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According to Davison, Monotti, and Wiseman, a trademark is an Intellectual property right designed to promote innovation and protect enterprises that develop unique IP so as to have a competitive edge. Trademarks are used as marketing tools and they distinguish between products or services. A registered trademark ensures that the owner has legal protection, thus preventing other people from using the brand without permission.1 Emma and Reuben registered trademark is a combination of a fancy name for their brand the ‘First Home Avo-smasho’ and aesthetic visual features on the product. However, there are various IP issues arising as discussed in the paper.


IP Australia has divided goods and services into two categories of more than forty-five classes for easy registration of trademarks. This follows an international classification system called the Nice Classification system.2 The ‘First Home Avo-smasho’ has different uses which are classified into the two categories and as a result, the two have registered with IP Australia for the mark — for Goods — Class 7 under electric food mixers and blenders, and Services — Class 36 under management of finances. The trademark is duly registered to prevent third parties from infringing on the rights of the product created by Emma and Reuben. The combination trademark separates the words and the logo so that they are registered separately for a broader protection of the product. The other benefit is that the owners can retain the protection of the words in case there is a change in the logo.3

  1. Employment Contracts, Shop Rights and IP

Reuben is a part time employee of Kapital Kool café. However, there is no contract that sets out any terms of employment or inventions made by an employee in the course of their employment. In Australia, the general rule is that an employer owns any IP created by their worker unless the contract provides otherwise. The idea for the ‘First Home Avo-smasho’ came to Reuben while he was at work in the café during working hours. However, there are exceptions to the rule as established by the law meant to protect and legally avert other people from taking advantage of the success of an innovation.4

Where an employment contract does not exist and the employee is not employed for the purposes of inventing or solving a specific problem during the course of employment, the IP rights are automatically the employees’. Mere employment, and in the case of Reuben part time employment, does not satisfactorily signal a transfer of ownership to Kapital Kool café despite the invention relating to the business conducted by the café. There are three considerations that determine whether IP belong to the employer or employee. First, the duties prescribed by the employment contract. Second, any recorded duty statements for the duties of the worker. Third, whether the employer directed the activities of the employee that led to the conception of the IP. Therefore, Mark the former boss to Reuben at the café cannot claim ownership because Reuben was not under an employment contract that stipulated anything about IPs.

The rights of a company were spelled out by an appeal decision by the Federal Australian Court of Appeal in 2010.5 Justice Bender stated that common law and the law of equity governs the rights of an employer to the creations of the employee. The rules show that where no written contractual obligations exist, the invention cannot be termed as the property of an organization. Thus, it becomes essential to determine if the employment relationship implies that it was the duty of the employee to invent or not.6 The strength of the ownership issue is based on statutory provisions. The law seeks to protect the rights and promote creativity. Therefore, express terms in a contract are essential for both the employer and the employee so as to avoid legal disputes and protection of trademark rights.

However, the café and Mark can still attempt to claim the invention by Reuben through shop rights. ‘Shop rights’ are explained in the context where an employment contract does not exist. The law may award an organization a royalty free personal license to utilize an invention made by their employees using the information and resources of the company during their employment whether or not specific orders were given with respect to the invention.7 In Australia, the rights can only be awarded if an employee conceives the invention during their working hours and while working with the materials and appliances of the organization. The doctrine is under common law and Australia is among the common law countries.8 Hence, Kapital Kool café can claim shop rights to Reuben’s inventions. However, the doctrine has lost weight and lawyers do not apply it in the court of law unless as a last resort.9

  1. Registering a Design

To register a trademark in Australia, the logo or mark must be easily identifiable and distinguishable from other goods and services in the market.10 The factual scenario describes the design of the ‘First Home Avo-smasho’ as appearing to incorporate aesthetic visual features not unlike the designs of the French home ware giant, Le Creuset, and its Australian subsidiary ‘Le Creuset en Australie’. According to international instruments such as the TRIPS Agreement,11 when registering a design that is significantly similar in the general impression to another, the applicant must put more emphasis on the similarities between the designs to avoid infringement. Section 19 of the Designs Act in Australia,12 sets out the factors that Emma must consider in the design that is very similar to that of Le Creuset so as to avoid infringement.

