E. USE OF PLAYGO DEVICE MARK IN AUSTRALIA
121 The next issue is whether the respondents used as a trade mark the Playgo Device Mark in relation to goods in respect of which the relevant Playgro trade marks are registered (namely, playthings) in Australia. It is accepted by Playgro that, although s 120(1) of the Act does not refer expressly to use in Australia, standard principles of statutory interpretation require that, prima facie, s 120(1) of the Act be interpreted as referring to use in Australia. That prima facie operation of the provision is implicitly confirmed, and extended, by s 4 of the Act, which provides:
4 Application of Act
This Act extends to:
(a) Christmas Island; and
(b) Cocos (Keeling) Islands; and
(c) Norfolk Island; and
(d) the Australian continental shelf; and
(e) the waters above the Australian continental shelf; and
(f) the airspace above Australia and the Australian continental shelf.
122 The issue arises in circumstances where Playgo Enterprises sold and delivered children's toys bearing the Playgo Device Mark to Myer and WSL in China, for sale to customers in Australia, and Myer, Woolworths and Big W then offered for sale and sold the toys to customers in Australia. The relevant facts are set out in Section C, above, and summarised in paragraphs [66]-[67] (in relation to Myer) and paragraphs [81]-[82] (in relation to Woolworths and Big W). There is no relevant distinction, for the purposes of this issue, between the facts relating to Myer, on the one hand, and those relating to Woolworths and Big W, on the other.
123 The applicant's submissions can be summarised as follows:
(a) It is well established that an overseas manufacturer which places (whether by itself or through an authorised user) a trade mark on goods which are then offered for sale and sold in Australia is a user of that trade mark in Australia: E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 (Gallo) at [46]-[47], [52] per French CJ, Gummow, Crennan and Bell JJ.
(b) The issue most often arises in the following contexts:
(i) where a foreign trade mark owner is seeking to establish ownership of the trade mark on the basis that it was the first user of the trade mark in Australia: see, for example, Re the registered trade mark 'Yanx'; ex parte Amalgamated Tobacco Corporation Limited (1951) 82 CLR 199 (Yanx);
(ii) where a foreign trade mark owner is defending an application to remove the registration of its trade mark under s 92(4)(b) of the Act (and its predecessors) on the basis that it has not used the trade mark in Australia within the relevant three year period: see, for example, Estex Clothing Manufacturers Pty Limited v Ellis and Goldstein Limited (1967) 116 CLR 254 (Estex) and Gallo.
(c) In Estex, women's garments were manufactured in London by Ellis & Goldstein Limited (Ellis) and sold to Australian retailers for sale to customers in Australia. The sales took place through buyers or buyer's agents located in London. Estex argued that because the sale of the goods took place in London, the property passed there to the buyer, who in some cases was the London buying agent, and that therefore there was no use of the trade mark by Ellis in Australia (see at 266). Windeyer J rejected this argument (at 266-267):
As a proposition of law it is no doubt perfectly correct that the goods when sold and delivered in London no longer belonged to the manufacturer. But when it is said that a trade mark is used to distinguish the goods of one man from those of another, that abbreviated statement obviously does not refer to the goods of the owner of the mark in the sense of goods which he owns or possesses. After the goods have been sold by him his mark may still, using the definition of trade mark in the Act, be used in relation to those goods for the purpose of indicating a connexion in the course of trade between them and him, the registered proprietor of the mark. The manufacturer who sells goods, marked with his mark, to a warehouseman, wholesaler or retailer does not, in my view, thereupon cease to use the mark in respect of those goods. The mark is his property although the goods are not; and the mark is being used by him so long as the goods are in the course of trade and it is indicative of their origin, that is as his products. Goods remain in the course of trade so long as they are upon a market for sale. Only when they are bought for consumption do they cease to be in the course of trade. The concepts upon which the case turns are economic, commercial, business concepts concerning the marking and marketing of goods, rather than the provisions of the Sale of Goods Act concerning the passing of property.
