With increases in international trade, issues relating to the extent to which IP rights originating in other countries can or can’t be enforced in Australia. Some countries use a doctrine of exhaustion of intellectual property rights to deal with it.
While there remains no common law doctrine or comprehensive body of law regarding intellectual property right ‘exhaustion’ in Australia, overlapping areas of law may offer some assistance in the parallel importation supply chain.
This note touches upon some areas of law which may be relevant to how differently the issue is dealt with for intellectual property right transactions in Australia:
The examples are not particularly consistent in all respects. However, they are reflective of a perceived need to do with Australia, being a smaller and relatively uncompetitive market, having particular access and competition issues driving policy and Law.
The Trade Marks Act 1995 (Cth) creates and regulates the registration of trade marks in Australia. Section 120 of the Trade Marks Act proscribes use of a trade mark sign that is substantially identical, or deceptively similar to a trade mark in relation to goods or services in respect of which:
Relevant to parallel importation, the Trade Marks Act provides two defences contained in sections 122A and 123. These relates to goods (s122A) and services (s123) separately. Section 122A is a total defence to an infringement under section 120. It requires that:
Section 123 mirrors section 122A but applies to services: the alleged infringer has not infringed the owner’s trade mark if the mark is associated with the services with the consent of the owner.
The ‘consent’ requirement in both sections 122A and 123 relate to the original application of the trade mark on the goods, or in connection with the services. Where that applies goods and services can be sold in the Australian marketplace without breach of the rights of an owner of relevant trade marks
The Copyright Act deals with the issue by prohibiting the importation of works and other subject matter without licence from the copyright holder at section 37 and 102 respectively.
Again, due to the smaller uncompetitive Australian market, the Copyright Amendment Act 1990 (Cth) introduced exceptions for specific goods, and each type of work/subject matter contains its own restrictions:
Where the importation relates to ‘artworks’ as defined in the Resale Royalty Rights for Visual Artists Act 2000 (Cth) at section 7, the importer may be liable to pay royalties at the sale if they are acting in the capacity of an ‘art market professional’.
For distributors or intellectual property rights holders, the tort of ‘passing off’ may be an effective but costly as to enforcement cause of action against importers of counterfeit but not original goods.
In brief summary, plaintiffs need to establish they held a reputation; the defendant deceived consumers; and that deception harmed the reputation.[1] Demonstrated in Pioneer Electronics Australia Pty Ltd v Lee,[2] the plaintiff established that its reputation had been harmed by the defendant whose marketing had falsely represented a connection with the plaintiff. The defendant had parallel-imported the plaintiff’s trademarked goods but made alterations diminishing their safety.
D-1 Misleading and Deceptive Conduct
In a similar vein to the tort of passing off, intellectual property rights holders, manufacturers and authorised re-sellers may have an action in Australian Consumer Law (‘ACL’) under the misleading and deceptive conduct provision, section 18. In the event a parallel importer makes representations to the effect they are authorised by the intellectual property right holder or similar, and that representation is false and causes loss an action may be brought for misleading and deceptive conduct.
D-2 Anti-Competitive Behaviour
In Australia, the Competition Consumer Act 2010 (Cth) (‘CCA’) creates broad prohibitions against anti-competitive commercial behaviour. There has been some academic discussion on the relationship between competition and consumer law and parallel importation, (see generally: Arlen Duke, ‘The Overlooked Dimension to the Parallel Import Debate’ (2014) (37) Melbourne University Law Review, 585).
Section 47 of the CCA prohibits the restriction on distributors to resupply goods. However, conduct will only contravene s 47 of it substantially lessens competition in a market (s 47(10) CCA).
In Universal Music Australia Pty Ltd v Australian and Competition Consumer Commission (2003) 131 FCR 529 – the ACCC brought an action against Universal Music Australia for preventing retailers from stocking parallel imports of CDs. The Federal Court, and then Full Federal Court on appeal, found in favour of ACCC. Universal’s conduct contravened bother section 46 and 47 of the CCA.
Conversely, the High Court in Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (‘Melway’) (2001) 205 CLR 1 acknowledged that exclusive distribution channels could possibly be pro-competitive, extracted as below:
‘… it is not the case that the adoption by a manufacturer, whether with or without a substantial degree of market power, of a system of distribution involving what are sometimes called vertical restraints necessarily manifests an anticompetitive purpose … When regard is had to the state of competition in the relevant market, the purpose may be pro-competitive… competition in the retail market may be fostered by inhibiting the engagement n certain conduct by wholesalers or other “middle men”’ at [38] (Gleeson CJ, Gummow, Hayne, and Callinan JJ).
The writer acknowledges the contribution of Owen Smith, Paralegal, Eakin McCaffery Cox to the preparation of the above comments.
[1] ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302
[2] (2000) 108 FCR 216
Gregory Ross is a partner at Eakin McCaffery Cox, Lawyers. During his time with the firm he had a part-time appointment with the Independent Commission Against Corruption. Connect with Gregory via email ross@eakin.com.au or LinkedIn