Court rules against
Hashtag Burgers using Down-N-Out branding pending an appeal
In what might be its last stand, Hashtag Burgers has
failed to obtain a stay of orders made to remove its
DOWN-N-OUT, DOWN N’ OUT and D#WN N’ OUT names and logos
immediately, despite foreshadowing an appeal against the
Federal Court’s original decision in In-N-Out Burgers,
Inc v Hashtag Burgers Pty Ltd  FCA 193 (26
Justice Katzmann provided this excellent summary of her
original decision in the reasons for judgment which deal
with the application for stay of injunctions, orders for
delivery-up and destruction of infringing materials:
In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (No 2)
 FCA 772 (5 June 2020).
“The parties in this case carry on business selling
burgers and related goods. The applicant, In-N-Out
Burgers, Inc, is a long-established American
corporation. For many years it has owned and operated a
growing number of burger restaurants in the United
States and from time to time it has staged pop-up events
in other countries, including Australia. In 2016 the
second and third respondents, Benjamin Kagan and Andrew
Saliba, inspired by the popularity and success of the
applicant’s business, established first their own pop-up
events and, later on, restaurants, settling on the name
“Down-N-Out” for their business venture. About a year
later they incorporated the business. Thereafter, the
business was operated by the corporate entity, Hashtag
Burgers Pty Ltd, the first respondent. Mr Kagan and Mr
Saliba are the directors of the company. Earlier this
year I held that, by using the names DOWN-N-OUT, DOWN
N’OUT and D#WN N’OUT in connection with their burger
business, the respondents infringed certain of the
applicant’s registered trade marks, engaged in
misleading or deceptive conduct in contravention of the
Australian Consumer Law, and committed the tort of
passing off.” [paragraph 1]
For an analysis of the earlier decision see
Wars: IN-N-OUT vs DOWN N’ OUT
In-N-Out sought two remedies, injunctive relief and
orders for delivery-up and destruction of infringing
material, while Hashtag Burgers applied for a stay of the
remedies, pending an appeal.
Orders were made against Hashtag and its directors
restraining the infringement of the registered In-N-Out
trade marks, restraining the use of the names and logos
DOWN-N-OUT, DOWN N’OUT and D#WN N’OUT, and passing off their
business as a business that is associated with In-N-Out by
using their names and logos of in connection with burgers or
associated food and beverages, and related restaurant and
take away services.
Specific orders were also made:
- DOWN-N-OUT social media – remove from Facebook pages
and the Instagram page all names and URLs with
‘downnout’ (and other versions) and remove all names and
logos from the Facebook and Instagram accounts.
- DOWN-N-OUT business name registration is to be
cancelled or amended to remove all references to the
name and the domain name is to be cancelled.
The delivery-up and
Orders were made for the delivery-up of all physical
materials ‘including but not limited to signage, packaging,
promotional material, advertising, brochures, pamphlets,
merchandise, stationery and business cards’, a USB of the
electronic materials; and the destruction of electronic
materials ‘including but not limited to images, concepts,
plans, proposals or artwork’ which bear the names and logos
within 60 days of the orders being made. Some examples
appear below. Financial and tax records were exempted.
DOWN N’ OUT undertook to store all materials delivered up
at its own expense pending the determination of any appeal,
and to return the materials if an appeal was successful.
The stay application
Hashtag Burgers sought a stay of the orders, pending the
determination of an appeal.
Justice Katzmann summarised the relevant principles as
“The Court has a broad discretion and special
circumstances are not required. But the judgment is not
to be treated as provisional. The successful party is
entitled to its benefit and the presumption that it is
correct. Consequently, the applicant for a stay carries
the burden of demonstrating that a stay is appropriate.
