Parallel Importing and s123 of the Trade Marks Act

A recent decision of Tamberlin J in the Federal Court of Australia has provided some interesting insights into the legality (or otherwise) of parallel importing of trade marked goods. See Brother Industries Ltd v Dynamic Supplies Pty Ltd [2007] FCA 490 When it comes to parallel importing of trade marked goods or grey imports, a key provision in the Australian legislation is s123 of the Trade Marks Act (Cth) 1995 . Section 123 provides that: a person who uses a registered trade mark in relation to goods that are similar to 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.

Tamberlin J’s decision makes it clear that the onus is on the defendant to establish the existence of the necessary application of the trade mark or consent to the application of the trade mark by the trade mark owner. In addition, and more importantly, his obiter comments made it clear that it is not sufficient to demonstrate that another member of the trade mark owner’s corporate group applied the trade mark or consented to the relevant application. The facts of the case are relatively straightforward.

Dynamic Supplies acquired, via the United States, some printer drum units which were made by the Australian trade mark owner, Brother Industries Ltd, a Japanese company, ( Brother Japan ). Importantly though, Brother Japan did not place its trade mark on these printer drum units. Such products are known as ‘original equipment manufacturer’ products ( OEM’s ).

The OEM’s acquired by Dynamic Supplies via the United States were sold in packaging using the Brother Japan trade marks and which purported to be Brother packaging. Tamberlin J found that, in fact, the packaging was counterfeit and that packaging was neither made by or with the consent of Brother Japan. Up to that point, the case was somewhat unremarkable.

Brother Japan did not apply its trade mark to the goods or the related packaging and did not consent to such application. However, Dynamic Supplies claimed that the evidence suggested that the OEM’s had been sold via Brother International Corporation ( Brother America ), an American company that is part of the global Brother corporate group, and that the packaging originated from Brother America. Tamberlin J rejected that proposition as a matter of fact.

But he then went on to state that even if Brother America had applied the trade mark to the packaging, s123 would not apply: I am of the view that Brother Japan’s consent for the purposes of s123 of the Act is not to be implied from the fact that another member of the Brother corporate group may have, contrary to my finding, given its consent. What remains unclear from the judgment is what else is required to demonstrate the existence of implied consent by the actual trade mark owner to the application of the trade mark. For example, in the English Court of Appeal decision of Revlon Inc v Cripps and Lee [1980] FSR 85, the majority found consent to use of the plaintiff’s trade mark (a different concept from consent to application) on the basis that the product in question, Revlon shampoo, was marketed internationally by the entire corporate group as a house mark.

Consequently, use of the trade mark by one member of the corporate group was equivalent to use by another in the context of the evidence in that case. In contrast, the third member of the Court, Lord Justice Templeman, found that it was sufficient in itself that the plaintiff and the company were part of the same corporate group and he regarded any use by one as necessarily use by another. Tamberlin J’s judgment clearly rejects Templeman LJ’s approach in so far as it might, by analogy, apply to s123 of the Australian Act.

Whether Tamberlin J intended to go even further and suggest that evidence of the general corporate relationship between companies coupled with evidence of their international marketing strategy may also be insufficient to establish consent to the application of a trade mark is unclear. The real effect of s123 will depend on the willingness or otherwise of Australian judges to imply the existence of consent to the application of a trade mark to or in relation to goods. This case suggests that s123 may not provide an easy legal ‘out’ for parallel importers who will certainly have to think carefully about the basis on which they claim that a trade mark owner has impliedly consented to the application of their trade marks. For more on the evidence required, see our discussion of the recent Cussons case here .

Mark Davison. Tue Jan 2008 08:01 (11 months, 2 weeks ago)