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Nobody likes a freeloader. Problem is, globalisation and
the internet has made freeloading really easy and profitable. In
the retail world, you just source branded, non-counterfeit products
from somewhere cheap and offshore and rely on the local
distributor's marketing to promote the product. Great
margins, free advertising, and often it's perfectly legal.
Voila! Megabucks!
If you're a brand owner, you're probably not so
keen on the freeloaders. You make a lot more money if you can
control your regional markets. And local distribution rights are
more valuable if you can protect exclusivity. This would be easy if
there were a blanket prohibition on parallel importation of trade
marked goods. But there's not.
A recent decision from the Full Federal Court confirms that if
you're a bit clever about how you deal with your trade
marks, as a brand owner you can make a pretty strong case for
stopping parallel imports. It boils down to a question about
whether the trade mark on the parallel imported product is applied
with the trade mark owner's consent.
In this case some Greg Norman branded products were manufactured
in India and then sold outside India, eventually into Australia.
But the manufacturer was only licensed to make goods for sale in
India. The Court said that the trade mark owner had not consented
to the Indian manufacturer applying the Greg Norman brand to goods
being sold outside India. This meant the Australian Greg Norman
licensee could stop the parallel imports originating from the
Indian manufacturer.
As a brand owner, the tip here is to only license your overseas
manufacturers to apply the trade marks to products for sale within
their region. Then if the manufacturer sells the product outside
the region in breach of their licence, you would have a good
argument that the mark was applied without your consent. That means
you can stop parallel imports of those products.
So freeloaders beware. Defending trade mark infringement
proceedings can make a nasty dent in your profit. And brand owners,
take heart. This is one of a few things you can do to control
parallel imports.
Questions? Give us a call.
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