Trade mark pro­tec­tion against par­al­lel importers 

When an over­seas man­u­fac­tur­er exports to Aus­tralia, it may choose to set up a dis­trib­u­tor in Aus­tralia under an exclu­sive dis­tri­b­u­tion agree­ment. Unfor­tu­nate­ly for the exclu­sive Aus­tralian dis­trib­u­tor, unau­tho­rised par­ties may source and sell in Aus­tralia gen­uine prod­ucts which may have been orig­i­nal­ly man­u­fac­tured and trade marked by the over­seas man­u­fac­tur­er. This par­al­lel impor­ta­tion by unau­tho­rised par­ties strikes at the heart of the exclu­sive agree­ment between the over­seas man­u­fac­tur­er and its Aus­tralian dis­trib­u­tor. An impor­tant ques­tion is whether this type of par­al­lel impor­ta­tion rep­re­sents an infringe­ment of the trade mark rights of the over­seas man­u­fac­tur­er in Aus­tralia. The short answer to that ques­tion is that such con­duct does not usu­al­ly con­sti­tute trade mark infringe­ment. Par­al­lel impor­ta­tion of this nature is gen­er­al­ly pro­tect­ed under sec­tion 123 of the Aus­tralian Trade Marks Act (Act). Under this sec­tion of the Act, no trade mark own­er can claim infringe­ment of its trade mark if the sale of the sub­ject goods bears a trade mark which has been applied by the man­u­fac­tur­er or with its con­sent. Fur­ther­more, the rights of the par­al­lel importer to sell such gen­uine goods in Aus­tralia gen­er­al­ly extend to the pub­li­cis­ing, adver­tis­ing and dis­tri­b­u­tion of such gen­uine goods. 

Does the over­seas man­u­fac­tur­er own the Aus­tralian trade mark registration?

The above pro­tec­tion of the par­al­lel importer against a claim of trade mark infringe­ment assumes that the over­seas man­u­fac­tur­er owns its trade mark in Aus­tralia. How­ev­er, trade mark reg­is­tra­tion rights apply only to the juris­dic­tion in which the mark is reg­is­tered. As a con­se­quence, if the over­seas man­u­fac­tur­er allows its Aus­tralian dis­trib­u­tor to own the trade mark in Aus­tralia then the par­al­lel importer usu­al­ly can­not claim the pro­tec­tion of sec­tion 123 of the Act because the Aus­tralian trade mark own­er did not apply the sub­ject trade mark to the import­ed goods.

Con­di­tion­al assign­ment agreements

Nat­u­ral­ly, most over­seas man­u­fac­tur­ers are reluc­tant to allow their Aus­tralian dis­trib­u­tors to obtain own­er­ship of their trade mark rights in Aus­tralia. As a con­se­quence, some over­seas man­u­fac­tur­ers have set up con­di­tion­al assign­ment agree­ments with their Aus­tralian dis­trib­u­tors under which the dis­trib­u­tor is allowed to become the reg­is­tered own­er of the trade mark in Aus­tralia on the con­di­tion that the mark will be assigned back to the over­seas man­u­fac­tur­er when the dis­tri­b­u­tion agree­ment ter­mi­nates. This con­trived arrange­ment has gen­er­al­ly proven to be suc­cess­ful under Aus­tralian law. Aus­tralian courts have been pre­pared to accept the ben­e­fi­cial own­er­ship of the Aus­tralian trade mark by the dis­trib­u­tor, declin­ing to look behind this own­er­ship into the con­trived assign­ment agree­ment between the dis­trib­u­tor and the over­seas manufacturer. 

Arms-length rela­tion­ship with Aus­tralian distributor

There are cer­tain caveats to the gen­er­al posi­tion on par­al­lel impor­ta­tion out­lined above. It is impor­tant for the over­seas man­u­fac­tur­er to main­tain an arms-length rela­tion­ship with its Aus­tralian dis­trib­u­tor which owns the trade mark in Aus­tralia. If the over­seas man­u­fac­tur­er takes a con­trol­ling finan­cial inter­est in the Aus­tralian dis­trib­u­tor, that dis­trib­u­tor’s own­er­ship of the trade mark could be deemed to be under the con­trol of the over­seas man­u­fac­tur­er. As a con­se­quence, the Aus­tralian trade mark own­er could be seen to be con­sent­ing to the affix­ing of the trade mark applied by the over­seas man­u­fac­tur­er. In those cir­cum­stances, the par­al­lel importer could there­by claim the pro­tec­tion of sec­tion 123 of the Act.

Trade mark affixed with the con­sent of the over­seas manufacturer

From the view­point of the par­al­lel importer, it is impor­tant to first check that the over­seas man­u­fac­tur­er is the reg­is­tered Aus­tralian own­er of the sub­ject trade mark before it com­mences par­al­lel impor­ta­tion into Aus­tralia. How­ev­er, this pre­cau­tion is not fool­proof. It is also impor­tant for the par­al­lel importer to check that the trade mark on the goods it is import­ing was affixed with the con­sent of the over­seas man­u­fac­tur­er. In a world of glob­al sup­ply and com­plex licens­ing arrange­ments, it may be dif­fi­cult to prove that the rel­e­vant con­sent was giv­en to the affix­ing of the trade mark by the over­seas man­u­fac­tur­er. Par­al­lel importers should also be care­ful that they do not expose them­selves to a claim of mis­lead­ing con­duct if they imply that they can pro­vide man­u­fac­tur­er’s war­ranties which may apply to the import­ed goods.

Although the gen­er­al posi­tion under Aus­tralian trade mark law on par­al­lel impor­ta­tion is fair­ly set­tled, there are par­tic­u­lar cir­cum­stances which make it advis­able for Aus­tralian dis­trib­u­tors and par­al­lel importers to con­sult their intel­lec­tu­al prop­er­ty lawyers before embark­ing on major com­mer­cial activ­i­ties which depend on the oper­a­tion of sec­tion 123 of the Act.