A stay should not be granted unless the appeal is at
least arguable, although speculation as to its prospects
of success is usually inappropriate. Without more,
however, an arguable case is not sufficient
justification for a stay. In the exercise of the
discretion, the court will weigh up such factors as the
balance of convenience and the competing rights of the
parties, including, in particular, any prejudice to the
parties that would be caused by granting or refusing a
stay. A substantial factor in favour of a stay is the
risk that, without a stay, the appeal would be rendered
nugatory.” [paragraph 25]
In this case, the significant factors and findings were:
- The proposed grounds of appeal concerning the
Court’s finding of deceptive similarity between the
competing marks were arguable, which favoured a stay.
- Hashtag Burgers argued that the appeal would be
nugatory without a stay, and even if the appeal were to
succeed, there was a real risk that they would not be
restored to their former position because changing the
name of the business would be a costly exercise,
estimated to cost between $39,000 and $61,000.
- The Court took a sceptical view of these arguments.
After describing the Down N’ Out cost estimates as
inflated, Justice Katzmann said:
[as to the estimate of $2,000 for internal decorations
and fit-out] “their décor was of a dive bar. The walls
are made of exposed bricks and decorated with cartoons
and posters. The marks appear on few items” [on posters
and a light box sign].
“I accept that refusing a stay will be inconvenient …
and will come at some cost, both in time and money. But
I am not persuaded that the respondents would suffer any
great hardship in the absence of a stay. Nor [would the
appeal] be rendered nugatory.”
- Hashtag Burgers did not offer a security or bank
guarantee to In-N-Out “to secure or protect it against
intermediate damage should the appeal fail”. Hashtag
Burgers did not disclose any assets
- The case has “a public interest dimension” because
questions of consumer protection are raised, which
counts against a stay.
Hashtag Burgers made two major errors:
The first was that Hashtag Burgers appropriated
In-N-Out’s branding for their business. The changed “In” to
“Down” but kept “N-Out”. The names were too similar.
Hashtag Burgers has paid the price of not creating their
own distinctive branding, not only in terms of the cost and
distraction of legal proceedings, but also the cost of
having to completely rebrand its business and most likely
being ordered to compensate In-N-Out for loss it has
The second was that Hashtag Burgers should have taken the
opportunity to stop using its deceptive Down N’ Out names
and logos when the legal proceedings commenced. Instead,
they continued to trade even after the judgment was handed
By continuing to trade, it was inevitable that injunctive
relief and delivery and destruction orders would be made if
they failed, incurring more legal costs including payment of
In-N-Out’s legal costs.
For a marketing analysis, read on.
Marketing Commentary By
from EvettField Partners
Headline: Hashtag Burgers made a hash of it!
In free markets, similar businesses routinely compete in
similar categories offering similar products and services.
Fast food is a highly contested market, which is cost heavy,
making it unattractive to use ‘price leadership’ to compete.
Fast food companies prefer to invest heavily in their
brand, products and marketing, and then protect that
investment through trade marks and other mechanisms.
A good example is McDonalds and Hungry Jacks (or Burger
King outside of Australia) which regularly compete head to
head in the dine-in and drive through burger market. They
often have similar products and imitate each other’s
innovations, such as opening earlier to serve breakfast,
introducing ‘kid’s meals’ or children’s play areas.
Although there may be occasions when there is a great
deal of similarity, they are very careful to have their own
original and distinctive trade marks. And they invest
heavily in creating and protecting their own brand ‘look and
feel’, down to the number of French fries in their red or
Justice Katzmann posed this question in her original
“What is the line between inspiration and appropriation?”
Simply put, the answer is be inspired, but come up with
something innovative and original. Be inspired by other
market participants’ products, services or even their
marketing, but don’t appropriate their brand or business
name by copying it with a few small changes, or by creating
a deceptively similar one, because that will not comply with
The fact is that Hashtag Burgers selected the deceptive
Down N’ Out names and logos in the first place as their
trading name and then to add insult to injury continued to
use it after the judgement was handed down.
This reveals a lack of care and attention to detail in
one of the fundamentals of good marketing, which is
complying with the relevant laws. In this case, the trade
mark law and the consumer law which outlaw deceptive
Read Michael’s comments on the original judgment in
Burger Wars: IN-N-OUT vs DOWN N’ OUT