The court rejected the Sydney company’s contention that it was inspired by In-N-Out, which was lawful, rather than unlawfully appropriating the US company’s trademarks to ride on its coat-tails.
At the height of its success, Hashtag Burgers operated a number of Down N’ Out restaurants including a flagship outlet in Sydney’s CBD, a pop-up version in Penrith and another in Ryde.
The CBD restaurant remains, but its name was changed this year to Nameless Bar. The company also runs a pop-up bar in Leichhardt called High N’ Dry.
During the original hearing before Justice Katzmann, the Federal Court heard evidence Hashtag Burgers deliberately set out to emulate In-N-Out’s menu and famous logo with the yellow arrow, before tweaking the design in a bid to avoid litigation.
“Need to differentiate ourselves ASAP before we get sued lol,” one of Hashtag Burgers’ owners, Ben Kagan, told a graphic designer in 2016.
The Full Court said In-N-Out, which had 300 restaurants across America as at 2016, regularly hosted pop-ups outside the US including several in Australia since 2012.
The judges said Justice Katzmann had not erred in finding that the name Down N’ Out, also written in some cases as Down-N-Out, was “deceptively similar” to the registered trademark In-N-Out Burger. The court said Justice Katzmann erred in finding the Sydney company’s founders, Mr Kagan and Andrew Saliba, had acted dishonestly in deciding to appropriate aspects of In-N-Out’s trademarks, but this did not affect the outcome of the case.
The court did not overturn Justice Katzmann’s finding that the men intended to cause confusion. The judges said “the inference that DOWN-N-OUT was chosen by Messrs Kagan and Saliba for the purpose of causing confusion to consumers was based on the evidence available to the primary judge.”
The Full Court ordered Hashtag Burgers and its founders to pay In-N-Out’s legal costs.
In June, Justice Katzmann ordered Hashtag Burgers to hand over to In-N-Out’s Australian lawyers all material bearing the Down N’ Out logo including “signage, packaging, promotional material … and business cards”. The lawyers were obliged to store the material until after the appeal.
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Michaela Whitbourn is a legal affairs reporter at The Sydney Morning Herald.