A $3 billion company is being forced to rebrand in its home market after years of trademark infringement, and the honest concurrent use defence it relied upon has been decisively rejected by the High Court. This decision isn’t just a corporate cautionary tale; it’s a warning to any business that has ever assumed a name was “close enough.”
When Larry Diamond and Peter Gray were building what would become one of Australia’s most recognisable fintech brands, they sent a calendar invitation with a revealing subject line: “ATTACK FIRSTMAC TRADEMARK ‘ZIP’.” Years later, those four words would appear in a unanimous High Court judgment and effectively seal the fate of the brand they had worked over a decade to build.
On 13 May 2026, Australia’s highest court unanimously ruled that Zip Co had no defence to its infringement. The infringement related to the Zip name in Australia. The decision ended a legal battle that had been brewing since 2013. Active litigation had been running since 2019. The opposing party was Brisbane-based mortgage lender Firstmac. Firstmac had registered the Zip trademark on 20 September 2004. That was nearly a decade before the buy now, pay later business was even incorporated. The consequences are stark: a company with a $3 billion market capitalisation must now rebrand its entire Australian operation.
A Trademark Registered, A Brand Built Anyway
The facts of this case are, on their surface, straightforward. Firstmac registered the Zip trademark in 2004. Zip Co’s founders identified the name as desirable, had their trademark applications flagged by IP Australia as conflicting with Firstmac’s existing registered mark, and, by the High Court’s finding, proceeded to use the name regardless. The Federal Court had already found trademark infringement. Zip Co’s last line of defence was an appeal to the High Court, relying on the doctrine of honest concurrent use.
That doctrine had been contested and ambiguous for years. It allows a party to continue using a registered trademark in certain circumstances. The party must have used it honestly and concurrently alongside the registered owner. Importantly, the defence does not strictly require ignorance of the competing mark. However, knowledge of the competing mark will weigh heavily against a finding of honesty. The Zip Companies did not dispute that their use of the mark amounted to potential infringement. They argued, however, that their use had been “honest.”
The High Court, in a unanimous judgment of Gageler CJ, Gordon, Edelman, Steward and Beech-Jones JJ, disagreed:
“The standard of dishonesty is assessed by ‘the standards of ordinary, decent people’ and not, as a ‘Robin Hood test’, by reference to the subjective standard of honesty held by the person alleged to have been dishonest.” – Gageler CJ, Gordon, Edelman, Steward and Beech-Jones JJ
In simpler terms, it does not matter whether the founders personally believed their conduct was justified, or that their brand would not harm Firstmac’s business. What matters is whether their state of mind, judged against the standards of ordinary, decent people, was honest. The Zip Companies failed to discharge the onus of proving that it was – particularly in circumstances where they knew of the Firstmac Mark and had received adverse reports from IP Australia, yet chose not to engage with those reports and instead pursued a strategy to “attack” a competitor’s legitimately held trademark.
Why This Decision Is “Seminal”
IP lawyers have been quick to describe the judgment as a watershed moment. Trademark specialist Aparna Watal of Halfords captured it succinctly: “This decision is seminal. It closes off nearly 15 years of argument about when and how the honest concurrent use defence operates, and what honesty actually means in that context.”
Until now, businesses that found themselves infringing an existing trademark had a degree of ambiguity to exploit. Was the standard of honesty purely subjective, or did it have an objective element? Could a founder’s genuine belief in the rightness of their cause count as “honesty”? The High Court has now answered those questions clearly and finally: honesty requires identifying the person’s actual state of mind, and then assessing that state of mind against the standards of ordinary, decent people. A person’s own belief that they were acting fairly is not, by itself, enough.
This is the second significant trademark ruling from the High Court in 2026, following its decision permitting Sydney fashion designer Katie Perry to continue trading under her name despite the objections of global pop star Katy Perry. Taken together, the two decisions reflect a court increasingly willing to draw firm lines around trademark rights in both directions.
Context: Zip Co confirmed the decision does not affect its US or New Zealand operations, where it holds separate trademark rights. The US now represents approximately 80% of divisional cash earnings, insulating the company from the brunt of commercial impact. However, rebranding an established consumer brand across an entire national market is costly. This includes marketing, product changes, and customer communications. The total cost will run into the tens of millions of dollars.
The Real Lesson: It’s Not Just for Big Business
It would be easy to read this story as a problem for large corporations. It is not. The legal principles at stake apply equally to a sole trader naming a new side business, a start-up choosing a product name, or a growing SME expanding into a new market. The moment you adopt a name that is already registered by another party, you are exposed, regardless of how long you have been trading under it.
Zip Co’s case is unusual in scale, but the underlying pattern is common: a business identifies a name it likes, encounters a conflict, decides to proceed anyway, and spends years assuming the problem will resolve itself or never be enforced. It rarely stays that way.
What makes the Zip Co situation particularly instructive is the paper trail. The calendar invitation titled “ATTACK FIRSTMAC TRADEMARK” was not, of course, created as evidence against the founders. It was an internal planning note. But in litigation, internal communications are discoverable, and words chosen in haste, or in the heat of a competitive moment, can define how courts understand your intentions years later.
Key Takeaways for Businesses
1. Search before you name. A comprehensive trademark search, including registered, pending, and commonly used marks, is not optional. It is foundational. Conduct one before investing in a brand, not after. The cost of a search is trivial compared to the cost of a rebrand.
2. An adverse report is a stop sign, not a suggestion. Zipmoney’s trademark applications received adverse examination reports from IP Australia identifying a conflict with Firstmac’s registered mark before the business even launched. Proceeding regardless and then building an entire brand identity on that name compounded the legal risk at every step. If your trademark application encounters opposition, take that seriously and take advice.
3. “We’ve been using it for years” is not a defence. Length of use does not cleanse an infringement. The honest concurrent use defence requires proof that your state of mind was honest by the standards of ordinary, decent people at the time of each alleged infringement. Knowledge of a competing mark is not automatically fatal, but proceeding in the face of adverse reports without engaging with them or seeking to resolve the conflict will make it very difficult to establish honesty.
4. Your internal communications are evidence. Emails, Slack messages, calendar invitations, and meeting notes can all be produced in discovery. Be thoughtful about how your team discusses competitors, legal disputes, and strategic decisions in writing.
5. Register your own marks and protect them. Firstmac won this case in large part because it had the foresight to register its trademark in 2004 and the resolve to defend it. Registration gives you standing. Without it, you may have rights but enforcing them is harder and more expensive.
6. Jurisdiction matters. Trademark rights are territorial. Zip Co can continue operating under its name in the US and New Zealand because its rights there are distinct from its Australian position. If you operate across borders, your trademark strategy must match your geographic footprint.
What Happens Next for Zip Co
The company told investors it is “prepared for this outcome” and will use it as an opportunity to “evolve its Australian brand.” A new name has not been announced, with further updates promised in the coming weeks. Shares fell 3.5% immediately after the judgment before recovering to trade marginally higher.
From a purely commercial standpoint, Zip Co is fortunate that the bulk of its business has shifted to the United States, which now accounts for around 80% of earnings. The Australian rebrand is a significant cost, but not an existential one. For a smaller business without that geographic diversification, the same outcome could be fatal.
The more enduring legacy of this case will be in how businesses approach brand strategy going forward. The High Court has removed the grey area that some had hoped to use as shelter. The message is clear: if you knowingly build on someone else’s trademark, you are building on sand.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
Article Written by Seb Hain, PLT
References:
Drevikovsky, J (2026, May 13). Zip Co forced to change its name after losing major High Court stoush. Financial Review.
Zip Co Limited v Firstmac Limited [2026] HCA 16.
