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.
We do not disclaim anything about this article. We're quite proud of it really.
