Parallel Universes Converge: Trade Mark Act Amendments

An act with the lengthy title Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Act 2018 [Amending Act] was passed by both Houses of the Commonwealth Parliament on 16 August 2018 and received Royal Assent on 24 August 2018. As the name of the Amending Act implies, the primary purpose of the Act is to give effect to recommendations of the Productivity Commission and the first set of amendments in Part 1 of Schedule 1 of the Act relate to Parallel Importation.

The Amending Act amends the Trade Marks Act 1995 (Cth) [Trade Marks Act] and contains a number of other amendments in relation to Acts relating to intellectual property, but only the parallel importation amendments for trade marks are discussed in this article.

What is parallel importation?

Parallel importation of goods occurs when goods bearing a trade mark that is registered in Australia are imported into Australia from overseas. The Explanatory Memorandum to the Amending Act states that:

The Australian Government’s policy position on parallel imports is that they increase competition and the Trade Marks Act was intended to allow for the parallel importation of legitimately trade-marked goods.

The Trade Marks Act already contains Section 123 which provides that if a trade mark is used in relation to goods or services that are similar to goods or services for which the trade mark is registered, and the trade mark has been affixed to the goods or used in relation to services with the consent of the registered owner of the trade mark, this will not infringe the trade mark. In relation to Section 123, the Explanatory Memorandum says:

However, the existing Section 123 is limited in its scope and clarity, and this has permitted the use of various corporate or contractual arrangements that subvert the policy intent of allowing parallel imports. The amendments in this Part are intended to ensure that parallel imports of legitimately marked goods are not taken to infringe an Australian registered trade mark when the goods have first been brought to market by the registered owner of that mark or another person who has (or had at the relevant time) some sort of relevant commercial or contractual relationship with the registered owner.

Amendments to the Trade Marks Act

The amendments remove the references to goods in Section 123, so that it will now only apply to services, and a new Section 122A Exhaustion of a Registered Trade Mark in relation to goods has been inserted.

As the Explanatory Memorandum indicates, the new section can apply to goods to which a trade mark has been applied either by or with the consent of a range of relevant persons including:

  • the registered owner; or
  • an authorised user; or
  • a person permitted to use the trade mark by the registered owner; or
  • a person permitted to use the trademark by an authorised user; or
  • a person with significant influence over the use of the trade mark by the registered owner or an authorised user”; or
  • an associated entity of a relevant person.

Reasonable enquiries

The new Section 122A does not, however, apply automatically to exonerate an infringement of a trade mark by the importation of goods to which the trade mark is applied. It is necessary for a person seeking to use the section as a defence against a claim of infringement of a trade mark to make “reasonable enquiries” (Section 122A(1)(b)) and to show that:

at the time of use, a reasonable person, after making those enquiries, would have concluded that the trade mark had been applied to, or in relation to, the goods by, or with the consent of, a person (a relevant person) …

As noted above, this can be the registered owner of the trade mark in Australia, or other persons which the Explanatory Memorandum describes as having “some sort of relevant commercial or contractual relationship”.

Nature of consent

The nature of the consent that is required for the operation of Section 122A(c) is expanded by Section 122A(2) and includes consent subject to a condition, e.g. that goods may only be sold in a foreign country, or consent that can be reasonably inferred from conduct.

The classes of person who may give a consent are also extended in Section 122A, as a person permitted to give consent may be permitted where the permission arose directly or indirectly or “by way of proprietary interest, contract, arrangement, understanding, a combination of those things or otherwise”.

Also, in considering whether a person with significant influence over the use of the trade mark under Section 122A(1)(c)(v) had that influence, subsection (4) requires that the manner in which the influence arose must be disregarded, for example whether it arose directly or indirectly, or by way of proprietary interest, contract, arrangement, understanding, a combination of those things or otherwise.

What will the effect be?

Undoubtedly new Section 122A will have an effect in limiting actions that a registered trade mark proprietor may take in relation to parallel imports of goods. However, some of the concepts and wording of the section may not be as clear as the Explanatory Memorandum confidently asserts when it states that “the amendments also introduce greater clarity and certainty in how the provisions operate”. A number of the concepts in the new section may not be clear, and it may be that the new provisions will require some judicial interpretation.

For more information, please contact:
Sandy Donaldson

Sandy Donaldson
Director
p.  +61 8 8124 1954
e.  Email me

This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.

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