(d) Estex appealed unsuccessfully to the Full Court of the High Court. Barwick CJ, McTiernan, Taylor and Owen JJ stated, in relation to the Trade Marks Act 1955 (Cth) (at 271):
By the Act a trade mark means "a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person" and "use" in s 23 must be understood in this context. Its denotation is not limited by any concept of the physical use of a tangible object and we have no doubt that when an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer.
(e) In Gallo, a United States company (Gallo) was defending its Australian trade mark registration of 'BAREFOOT' (in respect of wines) against an application by an Australian company (Lion Nathan) to remove the mark from the register under s 92(4)(b) of the Act, on the basis that the mark had not been used in Australia by its owner for a three year period. Before the relevant period, wine bearing the registered trade mark was sold by a United States licensee of the trade mark to a company in Germany. There was no evidence of the consignment's exact trajectory thereafter, except that some of the wine from that consignment was eventually sold to a Victorian liquor wholesaler (Beach Avenue) who imported it into Australia. Beach Avenue proceeded to sell 41 bottles of the wine under the registered trade mark during the relevant three year period. French CJ, Gummow, Crennan and Bell JJ (Heydon J agreeing) held that the concept of 'use' of a trade mark must be understood in the context of s 17 of the Act, which describes a trade mark as a sign used, or intended to be used, to "distinguish" the goods of one person from the goods of others (at [41]). Their Honours rejected Lion Nathan's contention that it was a necessary condition to establish a use in Australia that an overseas manufacturer knowingly "projects" his goods into the course of trade in Australia (at [49]). Their Honours explained that this contention misreads the judgment in Estex, and confirmed that Estex was authority for "the proposition that the foreign owner of an Australian trade mark uses it in Australia when he sells goods for delivery abroad to Australian retailers and those retailers import them into Australia for sale and there sell them" (at [49]). In a key passage, their Honours held (at [51]-[52]):
51 The capacity of a trade mark to distinguish a registered owner's goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market. It depends on the goods being in the course of trade in Australia. Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act. A registered owner who has registered a trade mark under the provisions of the Trade Marks Act can be taken, in general terms, to have an intention to use that trade mark on goods in Australia. It is a commonplace of contemporary international trade that prior to consumption goods may be in the course of trade across national boundaries.
52 An overseas manufacturer who has registered a trade mark in Australia and who himself (or through an authorised user) places the trade mark on goods which are then sold to a trader overseas can be said to be a user of the trade mark when those same goods, to which the trade mark is affixed, are in the course of trade, that is, are offered for sale and sold in Australia. This is because the trade mark remains the trade mark of the registered owner (through an authorised user if there is one) whilst the goods are in the course of trade before they are bought for consumption [Estex (1967) 116 CLR 254 at 266-267]. As affirmed by Gummow J in Wingate Marketing Pty Ltd v Levi Strauss & Co [(1994) 49 FCR 89 at 136], "whilst a trade mark remains on goods, it functions as an indicator of the person who attached or authorised the initial use of the mark". During the trading period, the trade mark functions as an indicator of the origin of the goods, irrespective of the location of the first sale.
(f) The High Court's consideration of 'use' of a trade mark in Gallo relied on several authorities which considered the concept of 'use' of a trade mark in contexts other than removal for non-use, including Shell (an infringement case); Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330 at 341 (an infringement case); Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 at 688 (a case for registration of a permitted user); and Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 105 at 136 (an infringement case).
(g) The approach of the High Court in Gallo reflects the scheme of the Act, which contains many references to the concept of 'use' of a trade mark. Some of those references to 'use' are addressed to use by certain persons in certain contexts, but many of the other references to use do not apply to any particular person or context.
(h) The Act contemplates three types of person who 'use' a trade mark which is registered or pending registration: the owner (which includes a pending applicant for registration); a person whose use is "controlled" and thus "authorised" by the owner, whose use is taken to be use by the owner and who has certain rights of enforcement; and other persons whose use is not "controlled" and thus not "authorised" by the owner, which may include infringers under s 120 or persons who do not infringe because they are using a mark which has been applied to the goods or services by or with the consent of its owner.
