The Full Court of the Federal Court of Australia has recently confirmed that under Australian law a parallel importer may import, repackage (via processes unknown), market and sell products in the importer’s new packaging bearing a registered trade mark applied without the consent of the trade mark holder and this will not infringe the registered trade mark.

In November 2015, we reported on the first instance decision of Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd here. In brief, the respondent (Trojan) parallel imports genuine cigars manufactured by, or with the consent of, the applicant (STG) in Belgium and Holland. The cigars are imported in STG packaging bearing STG trade marks, which Trojan then re-packages to comply with the Australian Tobacco Plain Packaging laws. It was not in dispute that STG had not given consent for Trojan to reapply its trade mark to the cigars.

While this repackaging was a “use” of STG’s trade marks under the Trade Marks Act 1995 (the Act), it was found to be use with consent under section 123(1) because “the operation of this section is not expressly or impliedly confined to a situation in which the goods still bear the mark as applied by the owner.” Once the registered owner has applied its mark to the relevant goods, the defence is engaged and “it will be open to another person to purchase the goods, remove the mark, and then re-apply it for the purposes of resale”.

This judgment has not been appealed to the High Court.

Implications and recommendations

This judgment was made in the context of Australian tobacco plain packaging laws, but may have wider implications for any industry where there is a need to repackage products to comply with regulatory requirements, or potentially even where products are repackaged for practical or other reasons, including re-sizing, separate sale, changes to language and customising.

However, there are strategies available to trade mark owners to protect their trade marks even in the face of this decision. For example:

  1. Affix labels prohibiting repackaging of products: a trade mark holder can add a notice directly on the goods prohibiting application of the trade mark to goods or in relation to those goods where their packaging has been altered. Breach of such a prohibition also amounts to infringement of the trade mark, but s 123 does not provide a defence to such a claim. In order to rely on s 123, a purchaser will need to have acquired the goods in good faith and without notice of the prohibition to avoid infringing the trade mark.

  2. Contractual restraints: a trade mark owner can impose contractual restrictions on its distributor or manufacturer limiting the territories in which products bearing the trade mark can be on-sold. Where that distributor or manufacturer sells products outside its authorised territory, or sells to a person it knows will sell the products outside the authorised territory, this may in some circumstances breach the terms of the original consent and prevent reliance on s 123.

  3. Structural changes: as consent must be from the trade mark holder in Australia, another strategy is to have trade marks in different jurisdictions held by different entities. This leverages the national limitations of rights in respect of each trade mark, even if the same mark is registered in other countries.

While this latest development in the law of trade marks is disappointing for brand owners and trade marks holders, it highlights the importance of regularly reviewing brand strategy and IP portfolio management to ensure that strategies for preserving the integrity and value of global brands remain effective in the face of changing local laws.