repackaging

Repackaging into tobacco plain packaging is still parallel importing

The Full Court has dismissed Scandinavian Tobacco’s appeal from Allsop CJ’s ruling that Trojan’s repackaging of various genuine cigar products into conformity with Australia’s plain packaging laws is legitimate.

Scandinavian Tobacco is the owner, amongst other things, of the Henri Wintermans, La Paz and Cafe Creme cigar brands. Trojan bought genuine products in Scandinavian Tobacco’s genuine packaging overseas. As that genuine packaging did not comply with Australia’s tobacco plain packaging laws, Trojan removed that packaging and replaced it with packaging that did conform. Amongst other things, this involved Trojan placing The relevant trade mark – Henri Winterman, La Paz or Cafe Creme – on the packaging in the font style and size permitted under the legislation.

The Full Court considered that Trojan was using the Scandinavian Tobacco trade marks as trade marks within the meaning of s 120 by importing and offering the repackaged goods for sale. So Trojan would infringe if the s 123 defence did not apply. However, the s 123 defence did apply.

Use as a trade mark

Case law in the 1930s had established that using a trade mark in relation to goods to which the trade mark owner had applied the goods was not infringing use of the trade mark. So there was no infringement of CHAMPAGNE HEIDSIECK to import and sell genuine products marked CHAMPAGNE HEIDSIECK by the trade mark owner – even if they were a different quality to those put on the market within the jurisdiction by the trade mark owner.[1] Similarly, there was no infringement to use the trade mark YEAST VITE in the expression “YEAST TABLETS a substitute for YEAST-VITE”.[2] Numerous decisions of Australian courts under the 1955 Act proceeded on that basis.

The Scandinavian Tobacco Full Court agreed with four previous Full Courts that the introduction of s 123 into the 1995 Act – there having been no counterpart in the 1955 Act – has led to a change in the law. At [56], their Honours ruled:

In our opinion, under the provisions of the 1995 Act, 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. It follows that, on this issue, we are not satisfied that the position under the 1995 Act is other than as stated in Montana, Gallo, Sporte Leisure and Lonsdale.

As their Honours explained at [58]:

Section 123 of the 1995 Act gives the Champagne Heidsieck principle an express statutory footing that, in our view, leaves no scope for the principle to be given any more expansive operation by reference to cases decided under different legislation including Champagne Heidsieck itself: see Sporte Leisure at [71] and Lonsdale at [62]-[63] where reference is made to the difficulties involved, as a matter of statutory construction, in attributing to the Champagne Heidsieck principle a broader operation that travels beyond the scope of s 123. Under the 1995 Act, the question of whether or not a registered mark is infringed by the commercial importation or sale of genuine goods (what Clauson J described as “those upon which the plaintiff’s mark is properly used”) must now be determined by reference to s 123(1). If the respondent who is selling what are said to be genuine goods is held to be outside the protection of s 123(1), then the respondent will not avoid liability for trade mark infringement on the basis that he or she is not using the relevant mark unless there is something else about the context in which the use occurs that (as in Wingate) might lead to a different conclusion.

The Scandinavian Tobacco Full Court noted that was the way the English Court of Appeal in Revlon v Cripps and Lee Ltd had treated the introduction of a counterpart “consent” defence into the UK Trade Marks Act.

The Scandinavian Tobacco Full Court perceived a lack of enthusiasm for the “old” cases in the High Court’s decisions, such as Gallo, under the 1995 Act. In addition, their Honours noted their conclusions was consistent with the position expressed by Aickin J, sitting alone, in the Pioneer case:

Thus if Pioneer Australia had done no more than import the goods and sell them by retail it would have used the mark, but in fact it did much more as the evidence referred to above demonstrates.

There is no doubt that the Pioneer ruling was a landmark decision in Australia accepting the validity of trade mark licensing. For many years, however, Aickin J’s acceptance that a trade mark could be validly used to denote source in both the trade mark owner and one or more authorised users, rather than the trade mark owner alone, was considered rather problematical, albeit arguably contemplated by the definition of a trade mark under the 1955 Act[3]. That Janus-like approach appears very difficult to maintain in the face of the definitions in s 7 and s 8 of the 1995 Act.

Their Honours also noted the problems that defendants might have, bearing in mind the onus of proving the elements of the defence. However, they considered that the evidential burden could shift quickly as the trade mark owner would usually ve best placed to give the relevant evidence.

