Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd  FCAFC 91 (24 June 2016).
The Full Federal Court's decision in Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd provides guidance on the scope of the defence to trade mark infringement under section 123 of the Trade Marks Act 1995 (the Act) and limits the rights of trade mark owners in preventing parallel importers from re-applying their trade marks, if those trade marks were previously applied to the goods by the trade mark owner or with the trade mark owner's consent.
The Full Federal Court dismissed Scandinavian Tobacco Group Eersel BV's (STG) appeal against the primary judge's decision that Trojan Trading Company Pty Ltd (Trojan) did not infringe STG's trade marks, nor did it engage in misleading or deceptive conduct or passing off.
This decision has potential impacts for trade mark owners' goodwill, particularly where the branded goods are subject to parallel importation, as re-sellers are permitted to remove and re-apply the owners' marks without consent. In this case, the reason for re-applying STG's marks was so that the packaging complied with Australian plain packaging laws, however, the decision could have more far-reaching implications, as a re-seller could potentially re-package genuine goods for any reason.
STG manufactures and sells cigars and is based out of the Netherlands. It is the owner of Australian trade marks CAFÉ CRÈME, HENRI WINTERMANS, and LA PAZ (the STG trade marks). STG has an authorised distributor in Australia. Trojan is an importer and supplier of cigars. It imports cigars from overseas and re-packages and sells them in Australia, including cigars made by STG. When Trojan acquires the STG cigars, it removes them from their original packaging and re-packages them so that the new packaging complies with the Australian plain packaging laws.
Trade mark issues on appeal
The Full Court considered that there were two trade mark issues on appeal:
- Whether Trojan used the STG trade marks as trade marks (as required for trade mark infringement under section 120 of the Act).
- Whether Trojan could rely on the defence to trade mark infringement that it did not infringe STG's trade mark rights because the STG trade marks were applied to the cigars by or with the consent of STG (within the meaning of section 123 of the Act).
It was held that Trojan had used the STG trade marks as trade marks, however, it did not infringe STG's trade mark rights because the defence under section 123 applied.
Their Honours found that a person who imports and sells goods to which a registered mark was applied by or with the consent of its owner at the time of manufacture will have used the trade mark.
The Full Court also accepted, as the primary judge had, Trojan's submissions on the construction of section 123. That is, where a registered trade mark is applied to goods by the owner, then it is open to a third party to purchase the goods, remove the mark and then re-apply the mark for the purposes of re-sale. In other words, because STG had consented to the application of its trade marks on its cigars, Trojan was free remove those marks and re-apply them.
This decision highlights that trade mark owners must take precautionary measures to protect their trade mark rights against parallel importers, as they may not be able to rely on trade mark rights to prevent third party re-sellers from re-packaging their genuine goods.
As mentioned by the Full Court in this case, trade mark owners can seek to rely on other causes of action such as passing off and misleading or deceptive conduct in these circumstances. Although, as was the case here, these actions are not always successful.
Alternatively, trade mark owners can elect to display a notice on their goods prohibiting the re-packaging of their goods (a mechanism available under section 121 of the Act). If an effective notice is displayed on the goods and a re-seller breaches that notice, then trade mark owners could have some recourse under the Act for infringement.
Another option is to have trade marks in different jurisdictions held by separate entities. In such a case, the repackaging of products where the trade mark was applied by a different entity from that which holds the trade mark in Australia, may amount to infringement of the Australian trade mark. This issue has not been completely settled at law.
While this decision is concerning for trade mark owners, it highlights the fact that rights holders need to take active steps to preserve their goodwill. It may be that trade mark owners have to seriously consider the option of placing notices on their packaging in order to prevent third parties from removing it. The decision to place notices on packaging may also be a good strategy to prevent the parallel importation of cigarettes or cigars into Australia as, without the ability to re-package the genuine goods to comply with plain packaging laws, the goods cannot be sold in Australia.