Ampol gas station rebranding strategy runs out of gas

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While continuity and brand loyalty are important to business success, there are times when companies need to update or change their aesthetics. The reasons for change can be positive and proactive – like a brand refresh – or negative and reactive – when a company has lost the right to use its brands and logos. The ease with which a business can pivot to implement these brand changes can be critical to its success. When the company owns and controls all manifestations of a brand, it is relatively easy to make these changes. It is often more complex when third parties, such as a franchise or authorized distributor, are involved, especially when the third party operates their business using the trademark on property owned and controlled by the business.

The Federal Court was recently required to examine precisely this situation in proceedings before the Supreme Court of New South Wales brought against Ampol Australia Petroleum Pty Ltd (Ampol) by one of its main multi-site operators, EG FuelCo (Australia) Ltd (FOR EXAMPLE). In the proceedings, Ampol requested a mandatory pre-trial injunction to require EG to allow Ampol to access and rename 87 gas stations from Caltex at Ampol. Ampol’s injunction was part of a larger ongoing litigation between the parties that began late last year against Ampol. In these proceedings, EG alleged that Ampol engaged in deceptive or deceptive behavior in connection with Ampol’s rights to use the Caltex trademark in Australia.

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As well reported in the media, in 2019 the international owner of the Caltex brand, Chevron Global Energy Inc (Chevron), announced that it was withdrawing Ampol’s authorization to use the Caltex brand in Australia. As part of the withdrawal, Ampol promised Chevron that it would stop using the Caltex brand by December 31, 2022 and reinvigorate the history Ampol (last seen in Australia in 1995) to replace the Caltex brand at county gas stations. To date, Ampol has successfully renamed some 400 non-EG sites from Caltex at Ampol.

Ampol relies on its contractual rights to implement this strategy with its authorized operators. In doing so, however, he encountered a potential problem, as EG refuses to change brands and insists on continuing to trade as Caltex until the end of its trademark license agreement (MT Agreement) with Ampol. The relevant clause of the TM agreement between EG and Ampol provides:

“8.1 Addition or deletion of trademarks

(a) Subject to clauses 8.1 (c) and 8.1 (d), if [Ampol] proposes modifications to his mark and therefore wishes to add new marks to this act or to modify or delete one of the marks of this act, he must:

(1) provide [EG] with reasonable notice that it wishes to access Licensee’s sites to implement such changes (including providing details of the change); and

(2) not unduly interfere with the conduct of the business or any other business operated at the Licensee’s site while at the Licensee’s site to implement such changes; and

(3) pay the costs associated with adding, modifying or removing marks in accordance with clause 16.3.

Ampol seeks urgent interlocutory injunction

In July 2021, Ampol filed an urgent mandatory injunction (a form of mandatory order) against EG seeking access to EG’s gas stations to remove the Caltex brand and replace it with the Ampol brand. Specifically, Ampol requested orders that EG:

  1. allow Ampol access to each of EG’s service stations to “implement additions, modifications and deletions” of the Caltex brands with the Ampol brands
  2. cooperate with Ampol “in the implementation of additions, modifications and deletions” of the Caltex brands with the Ampol brands.

In order to convince the Court that it should grant the injunction, Ampol first had to prove that there was a “serious issue to be decided”. He then had to prove, having regard to the interests of the competing parties (for and against the granting of the injunction) that the scales were in Ampol’s favor – which was a much more difficult test to meet. Traditionally, the standards applied by the courts for compulsory injunctions are much higher than for a regular injunction. Ampol argued that delays in rebranding EG would impact the successful rollout of the Ampol brand, damages for which it would be difficult to quantify and would expose it to damages claims by Chevron. . Given the possibility that Chevron will re-enter the Australian market using the Caltex brand after December 31, 2022, Ampol exposes itself to the possibility of an injunction proceeding brought by Chevron and there is a risk that consumers will be confused by the different parties using the mark.

EG’s opposition to the injunction

EG opposed Ampol’s claim on a number of grounds – whether the Court granted the injunction:

  • it was not clear how Ampol would coordinate this work with EG’s corporate rebranding program which had already started
  • The work proposed by Ampol would disrupt EG and cause inconvenience to its customers and a consequent loss of income
  • EG’s loss and damage would be difficult to quantify.

Ampol had provided EG with a very detailed “scope summary” of the work, which presented a detailed program of what was needed to complete the rebranding exercise.

The reasoning of the Court

The NSW Supreme Court found the parties’ arguments “very balanced” but ultimately refused to make the orders requested by Ampol. The Court’s refusal to grant the injunction was based fundamentally on the form of the orders sought by Ampol, which Ampol had based on its express contractual rights. In fact, Ampol has sought a binding injunction from the court to compel EG to comply with the TM agreement. Unfortunately for Ampol, due to the vague nature of the relevant clause in the TM agreement, the orders requested lacked specificity, as they did not detail precisely what Ampol required EG to do (or not do). to help with rebranding. The court was concerned that this lack of detail in the orders meant that EG’s compliance could require significant court oversight. In general, Australian courts are reluctant to step in and issue orders requiring a permanent oversight role in day-to-day operational matters. The risk of this happening was highlighted by the detailed summary of the scope and the many areas where disagreements could arise between the two parties.

While it is quite common for parties to reflect the terms of contracts in injunction orders (to avoid arguments that the orders sought are an undue infringement of contractual rights), then vague and open contractual terms have become. ultimately proved the loss of Ampol. Importantly, Ampol could have strengthened its position – both in negotiations with EG and in its claim to the court – had the terms of the TM deal been firmer and clearer. For example, the TM deal should have created clearly defined powers giving Ampol the right to:

  • modify or stop using any of the trademarks, trade name or use one or more additional or substitute marks
  • change company colors, business dress, decor, uniform specifications, any part of a logo and any other attributes of the design, appearance and operation of the company
  • enter EG property and then remove, cover or modify branded items on site to reflect its new branding
  • force EG to:
    • use the new branding and all of the above
    • stop using any marks, corporate colors, trade dress, decors, uniforms, designs, appearances or attributes declared by Ampol to be obsolete
    • undertake all renovations, arrangements, reprints and reasonable modifications to premises, equipment, letterhead, business cards, stationery and uniforms.

If Ampol had included a dispute resolution mechanism for issues arising during the program, it might have facilitated their application. Had the parties agreed to an independent expert or arbitrator to resolve any practical issues through a binding decision, there would have been no need for an ongoing monitoring role on the part of the Court, which ultimately determined Ampol’s claim.

It is possible that, if Ampol had had these types of rights, it could have been more specific with the orders requested and the outcome of the request could very well have been different.

What should you do

Owners or licensees of trademarks and other marks who intend to authorize others to use such marks over an extended period of time should carefully plan for the change, modification or even discontinuation of the use of such marks. registered and these trademarks. These companies should also not assume that their licensees (or franchisees) will cooperate with rebranding programs and adequately plan how they might affect such rebranding program. If you don’t, you risk exposing these companies in a number of different ways, just like Ampol.


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