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Playtime is over!

Australian Court delivers landmark decision upholding rights of Australian trade mark owners against foreign manufacturers

18 July 2019

In Playgro Pty Ltd v Playgo Art & Craft Manufactory Ltd [2016] FCA 280 and Playgro Pty Ltd v Playgo Art & Craft Manufactory Ltd (No 2) [2016] FCA 478, a toy products manufacturer incorporated in Hong Kong (with registered trade marks in Hong Kong and the People’s Republic of China) was held liable for trade mark infringement in respect of products bearing its mark sold to consumers in Australia by retailers having no corporate connection to the manufacturer. This was despite the manufacturer itself having no operations in Australia. These decisions by Justice Moshinsky of the Federal Court of Australia are a remarkable victory for Australian trade mark owners, necessitating that foreign companies must exercise a high degree of caution if they are aware that their products may be imported into and/or sold in Australia. In the absence of holding a Australian-registered trade mark, this decision highlights that infringement can occur regardless of whether or not the manufacturer holds a registered trade mark in its jurisdiction of incorporation, manufacture and/or the primary product market.

Background

In Australia, a registered trade mark will be infringed if any of the three distinct tests set out in section 120 of the Trade Marks Act 1995 (Cth) are satisfied. For the purposes of this article, only the primary test under section 120(1) is considered. The primary test provides: “A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.”

Two companies incorporated in Hong Kong, Playgo Art & Craft Manufactory Limited and Playgo Toy Enterprises Limited are members of a group of corporations which designs, manufactures, distributes and wholesales children’s toys. Playgo Craft is the registered owner of a trade mark in Hong Kong and the People’s Republic of China.

During 2013 and 2014, Playgo Enterprises sold and delivered in the People’s Republic of China goods bearing the Playgo Mark to an Australian department store operator, Myer, and an Australian supermarket owner, Woolworths for sale to consumers in Australia. These goods were then offered for sale and sold to consumers in Australia by, among others, Myer and Woolworths.

Federal Court of Australia Proceedings
(i) Introduction

On 4 May 2015, Playgro Pty Ltd., the registered owner of six Australian registered trade marks, commenced proceedings in the Federal Court of Australia alleging, among other things, infringement of its trade marks by Playgo.

Following a trial on liability in early December 2015, Moshinsky J published reasons for judgment on 22 March 2016, finding each of Playgo Craft and Playgo Enterprises liable for trade mark infringement in respect of three of Playgro’s Australian-registered trade marks. A further oral hearing and round of written submissions was necessary after the parties could not agree on orders giving effect to the Playgro No 1 decision. On 9 May 2016, Moshinsky J published reasons for judgment making declarations that the Playgro Marks had been infringed and enjoining Playgo from infringing the Playgro Marks, including by way of supplying for sale in Australia goods bearing the Playgo Mark.

The primary issue at trial was whether a foreign company which had, at no point in time, manufactured, advertised or supplied for sale, goods or services in Australia could be held liable for trade mark infringement.

A subsidiary issue was whether a foreign company could be held liable as a joint tortfeasor in an Australian company’s offering for sale and sale (in Australia) of goods or services which infringed Australian-registered trade marks.

(ii) Infringement

As a threshold issue, Moshinsky J needed to consider whether the Playgo Mark was “substantially identical with, or deceptively similar to” the Playgro Marks. On the facts of the case, Moshinsky J held that the Playgo Mark was not “substantially identical with” but was “deceptively similar to” the Playgro Marks, chiefly on the basis that there was a real, tangible danger of confusion between the marks, taking into account, among other things, the imperfect recollection of the notional consumer.

The next question that needed to be considered was whether Playgo had ‘used’ the Playgo Marks in Australia. Again, after careful consideration of the applicable legislation and the authorities on the subject matter, as well as the parties’ detailed submissions, Moshinsky J held that Playgo used the Playgo Mark as a trade mark in relation to goods in Australia. The chain of reasoning can be summarised as follows:

  1. The Playgo Mark was applied as a “badge of origin” to indicate a connection in the course of trade between the goods and Playgo;
  2. Playgo did not cease to use the Playgo Mark upon sale or delivery of the goods to Myer or Woolworths; and
  3. The goods remained in the course of trade until their ultimate sale to customers in Australia.

Moshinsky J rejected Playgo’s submission that such a finding would have a ‘floodgates’ effect, necessitating that every foreign company throughout the world would be liable for trade mark infringement in Australia if its marked goods are present in Australia in the course of trade, no matter how far removed the company might be from the point of sale to the consumer nor how long the chain of international trade and commerce might extend. An important consideration for Moshinsky J was a finding that Playgo was aware that its goods were to be offered for sale and sold to customers in Australia. His Honour did not consider whether a foreign company would be liable for infringement if this were not the case.

(iii) Joint Tortfeasorship

In light of Moshinsky J’s findings in respect of infringement, it was not necessary for his Honour to consider the alternate basis on which Playgro’s case was put (which was only in relation to Myer, not Woolworths). Moshinsky J nevertheless gave brief consideration to the matter, ultimately deciding that Playgo and Myer did not engage in the necessary “common design” to offer for sale and sell infringing goods bearing the Playgo Mark, chiefly on the basis that their relationship was merely that of vendor and purchaser. His Honour concluded that, unlike with respect to his findings on infringement, Playgo’s knowledge that Myer would offer for sale and sell infringing goods to customers in Australia was insufficient to amount to a “common design”, noting that at most this amounted to facilitation of infringement which was not enough to establish joint tortfeasorship.

(iv) Appeal?

Extensions in respect of the time available within which to lodge an appeal were sought and granted (including, on multiple occasions, by consent) but it appears from the court record that an appeal was ultimately not pursued.

Takeaways

The main takeaway emerging from the Playgro Decision is that foreign companies that manufacture goods or provide services in the knowledge that those goods or services will be sold or provided to consumers in Australia must exercise caution that any marks used in the course of selling goods or providing services do not infringe Australia registered trade marks. It remains to be seen whether a foreign company that lacks that knowledge (or is wilfully blind to such matters) would be held liable for trade mark infringement in Australia.