Parallel Infringement - Parallel Importation of Rebranded Cigars Okay, Says Australian Full Federal Court

Tobacco packaging has been a popular topic in the last couple of years, including on this very blog (articles on which can be found here, here and here), particularly in the remit of plain packaging. Whether you dislike the initiative or support it, one can still appreciate the sentiment behind it. What the legislation has done is caused severe issues for products like cigarettes that heavily rely on these distinctive markings to indicate their own brand and distinguish its features from the rest. In Australia the law has been in effect since 2011 under the Tobacco Plain Packaging Act 2011, which means all tobacco products must conform to the requirements of the law in their packaging. With that said, could one repackage purchased tobacco products and subsequently resell them in Australia? The Full Federal Court took this question on after an appeal from the Federal Court whose decision was handed down in late 2015.

The case of Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd dealt with the sale of tobacco products in Australia, specifically cigars manufactured by STG Eersel. The company, in relation to the sale of these goods, also holds several trademarks for cigar brands, including Café Créme (No. 761892), Henri Wintermans (No. 179680) and La Paz (No. 643779). The cigars were manufactured in Belgium, Holland and Indonesia, using packaging incorporating the aforementioned marks. The same cigars are packaged differently for the Australian market in order to conform to the plain packaging legislation mentioned above, which is done abroad similarly to the branded products. Trojan is an importer and supplier of cigars and other tobacco products, supplying, among other items, STG's cigars to the Australian market from overseas, repackaging them to conform to the same legislation. At first instance, Chief Justice Allsop saw that Trojan had not infringed STG's trademarks by repackaging their branded products; however, the decision was appealed by STG.

The Full Federal Court firstly sought to establish was whether the trademarks mentioned above had been infringed by Trojan through their parallel importation, i.e. were STG's marks used "as a trade mark" under section 120 of the Trade Marks Act 1995 and if section 123 (allowing for the use of a trademark if the mark has been applied to the goods prior to or with the consent of the rightsholder) of the same Act applied to those uses.

Lewis now doubted the legitimacy of his cigarettes

What constitutes use "as a trade mark" was initially set out by the Court as "...[a] 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". This use still has to be assessed within its context, including how the marks are used, as "...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".

The Court concluded that "...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". Their conclusion relies heavily on the impact of parallel importation on the original manufacturer, and the existence of section 123, which, if this were not the case, would be largely redundant. This position follows previous Federal Court case law quite well, even with the existence of foreign cases accepting the opposite position.

As the Court had determined that the importation of the branded goods was indeed a use of the marks, they moved onto the question of whether the use amounted to an authorized use under section 123 of the Act. The section is engaged when, in the past or prior to the use under section 120, the rightsholder (or someone authorized by them) has applied the mark onto the packaging of the goods, which are subsequently sold onward by the third-party (i.e. used "as a trade mark" as discussed above). What seems to remain key here is the reapplication of the mark onto the new packaging by Trojan, which, according to the Court, should be covered by the section through a much wider interpretation of it. Ultimately what the Court concluded was that Trojan were protected under section 123 and did not infringe STG's trade marks.

Finally, the Court did briefly discuss issues surrounding a passing off claim and Australian consumer protection laws, and deemed that Trojan had not passed the repackaged cigars off as STG's, nor had they been in breach of any consumer legislation in their repackaging efforts (specifically deceive or mislead consumers).

The case is a very interesting illustration of the possible perils of parallel importation, and shows the differences in the approaches in the UK and Australia (and, to some extent, the EU). As the world and trade have become more and more global, parallel importation will be a bigger issue for the future. Even so, the Full Federal Court's approach is very sensible, considering the packaging environment that exists in the country for tobacco products. It is unclear whether the decision will be appealed to the High Court, but this writer thinks, after two successive losses, STG might have to just accept defeat.

Source: IP Whiteboard

A Gleeful End - TV Show 'Glee' Infringes Comedy Venue's Trademark

Whether you are old or young you cannot have escaped the phenomenon that was the TV show Glee, which reached its peak popularity some time just before the turn of the first decade in 2000. The show was a teen drama, encompassing musical elements on top of the usual teen drama fare (very much in the spirit of glee clubs in the days of yore). Even with its upbeat style, the show, or rather its name, has not existed in pure glee, but has faced a prolonged challenge in the UK over its name. With that said, would the show have its last song as "Glee", or were they able to defend their moniker?

