Case Reference: Zip Co Limited v Firstmac Limited [2026] HCA 16 | Decided: 13 May 2026 | Court: High Court of Australia (Gageler CJ, Gordon, Edelman, Steward & Beech-Jones JJ)

Background

This case concerns a dispute between two Australian businesses both using the word “ZIP” in the financial services sector, and whether one of them could escape liability for trade mark infringement by relying on the doctrine of honest concurrent use.

Firstmac Limited is a large non-bank lender that has offered home loans, car loans, and investment products for over 40 years, managing approximately $12 billion in mortgages. Since 2004, Firstmac has been the registered owner of the trade mark “ZIP” (the Firstmac Mark) in Class 36 for “financial affairs (loans)”. Firstmac actively marketed ZIP home loan products from early 2005 and, after a period of not offering new ZIP loans, relaunched a ZIP home loan product in September 2018.

The Zip Companies (Zip Co Limited and Zipmoney Payments Pty Ltd) were founded from 2012 onwards to provide consumer credit products — initially a buy-now-pay-later style offering called “Zip Money”, followed by “Zip Pay”. The co-founders, Mr Diamond and Mr Gray, chose the name ZIP because it evoked speed and fast movement. Before launching, they conducted internet searches for the name ZIP but did not find Firstmac’s products. They also failed to search the Trade Mark Register before registering a domain name and developing their branding.

In August 2013, Zipmoney filed trade mark applications for its ZIP and ZIP MONEY logos. In October 2013, IP Australia issued adverse examination reports indicating that the Firstmac Mark — registered nearly a decade earlier — was an obstacle to registration because of the similarity of the marks and the overlap in financial services. Mr Diamond received those reports and gave them only cursory attention. He did not seek legal advice. Despite this, from November 2013, the Zip Companies proceeded to use ZIP-branded marks in trade.

The Legal Framework: Honest Concurrent Use

Under s 120(1) of the Trade Marks Act 1995 (Cth), using a sign that is substantially identical with or deceptively similar to a registered trade mark in relation to the same or similar goods or services constitutes infringement. However, ss 122(1)(f) and 122(1)(fa) provide a defence where a court is satisfied that the person would obtain registration of their mark if they were to apply for it.

To succeed on this defence, the person must show they satisfy the conditions for registration under s 44(3), which permits the Registrar to accept an application notwithstanding an earlier conflicting mark if:

• there has been “honest concurrent use” of the two trade marks (s 44(3)(a)); or
• because of other circumstances, it is proper to do so (s 44(3)(b)).

The doctrine of honest concurrent use has old roots. Before trade mark registration existed, courts of equity would refuse to restrain a trader from using a mark where both parties had honestly adopted similar marks and built up legitimate goodwill — provided the party seeking protection had come to equity with clean hands. That equitable foundation was later codified in statute and has evolved through successive Trade Marks Acts into the current defence.

The Two Key Legal Questions

1. When Is Honesty Assessed?

The Zip Companies argued that honesty should be assessed at the time they filed their defence (August 2019) or at the time of trial (March 2022) — not at the time of the first alleged infringement. Their argument was that the language of ss 122(1)(f) and 122(1)(fa) — “would obtain registration” — refers to a future state rather than a hypothetical inquiry at the time of use.

The High Court unanimously rejected this. The Court held that honesty under the honest concurrent use defence must be assessed at the time of each alleged potential infringement. Since every occasion of use of a mark in trade can constitute a separate potential infringement, the defence must be assessed separately for each occasion.

“It would be incoherent for a defence to infringement to arise based upon the potentially infringing mark being capable of registration many years later when actual registration years later would not be sufficient.”

The practical significance of this is that the Zip Companies could not point to facts that had developed over years of trading — their commercial success, their expanded brand recognition, their eventual reputation in the market — as the basis for establishing honesty. The question was whether they were honest when they first started using the marks in November 2013. By that time, they already knew about the Firstmac Mark through the IP Australia adverse reports.

2. What Does “Honest” Actually Mean?

The second issue was the standard of honesty under s 44(3)(a). The High Court confirmed that “honest” in this context takes its ordinary meaning. Honesty requires identifying the relevant person’s state of mind — their knowledge, belief, or intent — and assessing that state of mind against the standards of ordinary, decent people.

Importantly, the Court rejected two incorrect approaches:

• • Honesty is not a purely subjective question assessed by the party’s own standards of what they considered acceptable.
• Honesty does not require showing that the person actually realised they were behaving dishonestly by community standards (the so-called “Robin Hood” approach is not applicable here).

Equally, mere knowledge of a competing registered mark does not, by itself, preclude a finding of honesty. The Court acknowledged that a person might be found honest even with knowledge of an earlier mark, if they genuinely believed there was no real risk of confusion and could demonstrate that belief. However, in this case, that evidence was absent.

