On 21 May 2026, Zip Co Limited announced that it reached a settlement with Firstmac under which Zip Co Limited acquired Firstmac’s registration for the ZIP trade mark, and will consequently continue using the ZIP brand in Australia instead of rebranding. This article was written and published before that settlement had been announced. Minor updates have been made to this article to address that settlement.
On 13 May 2026, the High Court of Australia (Gageler CJ, Gordon, Edelman, Steward and Beech-Jones JJ) unanimously dismissed an appeal by Zip Co Limited and Zipmoney Payments Pty Ltd (together, the Zip Companies) and found in favour of Australian home loan provider Firstmac Limited (Firstmac) in a longstanding dispute relating to the ZIP brand.
The High Court upheld the Full Federal Court's findings that the Zip Companies had not established that they had honestly used various ZIP trade marks, including because the Zip Companies were aware of Firstmac’s registered rights when the Zip Companies began using the ZIP brand back in 2013 and did not prove that they genuinely believed there was no likelihood of confusion between the respective trade marks.
This means that the ASX-listed buy now, pay later business has been infringing Firstmac’s trade mark rights for many years and was prohibited from continuing to use the ZIP brand in Australia. The Zip Companies consequently announced that they would rebrand their business in Australia. However, a week later, Zip Co announced that it had reached a settlement with Firstmac under which Zip Co acquired Firstmac’s trade mark registration and will consequently continue using the ZIP brand in Australia instead of rebranding. The settlement amount has not been publicly disclosed, but it is likely a significant sum – particularly given the settlement appears to account for the legal costs incurred by Firstmac during the last seven years of litigation.
This decision serves as a cautionary tale for businesses when adopting new trade marks, and is significant because it has clarified some longstanding uncertainty in relation to the requirements for establishing ‘honest concurrent use’ of trade marks. This is relevant not only for the purpose of defending trade mark infringement claims, but also for registering trade marks with the Australian Trade Marks Office. The broader implications of this decision are discussed at the end of this article.
Key takeaways
- The honest concurrent use defence to trade mark infringement claims, which is set out in sections 122(1)(f)-(fa) read together with 44(3) of the Trade Marks Act 1995 (Cth), is to be assessed at the time of each alleged infringement – not at the later date of filing a defence or at the time of hearing, or any earlier date of adoption (if applicable).
- The defence must be assessed separately in relation to each instance of alleged potential infringement – simply because a party establishes the defence in respect of a particular trade mark use does not mean it applies to all other uses of the trade mark by that party (for example, use of a trade mark that may be initially honest may later become dishonest if the party begins using the mark in a manner that trades off the goodwill of the earlier registered mark).
- For the purpose of a trade mark application, a claim of honest concurrent use must be assessed at the time of examination, but the honesty element must be assessed as at the date of the first use of the relevant trade mark by the applicant and throughout the period of concurrent use. If there has been no pre-filing date use of the trade mark, it will be difficult for the applicant to establish that there has been honest concurrent use.
- The party trying to establish honest concurrent use must affirmatively establish that they had an “honest” state of mind when they first began using the relevant trade mark and throughout the period of concurrent use. This enquiry is concerned with that party’s actual subjective state of mind, but this must be assessed against the objective standards of ordinary, decent people.
- Knowledge of an earlier registered trade mark is not necessarily fatal to a finding of honesty but may weigh against such a finding. Where a party has knowledge of an earlier registered trade mark, they must demonstrate that they had a genuine belief that the use of their own trade mark was not likely to cause confusion or otherwise trade off the goodwill of the earlier registered mark.
- A failure to properly search the Register before commencing use of the trade mark will not necessarily preclude honest concurrent use but, in that case, the party will need to explain their failure to do so.
Background
Firstmac is a non-bank lender which, together with its corporate group, is said to be the largest non-bank lender in Australia. Firstmac owns an Australian trade mark registration for the plain word ZIP in respect of “financial affairs (loans)”, which dates back to 20 September 2004.
From early 2005, Firstmac marketed home loan products under the ZIP mark. At the beginning of 2014, Firstmac ceased offering its ZIP home loan products to new customers, although it continued to manage and service those loans for existing borrowers. Later, in September 2018, Firstmac launched a new home loan product under the ZIP brand.
In 2012, around eight years after Firstmac registered the ZIP mark, an unrelated entrepreneur (Mr Diamond) began considering starting a new business involving online short-term consumer lending with rapid processing. He considered the name ZIP to be a short and catchy way to "evoke fast movement". In early 2013, Mr Diamond's co-founder, Mr Gray, conducted internet searches for ZIP but none of those searches returned results for Firstmac's ZIP home loan products. By June 2013, Mr Diamond and Mr Gray had decided to adopt the names ZIP and ZIP MONEY for their business without any awareness of Firstmac's use of ZIP or its trade mark registration.
