Did Trojan use the STG trade marks as a trade mark?
22 Section 120(1) expressly requires that there be use of a sign "as a trade mark" in order for there to be infringement. The 1955 Act did not contain any express requirement to this effect but s 58(1) and s 62(1) of the 1955 Act, when read with the definition of "trade mark" in s 6, were held to impliedly require that the use referred to in those provisions be use of a mark as a trade mark.
23 Trojan did not submit that there was no use of the STG trade marks as trade marks on the packaged products it distributed. On the contrary, it accepted both before the primary judge and this Court that there was trade mark use. Trojan's submission was that it did not use the STG trade marks as trade marks because it did not use any of the STG trade marks to do more than indicate a connection in the course of trade between its re-packaged goods and the owner of the STG trade marks.
24 In E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 ("E & J Gallo") at [43] the plurality, French CJ, Gummow, Crennan and Bell JJ and at [87] Heydon J, expressly approved the following statement of the Full Court in Coca-Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107:
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 [see Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 341, 351]. 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.
25 The authorities provide many examples of use that was found not to constitute use as a trade mark. The principal authorities emphasise that the question whether there has been use of a mark as a trade mark depends upon the context in which the mark is used: see, for example, Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 ("Shell") at 422 per Kitto J (with whom Dixon CJ, McTiernen and Owen JJ agreed); Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 340-341 per Lockhart J, at 342-343 and 351 per Gummow J (both of which were decided under the 1955 Act).
26 Shell concerned the alleged infringement of the plaintiff's registered trade marks for a device in the form of a caricature of a man in the shape of an oil drop. The defendant was alleged to have infringed the marks by reproducing them in two television commercials. Kitto J said at 422:
The question, then, is whether such a user of the oil drop figure as takes place by the exhibition of the films on television involves infringement of the trade marks. It is a question not to be answered in favour of the appellant merely by pointing to the brevity of the occasions when substantial identity is achieved. The assumption I have made means, of course, that if the oil drop figure as appearing in some of the individual frames of the films were transferred as separate pictures to another context the use of the pictures in that context could be an infringement. But the context is all-important, because not every use of a mark which is identical with or deceptively similar to a registered trade mark infringes the right of property which the proprietor of the mark possesses in virtue of the registration.
27 His Honour then referred to the implied requirement that the defendant's use be use as a trade mark and said at 424-425:
Was the appellant's use, that is to say its television presentation, of those particular pictures of the oil drop figure which were substantially identical with or deceptively similar to the respondent's trade marks a use of them "as a trade mark"?
With the aid of the definition of "trade mark" in s. 6 of the Act, the adverbial expression may be expanded so that the question becomes whether, in the setting in which the particular pictures referred to were presented, they would have appeared to the television viewer as possessing the character of devices, or brands, which the appellant was using or proposing to use in relation to petrol for the purpose of indicating, or so as to indicate, a connexion in the course of trade between the petrol and the appellant. Did they appear to be thrown on to the screen as being marks for distinguishing Shell petrol from other petrol in the course of trade?
28 Kitto J (at 426) described the decision of the House of Lords in Irving's Yeast-Vite Ltd v FA Horsenail (1934) 51 RPC 110 as "a striking example of a context precluding a conclusion that a use complained of as an infringement was a use as a trade mark." The goods in that case were labelled "YEAST TABLETS a substitute for YEAST-VITE". This was held by the House of Lords not to be use of the Yeast-Vite mark as a trade mark. Lord Tomlin said at 115:
[t]his is clearly a use of the word "Yeast-Vite" on the Respondent's preparation to indicate the Appellant's preparation and to distinguish the Respondent's preparation from it. It is not a use of the word as a trade mark, that is, to indicate the origin of the goods in the Respondent by virtue of manufacture, selection, certification, dealing with or offering for sale.
29 Thus, the "Yeast-Vite" mark was not used so as to indicate any relevant trade connection between the goods to which the labels had been applied and the registered owner. The finding that there was no trade mark use is explicable on that basis.