(i) Various provisions of the Act give meaning to the concept of 'use' of a trade mark, without distinguishing between these three types of persons: ss 7(1), 7(2), 7(4), 7(5), 9, 17, 18. This is consistent with the well-established proposition that use of a trade mark is to be determined objectively: Gallo at [33].
(j) The correct approach is that of the High Court in Gallo, which first analysed objectively whether there was 'use' of the 'BAREFOOT' trade mark in Australia constituted by the local retailer's sale to local consumers of 'BAREFOOT' branded bottles: Gallo at [28]-[29]. The High Court then analysed whether the registered owner at the relevant time was using the trade mark in that transaction in Australia, notwithstanding that he had no direct involvement in or knowledge of that transaction.
(k) The word 'use' appears in both ss 92(4)(b) and 120 and ought to be construed the same way in each of those sections: see, eg, Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 per Mason J. Indeed, given the number of times and contexts in which the word 'use' appears in the Act, it is vital that it be given a consistent construction.
(l) Estex and Gallo make clear that the sales in Australia by Myer and Woolworths of toys bearing the Playgo Device Mark amounted to 'use' of that trade mark by the foreign manufacturer (Tai Way) which applied that trade mark to those toys and the foreign supplier of the goods bearing the trade mark (Playgo Enterprises). Further, the use of the mark by each of Tai Way and Playgo Enterprises was controlled and thus authorised by Playgo Craft: s 8 of the Act. Such authorised use by each of Tai Way and Playgo Enterprises is thus deemed to be use by Playgo Craft: s 7(3).
(m) At all material times, the respondents knew that they were manufacturing and supplying goods bearing the Playgo Device Mark to Myer and WSL for sale in Australia.
124 The respondents' submissions can be summarised as follows:
(a) The applicant's case has the effect that a foreign company that disposes of goods bearing its own brand, in a foreign jurisdiction, no matter to whom, no matter the context, and no matter how long ago, and who:
(i) does not offer to sell its goods in Australia;
(ii) does not market or advertise its goods in Australia;
(iii) does not import its goods into Australia;
(iv) does not sell or trade its goods in Australia; or
(v) does not have any presence in Australia,
nevertheless 'uses' its trade mark in Australia for the purposes of infringement under s 120(1) of the Act, if a third party (not the foreign company) does any of these things in Australia with goods bearing its mark. This should be rejected. Such alleged 'use' by the foreign company is no more than theoretical and notional; it is not real or substantial. The foreign company is not putting its goods in the Australian market; the third party is.
(b) The Act does not have extra-territorial operation so as to make an overseas manufacturer liable for infringement under the Act, when it has not engaged in any conduct in Australia which could amount to infringing use of the trade mark in Australia as proscribed by s 120(1).
(c) No binding authority holds that an overseas manufacturer which simply places a trade mark on goods "which are then offered for sale and sold in Australia" (by another person) is a user of that trade mark in Australia for the purposes of determining trade mark infringement.
(d) Legislation is presumed not to have an extraterritorial effect and "read as being prima facie restricted in [its] operation within territorial limits": Jumbunna Coal Mine NL v Victorian Coal Miners' Association (1908) 6 CLR 309 at 363 per O'Connor J; Pearce and Geddes, Statutory Interpretation in Australia (8th ed, 2014), [5.9]-[5.11]; Acts Interpretation Act 1901 (Cth), s 21(1)(b). By s 4, the Act extends to Australian territorial limits. It has no operation beyond those limits.
(e) The use of the trade mark proscribed by s 120(1) of the Act must be use within the jurisdiction, namely in Australia: Burrell and Handler, Australian Trade Mark Law (Oxford, 2010), p 320. "Trade mark rights are territorial. An infringing act committed outside the United Kingdom cannot be sued upon as infringement of a United Kingdom registered trade mark": Kerly's Law of Trade Marks (14th ed, 2005), pp 395-396. Any consideration of 'use' under the Act must be read subject to this fundamental territorial limitation.