In August 2013, trade mark applications for ZIP and ZIP MONEY logos were filed in the name of one of the Zip Companies. Critically, in October 2013, the Australian Trade Marks Office issued adverse examination reports raising objections based on Firstmac’s trade mark registration, which identified that the respective marks closely resembled each other and claimed overlapping financial services.
Mr Diamond gave the reports only cursory attention and it did not occur to him that he should seek legal advice. Nevertheless, from the time of receiving those reports, Mr Diamond was aware of Firstmac’s registered rights and the fact that the trade mark applications were blocked by Firstmac’s trade mark registration.
Despite this knowledge, from November 2013, the Zip Companies proceeded to use various ZIP trade marks for their consumer credit services, including ZIP MONEY and ZIP PAY. In 2015, the Zip Companies’ initial trade mark applications lapsed and they filed new applications, which faced similar objections based on Firstmac’s trade mark registration.
In 2016, the Zip Companies challenged Firstmac’s trade mark registration on the basis of non-use. That challenge was unsuccessful due to the ongoing use of the ZIP trade mark by Firstmac. By June 2019, the Zip Companies’ business had grown significantly – they had revenue of more than $84 million with more than 16,000 participating merchants and 1.3 million customers in Australia – but they were still unable to achieve registration of their core trade marks.
In 2019, the Zip Companies once again tried to challenge Firstmac’s trade mark registration on the basis of non-use. In response, Firstmac commenced infringement proceedings against the Zip Companies.
At first instance, the trial judge (Markovic J) found that the Zip Companies had infringed Firstmac’s registration but that they had established the honest concurrent use defence. On appeal, the Full Federal Court (Katzmann, Bromwich and Perram JJ) overturned that decision and found that the Zip Companies had not established the honest concurrent use defence because they had not demonstrated that their use of the ZIP trade marks was honest.
The Zip Companies then filed an appeal with the High Court of Australia, which agreed to take the case.
The High Court appeal
The Zip Companies argued two main grounds of appeal before the High Court:
- The Full Federal Court erred by treating the date for assessing honest concurrent use as the date of first potential infringement. The Zip Companies argued that the relevant date should instead be the date at which they filed their defence or, alternatively, the date of the hearing before the trial judge.
- That the use of the ZIP trade marks by the Zip Companies was honest.
The legal principles
The High Court unanimously rejected the Zip Companies' arguments as to the relevant date for assessing honest concurrent use and found that the defence must be assessed at the date of the alleged infringing conduct (i.e. the date of use of the allegedly infringing trade mark). The High Court found that taking a different approach would represent a “radical break” in the history of the doctrine of honest concurrent use by transforming it from one which assessed honesty at the time of the concurrent use to one which assessed honesty at the time of filing a defence or at trial and then applied that assessment retrospectively.
However, the High Court found that the defence does not operate as a ‘once-and-for-all’ defence for all potential infringements based on the first use of the allegedly infringing trade mark. The defence applies separately to each occasion of use of the allegedly infringing trade mark. The High Court observed that the defence may similarly apply to each subsequent use of the trade mark if the uses are similar and closely related in time, but this will not always be the case.
The High Court found that, for the purpose of honest concurrent use, the word ‘honest’ should be taken to have its ordinary meaning. Importantly, the High Court found that ‘honesty’ in this context concerns the actual state of mind of the person who started using the trade mark. It is necessary to identify the actual knowledge, belief or intent of that person, and then assess that against the standards of ordinary, decent people, rather than by reference to the subjective standard of honesty held by that particular person.
The High Court confirmed that knowledge of an earlier registered mark is an important factor in assessing honesty, but that mere knowledge will not necessarily preclude a finding of honesty. For instance, honesty may still be established where a person was aware of the earlier mark but held a genuine belief that their use of the trade mark was not likely to cause confusion or otherwise trade off the goodwill of the earlier mark. On the other hand, a person may have a stronger case for honesty if they had no knowledge of the earlier mark, though they may need to demonstrate they did not deliberately abstain from searching the Register.
A careless failure to search the Register will not necessarily establish a lack of honesty and a person might be able to establish that they had honestly overlooked the importance of such a search before using a trade mark in an otherwise honest manner. The High Court specifically observed that carelessness is not the same as dishonesty. In other words, a lack of knowledge of another’s trade mark “could lead to a situation where one could justify trade mark use with one’s ignorance”. However, in that case, the High Court cautioned that “a person’s honesty might be vindicated at the expense of their intelligence”.
