Don’t infringe my trade marks or I’ll bite! Federal Court rules on the use of the Great White Shark trade marks

On 29 October 2010, the Federal Court of Australia in Sporte Leisure Pty Ltd v Paul's International Pty Ltd (No 3) [2010] FCA 1162 handed down its decision as to whether a licence to use trade marks on goods that were to be manufactured in India, also included a right to export those same goods outside of India.

The Court considered the operation of section 123 of the Trade Marks Act 1995 (Cth) that provides a defence to an infringement where a trade mark is used with the consent of the registered trade mark owner (Section 123 Defence).

Background

The appellants brought a claim against numerous respondents regarding the infringement of both the "Greg Norman" word mark and a shark image mark (Marks). The Marks were registered in class 25 for apparel, footwear and headwear.

The second applicant, Great White Shark Enterprises LLC (Great White) is the owner of the Marks.

The Greg Norman Collection (GNC), being the head licensor of Great White, entered into a limited and non-exclusive license (License) with an Indian manufacturer and distributor.

Under the terms of the Licence, the Indian company was contracted to use the Marks in India only. However, garments which depicted the Marks were manufactured by the Indian Manufacturer and then indirectly exported to Australia.

In early 2009, Paul's Retail Pty Ltd (Paul's Retail) imported the infringing garments into Australia.

Considerations

The key issues raised in this case were:

• whether the Marks were applied to the garments with the consent of Great White; and
• whether shipping the goods outside India was a violation of the License.

Paul's Retail sought to establish that the infringing garments were manufactured by one of Great White's authorised manufacturers, and that the Marks were applied to the garments at the time of manufacture with Great White's consent, thereby giving rise to the Section 123 Defence.

Nicholas J stated that where an owner consents to another person applying the registered mark to goods on the condition that the goods must not be supplied outside a particular territory, then the registered owner would not usually be regarded as having consented to the application of the mark to goods which are intended to be supplied by the person outside of the designated territory.

In this case, His Honour found that there was no consent by Great White to apply the Marks to the garments which were exported outside of India.

Important points to note

When entering into a licence agreement with overseas manufacturers and other parties, trade mark owners and licensees need to ensure:

• they enter into a written agreement that contains clear terms regarding the permitted use of the trade marks; and
• compliance with the terms of the agreement is closely monitored.

This case reinforces the fact that infringing parties cannot escape liability under the Section 123 Defence if they have not complied with the express terms of a license agreement.

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