- The fact that goods to which a trade mark has been applied have been sourced from a related entity or member of the same corporate group as the Australian registered trade mark owner will not be sufficient to give rise to an implication, for the purposes of the defence, that the importer or seller of the goods has the necessary consent.
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 (section 120 of the Trade Marks Act 1995 (Cth)).
However, there is a defence under section 123, which says that there is no infringement if the trade mark has been applied with the consent of the registered owner of the trade mark in Australia.
In Brother Industries Ltd v Dynamic Supplies Pty Ltd  FCA 1490, Justice Tamberlin held that a respondent who is alleged to have infringed a registered trade mark will not be successful in establishing consent as a defence unless that consent, be it express or implied, came from the entity that is the registered owner of the trade mark.
Brother Industries Ltd (Brother Japan) and its Australian subsidiary, Brother International (Aust) Pty Ltd (Brother Australia), commenced proceedings in the Federal Court of Australia against Dynamic Supplies Pty Ltd for infringement of registered Australian trade marks of Brother Japan for the word "BROTHER". The alleged infringing conduct of Dynamic was the sale in Australia of unbranded, generic printer drum units in packaging to which the "BROTHER" trade marks were applied.
Dynamic sought to rely on the defence of consent. Until 2003, Dynamic sourced almost all of the Brother products it sold or distributed from Brother Australia or its authorised distributors. This arrangement changed in early 2003 when Dynamic sourced three shipments of units at a substantially lower price from another supplier, Discover Group Inc. Dynamic relied on evidence that Discover sourced its Brother products from All Day Trading, an authorised distributor of Brother products in the USA.
Accordingly, Dynamic claimed that the evidence established that, on the balance of probabilities, the units it imported from Discover were sourced originally from Brother International Corporation (Brother America), a wholly owned subsidiary of Brother Japan. It argued that, as the chain of supply of the products traced back to Brother America, it had implied consent for the purposes of section 123 of the Act.
Justice Tamberlin noted that the onus was on Dynamic, raising the defence, to establish it. Further, in order to make out a defence under section 123 of the Act, Dynamic must demonstrate that the application of the "BROTHER" trade mark was done with Brother Japan's express or implied consent as it was the registered owner of the trade mark in Australia. He held that Dynamic failed to establish such consent for two main reasons:
- First, Dynamic did not establish that the chain of supply of the impugned products traced back to Brother America, let alone to Brother Japan. Justice Tamberlin held that the evidence did not demonstrate that the specific units and packaging were sold by Brother America to Discover. Without establishing this essential link in the supply chain, Dynamic could not show any consent, express of implied, by Brother America or Brother Japan for the purposes of section 123 of the Act.
- Second, even if Brother America was part of the supply chain, Dynamic did not demonstrate that Brother Japan, the registered owner of the relevant trade marks in Australia, expressly or impliedly consented to the application of its trade mark to or in relation to the goods in question. No consent, whether express or implied, was given by Brother Japan to any person to apply its registered trade mark to the generic products. To the contrary, Brother Japan had distanced itself from the OEM units, manufacturing them only as unbranded products and selling them only through a confidential arrangement.
Justice Tamberlin went on to note that, in any event, a finding that Brother America was part of the supply chain of the impugned products would not allow Dynamic to rely on section 123 of the Act because it is the consent of the registered owner which must be acquired. He observed that "the situation where consent is not acquired from the registered owner of the trade mark but from a related entity in its corporate group has not, so far as I am aware, been considered in Australian law". Justice Tamberlin expressed the view that Brother Japan's consent for the purposes of section 123 of the Act was not to be implied from the fact that another member of the Brother corporate group may have, contrary to his finding, given its consent.
Accordingly, Justice Tamberlin held that Dynamic's use of the "BROTHER" trade mark was not done with the consent of Brother Japan. Its infringement of Brother Japan's Australian trade marks was thus not excused by section 123 of the Act.
Implication for lawyers advising clients
The view taken by the Court in this instance has significant implications for lawyers advising businesses that use a registered trade mark owned by another entity. Lawyers should ensure that their clients obtain the written consent of the registered owner of the trade mark and not simply rely on the representations of third parties, including related entities in the corporate group of the registered owner.
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.