On 29 October 2010, the Federal Court of Australia in
Sporte Leisure Pty Ltd v Paul's International Pty Ltd (No
3)  FCA 1162 handed down its decision as to whether a
licence to use trade marks on goods that were to be manufactured in
India, also included a right to export those same goods outside of
The Court considered the operation of section 123 of the
Trade Marks Act 1995 (Cth) that provides a defence to an
infringement where a trade mark is used with the consent of the
registered trade mark owner (Section 123 Defence).
The appellants brought a claim against numerous respondents
regarding the infringement of both the "Greg Norman" word
mark and a shark image mark (Marks). The Marks
were registered in class 25 for apparel, footwear and headwear.
The second applicant, Great White Shark Enterprises LLC
(Great White) is the owner of the Marks.
The Greg Norman Collection (GNC), being the
head licensor of Great White, entered into a limited and
non-exclusive license (License) with an Indian
manufacturer and distributor.
Under the terms of the Licence, the Indian company was
contracted to use the Marks in India only. However, garments which
depicted the Marks were manufactured by the Indian Manufacturer and
then indirectly exported to Australia.
In early 2009, Paul's Retail Pty Ltd (Paul's
Retail) imported the infringing garments into
The key issues raised in this case were:
whether the Marks were applied to the garments with the consent
of Great White; and
whether shipping the goods outside India was a violation of the
Paul's Retail sought to establish that the infringing
garments were manufactured by one of Great White's authorised
manufacturers, and that the Marks were applied to the garments at
the time of manufacture with Great White's consent, thereby
giving rise to the Section 123 Defence.
Nicholas J stated that where an owner consents to another person
applying the registered mark to goods on the condition that the
goods must not be supplied outside a particular territory, then the
registered owner would not usually be regarded as having consented
to the application of the mark to goods which are intended to be
supplied by the person outside of the designated territory.
In this case, His Honour found that there was no consent by
Great White to apply the Marks to the garments which were exported
outside of India.
Important points to note
When entering into a licence agreement with overseas
manufacturers and other parties, trade mark owners and licensees
need to ensure:
they enter into a written agreement that contains clear terms
regarding the permitted use of the trade marks; and
compliance with the terms of the agreement is closely
This case reinforces the fact that infringing parties cannot
escape liability under the Section 123 Defence if they have not
complied with the express terms of a license agreement.
As a licensor or a licensee, here are some tips you should consider when negotiating your next licence agreement.
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