(f) Yanx was a proprietorship case. Estex concerned the 'use' of the mark in the context of a non-use removal application (not infringement). There were clear findings or concessions to the effect that the registered proprietor had relevantly used the mark in Australia to defeat the non-use application (see at 266, 270-271). Gallo also considered use of a trade mark in the context of a non-use removal application: see Gallo at [52].
(g) In Badische Anilin und Soda Fabrik v Basle Chemical Works, Bindschedler [1898] AC 200, a patent infringement case, the House of Lords decided unanimously that a foreign manufacturer in Switzerland was not liable for patent infringement of an English patent where he had posted goods to an English buyer, as the sale and delivery took place in Switzerland, so the English court had no jurisdiction, and the English patent legislation had no operation upon the Swiss defendant (see at 205 per Lord Halsbury, at 206 per Lord Hershell). Notwithstanding that it was a patent infringement case, the observations in Badische apply to the alleged infringing use in this case.
(h) Only usage "in the course of trade" can amount to trade mark use. The course of trade encompasses the acts of merchandising, advertising and promotion, making offers, selecting, distributing, selling, hiring, leasing, letting out for public use, exporting, importing, repairing, processing, maintenance, servicing - all the operations of a commercial character by which a trader provides to customers for reward some kind of goods or services: see Lahore, Patents, Trade Marks & Related Rights, vol 1A, at [60,130] and the cases there referred to.
(i) The applicant confuses and conflates 'use' of a trade mark in Australia by the proprietor of the mark sufficient to support or maintain registration of the mark, and 'use' of the mark by a third party sufficient to form a basis for an infringement claim. It confuses the issue of who is entitled to the benefit of representations regarding the origin of goods communicated by a trade mark, and who is responsible for making such representations each time they are made.
(j) The High Court in Gallo held that an overseas manufacturer who has registered a trade mark in Australia and who places the trade mark on the goods could be said to be a "user of the trade mark" when the goods are offered for sale and sold in Australia: see Gallo at [51]-[52]. The use of a trade mark in relation to goods in the course of trade comprises a representation that the goods originate from the owner of the mark. The owner of the mark makes the representation when it applies the mark to the goods. After the owner of the mark disposes of the goods, the representation may be repeated each time that the goods are offered for sale or dealt with in the course of trade. However, the owner of the mark is not the person who is repeating the representation. It is not responsible for when and where the representation is repeated, nor the context in which it is repeated. While the owner of the mark is entitled to the benefit of goodwill that might accrue as a result of the representation, it is not making it.
(k) It cannot, in principle, be the case that every foreign company throughout the world is liable for trade mark infringement in Australia if its marked goods are present in Australia in the course of trade, no matter how long the chain is of international trade and commerce. That would make them hostages to the actions of others, even where there is no suggestion of vicarious or contributory liability and even if they are unaware of such conduct in Australia.
(l) Gallo should be confined to non-use cases. First, the case is expressed to be only a statement of what constitutes 'use' to defeat an application to remove a registered trade mark under ss 92 and 100 of the Act: see Gallo at [51]-[53]. Secondly, there are implications in the Act that 'use' of a trade mark is different in non-use infringement contexts. Sections 92 and 100 (for non-use) focus on the use of the Australian registered trade mark, not use as a trade mark of a sign as in s 120. Non-use is dealt with in Part 9 of the Act; infringement in Part 12. Sections 7(1), 7(3) and 8 are apt for non-use analysis but not for infringement. Thirdly, the issues that must be resolved in a case in which the registered proprietor of a trade mark wishes to preserve its trade mark registration are very different to the issues that must be resolved if it wishes to establish that a third party is liable for infringement.
