Federal Court allows parallel importer to re-package products and apply registered owner's marks

In Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd ([2015] FCA 1086), the Federal Court has considered whether a parallel importer of cigars, which re-packaged the cigars to comply with Australia's tobacco plain packaging laws and re-applied the registered trademarks to that packaging, had engaged in trademark infringement, the tort of passing off, and misleading or deceptive conduct under the Australian Consumer Law.

Scandinavian Tobacco Group Eersel (STG Eersel) and Scandinavian Tobacco Group Australia Pty Ltd (STG Australia) alleged that Trojan Trading Company Pty Ltd had infringed registered Australian trademarks owned by STG Eersel for the word marks CAFÉ CRÈME, HENRI WINTERMANS and LA PAZ, which appear on STG-branded cigars. STG Eersel manufactures machine-made cigars under those three brands overseas and, under a formal distribution agreement, STG Australia is supposed to be the sole distributor and wholesaler of those branded cigars in Australia.

Trojan imports the same, genuine STG-branded cigars (which it purchases from a supplier whose identity was not disclosed in the proceeding), and re-packages, markets and sells the cigars in Australia. Before selling them, Trojan transfers the cigars from the original packaging to compliant plain packaging, to which it applies the word marks.

Chief Justice Allsop first considered whether there was infringing use by Trojan of each of the marks "as a trademark" for the purposes of Section 120(1) of the Trademarks Act. Trojan argued that, despite its re-packaging conduct, it was in fact STG Eersel using the trademarks as STG Eersel had originally applied the trademarks before the re-packaging and Trojan was doing no more than indicating a connection between the cigars and STG Eersel. However, Allsop CJ referred to four binding decisions of the Full Federal Court in which it has been held that even the sale of goods already marked by the registered owner is prima facie infringing use of the mark by the seller. It followed, therefore, that Trojan's conduct in re-packaging and selling the cigars by reference to the registered trademarks amounted to infringing use.

Allsop CJ then considered whether Trojan could rely upon Section 123, which provides that:

"a person who uses a registered trademark in relation to goods that are similar to goods in respect of which the trademark is registered does not infringe the trademark if the trademark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trademark".

Allsop CJ was required to determine which "application" of the trademark Section 123 refers to: the application at the time of original packaging (which was done with the consent of STG Eersel) or the application at the time of the alleged infringement (which was done later by Trojan without consent)?

Allsop CJ agreed with Trojan that the relevant enquiry is whether the trademark has been applied to, or in relation to, the relevant goods, at the time of original packaging or manufacture with the consent of the registered owner. Trojan had used the trademarks in relation to the cigars, being the same goods to which the trademarks had been applied with the consent of STG Eersel at the time of original packaging, and therefore it could rely on Section 123 as an exception or defence to trademark infringement. Allsop CJ said this construction accords with the purpose of Section 123, which is to protect as non-infringing use conduct which does no more than draw a connection between the genuine goods and the registered owner, and does not draw any connection between the goods and that person dealing with the goods who is not the registered owner.

STG also failed to establish that Trojan had engaged in the tort of passing off, and in misleading or deceptive conduct. STG argued that Trojan, by re-packaging the cigars in this way, was misrepresenting that such re-packaging was done with the authority of the original packagers. However, Allsop CJ found there was no such misrepresentation because there was no evidence that anyone would assume that such re-packaging was required to be carried out under some unidentified process of authorised activity.

Andrew Wiseman and Lauren John, Allens, Sydney