Entertainment merchandise, whether for concerts or sporting teams, is big business. An entire industry has developed around the production and sale of licensed memorabilia, clothing and other items that make fans feel closer to their favourite teams and artists. However, as shown in the ongoing Katy Perry litigation, the intersection between merchandising and trade mark law can be a fraught one.
In Fanatics, LLC v FanFirm Pty Limited [2025] FCAFC 87, the Full Court of the Federal Court examined the entertainment merchandising industry from a different perspective – that of the “fan” and those who distribute and sell licensed goods to those fans. In determining a dispute between two users of the name “FANATICS” in the sporting good fields, the Full Court provided guidance on when a trade mark is used “in relation to” goods in a retailing scenario and highlighted the factors that need to considered when adopting and using trade marks as a business’s activities evolve.
Background
Fanfirm is an Australian company that specialises in arranging “sports tours” (particularly to sporting events involving Australian teams and individuals) under the name FANATICS. Participants in these tours often wear “tour branded” clothing. Fanfirm obtained an Australian trade mark registration for FANATICS dating from April 2008 covering, amongst other goods and services, “clothing, footwear and headgear, shirts, scarves, ties, socks, sportswear” in class 25 (FanFirm Trade Mark Registration). It does not have a registration for the FANATICS trade mark covering retail services in class 35.
Fanatics US is a United States company operating in the sports entertainment field. Relevantly, it is known for manufacturing and selling licensed sports merchandise, including jerseys, apparel and other clothing products, that bear the names, logos, colours and other indicia of well-known sporting teams and leagues (Sports Team Branding). In recent years, Fanatics US has expanded its merchandising to cover Australian domestic and national sporting teams.
In Australia, Fanatics used its trade marks FANATICS and (Fanatics US Trade Marks) in respect of sport merchandise by:
- selling apparel items bearing the Sports Team Branding, where the Fanatics US Trade Marks are used in either the product description or on the goods themselves (the Fanatics Branded Clothing);
- selling apparel items bearing the Sports Team Branding, where the trade mark FANATICS only appears on care labels or post-purchase packaging labels (referred to as Information Labels); and
- operating an online store by reference to the Fanatics US Trade Marks (Fanatics US Website) selling items with Sports Team Branding sourced from other manufacturers, such as Nike or Adidas (the Third Party Goods).
Fanfirm commenced proceedings against Fanatics US on multiple grounds, including that this conduct infringed the FanFirm Trade Mark Registration. FanFirm also sought cancellation of Fanatics US’s existing FANATICS-related Australian trade mark registrations. Fanatics argued, amongst other arguments, that the use of the Fanatics US Trade Marks on sports merchandise was not use “in relation to” those goods for the purposes of trade mark infringement, and that it was otherwise entitled to rely on the “own name” and “honest concurrent use” defences.
The distinction between sports merchandise and selling sports merchandise
Fanatics Branded Clothing
At first instance in FanFirm Pty Limited v Fanatics, LLC [2024] FCA 764, the Primary Judge held that use of the Fanatics US Trade Marks on ‘Fanatics Branded Clothing’ (which was considered to be items of clothing which either had Fanatics in the item name, or which were sold as ‘Fanatics Corporate Gear’)was infringing trade mark use, as the trade marks were being used “as “a badge of origin” and therefore as a trade mark on those goods. This was not challenged on appeal.
Information Labels and Fanatics US Website
However, FanFirm appealed, and the Full Court overturned the initial decision in relation to the use of the Fanatics US Trade Marks on the Information Labels and the Fanatics US Website, as the Full Court did not consider these uses to be trade mark use “in relation to” clothing for the purposes of “direct” trade mark infringement.
The Full Court considered that the presence of FANATICS on the Information Labels was not trade mark use as it was not use in the course of trade, given the labels would not have been visible to the consumer until after the purchase had been made. Even if the use was in the course of trade, the Full Court also considered that FANATICS would not be seen as a trade mark for those goods given the relative size and position of the Information Labels and the more prominent presence of other trade marks (such as the Sports Team Branding).