30 In Musidor BV v Tansing (1994) 52 FCR 363 the applicant brought a proceeding for infringement of trade marks comprising the words "The Rolling Stones" registered in respect of (inter alia) compact discs. Gummow and Heerey JJ said at 376:
On the question of infringement, one asks whether in the setting of the packaging and on the discs themselves in which the words "THE ROLLING STONES" are depicted, that phrase appears as an expression which the manufacturer of the disc is using for the purpose of indicating or so as to indicate a connection in the course of trade between him and the disc contained within the packaging.
…
We accept the submission for the respondent that the words "The Rolling Stones" are not used for the purpose of indicating a connection in the course of trade between him and the discs or any other goods in respect of which the trade marks are registered. Rather, they are used here to identify a recording made many years ago of a live performance by those persons in the United States, which has been reproduced and embodied in the discs manufactured by the respondent. That is not a trade mark use by the respondent: cf. News Group Newspapers Ltd v Rocket Record Co Ltd [1981] FSR 89 at 98; Unidoor Ltd v Marks and Spencer Pic [1988] RPC 275 at 280; Re Polar Music International AB 714 F 2d 1567 at 1572 (1983).
31 In E & J Gallo the High Court was concerned with an application for removal of a registered trade mark for non-use under s 92(4)(b) of the 1995 Act. It was held that retail sales in Australia of goods to which the mark had been applied by an authorised user in the United States involved trade mark use by the registered owner which was sufficient to defeat the non-use application. The High Court rejected a submission based upon Estex Clothing Manufacturers Pty Ltd v Ellis and Goldstein Limited (1967) 116 CLR 254 ("Estex") to the effect that there could be no use by the overseas owner of the mark unless it knowingly "projects" its goods into the course of trade in Australia (at [49]-[52]). The question whether the importation and sale of goods to which a registered mark has been applied by or with the licence of the overseas trade mark owner constitutes trade mark use by the importer was expressly left open by the High Court at [53].
32 There is some authority to suggest that a person who merely sells goods to which a registered mark has been applied by or with the licence of the trade mark owner does not use the mark as a trade mark even though the very presence of the goods indicates a connection between the goods and the registered owner. Perhaps the most well-known of these is Champagne Heidsieck Et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330 ("Champagne Heidsieck"), a decision of Clauson J under the Trade Marks Act 1905 (UK).
33 In Champagne Heidsieck the plaintiff alleged that the defendant was infringing its trade mark for "Champagne Dry Monopole" by selling in England the plaintiff's Brut champagne which the plaintiff claimed to make for sale solely in France. It was common ground that the plaintiff had made and applied its mark to the Brut champagne that the defendant was selling in England.
34 Clauson J rejected the plaintiff's submission that the defendant had infringed the plaintiff's trade mark. The plaintiff's principal submission was based upon the statutory provision expressed to confer on the plaintiff the exclusive right to use the registered trade mark upon goods in respect of which it was registered: see s 39 of the Trade Marks Act 1905 (UK) and s 3 of the Trade Mark Registration Act 1875 (UK). His Lordship rejected the plaintiff's submission and said at 338-339:
It was, in effect, suggested that, whereas before 1875 a trade mark, if established as a trade mark, was a badge of the origin of the goods, the effect of s. 3 of the Act of 1875 was to make a registered trade mark a badge of control, carrying with it the right in the owner of a registered trade mark to full control over his goods, into whosesoever hands they might come, except in so far as he might expressly or by implication have released this right of control. I do not so read the section. Nor am I aware that, until the present case, any such construction of the section or of corresponding sections in subsequent Acts has been adopted by any tribunal; or indeed that, until very recent times, any such construction has been propounded to any tribunal. It would be astonishing, if in an Act to establish a register of trade marks, such a remarkable extension of the rights of owners of trade marks were intended to be enacted by the use of such terms as appear in the section. The section appears to me to mean that the proprietor of a registered trade mark is to have the right exclusively to use such trade mark in the sense of preventing others from selling wares which are not his marked with the trade mark. I do not believe that the legislature intended to say, or can fairly be held to have said, that the registration of a trade mark had the wide consequences suggested by the plaintiffs.
