Trade marks

A case of (un) parallel imports

1 Comment / Trade marks / / / , , , , ,

BTB holds a licence to make and sell “Greg Norman” branded clothing in India from Greg Norman Collection Inc (GNC). GNC is the “head licensor” of the “Greg Norman” trade marks registered in, amongst other places, India and Australia.

By clause 2.4 of the licence agreement, BTB agreed not to sell the branded clothing it made outside India without GNC’s consent:

LICENSEE acknowledges that this License is limited to the TERRITORY defined herein, and agrees not to sell LICENSED PRODUCTS to anyone other than its regular retail customers in the TERRITORY in the normal course of trading, and further agrees that it will not sell LICENSED PRODUCTS destined directly or indirectly for sale outside the TERRITORY without the prior written approval of GNC.

Sunsport operates mainly in Pakistan, but also has a representative in Singapore, Mr Wadhwani. Mr Wadhwani also operates a business, PT International which, amongst other things, supplies product to the second respondent in Australia.

Sunsport told Mr Wadhwani that it could source genuine Greg Norman branded merchandise from BTB. Mr Wadhwani told the principal of the second respondent, Mr Dwyer, this. Mr Dwyer checked out GNC’s website and established that BTB was an authorised licensee of GNC and placed an order with Mr Wadhwani from BTB’s catalogue.

Sunsport placed an order with BTB for a shipment of clothing, apparently to be delivered to Pakistan via Singapore. When the shipment reached Singapore, however, PT International on sold the goods to Mr Dwyer’s company, which imported them into Australia.

Nicholas J has found that in doing so Mr Dwyer’s company infringed the “Greg Norman” trade marks.

One particularly interesting issue is why Mr Dwyer’s company was unable to rely on s 123 of the Trade Marks Act 1995: while BTB was in fact a licensee of the relevant trade marks, Nicholas J still found that the trade marks had not been applied to the particular goods with the trade mark owner’s consent. The main reason for this conclusion was that BTB’s licence was limited to India. Although BTB made and marked the goods in India where it did have a licence, it had no licence to sell “Greg Norman” merchandise outside India. At [78] his Honour said:

Where a registered owner consents to another person applying the registered mark to goods on condition that the goods must not to be supplied outside a designated territory, the registered owner would not usually be regarded as having consented to the application of the mark to goods which the other person knows at the time he or she applies the mark are to be supplied by him or her outside the territory.

However, there may be more to it than that. It would appear that BTB made a special batch of the merchandise to fill the order from Sunsport. Also, the evidence showed that BTB did not include the sale in its royalty reports to GNC. While strictly obiter, his Honour went on to note at [89]:

I would not be prepared to infer that products manufactured by BTB in respect of which GNC had received royalty payments were products to which the second applicant’s marks had been applied without the second applicant’s consent in the absence of convincing evidence to that effect. Of course, as I have previously found, royalties were not paid on the products shipped to Sunsports. ….

and went on to reject an argument that the goods imported were of an inferior quality.

If nothing else, this decision shows just how high the hurdle may be for someone who want to engage in parallel importing. On the other hand, if the receipt of royalties has the significance identified at [89], trade mark owners will need to scrutinise statements from their licensees very carefully to ensure that they are not “implicitly” licensing a parallel importer. The implicit licence, or licence by acquiescence, however,  might seem very hard in cases where royalty reports don’t come in for several months (or longer) unless, perhaps, there be a pattern of acquiescing.

A second interesting point lies in his Honour’s comments on the Champagne Hiedsieck case. In that case, Clauson J had held that there is no use of a trade mark as a trade mark by someone when the goods in question are goods to which the trade mark owner had actually applied the mark. That ruling has been upheld and applied many times.

I had thought the High Court’s references to Champagne Hiedsieck in its Gallo ruling showed its continuing relevance.

Nicholas J points out, however, that the High Court stated that s 123 embodies the principle in Champagne Hiedsieck. As a consequence, applying conventional principles of statutory interpretation, his Honour concluded that the enactment of s 123 has operated as a kind of statutory repeal or displacement of Champagne Hiedsieck. His Honour explained:

[98] The question whether a person who sells goods to which a trade mark has been applied with the consent of the owner of the mark uses the mark as a trade mark was recently left open by the High Court: E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; (2010) 265 ALR 645 at [53].

