The Tobacco Plain Packaging Act 2011 (TPP) and associated regulations set detailed requirements for the packaging of tobacco products in Australia. This led to interesting results in the recent case of Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086, where Trojan, a parallel importer of cigar products, removed the original external packaging of the imported products and replaced them with new TPP-compliant packaging including the manufacturer Scandinavian Tobacco’s trade marks so the cigars could be lawfully sold in Australia.

Scandinavian Tobacco commenced proceedings for trade mark infringement (as well as contravention of the Australian Consumer Law and passing off).  Allsop reluctantly followed previous cases such as Paul’s Retail Pty Ltd v Lonsdale Australia Ltd [2012] FCAFC 130 and Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd [2012] FCAFC 51 in finding that the sale of the cigars in the Trojan TTP compliant packaging amounted to trade mark infringement. However, in those prior cases the trade mark owners had filed detailed evidence regarding the source of the goods including the original application of the mark to the goods outside the terms of the applicable licence. This meant the parallel importer in those cases could not rely on the section 123 defence, which provides that:

…a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.

In this case, Scandinavian Tobacco was essentially relying on the fact that it had never projected goods onto any market in the Trojan TPP-compliant packaging. However, the cigars inside the original packaging also bore Scandinavian Tobacco branding including on a paper band around the inner cellophane wrap and on the outer tube in which each cigar was packaged. As a result, Allsop J found that Trojan’s application of the trade marks to the external TPP compliant packaging did fall under the section 123 defence and it was not liable for trade mark infringement.

The case will have serious ramifications for controlling distribution channels for goods which are branded on the goods themselves or other inner packaging as well as outer packaging. In that case, subsequent dealers may have more leeway to repackage or otherwise re-apply trade marks to exterior packaging for the goods for any reason, including regulatory compliance such as TPP or cosmetic reasons, such as to replace foreign language exterior packaging.