Use of manufacturer's mark on OEM goods is infringing

In Brother Industries Ltd v Dynamic Supplies Pty Ltd ([2007] FCA 1490, September 26 2007), the Federal Court of Australia has allowed Brother Industries Ltd’s claim that Dynamic Supplies Pty Ltd had infringed its registered trademark.

The trademark BROTHER is used in Australia in relation to printer drums (and other products) manufactured by Brother, a Japanese company, and imported and distributed by its Australian subsidiary, Brother International (Aust) Pty Ltd. Brother also makes an unbranded printer drum unit which is similar but not identical to its BROTHER-branded model. The unbranded units are commonly known as 'original equipment manufacturer' (OEM) products. All OEM products produced by Brother are sold exclusively through another company under a brand name unrelated to Brother or with no brand name at all.

Dynamic Supplies imports and distributes genuine printer drum units which are made by Brother and sold under the BROTHER trademark. However, in 2003 Dynamic sourced certain shipments of Brother-manufactured but unbranded OEM printer drums which were subsequently branded as BROTHER. Brother sued Dynamic for:

• infringement of its registered trademarks under Section 120 of the Trademarks Act 1995;
  
  
• engaging in misleading and deceptive conduct in contravention of the Trade Practices Act 1974; and
  
  
• passing off.

The interesting trademark-related issues in this case arose out of two of the defences relied on by Dynamic. The first was that Brother's right of exclusive use conferred by Section 20 of the Trademarks Act operates only to prevent the sale in Australia of goods that are not Brother's but which bear its trademark. Given that the goods in this case were in fact the products (albeit the OEM unbranded products) of Brother, Dynamic argued that its use of BROTHER accurately indicated that the goods were those of Brother and that Brother itself was thus the 'user' of the BROTHER trademark for the purposes of the act.

Justice Tamberlin considered the authorities and discerned the two following general principles:

• Where a foreign manufacturer projects a product into the course of trade in Australia, that manufacturer retains the use of any trademark which attaches to that product; and
  
  
• A retailer in Australia 'uses' that mark as a trademark if it applies the manufacturer's mark to a product, thereby giving rise to infringement of the mark where there is no authorization.

However, this case was distinguishable from these general principles: Brother's lack of knowledge of the presence of its OEM products in Australia and its specific intent to disassociate itself from its OEM products meant that Brother could not be treated as the user of a trademark which had been applied falsely to its OEM products. Thus, the fact that a counterfeiter repackaged Brother's OEM products in unauthorized BROTHER packaging did not support Dynamic's defence that Brother was the user of the mark.

Dynamic's second defence was that Brother had impliedly authorized the use of the BROTHER mark for the purposes of Section 123(1) of the act. This argument was also rejected. On the facts, even if Brother's US subsidiary had been part of the OEM product supply chain (which was not proven), Dynamic could not demonstrate that Brother, being the registered owner of the relevant trademarks in Australia, expressly or impliedly consented to the application of its trademark. The court adopted a strict interpretation of Section 123, holding that the fact that Brother's US subsidiary is a related entity within the same corporate group does not affect the clear meaning of Section 123 - that is, an operative consent to use Brother's Australian trademarks must be obtained from Brother in Japan.

Julian Gyngell, Julian Gyngell, Wahroonga