The High Court clarifies the “Honest Concurrent Use Defence”: Zip Co Ltd v Firstmac Ltd [2026] HCA 16

The High Court of Australia recently delivered an unanimous judgment in Zip Co Ltd v Firstmac Ltd [2026] HCA 16 (the Judgment), which sets out the test for a defendant seeking to make out the honest concurrent use defence (the Defence) under s 122(1)(fa) and s 44(3)(a) of the Trade Marks Act 1995 (Cth) (the Act).

Background

1. In September 2005, Firstmac became the registered owner of the mark “ZIP” in respect of financial affairs (loans) in class 36 (the Firstmac Mark)[1]. In early 2005 Firstmac began marketing products using the Firstmac Mark.
2. Between June and mid-August 2013, Zip Co applied for registration of trade marks using the word “ZIP” in relation to the provision of credit in class 36 without first searching the Register of Trade Marks or seeking legal advice[2]. Representatives of Zip Co also conducted internet searches for ZIP. However, none of the searches disclosed the Firstmac Mark.  After IP Australia issued adverse examination reports identifying the Firstmac Mark as an objection to Zip Co’s registration, Zip Co nevertheless began using the marks for their online consumer credit products[3].
3. Zip Co also re-applied for registration of its trade marks multiple times, all of which were rejected because of the similarity to the Firstmac Mark, both explicitly in name and in trade mark type, as they were both credit service class 36 trade marks[4]. Nevertheless, from November 2013 Zip Co Ltd and its subsidiary (collectively ZIP Co) used, as trade marks, signs containing the word “ZIP” in relation to services in class 36 which were substantially identical with, or deceptively similar to, the Firstmac Mark.

The central issue at trial, was whether Zip Co could make out a defence of honest concurrent use. If answered in the negative, Zip Co would have been held to have committed trade mark infringement.

The Court ultimately found that Zip Co failed to establish the requisite honesty to establish  the Defence, given their prior knowledge of the Firstmac Mark and subsequent disregard for adverse examination reports which highlighted the risk of confusion.

The Operation of the Defence

The Defence is complex as it is not set out  in a single section of the Act, but rather is the result of interactions between s 122(1) and s 44, which respectively govern the defences to trade mark infringement and the considerations relevant to trade mark registration applications. Its operation can be illustrated as follows:

1. s 122(1) sets out the circumstances in which a person may evade liability for trade mark infringement. The scenario in s 122(1)(f)(a) is where a person used a trade mark that is deceptively similar to a registered mark, but the Court is of the opinion that the person would have obtained registration of the mark if they had applied for it (the Scenario).
2. Typically, this hypothetical application would be rejected under s 44(1) or (2) which stipulate that applications for the registration of marks which are substantially identical with or deceptively similar to another registered mark, must be rejected. As such, the Court could not be convinced that registration would have been obtained and the Scenario would not be enlivened to excuse liability.
3. The application (and thus the Scenario) may only proceed, if the infringer can rely on the exception to the requirement for refusal pursuant to s 44(1) set out in s 44(3)(a) which is that registration may not be rejected, if “there has been honest concurrent use”.

Issues before the Court

In the present case, the complexity of the Defence and uncertainty regarding its elements, brought two key questions before the Court[5]:

1. What is the date or time at which honest concurrent use should be assessed?
2. What is the meaning of “honest” in s 44(3)(a), and thus what must be established for the Defence?

The Court made clear that it did not consider other possible issues such as  whether honest concurrent use excludes a consideration of concepts of blameworthy or disentitling conduct, the relationship between s 44(3) and other provisions of the Act, or whether there could be concurrent use for the purposes of the defence if a registered mark is not being used.

Issue 1: Timing

On appeal, Zip Co argued that that the date for assessing honest concurrent use should not be at the time of the alleged infringements, but rather the date at which they filed their defence or in the alternative, the date of the hearing before the original trial judge[6].

Zip Co advanced an argument that the language of s 122(1)(fa) and particularly the words “would obtain registration” as opposed to “would have obtained registration”, speak to a date in the future following an infringement[7].