[99] The respondents’ argument before me was that, independently of the question of trade mark use by them (which was, as I have said, conceded by them to have occurred), the applicants were also required to establish that the respondents had engaged in “infringing use” and, for that purpose, had to establish that the marks on the relevant goods had not been applied by or with the licence of their owner. I do not think this is correct. There is no justification for implying any such additional requirement. If the circumstances referred to in s 123 are shown to exist then the respondents will not have infringed the registered trade marks, not because of any additional requirement of the kind now postulated but by operation of s 123 itself. The High Court observed in E & J Gallo Winery at [34] that s 123 reflects the principle established by Champagne Heidsieck.
[100] As a matter of statutory construction, s 123 of the Act, in form and substance, creates an exception to infringement which, in accordance with the relevant principles of statutory construction, leads to the conclusion that it is the person who invokes the section who carries the onus of proof: Avel Pty Ltd v Multicoin Amusements Pty Ltd [1990] HCA 58; (1990) 171 CLR 88 at 119; Vines v Djordjevitch [1955] HCA 19; (1955) 91 CLR 512 at 519.

(Nicholas J did go on to note how lightly the burden on a respondent might shift.)

Arguably, the point was not strictly before his Honour as Mr Dwyer’s company conceded it was using the Greg Norman trade marks “as trade marks”. If right, however, there would appear to have been a significant narrowing of defendants’ “wriggle room”.

Sporte Leisure Pty Ltd v Paul’s International Pty Ltd (No 3) [2010] FCA 1162

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Coke, Pepsi and the shape of the bottle

4 Comments / Trade marks / / / , , , , , ,

Newspaper reports that Coca Cola has sued Pepsico and its Australian licensee, Schweppes, over the shape of the new Pepsi bottle.

The print edition had a photo, but not online. You can go down to your local 7 Eleven or compare for yourself:

Coke 'contour' and Pepsi's new bottle

The press report doesn’t say whether the action is over a registered “shape” trade mark, passing off/TPA or both. But, we know Coke has them:

TM 877676

So, if it goes to trial we may well find out what you can do with a shape trade mark.

The newspaper report quotes Matthew Hall asking who is going to buy a bottle of Pepsi in mistake for a Coke.

Fair question but, if there is a registered trade mark for the shape (without Coke plastered all over it, unlike e.g. TM 1057210) and the bottle itself is used as a trade mark, the presence of the Pepsi logo should be irrelevant.

Further, what role will “intention” play here? In particular, why did Pepsi change the shape of their bottle?

Pepsi apparently introduced the new bottle shape in May this year. Here’s an interesting mash-up which shows you the “old” bottle’s silhouette compared to the Coke bottle.

Here’s what the Full Court had to say in the All-fect case:

25 The confectionary has three features that are not descriptive of the goods. They are the silhouette, the fluting at the top and bottom, and the label band. It is not necessary for the respondent to adopt any of those features in order to inform consumers that its product is a cola flavoured sweet. It could do so by using the cola colour, the word COLA and the shape of an ordinary straight-walled bottle. The silhouette, fluting and band are striking features of the confectionary, and are apt to distinguish it from the goods of other traders. The primary function performed by these features is to distinguish the goods from others. That is to use those features as a mark. It is true, as the respondent said, that the fact that a feature is not descriptive of goods does not necessarily establish that it is used to distinguish or differentiate them. But in the present case we are compelled to the conclusion that the non-descriptive features have been put there to make the goods more arresting of appearance and more attractive, and thus to distinguish them from the goods of other traders.

While that was observed in the context of “contour” bottle shaped confectionery, things could get a bit sticky for Pepsi here.

As a side note: an interesting timeline comparing the Pepsi word and logo marks against the Coke history.

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Anti-counterfeiting Down Under

1 Comment / Enforcement, Trade marks / / / , , , ,

The Feds (aka the Australian Federal Police in co-operation with Customs) executed 21 search warrants on 14 September and apparently

Thousands of counterfeit goods were seized, including counterfeit computer software, CDs, DVDs and luxury items such as bags and jewellery.

