Trade Mark News & Information

Trademark Attorney-Federal Court-Parallel imports repackaging appeal

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2016] FCAFC 91 (24 June 2016)

Unsuccessful appeal by Scandinavian Tobacco Group (STG). The Full Federal Court upheld the primary judge’s decision reported here that Trojan’s conduct in re-packaging parallel imported tobacco products did not constitute trade mark infringement or otherwise constitute misleading or deceptive conduct or passing off.

Significantly, the Full Court reviewed earlier authority and confirmed, at paragraph 56, that “a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of manufacture will have used the mark as a trade mark”.

Hence, Trojan’s conduct in removing the trade marks and re-applying them in the course of re-packaging did constitute trade mark use. The issue was whether infringement could be avoided through the application of s123 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”.

At paragraph 52, the Full Court commented that it is necessary to give full effect to the “wide language” of s123. Also, while the burden of proof is on the alleged infringer, “in a particular case, the evidential burden may quickly shift to the registered owner since it will usually be best placed to know whether a registered trade mark has been applied with or without consent”.

At paragraph s63, the Full Court noted: “It is important to keep in mind when interpreting s 123(1) that a registered trade mark may be used in many different ways which do not involve physically applying the mark to goods. Trade mark use can also occur in relation to goods in print and electronic advertising, invoices, bills of lading and other commercial documents, or even in conversations between a salesperson and a customer, in many different markets involving the supply of all manner of goods. If s 123(1) is to operate as intended (ie. reflecting the principle in the Champagne Heidsieck case) it must be interpreted in a manner that allows it to apply in the wide variety of circumstances in which a mark may be used in relation to the goods.”

The Full Court went on to state, at paragraph 65: “The operation of the section is not expressly or impliedly confined to a situation in which the goods still bear the mark as applied by the owner. The temporal requirement of the section will be satisfied if at some time in the past, which may be after the time of manufacture, the mark has been applied to or in relation to goods by or with the consent of the owner. If those goods are later sold by a person in circumstances which involve him or her using a mark that was previously applied by or in relation to the goods by the owner then s 123(1) will be engaged.”

Further, at paragraph 66, because of the wide variety of circumstances where a trade mark may be “applied in relation to” the relevant goods, the Full Court noted “there need not be any direct physical relationship between the registered owner’s use of the mark (which might be in a television commercial) and the goods in relation to which the mark must be taken to have been applied”.

Given this analysis, the Full Court readily found that the relevant trade marks had previously been applied to the packaging of the goods by STG and that Trojan could rely on s123 to avoid infringement.

There was also a brief discussion of s121 which allows the registered owner to be display on goods (registered goods) in respect of which the trade mark is registered, or on their package, or on the container in which they are offered to the public, a notice (notice of prohibition) prohibiting certain act, namely:

(a)  applying the trade mark to registered goods, or using the trade mark in physical relation to them, after the state, condition, get-up or packaging in which they were originally offered to the public has been altered;

(b)  altering, or partially removing or obliterating, any representation of the trade mark applied to registered goods or used in physical relation to them;

(c)  if the trade mark has been applied to registered goods, or used in physical relation to them, together with other matter indicating that the registered owner or authorised user has dealt with the goods–removing or obliterating, totally or in part, any representation of the trade mark without totally removing or obliterating the other matter;

(d)  applying another trade mark to registered goods or using another trade mark in physical relation to them;

(e)  if the trade mark has been applied to registered goods or used in physical relation to them–using on the goods, or on the packaging or container of the goods, any matter that is likely to injure the reputation of the trade mark.

Significantly, s123 does not provide an exception or defence to infringement under s121. However, s121 is rarely invoked due to the impracticability of displaying a notice of prohibition on the relevant goods or their container or packaging.

STG argued that s121 is of limited benefit because the phrase “using the trade mark in physical relation to” is likely to be construed very narrowly as requiring being incorporated into the structure of the goods, but the Full Court did not agree with this interpretation and pointed out, at paragraph 76, that “there are many examples to which one can point where a mark is not used upon goods, but is used in physical relation to them including the use of a display sign reproducing the mark in close physical proximity to the goods in a window display”.

There was no discussion of the limitations specifically arising from the tobacco plain packaging laws in attaching a notice of prohibition to tobacco goods or their packaging.

The Full court also dismissed STG’s appeal on the passing off and misleading or deceptive conduct grounds. STG contended that a purchaser of re-packaged cigars bearing its trade marks would assume that the packaging had been done by or with the authority of the brand owner. However, there was no evidence to show that either retailers or consumers would make this assumption. At paragraph 85, The Full court stated: “There may be cases involving particular kinds of products in which it might be possible to infer, in the absence of any other specific evidence to support the inference, that purchasers will assume that the products had not been re-packaged or at least not without the authority of the manufacturer. This may well be true of some pharmaceutical products especially if they are supplied in tamper free packaging. But we do not think it is open to draw any such inference in this case in the absence of evidence to indicate that either retailers or customers involved in the sale and purchase of cigars packaged in accordance with the plain packaging laws would make any such assumption. In our view, STG’s submissions on this point do not rise above mere conjecture. We are not persuaded that the primary judge’s decision on this point was wrong.”