Posts Tagged ‘parallel imports’

Parallel imports

Wednesday, October 8th, 2014

Well, it seems the 10th anniversary of IPwars has come and gone! Yes, the first IPwars blogpost (on the now defunct iBlog system) was back on 4 October 2004, inspired by Marty Schwimmer, Denise Howell, Evan Brown, Ernie the Attorney and others who were originally “Between Lawyers” but have since moved on to podcasting, video casting and other, bigger things.

In the meantime, my article on Trade Marks and Parallel Imports has been published in Volume 22 No. 1 of the Competition & Consumer Law Journal starting at p. 54. It is essentially an overview of the Federal Court’s case law on s 123(1) to date.

In the same issue of the CCLJ, you will also find articles by:

  • David Brennan “Shifting shades of grey – International price discrimination and Australian copyright” law starting at p. 1; and
  • Matthew Taylor and Arlen Duke “Refocussing the parallel import debate” starting at p. 54.

I am afraid the online versions of these papers are behind the LexisNexis paywall.

Happy anniversary! and thanks for stopping by, especially those of you who have left a comment.

The price of digital downloads in Australia

Thursday, March 28th, 2013

Big week for parallel imports last week:

(1) the US Supreme Court declared US law applies a doctrine of international exhaustion for copyright material

(2) Adobe, Apple and Microsoft fronted the Australian Parliament to explain why digital “things” cost so much more in Australia than elsewhere (i.e., the USA).

Apple’s defence said, amongst other things, it was the price it had to pay to the owners of Australian copyright – lovely chart here. Other reports (with more analysis) here and here (which may be challenges Apple’s explanation a bit for its own products).

That didn’t really work as an explanation for Adobe, which gets lambasted here.

Perhaps, just maybe, treating digital downloads as a single global market might lead to some lowering of prices, but the beauty of digital delivery (from the content owner’s perspective) is that you can set your price and the customer can buy or not.

Is there a link between (1) and (2)?

In his analysis, Prof. Goldman sets out a number of reasons why he thinks Kirtsaeng, while it may provide some good news in terms of lower prices, will have only a short term effect.

(I suppose we can trumpet the fact that our technological protection measure protections don’t extend to protecting region coding (here and here), although I do wonder how one would prove that was the purpose of the (ac)tpm.)

Agreements to block parallel imports

Friday, May 11th, 2012

According to the Age today, a number of (fashion) importers have agreed with their overseas manufacturers that the manufacturers will not supply orders to online purchasers in Australia:

Importers close door on overseas online stores by Rachel Wells.

The Gerry Harvey-esque arguments about how GST makes local retailers uncompetitive get a run again but, as previously noted, Prof. Gans is not convinced by that (in the context of digital downloads).

This announcement seems like particularly good timing given Senator Conroy’s plans to have somebody inquire into something.

Maybe this is not exclusive dealing in contravention of s 47 of the Competition and Consumer Act 2010 because does not have the purpose, and it is not likely to have the effect, of substantially lessening competition, but:

(a) I hope they talked to the lawyers before they started making what might be thought of as “admissions”; and

(b) the record companies didn’t get away with the argument.

I guess we can look forward to some further instalments in this story.

The price of digital downloads in Australia

Thursday, May 3rd, 2012

Apparently inspired by this report, Senator Conroy, the Orwellian named Minister for Broadband, Communications and the Digital Economy,[1] has acted to announce a new inquiry to be undertaken by the House of Representatives’ Standing Committee on Infrastructure and Communications.

Reports here and here.

According to that second report, someone trailed a coat on the issue last week when ACCC Commissioner Ed Willett appeared before the Joint Committee on the National Broadband Network.

Now, as a purchaser of digital files, I am hardly unbiased but it does seem hard to justify price differentials of 50% or more. Seems like there is economic reasoning that challenges the Gerry Harvey-esque explanations.

Only problem, almost 20 years ago, the Prices Surveillance Authority recommended (what became in effect) this provision and some record companies got into big trouble trying to circumvent their own corresponding provision, but it would seem nothing has changed. Gartner analyst, Brian Prentice, reported here might be on to something suggesting the problem is the territorial nature of copyright itself. A (copyright) world without borders. Imagine!


  1. He is afterall the man who wants to impose filtering on the internet.  ↩

iTunes Match and making Prof. Lessig’s case

Friday, June 17th, 2011

Recap: Prof. Lessig’s argument.

You will remember that Michael Speck from Music Industry Piracy Investigations was outraged by Apple’s pending iTunes Match service and, in particular, the part where the service would in your iCloud account copies of music on your hard drive which had not been bought through iTunes.

At the time, it wasn’t clear (at least to me) whether Apple was going all gung-ho and just offering this unilaterally or had the agreement of the record companies to this.

Of course, if the record companies had agreed to this, it would be rather hard for them, or their representative, to complain about the pirate’s charter.

Jonathon Bailey, at Plagiarism Today, reports here that Apple is in fact offering the service in the USA with the agreement of the record companies. He also goes on to discuss indications that this is all part of a clever new strategy by the record companies to combat piracy – one of the indications he identifies includes recent reports that the music industry in Australia is not pursuing a 3 strikes policy (at least as strongly) as the movie industry.

Swerving to another aspect: the iTunes Match service Steve Jobs announced was for the USA only. Media reports suggest it will take up to 12 months for the service to be extended to the UK and speculate other countries will have similar delays.

