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Fashion, Parallel Imports and Trade Mark Infringement – Part I

We have recently been advising a client in relation to an alleged trade mark infringement.

The client has been sued in the Federal Court of Australia in circumstances where they imported items of clothing from Europe for resale in Australia. The goods were branded with a well-known international label. Our client purchased the goods, amongst others, for resale in the belief that they were genuine goods. That claim is being tested.

Under Australian trade mark law, a registered trade mark is infringed if it used as a sign that is substantially identical with, or deceptively similar to the trade mark in respect of which the goods are registered. The owner of the registered trade mark has a monopoly over its use in connection with the goods or services in respect of which it is registered. “Use as a sign” is an expression that is principally directed to advertising and marketing material, however it can also apply to the label sewn into a garment if the label features the registered trade mark.

Most international fashion brands register their trade marks in the major territories where they have distribution arrangements. Usually, their local distributor has the right to use the trade mark and uses those rights to prevent third parties from promoting the goods and/or trading off the reputation for the products the registered trade mark owner has acquired.

The Trade Marks Act 1995 (Cth) provides a defence for resellers of trade marked goods where the registered trade mark (in this case the label sewn into a garment) has been applied with the consent of the trade mark owner at the original point of manufacture. In other words, if the goods have been manufactured for or on behalf of the trade mark owner and are genuine goods, a person who sells goods that feature the registered trade mark does not infringe the trade mark. In addition, using the trade mark to advertise or promote the goods would also be permitted, although copyright issues might arise. In some cases the local distributor may own the trade mark, in which case the defence may not be available.

The onus of proving “genuineness” is the responsibility of the party seeking to rely on the defence. In practical terms, that will mean obtaining evidence through the supply chain to demonstrate a direct connection back to the trade mark owner. In some circumstances, obtaining such evidence may be difficult. Failure to provide satisfactory evidence will usually lead to the assessment of damages or loss of profits, injunctions and significant costs orders.

There have been some recent court decisions which provide some valuable lessons in this area of law. We are writing about them now and will publish the content on our website in coming weeks.

For advice on trade mark law, branding and marketing law contact Peter English or Anthea Eills.