with Winnebago or its products now or in future.
2. For the period which Binns and Australian company comply with all of the terms of this agreement, Winnebago agrees not to take any legal action in the United States of America against Binns or Australian company for their use of the proprietary marks, their passing off or their attempts to trade on the reputation and goodwill of Winnebago.
6. This agreement does not address, impact upon, or relate in any way, manner or form to the use or ownership of the proprietary marks in Australia or to any rights relating to the proprietary marks based on reputation or use under any statute or at common law in Australia. By entering into this agreement, Winnebago does not expressly or impliedly acknowledge that Australian company has any rights of any nature whatsoever to the proprietary marks in Australia. To the extent not expressed in this agreement, this agreement shall be without prejudice to the rights of Winnebago and Winnebago expressly reserves all of its legal rights."
The Australian company argued that Clause 1 amounted to a representation that Knott was permitted to use the WINNEBAGO marks in Australia in perpetuity. The court rejected this argument, noting that:
- the agreement did not contain any release in favour of the Australian company;
- the agreement only contained a promise not to sue Binns and Knott in the United States, not a promise not to sue in Australia; and
- Clause 6 made it clear that the parties’ intention was to leave matters as they stood as at the date of the agreement until such time as the US company might wish to exercise its rights in respect of the WINNEBAGO marks.
In addition, the court held that the substantial delay in bringing legal proceedings was not a proper basis for denying final relief to Winnebago. The settlement agreement was, in effect, a “standstill” agreement in which the US company reserved its rights to take legal action. Likewise, the Australian company was “quite happy” to take this “calculated” “commercial” risk, so that in the meantime it could “continue on its merry way manufacturing and selling Winnebago-branded RVs in Australia without interference from Winnebago” (Winnebago ).
Given the findings of Winnebago’s reputation in Australia, the court ordered the cancellation of Knott’s trademark registration of the Winnebago logo.
The court further held that Winnebago did not make out its copyright claim because there was insufficient evidence of how the earliest sketches of the Winnebago logo came to be first applied and used on the US company’s recreational vehicles. The court did not have to decide the breach of contract claims, as they were equivalent to Winnebago’s claims for passing off and contraventions of the Australian Consumer Law and the former Trade Practices Act.
While the case may still be subject to appeal, it demonstrates the potential under Australian law for overseas brand owners to recover their brands from local 'borrowers' based on the brand owner’s 'spill over' reputation. This reputation can be proved by a variety of indirect means, including travel between countries, exposure in popular culture and, as the judge noted, “the rise of the internet in the last 10-15 years” (Winnebago )
The case also shows that mere delay - even mere delay over a very long period - is not of itself a barrier to such claims.
Odette Gourley and Wen H Wu, Corrs Chambers Westgarth, Sydney
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