Australia's Highest Court Deals Blow to Zip Co in Long-Running Trade Mark Battle

The High Court of Australia has upheld a finding that the buy-now-pay-later giant infringed a rival’s registered mark and its failure to heed official warnings, or lead evidence of its honesty in face of those warnings, proved its undoing.

Background

In the recent decision of Zip Co Limited & Anor v. Firstmac Limited [2026] HCA 16, the High Court of Australia has issued a ruling that will reverberate across Australia’s trade marks industry for years. The Court decided the long-running trade mark infringement dispute between Australia’s largest non-bank lender ‘Firstmac Limited’ (‘Firstmac’) and financial services company ‘Zip Co Limited’ (‘Zip Co’). 

Since September 2004, Firstmac has been the registered owner of the mark ‘ZIP’ in respect of ‘financial affairs (loans)’ in Class 36, and marketed ZIP home load products under that mark from 2005 (the Firstmac Mark). 

In 2012, Zip Co independently conceived the name ‘ZIP’ for short-term loans, having conducted internet searches which returned no results linking the mark to Firstmac. By June 2013, Zip Co’s founders settled on using the named “ZIP” and “ZIP MONEY” for their business. 

In October 2013, IP Australia issued adverse examination reports on Zip Co’s trade mark applications, informing the company that the proposed marks were identical or closely resemblant of the Firstmac Mark and that their use would likely cause confusion. Failing to seek legal advice in response to these reports, Zip Co proceeded to launch the Zip Money product using ‘ZIP’ marks in November 2013. 

In June 2019, Firstmac commenced proceedings in the Federal Court of Australia against Zip Co for infringement of the Firstmac Mark. 

The procedural history

Federal Court:

At first instance, the trial judge (Markovic J) held that the Zip Co formative marks including “ZIP PAY” and “ZIP MONEY” did not infringe the Firstmac Mark. The trial judge found that Zip Co had successfully established the defence of honest concurrent use together under ss 122(1)(f) and 122(1)(fa) and s 44(3) of the Trade Marks Act 1995 (Cth). Her Honour found that Zip Co had acted honestly from the first half of 2013, concluding that Firstmac did not use the Firstmac Mark between 2014 to 2018. As a result, the trial judge ordered the cancellation of the Firstmac Mark on the basis that it was likely to cause confusion due to Zip Co’s goodwill. The respondent appealed the decision to the Full Court on various grounds. 

Full Court:

On appeal, the Full Court unanimously reversed the trial judge’s decision. The Full Court found that Zip Co infringed the Firstmac Mark by using formative ZIP marks and that the trial judge erred in assessing honesty prior to the date of the first potential infringement in November 2013. The Full Court concluded that the trial judge had erred by removing the Firstmac Mark from the Register on the basis of non-use between 2014 to 2018, as the respondent had used the Firstmac mark from September 2018. The Full Court also concluded that the trial judge erred in cancelling the Firstmac Mark and that this was not justified. 

The appellant then filed an appeal with the High Court of Australia, on multiple grounds. 

Key Issues:

The Zip Co contested the Full Court decision. As a result, the High Court of Australia identified two principal issues:

• What is the date of assessment of the defences under ss 122(1)(f) and 122(1)(fa), including the honest concurrent use?

The Zip Co contested that defence of honest concurrent use should be assessed at the date at of filing the defence or the date of the hearing before the trial judge. The High Court rejected this, concluding that defences of honest concurrent use are to be assessed at the time of each alleged potential infringement. Upholding the Full Court’s decision, the undisputed time of the first potential infringement was found to be November 2013, the date of first use of “ZIP” as a trade mark by the Zip Co. 

Importantly, the High Court found that the defences do not operate as a “once and for all” assessment at a first instance of infringement. Rather, each instance of infringement must be assessed separately. In a practical sense, this means that a defence is not automatically precluded because it was unavailable at first use nor is it automatically available for the entire duration of the infringing conduct, rather a change in circumstances could impact its availability for later use. 

However, here is where ambiguity arises. Zip Co contended that the defence ultimately becomes useless as the date of first use if also the date of infringement, rendering the threshold for establishing honest concurrent use so narrow as to be, in practical terms, almost impossible to satisfy. The High Court rejected this, confirming that the defence can operate in at least two instances, namely (i) where two traders in different localities innocently adopt marks that later come to compete in the same market; and (ii) where the goodwill of a business is divided among successors. Beyond these doctrinal examples, however, the Court offered little practical guidance as to how broadly the defence might operate in practice. The Court did, however, state without sufficient elaboration that Zip Co could have relied on the defence in this instance if it had demonstrated its use was honest despite having the knowledge of the mark. 

• What does “honest” actually mean?

In order to ascertain “honesty”, the High Court confirmed that “honest” bears its ordinary meaning – a state of mind assessed by “the standards of ordinary, decent people”. It is not a purely subjective test, nor is it wholly objective. Rather, ones’ subjective state of mind is assessed against objective standards of decency. 

While knowledge of a competing mark is an important factor, the High Court concluded that mere knowledge will not preclude the defence of honesty. The High Court also reasoned that mere carelessness to search the Register does not amount to dishonesty, but the person seeking to prove honesty may have to convince a court that they did not deliberately abstain from searching the Register for fear of what it might reveal. Otherwise, applying the approach from Flexopack SA Plastics Industry v Flexopack Australia Pty Ltd (2016) 118 IPR 239, a subjective lack of knowledge of another’s mark “could lead to a situation where one could justify trade mark use with one’s ignorance”.

