Australia: Protecting Your Brand from Parallel Importation
Addisons Insolvency Update

Type : Focus Paper

Brand owners have long been concerned about the competition created by goods containing trade marks legitimately purchased in another market and imported and sold in another market for which those goods are not authorised, otherwise known as 'parallel importation'.

In an important decision for brand owners, the Full Court of the Federal Court has recently prevented an Australian retailer from selling parallel imported garments bearing the trade mark of the brand owner.

The Facts¹

Lonsdale Australia Ltd (Lonsdale Australia) own particular trade marks relating to the Lonsdale brand in Australia.

Lonsdale Sports Limited (LSL), a related entity to Lonsdale Australia, own particular trade marks relating to the Lonsdale brand in Europe.

LSL provided a licence to Punch GMbH (Punch) to promote, distribute and sell clothing bearing the Lonsdale marks owned by LSL, in the territory of Europe.

Lonsdale Australia previously supplied Paul's Retail with Lonsdale branded goods.

Punch sold a number of Lonsdale branded goods to Unicell Ltd (a company based in Cyprus). Further down the supply chain, Paul's Retail managed to purchase and import into Australia Lonsdale branded goods that contained Lonsdale trade marks and which were manufactured by Punch.

A number of the Lonsdale branded goods were seized by Customs for potential trade mark infringement.

Lonsdale Australia sought to stop Paul's Retail from importing and selling the Lonsdale branded goods by way of injunction, alleging the goods infringed the trade mark rights of Lonsdale Australia.

Trial Judge's Decision²

At trial, the parties accepted that the trade marks appearing on the goods imported by Paul's Retail were substantially identical and/or deceptively similar to Lonsdale Australia's registered trade marks (some of the Australian Lonsdale trade marks differ from the European Lonsdale Marks).

Paul's Retail argued, relying on the defence available under Section 123 of the Trade Marks Act 1995 (Cth), that it had not infringed Lonsdale Australia's trade mark as the Lonsdale trade marks on the goods it was importing and selling in Australia had been applied to the goods by Punch with the consent of the trade mark owner, LSL. The trial judge, Gordon J, considered that the proper question to be determined was whether Lonsdale Australia's rights in the Lonsdale trade marks had been infringed by Paul's Retail.

Her Honour found that the relevant trade mark owner from whom consent was necessary was Lonsdale Australia, as it was the owner of the trade marks in Australia, and that Paul's Retail had the onus of adducing evidence to establish that the marks had been applied with the 'consent' of Lonsdale Australia.

As Paul's Retail was unable to establish that the Lonsdale trade marks had been applied with the consent of Lonsdale Australia, its attempt to rely on the defence under Section 123 of the Trade Marks Act failed.

Full Court Decision

Paul's Retail appealed the decision of Gordon J to the Full Court of the Federal Court. Paul's Retail sought a reversal of Gordon's J's decision on the basis that the trade marks had been applied to the goods with the consent of LSL, a related entity of Lonsdale Australia.

The Full Court affirmed the decision of Gordon J and dismissed the appeal.

On the facts, the Full Court found that the consent provided by LSL (which licensed Punch to manufacture and distribute goods bearing the Lonsdale mark) was limited in its terms to a particular territory which was defined in the agreement as 'Europe'. Therefore, Punch were not authorised to apply the Lonsdale marks outside of Europe. Accordingly, Paul's Retail did not have the consent of Lonsdale Australia, and therefore the goods it had imported were found to infringe Lonsdale Australia's trade mark rights.

Conclusion

This is the second case this year in which Paul's Retail has unsuccessfully used a defence based on Section 123 of the Trade Marks Act in respect of parallel imported goods. In an earlier Federal Court decision³, the Full Court found that Paul's Retail infringed Greg Norman's 'Shark' trade mark by importing goods in Australia bearing the 'Shark' trade make without a license of the owner of the 'Shark' trade mark. Again, this decision was based on the fact that the licensee, who had applied the 'Shark' trade make to the goods with the consent of the trade mark owner, was only licensed to use the trade mark in India.

Footnotes

The assistance of Melissa Corbutt, Solicitor, of Addisons in the preparation of this article is noted and greatly appreciated.

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.