(m) A principled justification for a different conception of 'use' in proprietorship/non-use cases and infringement cases is that in the former cases the person has registered a trade mark in Australia and has an intention to use the trade mark. That person has sought the protection of the Act for its commercial activities in Australia. It is therefore entitled to the protection of the Act and its benefits, by a broad view of its use of the mark. On the other hand, a person who is completely outside Australia and engaged in commercial activity outside Australia should not be subject to the burden of the Act which would be imposed if the Act operated extra-territorially, so as to make liable a person in a foreign country for infringement.
(n) Absurd consequences would follow in the context of parallel imports if the applicant's case on 'use' were accepted: see, eg, Fender Australia Pty Ltd v Bevk (1989) 25 FCR 161. If the concept of 'use' for the purposes of infringement were exactly the same as 'use' for the purposes of a proprietorship/non-use action, it would follow (in that case) that the US manufacturer was infringing the Australian trade mark, even though it did nothing but manufacturer and sell 'FENDER' guitars in the US under its own trade mark.
125 In my view, for the reasons that follow, the respondents used as a trade mark the Playgo Device Mark in relation to playthings in Australia.
126 The starting place for consideration of the issue is the text of s 120(1) of the Act (see paragraph [98] above) and the concepts it embodies. Putting to one side 'substantial identity' and 'deceptive similarity', which have been discussed above, central concepts are 'use' and 'use as a trade mark'. The latter element expressly brings in the definition of "trade mark" in s 17 of the Act (see paragraph [99] above).
127 The concept of 'use' of a trade mark was considered in Estex. The basic facts in Estex are set out in the judgment of Windeyer J at first instance at pp 255-257. The respondent, Ellis, was a public company which manufactured in England women's garments. It did not itself sell its goods by retail. Its goods were marketed by being sold to buyers for the retail trade, both in the United Kingdom and elsewhere. It sold goods for export to various places, including Australia. It was the registered proprietor of two trade marks in Australia comprising the word 'EASTEX' in respect of outer clothing for women and the word 'EASTEX' followed by 'Range 52' in respect of complete articles of clothing. The dresses it sold bore its trade mark, either 'EASTEX' or 'EASTEX Range 52' on labels sown inside the garment and on tied-on tags. Windeyer J found (at 256) that: "There can be no doubt at all that the use of the trade mark on garments and on tags in this way was for the purpose of indicating, and did and does indicate, that goods bearing the marks are the product of a particular manufacturer." The applicant (Estex) was a company incorporated in New South Wales. It made and sold women's clothing under the name 'Estex'. Ellis commenced proceedings in the Supreme Court of New South Wales against Estex alleging infringement of its trade mark and seeking an injunction to restrain it from using the name 'Estex'. Estex commenced two motions against Ellis seeking removal of its trade marks pursuant to s 23(1)(b) of the Trade Marks Act 1955 (Cth) upon the grounds of non-use during the relevant periods. The proceedings before Windeyer J comprised these two motions. The infringement proceeding was adjourned pending the determination of the two motions. Section 23(1)(b) provided:
(1) Subject to this section and to section ninety-three of this Act, the High Court or the Registrar may, on application by a person aggrieved, order a trade mark to be removed from the Register in respect of any of the goods in respect of which it is registered, on the ground - …
(b) that, up to one month before the date of the application, a continuous period of not less than three years had elapsed during which the trade mark was a registered trade mark and during which there was no use in good faith of the trade mark in relation to those goods by the registered proprietor or a registered user of the trade mark for the time being.
128 Windeyer J said (at 258) that the use which s 23(1)(b) postulated was: (1) use of the mark in good faith; (2) use of it by the registered proprietor; (3) use of it as a trade mark in relation to goods of the class for which it is registered; and (4) use of it in Australia. His Honour then said: "The central issue in the case is whether or not anything which occurred in the relevant periods amounted to a use of the mark in Australia by the respondent."
