Mark owners rely on copyright to prevent parallel importation and sale of goods

Australia
The decision of the Federal Court of Australia in QS Holdings Sarl v Paul’s Retail Pty Ltd ([2011] FCA 853, August 2 2011) demonstrates the clear utility of copyright in preventing the parallel importation and sale of products, regardless of whether those products bear trademarks applied with the trademark registrant’s consent.

Paul’s Retail Pty Ltd is a large discount retailer of sportswear, including apparel and footwear products. Paul’s owns and operates a chain of discount stores across the east coast of Australia trading under the banner Paul’s Warehouse.

Applicants Billabong, Quiksilver and DC Shoes (a Quiksilver-related company) learned of ongoing sales by Paul’s of counterfeit products bearing their respective trademarks. Some of those products also bore pirated reproductions of certain graphic designs created by the respective applicants, all protected by copyright. In addition, Paul’s was also selling genuine Billabong products upon which Billabong had itself applied its trademarks, as well as other copyright-protected graphic designs. Finally, Paul’s was advertising the products in mail-out brochures bearing reproductions of the applicants’ famous stylised trademarks registered in Australia, such as:
  • Billabong’s 'military wave':

  • Quiksilver’s 'Natas script':
  • DC Shoes’ DC logo:
Each of the stylised marks was alleged by the applicants to constitute an “artistic work” in which copyright independently subsisted.

The applicants issued court proceedings, seeking declaratory and injunctive relief and damages for claims arising under the Trademarks Act 1995 (in respect of the counterfeit products) and the Copyright Act 1968 (in respect of the sale of products bearing the pirated artistic works, the importation of genuine products and the reproduction of the stylised marks in brochures). 

Paul’s admitted trademark infringement due to the importation and sale of counterfeit products. However, it put Billabong, Quiksilver and DC Shoes to their proof in their summary judgment application on their assertion of copyright in their artistic works, including in the stylised trademarks. Through affidavit evidence from the artists that created the works laying out the circumstances of their employment and creation of the works, the applicants satisfied the court that copyright subsisted in the works, including in the stylised marks.

Having established subsistence and ownership of copyright, it was next necessary to establish Paul’s infringement of them. For both the pirated products and genuine products, infringement was established under Section 37 of the Copyright Act. Under that section, unauthorised reproduction of artistic works and unauthorised importation for sale, offer for sale or sale of artistic works (or, in either case, of products bearing those works) is an infringement of copyright “if the importer knew or ought reasonably to have known that the making of the article would, if the article had been made in Australia by the importer, have constituted an infringement of copyright”. In light of this, both the pirated products (bearing unauthorised reproductions of works) and the genuine products (bearing authorised reproductions of the works, but imported or sold without their owner’s authorisation) were held to infringe the applicants’ copyright. In addition, unauthorised reproduction of the stylised marks by Paul’s in its advertising was also held to constitute an infringement under Section 37.

By relying on their copyright subsisting in those works, including in the stylised marks, the applicants halted:
  • Paul’s unauthorised reproduction of stylised marks in its brochures;
  • the unauthorised importation and sale of products bearing unauthorised reproductions of their artistic works; and
  • the unauthorised importation and sale of genuine products, regardless of whether the products bearing those works were genuine or not.
Daniel Plane and Faisal Mian, Corrs Chambers Westgarth, Melbourne

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