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In a major win for Australian brand owners, the Full Court of
the Federal Court of Australia has held that the Paul's
Warehouse discount retail chain infringed the trade marks of
Lonsdale Australia Limited when it imported into Australia
"Lonsdale" branded goods that were not licensed for the
Australian market.1
Cameron Harvey and Andrew McRobert of Norton Rose Australia ran
the proceeding for Lonsdale Australia.
The Proceeding
The proceeding was issued on 15 May 2012 and Lonsdale Australia
successfully obtained an interlocutory injunction the following
week. A week after that, the trial was held. Four days after the
trial, Gordon J delivered her judgment and found in favour of
Lonsdale Australia.
An expedited appeal was heard by the Full Court (Keane CJ, Yates
and Jagot JJ) on 28 August 2012. The judgment of the Full Court was
handed down this morning, two weeks after the hearing of the
appeal. The Full Court held unanimously in favour of Lonsdale
Australia.
The Facts
The "Lonsdale" branded clothing and footwear in this
case had been manufactured at the direction of the German licensee
of Lonsdale Sports Limited (Lonsdale Sports).
Lonsdale Australia and Lonsdale Sports are both UK-based
companies.
The respondents in the case were PW Inventory Pty Ltd and
Paul's Retail Pty Ltd (Paul's Retail).
Paul's Retail operates (as trustee) the "Paul's
Warehouse" chain of stores in Australia (Paul's
Warehouse Group).
The licence granted to the German licensee of Lonsdale Sports
was to promote, distribute and sell goods marked with particular
"Lonsdale" trade marks within a range of European
countries. In August 2011, the German licensee entered into an
agreement with a Cyprus-registered company named Unicell Ltd.
Pursuant to that agreement the German licensee sold almost 300,000
units of Lonsdale goods to Unicell Ltd. The Paul's Warehouse
Group acquired all of them (Paul's Goods)
through a US-based intermediary named TMS LLC.
Although Unicell is registered in Cyprus, title in the
Paul's Goods passed from the German licensee to Unicell Ltd in
the Peoples Republic of China (PRC). The
Paul's Goods never entered Europe. They were shipped from the
PRC to Colombo, Sri Lanka and then processed and reloaded in Sri
Lanka before being shipped to Sydney, Australia through Singapore.
Over 100,000 units of the Paul's Goods were seized by the
Australian Customs and Border Protection Service under trade mark
notifications that had been lodged by Lonsdale Australia.
The Decision
The key issue in the case was whether the Australian registered
trade marks had been applied to the Paul's Goods with the
consent of the registered owner of those marks.
The Full Court upheld Lonsdale Australia's argument that the
Paul's Goods had been sold in the PRC, being outside the
territory of the German licensee of Lonsdale Sports. The Full Court
held that to interpret the relevant licence agreement in the
contrary manner contended for by the Paul's Warehouse Group
would be to deny the "evident intention of the [contracting]
parties that the authorised supply of goods bearing the mark[s]
should be confined to the defined geographic area". Because
Lonsdale Sports had not given its consent there could be no consent
by the owner of the Australian trade marks, Lonsdale
Australia".
The Paul's Warehouse Group had also argued that it could not
have infringed the Australian trade marks of Lonsdale Australia
because it did not "use" those marks when it imported the
Paul's Goods into Australia. The Full Court dismissed that
argument. It held that an importer does use a trade mark when
importing branded goods for the purpose of sale in Australia.
Ultimately, whether the owner of Australian registered trade
marks has consented to the application of those marks to goods made
overseas will depend on the facts of the particular case. However,
the result in this case provides a powerful additional weapon to
trade mark owners in combating direct imports.
Footnotes
1Paul's Retail Pty Ltd v Lonsdale
Australia Limited [2012] FCAFC 130 (11 September
2012)
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