129 Windeyer J found (at 264) that Ellis had from time to time sent women's garments of its manufacture to Grace Bros Pty Limited, Sydney, and that it had also on occasions sent such garments to other retail houses in Australia. His Honour said (at 264) that the practice of several well-known leading retail stores in Australia which import goods from London was to buy through buyers or buying agents there who place their orders for them. After detailing the transactions established by Ellis's evidence (at 264-265), His Honour summarised the position (at 266):
All the sales I have mentioned were in fact concluded in London. The goods were ordered in London by someone there, either someone from one of the regular London buying agents or some other representative of the Australian customer. The orders were accepted by the respondent in London and payment was made in London. Delivery was in each case made by the respondent as directed - to a shipping agent, or in some other way including direct despatch by air, for onward movement to the Australian retail house to which the goods were to go. However they went, the goods left the respondent's premises addressed to an intended Australian destination. …
I am satisfied too that the goods bore, as the respondent's goods at this time always did, an "EASTEX" sewed-on label and "EASTEX" tags. There is no reason to suppose that any of the goods so sent to Australia did not arrive here. There is every reason to believe they did. There is indeed positive and unchallenged evidence by affidavit that goods ordered from the respondent in fact arrived in Australia and were during the relevant periods offered for sale and sold by Australian retail houses with, as one would expect, their "EASTEX" marks and tags still on them.
130 Windeyer J then set out (at 266) the argument put by Mr Franki QC for Estex:
Mr. Franki for the applicant really could not dispute any of this; what he says, however, is that because the sale of the goods took place in London, the property passed there to the buyer, who in some cases was the London buying agent, and that therefore there was no use of the trade mark by the respondent in Australia. The respondent, he said, had parted with its goods. It had delivered them to some stipulated place somewhere in or near London; where they went or what was done with them thereafter by the buyer who then owned them, was a matter beyond the control of the respondent, a matter with which it was no longer concerned. The respondent, he said, entered into no transaction in Australia.
131 In the next paragraph, at pp 266-267, Windeyer J rejected this argument. Although most of the paragraph is quoted above, I set out the full paragraph here for ease of reference and to add emphasis to certain parts:
All this is true enough. But I think that to insist on it is to misapprehend the present case. As a proposition of law it is no doubt perfectly correct that the goods when sold and delivered in London no longer belonged to the manufacturer. But when it is said that a trade mark is used to distinguish the goods of one man from those of another, that abbreviated statement obviously does not refer to the goods of the owner of the mark in the sense of goods which he owns or possesses. After the goods have been sold by him his mark may still, using the definition of trade mark in the Act, be used in relation to those goods for the purpose of indicating a connexion in the course of trade between them and him, the registered proprietor of the mark. The manufacturer who sells goods, marked with his mark, to a warehouseman, wholesaler or retailer does not, in my view, thereupon cease to use the mark in respect of those goods. The mark is his property although the goods are not; and the mark is being used by him so long as the goods are in the course of trade and it is indicative of their origin, that is as his products. Goods remain in the course of trade so long as they are upon a market for sale. Only when they are bought for consumption do they cease to be in the course of trade. The concepts upon which the case turns are economic, commercial, business concepts concerning the marking and marketing of goods, rather than the provisions of the Sale of Goods Act concerning the passing of property.
(emphasis added)
132 I note that most of this passage was quoted by French CJ, Gummow, Crennan and Bell JJ (Heydon J agreeing) in Gallo at [46]. Their Honours also said (at [48]) that in dismissing appeals from the judgment of Windeyer J, the Full Court said nothing to detract from Windeyer J's analysis of use.
133 The judgment of Windeyer J was affirmed by the Full Court of the High Court (Barwick CJ, McTiernan, Taylor and Owen JJ). After summarising the conclusion of Windeyer J, the Full Court set out the appellant's argument (at 271):
However, counsel for the appellant contends that this view is erroneous. He points out that the sales which it is proved were made by the respondent to the several Australian retail houses were made in England, the goods, in each instance, were the subject of an f.o.b. contract and, presumably, the property in them passed upon shipment in London. That being so, it is said, there was no act of the respondent in Australia which can be said to constitute a use by it in Australia of the mark. For this proposition we were referred to the decision in Badische Anilin und Soda Fabrik v. Basle Chemical Works, Bindschedler [[1898] AC 200] where it was held that a manufacturer in Switzerland who sold and delivered in that country to an English trader goods manufactured according to an invention the subject of English letters patent had not thereby infringed the rights of the holder of the patent by using or vending the patent in England.
