Parallel imports, also called grey imports, are genuine goods imported into Australia by someone other than the trade mark owner or an authorised licensee. Grey goods are generally sold at a discounted price, or may be of a different standard or quality from goods intended by the trade mark owner for the Australian market.
In August 2018, s123 of the Trade Marks Act 1995 was replaced with a new section, s122A. This amendment favours parallel importers in Australia, which may cause brand owners to reassess their commercial strategies.
Until recently, s123 of the Trade Marks Act 1995 provided a defence to parties, including importers, using a trade mark to sell or import goods where the trade mark had been applied with the consent of the trade mark owner. What was meant by the ’consent’ of the registered trade mark owner had been the subject of court action in Australia, with previous decisions[i] applying the defence narrowly.
On 24 August 2018, s123(1) was repealed and replaced with a new section, 122A. It provides a limited defence to parallel importers who make “reasonable inquiries” in relation to the trade mark before the time of use.
If, after making these inquiries, a reasonable person would have concluded that the trade mark had been applied to the goods with the consent of the trade mark owner, one of its authorised users, someone with significant influence over the use of the trade mark, or an associated entity of one of these people – then the importation of those goods into Australia will not infringe the relevant trade mark rights in Australia.
In the past, trade mark owners have been able to preclude parallel importers from relying on the section 123(1) provisions by assigning the registered mark to their local licensee, distributor or subsidiary. Such arrangements will no longer overcome the new defence.
The changes also remove the burden on parallel importers to prove that the registered owner actually applied or consented to the application of the trade mark to the goods. The importer now only has to show that it was reasonable to assume so.
These recent changes are clearly in favour of parallel importers. However, brand owners may still be able to take action against a parallel importer if the products present a risk to public health and safety, or do not comply with Australian labelling requirements. POF can also advise you on how to implement the right distribution and license agreements to keep a tight rein on your global supply chain.
[i] In Paul’s Retail Pty Ltd v Lonsdale Australia Limited [2012] FCAFC 130 (11 September 2012) Paul’s was found to have infringed by selling genuine products obtained from suppliers who were not permitted to supply these products for sale in Australia. (the licence to manufacture was limited to a particular territory not including Australia)