Firstmac v Zip: Honest Concurrent Use, Variability, and the Rising Cost of Trade Mark Clearance
The Australian Federal Court’s decision (Full Court) in Firstmac Ltd v Zip Co Ltd [2025] FCAFC 30 (Firstmac v Zip) has been reported by many in our community. In this article, we have analysed this significant trade mark case that has fundamentally changed how businesses and IP professionals approach trade mark clearance.
For some time now, in practice, particularly before IP Australia, there have been increasing requirements and obstacles to establishing honest concurrent use. The Firstmac v Zip decision has clarified the contemporary scope and requirement of honesty of use in respect of trade mark registration and as a defence to infringement. What makes it truly significant for IP practitioners, however, is not simply the doctrinal clarification. The decision reshapes the practical risk environment for businesses adopting brands, increases the leverage of earlier right holders, and raises the responsibility and cost of professional trade mark clearance advice.
Background to Firstmac v Zip case
At issue was whether Zip Co’s use of ZIPPAY and ZIPMONEY infringed Firstmac’s earlier “ZIP” mark, registered in 2004 for financial services. The primary judge dismissed Firstmac’s infringement case, upholding defences of honest concurrent use and good faith corporate name use, while also ordering Firstmac’s registration removed for non-use and rectification.
On appeal, Justices Katzmann, Bromwich and Perram reversed course:
- The ZIP-formative marks were held deceptively similar to Firstmac’s registration.
- The honest concurrent use and corporate name defences failed.
- Firstmac’s mark had been validly used and should not be cancelled.
Justice Perram’s separate reasons, while concurring, gave sharper expression to the honest concurrent use issue. He emphasised that honesty must be assessed at the point of first actual use (here, November 2013), and that proceeding after receiving adverse examination reports was inconsistent with the conduct of an honest trader.
Australian Trade Mark Law: Variability in Deceptive Similarity
One of the defining features of Australian trade mark law is the variability of decisions on deceptive similarity. Even applying settled principles, examiners, hearing officers and judges often reach different conclusions about whether two marks are likely to confuse. Where uncertainty reigned before, the ZIP decision raises the stakes, making early warnings pivotal, reducing the room for discretion, and elevating costs, leverage, and professional responsibility across the field.
Firstmac v Zip exemplifies this: the trial judge downplayed the distinctiveness of “ZIP” in favour of “ZIPMONEY” and “ZIPPAY,” while the Full Court found “ZIP” to be the dominant, distinctive element.
For practitioners, such divergence is not surprising. The comparison is inherently evaluative, influenced by case law but applied in context. Over decades, applying settled principles to individual factual situations, results have varied widely as decision makers determine which elements carry the most weight.
The Shift in Australian Trademark Law: Red Flags Now Carry More Weight
Against this background, the Full Court’s reasoning is stark. Variability in deception assessments may remain, but an adverse report or cautious legal opinion now carries disproportionate weight.
Where once such a report might have been viewed as “just one view,” the Court has effectively elevated it into a decisive risk factor. A trader who proceeds despite a red flag will find it difficult to establish honest concurrent use years later, even if another tribunal might have taken a different view on similarity.
This is the core change: it is not just the fact of similarity that matters, but how the trader responded to warnings about it.
What this Means for Businesses in Relation to Trade Mark Risks
For businesses, the consequences of this case are significant:
- Heightened risk of poor trade mark clearance advice
- Clearance is no longer a “check-the-box” exercise. It requires a nuanced understanding of deceptive similarity case law and practice trends.
- Businesses relying on generalist or inexperienced advisors risk adopting a brand that cannot later be defended.
- Greater power for IP Australia
- Because adverse examination reports are now treated as serious red flags, the Office’s stance carries far more weight than before.
- Examiners’ guidelines, which shift depending on leadership and policy, will effectively shape commercial risk far beyond the application stage.
- Increased leverage for earlier right holders
- Once cited, an earlier mark provides its owner with bargaining power, even if similarity is arguable.
- Consents become more valuable, raising the risk of “consent monetisation,” where earlier owners or their advisors demand fees or undertakings for permission to coexist.
- Rising costs of trade mark clearance and negotiation
- More businesses will feel compelled to obtain written, reasoned clearance advice to preserve a record of prudence.
- Professional fees will rise, not just for clearance, but also for negotiating consents or addressing adverse reports.
Greater Responsibility for IP Practitioners
For IP lawyers and trade mark attorneys, the responsibility of giving clearance advice has been significantly heightened. A casual “looks clear enough” will not suffice.
- Professional liability risk increases: clients may later allege that inadequate advice deprived them of a defence.
- Evidentiary importance grows: a well-reasoned clearance opinion can be decisive in showing a client acted as a prudent, honest trader.
- Pressure to decline risky instructions: practitioners may advise against pursuing a brand even where similarity is debatable, knowing that ignoring warnings will undermine later defences.
This responsibility comes with cost implications. More time, more careful opinions, and more detailed documentation will inevitably increase the expense of clearance for businesses.
Key Takeaways
- Variability remains: Deceptive similarity will continue to produce divergent views across decision-makers.
- Red flags are now decisive: Adverse reports or cautious legal advice must be treated as serious indicators of risk.
- Clearance is critical: Only well-documented, expert clearance advice will preserve a claim to honesty.
- Costs will rise: More clearance work, more consent negotiations, and more professional liability pressure.
- Earlier right holders gain leverage: Consent agreements become more powerful tools of control.
Summary
Firstmac v Zip’s Impact on Trade Mark Law, Honest Concurrent Use, and Professional Liability Firstmac v Zip does not resolve the long-standing variability of deceptive similarity decisions. Instead, it reshapes how those differences must be managed in practice. An examiner’s report or attorney’s caution is no longer “just another opinion”, it is a marker of high risk that may be decisive years later in litigation.
For businesses, this means greater dependence on specialist IP advisors. A superficial clearance opinion will no longer suffice, and failures in this process may be fatal to any future honest concurrent use defence.
For earlier right holders, even marginally similar registrations gain new leverage: consent becomes more valuable, and the risk of “consent monetisation” rises.
For practitioners, the professional responsibility of providing thorough, well-reasoned clearance advice is sharper than ever, and with it the cost of obtaining such advice is likely to increase.
Honest concurrent use has not disappeared, but it is now a narrow, high-standard pathway, one that requires traders and their advisors to take every red flag seriously.
Author: Kate Kelly, Trade Marks Attorney
