Zip Co v Firstmac: High Court Recalibrates the Honest Concurrent Use Defence

Summary

The High Court’s unanimous decision in Zip Co Limited v Firstmac Limited [2026] HCA 16¹ settles two long running questions of Australian trade mark practice. When is the honest concurrent use defence under ss 122(1)(f) and 122(1)(fa) of the Trade Marks Act 1995 (Cth)² to be assessed, and what does “honest” mean for the purposes of s 44(3)(a)?

On both points, the strict construction prevailed. The defence must be assessed at the time of each alleged infringement, starting with the first, and “honest” carries its ordinary meaning, namely a state of mind that is honest by the standards of ordinary, decent people. An adopter who keeps using a sign after notice of an earlier registered mark and an adverse examination report cannot rescue that use by pointing to later commercial success, fresh registration attempts, or trial day forensics. The defence has to be earned at the moment of first use.

Background

Firstmac Limited has owned the registered word mark ZIP for “financial affairs (loans)” in Class 36 since September 2004, and has marketed home loan products under that mark from early 2005. In 2013, Mr Diamond and Mr Gray began an online consumer credit business using the names ZIP and ZIP MONEY, incorporating Zipmoney in June and filing trade mark applications in August. In October 2013, IP Australia issued adverse examination reports citing Firstmac’s registration as an almost identical earlier mark for similar services. Mr Diamond gave the reports only cursory attention, did not seek legal advice, and from November 2013 the Zip Companies launched the Zip Money product. They pressed on through further adverse reports in 2015 and 2016, two applications to remove the Firstmac mark for want of use, and an internal calendar invitation headed “ATTACK FIRSTMAC TRADEMARK ‘ZIP'”. Firstmac commenced infringement proceedings in June 2019.

At first instance, Markovic J found the Zip Companies’ use of ZIP simpliciter and the stylised ZIP marks to be prima facie infringing under s 120(1), but accepted defences of honest concurrent use under ss 122(1)(f) and 122(1)(fa), read with s 44(3). The Full Federal Court (Katzmann, Bromwich and Perram JJ) reversed, holding that honesty had not been affirmatively established as at first use in November 2013.³ The High Court dismissed the further appeal.

The Date Question

The Zip Companies’ principal contention was textual. Sections 122(1)(f) and 122(1)(fa) refer to whether the alleged infringer “would obtain registration“, language said to direct the inquiry forward to the date of the defence or trial. The Court rejected that reading. Section 122 opens with the words “[i]n spite of section 120, a person does not infringe a registered trade mark when“, anchoring every defence in the subsection to the moment of the impugned use. Coherence with the wider scheme, which prevents one registered owner suing another, requires the hypothetical “would obtain registration” question to be answered at the date of potential infringement. Actual registration years later would not immunise prior conduct, and a hypothetical registration cannot do so either.

The Court also went further than the Full Court’s “single first use” framing. Every occasion of use can be a separate potential infringement, and the defence applies to each in turn. The parties’ shared premise that the defence operates “once and for all” from the first use was rejected. That distinction will matter where the adopter’s state of mind, or the surrounding circumstances, shifts materially over time. The reasoning puts the Anchorage Capital Partners v ACPA⁴ line of authority on firm ground and disposes of the residual uncertainty left by Optical 88.⁵

What “Honest” Means

“Honest” in s 44(3)(a) bears its ordinary meaning, the Peters v The Queen⁶ standard. The inquiry focuses on the party’s actual state of mind, proved directly or by inference, measured against the standards of ordinary, decent people. The Court disapproved any “Robin Hood” test resting on the adopter’s own subjective standards, and was wary of language in the Full Court reasons that described the inquiry as “objective” without qualification, or that risked equating mere carelessness with dishonesty.

Knowledge of an earlier registered mark is not automatically fatal. As confirmed in Alex Pirie⁷, and as McCormick & Co Inc v McCormick⁸ illustrates locally, an adopter aware of the earlier mark may still be honest if they genuinely believed their use would not cause confusion. Knowledge will “ordinarily weigh strongly” against honesty, however, and the burden of positive proof sits with the alleged infringer. An absence of knowledge does not always save an adopter either. The Register exists to be searched, and the Court reaffirmed (consistent with Self Care v Allergan⁹) that a party who deliberately avoids searching, for fear of what might be found, will struggle to establish honesty.

Where an adverse examination report has put the adopter on notice of a “material impediment to the legitimate use” of its proposed mark, evidence driven justification matters. The Zip Companies failed not because they were affirmatively dishonest, but because they led no evidence sufficient to show that, despite knowing of the Firstmac Mark and the adverse reports, Mr Diamond actually considered no consumer confusion would arise, or had not been reckless in failing to turn his mind to the question.

Practical Consequences

For trade mark adopters, and the foreign associates instructing Australian filings, the decision narrows the litigation utility of honest concurrent use and raises the weight of diligence before adoption. A clean clearance search is no longer simply good practice. In most disputes it will be the record that either makes or breaks honesty at the date of first use. Adverse examination reports must equally be treated as substantive notice events. An adopter who receives a citation and keeps using the proposed sign without taking advice, seeking the cited mark owner’s consent, or reconsidering the brand cannot expect the courts to disregard that decision later. The Zip Companies’ fate, an objectively successful business stripped of its defence by reference to a 2013 decision to give the IP Australia reports “cursory attention”, makes the point. For earlier registered owners, the corollary is that prompt enforcement carries renewed strategic value; the earlier a junior adopter is put on actual notice, the harder it becomes to satisfy the honesty threshold for any later use.

Takeaway

Zip Co v Firstmac confirms that honest concurrent use is a moment in time defence rather than a forensic reconstruction. Each impugned use must be defended on its own facts, and “honest” carries its ordinary meaning, with the burden of proof resting on the adopter. The practical discipline for any Australian brand launch is therefore straightforward. Brand owners should clear properly before adoption, address any citation substantively at the time it issues, and keep a contemporaneous record of the basis on which use will continue. Senior registered owners gain a corresponding advantage from prompt enforcement, since putting a junior adopter on actual notice early sharpens the evidentiary task that adopter will face later. The defence remains available, but only to those whose evidence, fixed at the date of first use, can shoulder the burden the High Court has now squarely confirmed.

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1. Zip Co Limited v Firstmac Limited [2026] HCA 16 (13 May 2026) ↩︎
2. Trade Marks Act 1995 (Cth), ss 44, 120, 122 ↩︎
3. Firstmac Ltd v Zip Co Ltd (2025) 184 IPR 458 ↩︎
4. Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514 ↩︎
5. Optical 88 Ltd v Optical 88 Pty Ltd [No 2] (2010) 89 IPR 457 ↩︎
6. Peters v The Queen (1998) 192 CLR 493 ↩︎
7. In the Matter of an Application by Alex Pirie and Sons Ltd to Register a Trade Mark (1933) 50 RPC 147 ↩︎
8. McCormick & Co Inc v McCormick (2000) 51 IPR 102 ↩︎
9. Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186 ↩︎