134 I note that Badische Anilin und Soda Fabrik v Basle Chemical Works, Bindschedler [1898] AC 200 is also relied upon by the respondents in the present proceeding.
135 The Full Court rejected these submissions. The Court said (at 271) (although most of this passage is quoted above, I set out the full passage for ease of reference and to add emphasis to certain parts):
But to apply the reasoning in that case in solving the problem in the present case would be to misconceive the significance of the word "use" when it is used in relation to a trade mark.
By the Act a trade mark means "a mark used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the goods and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person" and "use" in s 23 must be understood in this context. Its denotation is not limited by any concept of the physical use of a tangible object and we have no doubt that when an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer. Indeed, in this case, the respondent is the only person who has the right to use the mark and the retailer to whom the goods have been sold for re-sale does not, in any relevant sense, use it.
(emphasis added)
136 In Gallo, French CJ, Gummow, Crennan and Bell JJ said (at [49]) that the reference to "projects" in the above passage reflected the facts of the case, and it was not suggested that what was sufficient in that case was necessary in every case. Their Honours affirmed the observation of Aickin J in Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 at 688 that Estex was authority for "the proposition that the foreign owner of an Australian mark uses it in Australia when he sells goods for delivery abroad to Australian retailers and those retailers import them into Australia for sale and there sell them".
137 Central to the reasoning of both Windeyer J and the Full Court in Estex was that the word 'use' was to be understood in the context of the definition of a trade mark which, under the Trade Marks Act 1955, meant a mark used or proposed to be used in relation to goods "for the purpose of indicating … a connexion in the course of trade between the goods and a person who has the right … to use the mark". Once the word 'use' was understood in this sense, it followed that the overseas manufacturer continued to use its trade mark after property in the goods had passed to the Australian retailers, so long as the goods remained in the course of trade.
138 The definition of "trade mark" in s 17 of the current Act is not expressed in the same terms, yet the essential function of a trade mark remains the same. This was explained by French CJ, Gummow, Crennan and Bell J in Gallo (at [42]):
Whilst that definition [in s 17 of the Act] contains no express reference to the requirement, to be found in s 6(1) of the Trade Marks Act 1955 (Cth), that a trade mark indicate "a connexion in the course of trade" between the goods and the owner, the requirement that a trade mark "distinguish" goods encompasses the orthodox understanding that one function of a trade mark is to indicate the origin of "goods to which the mark is applied". Distinguishing goods of a registered owner from the goods of others and indicating a connection in the course of trade between the goods and the registered owner are essential characteristics of a trade mark. There is nothing in the relevant Explanatory Memorandum to suggest that s 17 was to effect any change in the orthodox understanding of the function or essential characteristics of a trade mark.
(footnotes omitted)
139 Although Estex and Gallo were concerned with applications for the removal of registered trade marks for non-use, the consideration of 'use' of a trade mark in the passages referred to in paragraphs [127]-[138] above does not appear to be limited to that context, and seems equally applicable to an infringement context. This is consistent with the principle of statutory construction that words used consistently should be construed consistently, unless there is good reason to do otherwise: Queensland v Forst (2008) 168 FCR 532 at [41] per Black CJ, citing Craig, Williamson Pty Ltd v Barrowcliff [1915] VLR 450 at 452 per Hodges J; Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 per Mason J (with whom Barwick CJ and Jacobs J agreed).
140 Turning to the concept of 'use as a trade mark', this was discussed by the Full Court of this Court in Coca-Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107. In that case, which concerned alleged infringement of a trade mark, Black CJ, Sundberg and Finkelstein JJ said (at [19]):
Use "as a trade mark" is use of the mark as a "badge of origin" in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods ... That is the concept embodied in the definition of "trade mark" in s 17 - a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else.