However, the Court found that such a literal interpretation was inconsistent with both the purpose of the legislation and its surrounding interpretive context including the fact that every paragraph preceding and succeeding s 122(1)(f) is “concerned with a defence that operates at the time of potential infringement.”[8]

Zip Co also  argued that “an assessment of the defences of honest concurrent use at the date of potential infringement would eviscerate the defence, leaving it only with “inconsequential” operation”[9]. However, the Court rejected this submission and offered two instances where it would retain consequential operation:

“(i) where two traders in different localities had innocently used marks that closely resembled each other on goods but those goods later came to be on sale to the same potential purchasers; and

(ii) where the goodwill of a business that was conducted from more than one shop or in partnership was divided among successors.”[10]

As such, the Court decided that the time of the  infringement under s 120 determines the time for the operation of the defence of honest concurrent use[11].

Issue 2: Honesty

The Court also clarified that “honesty” under s44(3)(a) of the Act requires a subjective state of mind assessed against the objective standards of ordinary, decent people[12]. The defendant must establish its relevant “knowledge, belief and intent” in relation to the infringing conduct and then assess that “knowledge, belief and intent” according to the standards of ordinary, decent people”[13].The examination of the person’s state of mind is in relation to each instance of potential infringement of a trade mark and requires that they “had a genuine belief that use and adoption of its mark would not likely cause confusion, or in some way trade off the goodwill of the earlier registered trade mark”.[14]

The Court found that Zip Co failed to discharge the onus of proving it had established this threshold of honesty. This was in no small part due to the fact that they already had knowledge of the Firstmac Mark being an impediment to their trade mark registration, because of  the report from IP Australia, and failed to respond meaningfully[15]. Whilst mere knowledge of an earlier registered trade mark is not necessarily fatal to a finding of honesty, the Judgment suggests that it weighs strongly against such a finding unless the infringer is able to prove that they believed consumers would experience no confusion or that they wouldn’t receive a benefit from the goodwill of the earlier mark.[16] Zip also failed to lead sufficient evidence that the failure to turn their minds to such matters had not been reckless. An infringer must further be prepared to demonstrate that they did not deliberately avoid searching the Register of Trade Marks to confirm availability of the mark[17].

In this case, Zip Co’s failure to establish honesty at the date of first infringement was fatal to any application of the defence to later infringements, because no subsequent events could otherwise establish honesty.

Key Takeaways

• The date of the infringement is the date at which the Court will assess whether the defence is applicable
• The onus in proving honesty rests with the infringer
• In the event of adverse reports from IP Australia or allegations of trade mark infringement, legal advice should be promptly obtained
• Infringers likely need to be prepared to lead evidence demonstrating that they did not deliberately decide not to search the Register of Trade Marks, in a bid to avoid discovering a previous mark
• Knowledge of a prior registration will mitigate strongly against a finding of honesty unless it can be proved that the infringer believed consumers would experience no confusion or that they wouldn’t receive a benefit from the goodwill of the earlier mark

Ultimately, the Judgment further underscores the necessity for businesses to exercise heightened care and diligence when adopting trade marks that may conflict with prior registrations, especially when knowledge of these registrations is evident. Furthermore, it reaffirms the established legal principle that the standard of honesty is to be a genuine belief that adoption of the mark would not likely cause confusion or undue profit off o the earlier mark by the standards of ordinary, decent people.

Authors: David Hing, Andy Lan and Preethika Mathan

Image Credit: Nathana Rebouças via Unsplash (obtained under the Unsplash License).

Please note that this article contains general advice only and that specific advice should be sought for specific problems.

[1] Zip Co Ltd v Firstmac Ltd [2026] HCA 16 [4] (‘Judgment’).

[2] Judgment [13] – [15].

[3] Judgment [13] – [15].

[4] Judgment [18] – [24].

[5] Judgment [5].

[6] Judgment [35].

[7] Judgment [50].

[8] Judgment [47] – [51].

[9] Judgment [55].

[10] Judgment [38].

[11] Judgment [56].

[12] Judgment [57] – [59].

[13] Judgment [57].

[14] Judgment [61].

[15] Judgment [70].

[16] Judgment [62] – [63].

[17] Judgment [63].