Honest Concurrent Use After Zip Co: What the High Court's Decision Means for Your Brand
On 13 May 2026, the High Court of Australia unanimously dismissed Zip Co's appeal in Zip Co Limited v Firstmac Limited [2026] HCA 16, finding that the buy-now-pay-later company had not established the defence of "honest concurrent use" under the Trade Marks Act 1995 (Cth). The decision is an important reminder for anyone launching a new brand, examining what is the requirement of “honesty” at the initial stage of brand when you discover a competing trade mark and proceed to use the trade mark.
1. Background to the case
Firstmac, one of Australia's largest non-bank lenders, registered the trade mark "ZIP" for financial services back in 2004. Zip Co's founders independently chose the same name in 2012 without knowing about Firstmac's registration — they chose this mark for associations with speed and efficiency.
The issue was not whether Zip Co was infringing Firstmac’s “ZIP” mark, the question was whether the defence of “honest concurrent use” was available to Zip Co. Traditionally, this defence permits infringement, where the infringer honestly adopted the infringing mark, often in different geographic locations or where the infringer honestly did not believe there would be a risk of confusion between the two brands.
The critical moment came in October 2013 (before Zip Co’s first use of the “ZIP” mark), when Zip Co received formal reports from IP Australia identifying Firstmac's mark as a barrier to their own registration. Despite this, Zip Co proceeded to launch their consumer credit product under the ZIP brand the following month. By 2019, the business had grown to over $84 million in revenue with 1.3 million customers — but when Firstmac sued for trade mark infringement, that commercial success (and its years of otherwise peaceful co-existence) did not assist Zip Co's defence.
2. What the High Court Decided
The High Court confirmed two important principles.
First, whether your use of a mark is "honest" is judged at the time you actually use it. Established reputation after the initial point of infringement may not be able to retrospectively establish the honesty of your current conduct, if your initial adoption was not honest.
Second, "honest" means what ordinary, decent people would consider honest. It is not enough to say "I didn't think I was doing anything wrong." The question is whether a reasonable person, knowing what you knew, would consider your conduct as honest. Importantly, knowing about a competing registered mark is not automatically fatal — but if you know about it and cannot show you genuinely believed your use would not cause confusion, you will struggle to establish the defence.
3. When Can You Still Rely on Honest Concurrent Use?
The defence remains available, but it is narrower than many businesses assume. In broad terms, the less you knew and the more innocent your actions are at the time of infringement, the stronger your position.
The best case scenario: you adopted your brand innocently and only found out about the other mark later. The Court confirmed that this is precisely the situation the defence was designed for. If you chose your brand in good faith, traded under it openly, built a customer base, and only then discovered a competing registration, you are in the strongest possible position. The Court endorsed the longstanding principle that once honesty has been established through a period of innocent use, subsequent discovery of the competing mark "loses much of its significance." You can continue trading — provided you can show you genuinely believed your use was not causing confusion, which is far easier to demonstrate when you have years of trading without any evidence of customers being misled.
The worst case scenario: you knew about the competing mark before you started trading. This was Zip Co's position. They learned of Firstmac's registration before they launched, proceeded regardless, and could not show they had genuinely turned their minds to whether confusion would arise. Their subsequently built reputation in their “ZIP” marks did not alter that assessment.
The burden is on you to prove honesty — not on the other side to prove dishonesty. This is an important distinction. If a conflict exists and you want to rely on this defence, you need contemporaneous evidence showing you genuinely considered the risk of confusion and concluded it was not a concern. That might include evidence of different customer bases, different sales channels, different geographic areas, or simply the absence of any actual confusion over a sustained period. Ideally, before you adopted your mark, you will be able to present documented searches you undertook before you adopted your brand and went to market. This might include:
Searches of the Trade Marks Register; or
Online Google searches.
4. Why You Should Always Search Before Launching a Brand
You might wonder: if ignorance of a competing mark helps establish honesty, would you be better off simply not searching the Trade Marks Register?
The short answer is no - and the Court addressed this directly.
It is true that a “careless” failure to search is not, by itself, dishonest. A first-time business owner who genuinely did not know the Register existed can still claim honest use. But the Court drew a sharp line between innocent oversight and deliberate avoidance. Choosing not to search "for fear of what it might reveal" — engineering your own ignorance — is not the same as genuine unawareness, and will not be treated as honest by the standards of ordinary, decent people.
More importantly, searching the Register actually protects you regardless of what it reveals. If no conflicts appear, you can proceed with confidence. If a conflict does appear, you are in the best possible position to take advice, assess whether confusion is genuinely likely, and — critically — document that assessment. That contemporaneous record of genuine belief is exactly what the Court found missing in Zip Co's case, and its absence was fatal.
Further, if these searches reveal conflicts, you can rebrand before investing time and effort into your brand development, avoiding costly rebrands and possibly defending infringement claims.
A business that discovers a conflict and takes sensible steps - seeking legal advice, considering whether the goods or services are genuinely different, or approaching the other trade mark owner — demonstrates the kind of honest, responsible conduct the law rewards. A business that ignores warnings, gives them only "cursory attention", or adopts an aggressive posture towards the existing owner will find the defence extremely difficult to establish.
5. What This Means for Your Business
The importance of conducting and recording searches before adoption: If you are launching a new brand, the practical takeaways are straightforward. Search the Trade Marks Register before you commit to a name. If you find a conflict, get legal advice and document your reasoning — do not ignore it and hope for the best. If you genuinely believe your use will not cause confusion (because you operate in a different market, sell to different customers, or offer materially different services), record that belief and the reasons for it at the time. That record could prove decisive if you are ever challenged. Don’t forget to record any internet searches you have conducted for similar brand names to yours as well, before you adopt the mark!
The power of a registered mark: If you already own a registered trade mark, the decision reinforces the value of your registration. Firstmac's mark, registered nearly a decade before Zip Co started trading, ultimately prevailed — even though Firstmac's own use of the mark had been intermittent. Early registration and vigilant monitoring remain your strongest tools.
6. How We Can Help
Whether you are facing infringement claims, wanting to enforce your trade mark rights, or you’re looking to register a trade mark, our specialist team can assist. We advise on:
Trade mark, design and patent registration strategies
Enforcement of IP rights and infringement claims
Defending against Australia Consumer Law and passing off allegations
Brand protection and portfolio management
Please contact us if you have any questions or would like to discuss your intellectual property needs.
Thomas Howell
Associate
T +61 3 5226 8526
Ethowell@sladen.com.au
Michelle Dowdle
Principal Lawyer
T +61 3 9611 0114 | M +61 408 674 256
Emdowdle@sladen.com.au