…
In the Act of 1905 the word "trade mark" is defined as a mark used upon goods for the purpose of indicating that they are the goods of the proprietor of the mark, and reading this definition into s. 39 it appears to me quite clear that the exclusive right to use the mark conferred on the registered proprietor by that section is the right to use the mark as a trade mark - i.e., as indicating that the goods upon which it is placed are his goods and to exclude others from selling under the mark wares which are not his.
(emphasis added)
35 His Lordship's judgment is often relied upon in support of the proposition that a person who, in the course of trade, sells goods to which the trade mark owner has itself applied its mark does not use the mark as a trade mark. However, the decision can also be explained on the basis that the defendant's use in that case was not an infringing use of the mark. This view finds support in the final paragraph of Clauson J's reasons where his Lordship said at 341:
… to hold that the use of a mark by the defendant which is relied on as an infringement must be a use upon goods which are not the genuine goods, i.e., those upon which the plaintiffs' mark is properly used, for any one may use the plaintiffs' mark on the plaintiffs' goods, since that cannot cause the deception which is the test of infringement.
36 This view of the decision in Champagne Heidsieck is relevant to an understanding of s 123 of the 1995 Act, to which we will return later in these reasons. What matters for present purposes is that the decision in Champagne Heidsieck can be explained on the basis that, although the defendant may have used the plaintiff's mark, he did not engage in infringing use when selling goods to which the plaintiff had itself applied the registered mark.
37 The Trade Marks Act 1938 (UK) ("the 1938 UK Act") included in s 4(3)(a) an express provision that deemed a mark not to be infringed by the use of a mark in relation to goods where the use occurred with the express or implied consent of the registered proprietor. In Revlon Inc v Cripps & Lee Ltd [1980] FSR 85, Champagne Heidsieck was interpreted by the English Court of Appeal not as a case in which there was no trade mark use by the importer of the relevant goods, but on the basis that the registered proprietor's mark had been applied to such goods with the registered proprietor's consent. Buckely LJ (with whom Bridge LJ agreed) appears to have decided the case (at 108) not on the basis that there was no trade mark use by the importer, but on the basis that s 4(3)(a) applied, and that the importer's use was deemed to be a non-infringing use.
38 The High Court's decision in Estex was made under the 1955 Act. The case involved an application to remove a trade mark for non-use pursuant to s 23(1)(b) of the 1955 Act. The application was heard by Windeyer J at first instance who described the main issue in the case as whether there was use by the registered owner of its mark in Australia. His Honour found that there was. His Honour distinguished the High Court's previous decisions in Rothman Ltd v WD & HO Wills (Australia) Ltd (1955) 92 CLR 131 (Fullager J) and WD & HO Wills (Australia) Ltd v Rothmans Ltd (1956) 94 CLR 182 (Full Court) ("Rothmans") on the basis that in Rothmans, at the point of sale in the United States, the relevant goods ceased to be goods in trade, whereas in Estex, the registered proprietor of the mark sold its goods in England for sale in Australia. Windeyer J held that the subsequent sale of the goods in Australia under the trade mark constituted use by the registered owner of the trade mark in Australia. His Honour's decision in Estex was upheld on appeal to the Full Court. The Full Court said at p 271:
[W]e 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)
39 This passage in the Full Court's judgment in Estex, with the important exception of the last sentence, was referred to with apparent approval by the plurality in E & J Gallo at [48]. Their Honours also referred with approval to what Aickin J said in Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 ("Pioneer") at 688 concerning Estex which his Honour described as 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."
40 A question arose in Pioneer as to who might be registered as a registered user of a mark pursuant to s 74 of the 1955 Act. Section 74(1) provided that a person other than the registered owner could be registered as a registered user for all or any of the goods or services in respect of which the mark was registered. One of the submissions made on behalf of the Registrar of Trade Marks was that a distributor of goods upon which a trade mark had already been applied by the registered proprietor does not use the mark as a trade mark.