Applying these principles, the High Court agreed with the Full Court that the Zip Co had failed to discharge their onus of proving honesty from November 2013 onwards. The Zip Co failed to act “honestly” as they were aware of the likelihood of a material impediment to the legitimate use of the Zip Co’s marks, chose not to engage with IP Australia’s adverse reports, and despite this knowledge, chose not to seek legal advice. No evidence was led regarding the honesty of Zip Co in the face of First Mac’s marks. These gaps in the evidentiary record were paramount in precluding the Zip Co honesty.

Key Takeaways:

What does this mean for Business Owners?

• Brand risk is business risk

Zip Co did not ignore the Firstmac Mark because its founders were reckless. They ignored it because the business was growing and the problem felt distant. That is a familiar calculus for founders under commercial pressure. But the Zip Co story is a reminder that an unresolved trade mark conflict does not stay small, it compounds. Every dollar invested in a legally precarious brand, every merchant partnership, every customer relationship, every product launch is built on an uncertain foundation. The cost of resolving a conflict early is almost always a fraction of the cost of resolving it after a decade of growth.

Given the complexity of comparing trade marks, business should instruct attorneys or other legal professionals to undertake searches. In the present case, had Zip Co conducted a comprehensive search of the register before filing, the dispute may have been avoided entirely.

• Scale does not cure a ‘dishonest’ adoption 

There is a tempting logic in scale: the bigger and more established a brand becomes, the harder it is to challenge. The High Court has put that logic to rest. Scale does not cure a ‘dishonest’ adoption. But here is the less obvious lesson: a comprehensive trade mark search before launch, followed by proper legal advice and a documented decision to proceed, does not merely reduce the risk of conflict; it builds the evidentiary foundation that the honest concurrent use defence actually requires. The defence is assessed at the moment of first use. What a business knew, what it was advised, and what it genuinely believed at that moment is what matters. Zip Co had no such record. A business that searches, takes advice, documents its reasoning, and proceeds on an informed and considered basis is in an entirely different position, not just commercially, but legally.

• Silence can speak to a state of mind

A striking aspect of the High Court’s reasoning is what it says about the absence of evidence. Zip Co did not lead evidence that Mr Diamond, despite knowing of the Firstmac Mark, genuinely believed no confusion would result. It did not explain why, in the face of three sets of adverse reports over three years, the decision was made to continue. That silence was treated not as neutral, but as a gap in the evidentiary record that precluded a finding of honesty. For businesses facing a known conflict, this is the real lesson: document your reasoning at the time, not in retrospect.

• Seek professional advice – whether that’s on adoption, or when dealing with adverse reports from IP Australia 

The moment a business decides on a brand name – or expands the field of use of an existing brand –  is also the moment it should be seeking trade mark advice. A clearance search conducted by a trade mark attorney does more than identify conflicts. It creates a contemporaneous record that the decision to adopt a mark was informed, considered, and defensible at the time. That record, as this case demonstrates, can be the difference between a viable defence and no defence at all.

But the more pointed lesson from Zip Co concerns what happens when IP Australia pushes back. Adverse examination reports issued by IP Australia are not to be ignored. Such reports are more than bureaucratic objections that businesses must treat as a matter of urgency, seeking legal advice almost as soon as practicable. Once objections are raised based on a prior trade mark application/registration, businesses become imbued with knowledge, making it highly risky to proceed in the face of such objections. Proceeding without legal advice after that point is not merely careless. It transforms a potentially honest adoption into conduct that a court may find impossible to characterise as honest. Zip Co received three rounds of adverse reports between 2013 and 2016 and engaged with none of them meaningfully. The High Court’s treatment of that silence was unsparing.

The prescription is simple: get advice before you launch, and get advice immediately when IP Australia objects. The cost of that advice is negligible compared to what Zip Co spent finding out the hard way.

• Knowledge of a competing mark is a powerful factor 

While knowledge does not immediately vitiate the defences of honest concurrent use, it raises the evidentiary threshold for businesses to prove why and how their conduct remained honest. Once a business is aware of a potential conflict, it must be able to show that it genuinely believed no confusion would result and that it did not proceed recklessly..

A Paradox the High Court Left Unanswered

The High Court’s confirmation that the honest concurrent use defence is assessed at each individual instance of infringement raises a question the Court acknowledged but did not resolve  and it is one that may trouble practitioners and businesses alike.

The honest concurrent use defence is not merely about honesty, rather it also requires concurrent use of sufficient volume, duration, and extent to justify the concurrent registration. Consider a trader who adopts a mark in complete good faith, uses it honestly throughout, and builds a genuine business under it. At the moment of first use, the defence is almost certainly unavailable. Not because of any dishonesty, but simply because there is no use yet to point to. The defence requires concurrent use of sufficient volume, duration, and market extent to satisfy a Registrar that co-registration is justified. A business that launched yesterday cannot make that case, no matter how honest its founders were.

The High Court in [56] acknowledges that the same answer will not always be given at different points in time. What follows is a striking legal consequence: conduct that is infringing on day one can become non-infringing over time provided the trader’s adoption and use remain honest. The infringement does not cure itself through any corrective act. It cures itself through persistent use. The trader who keeps going, honestly and continuously, may eventually find that the law catches up with the commercial reality they have created.

If your business is navigating a trade mark conflict, whether at the point of adoption, in response to an adverse report, or in the middle of a dispute, the team at Halfords IP can help you understand where you stand and how to protect your position. Reach out to our trade marks head, Aparna Watal. 

Halfords IP gratefully acknowledges Inika Narayan’s efforts, including research and drafting, in preparing this case note.