Lid dip: Marine Guillou. The AFP issued their own Media Release.

In typically timely fashion, Stephen Stern will be giving a Tech IP Seminar:

Australian Customs And Border Protection Service – How To Access This Service To Protect Trade Marks And Stop Replica Products At The Border

in Melbourne on 12 October.

Steve has probably forgotten more about this subject than I’ve learned so, if you act for a brand owner who could be exposed, you should get yourself along to find out more.

Anti-counterfeiting Down Under Read More »

The penalty for contempt

1 Comment / Copyright, Enforcement, Trade marks / / / , , , , ,

Previously, I had noted that the remedy for breaching an injunction is proceedings for contempt of court.

Tracey J, having found various respondents in contempt arising from breaches of injunctions made in 2004 not to infringe Ugg Australia’s copyright and trade marks in connection with the manufacture and sale of ugg boots, has now handed down the punishments:

  • One of the individual respondents, a Mr Vladimir Vaysman, was sentenced in the No. 8 proceeding to 3 years’ imprisonment for the most serious contempt
  • A second principal contemnor, Mr Josef Vaysman (the father of Vladimir) has been sentenced to 18 months imprisonment, with a minimum of 6 months to be served and the balance suspended for 2 years, in the No. 9 decision,
  • a third principal, Victoria Vaysman (the daughter of Josef, and sister of Vladimir) received a sentence of 12 months, with a minimum of 2 months to be served and the balance suspended for 2 years in the No. 8 decision;
  • all also received other, shorter terms of imprisonment for lesser breaches to be served concurrently.

It would appear that copyright owners over in the UK have secured their first imprisonment for ‘camming‘, although that seems to be for a criminal offence rather than contempt.

Deckers Outdoor Corporation Inc. v Farley (No 9) [2010] FCA 1007

Deckers Outdoor Corporation Inc. v Farley (No 8) [2010] FCA 657

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Talk on keywords, adwords and trade marks

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For anyone who may find some value in them, I have posted the slides from my IPSANZ talk ‘Of Keywords, Adwords and Trade Mark Infringers at Slideshare.

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Appeal sinks luscious LIPS

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One month after the appeal was heard, the Full Court has rejected Nature’s Blend’s appeal that Nestlé used Luscious Lips as a trade mark.

Nature’s Blend argued first that the trial judge had wrongly focused on the character of Nestlé’s use instead of the proper meaning of the Nature’s Blend mark. As the mark was registered for all confectionery, not just “lips”, it was said to be inherently distinctive. The Full Court, however, rejected this requirement and re-affirmed that the test was to examine whether or not the way Nestlé used the mark (the “impugned use”) would be understood by ordinary consumers as functioning as a badge of origin.

Nestlé’s Luscious Lips are part of its ‘Retro Party Mix’ pack. The expression ‘luscious Lips’ appeared only on the back of the packaging in the expression:

That’s right! All your old favourites are back, so put on those flares & get ready to party! Up to 7 lolly varieties including … cool COLA Bottles, those radical Racing Cars, yummy Honey flavoured Bears, totally freeeekie Teeth, luscious Lips, partying Pineapples and outrageous Raspberries.

You can see the front of the packaging at the product’s very own facebook page.

Nature’s Blend contended that the trial judge had improperly diluted the significance of the ‘luscious Lips’ expression on the Nestlé packaging by reference to the presence of other, more prominent brands.

This issue can be tricky because the Courts have long held that one does not take into account extraneous matters such as disclaimers or the presence of other trade marks when considering the question of deceptive similarity. On the question of use as a trade mark, it is permissible.

While the Full Court acknowledged that the fact that other trade marks were used more prominently on the packaging did not preclude ‘luscious Lips’ from being used as a trade mark, the characterisation of the impugned use depended on the particular usage in question in its own particular setting. In this case, the presence of ALLEN’s and Retro Party Mix did in fact undercut the likelihood that consumers would read ‘luscious Lips’ as a trade mark.

The Full Court also agreed that Nestlé had used the trade mark in good faith as a description.

Nature’s Blend Pty Ltd v Nestlé Australia Ltd [2010] FCAFC 117 (Stone, Gordon and Mckerracher JJ)

Comment on decision at first instance.