The recent decision of Comic Enterprises Ltd v Twentieth Century Fox Film Corporation dealt with a series of comedy clubs in the UK called The Glee Club, existing in Cardiff and Birmingham, among other cities. The owners of the clubs, Comic Enterprises, registered the logos of the clubs as UK trademarks in 2001. The marks incorporated the club's name in a stylized fashion, including a spotlight in the background of the name with each constituent part of it being roughly of equal size. The TV show "Glee" (focussing on the antics of a alee club at a fictional US high school) ran between the years of 2009 and 2015, garnering huge success both in and off the TV format, prompting Comic Enterprises to take them to court for trademark infringement and passing off after the clubs' owner noticed the similarities between the two names.

What the Court of Appeal had to address was whether Fox infringed the registered trade mark under sections 10(2) and 10(3) of the Trade Marks Act 1994, and whether they were guilty of passing off.

Under both sections 10(2) and 10(3), infringement is assessed on the basis of six factors: "(i) there must be use of a sign by a third party within the relevant territory; (ii) the use must be in the course of trade; (iii) it must be without the consent of the proprietor; (iv) it must be of a sign which is identical with or similar to the trade mark; (v) it must be in relation to goods or services which are identical with or similar to those for which the trade mark is registered; and (vi) it must give rise to a likelihood of confusion". The first four factors were not disputed, as the show was indeed shown in the relevant territory (the UK); the mark was used in the course of trade (a commercial TV show); there was no consent over its use by Comic Enterprises; and the mark was identical with or similar to the registered mark (the Glee Club/Glee).

No room for song and dance after Lord Justice Kitchin's judgment

The final two factors look at whether the use of the mark was for similar or identical goods or services (i.e. is a club the same as a TV show in terms of use), and whether, as a result, there would be a likelihood of confusion between the goods and services. This is a matter of assessing, among other factors, "...their nature, their intended purpose and their method of use and whether they are in competition with each other or are complementary". Equally, the two marks have to be compared through the perspective of the average consumer. Without similarity there cannot be infringement, so this is very important.

A big point of contention in the assessment of similarity was the trial judge's 'wrong way round' determination through evidence, or in other words, that the registered mark evoked a connection with the TV show, rather than the other way around (the more typical test for similarity). After discussing all submitted evidence anew, Lord Justice Kitchin determined that the evidence did indeed create a likelihood of confusion, however acknowledging some of it having little probative value. This is an interesting point, as the case clearly accepts 'wrong way round' evidence, and as such this could be used in other cases to prove a likelihood of confusion.

Finally, Lord Justice Kitchin turned to the matter of infringement, due to substantial errors made by the trial judge in their initial judgment. He ultimately found that there was indeed infringement under section 10. The two marks were deemed to be similar, even with the fact that the word "glee" was a common word.  Additionally, the goods and services offered by the two parties were sufficiently similar, although the similarity of a TV show and a club were challenged by the defendant. Lord Justice Kitchin specifically mentioned the context of the marks' use, and even though he accepted that the connection between the two was loose on the face of it, there still was a possible connection, especially with a world tour planned for the TV show incorporating a live element to the mark's use. He ultimately found a likelihood of confusion between the two marks. A potential changing of economic behavior by consumers based on this confusion would also cause detriment to the claimant, especially in the light of a need to change their marketing to further distinguish themselves from the TV show.

He also agreed with the trial judge and dismissed the passing off claim made by the claimant, as a likelihood of confusion is to be distinguished from misrepresentation, which is crucial for a passing off claim. As the defendant's use of the name was not to pretend the TV show was associated with the comedy clubs (although the mark was confusingly similar) and thus was not a misrepresentation.

The case is an interesting one, and shows that 'wrong way round' confusion is a legitimate argument, even though one could consider it unorthodox under the letter of the law. Nevertheless, this writer agreed with Lord Justice Kitchin, and wonders whether the case will see a further appeal, especially because of an outstanding issue on the compatibility of section 41 under EU law (specifically Directive 2008/95/EC). This remains to be seen, but it seems that the show will have to be rebranded in the UK, even after its end some time ago.

Source: IPKat

Supreme Goodwill - UK Supreme Court Addresses Jurisdictional Goodwill

In today's business world reputation is everything when selling your goods or services to the masses at large. Goodwill, the inherent reputation of your goods or services, can easily overreach beyond the mere confides of countries, continents, or even the solar system. With this in mind, how far a business' goodwill can, and does, reach is hugely important, especially when it comes to someone passing off their goods or services as a famous brands' equivalents. What makes things even more complex is the nature of the online world we are all a part of, which has a wholly borderless reach (excluding geo-blocking), and in which anyone can pass themselves off as someone or something else without much difficulty. This begs the question: how far does your goodwill extend, even if you have no or very little presence in a given territory, due to your goodwill online? The Supreme Court of the United Kingdom endeavored to answer this question only a little over a month ago.

