The Full Federal Court yesterday dismissed an appeal by
Paul's Warehouse against a judgment in which its importation of
GREG NORMAN branded goods was held to be a trade mark
This is good news for Australian trade mark owners and licensed
distributors, and highlights the value of a well-considered trade
mark protection and licensing strategy.
A critical issue in the case was whether the trade mark owner
had consented to application of its trade marks to the goods that
were imported. Such consent would have given Paul's Warehouse a
complete defence to trade mark infringement.
In this case, the trade mark owner's head licensor had
licensed an Indian company, BTB, to manufacture, market, distribute
and sell clothing and other goods bearing the trade marks
"GREG NORMAN" and the shark logo, within India only.
The license agreement also contained, relevantly:
an acknowledgement by BTB that the licence was limited to
an agreement by BTB that it would not supply goods bearing the
marks destined directly or indirectly for sale outside India with
prior written approval from the licensor.
BTB fulfilled a purchase order for goods bearing the trade marks
from a third party who was based in Pakistan. That party then
supplied those goods to another business based in Singapore, who
then on-sold the goods to Paul's Warehouse, who marketed and
sold the goods in Australia.
The trade mark owner and its head licensors sued Paul's
Warehouse for, among other things, infringement of the above
Australian registered trade marks by its sale and offer for sale of
those goods in Australia.
At trial, the judge stated:
"Where a registered owner consents to another person
applying the registered mark to goods on condition that the goods
must not to be supplied outside a designated territory, the
registered owner would not usually be regarded as having consented
to the application of the mark to goods which the other person
knows at the time he or she applies the mark are to be supplied by
him or her outside the territory."
BTB made the goods in response to the purchase order from the
third party distributor, and a letter of credit, both of which
indicated that the goods were to be shipped to Pakistan. In light
of this, the Court at first instance found that BTB specifically
made the goods for the purpose of sale outside of India.
As the trade mark owner had only licensed the use of the mark in
India, the trade mark owner was found not to have consented to
application of its mark to the goods that were specifically
destined to be delivered outside India. On appeal, the Full Federal
Court upheld the primary judge's decision on this issue. There
was an express contractual prohibition on BTB applying the
registered trade marks to goods to be supplied outside of
The case highlights the importance of strong contractual terms
specifying any limitations on an authorised manufacturer or
distributor to market or sell goods, including the territories in
which such goods can be made or sold. By having such contractual
terms in place, trade mark owners are better armed to control how
and where their products are marketed and sold.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The authors discuss 5 key ways Australian businesses can mitigate risks of engaging in expensive trade mark litigation.
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