In a blow to copyright owners Australia-wide, Rares J of the Federal Court recently held that local owners of copyright in a mark or logo are unable to prevent unauthorised parallel import of their goods. This follows the case of Polo/Lauren Company L.P. v. Ziliani Holdings Pty Ltd (2008) FCA 49
The well-known polo player logo is a recognised trade mark associated with the Ralph Lauren fashion house (Polo). In this case Polo sought an injunction against Ziliani Holdings Pty Ltd and its principal, Adam Ziliani (Ziliani), to restrain the import and sale of clothing bearing the embroidered logo without its consent.
The core issue of the case was whether a symbol (in this case, the polo player logo), when lawfully embroidered overseas into the external surface of an article of clothing, is protected by copyright within the provisions of the Copyright Act 1968 (Cth) (the Act) so that it may not be imported for sale or sold in Australia without the consent of the person entitled to the copyright here.
The products had been lawfully purchased in the United States (although at a significantly reduced price from that usually paid in Australia) and were genuine articles. Ziliani imported the products into Australia and sold them in his Chatswood store despite being aware that Polo had authorised Australian distributors selling the products legitimately and for higher prices. Polo sought to prevent Ziliani from importing and selling the goods in Australia.
The Court said it was plain that in the absence of a licence from Polo and a defence under the Act, Ziliani would infringe any copyright in the logo by importing the goods here and then trading with them.
It was considered common ground that the logo was an original artistic work under the Act, and was copyright in Australia. Polo argued that Ziliani infringed this copyright twice. The first was by importing the articles into Australia without its consent (s37 of the Act) (or alternatively by continuing the breach of copyright after given notice of the infringement). The second argument was that Ziliani had breached copyright under s38 of the Act by selling or offering for sale each imported article on which the logo appeared. Such arguments before 2000 had been used extensively to prevent parallel import of goods into Australia.
Ziliani raised two defences under the Act - that the embroidered logo was a non-infringing accessory under s44C of the Act, and that as applied to the clothing, the label was a ‘corresponding design’ which was authorised under s77.
Section 44C of the Act was introduced in 1998 and provides that the copyright in an artistic work will not be infringed by importing a reproduction of the work if the reproduction is embodied in a 'non-infringing accessory' to an article such as a label attached to or incorporated on to the surface of an article. The purpose of the section was to prevent a symbol (such as the Polo logo) being used to deny the article its ordinary use as clothing simply because the polo player logo is copyright. The section effectively permits the commercial import of ‘non-infringing accessories’ with articles/garments, even if those accessories are copyright protected.
The main components of a defence under s44C are that the artistic work (the logo) must have been used in the country of manufacture with the licence of the person entitled there to the copyright by embroidering it on to an article (the garments), and that it be an accessory (a label).
Using this, Ziliani argued the embroidered form of the logo was a 'labe' and therefore a non-infringing accessory to the articles of clothing. The court looked to the ordinary English meaning of 'label' and decided the Polo logo fell within the definition, and because the garments were original Polo products, they were therefore 'non-infringing.' Accordingly, the defence was established and Ziliani had not infringed Polo’s copyright in the logo by importing and selling garments with the official embroidered logo. The case only dealt with items that had the polo player logo embroidered on to them.
While the case was decided under s44C, Rares J also considered the alternative, being that the logo was a 'corresponding design' under s74 of the Act and therefore covered by the design/copyright overlap defence (s77). The court held the overlap provisions would apply to the logo and no infringement had occurred.
This case demonstrates that where imported goods are genuine (even if they are heavily discounted and not sold as a part of a legitimate distributorship) their sale is unlikely to be protected by way of copyright. While sections of the Act do prevent parallel importing of copyright material, it will be difficult to establish an infringement where genuine articles are imported, in instances where the copyright owner has authorised the application of particular marks/logos on to the goods.
The court accepted that other actions may have more success, in particular passing off and misleading and deceptive conduct under the Trade Practices Act. Even though a brand can exclusively licence the sale of its products in Australia, this by no means guarantees them a local monopoly. While it is possible for brands and designers to prevent parallel importing, this case makes it clear copyright will not be the best method.
For further information please contact Nicole Stevens-Warton on +61 3 9608 2264 or n.stevens-warton@cornwalls.com.au or Anna Smits on +61 3 9608 2103 or a.smits@cornwalls.com.au.