The Court also clarified that careless failure to search the Trade Mark Register does not, on its own, establish dishonesty. A person might have overlooked the register but still be found to have acted honestly in all the circumstances. However, where a party knows of an adverse report from IP Australia identifying a specific conflict, the bar is much higher.

What Went Wrong for the Zip Companies?

The trial judge had found in favour of the Zip Companies but had started her assessment of honesty at the wrong point in time — looking at the founders’ conduct in the first half of 2013, before they knew of the Firstmac Mark. By that earlier date, the founders had been entirely unaware of any competing mark and had acted in good faith.

The Full Federal Court overturned that finding, and the High Court agreed. The error was treating the pre-knowledge period (when the founders were genuinely unaware of Firstmac) as establishing honesty for the later period when they were fully aware of the obstacle. The relevant question was not whether the founders had been honest before they knew of Firstmac, but whether they remained honest after knowing.

In November 2013, when the Zip Companies made their first use of ZIP-branded marks in trade:

• Mr Diamond had received adverse examination reports explicitly identifying the Firstmac Mark as an obstacle to registration.
• Those reports made clear that IP Australia considered the marks similar and the services overlapping.
• Despite this, no legal advice was sought, no response to the adverse reports was prepared, and the Zip Companies proceeded to trade regardless.
• The Zip Companies did not adduce evidence showing that Mr Diamond genuinely believed there would be no confusion, or that he had turned his mind to the matter and rationally concluded the concerns were unfounded.

The Court found that the Zip Companies had failed to discharge the burden of proving their honesty at that time. They had not led evidence sufficient to find that Mr Diamond genuinely believed consumers would not be confused by the marks, or that he had not been reckless in his failure to engage with the adverse reports. The gaps in the evidentiary record were fatal to Zip.

Practical Implications for Brand Owners

For Businesses Choosing a Brand

The case underscores that conducting internet searches, while useful, is not a substitute for searching the Australian Trade Marks Register before adopting a name or logo in Australia. The Zip Companies’ founders searched online and found nothing relevant to Firstmac — but a register search would have revealed the obstacle immediately. A failure to search will not, by itself, be treated as dishonest, but it does create the risk that a business will proceed into the market without knowing about an existing conflict.

If a business proceeds to use a mark after receiving clear notice of a conflict — whether through an adverse examination report, a cease-and-desist letter, or otherwise — it needs to be prepared to demonstrate that it genuinely formed a view about why the conflict was not a real problem. Documenting that analysis contemporaneously (ideally with legal advice) is important.

The Defence Has Genuine Value, But Must Be Earned

Honest concurrent use remains a viable defence. The Court confirmed that it can operate in the classic scenarios where two businesses independently adopted similar marks in different parts of the market and gradually came into competition, or where a business division has been split and both successors carry on using a mark. It can also apply where a new entrant knows of an earlier mark but genuinely forms the view, supported by evidence, that there is no real risk of confusion in the market.

The defence is not a safety net for businesses that know of a conflict, choose to ignore it, and then accumulate commercial goodwill in the hope that their market success will eventually make the legal problem go away. An aggressive “build and attack” strategy — as the Zip Companies pursued when they attempted to remove the Firstmac Mark from the Register for non-use — does not assist in demonstrating honesty.

Knowledge of a Conflict Is Not Automatically Disqualifying

One significant point from the case is the Court’s rejection of a rule that knowledge of a competing mark automatically defeats the defence. A business can still establish honest concurrent use even where it knew of an earlier registered mark — but it must demonstrate that, knowing of the mark, it genuinely assessed the position and formed a reasonable belief that its use would not cause confusion or otherwise trade on the other party’s reputation. That is a higher bar than simply proceeding in ignorance.

Timing and the Date of Assessment

The Court’s ruling that honesty is assessed at the time of each potential infringement (not at some later stage) has important implications. A business cannot rely on hindsight evidence of commercial co-existence to establish it was honest years earlier. The key question will always be: what did the brand owner know, and what did they genuinely believe, at the time they started using the potentially infringing mark?

This does not mean that a party who was genuinely honest at first use can never develop a problem later. If circumstances change — for example, if a party later learns of clear evidence of confusion and continues to use the mark without addressing it — the analysis for later potential infringements may differ from the analysis for earlier ones.

For Registered Trade Mark Owners

The case also illustrates the importance of maintaining active use of a registered trade mark. Firstmac faced a non-use cancellation application that succeeded in part — its mark was found not to have been used between 2014 and 2018. Only the relaunch of the ZIP home loan product in September 2018 saved the registration from full cancellation on non-use grounds. Periods of non-use create vulnerability to cancellation applications, particularly from competitors who have an obvious interest in clearing the field.