In relation to the Fanatics US Website, the Full Court drew a distinction between two types of activities:
- Goods that were labelled by reference to “FANATICS” –this was considered to be infringing use of FANATICS even if the goods themselves were manufactured by third parties and sold under the third party trade marks; and
- The use of FANATICS generally in relation to the Third Party Goods – where the Third Party Goods were clearly labelled with the third party trade marks, and had no other FANATICS branding, the use of the Fanatics US Trade Marks was to attract custom to its website to “acquire a large range of apparel much of which has no Fanatics branding on it” and therefore for online retail sale of clothing rather than use “in relation to” the clothing itself. For these reasons, these uses were held not to constitute trade mark infringement.
Infringing conduct
Accordingly, the following uses were held to be prima facie infringements (subject to the applicability of any defences):
- Use on Fanatics Branded Clothing (a finding that was not disturbed on appeal); and
- Use on third party goods labelled by reference to the Fanatics Marks on the Fanatics US Website.
No good faith use of own name or honest concurrent use
The Full Court agreed with the Primary Judge that Fanatics US could not rely on any of the defences to trade mark infringement. In particular, the Full Court considered that Fanatics US had not adopted the name FANATICS in Australia honestly or in good faith because:
- Even though Fanatics had used the word FANATICS on its US website since June 2010, it had not produced appropriate evidence to prove that there was an intention to fully adopt the mark until December 2010 – the earlier website uses of FANATICS was considered as merely being an “early part of a ‘process of experimentation with different brands’”.
- There was evidence that Fanatics knew of “FanFirm, its business and its use” of FANATICS prior to its adoption of the mark, in part, resulting from Fanatics’ opposition of one of FanFirm’s marks in August 2010. While prior knowledge of a competing mark does not necessarily mean that a company will be unable to use the honest concurrent use or good faith use of own name defences, it makes it more difficult to prove “honesty”.
- Fanatics could not establish that it “honestly thought that no confusion would arise and they had no intention of wrongfully diverting business to themselves by use of the name” at the time of adoption because it could not produce any evidence of its decision-making process in adopting FANATICS in Australia in the face of FanFirm’s use.
In the absence of proof of “honest adoption”, the defences could not apply.
Trade mark cancellation and “evolving confusion”
The Full Court also agreed with the Primary Judge that Fanatics US’s registration in class 35 should be cancelled because:
- Fanatics was not the owner of the FANATICS word mark (FanFirm was).
- Fanatics’ registration of the FANATICS word mark was substantially identical or deceptively similar to FanFirm’s FANATICS marks, even though they were registered in different classes.
- There was a likelihood of confusion between Fanatics’ and FanFirm’s businesses as long as Fanatics engaged in the online sale of sports merchandise under the FANATICS mark – while there may not have been a likelihood of confusion when Fanatics and FanFirm first began their businesses, the expansion of their businesses by both companies outside of their original “lanes” increased the likelihood of confusion and made the parties more likely to be direct competitors.
Takeaways
Even for those outside of the sports merchandising industry, this case provides several reminders for trade mark owners and businesses dealing in consumer focussed fields such as retail or general consumer goods:
- It is more important than ever to maintain good records of the business decisions associated with adopting trade marks, including evidence of trade mark searches carried out prior to adoption and evidence of the assessments made in relation to the marks identified from those searches – in the absence of these records, it is likely to be difficult to prove honest concurrent use or good faith use of your own corporate name.
- As business activities expand (or “change lanes”), the effect of that change needs to be considered from a trade mark perspective – an existing business that was not previously a risk may become one if you are both merging into the same field.
- Consider trade marks from the perspective of your customers – if you are a manufacturer of goods (and particularly goods for sale by others) is your trade mark in a sufficiently prominent location that it will be seen by consumers during the buying process? For retailers, are you sufficiently distinguishing between the trade marks used for your retail activities and the third party trade marks used on the goods you are selling?
- As the lines between “manufacturers” and “retailers” blur, consider registered trade mark protection for both the goods being sold and the service of selling those goods, including defensive trade marks.
As the Full Court only assessed “direct” trade mark infringement, there remains the question of whether the “retail of clothing” is a closely related service to “clothing”, raising the possibility of future infringement, oppositions and/or non-use applications in these scenarios.
In September 2025, Fanatics US lodged an application seeking Special Leave to appeal the decision to the High Court of Australia.