  1. De-Registration

Registering a trademark with the IP office in Australia means that the product is uniquely distinguishable. However, registration of intellectual property does not guarantee protection. As a result, the Sydney-based mortgage broking firm ‘First Home Smasho’ has demanded that ‘First Home Avo-smasho’ registered in Class 36 – management of finances voluntarily de-registers their trademark and ceases to use the name ‘First Home Avo-smasho’ all or any of their business activities, advertising, or promotions because they allege that the name passes off an unauthorized connection with their mortgage broking business.

Disputes will sometimes arise between enterprise owners over the use of similar names in the same class. The conflict arises where the names confuse the customers or where the companies consider that they have a legal right exclusive use of a specific business name. The Australian Securities and Investment Commission is in charge of registering, managing and administering business names in Australia.13 The aim is avoid the registration of an identical name or closely identical to an existing registered business name.14 However, registration of a business name is different from trademarking it and the rules are stricter.

The Trademark Act only provides for de-registration of a company trademark on the grounds of non-use. However, a company that is sufficiently reputable can prevent another from using a similar name or mark because it might mislead the customers or harm the reputation of the existing business. These rights acquired just by using a trading name are called common law trademarks. Additionally, in Australia, the Trade Practices Act makes it illegal to mislead or use deceptive conduct such as entering the market using a similar name to another brand. 15 ‘First Home Smasho’ allege that the registration for ‘First Home Avo-smasho’ in Class 36 – management of finances and the use of that name connects the business to the mortgage broking company due to the significantly similar name. The letter by registered post is the first action taken by the firm to instruct Reuben and Emma to de-register their trademark within a specific time or the Sydney-based enterprise will take legal action.

According to the Australian law, the ‘First Home Smasho’ has an exclusive right to prevent Emma and Reuben from using the name because the firm already has a valid trademark registration. The office of the Federal Government’s Intellectual Property Department16 state that a person holding a legal trademark to a name can stop others in three circumstances. First, if the party uses a name as a trademark. Second, if the name is used in relation to goods and services under the trademark registration. Third, if the name or mark is misleadingly similar to the registered trademark. The ‘First Home Avo-smasho’ satisfies all the three criteria and thus, the broking firm has a legal basis to demand for de-registration. If the two companies do not agree, the ‘First Home Smasho’ can issue an injunction to restrain Emma and Reuben from using the name as well as claim damages. Names are said to be deceivingly similar if their simultaneous use has a likelihood of causing confusion to the consumers.

The main weakness of trademark law is that it has a limitation on the names or marks that it can protect. The Australian Trademark Act cannot protect against non-use, functional features, or deceptively similar marks. Therefore, an already existing and valid trademark that has the ® on a mark ensures that the owner has a legal claim against the infringers. The courts have discretion on when another person can be allowed to use a mark or name in restricted situations.

  1. Breach of Confidentiality

There are certain elements that are essential when discussing a breach of confidence. The information must have been confidential in nature meaning that it is not in the public domain. Second, the person must understand that there is an obligation to keep the information confidential. Third, the breach must be detrimental to the owner of the trademark. 17In the case study, the manager of Café Volcano and the staff are obligated to keep the invention confidential after Calvin signs the agreement. However, Donna a part-time employee at Café Volcano and Kapital Kool tells Reuben’s former boss who threatens to sue him. Trade secrets and confidential information are terms used interchangeably and are used to reasonably protect IP. When there is a breach of confidence, common and the courts of law offer remedies such as injunctions to prevent the third party from using the disclosed information.18


Trademark law in Australia is significant for encouraging innovations and protecting the ideas, products, and services of the original owners. Most innovations take place in the workplace and thus, employers have taken steps to ensure that they have rights against the employee’s IP. Consequently, employment contracts contain clauses detailing the duties of the workers and intellectual property rights. However, in case there are no express terms, the Australian statute provides that an employer cannot claim any rights to the innovations of their employees. Trademark is an important undertaking that protects the original product or services from infringement by third parties. However, there are various issues that an innovator can experience in the process of registering a trademark as discussed in the text. Common law and the law of equity complement statutory law in countries such as Australia. Thus, where statutes do not fully outline the terms, common law and legal precedents interpret the rights of an employer or an organization to the inventions of the worker. A proper search on the government website and IP Australia is enough due diligence to avert disputes on trademark infringement. Companies with similar names in the same class will always have conflicts because of brand reputation. Therefore, the applicable policy which also serves as the greatest strength of the trademark is ‘first come, first serve’ and the person registering the trademark can be asked to deregister where a previously valid one exists.


