When can an authorised user sue

Following on from my earlier post about the Trade Marks Act 1995 and repackaged goods, it is worth noting that there was also a dispute about the power of an authorised user to bring proceedings under s 26(1)(b) of the Act.

Amongst other things, section s 26(1)(b) provides:

Powers of authorised user of registered trade mark

(1) Subject to any agreement between the registered owner of a registered trade mark and an authorised user of the trade mark, the authorised user may do any of the following:

….

(b) the authorised user may (subject to subsection (2)) bring an action for infringement of the trade mark:

   (i) at any time, with the consent of the registered owner; or

  (ii) during the prescribed period, if the registered owner refuses to bring such an action on a particular occasion during the prescribed period; or

  (iii) after the end of the prescribed period, if the registered owner has failed to bring such an action during the prescribed period;

Scandinavian Tobacco Group Eersel, as the owner of the registered trade marks, had brought the proceeding, but it was joined as an applicant by its local distributor as an authorised user. Trojan argued that the authorised user had no standing to sue in this case. This was not an argument about whether the local distributor was an authorised user. Rather, it was whether or not the formal requirements of s 26(1)(b) had been met.

Allsop CJ confirmed that s 26(1)(b) allowed an authorised user to bring proceedings for trade mark infringement concurrently with the trade mark owner. It was not necessary for the authorised user to call on the registered owner to bring proceedings and then wait 60 days for the owner to fail to take any action.

The power of an authorised user under the Act to bring proceedings is subject to any agreement with the registered owner to the contrary. In that connection Cl 8 of the relevant distribution agreement is in fairly typical terms:

Nothing in this Agreement shall be interpreted or otherwise construed as giving the Distributor any rights to any of the Supplier Trade Marks. The Distributor shall inform the Supplier of any Infringements of the Supplier Trade Marks of which the Distributor becomes aware. Prosecutions for infringements shall be at the Supplier’s discretion and cost, but the Distributor shall offer all reasonable assistance. Any damages received shall be credited to the Supplier.

Allsop CJ considered this did not exclude the authorised user’s powers under s 26(1)(b) but, if it did, his Honour would have inferred the registered owner had given consent in the circumstances of this case: both the registered owner and the authorised user had issued the proceedings as joint applicants.

The question of the local distributor’s standing as an authorised user to bring proceedings is not necessarily an arid debate in cases where the right owner is also an applicant. It might have affected how much damages could be recovered for any infringement by Trojan.

There are of course a number of ways damages could be calculated (assuming damages and not an account of profits were pursued). One way of calculating such damages is the amount of profits that would have been made on sales lost as a result of the infringing activity. If s 123 had not provided Trojan with a defence and the applicants had pursued damages for lost sales, the quantum as measured by any profits lost by reason of the (hypothetical) infringement would probably include the local distributor’s “lost” profits only if it was an authorised user and entitled to join in the proceeding. If STG, as the owner of the registered trade marks, was the only applicant, its damages would probably have been limited only to the profits it lost on sales to its distributor and probably would not include profits on sales “lost” by the distributor.[1]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086[2]