Goods manufactured contrary to licence agreement are not "genuine goods"

Australia

In Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd ([2012] FCAFC 51, April 11 2012), the Full Court of the Federal Court of Australia has confirmed that the exclusive rights of a trademark owner will be infringed by the importation into Australia of goods bearing the registered mark in circumstances where the terms of the relevant manufacturing licence restricted the supply of the goods and the use of the mark to India.

Great White Shark Enterprises LLC (GWS) is the owner of two registered trademarks for apparel, footwear and headwear. The first mark consisted of the name Greg Norman (being the name of the famous Australian golfer). The second mark consisted of a stylised depiction of a shark, which is Norman’s commonly used nickname.

Greg Norman Collections Inc (GNC) holds the head licence for the two Greg Norman marks from GWS and granted a sub-licence to BTB Marketing Pvt Ltd to use the Greg Norman marks in India. However, BTB also manufactured clothing for companies outside India and the clothing in question ultimately was purchased from one of those companies by Paul’s Retail Pty Limited. Paul’s Retail then imported and sold the goods in Australia.

GWS and GNC sued Paul’s Retail for infringement of the Greg Norman marks under Section 120 of the Trademarks Act 1995 (Cth). Paul’s Retail's defence was based on Section 123 of the act - that is, it argued that it had not infringed the Greg Norman marks because BTB had applied the trademarks to the clothing with the consent of GWS through GNC as the head licensor. 

The trial judge rejected this defence. He said that the question of whether a mark has been applied to goods with the consent of the registered owner of the trademark is one of fact. The substantive basis of the judgment was as follows:

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 … outside the territory.”

However, Paul’s Retail maintained on appeal that, as a matter of fundamental principle, there can be no infringement of a registered trademark in respect of the importation or supply of "genuine goods" (namely, those upon which a registered trademark is properly used). This argument was based on the judgment of Clauson J in Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton ([1930] 1 Ch 330). Alternatively, Paul’s Retail submitted that the Champagne Heidsieck principle is reflected in Section 123 of the act, which creates “a true exception” to infringement.

Paul’s Retail therefore asserted that the two Greg Norman marks had been applied to the goods with the consent of the registered owner and that this was so notwithstanding the territorial limitation imposed by the licence agreement under which BTB manufactured the goods.

In rejecting this argument, the Full Court noted that the goods supplied by BTB were specifically manufactured by BTB for supply outside India and that this was forbidden by the express terms of the licence agreement. It followed, therefore, that the goods were not “genuine goods” within the Champagne Heidsieck principle because they were not goods “upon which the plaintiffs’ marks were properly used”. Accordingly, the Full Court held that BTB stood in no different position to a third party applying the Greg Norman marks who had no licence agreement with GWS or its licensees.

Similarly, or for the same substantive reason, it could not be said that the Greg Norman marks had been applied by BTB with the consent of the registered owner because the relevant consent was limited expressly to the territory of India.

Julian Gyngell, Kepdowrie Chambers, Wahroonga

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