The case in question was Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others, which concerned the use of IPTV, or in more simplistic terms, the streaming of TV via the Internet using dedicated hardware to do so, very much like cable TV but in an online environment. Starbucks (HK) and PCCW Media Ltd, two corporate members of a larger group (referred to as "PCCM" in the judgment as a whole), which operated an IPTV service called "NOW BROADBAND TV", subsequently renamed to "NOW TV", in Hong Kong, being the largest entity in its respective IPTV business in the country. Most of the channels offered through the NOW TV service are in Chinese, and are not accessible in the United Kingdom, although some people in the UK had been identified as being aware of the service. PCCM had since considered expanding internationally, and did so by launching a mobile app called NOW aimed at the Chinese-speaking population in the UK. Prior to the launching of the app in the same year Sky announced its "NOW TV" on-demand service, which went into its beta phase roughly at the same time as the launching of PCCM's mobile app. PCCM subsequently sued Sky under the tort of passing off (more on which can be found here), with the case ending up all the way in the Supreme Court.

Passing off, as has been noted in the article above, hinges on three factors that need to be established in order to prove the tort of passing off: (i) goodwill or reputation in the goods or services provided in the minds of the purchasing public; (ii) a misrepresentation by the defendant to the public that leads or is likely to lead, the public to think the goods or services are provided by the plaintiff; and (iii) the plaintiff suffers, or is likely to suffer, damage as a result of this misrepresentation. PCCM established the latter two requirements at first instances, and therefore the Supreme Court had to decide on whether Sky's service fulfilled the first requirement, amounting to passing off.

The main question therefore to the Supreme Court was whether PCCM had goodwill in the jurisdiction in question, in other words a customer base, meaning the UK. As the court stated, reiterating Lord Justice Oliver in Anheuser-Buch v Budejovicky Budvar NP, that goodwill is very much "localized" and that "...reputation which may, no doubt, and frequently does, exist without any supporting local business… does not by itself constitute a property which the law protects". In other words, even if goods or services have a certain, even strong reputation to them, does not mean it inherently commands it everywhere, irrespective of actual use or not. This line of thinking very much confirms precedent from decades prior, where similar conclusions have been made as to the localized nature of goodwill.

Territorial issues can be dealt with amicably at times

After a presentation as to the law from both sides the Court finally discussed its decision on whether passing off, or goodwill, has a territorial nature to it. As Lord Neuberger remarked: "...I consider that we should reaffirm that the law is that a claimant in a passing off claim must establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question. And, where the claimant's business is abroad, people who are in the jurisdiction, but who are not customers of the claimant in the jurisdiction, will not do, even if they are customers of the claimant when they go abroad". To put Lord Neuberger's argument in different words, goodwill can only exist in a jurisdiction if its goods or services are used by actual customers in that jurisdiction, irrespective of foreign users who have emigrated or visit that jurisdiction (although, one would imagine, given a sufficient amount of immigrants this would be acceptable). As said, this is fully in line with older precedent, and also foreign authorities within the common law, as was put forth by Sky in its argument. PCCM had very little presence in the UK, although it did establish some user base did exist.

Finally, Lord Neuberger aimed to settle two questions that remained: "(i) clarification as to what constitutes sufficient business to give rise to goodwill as a matter of principle, and (ii) resolution of the judicial disagreement as to the jurisdictional division of goodwill".

In answering the first question Lord Neuberger quickly settled the matter by largely stating what has already been settled above: "The claimant must show that it has a significant goodwill, in the form of customers, in the jurisdiction, but it is not necessary that the claimant actually has an establishment or office in this country. In order to establish goodwill, the claimant must have customers within the jurisdiction, as opposed to people in the jurisdiction who happen to be customers elsewhere. Thus, where the claimant's business is carried on abroad, it is not enough for a claimant to show that there are people in this jurisdiction who happen to be its customers when they are abroad. However, it could be enough if the claimant could show that there were people in this jurisdiction who, by booking with, or purchasing from, an entity in this country, obtained the right to receive the claimant's service abroad.". Lord Neuberger's answer to the first question further establishes that a business has to have some form of customer base in a jurisdiction it wishes to protect its intellectual property in that jurisdiction, and that business would have to be, mostly at least, permanent in that jurisdiction, rather than just transient.

