Good-faith use of mark must include special language, rules court

In Nokia Corporation v Mai, the Federal Court of Australia has issued a summary judgment against the defendant, a seller of counterfeit accessories for Nokia mobile phones. The court found that a good-faith use of the NOKIA mark would have included special, non-ambiguous language, such as 'suitable for use with'.

Truyen Mai sold mobile phone accessories, including mobile phone covers, straps and batteries, bearing the mark NOKIA. Nokia made several trap purchases of the counterfeit goods at a market stall and kiosk shop. Having issued a letter of demand, Nokia obtained a deed of undertaking from Mai to desist from selling the accessories. However, a subsequent purchase established that Mai was in breach of his undertaking. In addition, customs made two seizures of imports from Hong Kong, which Mai co-signed, containing counterfeit Nokia accessories. Nokia therefore filed a summary judgment action against Mai. In response, Mai claimed that his use of the NOKIA mark did not amount to infringement as it was done "in good faith to indicate the intended purpose of goods (in particular as accessories or spare parts) or services", pursuant to Section 122(1)(c) of the Trademarks Act 1995.

The Federal Court carried out a detailed examination of Mai's defence. It established that the good-faith element requires use of the mark to be made "honestly and with no ulterior motive", as quoted from Angove's Pty Ltd v Johnson. However, the court found that the evidence deposed by Nokia that a shop assistant stated that a battery bearing the NOKIA mark was genuine during a trap purchase indicated a lack of good faith. The court also rejected the contention that items bearing words 'for Nokia' displayed good faith, thus taking a narrow view of what would be appropriate to indicate a fair reference to a registered trademark. The court stated that (i) depending on the packaging and degree of prominence of the mark, a specific language is needed to convey that accessories or parts are adapted for use with a trademarked product, making clear that in no way are the goods represented as actual goods of the trademark owner, and (ii) it would be "difficult to make out the defence in the absence of words such as 'suitable for use with' or 'suitable in' when referring to the trademark".

In the case at hand, the court ruled that the prominent display of the mark NOKIA on the infringing items indicated a badge of origin of the goods. The fact that there were differences in packaging between the Nokia products and Mai's products did not sufficiently indicate that the goods were "merely adapted for use in connection with Nokia products".

The question was raised whether the imported items seized by customs were infringements under the Trademarks Act. The court found that, by attempting to pick up the goods from Melbourne Airport, Mai had acted in the course of his business activities with the intention of selling the items. This made it implausible for Mai not to have known that the imported goods bore the Nokia trademarks. These circumstances led the court to conclude that, as the facts were indistinguishable from those of Sony Computer Entertainment Australia Pty Ltd v Saleh, the importation was an infringement under Section 120(1) of the act.

The court awarded costs on an indemnity basis, rather than the usual party and party basis, in favour of Nokia. This is because Mai's conduct in pursuing the action despite a clear breach of the law came under the principles set out in Colgate-Palmolive v Cussons Pty Limited, where the court ruled that indemnity costs may be granted in circumstances such as:

• a wilful disregard of known facts or clearly established law;
  
  
• making allegations that ought never to have been made;
  
  
• undue prolongation of a case by groundless contentions; or
  
  
• an imprudent refusal of an offer of compromise.

The court also ordered, among other things, the destruction of all counterfeit products in Mai's possession.

Peter Godhard, Allens Arthur Robinson, Sydney