Zipped Up: High Court Of Australia Confirms Narrow Application Of Honest Concurrent Use Defence To Trade Mark Infringement

In Zip Co Limited v Firstmac Limited [2026] HCA 16, the High Court of Australia has delivered a much-anticipated decision on the application of the honest concurrent use defence to trade mark infringement under s 122(1)(fa) and s 44(3)(a) of the Trade Marks Act 1995 (Cth) (Act). 

This decision has important practical ramifications for businesses looking to launch new brands or extend existing brands in Australia as well as for registered rights owners. The Court’s decision confirms that the honest concurrent use defence is narrow with a high evidentiary bar on the party seeking to rely on the defence. It emphasises the importance of thorough pre-launch clearance searches, obtaining prompt legal advice where prior registered marks are identified, and the retention of relevant, contemporaneous records to evidence the honesty of the use.

The case centres around a trade mark infringement dispute relating to the use of the word “ZIP”. The Court unanimously dismissed the appeal and upheld the decision of the  Full Court of the Federal Court that the appellants (the Zip Companies) had infringed Firstmac Limited’s (Firstmac) trade mark for the word “ZIP” (Firstmac Mark), and had failed to establish the defence of honest concurrent use in respect of that infringement. In doing so, the Court clarified two important aspects in relation to the application of this defence:

• honest concurrent use is to be assessed at the time of each alleged potential infringement; and
• whether the concurrent use was “honest” is determined by identifying the state of mind of the user assessed against the standard of “ordinary, decent people”. 

This case also helps to show the potentially significant and costly consequences of getting this wrong, as the Zip Companies have announced that, as a result of this decision, its Australian buy-now-pay-later business will be rebranded. 

Key takeaways

This decision provides a welcome clarification in relation to both the standard against which honesty must be assessed, and the time at which such an assessment must be focused for the purposes of the honest concurrent use defence. 

Key takeaways for businesses looking to use new brands, or expand existing brands, in Australia, include: 

• Thorough and robust trade mark clearance searches and obtaining relevant legal advice (particularly if a prior competing mark is identified) remain key to mitigating trade mark infringement and ownership risks when launching a new brand or expanding an existing brand into a new market. 
• If any of these steps are not taken and there is a prior competing mark, to rely on the defence, businesses will likely need to satisfy the Court that it was not a deliberate avoidance strategy.
• While having “mere knowledge” of a prior competing mark at the time of use will not necessarily be disentitling, it is likely to raise the evidentiary burden and this case suggests affirmative evidence demonstrating that the use was “honest” may be required. Businesses should consider retaining relevant contemporaneous records that may assist with establishing that they had a genuine belief that the use of their own trade mark was not likely to cause confusion or trade on the goodwill of the prior competing mark.
• Ongoing monitoring may be required to ensure that if there is a change in circumstances (for example, receipt of a cease and desist letter), any concurrent use continues to satisfy the requirement of honesty. 

Factual background

Firstmac Limited (Firstmac) is a non-bank lender which provides a range of financial products and services including home and car loans and investment products. Since 2004, it has been the registered owner of a trade mark for the word “ZIP” (Firstmac Mark) in respect of financial affairs and loans in class 36. From 2005, Firstmac marketed home loan products and services under the Firstmac Mark. From the   beginning of 2014, Firstmac ceased offering its ZIP loan products to new customers, although it continued to manage and service loans for existing customers, before launching a new home loan product under the name ZIP in 2018. 