Tanya Frances, Aplin, Gurry, Francis and Gurry, Francis, Gurry On Breach Of Confidence (Oxford: Oxford University Press, 2012).

Davison, Mark., Monotti, Ann and Wiseman, Leanne. Australian Intellectual Property Law

(Cambridge University Press, 1st edition, 2015).

Fink, Carsten, and Keith E. Maskus. Intellectual Property and Development: Lessons from Recent Economic Research. (Washington: World Bank, 2005).

Harms, L T. C. The Enforcement of Intellectual Property Rights: A Case Book. (Geneva, Switzerland: World Intellectual Property Organization, 2012).

Hawkins, Sally. Intellectual Property. (Southern Cross University, 5th edition, 2017).

Myers, Gary. Principles of Intellectual Property Law ( Cambridge, 2013).

Torremans, Paul. Holyoak and Torremans Intellectual Property Law. , (Oxford 2013).

Vaver, David. Intellectual Property Rights: Critical Concepts in Law, Volume 5. (Taylor & Francis, 1st ed, 2006).

  1. Case laws/ Statutes

Richwood Creek Pty Ltd v Williams[2010] FCA 196

Spencer Industries Pty Ltd v Collins [2003] FCA 542

  1. Legislations

The Trade Practices Act 1964

Designs Act 2003

Business Names Registration Act 2011 (Business Names Act).

Trademarks Act 1995

  1. Websites

Huntsman, P. (2017). Shop rights to employee inventions and joint ownership issues Davies Collison Cave Australia. [online] Davies.com.au. Available at: http://www.davies.com.au/ip-news/shop-rights-to-employee-inventions-and-joint-ownership-issues [Accessed 29 May 2017].

Simic, Vanja. «Is It Possible To Deregister Another Owner’S Trade Mark? | Legalvision.Com.Au». LegalVision. N.p., 2015. Web. 29 May 2017.

1 Mark, Davison, Ann, Monotti, and Leanne, Wiseman, Australian Intellectual Property Law (Cambridge University Press 2015).

2 Sally, Hawkins, Intellectual Property (Southern Cross University 2017) 11.

3Carsten, Fink, and Maskus. E.Keith. Intellectual Property and Development: Lessons from Recent Economic Research. (Washington: World Bank, 2005).

Harms, L T. C. The Enforcement of Intellectual Property Rights: A Case Book. (Geneva, Switzerland: World Intellectual Property Organization, 2012).

5Richwood Creek Pty Ltd v Williams[2010] FCA 196.

6Spencer Industries Pty Ltd v Collins [2003] FCA 542.

7 David, Vaver, Intellectual Property Rights: Critical Concepts in Law (Taylor & Francis 2006).

8 Huntsman, P.,  Shop rights to employee inventions and joint ownership issues Davie (2015) Collison Cave Australia. [online] Davies.com.au. Available at: <http://www.davies.com.au/ip-news/shop-rights-to-employee-inventions-and-joint-ownership-issues/>

9 Gary, Myers. Principles of Intellectual Property Law (Cambridge 2013) 336.

10 Trademarks Act 1995 (AU) S 41.

11 The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

12 Designs Act 2003(AU) S 19.

13 Business Names Registration Act 2011 (Business Names Act).

14 Simic, Vanja. «Is It Possible To Deregister Another Owner’S Trade Mark? (2015)| Legalvision.Com.Au». LegalVision. < https://legalvision.com.au/possible-deregister-owners-trade-mark/>

15 The Trade Practices Act 1964 (AU) S 52 & 53.

16 IP Australia.

17 Paul, Torremans. Holyoak and Torremans Intellectual Property Law (Oxford 2013).

18 Aplin, Tanya Frances, Francis Gurry, and Francis Gurry. Gurry On Breach Of Confidence (Oxford: Oxford University Press, 2012).