Paul's Pushes Parallel Importers' Defence

Jacqueline Kroll and John Fairbairn

 

Although the trial judge stated that it was not a case about parallel or 'grey' marketing, the judgment in Lonsdale Australia Limited v Paul's Retail Pty Ltd [2012] FCA 584 has significant implications for the practice in Australia, which has become increasingly attractive in recent times due to a high Australian dollar.

 

In yet another case in which the court rejected the application of the so called parallel importation defence, Paul's Retail Pty Ltd (Paul's) was found to have infringed Lonsdale Australia Ltd's (Lonsdale Australia) trade mark rights by importing sporting goods manufactured by a licensee of a company within the Lonsdale corporate group.

 

Background

 

Lonsdale Australia is the registered owner of a number of trade marks protecting the Lonsdale brand (Lonsdale Australia Marks). Punch GmbH (Punch) is licensed by Lonsdale Sports Limited, a company related to Lonsdale Australia, to promote, distribute and sell in Europe clothing bearing certain Lonsdale trade marks (Licensed Marks).

 

Paul's purchased and imported sporting apparel that had been manufactured by Punch, which featured Lonsdale Australia marks. Importantly, some of those trade marks were not the Licensed Marks and goods that Lonsdale Australia manufactured differed from those of Punch in terms of design, composition and quality.

 

Lonsdale Australia sued for trade mark infringement seeking, amongst other things an injunction restraining the sale of the goods in the Australian market.

 

This is not the first time Paul's has been found liable for importing sporting apparel. Earlier this year, the Full Court handed down its decision[1] relating to the use of the name 'Greg Norman' and the stylised depiction of the shark (Greg Norman Marks). In that case, Paul's had imported goods from India bearing the Greg Norman Marks, which were then sold in Australia. The company that manufactured the goods was a licensed manufacturer of Greg Norman branded goods in India, but the court found that they had been manufactured for sale outside of its licensed territory and consequently were not made with the trade mark owner's consent i.e. they were not genuine goods.

 

In this more recent case concerning Lonsdale goods, the Court considers the application of the parallel importation defence where the goods are 'genuine' in the sense that they were manufactured within the terms of a licence, albeit granted by a related body corporate of the Australian trade mark owner.

 

First Instance Decision

 

Paul's sought to rely on the Champagne Heidsieck principle, namely that there can be no infringing use where the goods are 'genuine goods'[2] (i.e. goods to which the trade mark owner has affixed the mark) and section 123 of the Trade Marks Act 1995 (the Act), which 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.

Paul's argued that there could be no infringing use as the trade marks were legitimately applied by Punch GmbH.

 

The court considered that Paul's had mischaracterised the issue and that what needed to be determined was whether Lonsdale Australia's exclusive rights in the Lonsdale Australia Marks had been infringed.

 

Gordon J found that at least some of the trade mark had not been legitimately applied by Punch and therefore could be considered 'counterfeit goods'. More relevantly to parallel importation, the judge found that:

1. Consistent with the approach taken by the Full Court in E&J Gallo Winery v Lion Nathan Australia Ltd (2009) 175 FCR 386, Champagne Heidsieck had been usurped by s 123 of the Act and the principle is not relevant to the question of infringement under s 120 of the Act; and
2. Even if the Champagne Heidsieck principle is applied, properly construed it requires consideration of whether the trade marks in issue had been applied by the 'registered owner' (or its licensee) i.e. similar considerations to those under s 123; and
3. In order to rely on s 123 of the Act, Paul's bore the onus of establishing that Lonsdale Australia had consented, expressly or impliedly, to the application of the Lonsdale Australian Marks. Gordon J commented that the authorities reveal three ways in which consent under s 123 might be established — chain of title or supply chain, related entities within the same corporate group and other conduct. Those categories are not closed.

In this case, Paul's failed to discharge that onus. In particular, the judge found:

1. Lonsdale Australia played no role in the application of a mark to or in relation to any of Paul's goods;
2. The corporation that applied the trade marks to the goods (Punch) was not a member of the same corporate group as Lonsdale Australia;
3. In any event, the principal authority regarding implied consent in the case where the registered owner and the entity applying the mark are in the same corporate group, Revlon Inc v Cripps and Lee Ltd [1980] FSR 85, has not been definitively accepted within Australia on this point: see Brother Industries Ltd v Dynamic Supplies Pty Ltd (2007) 163 FCR 530; and
4. There was no evidence to establish that Lonsdale Australia took any step, or failed to take any step, that could be considered consent by it to the application of the Lonsdale Australia Trade Marks to the Paul's goods.

Application for leave to appeal[3]

 

Paul's has been granted leave to appeal and the hearing of that appeal has been expedited to August 2012 due to the significant financial costs and burdens which would not be recoverable even if the judgment was overturned. In the application for leave to appeal, Paul's summarised its proposed case as:

1. Seeking a reversal of the finding that the marks had been applied without the consent of Lonsdale Australia;
2. The Punch licence included a licence of the LONSDALE word mark, which is the form that conventionally embraces all uses in all forms of the word mark; and
3. The Champagne Heidsieck principle continues to apply in Australia.

This case follows a recent trend in Federal Court decisions to give s 123 of the Trade Marks Act a narrow application and thereby make parallel importation much harder. As things stand, a trade mark owner's strategy of having different but related entities controlling trade mark portfolios in different territories may be sufficient to prevent parallel importation. Whether the Full Court is able to provide greater certainty on this issue following Paul's appeal remains to be seen, but the decision is likely to have significant implications for the practice of parallel importation in Australia.

 

 

 

[1] Paul's Retail Pty Ltd v Sporte Leisure Pty Ltd [2012] FCAFC 51.

[2] Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330.

[3] Paul's Retail Pty Ltd v Lonsdale Australia Limited [2012] FCA 724.