Zip Co Ltd and Zipmoney Payments Pty Ltd (Zip Companies) were founded in 2013 by Mr Diamond and Mr Gray and operate “buy now pay later” services. Relevantly:

• This ‘ZIP’ name was first identified by Mr Diamond in 2012, as a “short and catchy way to ‘evoke fast movement’”. Mr Diamond and Mr Gray conducted various internet searches in early 2013, none of which returned any results for Firstmac or its products, and in June 2013, they settled upon the use of “ZIP” and “ZIP MONEY” for their businesses. They were not aware of Firstmac’s ZIP loan products or the Firstmac Mark.
• In August 2013, Zipmoney applied to register as trade marks the ZIP MONEY and ZIP logos (ZIP marks). Prior to making these applications, Zipmoney did not seek legal advice, and Mr Diamond did not search the Register of Trade Marks. 
• In October 2013, Zipmoney received adverse examination reports from IP Australia in relation to the ZIP marks. In each case, the report identified the Firstmac Mark as a prior registered mark that was identical to or closely resembled the ZIP Mark. Mr Gray provided the reports to Mr Diamond, who gave them “cursory attention”, but it did not occur to him that legal advice should be sought. Zipmoney did not respond to the adverse reports and these applications lapsed in February 2015.
• Despite the adverse examination reports, from November 2013 Zipmoney proceeded to use marks involving the word ZIP. 
• In June 2015, Zipmoney again sought to register the ZIP Marks. During this process, a trade mark attorney for Zipmoney’s parent company sent Mr Diamond an email with a draft letter to be sent to Firstmac requesting consent for the use of the ZIP marks. Ultimately this was not sent, and instead Zipmoney switched strategy, to seek to “attack” the Firstmac Mark. 
• In August 2016, Zipmoney unsuccessfully brought an application under ss 92(1) and 92(4)(b) of the Act for the removal of the Firstmac Mark from the Register for non-use. 
• In March 2019, Zipmoney filed a second application for the removal of the Firstmac Mark from the Register for non-use. 

In June 2019 Firstmac commenced proceedings in the Federal Court against the ZIP Companies alleging infringement of the Firstmac Mark. 

Recap: the findings of the primary judge and Full Court 

At first instance, Justice Markovic relevantly found that the Zip Companies had infringed the Firstmac Mark through the use of the ZIP name, stylised Zip marks and the domain name www.zip.co, but that the ZIP PAY and ZIP MONEY marks were not infringing. 

However, Markovic J also found that the ZIP Companies had successfully established the defence of honest concurrent use under s 122(1)(fa) of the Act ([27]). Her Honour held that:

• the application of the defence was to be assessed as at the date of the alleged infringing conduct; and 
• she was satisfied that from the first half of 2013, when Mr Gray and Mr Diamond had been developing the Zip marks, they had acted honestly and this did not change throughout the period of alleged infringing conduct. 

Firstmac then appealed to the Full Court, with the Full Court unanimously allowing the appeal (see Firstmac Ltd v Zip Co Ltd (2025) 184 IPR 458 at 479, [56]). On the issue of honest concurrent use, the Full Court found that the Zip Companies had failed to “affirmatively” prove that, despite Mr Diamond’s knowledge of the Firstmac mark and the numerous adverse examination reports received in October 2013, the concurrent use was honest in November 2013, being the date of the first potential infringement (Full Court at 465 [16]).

The Full Court also held that Zip Companies infringed the Firstmac mark by using ZIP in conjunction with other words, overturning the trial judge’s findings and expanding the conduct found to be infringing. This finding was not the subject of the appeal to the High Court.

The decision of the High Court 

On appeal to the High Court, the Zip Companies relevantly argued that: 

1. The correct date to assess honest concurrent use is the date the defence was filed or the date of hearing before the trial judge, not the date of the first potential infringement.
2. The Zip Companies had acted honestly in their concurrent use of the ZIP marks. 

Date of assessment of honest concurrent use:

The High Court upheld the decision of the Full Court that the date of assessment of honest concurrent use is the date of the potential infringement. 

