The High Court of Australia issued a key decision in Zip Co Limited v Firstmac Limited [2026] HCA 16, clarifying the scope of the “honest concurrent use” defence under the Trade Marks Act 1995 (Cth).

This decision impacts brand adoption and highlights the importance of trade mark clearance searches and legal diligence before launch.

At its core, the case considered whether Zip Co’s use of “ZIP”-formative branding for its buy-now-pay-later services infringed Firstmac’s earlier registered trade mark for ZIP in relation to financial services.

Background

Firstmac owned a registered trade mark for “ZIP” in class 36 covering financial affairs and loans.

Zip Co later launched a range of financial products and services using branding, including:

  • ZIP
  • ZIP MONEY
  • ZIP PAY
  • ZIP-formative promotional phrases and sub-brands

At first instance, Zip Co successfully defended the infringement claim. The primary judge found:

  • the competing marks were not deceptively similar;
  • Zip Co could rely on the “honest concurrent use” defence; and
  • Firstmac’s registration should be vulnerable to removal or cancellation arguments.

However, the Full Federal Court overturned that decision in 2025, finding that:

  • the ZIP-formative marks were deceptively similar to Firstmac’s registered ZIP mark;
  • the honest concurrent use defence failed; and
  • Firstmac’s registration remained valid.

Zip Co then appealed to the High Court.

The Central Legal Issue

The key issue before the High Court was not simply whether the marks were similar.

The real controversy concerned the meaning of “honesty” for the purposes of the honest concurrent use provisions and related infringement defences.

In particular:

  • Is honesty assessed subjectively or objectively?
  • At what point in time is honesty assessed?
  • Can a trader continue using a mark after becoming aware of a conflicting earlier registration and still rely on the defence?

These questions have become increasingly important in Australian trade mark practice, particularly as businesses adopt short, memorable, tech-style brands in crowded markets.

What the High Court Decided

The High Court dismissed Zip Co’s appeal and confirmed the stricter approach of the Full Federal Court.

The Court reinforced several key principles.

1. Honest concurrent use requires objective honesty

The Court confirmed that honesty is not merely the absence of bad faith.

Instead, the assessment involves an objective evaluation of whether the trader acted honestly in adopting and continuing to use the mark in all the circumstances.

This means businesses cannot simply argue:

“We did not intend to infringe.”

The question is whether the conduct would objectively be regarded as honest commercial behaviour.

That approach places significant emphasis on:

  • pre-launch searches;
  • trade mark clearance investigations;
  • responses to examination objections;
  • legal advice obtained;
  • awareness of competing rights; and
  • conduct after becoming aware of a prior mark.

2. Knowledge of a conflicting mark matters

A critical factual issue was that Zip Co became aware of Firstmac’s earlier ZIP registration through adverse examination reports from IP Australia before commencing use of its branding. (spruson.com)

Despite that knowledge, Zip Co proceeded to launch and expand its services.

The High Court agreed with the Full Court’s view that this significantly undermined any claim to “honest” concurrent use.

The decision suggests that once a trader is put on notice of a potentially conflicting mark, continuing without properly addressing the issue may jeopardise reliance on the defence.

3. Clearance searches are now commercially critical

One of the broader implications of the decision is the increasing importance of formal clearance processes.

Historically, some businesses treated trade mark searches as optional or limited them to internet and ASIC checks.

The Court’s reasoning indicates that this approach may no longer be commercially safe.

Businesses launching new brands — especially in financial services, technology and consumer-facing sectors — are now expected to undertake:

  • proper trade mark register searches;
  • legal risk assessment;
  • consideration of similar marks; and
  • strategic advice before launch.

Failure to do so may later undermine infringement defences.

Why the Decision Matters

This case sets a new benchmark for honest concurrent use in Australia. Its guidance impacts all brand owners: due diligence is vital, clearance searches are now critical, and earlier registrations are more strongly protected.

Its importance extends well beyond the parties involved.

For brand owners

The decision strengthens the position of earlier registered trade mark owners.

Businesses with registered marks can now more easily challenge later adopters who ignored warning signs or skipped due diligence.

For startups and scale-ups

The case is particularly relevant for fast-moving businesses that prioritise speed to market.

The High Court has effectively reinforced that:

  • branding decisions are legal risk decisions;
  • “move fast” strategies do not excuse inadequate clearance; and
  • rebranding risk can become substantial if proper checks are not undertaken early.

For advisers and professionals

Trade mark attorneys, lawyers, marketing teams and founders will likely need to adopt more rigorous clearance practices.

The decision may also increase the evidentiary burden on parties attempting to establish honest concurrent use in future disputes.

Practical Lessons for Businesses

1. Conduct clearance searches before launch

At a minimum, businesses should:

  • search the Australian Trade Marks Register;
  • review relevant classes carefully;
  • assess similar marks, not just identical marks; and
  • obtain legal advice where risk exists.

2. Do not ignore adverse examination reports

If IP Australia raises conflicting marks during examination, treat it as a serious commercial issue, not just a procedural step.

Proceeding regardless may later undermine both registration prospects and infringement defences.

3. Consider rebranding early if risk exists

The earlier a risk is identified, the cheaper and easier it usually is to manage.

Once a business has invested heavily in:

  • advertising;
  • domain names;
  • platform integrations;
  • customer recognition; and
  • investor communications,

rebranding becomes significantly more disruptive and expensive.

4. Keep records of clearance and advice

Evidence matters.

Businesses should maintain records of:

  • searches undertaken;
  • legal advice received;
  • reasons for selecting a mark; and
  • steps taken after discovering possible conflicts.

These documents may become important evidence if a dispute later arises.

Final Thoughts

The High Court’s Zip Co Limited v Firstmac Limited decision sets stricter standards for brand adoption and trade mark diligence in Australia.

The case reinforces that honest concurrent use is not a broad safety net for businesses that proceed despite warning signs. Instead, it is a narrow defence requiring objectively honest commercial conduct.

For businesses, the message is straightforward:

Choosing a brand is a legal and strategic decision. Approach it with proper diligence from the outset.

Key Takeaway:

Key Takeaway: The High Court decision makes trade mark clearance essential for launch planning. Proper due diligence costs less than litigation or rebranding. Integrate clearance into brand strategy from the outset to avoid costly setbacks.

Sources: High Court of Australia case materials and commentary regarding Zip Co Limited v Firstmac Limited [2026] HCA 16 and Firstmac Limited v Zip Co Limited [2025] FCAFC 30. (hcourt.gov.au)