The Full Court of the Federal Court of Australia has reaffirmed that a registered trademark can only be infringed by the primary user of a trademark and there is no concept of authorisation of infringement recognised under Australian trademark law.

Background

PDP Capital manufactures and sells a range of chilled dessert products and snacks under registered trade marks containing the words WICKED SISTER.

Grasshopper Ventures is an IP holding company that licensed other trading entities within its corporate group to apply an unregistered trade mark for the word WICKED in stylised font on a range of dipping sauces and other products.

PDP alleged that Grasshopper Ventures infringed PDP’s WICKED SISTER registered marks by using the ‘WICKED’ stylised mark and engaged in misleading or deceptive conduct and passing off.

Although the appeal concerned numerous issues, the focus of this article is PDP’s novel contention that Grasshopper Ventures could be held liable for the actions of its licensees on the basis that it “authorised” the infringing use by its related corporate entities.

Full Federal Court decision and significance

The Trade Marks Act 1995 (Cth) (TMA) recognises that “use of a trademark” can include authorized use by third parties. For example, the owner of a registered trademark has the exclusive right to authorize others to use the mark. The owner of a trademark can rely on authorized use of the relevant trade by third parties In order to defeat a non-use removal action or to prove prior use or to prove acquired distinctiveness.

The test for infringement under section 120 of the TMA refers to a person “using” a trademark, which PDP argued encompasses authorized use in the same way as other mechanisms dealing with “use of a trade mark” under the trade mark regime.

The Full Federal Court dismissed the appeal and reaffirmed that Grasshopper Venture’s mere act of authorising the use of a trade mark to another entity does not constitute trade mark infringement. This is to be contrasted with the Copyright Act 1968 (Cth) and Patents Act 1990 (Cth) which specifically provide for infringement by authorisation.

The Court found that the language of section 120 emphasises on the personal nature of an act. It is the act of ‘the person’ that attracts a finding of infringement. It does not suggest use by one person will constitute an infringement by another person. Furthermore, unlike other sections of the TMA which incorporate authorised use, infringement under section 120 of the TMA does not include a specific note that ‘use’ of a trademark includes ‘authorised use’ of the relevant mark by another person.

However, this does not mean that a party cannot ever be found liable for infringing uses of a trademark by third parties. The Australian common law has long recognized (and the Full Court affirmed) that a person who has not engaged in the primary act of infringement can be held responsible for the infringing acts of third parties under the doctrine of joint tortfeasorship. However, for unexplored reasons, PDP did not allege joint tortfeasorship in this case.

A full copy of the decision (PDP Capital Pty Ltd v Grasshopper Ventures Pty Ltd [2021] FCAFC 128) is available here.

Avy Lim also contributed to this article.