The s 123 defence

The Full Court upheld Allsop CJ’s ruling that the s 123 defence applied. Section 123(1) provides:

(1) In spite of section 120, 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.

The repackaged cigars were goods which ST itself had applied its trade marks to, or in relation to. So the requirements of s 123 were literally satisfied. ST argued, however, that s 123 applied only in relation to goods while the trade mark owner’s trade mark was actually applied to them. Once it was removed (such as by repackaging), therefore, s 123 had no operation.

The Full Court, however, pointed out that a trade mark owner could legitimately use its trade mark in relation to goods and did not necessarily have to apply the trade mark actually to the goods. Examples of this could be use of the trade mark on an advertisement or a document, rather than on the goods themselves. The Full Court held, therefore, that there was no express or implied limitation in the words of s 123. The temporal requirement in s 123 would be satisifed if at some point before the alleged infringer used the trade mark the trade mark owner (or someone with the trade mark owner’s consent) applied the trade mark to the goods or used it in relation to them. At [65], their Honours explained:

The language of s 123(1) refers to a mark that has been applied to or in relation to goods by or with the consent of the registered owner. 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.

Section 123 did not provide a defence to the type of infringement prescribed by s 121.[4] Therefore, the words of s 123 were not to be read down by reference to s 121.

The Full Court considered that Scandinavian Tobacco’s concerns that its goodwill may be harmed by Trojan’s repackaging exercise were not matters falling for consideration under the terms of s 123. Rather, such issues would need to be addressed through passing off and the consumer protection laws.

Passing off

The claim in passing off (and under s 18 of the ACL), however, also failed. The trial judge had found the repackaging did not misrepresent that Scandinavian Tobacco had repackaged, or authorised the repackaging of, the cigars. In this respect, Scandinavian Tobacco’s own evidence was unhelpful as it appears that Scandinavian Tobacco Australia itself had engaged in repackaging other brands of cigars for which it was not an authorised distributor.

Wrap up

I think this is the first case since Montana that has gone to trial which the parallel importer has won. Then again it is also the first case since Montana that actually involved parallel imports.

The Full Court’s interpretation of s 123 is at least straightforward and avoids the complicated notice procedure applying in the EU. The “new”[5] concept of use as a trade mark apparently introduced by the 1995 Act will mean some careful thought needs to be given to “old” cases on what constitutes trade mark use, unless the High Court becomes motivated to revisit the reservation left open in [33] and [34] of the Gallo decision. It will interesting to see if trade mark owners start to explore the use of conditions under s 121 or are willing to assign the Australian trade marks as in Montana in attempting to circumvent the operation of s 123.

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


  1. Champagne Heisieck et cie Monopole SA v Buxton [1930] 1 Ch 330.  ?
  2. Irving’s Yeast-Vite Ltd v FA Horsenail (1934) 51 RPC 110 (HL), a decision adopted and applied by the High Court in, for example, the [Tub Happy][tub] case.  ?
  3. That definition referred to a mark used so as to “indicate a connexion in the course of trade between the goods and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person”.  ?
  4. Section 121 empowers the trade mark owner to impose condition which may run with the goods to prevent those subsequently acquiring them from doing acts in breach of the conditions.  ?
  5. Bearing in mind this is the fifth Full Court decision adopting this position.  ?

Repackaging into tobacco plain packaging is still parallel importing Read More »

Parallel imports – repackaging Down Under

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


  1. The famous four: Transport Tyre Sales Pty Ltd v Montana Tyres Rims & Tubes Pty Ltd [1999] FCA 329; 93 FCR 421 at 440 [94]; [Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd [2012] FCAFC 51; 202 FCR 286 at 295 [66]; Paul’s Retail Pty Ltd v Lonsdale Australia Limited [2012] FCAFC 130; 294 ALR 72 at 82 [65] and E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2009] FCAFC 27; 175 FCR 386 at 403–404 [57]- [58]. The two Paul’s Retail cases, of course, did not involve genuine goods and the High Court in Gallo refrained from deciding this point while overtuning the Full Federal Court’s decision.  ?
  2. Champagne Heidsieck et cie Monopole Society Anonyme v Buxton [1930] 1 Ch 330.  ?
  3. See for example Case C–143/00 Boehringer Ingelheim KG v Swingward Ltd and Dowelhurst Ltd [2002] ECR–1 at [61] – [68].  ?

Parallel imports – repackaging Down Under Read More »

Scroll to Top