Copyright is, of course, a territorial right and there are often different owners and licensees for different territories (i.e., countries). Thus, just because you have consent from the (or a) copyright owner in one country does not give you rights to do the same thing with the corresponding copyright in another country. No doubt, therefore, a large part of any delay will be attributable to the need to negotiate separate arrangements with the owners of copyright in different territories.

So the delay reported in the media should come as no surprise. That shouldn’t come as too much of a surprise to those in Australia who monitored, for example, how long it took for the iBookstore to get any “in copyright” content. Perhaps, if Mr Speck’s view is representative of the views of the copyright owners in Australia, the wait would be even longer – what an economist might describe as “infinitely long”.

All of which goes to highlight, as representatives around the world assemble in Geneva to debate extending copyright and introducing limitations for visually impaired readers, why are we still dealing in the 21st century with territorial rights for electronic rights which can be accessed virtually instantaneously from virtually anywhere in the world?

Oh, perhaps it’s not just an electronic “problem”. This product is advertised for sale in the USA for US$399. You can buy it here for AUD$699 or (depending on exchange rate fluctuations) approximately US$736. (By the way, I am certainly not recommending that you do buy the product from either source, I have no experience with it.) Almost makes you wonder where’s Prof. Fels?

A case of (un) parallel imports

Thursday, November 4th, 2010

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

Parallel imports, books and Australia

Wednesday, November 11th, 2009

The Australian Government has announced today that it will not be changing the limitations in the Copyright Act on the parallel importation of books.

According to the Press Release:

Australian book printing and publishing is under strong competitive pressure from international online booksellers such as Amazon and The Book Depository and the Government has formed the view that that this pressure is likely to intensify.
In addition, the technology of electronic books (e-books) like Kindle Books will continue to improve with further innovations and price reductions expected.
The Government has not accepted the Productivity Commission’s recommendation to remove the parallel importation restrictions on books.

Australian book printing and publishing is under strong competitive pressure from international online booksellers such as Amazon and The Book Depository and the Government has formed the view that that this pressure is likely to intensify.

In addition, the technology of electronic books (e-books) like Kindle Books will continue to improve with further innovations and price reductions expected.

The Government has not accepted the Productivity Commission’s recommendation to remove the parallel importation restrictions on books.

You could write a book on the rules governing parallel importation of books so I won’t attempt to summarise them here.

The Productivity Commission’s report. I still don’t think there has been any answer to the question whether the prices of music CDs or computer software fell after open markets were introduced for those products.

IPRIA, parallel imports

Thursday, September 10th, 2009

IPRIA has organised a seminar in Melbourne on 15 September and Sydney on 16 September to discuss whether freeing parallel imports will make books cheaper.

Speakers include both Prof. Fels, who started it all, and Dr Rhonda Smith.

Details from here.

Has anyone established how far the prices of CDs and computer software fell once the markets for those products became open?

Productivity Commission on parallel imports (books)

Tuesday, July 14th, 2009

The Productivity Commission’s report has been released:

Copyright Restrictions on the Parallel Importation of Books

Key Points

Media Release

On a quick view, now they recommend repeal after a 3 year transition period:

Whereas the Commission’s draft report had proposed a partial liberalisation of the import restrictions, following further evidence, the final report recommends their repeal, with the industry having a period of three years to adjust before the changes take effect. The report recommends that the current range of grants and other financial assistance be refined to better target the local writing and publishing that adds cultural value to Australian society.

The Commission estimates that, while Australian authors and publishers do benefit from the restrictions, overseas authors and publishers benefit by a factor of 1.5 times. In addition to the transfer from consumers to authors/publishers (including those foreigners whom we could easily free ride on), there are also other inefficiencies.

On the question of subsidies:

For the reasons set out in chapter 7, the Commission has not recommended that the assistance provided by the PIRs [that's parallel import restrictions] be replaced by subsidies.

It has, however, recommended that current subsidies for the local books industry be reviewed ahead of the abolition of the PIRs, and that the arrangements be reviewed again five years after their repeal. These reviews will provide an opportunity to consider the appropriateness of the existing subsidies and whether they might be improved. Among other things, such reviews could examine the case for changing some of the current subsidies to more directly assist outputs that generate cultural externalities.

For the reasons set out in chapter 7, the Commission has not recommended that the
assistance provided by the PIRs be replaced by subsidies.
It has, however, recommended that current subsidies for the local books industry be
reviewed ahead of the abolition of the PIRs, and that the arrangements be reviewed
again five years after their repeal. These reviews will provide an opportunity to
consider the appropriateness of the existing subsidies and whether they might be
improved. Among other things, such reviews could examine the case for changing
some of the current subsidies to more directly assist outputs that generate cultural
externalities.

I wonder, has anyone done a study of how far the price of CDs or computer software fell after they became open markets? Speaking purely ad hoc, and unempirically, it always seems that computer programs, at least, are cheaper “over there”. Don’t have any experience with music.

Lid dip: Peter AP Clarke

Parallel imports and UPC codes

Tuesday, June 30th, 2009

Marty (The Trademark Blog) extracts from the 11th Circuit’s ruling in Davidoff v CVS, where the parallel importer was found liable for infringement by removing the UPC codes (which, of course, are not put there to detect parallel import leaks, but in case of product recall requirements).

He appends the text of the decision.

Off the top of my head, I don’t think that argument would help Davidoff down here as s 123 operates on consent in respect of ‘similar goods’. The 1994 Act, which never came into force and was repealed by the 1995 Act did make an attempt to deal with quality issues in s , but that ultimately fell be the wayside.

What chance of arguing misleading or deceptive conduct under s 52?