Polo/Lauren Company L.P. v Ziliani Holdings Pty Ltd

The Federal Court has confirmed that the door is now shut to trade mark owners seeking to use copyright in a mark or label as a means of preventing parallel importation in the recent decision of Rares J in The Polo/Lauren Company L.P. v Ziliani Holdings Pty Ltd [2008] FCA 49.

Ziliani Holdings (Ziliani) had imported into Australia for sale a number of articles of clothing onto which the Polo/Lauren ‘polo player logo’ was embroidered. Ziliani did not have the licence or consent of Polo/Lauren to import or sell those articles in Australia. The central issue in the case was whether sales to and purchases by Ziliani in the United States of genuine articles of clothing under the Ralph Lauren brand entitled it to ‘parallel import’ those goods into Australia.

Polo/Lauren had claimed that Ziliani infringed its copyright in the ‘polo player logo’ in Australia when it appeared embroidered on a genuine article imported into Australia. However, the proceedings were dismissed with costs.

The main question was whether a symbol or trade mark comprised of an artistic work when lawfully applied or embroidered overseas to the external surface of an article of clothing, was protected by copyright under the Copyright Act 1968 (Cth) (“the Act”) such that the copyright owner in Australia could prevent importation into, or sale in, Australia. This turned on whether the ‘polo player logo’ when embroidered on an article of clothing was a “non-infringing accessory” and therefore within the scope of section 44C of the Act.

In a similar manner to section 123 of the Trade Marks Act 1995, section 44C provides that copyright in a work, a copy of which is on or embodied in a “non infringing accessory” to an article is not infringed by importing the accessory with the article. The term “non infringing accessory” is broadly defined in section 10 of the Act to be an accessory made in a Berne Convention or WTO country with the permission of the copyright owner in that country. An “accessory” is also broadly defined and relevantly includes a “label” affixed to, or incorporated into the surface of the article.

Section 44C of the Act was introduced in 1998 following the decision of Young J in the Supreme Court of New South Wales in R & A Bailey & Co Ltd v Boccaccio Pty Ltd ((1986) 4 NSWLR 701; 77 ALR 177) in which the plaintiffs, who owned copyright in a painting appearing on a label affixed to a liqueur bottle, were entitled to restrain the importation and sale of liqueur in the bottles on which the label appeared. The Copyright Law Review Committee in recommending the amendment to the Act stated that distributors of goods should not be able to control the market for their products by resorting to the subterfuge of devising a label or a package in which copyright subsists. Rares J stated that the 1998 amendments to the Act were designed to prevent such an inappropriate use of copyright.

Polo/Lauren argued that the polo player logo was not a label but rather a decorative feature of articles on which it was placed. Rares J noted that the term “label” is not defined in the Act and therefore it was likely that the ordinary English meaning was that intended by Parliament. This was held to include a brand name, trade mark and the name by which a design or fashion house, and its product, such as ‘Polo’ and ‘Ralph Lauren’ and ‘Polo Ralph Lauren’, is generally known.

The evidence accepted by Rares J had established that if a shirt had the polo player logo on it, the presence of the logo conveyed to the person looking at it that it was manufactured by an entity within the Ralph Lauren group. According to Rares J, the polo player logo ‘labels’ the garment as a product of that design or fashion house and was therefore a label within the definition of accessory.

Accordingly, it was held that the polo player logo when embroidered on an article of clothing was a “non-infringing accessory”, being a “label” for the purposes of section 44C and therefore that copyright was not infringed by the importation or sale of the article. Rares J in dismissing the proceedings, stated that the Trade Marks Act and the tort of passing off adequately protected trade mark owners of wrongful exploitation of the trade mark by another.

Additionally, Rares J held that the copyright/designs overlap provisions would apply to the ‘polo player logo’ such that it would not be an infringement of copyright to embroider the polo player logo on an article of clothing in Australia. Therefore an importer in that situation would not be liable for copyright infringement as it could not have the requisite knowledge that the article would infringe copyright if made in Australia.