The case of Flexopack S.A. Plastics Industry v Flexopack Australia Pty Ltd  FCA 235 is relevant to this issue.
The Applicant, Flexopack SA Plastics Industry, was a company which had sold and distributed thermoplastic packaging films since 1979.
The First Respondent, Flexopack Australia Pty Ltd supplied packaging films for use in the Australian food industry since 2010.
The Second Respondent was Flexopack Australia’s sole director and shareholder.
Flexopack SA Plastics Industry alleged that the Respondents engaged in passing off and misleading or deceptive conduct under the Australian Consumer Law in addition to infringing their Australian trade mark for their “Flexopack” logo; which was registered in 2008.
Flexopack Australia cross-claimed, arguing that Flexopack SA’s Australian trade mark should be removed from the Register of Trade Marks pursuant to Sections 41 and 88 of the Trade Marks Act and also filed an application for non-use. It also alleged that it had the "own name defence" contained in Section 122(1)(a) of the Trade Marks Act which provides that:
“(1) In spite of section 120, a person does not infringe a registered trade mark when:
(a) The person uses in good faith:
(i) the person’s name”
The Court ruled in favour of Flexopack SA. The Court dismissed the First Respondent’s cross-claim and non-use application.
In his judgement, Justice Beach clarified the “Own Name” Defence. He stated:
“If a person does not take steps that an honest and reasonable person would take to ascertain the ability to use a trade mark, and has in effect taken a risk, then they are not acting in good faith” (at paragraph 111).
“The mere ignorance of the trade mark is not sufficient to enliven the defence. Moreover, a lack of fraud or a lack of conscious dishonesty does not establish the flip-side requirement of good faith” (at paragraph 115).
“In my view, good faith … is properly interpreted as requiring reasonable diligence to ascertain that a chosen name does not conflict with a registered trade mark” (at paragraph 116).
“If only subjective knowledge was relevant, a person could use the good faith defence despite not having taken any appropriate steps to inform himself of any relevant existing trade marks. This has the potential to undermine the utility of a registered trade mark. The reasonableness or lack thereof of the steps undertaken by the First Respondent in the choice of its company name is to be considered in light of the effect on the trade mark owner. If good faith were to be construed as merely being satisfied on the basis of a stated subjective belief that one did not know of the other, it could lead to a situation where one could justify trade mark use with one’s ignorance. The failure to make proper inquiries should not place a respondent in a better position than if such inquiries had been made” (at paragraph 118).
“An issue that had some focus during the trial was whether use that might once have been in good faith can still be characterised as such once the respondent became aware of the existence of the trade mark owner, the fact of its registration and/or of potential confusion that might arise in the marketplace” (at paragraph 109).
“Even if the First Respondent initially adopted its name in good faith, it and Mr Katelis were on notice of the Applicant and its rights by at least 15 May 2014 and the potentiality for confusion. Moreover, Mr Katelis must have known by the conversation with Mr Georgakakis in early 2014 that the Applicant was conducting business in Australia. From that time, the “own name” defence was not available. There was knowledge at that time of the Applicant’s position and the potentiality for confusion.
The Respondents provided evidence that they had conducted ASIC, domain name and general internet searches prior to registering the company name and claimed that they were not aware of Flexopack SA’s Australian trade mark. However, they did not conduct a trade mark search under the belief that no such search could be performed. The Court found the Respondents’ evidence unconvincing and held that they had failed to prove that their use of the “Flexopack” mark was in good faith.