The Sharks are Circling Parallel Importers of Trademarked Goods

Introduction

Brand owners interested in stopping parallel imports of their trademarked goods have been assisted by the recent decision of Nicholas J of the Federal Court of Australia in Sporte Leisure Pty Ltd v Paul's International Pty Ltd (No 3) [2010] FCA 1162 (Sporte Leisure).

In the Sporte Leisure case, the Court held that Greg Norman branded clothing which had been manufactured by the exclusive Indian distributor of Great White Shark Enterprise's Inc, had been made outside the terms of its licence agreement and therefore the importation of those goods into Australia infringed various "Greg Norman" trade marks. However, before we discuss the Sporte Leisure case we first make some comments about what we mean when we talk about the 'parallel importation' of trademarked goods.

Parallel Importation

Parallel importation occurs when a trade mark is applied to goods overseas either by the owner of the trade mark in the overseas country or under a licence granted by them and the goods are then imported into Australia by someone who does not have the consent of the brand owner to do so. Importantly, the goods are 'genuine' rather than counterfeit.

The unauthorised parallel importation and sale of goods often competes with the sale of the same goods by an authorised Australian distributor. Somewhat understandably, the distributor is unlikely to look favourably upon competition by the parallel importer if the distributor has made a significant financial investment in order to obtain their distributorship.

The legality of the parallel importation of trademarked goods into Australia has long been problematic.

The Trade Marks Act 1995 (Cth) (Act) was amended in 1995 to include, in section 123, a new defence to infringement of a registered trade mark. Section 123 says:

"... 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." [emphasis added]

The stated purpose behind the introduction of this section was to give statutory protection to the legitimacy of parallel importation of trade-marked goods. In a 1995 report of the Australian Law Reform Commission, the ALRC said that as a result of this section, "importing and selling genuine trade marked goods by an 'unauthorised' Australian importer will not...