Implications for Trade Mark Examination

Adverse Reports Are Not Merely Procedural Hurdles

The decision has direct implications for how trade mark applicants — and their advisers — should treat adverse examination reports. In this case, IP Australia’s adverse reports in October 2013 explicitly identified the Firstmac Mark as a conflict and explained why: the marks were similar and the services overlapping. Those reports were the mechanism by which the applicant was put on formal notice of a potential problem.

The High Court treated the receipt of those reports as the critical moment from which knowledge of the conflict was fixed. An applicant who receives an adverse report and proceeds to use a mark in trade without genuinely engaging with the cited conflict — by seeking legal advice, investigating the extent of any actual confusion, or attempting to resolve the matter with the earlier registrant — cannot later claim to have been honest in that use. The adverse report is not a bureaucratic inconvenience; it is a substantive legal warning that must be taken seriously.

Knowledge Attributed to the Applicant

The Court confirmed that knowledge of the adverse report was attributed to the Zip Companies through their director, Mr Diamond. Even though Mr Diamond gave the reports only cursory attention and passed them on without acting on them, that inattention did not diminish the legal significance of the knowledge. This has practical implications for examination: an adverse report issued to an applicant is treated as having been received and understood, regardless of whether the applicant actually reads it carefully. Applicants should not assume that the limitation periods for responding to adverse reports can be used simply as time to build a commercial presence while the legal problem is ignored.

The Role of the Examination Process in Defining the Honest Use Window

The judgment reinforces the importance of the examination timeline in delineating when a party can and cannot claim to be an honest concurrent user. Before a trade mark application is filed and before any adverse report is issued, a party that begins using a mark in genuine ignorance of a conflict may well have a strong honesty argument. The earlier cases recognised this — honest adoption in ignorance is a sound foundation for the defence.

However, the examination process creates a hard line. Once IP Australia identifies a specific conflict in an adverse report, the window for genuine ignorance closes. Any subsequent use of the potentially infringing mark occurs in the shadow of that notice. Examiners are, in effect, the mechanism by which the trade mark system communicates conflicts to applicants, and the High Court’s reasoning treats that communication as legally significant from the moment of receipt.

Non-Use Periods and Their Significance in Examination and Opposition

An important secondary issue in the case was Firstmac’s failure to use the Firstmac Mark as a trade mark between 2014 and 2018. The Full Court upheld the trial judge’s finding that Firstmac had not used the mark in that period. This is a reminder that registered marks must be kept in active, genuine trade mark use to withstand a non-use removal application. For examination purposes, this case illustrates that:

• A registered mark that survives examination as a cited prior mark may still be vulnerable to removal if the registrant has not been actively using it in connection with the registered services.
• Applicants faced with an adverse report citing a mark they believe is not being used may have a legitimate path to clearing the field, but any such strategy must be pursued promptly and with legal advice — not as an adjunct to a strategy of simply proceeding to trade and hoping for the best.
• The narrow survival of the Firstmac Mark — saved only by the 2018 relaunch — illustrates how precarious registrations can become during periods of commercial inactivity, even where the registrant has a genuine intention to recommence use

Summary for Examination Practice

Taking these threads together, the key examination messages from this decision are:

• Adverse reports are legally significant notices of conflict, not procedural steps to be managed around. Applicants who receive them and proceed to use the mark in trade without genuinely engaging with the cited conflict face a high bar to establishing the honest concurrent use defence later.
• The timing of the first infringing use relative to the applicant’s knowledge of the conflict is critical. Use that predates any knowledge of a conflict is assessed differently from use that follows a formal adverse report.
• Non-use of a cited earlier mark may provide a separate path to clearing the way for registration, but must be pursued through the proper legal mechanism — a non-use removal application — and not treated as a substitute for honest engagement with the conflict.
• The onus of proving honesty rests on the applicant seeking to rely on the defence. Silence, inaction, or minimal engagement with an adverse report will not satisfy that onus.

Summary

The High Court’s decision in Zip Co Limited v Firstmac Limited confirms that the honest concurrent use defence requires a brand owner to demonstrate genuine honesty as at the time of each allegedly infringing use. A business that has received clear notice of a conflict — through IP Australia adverse reports, correspondence from a trade mark owner, or otherwise — and then continues to use a potentially infringing mark without genuinely engaging with the issue, faces a significant evidential burden in establishing the defence.

The outcome is a reminder that commercial momentum and market success, while relevant to many aspects of trade mark disputes, cannot substitute for the foundational requirement of honest conduct at the critical time. Brand owners who face potential conflicts are better served by seeking timely legal advice, documenting their reasoning, and genuinely engaging with any competing interests — rather than adopting a strategy of proceeding and dealing with the legal consequences later.

This case summary is prepared for informational purposes only and does not constitute legal advice.