Australia: Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd (2016) 119 IPR 247; [2016] FCAFC 91

Last Updated: 11 February 2017
Article by Michael Deacon and Chris Bevitt

The Parties

Scandinavian Tobacco Group Eersel BV (STG) is the registered owner of various Australian trade marks. Trojan Trading Company Pty Ltd (Trojan) is the alleged infringer of the trade marks. The judgment of the Full Federal Court (Besanko, Nicholas and Yates JJ) relates to an appeal by STG and its Australian distributor, Scandinavian Tobacco Group Australia Pty Ltd, from the first instance Federal Court decision of Allsop CJ, who dismissed STG's claims against Trojan for trade mark infringement, passing off and contraventions of the Australian Consumer Law.

The Trade Marks

The Australian trade marks in issue were:

  • CAFE CREME (No. 761892) – registered in class 34 for "Cigars, cigarettes, tobacco, tobacco products, smokers' articles, lighters, matches";
  • HENRI WINTERMANS (No. 179680) – registered in class 34 for "Manufactured tobacco, cigars, cigarillos and other manufactured tobacco products";
  • HENRI WINTERMANS (No. 1529889) – registered in class 34 for "Cigarettes, tobacco, tobacco products, smokers' requisites, lighters and matches"; and
  • LA PAZ (No. 643779) – registered in class 34 for "Cigars and cigarillos",

(all together referred to as the STG Marks).

Background and Issues

STG manufactures cigars in Belgium, Holland and Indonesia, during which time the STG Marks are applied to the packaging of the cigars by or under the control of STG.

Trojan imported into Australia genuine STG cigars which had been manufactured and packaged by STG overseas. Trojan then unwrapped and re-packaged the cigars for compliance with the Tobacco Plain Packaging Act 2011 (better known as Australia's "plain packaging laws"), which involved Trojan replacing the original packaging with new packaging and then applying to the new packaging the STG Marks that were on the original packaging.

STG claimed that the importation and sale of the re-packaged cigars by Trojan infringed the STG Trade Marks pursuant to section 120(1) of the Trade Marks Act 1995. Section 120(1) states that "a person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered".

Under section 121, a person may also infringe a trade mark by doing certain prescribed acts in connection with the trade mark or the packaging of the goods, as long as those acts have been prohibited by the trade mark owner by notice applied to the goods. Applying the trade mark to goods after the state, condition, getup or packaging in which they were originally offered to the public has been altered is one of the acts which may be prohibited by notice from the trade mark owner. Importantly, STG did not apply any such notice to the original packaging of its cigars.

Trojan relied on section 123 to defend the infringement claim, which states that "in spite of section 120, a person who uses a registered trade mark in relation to goods that are similar to [or the same as] goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark".

STG also claimed that Trojan's conduct constituted passing off and contraventions of sections 18 and 29 of the Australian Consumer Law. Those claims were dismissed and are not discussed here.

Previous Decision

At first instance, Allsop CJ found that the application of the STG Marks by Trojan to the re-packaged cigars was an infringing use of the marks under section 120(1). However, Allsop CJ also found that Trojan had a defence to infringement under section 123.

STG argued that the phrase "has been applied to... with the consent of the registered owner" in section 123 refers to the alleged infringer's application of the trade mark, not to any earlier application of the mark by or under the control of the trade mark owner (in which case, Trojan's re-application of the trade mark would not have been protected by section 123). Conversely, Trojan argued that section 123 is directed to any application of the trade mark by or with the consent of the owner, which means the defence applies if the trade mark has at any time been applied to the goods by or under the control of the owner.

Chief Justice Allsop agreed with Trojan, noting that section 123 only requires that the trade mark has been applied to the goods with the consent of the trade mark owner at some time in the past. Section 123 does not require the goods to continue to bear the mark as applied by the owner. In other words, section 123 will provide a defence in connection with the later use of a trade mark on or in relation to goods, such as re-packaging the goods with the same trade mark, as long as the trade mark was initially used on or in relation to those goods by or with the consent of the trade mark owner. This interpretation was considered to be consistent with the primary purpose of section 123 to protect non-infringing uses of trade marks to indicate a connection between the goods and the trade mark owner, for example in the context of advertising and sale by retailers.

The Decision

The Full Federal Court upheld Chief Justice Allsop's decision stating:

"The language of s123(1) refers to a mark that has been applied to or in relation to goods by or with the consent of the registered owner. The operation of the section is not expressly or impliedly confined to a situation in which the goods still bear the mark as applied by the owner. The temporal requirement of the section will be satisfied if at some time in the past, which may be after the time of manufacture, the mark has been applied to or in relation to goods by or with the consent of the owner. If those goods are later sold by a person in circumstances which involve him or her using a mark that was previously applied by or in relation to the goods by the owner then s123(1) will be engaged."

As a result, the Court held that Trojan's repackaging of the cigars with the original STG Marks fell within the scope of section 123 and that Trojan therefore had a valid defence to STG's trade mark infringement claim.

The Significance

This decision may cause serious concern for trade mark owners wishing to control the quality and nature of their product packaging, particularly where the quality of the product packaging is an important aspect of the owner's branding and goodwill. Applying an appropriate notice to product packaging as contemplated by section 121 is critical to provide grounds to stop importers altering product packaging in certain cases. Trade mark owners could also have other options available in addition to an action for trade mark infringement. Actions for passing off or breach of the Australian Consumer Law could be available, for example if the trade mark owner is able to establish that the re-packaging misleads or deceives Australian consumers or there is a misrepresentation that the re-packaging was carried out with the trade mark owner's consent. The specific circumstances will generally dictate whether these other options are available to trade mark owners.

Read full Scandinavian Tobacco v Trojan judgment

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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