Page 76 - Print21 Magazine May-June 2022

Legal
Legal
essentials
Resident legal eagle
Wal Abramowicz outlines the potential hazards in long term leases, and in trademarking your slogan.
What happens to your business if your landlord goes broke?
Paying long term rent upfront can be problematic. In a recent case,
the tenant took 25 year leases over various rural lands. The tenant paid the rent for some premises annually, and for other premises the tenant paid the rent entirely upfront for the full 25 years.
The landlord went broke and its creditors had it put into liquidation. The liquidator needed to sell the land to pay the landlord’s unsecured creditors. The land was only saleable if there was vacant possession, therefore the liquidator had to
get rid of the tenants somehow.
So the liquidator terminated (or “disclaimed”) the leases using Section 568(1) of the Corporations Act. The effect would ruin the tenants because the value of the fixtures put onto the land and the benefit of the early lump sum rent payments would go to the liquidator. The tenants would also lose their right to occupy the land.
The tenants sued the liquidator but the Court decided that liquidators can validly disclaim even a registered lease. The tenants had to vacate the land without any compensation.
Potential ways to safeguard your business:
• Ensure your lease is registered. • Include a clause in your lease
which stipulates that any property, fixtures or fittings brought onto the land by the tenant will not pass to the landlord until the landlord has paid the tenant the market value for all of the items.
• Ensure where possible that your landlord is financially stable so that liquidation of the landlord is less likely.
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• Unless your landlord is completely financially rock solid, avoid paying rent upfront (even though it could be tax effective) as this could have negative consequences in the long run.
“If you want to use a fairly common phrase and protect it by registering
it as a trademark, then the phrase must be sufficiently adapted to distinguish your business from others.”
was using the colours blue and red in their signage and product catalogues. The competitor chemist also chose blue and red.
Chemist Warehouse sued for misleading and deceptive conduct and breach of trademark, but they lost! What went wrong?
The Court found that even though the competitor chemist may have copied elements of Chemist Warehouse’s registered trademark, it did not amount to misleading or deceptive conduct. To make matters worse for Chemist Warehouse, the Court also found that the trademark was invalid. The problem was that the trademark consisted of a fairly common phrase. Registering it
was not enough. If you want to
use a fairly common phrase and protect it by registering it as a trademark, then the phrase must be sufficiently adapted to distinguish your business from others. The Chemist Warehouse trademark was merely a description which could potentially apply to any chemist. It could have been innocently used by any chemist.
In order to give protection, your trademark must be distinctive, specific, and have a distinguishable reputation. Presentation and colour scheme is not always enough. 21
For more information contact Wal at Fox & Staniland Lawyers, Gordon, NSW. Tel 02 9440 1202. Email: wal@foxstaniland.com.au
Protecting your
trademark
Business owners and managers
are right to be concerned if their competitors copy their slogans and marketing materials to confuse and mislead consumers. But is all intellectual property protectable?
Chemist Warehouse had a registered trademark. Their slogan was: “Is this Australia’s cheapest chemist?”. The words “Is this”
were in smaller letters and slightly diagonal. A competitor of Chemist Warehouse used the slogan “Who is Australia’s cheapest chemist?”, with the words “Who is” positioned exactly the same way as Chemist Warehouse’s slogan.
Chemist Warehouse painted their shop exterior yellow. The competitor chemist also painted their shop exterior yellow. Chemist Warehouse
Safeguards: Wal Abramowicz