The High Court also considered whether there could be “concurrent” use if the earlier registered mark is not actually being used in the marketplace. The High Court concluded that the word “concurrent” in this context means that the later trade mark has been used concurrently with the earlier registration or pending application, even if the trade mark that is the subject of that registration or pending application is not actually being used in the marketplace (which may also mean that the earlier registered mark is vulnerable to cancellation on the basis of non-use).
Application to the facts
The High Court found that the trial judge's conclusion as to the honesty of the Zip Companies was based on an error: the trial judge had assessed honesty as at the date when the Zip Companies first decided to adopt the ZIP trade marks in June 2013, rather than the time when they actually began using those trade marks in November 2013. In the intervening period, the Zip Companies had become aware of Firstmac’s registration when the Australian Trade Marks Office issued its examination reports and had not taken any steps to resolve the issue identified in those reports.
The High Court held that the Zip Companies had not affirmatively proven their honesty in circumstances where they were aware of the likelihood of a material impediment to the legitimate use of their marks and had chosen not to engage with the adverse reports from the Australian Trade Marks Office.
As a result, the High Court dismissed the Zip Companies’ appeal and upheld the Full Federal Court’s decision.
Significantly, the High Court observed that this conclusion largely turned on the fact that the Zip Companies did not lead sufficient evidence for a finding that, despite knowing of the material impediment, Mr Diamond nevertheless considered in November 2013 (and onwards) that consumers would experience no confusion between the respective marks. Nor had the Zip Companies led evidence sufficient for a finding that although Mr Diamond had not turned his mind to these matters, he had not been reckless in his failure to do so.
The High Court noted that this gap in the evidence precluded a conclusion that the Zip Companies had proved their honesty. In other words, if the Zip Companies had adduced some further evidence as to Mr Diamond’s state of mind, the outcome of this long-running trade mark dispute may have been different.
Implications
This decision settles several questions that have been the subject of judicial and academic discussion, namely the date at which honest concurrent use must be assessed and the actual requirements for establishing that concurrent use has been ‘honest’.
Whether or not there has been honest concurrent use will need to be assessed on a case-by-case basis and, as with many areas of trade mark law, the answer will not always be clear-cut. However, the High Court’s decision has helped to distil some important questions that will need to be considered when trying to establish honest concurrent use.
- Was the later trade mark user aware of the earlier registered mark when they first started using their trade mark (rather than when they first decided to adopt that trade mark)? For example, had they conducted a clearance search, or had their trade mark application faced any objections during examination? If so, did they have a genuine and reasonable belief that their use of the trade mark was unlikely to cause any consumer confusion, and unlikely to trade off the goodwill of the earlier mark? What steps did they take to form that belief?
- If they were not aware of the earlier registered mark when they first started using their trade mark, what steps did they take to check that the trade mark was available for them to use? Did they search the Australian Trade Marks Register or only conduct basic internet searches?
If the latter, did they deliberately abstain from searching the Register (in which case, honesty is unlikely to be established) or were they simply unaware of the need to search the Register? Did they have previous experience with trade marks or an otherwise sophisticated legal team? Did they identify anything of concern and/or seek any legal advice?
The High Court identified two specific circumstances in which honest concurrent use may be established. These are illustrative only and not intended to be exhaustive.
- Where two traders in different locations innocently used marks that closely resembled each other on goods, but those goods later came to be on sale to the same potential purchasers.
- Where the goodwill of a business that was conducted from more than one shop or in partnership was divided among successors.
Another circumstance in which it may be possible to establish honest concurrent use is where the first use of the allegedly infringing mark was before the filing date of the infringed registration, but after the first use of the registered mark (as otherwise, the respondent should be able to rely on the prior continuous use defence).
This decision also carries a practical lesson for new businesses entering the market and existing businesses that decide to adopt a new trade mark. Mr Diamond's failure to properly engage with the adverse examination reports – giving them only "cursory attention" and not seeking legal advice – was significant in the Court's finding that the Zip Companies had not discharged their onus of proving honesty.
Although a careless failure to search the Register will not by itself establish dishonesty, the Court made clear that a person may need to convince a court that they did not deliberately abstain from conducting the usual searches, given the “obvious and intended function” of the Register is to enable such searches to be conducted.
This decision reinforces the importance for business owners to complete thorough due diligence before investing in a new brand to avoid difficult and costly issues at a later stage. A failure to conduct a clearance search before using a new trade mark or take reasonable steps to resolve any identified risks could lead to litigation many years later and, in some cases (such as this one), a significant and costly rebrand or settlement.
This article was originally published on 15 May 2026 and updated on 25 May 2026.