The answer to the second question leads to a much wider discussion than can be settled in this blog post, and merits reading in its own rights by those who might be interested. What needs to be said, however, is that Lord Diplock's comments in Star Industrial Co Ltd v Yap Kwee Kor further support Lord Neuberger's conclusions and highlight the distinction between goodwill in different jurisdictions through the existence of separation of judiciaries; i.e. not one court can decide an issue of a foreign court.  Allowing for territorial overlap would let businesses simply claim a right in a name in another jurisdiction with a minimal presence, thus restricting business and trade for legitimate entities in that jurisdiction.

Ultimately the Supreme Court dismissed PCCM's appeal, and concluded that their claim in "NOW TV" had no basis in the UK, as they did not have the requisite consuming public in the UK for their service to merit protection under passing off.

This case is an interesting one, and although one could say the decision is very much a common sense approach, it still does answer some question relating to goodwill, especially in a digital age where the Internet permeates nearly every part of the globe. Businesses have to have a legitimate business presence in a given country in the form of a customer base, even in this digital age.

Source: KWM Legal Insights

Passing Off on Persons - Rihanna Wins Appeal Case

If reality TV has taught something to most individuals is that personality, and personas especially, are valuable. This, along with other celebrities, musicians and actors, illustrates an interesting aspect of humanity; a self-imposed value on the eccentric and the unusual, making people and their respective persons more than salable. People often buy things based on association, be it quality, notoriety or just through the endorsement of the right person. Because of this there is a huge amount of value in the right brand or good being associated with the right person, even if that image is conjured up through more 'nefarious' means, i.e. through the illusion of association or endorsement, which can potentially damage the 'brand' of an individual. After a recent case, this writer was inspired to answer one question: can you pass off on a person, not just a brand?

The case in question was Fenty & Ors v Arcadia Group Brands Ltd, decided in the Court of Appeal in the early days of 2015, which dealt with the sale of a simple article of clothing; a t-shirt. Topshop, a well-known store for all that is clothing, sold a t-shirt printed with the image of Robyn Fenty - more commonly known as Rihanna. The image itself was one of her posing, taken during the shooting of a music video for one of her songs. The picture was taken by a third-party photographer, and not commissioned by Rihanna herself, allowing the photographer to sell the rights to the image to Topshop, which he promptly had done, leading to its use in the aforementioned garment. Rihanna subsequently objected to this use, and initiated proceedings against Topshop for the image's use, citing an infringement of her rights, and claiming its use can confuse consumers to believe she endorses the shirt, amounting to passing off (more on which can be found here).

The starting-point for the discussion surrounding the law was set out by Lord Justice Kitchin: "There is in English law no "image right" or "character right" which allows a celebrity to control the use of his or her name or image". In the United States, under various State legislation, an individual's personality or persona can be protected; something that isn't protectable per say under UK legislation.

Some faces are just made for t-shirts

Nevertheless, the protection offered under passing off can potentially extend to individuals, at least on a prima facie application of the requisite elements: there has to be goodwill associated with that individual; a misrepresentation as to that goodwill applying to goods and/or services not associated with that individual; and actual or potential damage to said goodwill. Should Topshop have sufficiently misrepresented a connection with Rihanna, they could be liable under passing off. To put things in more simplistic terms, as described by Lord Justice Kitchin: "...it was [Rihanna's] case that the misrepresentation that she was associated with the t-shirt made it more attractive and so played a material part in the decision of the public to buy it".

Lord Kitchin turned to the earlier decision in Edmund Irvine Tidswell Ltd v Talksport Ltd, where Justice Laddie formulated two criteria that needed to be established for a successful case in passing off in a false endorsement matter: "It follows from the views expressed above that there is nothing which prevents an action for passing off succeeding in a false endorsement case. However, to succeed, the burden on the claimant includes a need to prove at least two, interrelated facts. First, that at the time of the acts complained of he had a significant reputation or goodwill. Second, that the actions of the defendant gave rise to a false message which would be understood by a not insignificant section of his market that his goods have been endorsed, recommended or approved of by the claimant".

Whether the public perceive the image of Rihanna as an endorsement or not is very much irrelevant, As long as an image of a potential endorser is used, the use can amount to a misrepresentation to that individual's endorsement of that product. This, however, does not allow a celebrity to unilaterally prevent all uses of their images, but is an assessment that has to be made in every instance and relating to every specific use separately. Topshop had attempted to use Rihanna's fame to their advantage through prior campaigns and contests, clearly leveraging her image to boost their sales. This does not amount to passing off itself, but is a contributing factor usable by the courts. In the end the Court saw that Topshop were indeed liable under passing off, and prevented the further sale of the above t-shirt.

