The Curious Case Of A Foreign Trade Mark Infringer – Remedy on Home Soil

August 11, 2020

It is trite law that when one uses another’s registered trade mark without consent, that user is said to have committed a trade mark infringement.

However, what happens when a foreign company sold infringing products to a 3rd party in another country, and the said 3rd party sold them to retailers for sale to consumers in the local markets? Would the foreign company be said to have committed a trade mark infringement locally?

This question was answered by the Australian Federal Court case of Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited [2016] FCA 280.

Facts The Applicant, Playgro was the registered owner of the ‘PLAYGRO’ trade mark in Australia for games and playthings.

The 1st Respondent and the 2nd Respondent were companies incorporated in Hong Kong who were members of the Playgo Group of companies that designs, manufactures, distributes and wholesale of the children’s toys.

The 1st Respondent was the holding company for the intellectual property of the Group and the registered owner of a trade mark known as ‘PLAYGO’ in Hong Kong, while the 2nd Respondent was responsible for the distribution and wholesale of the Group’s products.

In 2013 and 2014, the 2nd Respondent sold and delivered toys bearing the ‘PLAYGO’ mark to Myer Pty Ltd in China. In turn, Myer, Woolworths and Big W (associated with Woolworths) sold the toys in Australia. The Applicant sued the Respondents for, among others, infringement of its trade mark in Australia at the Federal Court of Australia.

It is interesting to note that Myer, Woolworths and Big W were not named as respondents in the case. This meant that the Applicant brought an action against the source of the infringement directly in Australia, namely the manufacturer and distributor of infringing products in China.

Naturally, the Respondents contended that, among others, that they have not engaged in any conduct in Australia amounting to an infringing ‘use’ of the Applicant’s trade mark.

One of the key issues to be decided by the Federal Court was, whether the Respondents ‘used’ the trade mark in Australia so as to constitute a trade mark  infringement in Australia?

Decision Firstly, the Court decided that the 1st Respondent’s trade mark, ‘PLAYGO’ is deceptively similar to the Applicant’s ‘PLAYGRO’ trade mark. Therefore, goods bearing the ‘PLAYGO’ trade mark are deemed to be infringing products.

Subsequently, the Court decided that the Respondents had used their trade marks in Australia, despite that the 2nd Respondent had sold the infringing products in China.

The Court relied on 2 principles to justify its decision:

(a) In Estex Clothing Manufacturers Pty Limited v Ellis and Goldstein Limited (1997) 116 CLR 254, a foreign trade mark owner resisted an application to remove its trade mark application on the basis that it had not used the trade mark in Australia as the goods bearing its mark had been sold in London first, before its sale by third parties in Australia. It was held that there was use of the trade mark by the foreign owner in Australia because the trade mark was still in use in the course of trade. Only when the goods are bought for consumption do they cease to be used in the course of trade.

(b) On the facts on the present case, the Respondents knew that the infringing goods were to be offered for sale and sold to customers in Australia. Applying the concept discussed in paragraph (a), the Respondents used the ‘PLAYGO’ trade mark in Australia in that it was used as a badge of origin to indicate a connection in the course of trade between the goods and the Respondents.

Therefore, the Court ruled that the Applicant had succeeded in proving its case of trade mark infringement against the Respondents, and orders for injunction damages were granted against them.

Comment In Malaysia, counterfeits and infringing products imported from foreign manufacturers are major issues for local brand owners. Infringements are further complicated by shady online marketplaces where it is difficult to identify infringers.

The approach adopted by the Australian court in the Playgro case is certainly very useful for brand owners as it allows them to attack the source of infringement directly. However, the Playgro case is silent on the liability of foreign manufacturers and distributors when they have no knowledge of the infringements by their products in other jurisdictions. One must be cautious as the approach in the Playgro case is not a one-size fit all solution for brand owners seeking relief in similar cases.