The High Court clarifies the honest concurrent use defence: the effect of Zip Co v Firstmac on brand owners

On 13 May 2026, the High Court of Australia unanimously dismissed the appeal of Zip Co Limited and its related entities in Zip Co Limited v Firstmac Limited [2026] HCA 16. The decision affirmed that the appellants had infringed Firstmac Limited's registered trade mark for the word "ZIP" and failed to establish the defence of honest concurrent use under the Trade Marks Act 1995 (Cth) (the Act).

In doing so, the Court resolved two uncertainties about the defence of honest concurrent use. First, honesty must be assessed at the time of each alleged act of infringement. Second, that “honesty” requires the alleged infringer to have a state of mind that is honest by the standard of ordinary, decent people.

The decision serves as an important reminder for businesses and brand owners to identify and address potential trade mark conflicts early. Where a business becomes aware of a conflicting mark but proceeds without properly assessing or responding to that risk, it may be difficult to establish honest concurrent use later.

Background 

Firstmac Limited (Firstmac) is an Australian non-bank lender and has owned the registered trade mark “ZIP” for “financial affairs (loans)” in Class 36 since 2004.

In mid-2013, Zip Co Limited and its subsidiary (Zip Companies) were newly incorporated for the purpose of operating a short-term consumer lending business and chose the marks “ZIP” and “ZIP MONEY”. 

The founders of the Zip Companies were initially unaware of Firstmac’s mark. However, in October 2013, IP Australia issued adverse examination reports which identified Firstmac’s earlier registration. Those reports determined that the proposed ZIP-related marks were deceptively similar to Firstmac’s mark and covered overlapping financial services. 

Once aware of the conflict, the Zip Companies did not obtain legal advice or substantively respond to the objections. In November 2013, they began trading under the ZIP branding. Further registration applications in 2015 and 2016 were rejected on similar grounds, and applications by the Zip Companies to remove Firstmac’s mark for non-use ultimately failed. 

Firstmac commenced proceedings in the Federal Court in June 2019 for trade mark infringement. The Zip Companies relied on the honest concurrent use defence, which was accepted by the trial judge. The Full Federal Court overturned that finding, holding that the Zip Companies had not established that their concurrent use was honest.

The Defence of Honest Concurrent Use 

Under section 120(1) of the Act, a person infringes a registered trade mark where they use, as a trade mark, a sign that is substantially identical with or deceptively similar to the registered mark in relation to the goods or services for which it is registered. That provision is subject to statutory defences. 

Sections 122(1)(f) and 122(1)(fa) provide a defence if the alleged infringer can establish that they would obtain registration of the conflicting mark if they can satisfy the conditions in section 44(3) of the Act. Section 44(3) permits registration of a substantially identical or deceptively similar mark where the Registrar is satisfied that there has been honest concurrent use of the two marks, or that other circumstances make it proper to accept the application, including subject to conditions or limitations imposed by the Registrar.

The High Court Appeal

The Zip Companies maintained their reliance on the defence of honest concurrent use and advanced two grounds of appeal to the High Court regarding the conditions in section 44(3) of the Act:

• first, they argued that the Full Federal Court erred in identifying the date at which honesty was to be assessed. They submitted that honesty should be assessed at the date on which the defence was filed or alternatively, at the date of the first-instance hearing, rather than at the date of the first potential infringement; and
• second, they argued that the Full Federal Court had erred in its finding that the Zip Companies’ use of the ZIP branding was not “honest”.

The date for assessing honest concurrent use 

The High Court upheld the Full Federal Court’s finding that, where honest concurrent use is raised as a defence to trade mark infringement, the relevant time for assessment is the date of the first potential infringement, which was November 2013.

The Court rejected the Zip Companies’ submission that honesty should be assessed with reference to August 2019, when the Zip Companies initially raised their defence, or in March 2022, at the time of the hearing before the trial judge. The Court reasoned that assessing honesty at that time would undermine the purpose of the defence.

The Court held that the statutory defences were not intended to create a “radical break” from the history of the honest concurrent use doctrine by assessing honesty at a later date and applying that assessment retrospectively. Rather, the defence is concerned with whether, at the time of the alleged infringement, the mark could have been registered by reason of honest concurrent use. It would therefore be “incoherent” to ask whether the mark might have become registrable years later.

The Court also clarified that the defence does not operate once and for all, in respect of every potential infringement. Because each use of a mark in trade can constitute a separate potential infringement, the defence must be considered at each alleged infringement. In this case, because the Zip Companies could not prove honesty at the first infringement, they could not establish honesty in subsequent infringements. 

The meaning of ‘honesty’

The Court held that an assessment of “honesty” under section 44(3)(a) requires an identification of the alleged infringer’s actual knowledge, belief or intention, and a subsequent assessment of that state of mind against the standards of ordinary, decent people.

The Court held that while knowledge of a competing mark is an important factor, it will not necessarily preclude a finding of honesty. A person may still act honestly if, despite knowing of an earlier mark, they genuinely believe their use would not cause confusion or improperly trade off the registered owner’s goodwill. Further, while a person may have a stronger case to establish honesty where they had no knowledge, they may have to prove that they did not deliberately avoid searching the Register. A careless failure to search the Register, however, will not, by itself, establish a lack of honesty.

The Court found that the Zip Companies’ evidence was insufficient to prove honesty. They could neither demonstrate a genuine belief that consumers would not be confused between the marks, nor that they were not reckless in failing to consider the conflict, in circumstances where they had become aware of the conflict through adverse reports and chose not to engage with them.

Although the High Court upheld the Full Federal Court’s finding that the Zip Companies had infringed Firstmac’s mark, following the appeal, the Zip Companies reached a private settlement with Firstmac, allowing them to continue trading under the ZIP marks.

The Practical Implications 

The decision provides important guidance for businesses developing new marks, as well as businesses using marks without proper registration.

Search before launch

Before adopting or launching a new brand, you should take proactive and thorough clearance steps. A basic internet search is unlikely to be enough. You should search the Trade Marks Register for potentially conflicting marks and obtain advice if any risk is identified.

Do not ignore adverse reports

If IP Australia issues an adverse examination report, you should treat it seriously. Early legal advice can help you assess your options, including whether to respond to the objection, narrow the application, seek consent to coexist, or choose a different mark.

Do not rely on success or goodwill 

If you are using an unregistered mark, you should not assume that time, success or goodwill will protect you from infringement. This is particularly important if you have received warnings or adverse reports and chosen not to act on them.

Keep contemporaneous records

If you may later need to rely on honest concurrent use, you should keep contemporaneous records of the searches you conducted, advice you received, why you adopted the mark, and how you assessed any risk of confusion or coexistence with earlier marks.[KT1] 

IP Australia has also updated Part 28 of its Trade Marks Manual of Practice and Procedure following the decision. The updated guidance confirms that honesty is a threshold requirement under section 44(3)(a) which applicants bear the onus of proving. It also clarifies that, in the context of an application for registration, the factors relevant to section 44(3) are assessed at the filing date of the application, as opposed to the date of each alleged use for the purposes of an infringement defence.

For more specific information on any of the material contained in this article, please contact Vas Marinos on +61 8 8210 1283

Authors: 

Principal, Vas Marinos  
Associate, Chelsea Chieng 
Law Graduate, Katie Tolis