Australia: Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited (2016) 335 ALR 144; (2016) 117 IPR 489; [2016] FCA 280

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

The Parties

Playgro Pty Ltd (Playgro) is the registered owner of various Australian trade marks. Playgo Art & Craft Manufactory Limited (Playgo Art) and Playgo Toys Enterprises Limited (Playgo Enterprises) are the alleged infringers of the trade marks. Both Playgo Art and Playgo Enterprises are jointly referred to as "Playgo" where relevant. This Federal Court judgment (Moshinsky J) relates to Playgro's claims that Playgo infringed Playgro's trade marks by applying a substantially identical or deceptively similar trade mark to products manufactured by Playgo and/or that Playgo Enterprises is liable as a joint tortfeasor for any infringement by retailers arising from the promotion and sale of those products in Australia.

Both Playgo Art and Playgo Enterprises are based in Hong Kong.

The Trade Marks

Playgro is the owner of Australian trade mark registration numbers 740357 and 1330413 for PLAYGRO and numbers 954929, 970023, 1149144 and 1330416 for the following logo:

(all together referred to as the Playgro Marks).

Amongst other things, the relevant Playgro Marks are registered in class 28 for "games and playthings" and "toys".

Playgo is a toy manufacturer and wholesaler based in Hong Kong which applies the following logo to its toys:

(the Playgo logo).

Background and Issues

Playgo supplied toys bearing the Playgo logo to Myer and a subsidiary of Woolworths in China, with the toys subsequently being exported and sold by Myer and Woolworths in Australia. Ownership of the toys passed from Playgo to Myer and Woolworths in China and Playgo had no control over the toys once they were delivered to Myer and Woolworths under the applicable commercial supply terms. Considering the above, all of Playgo's conduct occurred outside of Australia and Playgo had no involvement in the export or sale of the toys from China to Australia. However, Playgo knew that all the toys were to be shipped to and sold in Australia.

Playgro claimed that Playgo infringed its Playgro Marks by using as a trade mark the Playgo logo in respect of toys and playthings contrary to section 120(1) of the Trade Marks Act 1995.

Playgro also claimed that Playgo Enterprises should be liable as a joint tortfeasor for any trade mark infringement by Myer and Woolworths resulting from their promotion and sale of the toys in Australia, even if the court held that Playgo Enterprises had not used the Playgo logo in Australia for the purposes of section 120(1).

Playgo claimed that it never used the Playgo logo as a trade mark in Australia and therefore could not be liable for infringement under section 120(1). It argued that a finding to the contrary would mean that any foreign manufacturer could be liable for infringement in Australia even if it was unaware of the infringing conduct.

The primary issues for the Court were whether:

  1. the Playgo logo was substantially identical with, or deceptively similar to, the Playgro Marks;
  2. Playgo had "used" the Playgo logo for the purposes of section 120(1); and
  3. Playgo Enterprises was liable as a joint tortfeasor for any infringing conduct of Myer or Woolworths.

The Decision

Substantial identity and deceptive similarity

Not surprisingly, Moshinsky J held that the Playgo logo was deceptively similar to the Playgro Marks.

Justice Moshinsky accepted that there are a number of registered trade marks with the prefix "play". However, Moshinsky J considered that the Playgo logo and Playgro Marks were distinguishable from the other "play" marks and were deceptively similar given the strong visual and phonetic similarities between the "go" and "gro" aspects of the marks, which caused the marks to look and sound similar when considered as a whole. Taking into account the imperfect recollection of consumers, Moshinsky J considered that there was a real and tangible danger of purchasers being caused to wonder if two products sold by reference to the Playgo logo and Playgro Marks came from the same source.

"Use" of the Playgo logo

Justice Moshinsky applied the same reasoning as the High Court in Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd [1967] HCA 51 and E&J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 in deciding that Playgo had used the Playgo logo in Australia for the purposes of infringement, even though those cases were concerned with "use" of a trade mark for the purpose of non-use proceedings (and accordingly, unlike in this case, a finding of use in Australia was highly beneficial to the foreign owner in defending their trade marks). In Estex, the High Court confirmed that overseas manufacturers continue to use their trade marks in Australia after title to the goods passes to Australian retailers as long as the goods remain in the course of trade. In addition, the High Court in Gallo held that the foreign manufacturer's knowledge of product sales or use of the mark in Australia (or lack of knowledge, in fact) was not relevant to or necessary for establishing use of the mark in Australia by a foreign entity. According to Moshinsky J, the consideration of "use" in Estex and Gallo should not be limited to non-use cases and applied equally to the context of an infringement case.

Noting that Playgo was aware that the toys were intended to be sold by Myer and Woolworths in Australia, Moshinsky J held that Playgo continued to use the Playgo logo and the logo continued to operate as a trade mark indicating that Playgo was the source of the toys while the toys remained in the course of trade, even if this was after the initial application of the logo to the toys and transfer of title to the products in China. In this case, and noting that the toys were being supplied by Playgo to Myer and Woolworths for the purpose of sale in Australia, the toys remained in the course of trade while they were promoted in Australia by Myer and Woolworths and until such time as they were ultimately purchased by customers in Australia.

Much of Justice Moshinsky's decision on "use" appeared to be based on the fact that Playgo was aware from the outset that the toys were intended to be sold in Australia. It is unclear if Moshinsky J would have arrived at the same conclusion if Playgo was held to have no knowledge of the intended sale of the products in Australia. In fact, Moshinksy J specifically pointed out that this question did not need to be considered. However, applying the reasoning in Gallo, it may be the case that foreign manufacturers and distributors will still be liable for infringement in similar circumstances even without knowledge of intended or actual sales or use of the mark in Australia. While Moshinsky J specifically left this question open (because it was not relevant on the facts of the case), this would be a surprising result and is unlikely to correctly represent the law on trade mark infringement in Australia.

No joint tortfeasors

Despite finding that Playgo Enterprises was directly liable for infringing the Playgro Marks, Moshinsky J held that Playgo Enterprises would not have been considered a joint tortfeasor for any trade mark infringement by Myer and Woolworths resulting from their promotion and sale of the toys in Australia.

A person must share a common design to participate in or induce another person to commit the infringing act to be liable as a joint tortfeasor. In this case, Moshinsky J held that Playgo Enterprises did not share a common design with Myer or Woolworths to sell the toys in a manner which infringed the Playgro Marks, they simply shared a commercial relationship as vendor and purchaser.

Playgo Enterprises and Myer/Woolworths were not acting in concert for the common purpose of committing or furthering an infringing act. At best, Playgo Enterprises merely facilitated the infringing conduct by Myer and Woolworths by initially selling them the toys bearing the Playgo logo.

The Significance

The finding that Playgo was directly liable for trade mark infringement in this case has significant implications for overseas manufacturers and suppliers supplying overseas where they know that the goods will ultimately be promoted and sold in Australia. It does however provide Australian trade mark owners with some comfort that foreign distributors may not be able to avoid liability for trade mark infringement in Australia by simply restricting their commercial terms, activities and operations to other jurisdictions. Of course, it may not be easy for the Australian trade mark owner to prove that the foreign supplier knew of the intended destination.

Read full Playgro v Playgo 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.

Shelston IP ranked one of Australia's leading Intellectual Property firms in 2015.

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