41 Aickin J rejected the submission that a distributor of goods did not itself use a mark which was already on the goods. His Honour, referring to Estex, said at 688:
… It was not necessary in that case to consider whether the retailer also used the mark because the only relevant question was whether the registered proprietor himself had used the mark in Australia. There is no doubt that if the retailer had on the same basis imported goods other than those of the registered proprietor but bearing its mark, he would have used the mark by infringing it. This is established by W.D. & H.O. Wills (Australia) Ltd. v. Rothmans Ltd. [(1955) 92 CLR 131] (Fullagar J); [(1956) 94 CLR 182] (Full Court), where it was held that the only trade in the goods took place in the United States of America, because the importer was a consumer, not a trader. However in its joint judgment the Court observed [(1956) 94 CLR at p.188]: "If a purchaser instead of smoking the cigarettes had attempted to resell the packets he would of course have used the trade mark and would have been liable to be sued for infringement under s. 53 of the Trade Marks Act." Thus if Pioneer Australia had done no more than import the goods and sell them by retail it would have used the mark, but in fact it did much more as the evidence referred to above demonstrates.
(emphasis added)
42 It is clear that the observation in the last sentence of the passage we have quoted at [38] from the Full Court's judgment in Estex was not necessary to the decision in that case and was obiter dictum. This is apparent from a reading of the judgment and is also confirmed by what was said by Aickin J in Pioneer when describing the holding in Estex in terms approved by the plurality in E & J Gallo.
43 The Rothmans case was decided under the Trade Marks Act 1905 (Cth) ("the 1905 Act") as amended in 1948 to incorporate the same definition of "trade mark" that appeared in the 1938 UK Act, which was also later incorporated (with some slight changes) in the 1955 Act. The issue in Rothmans was whether the appellant, as the registered proprietor of the "Pall Mall" mark, had used that mark in Australia. The appellant relied upon what were held to be sales made abroad of tobacco products imported by the purchasers into Australia for their private consumption. The Full Court said at 188:
The cigarettes were not imported for sale. They were imported for consumption. The cigarettes that reached Australia for consumption by the Australian purchasers were in no different position from cigarettes which a traveller might have purchased in the United States and brought with him to Australia for his own consumption here. If a purchaser instead of smoking the cigarettes had attempted to resell the packets he would of course have used the trade mark and would have been liable to be sued for infringement under s. 53 of the Trade Marks Act. But that would have been an unlawful use of the trade mark by the purchaser and not a use by the proprietor of the trade mark and it is the latter use, and the latter use only, with which we are concerned.
44 Aickin J's observations in Pioneer, and the statements of the Full Court in Rothmans at 188 to which his Honour refers, draw attention to the conceptual difficulty in holding that a reseller of goods to which a trade mark owner has applied its mark does not use the mark, whereas a reseller of goods who has acquired goods from a third party who has applied a trade mark to the goods without the trade mark owner's consent does use the mark. The Full Court's statement in Rothmans provides strong support for the proposition (contrary to the obiter dictum in Estex) that in both of these examples the reseller will have used the trade mark applied to the goods if he or she sells the goods, or offers the goods for sale.
45 Counsel for Trojan referred us to the Full Court's decision in Wingate Marketing Pty Ltd v Levi Strauss & Co (1994) 49 FCR 89 ("Wingate"), also decided under the 1955 Act. That was a case in which the appellant was held not to have used any of the respondent's Levi Strauss marks as a trade mark by offering for sale and selling second-hand jeans that the appellant had (inter alia) repaired, reconditioned or altered to varying degrees but which still carried the "Levi Strauss" marks that were applied by or with the authority of the trade mark owner at the time of manufacture. The Full Court held that none of the "Levi Strauss" marks was used by the appellant as a trade mark. However, the appellant was found liable for trade mark infringement arising out of its use of its own mark ("Revise") which it applied to the second-hand jeans prior to offering them for sale.
