In addition to manufacturing BROTHER branded printer drum units, the Japanese company Brother Industries Ltd (“BIL”) manufactures “original equipment manufacturer” products (“OEM product”). OEM product is not branded with the BROTHER trade mark; it is sold to a third party company that sells or distributes the OEM product under a different brand name.
In these proceedings, BIL and its wholly owned Australian subsidiary applied for injunctive relief claiming that Dynamic Supplies Pty Ltd (“DS”) had infringed registered Australian trade marks and engaged in misleading and deceptive conduct in contravention of sections 52 and 53 of the Trade Practices Act 1974 and the tort of passing off. DS was alleged to have been selling OEM product in counterfeit BROTHER branded packaging.
A number of issues were considered by Justice Tamberlin in relation to the sale in Australia by DS of unbranded printer drum units in counterfeit packaging including:
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- Was the use of BROTHER on the packaging of the DS goods use as a trade mark by DS?
- Did DS use the BROTHER trade mark with the licence or authority of BIL?
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A substantial amount of evidence was adduced by BIL, including evidence as to the coordination between the manufacture and packaging of genuine BROTHER branded drum units and in relation to the composition of the particular packaging used for such products and special coding used thereon.
DS contended that because the products it imported and sold were products of BIL (OEM product) that BIL was the ‘user’ of the BROTHER trade mark for the purposes of the Trade Marks Act 1995.
Several authorities were referred to by DS and distinguished by Justice Tamberlin on the basis that they were not relevant to the particular commercial context of the case; that is, the retail in Australia of product manufactured by BIL from which it had disassociated itself by selling as an OEM product to a third party company, which was then retailed in packaging bearing the BROTHER trade mark, applied without authorisation. Although recognizing that circumstances do arise where a retailer or importer may be said to lawfully ‘use’ a trade mark (ie parallel importation) Justice Tamberlin held that where goods are packaged in counterfeit packaging, the importation is infringing ‘use’ of the trade mark. Reliance was placed on section 7(4) where ‘use’ of a trade mark is defined not only as the application of the mark to the product itself, but also the application of the mark to other items relating to the product such as packaging, invoices and advertisements. DS was therefore determined to have ‘used’ the trade mark when it imported, distributed, offered for sale and sold the drum units.
In light of the evidence adduced by BIL, the packaging of the goods was found to be counterfeit. DS was thereby unable to establish that BIL had expressly or implicitly licensed or authorised the use of the BROTHER trade mark to the drum units, and therefore failed to establish a parallel importation defence to infringement. In particular, it was unable to establish a link in the supply chain back to BIL in Japan. Justice Tamberlin further commented that a finding that Brother Amercia was part of the supply chain would still not allow DS to rely on the parallel importation defence because it was the consent of the registered owner which must be acquired, even if the companies are related entities within the same corporate group (a situation not previously considered in Australian law).
In conclusion, it was held that DS infringed the registered trade marks, and engaged in misleading and deceptive conduct and the tort of passing off.
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The Federal Court judgement
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