While this case is not a landmark one, it serves an interesting curiosity in the world of celebrity and marketing, and showcases that even images can carry weight and value. Next time you print an image of your loved ones on custom-made t-shirts, think twice.

Source: BBC

Retrospective - Passing Off

Success often breeds those who wish to follow in your footsteps, or even attempt to utilize it for their own gain. In the world of consumer products, distinguishing one's products is imperative, but what if your competitor uses your characteristics, or attempts to mirror them closely in order to improve their own sales? Such attempts could fall under the tort of passing off, where a competitor will try to imitate the market leader's product by making it look as similar to it as possible, in essence passing it off as it it were the same product or of equal quality. This can be a similar logo, shape or other characteristic that distinguishes the product which is being imitated from other such products. Passing off is used if that mark or characteristic is not registered, therefore not falling under any specific trademark legislation. The tort also applies to services. The defining case for passing off was Erven Warnink BV v J Townend & Sons (Hull) Ltd in England, however a later case distilled the essence of the tort itself; Reckitt and Colman Products Ltd v Borden Inc & Others.

A product that definitely isn't a lemon

Reckitt and Colman v Borden concerned the incredibly well-known product called a Jif Lemon. What this product is is a yellow lemon shaped container with lemon juice inside. For Pancake Day enthusiasts and other lemon lovers, a quintessential product for their purposes. What makes this product so easily distinguishable is its shape and striking resemblance to a real lemon, which has been used since the 1930s. Some decades later, Borden Ltd, who had sold lemon juice under the name ReaLemon, attempted to break the UK market by selling their lemon juice in a lemon shaped container only slightly deviating from the Jif design. In the course of several complaints on Reckitt and Colman's part Borden did change the shape, color of the cap and the size of their container, but still maintained the lemon shape. Reckitt and Colman subsequently sued Borden, and the final decision came from the House of Lords in 1990.

Passing off hinges heavily on one factor which has to be explained, called 'goodwill'. The concept of goodwill is reputation, how well-known the product is and how well consumers identify that particular product among others of a similar type. The less goodwill the product has, the less likely an action in passing off will succeed. This does not necessarily amount to just the longevity of the period in which the product or services is traded in, but can be merely its introduction as the only product of its kind, effectively becoming the only one consumers identify as the defining product of that type.

Lord Oliver provided a summation of the law's position in passing off, containing three requisite elements to prove the tort: "First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying 'get-up' (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. … Thirdly, he must demonstrate that he suffers or … that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff".

In the court's judgment, delivered by Lord Oliver and Lord Jauncey, the tort of passing off was a matter of answering three questions:

"(i) Have the respondents proved that the get-up under which their lemon juice has been sold since 1956 has become associated in the minds of substantial numbers of the purchasing public specifically and exclusively with the respondents' (or "Jif") lemon juice? 

(ii) If the answer to that question is in the affirmative, does the get-up under which the appellants proposed to market their lemon juice in all or any of the Mark !, Mark II or Mark HI versions amount to a representation by the appellants that the juice which they sell is "Jif" lemon juice? 

(iii) If the answer to that question is in the affirmative, is it, on a balance of probabilities, likely that, if the appellants are not restrained as they have been, a substantial number of members of the public will be misled into purchasing the defendants' lemon juice in the belief that it is the respondents' Jif juice?"

What Lord Oliver is asking is whether the product or service in question has goodwill or reputation; whether there has been a misrepresentation on the other party's part; and where there has been damage or there is a likelihood of such should the other party not be prevented from misrepresenting their product as the other. The assessment of each given factor is a matter of evidence, and there is no steadfast rule as to any hardline indicators proving either goodwill, damage or the likelihood of damage. In the case at hand their Lordships saw that Borden Ltd were liable under the tort of passing off, purely for the reason that the products' similarities would likely cause confusion on the purchaser's part and therefore cause damage to Reckitt and Colman. Borden intention was to not necessarily confuse the purchaser, but to identify their product with the other, causing the purchaser to pick up either product purely on the instinct that it is what they think it is due to its indicative shape. Their Lordships heard arguments over matters relating to a possible monopoly should the shape be kept strictly under Reckitt and Colman's control, and the possibility that the shape was commonly used in the trade (thus making it available for all to use in that trade); however none of these arguments were accepted.

The tort of passing off is incredibly important in the protection of traders' goods through the common law. Should this protection not be offered, distinctive shapes, marks or other characteristics which are not registered could be freely used by others to the detriment of the original trader. Some laws do offer protection through statutory means, such as the Australian Consumer Law (Competition and Consumer Act 2010) in Australia or the Trade-Marks Act in Canada, but the tort still remains an important part of the common law.