The Full Federal Court yesterday dismissed an appeal by Paul's Warehouse against a judgment in which its importation of GREG NORMAN branded goods was held to be a trade mark infringement.

This is good news for Australian trade mark owners and licensed distributors, and highlights the value of a well-considered trade mark protection and licensing strategy.

A critical issue in the case was whether the trade mark owner had consented to application of its trade marks to the goods that were imported. Such consent would have given Paul's Warehouse a complete defence to trade mark infringement.

In this case, the trade mark owner's head licensor had licensed an Indian company, BTB, to manufacture, market, distribute and sell clothing and other goods bearing the trade marks "GREG NORMAN" and the shark logo, within India only.

The license agreement also contained, relevantly:

  • an acknowledgement by BTB that the licence was limited to India
  • an agreement by BTB that it would not supply goods bearing the marks destined directly or indirectly for sale outside India with prior written approval from the licensor.

BTB fulfilled a purchase order for goods bearing the trade marks from a third party who was based in Pakistan. That party then supplied those goods to another business based in Singapore, who then on-sold the goods to Paul's Warehouse, who marketed and sold the goods in Australia.

The trade mark owner and its head licensors sued Paul's Warehouse for, among other things, infringement of the above Australian registered trade marks by its sale and offer for sale of those goods in Australia.

At trial, the judge stated:

"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."

BTB made the goods in response to the purchase order from the third party distributor, and a letter of credit, both of which indicated that the goods were to be shipped to Pakistan. In light of this, the Court at first instance found that BTB specifically made the goods for the purpose of sale outside of India.

As the trade mark owner had only licensed the use of the mark in India, the trade mark owner was found not to have consented to application of its mark to the goods that were specifically destined to be delivered outside India. On appeal, the Full Federal Court upheld the primary judge's decision on this issue. There was an express contractual prohibition on BTB applying the registered trade marks to goods to be supplied outside of India.

The case highlights the importance of strong contractual terms specifying any limitations on an authorised manufacturer or distributor to market or sell goods, including the territories in which such goods can be made or sold. By having such contractual terms in place, trade mark owners are better armed to control how and where their products are marketed and sold.

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