In a recent appeal decision, the Full Court of the Federal Court of Australia found that the appellants infringed trademarks owned by Lonsdale Australia Limited (Lonsdale Australia) by importing into, and promoting and selling in, Australia Lonsdale branded goods that had been produced on behalf of the licensee of Lonsdale Australia’s related company. Paul’s Retail Pty Ltd v. Lonsdale Australia Ltd
,  FCAFC 130 (Sept. 11, 2012).
Lonsdale Australia, a U.K. company with the same ultimate holding company as the U.K. company Lonsdale Sports Limited (LSL), acquired from LSL various Lonsdale trademarks in Australia (the Australian Registered Marks), including THE ORIGINAL LONSDALE LONDON (illustrated), LONSDALE LONDON and stylized Lion Device (the Subject Marks). It also acquired the exclusive license between LSL and an Australian company for the Australian company to promote, distribute and sell in Australia goods bearing the Australian Registered Marks.
In Europe, LSL had granted a German company, Punch GmbH (Punch), a license to promote, distribute and sell goods bearing certain Lonsdale trademarks within a defined European territory. Pursuant to this license, Punch sold Lonsdale branded goods to a Cypriot company (Punch’s Goods), and some of Punch’s Goods ultimately reached one of the appellants, Paul’s Retail Pty Ltd, which sold or offered to sell them in Australia. Others were held by Australian Customs under the customs seizure provisions of the Trade Marks Act, 1995 (Act).
All of Punch’s Goods bore trademarks that were substantially identical and/or deceptively similar to the Australian Registered Marks, and Lonsdale Australia filed an action for trademark infringement.
The appellants claimed they had a defense to infringement under Section 123(1) of the Act, which provides that infringement does not occur if the trademark on the subject goods was applied by or with the consent of the registered trademark owner (Section 123 Defense). The Section 123 Defense is often relied on as a defense to infringement by parallel/gray market importers.
However, the trial judge did not characterize Punch’s Goods as parallel imports. In fact, some of the goods bore trademarks that Punch was not licensed to use and therefore were counterfeit. As to the other goods, the trial judge found that the Section 123 Defense was not established, for the following reasons:
- No chain of title could be established linking Lonsdale Australia to the goods, and there was no evidence to suggest that Lonsdale Australia played any role in the application of the trademarks to any of Punch’s Goods.
- The entity that applied the marks to Punch’s Goods, Punch, was not a member of the same corporate group as Lonsdale Australia. In this case, there was separate ownership of the trademarks in Europe and Australia and separate manufacture (under license) of the relevant goods in each jurisdiction.
- There was no evidence to suggest that Lonsdale Australia took, or failed to take, any step that could be considered consent under Section 123 of the Act.
On appeal, while the Full Court identified the key issue as the proper construction and interpretation of Section 123, it did not find it necessary to reach a conclusion regarding that. Rather, focusing on the license granted by LSL to Punch, it found on the facts that the consent given by LSL to Punch was limited in its terms to “the non exclusive right to promote, distribute and sell Products bearing the Trade Marks in the Territory” in Europe. To extend the consent to other areas would be to deny the evident intention of the parties to the license. Therefore, the Section 123 Defense was not available to the appellants, and infringement of Lonsdale Australia’s marks was established.
The decision is available at www.auslii.edu.au/au/cases/cth/FCA/2012/130.html
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© 2012 International Trademark Association