Australian brand owners may take comfort in the recent Appeal decision of Paul’s Retail Pty Limited v Lonsdale Australia Limited [2012] FCAFC 130 in which the full bench of the Federal Court of Australia upheld the decision of the trial judge in confirming that the parallel importation into Australia of apparel bearing the Lonsdale trade marks infringed the Australian trade marks.

The 11 September 2012 judgment creates significant implications for parallel importers of trademarked goods as they now bear the onus of proving not only that the Australian registered owner of the trademarks has consented to the application of the trade mark to the goods, but, also that the terms of the consent have been complied with.

Background

Lonsdale Sports Limited (LSL) is a UK company which owns the “Lonsdale” brand and trademarks.

In 2011 LSL assigned its Australian registered trademarks to a related company Lonsdale Australia Limited (Lonsdale Australia). LSL also granted the German company Punch GmbH (Punch) an exclusive licence to promote, distribute and sell Lonsdale goods in a specific area of Europe and the right to manufacture the goods anywhere in the World.

However between December 2011 and April 2012, a company by the name of PW Inventory Pty Ltd (PW Inventory) purchased “Lonsdale” branded clothing and footwear manufactured by Punch and imported it into Australia. This clothing and footwear was then sold by Paul’s Retail Pty Limited (Paul’s Retail).

As a result, in May 2012 Lonsdale Australia brought a trade mark infringement action against both PW Inventory and Paul’s Retail.

Decision

Section 123 of the Trade Marks Act 1995 provides that trademark rights are not infringed if the registered owner of the trade mark has consented to their application to the goods.

PW Inventory and Paul’s Retail argued that the Lonsdale marks were applied to the goods pursuant to the Punch licence. They argued that the licence constituted consent by LSL to that application on behalf of Lonsdale Australia by reason of LSL and Lonsdale Australia being members of a group of companies under common control and ownership.

However, the Court did not find it necessary to determine whether or not the licence did amount to consent from Lonsdale Australia. This was because the goods supplied by Punch were sold pursuant to the terms of the licence, and the case turned on this fact.

Under the terms of Punch’s licence, LSL authorised the manufacture of the goods anywhere in the world, and under those terms Punch applied the trademarks to the goods in China. However Punch was only entitled under the licence to sell the goods in a specified Territory. This Territory did not include China or Australia. 

It was established that the goods were sold by Punch to a third party in China outside the terms of Punch’s licence.

Therefore the Court concluded that because the terms of the consent (licence) were not complied with it did not cover the application of the trade marks to the relevant goods.

Implications

The judgment is interesting because it held that in order for trade marks to be applied with the consent of the trade mark owner, the conditions of the consent in relation to use of the trade marks must be complied with. The existence of consent at the instant of application of the marks to the goods now appears not to be sufficient to found a defence under s123 of the Trade Marks Act if the party to whom the consent was given “uses” the trade marks in relation to the goods outside the terms of the consent.