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More on ‘Whiskas Purple’ TM

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Tim Golder, a partner at AAR, and Sandi Montalto have published an article with their take on the Federal Court’s recent decision directing that Mars’ trade mark application for the colour ‘Whiskas Purple’ proceed to registration.

More on ‘Whiskas Purple’ TM Read More »

WTR and new gTLDs survey

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World Trademark Review is running an online survey to gauge understanding of ICANN’s proposed new gTLDS and get some insight into what people are doing to prepare for these.

If you are a trademark professional or in “marketing”, participate here.

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Injurious falsehood and also passing off

1 Comment / IP generally, Trade, Trade marks / / / , , , ,

The tort of injurious falsehood (sometimes called malicious falsehood or even trade libel) has been largely superseded (but not totally extinguished) by passing off and the modern wrongs against misleading or deceptive conduct. In a helpful, practical primer, Jagot J has had to explore its operation as one of the issues in the Jack Brabham Engines case. There is also an elementary lesson to learn in passing off.

In overview, the case concerned 2 rival businesses engaged in developing car engines. They agreed to pool their resources and develop technologies through a new corporate vehicle, Jack Brabham Engines (JBE). The principals in the competitors became directors and shareholders and the great man himself was a shareholder. Things didn’t work out and one of the principals, Mr Beare, who had secured patents for technology he had developed earlier decided to invest elsewhere in competition with JBE.

Amongst other things, he published statements on his website and in ASIC documents which the applicants complained were injurious falsehoods. Jagot J rejected these allegations.

Her Honour pointed out at [246] that the tort required proof of 3 ingredients: proof that (1) the respondent has made a false statement, (2) that the respondent made the statement maliciously and (3) as a result the applicant has suffered actual damage.

Her Honour quoted Gleeson CJ on the difference between the tort and defamation:

The tort of defamation protects reputation, and it does so in a manner that involves a balancing of various considerations including the right of free speech. The tort of injurious falsehood protects against provable economic loss resulting from false and malicious statements.

Jagot J at [247] also endorsed the statement in Halsbury’s Law of Australia as a convenient summary of what is required for the statement to be malicious:

The false publication must have been made maliciously. A person who acted in good faith is therefore not liable. Malice is a question of motive, intention or state of mind and involves the use of an occasion for some indirect purpose or indirect motive such as to cause injury to another person. Malice may exist without an actual intention to injure. Malice may not be inferred from the fact of publication but will be inferred where the false publication was made with:
(1) an intent to injure without just cause;
(2) knowledge of their falsity; or
(3) reckless indifference to its truth or falsity.
No action will lie where the false publication was made with mere lack of care or with an honest belief in its truth. An honest belief in the truth of the statement will rebut any inference of malice.

The applicants failed on all heads for a wide variety of reasons. Some of the statements were not even pleaded. The applicants failed to prove that others were even false and, at every turn, the statements were not shown to be malicious because they were the honest beliefs or opinions of Mr Beare. There was also no proof of damage.

The difficulties of proving malice in particular highlight why, if the conduct is in trade or commerce, the tort has largely been supplanted by the fair trading laws such as  s 52 (in the case of corporations) and s 9 / s 42 (in the case of individuals).

The applicants also alleged passing off from use of the names “Beare Technology Engine” and “Beare Head Technology”. The names were not registered as trade marks, hence any rights had to arise at common law.

The problem for the applicants here was that Mr Beare had used these names in his business before JBE was incorporated and, while he or his company had authorised JBE to use the names, JBE was unable to identify any assignment of the earlier business and its goodwill to JBE. As a result, JBE did not own the relevant reputation.

Jack Brabham Engines Limited v Beare [2010] FCA 872

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The Australian High Court on trade marks

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Janice Luck and Peiwen Chen have published at the Fortnightly Review an analysis of the High Court’s recent rulings in the trade mark cases: Gallo v Lion Nathan (the Barefoot case) and Health World v Shin-Sun.

As Janice was one of the members of the Working Party whose review led to the 1995 Act and has been teaching trade mark courses at Melbourne Uni. for longer than she probably cares to remember, you should read it here.

The Australian High Court on trade marks Read More »