Delay in enforcing rights proves costly for Winnebago

Article written by: Natalie Harre    |   Thursday 19th September 2013

Knott Investments Pty Limited v Winnebago Industries, Inc [2013] FCAFC 59 (an appeal from the decision of Foster J in Winnebago Industries, Inc v Knott Investments Pty Ltd (No 2) [2012] FCA 785) is an intriguing case involving spill-over reputation, an unusual settlement agreement and a lengthy delay in bringing proceedings with resulting adverse consequences for Winnebago

Background

Prior to 1978, and from approximately 1959, United States based Winnebago Industries, Inc (Winnebago) carried on business in the United States and a number of other countries (but not Australia) manufacturing and selling recreational vehicles (RVs) under or by reference to the trade mark WINNEBAGO. The Winnebago name and Winnebago logos are registered trade marks in the United States, and have been registered for some time.

In 1963 Mr Arthur Binns (Mr Binns) holidayed in the USA, Canada and Mexico.  While travelling he saw RVs manufactured by three different companies: Fleetwood, Winnebago and Coachman.  After Mr Binns returned to Australia he began manufacturing “slide-ons” – being basic RVs comprising a caravan type construction attached to a standard utility or truck chassis.  Mr Binns’ early RVs were branded “Freeway”.  The Freeway business failed and was wound up on 31 October 1977.  Subsequently, in 1978, Mr Binns secured the Australian business name “Winnebago Industries” and began manufacturing new RVs through Knott Investments Pty Limited (Knott) (a company he had incorporated in 1967).  The RVs manufactured by Knott were sold in Australia and branded “Winnebago”. 

Winnebago first became aware of Knott’s activities in 1985 but took no steps to prevent Knott using the Winnebago name at that time.  In 1991, Winnebago instructed Australian lawyers to write a letter of demand to Knott.  A settlement agreement was ultimately executed in September 1992. 

The true meaning of the settlement agreement was disputed.  Knott argued that the document entitled it to continue to use the Winnebago name and logos in Australia.  In contrast, Winnebago argued that the document served to put Knott on notice of Winnebago’s rights.  The trial judge and the Full Court found that Knott had agreed not to use the Winnebago marks in any country other than Australia but that the parties had also agreed that Winnebago reserved all of its rights in respect of Knott’s activities.  Accordingly, Knott had continued to use the Winnebago name and logos at its own risk.

In the primary decision, Foster J gave orders permanently restraining Knott (and its dealers) from using the Winnebago mark (or any similar mark) in Australia in the future.  Knott appealed the decision.

The Appeal decision

The Full Court agreed with Foster J that Winnebago had sufficient reputation in Australia, despite never trading there, to found a passing off claim and claims for misleading and deceptive conduct.  The key issue on appeal was whether Winnebago’s delay in bringing proceedings affected its rights and if so how. 

The case confirms that final injunctive relief may be refused by reason of delay.  However, to the extent that any injunctive relief is informed by, or founded upon, the protection of the public by enforcement of consumer law[1], delay might not disentitle an applicant from relief, but instead lead to more limited relief.  

The Full Court agreed with the trial judge that Knott and Mr Binns had from the outset deliberately sought to obtain some connection with Winnebago and take advantage of any reputation Winnebago may have had in Australia as at 1978.  However, the fact that Knott had manufactured and sold RVs under the Winnebago name in Australia for 32 years, 25 years of which was with the knowledge of Winnebago, was an unusual situation which could not be overlooked.  In this case, the inaction by Winnebago allowed Knott to continue trading in Australia and thereby acquire some goodwill which the Full Court considered it would be inequitable to ignore. 

The Chief Justice noted that in normal circumstances, the fact that a party engaged in passing off had established and invested in its own goodwill and reputation would not matter – it would be something that the party would have to accept as a consequence of its wrong doing.  However, in this case, Winnebago contributed to Knott’s position by standing by for 25 years.  The Full Court found it would be unjust to ignore those matters and require Knott to cease to use the name and logos, if, in connection with the advertisement, sale or hire of, or other dealing with the RVs, a clear distinction between Winnebago and Knott could be made.

Accordingly, Allsop CJ held (Cowdroy and Jagot JJ agreeing) that it was appropriate that any injunctive relief permit Knott to continue to use the Winnebago name and logos, provided the distinction between its business and that of Winnebago’s was made clear.  An appropriate disclaimer had to be clear on any vehicles made by Knott in the future and on any advertising and promotional material.

Lessons?

This case (although extreme as to the length of delay) illustrates that brand owners must take care when they delay in taking steps to protect their intellectual property and associated rights.  The detrimental effect of Winnebago’s extreme delay in this case was substantially lessened by the settlement agreement.  Without that agreement, it is likely that Winnebago’s failure to issue proceedings for over 25 years may have prevented it from restricting Knott’s future use of the Winnebago name and logos.
 


[1] For example, the Fair Trading Act 1986 in New Zealand.

Need more information?

Contact a member of our team:

Contact us

Email newsletter

Sign up to our monthly newsletter