46 Wingate emphasises the importance of context in determining whether a person has used a mark as a trade mark. Central to the finding that the appellant did not use the "Levi Strauss" marks as trade marks was the fact that the goods were second-hand, that they were offered for sale as such, and that the appellant applied its own mark to them.
47 On the question whether the appellant was using any of the "Levi Strauss" marks as a trade mark, Sheppard J (with whom Wilcox J agreed) said at 111:
His Honour's finding of infringement was limited to cases in which the second hand jeans marketed by Wingate had undergone substantial alteration. His Honour did not find infringement in cases where the jeans were merely repaired by mending and such like. But, if Wingate is in truth using the Levi Strauss marks as trade marks, that distinction is not warranted. If there is a use of the mark as a trade mark, there will be such a use whether or not the jeans are largely as they originally were or have undergone substantial alteration or addition. That very circumstance suggests that the use here is not a trade mark use. A second hand shop or a charity shop selling second hand clothing which included worn or used Levi Strauss jeans would not without more infringe any of the Levi Strauss marks by selling the second hand garments although they might bear one or more of those marks. Members of the public acting reasonably are not misled or confused by the fact that in countless cases second hand products have attached to them original labels, many of which will consist of or contain the trade marks of a variety of manufacturers and distributors. Certainly they will not think that the second hand shop with which they deal is an offshoot of, or has some connection with, the original supplier of the product when new. They may think that a substantially altered garment bearing a trade mark is a second hand garment manufactured or distributed by the company whose name appears on the label affixed to the goods, but if that be so, it will not be because the mark is being used as a trade mark, but because of other factors, which taken together, may well warrant the conclusion that the person marketing the goods is passing them off as having been originally made or produced in the form in which they then are. That really is the essence of the Levi Strauss complaint in relation to this aspect of the case. But, in my opinion, it is properly dealt with in the context of misrepresentation and passing off and not in the context of infringement of trade mark.
48 Gummow J said at 134-135:
… The issue here is whether there is infringement of the marks already upon the goods by reason of the further activities of Wingate pursuant to which the goods are, in a sense, placed or further placed upon the market.
I have dealt at such length with the significance of the presence on the goods of the Wingate "REVISE" label because that circumstance differentiates the present from other cases where there is discussion of the significance in trade mark law of the sale of second hand goods bearing the mark affixed by the manufacturer. As I have said, those cases, particularly Fender, were not cases in which the second hand dealer affixed any mark of his own.
The issue as to infringement of the Levi Strauss trade marks by Wingate, not by reason of the use of "REVISE" (the first set of trade mark issues on the appeal), but by reason of the dealings conducted upon the goods and their resale is to be framed as follows. It concerns the purpose and nature of the alleged infringing use and is, in terms of the well known authorities, whether the Levi Strauss trade marks are used by Wingate for the purpose of indicating, or so as to indicate, a connection in the course of trade between the garments and Wingate: Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd at 342, 347.
As indicated earlier in these reasons, the issue thus presented is not answered by considerations concerned with deceptiveness or the goodwill of the registered proprietor.
In testing the question of infringement, it is proper to have regard to the very goods in question in their condition at the time of the allegedly infringing acts. The continued appearance of the Levi Strauss marks upon the goods as sold by Wingate, after what one might call their conditioning, is an illustration of the class of case referred to by Viscount Maugham in the quotation set out above from Aristoc Ltd v Rysta Ltd. Namely, these marks were intended by the manufacturer to indicate origin and thus indicate a character or quality of the goods. This may be displaced, having regard to the degree of change wrought by the activities of Wingate.
Here, the function of the mark "REVISE" is to indicate that there have been operations performed upon the goods since they left the manufacturer. The Levi Strauss trade marks appear on the goods not for the purpose of indicating or so as to indicate a connection between the garments and Wingate (the purpose and nature of "REVISE") but to indicate by way of comparison or contrast the origin of the goods. That is the purpose and nature of the alleged trade mark use by Wingate of the Levi Strauss marks. Use of that character is not a trade mark use: cf Irving's Yeast-Vite Ltd v Horsenail (1934) 51 RPC 110.