The Court found that the interpretation advanced by the Zip Companies – being that honest concurrent use should be assessed at the date of filing the defence or alternatively, the date of the hearing before the trial judge – undermined the purpose of the honest concurrent use defence. The Court reasoned that:

• This defence was introduced to maintain coherence with the scheme for registration of trade marks under the Act. That scheme allows for registration in certain circumstances of substantially identical or deceptively similar marks, and that the use of one such registered mark will not be an infringement of the other registered mark ([48]).
• Assessing honest concurrent use at the date of filing of the defence or the hearing would render ss 122(1)(f) and 122(1)(fa) inconsistent with the remainder of s 122(1) – the subsections of which are all otherwise concerned with defences that operate at the time of potential infringement ([52]-[53]).

Similarly, the Court rejected the Zip Companies’ literal textual argument that the phrase “would obtain registration” (as opposed to “would have obtained registration”) in ss 122(1)(f) and 122(1)(fa) implied a future date for assessment ([50], [53]). If this was correct, the same approach would need to be applied to s 23 of the Act, which precludes one registered owner from preventing the use by another registered owner of a substantially identical or deceptively similar trade mark ([53]). The Court held that such a literal interpretation was not open on the text. 

While the Court held that the time of assessment of the honest concurrent use defence was the time of the potential infringing conduct, the Court emphasised that this is not a collective, one-and-done approach – the application of the defence must be considered in relation to each instance of alleged potential infringement, stating ([56]):

In other words, since every occasion of the use of a mark in trade in Australia within s 120 can be a separate potential infringement, the defences apply separately to each such occasion. 

The Court observed that although in many cases, the same outcome will be true for each infringing use and subsequent defence, this is not guaranteed. 

Assessing whether conduct is “honest”: 

The High Court held that honest use must be assessed by the standards of “ordinary, decent people” – not the subjective standard of honesty held by the relevant person ([57]).

In relation to the issue of how honesty is to be assessed, it was not in dispute that the first alleged infringing conduct was in November 2013. 

The Court considered the history of s 44(3)(a), including its historical versions in England and Australia, and held that it requires an assessment of the person’s “state of mind assessed against the standards of ordinary, decent people.” ([59]). While the Court held that there is no fixed list of circumstances that will establish whether a person’s state of mind was honest (or not), the following factors are likely to be relevant: 

• Genuine belief: Honest concurrent use is likely to require at least a genuine belief that the use would not be likely to cause confusion or trade off the earlier mark’s goodwill. However, this belief alone will not always be sufficient to establish honesty ([61]).
• Knowledge of the competing mark: An important factor in assessing honesty will be whether the person had knowledge of the competing mark. Mere knowledge of the competing mark will not necessarily preclude a finding of honesty ([62]), but honesty may be more readily established if they were not aware of the other mark at the date of the infringing use ([63]).
• Deliberate avoidance or careless failure to search: However, the Court cautioned that where there is an absence of knowledge of the competing mark, a person seeking to rely on honest concurrent use may need to establish that they did not “deliberately abstain from searching the Register for fear or what it might reveal” ([63]). In contrast, the Court observed that careless failure to search the Register will not, on its own, establish a lack of honesty. 

Applying these principles, the Court held that the trial judge had erred by assessing the honesty of the Zip Companies’ primarily on the conduct of Mr Gray and Mr Diamond in the first half of 2013, when they were unaware of the Firstmac Mark ([66]). Her Honour failed to consider (other than in a very limited respect) the honesty of the Zip Companies from November 2013, which was the date of the first potential infringement and by which time they had received the adverse examination reports and were aware of the Firstmac mark ([67]). Properly considered at that time, the Court held that ([70], referencing the Full Court decision):

The Zip Companies had not proved their honesty in circumstances in which they were aware of the likelihood of a material impediment to the legitimate use of the Zip Companies’ Marks and they had chosen not to engage with the adverse reports.”

The Court further held that the Zip Companies failed to lead sufficient evidence that as at being November 2013 (or subsequently for later potential infringements), Mr Diamond, despite knowing of the Firstmac mark, nevertheless considered that consumers would experience no confusion which might have benefited the Zip Companies, or that, if he had not turned his mind to these matters, this failure was not reckless.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.