We have secured a major win for brand owners in their bid to stop direct imports of their trademarked goods into Australia.
A recent decision in the Federal Court in Lonsdale Australia Limited v Paul’s Retail Pty Ltd & Anor  FCA 584 has established that direct importers of goods into Australia bear the onus of proving that the registered owner of the Australian trade marks has consented to the application of those marks to goods made overseas.
In many cases, that will be difficult for a direct importer to prove. In this case, the Court held that there was no evidence that Lonsdale Australia took any step, or failed to take any step, that could be considered consent by it to the application of the Australian registered trade marks.
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Lonsdale Australia v Paul’s Retail Pty
The “Lonsdale” branded clothing and footwear in this case had been manufactured at the direction of the German licensee Lonsdale Sports Limited (Lonsdale Sports). Lonsdale Sports and Lonsdale Australia are both UK-based companies.
The respondents in the case were PW Inventory Pty Ltd and Paul’s Retail Pty Ltd (Paul’s Retail). Paul’s Retail operates (as trustee) the “Paul’s Warehouse” chain of stores in Australia (Paul’s Warehouse Group).
The Court held that the importation into Australia by PW Inventory Pty Ltd, and sale in Australia by Paul’s Retail, of the goods infringed the Australian registered trade marks of Lonsdale Australia.
Cameron Harvey and Andrew McRobert of Norton Rose Australia issued the proceeding on behalf of Lonsdale Australia on 15 May 2012. Three weeks later, on 5 June 2012, final judgment was delivered by Gordon J.
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The Lonsdale brand clothing and footwear that was imported and sold in Australia by the Paul’s Warehouse Group was manufactured at the direction of the German licensee of Lonsdale Sports. The German licensee is licensed by Lonsdale Sports to promote, distribute and sell goods marked with particular Lonsdale trade marks within a range of European countries.
In August 2011, the German licensee entered into an agreement with a Cyprus-registered company named Unicell Ltd. Pursuant to that agreement the German licensee sold almost 300,000 units of Lonsdale goods to Unicell Ltd. The Paul’s Warehouse Group acquired all of those goods (Paul’s Goods) through a US-based intermediary named TMS LLC.
Although Unicell is registered in Cyprus, title in the Paul’s Goods passed from the German licensee to Unicell Ltd in the Peoples Republic of China (PRC). The Paul’s Goods never entered Europe. They were shipped from the PRC to Colombo, Sri Lanka and then processed and reloaded in Sri Lanka before being shipped to Sydney, Australia through Singapore.
Over 100,000 units of the Paul’s Goods were seized by the Australian Customs and Border Protection Service pursuant to trade mark notifications that had been lodged by Lonsdale Australia.
On 23 May 2012, Lonsdale Australia obtained an interlocutory injunction restraining the Paul’s Warehouse Group from dealing with the Paul’s Goods.
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There were two key legal issues in the case. First, whether the Australian registered trade marks were “used” by the importer when the Paul’s Goods were imported into Australia. Second, whether the Paul’s Warehouse Group could prove that the Australian registered trade marks had been applied to the Paul’s Goods with the consent of the registered owner of those marks.
The Court decided against the Paul’s Warehouse Group on both issues.
The Court held that importation of the Paul’s Goods bearing the Australian registered trade marks was a “use” of those trade marks. On the defence of “consent”, the Court held that the Paul’s Warehouse Group of companies failed to establish that the trade marks were applied to the Paul’s Goods with the consent of Lonsdale Australia. In particular, the consent of Lonsdale Australia could not be established through:
- proof of chain of title to, or the supply chain of, the Paul’s Goods;
- any corporate relationships of Lonsdale Australia; or
- any other evidence that Lonsdale Australia took any step, or failed to take any step, that could be considered consent by it to the application of the Australian registered trade marks.
Ultimately, whether the owner of Australian registered trade marks has consented to the application of those marks to goods made overseas will depend on the facts of the particular case. However, the result in this case provides a powerful additional weapon to trade mark owners in combating direct imports.
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