49 Some of these statements suggest that a person who merely sells goods to which a mark has already been applied by the trade mark owner does not use the mark when offering the goods for sale. However, the Full Court did not address that question outside the context of the particular facts of the case before it, which involved, as we have explained, trade in refurbished second-hand goods. Nor was any reference made in any of the judgments in Wingate to Aickin J's observations in Pioneer at 688 or the High Court's observations to similar effect in Rothmans at 188.
50 We have considered it necessary to undertake this examination of authorities for the purpose of showing that by the time the 1995 Act was drafted, the question whether a person uses a registered mark already applied to goods by the registered proprietor which that person later imports and sells in Australia was by no means settled. By that time the last authoritative word on the issue belonged to Aickin J who, in Pioneer, gave a judgment that, even though only a decision of a single justice, came to be regarded as a seminal decision in the field of trade mark law. As to Wingate, neither Sheppard J nor Gummow J considered the issue at a general level and they instead focused on the particular facts of the case before them. In our respectful opinion, Wingate does not assist in resolving the present case.
51 As we have explained, at a conceptual level, it is difficult to see why a reseller who supplies genuine goods does not use a trade mark which the registered owner previously applied to those goods but does use a trade mark when he or she supplies goods to which a trade mark has been applied by a third party without the consent of the owner. However, there are two policy arguments often advanced to justify this distinction which we will now mention.
52 The first argument focuses on concerns that trade in genuine goods imported from overseas (ie. parallel imports) may be impeded by trade mark ownership and licensing structures and arrangements that may make it difficult to establish that the registered owner of a mark has consented to the application of the mark to genuine goods. But in most cases the argument is likely to be answered by giving full effect to the wide language of s 123 of the 1995 Act. Similarly, to the extent that the 1995 Act may have placed the burden of proof of the matters referred to in s 123 upon the respondent, it is also important to recognise that, in a particular case, the evidential burden may quickly shift to the registered owner since it will usually be best placed to know whether a registered trade mark has been applied with or without consent: Sporte Leisure Pty Ltd v Paul's International Pty Ltd (No 3) [2010] FCA 1162; 88 IPR 242 at [101].
53 The second argument emphasises the difficulty that may be faced by resellers who may have no sure way of knowing whether a mark applied to goods which they purchase was applied by or with the consent of the trade mark owner. This is, however, a difficulty that resellers have always faced when acquiring goods from anyone other than the registered owner of the mark. In the context of the 1995 Act, the reseller will either have the benefit of s 123 or will be left to rely upon any contractual or other remedies it may have against the person from whom it acquired the goods in the event these are found to be infringing.
54 Turning to other provisions of the 1995 Act, s 7(3) provides that an "authorised use" of a trade mark is taken to be use of the mark by the owner. Section 8(3) contemplates that a person who merely deals with, or provides, in the course of trade, goods in relation to which a mark is used, may be an authorised user of the mark. In such a case there may be use of the mark by both the authorised user and the registered owner. This accords with the view of Aickin J in Pioneer that a person who imports and sells goods to which a mark has been applied by the registered owner will have used the mark. Indeed, it seems to us that his Honour's analysis of the law in Pioneer (including at 688) had a considerable influence upon the drafting of the authorised use provisions.
55 The last point we would make in relation to the issue of trade mark use is that the very presence of s 123 in the 1995 Act suggests that a person who imports and sells goods to which a mark has been applied by or with the consent of the registered owner will use the mark as a trade mark. This is because s 123 would seem to be redundant if a person who imports and sells such goods did not use the mark as a trade mark.
56 In our opinion, under the provisions of the 1995 Act, a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of manufacture will have used the mark as a trade mark. It follows that, on this issue, we are not satisfied that the position under the 1995 Act is other than as stated in Montana, Gallo, Sporte Leisure and Lonsdale.