grey goods

Scandinavian Tobacco Group Eersel (STG) is the world’s largest manufacturer of cigars and pipe tobacco. Three of its brands include CAFE CREME, LA PAZ and HENRY WINTERMANS; each of which is registered in Australia as a trade mark for tobacco products.

Trojan bought up stocks of genuine STG cigars in Europe in their original packaging. STG had placed the relevant trade marks on the cigars or their packaging.

The Tobacco Plain Packaging Act, however, precludes the sale of such cigars in Australia in their packaging. Trojan took the cigars out of the packaging which STG sold them in and put them in the drab, khaki packaging with gruesome pictures and health warnings as required under the TPPA. It also placed on the new packaging the relevant trade mark in the plain font and type size in the limited places that the TPPA allows.

STG sued for infringement unsuccessfully. Trojan did use the trade marks as trade marks within the meaning of s 120, but the defence provided by s 123(1) applied.

Allsop CJ held that use of the trade mark by an importer on genuine goods was use of the trade mark “as a trade mark” and so would infringe if done without consent or other defence. While appearing to express some doubts, his Honour considered that 4 Full Courts[1] required him to find that the 1995 Act changed the law so that Champagne Heidsieck[2] was no longer good law. Accordingly, subject to the s 123 defence, Trojan would have infringed.

Section 123(1) provides:

In spite of [section 120][s120], 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.

This seems like a pretty straightforward application of s 123(1). STG argued, however, that the application of the trade mark which Trojan had to show STG’s consent was the application to the plain packaging by Trojan, not the application of the trade mark to the original packaging by STG.

Allsop CJ short circuited that argument. His Honour got STG to agree that a retailer could rely on s 123(1) to avoid infringement if it printed the trade mark on a purchase receipt. One would hope that proposition was not controversial. At [82], his Honour developed the ramifications:

During argument, I posited to Mr Heerey, counsel for STG, an example: a tie with
trade mark Z woven into the tie, in a pink box with trade mark Z embossed on the box. Both trade marks have been applied by the registered owner. The shop owner advertises his stock of Z ties with a sign outside bearing trade mark Z and invoices customers with a document bearing the same mark. Mr Heerey accepted that there would be no infringement in the use of the advertising and invoices even though such use would be use as a trade mark because of the operation of s 123: Facton Ltd v Toast Sales Group Pty Ltd [2012] FCA 612; 205 FCR 378 at 398–404 [112]-[145]. (It is to be noted, and Trojan emphasised this point in its submissions, that Middleton J in Facton said at [132] that “a natural reading of the words used in s 123 suggest that the only time at which the issue of consent is to be assessed is the time of the application of the trade mark to goods.”) I then posited a change to the facts. The
shop owner preferred selling the tie in a blue box (fitting in with a blue theme to his shop) upon which he faithfully and accurately placed the trade mark Z. The tie was taken out of the pink box (which was discarded) and put in the blue box for display and sale. STG submitted that the step of placing the Z trade mark on the blue box would not be protected by s 123, but accepted that the sign and invoices remained protected. That was so, it was submitted, because of an implied consent by the registered owner of the trade mark to the advertising and invoices in the light of the trade mark on the tie. Yet, should the difference be governed by the existence of weaving on the tie? Has not the trade mark already been applied in relation to the good (the tie) by embossing on the pink box?

Allsop CJ considered that the plain, natural meaning of the statutory language led to the answer “Yes” and was to be preferred.

In this case, there was no question about the quality of the goods once Trojan had repackaged them. Section 123(1) arguably does not concern itself with such matters. Nonetheless, the approach under the Australian Act contrasts starkly with the convoluted regime applicable in the EU which even requires the parallel importing repackager to give the trade mark owner advance notice of its nefarious plans.[3]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086