This passage was approved by French CJ, Gummow, Crennan and Bell JJ in Gallo (at [43]). See also Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd [2016] FCAFC 22 at [112]-[118] per Nicholas, Yates and Wigney JJ.
141 In Ward Group Pty Ltd v Brodie & Stone plc (2005) 143 FCR 479, which concerned alleged infringement of a trade mark, Merkel J considered whether the advertising and sale of certain products on the internet constituted a use of a mark in Australia. His Honour found that the website proprietors' advertising on the internet of products for sale was a marketing of those products to the world at large; and that it was not specifically targeted or directed at, or specifically intended to be acted upon by, consumers in Australia (at [37]). His Honour concluded that the use of a trade mark on the internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded; however, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction, then there is likely to be a use in that jurisdiction when the mark is downloaded (at [43]). While this case is concerned with the particular issues that arise in connection with the internet, it reinforces that 'use' may in some circumstances require that conduct be directed towards a particular jurisdiction.
142 In the present case, the Playgo Device Mark was applied to children's toys by Tai Way at the Dongguan factory under the authorisation of Playgo Craft and at the direction of Playgo Enterprises. The toys, with the Playgo Device Mark, were sold by Playgo Enterprises to Myer and WSL in China, for sale to customers in Australia. It is to be inferred that when Playgo Enterprises sold its products to Myer and WSL, it knew that the goods were to be offered for sale and sold to customers in Australia. Applying the concepts of 'use' and 'use as a trade mark' discussed above, the respondents used as a trade mark the Playgo Device 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. The respondents did not cease to use the Playgo Device Mark upon sale and delivery of the goods to Myer and WSL in China; rather, the mark was being used by the respondents so long as the goods were in the course of trade and it was indicative that they were the respondents' products. The goods remained in the course of trade until their ultimate sale to customers in Australia.
143 The facts of this case are materially the same as those in Estex. In each case, a foreign company affixed a trade mark overseas, sold and delivered the goods with that mark to an Australian retailer overseas, and the goods were (to the knowledge of the overseas company) to be sold to customers in Australia. Although it is true that in Estex, the foreign company was the registered proprietor of the trade mark in Australia, that fact does not appear to have played a part, or at least a significant part, in the reasoning of Windeyer J or the Full Court of the High Court in support of the conclusion that the foreign company used the trade mark in Australia.
144 The respondents submit that the Act does not have extra-territorial operation so as to make an overseas manufacturer liable for infringement under the Act, when it has not engaged in any conduct in Australia. But the conclusion in paragraph [142] above does not depend on the Act having extra-territorial operation. Rather, it is based on an understanding of what amounts to 'use' of a trade mark in Australia.
145 The respondents submit that the owner of a mark makes a representation when it applies the mark to goods; after the owner of the mark disposes of the goods, the representation may be repeated each time the goods are offered for sale, but the owner of the mark is not the person who is repeating the representation. This submission is inconsistent with Windeyer J's consideration of 'use' in Estex at pp 266-267, set out in paragraph [131] above, and with the reasons of French CJ, Gummow, Crennan and Bell JJ in Gallo at [51]-[52], set out in paragraph 123 above.
146 The respondents submit that it cannot, in principle, be the case that every foreign company throughout the world is liable for trade mark infringement in Australia if its marked goods are present in Australia in the course of trade, no matter how long the chain is of international trade and commerce. In the present case, however, the respondents were aware that the goods were to be offered for sale and sold to customers in Australia. It is not necessary to consider whether a foreign company would be liable for infringement if this were not the case.
147 For these reasons, I conclude that the respondents used as a trade mark the Playgo Device Mark in relation to playthings in Australia. It follows from the conclusions in the preceding section and this section of these reasons that the respondents infringed the Playgro trade marks described in paragraph 27-(c) contrary to s 120(1) of the Act.