Overseas manufacturers supplying goods for ultimate sale in Australia liable for trade mark infringement under Australian law

By Gregory Pieris and Allison Wallace

Playgro Pty Ltd v Playgo Art and Craft Manufactory Limited [2016] FCA 280

Manufacturers selling products into Australia be warned: the fact you are located outside of Australia will not protect you from infringing Australian trade marks. This was the message the Federal Court handed down in the recent decision of Playgro Pty Ltd v Playgo Art and Craft Manufactory Limited [2016] FCA 280.

Playgo was a Chinese manufacturer of children’s toys sold for many years under the “PLAYGO” trade mark. Playgo agreed to supply its toys to a number of well-known Australian retailers, who then imported the products into Australia and sold them in stores across the country. Australian company Playgro commenced proceedings against Playgo, arguing that it infringed various Australian registered trade marks for “PLAYGRO”.

Playgo attempted to argue that it had not used the “PLAYGO” in Australia and therefore did not infringe the “PLAYGRO” trade mark under the Australian Trade Marks Act 1995 (Cth). This was because Playgo was an overseas manufacturer with no direct business presence in Australia and, rather than exporting goods to Australia, this was in fact done by the Australian retailers who took delivery of the goods from Playgo within China.

This argument was unsuccessful.

Justice Moshinsky, drawing on previous rulings of the Federal Court and High Court of Australia, found that Playgo’s use of its trade mark did not cease upon sale and delivery of the goods in China. Rather, the “PLAYGO” mark was being used so long as the goods were in the course of trade until their ultimate sale to customers in Australia and it was indicative that they were Playgo’s products.

The Federal Court’s decision carries two key messages: overseas manufactures must recognise the risk of infringing trade marks in Australia whenever supplying goods designated for ultimate sale in Australia; and it is possible for Australian brand owners to take direct action against overseas manufacturers of infringing products even when they attempt to shield themselves from liability through complex supply arrangements.

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