Audemars Piguet is the designer and manufacturer of ultra-luxury Swiss watches. Originally founded in 1875 by watchmakers Jules-Louis Audemars and Edward-Auguste Piguet, it is one of the oldest fine horology manufacturers in the world and remains owned by the founding families. The brand shares prestigious acclamation with other watchmakers such as Patek Philippe and Breguet (or so I was advised one morning by a young banker who just so happens to be a fine watch aficionado).

Unsurprising, the brand’s esteem has resulted in imitators seeking to capitalise on their success, selling knock-offs for a fraction of the recommended retail price. The distributors of such pieces are often not the parties who manufacture the goods. So the question arises, what is the legal liability of a reseller of imitation goods? Below, we set out the law surrounding trademarking, design registration and misleading and deceptive conduct.

Non-Traditional Trade Marks

The Trade Marks Act 1995 (Cth) (‘the Act’) broadened the legal definition of ‘trade mark’. Under section 17 of the Act, a trade mark is defined to include any sign used in the course of trade for the purpose of distinguishing one trader’s goods and/or services from those of others.

The term ‘sign’ is further defined in section 6 of the Act and includes any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, colour, scent, sound and, most importantly, shape!

The Act considers shape trade marks as non-traditional marks attracting specific registrability criteria. Nevertheless, you can trade mark a shape (being a three-dimensional object). Some shapes been registered in Australia include belts, bags, jewellery and accessories.

Consequently, someone who sells or markets trade mark infringing products i.e. imitation luxury watches may be held liable for trade mark infringement. Nowhere is this more evident than in the case of Bugatti v Bugatchi, where an importer and distributor of imitation accessories was found to have engaged in trade mark infringement. Here, the retailer unsuccessfully argued that they should not be assigned liability because they merely distributed the merchandise and did not manufacture it themselves – an argument the Court found to be less than convincing. Ultimately, the reseller was ordered to pay some $550,000 in damages.

Design Registration

In Australia, design registration is the safest legal avenue you can pursue to protect the appearance of jewellery and accessories. To be afforded protection, the design must be registered, examined and certified. A fee applies for each registration and so generally only designs that are new, distinctive and act as a signature or calling card of a brand are registered. Much like trade marks, the owner of a registered design has the exclusive right to use, licence and assign the design as well as institute legal proceedings against infringers. Certification affords the owner exclusivity in respect of the design for ten years.

Misleading or Deceptive Conduct

Under Schedule 2, section 18 of the Competition and Consumer Act 2010 (Cth) (ACL) a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. For conduct to be misleading or deceptive, it must lead, or be capable of leading, a person in error (Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191).

Conduct that merely creates confusion is insufficient (Google Inc v Australian Competition and Consumer Commission (ACCC) (2013) 249 CLR 435). The rule is one of strict liability, and there does not have to be an active or even a passive intention to mislead or deceive, so long as the conduct has this effect. In certain circumstances, even silence can be misleading as it is the overall impression an individual receives from the representation.

Put simply, if you use someone’s registered trade mark or certified design, this may amount to use in a commercial context. Your actions could be regarded as trade mark or design infringement, and could also amount to misleading or deceptive conduct under the ACL. This will be the case where a majority of consumers mistakenly believe that there exists an association with the brand and the product featuring the brand. Replicas, in particular, may give rise to such an assumption.

Ultimately, where a replica is likely to mislead or deceive depends on the facts of the case and includes consideration of the following:

  • The nature of the product;
  • The price of the product;
  • The target market;
  • How the product is promoted, advertised, described and sold;
  • The demographic of the consumers of the product; and
  • Whether there is actual evidence that indicates consumers have been misled.

A breach of the misleading or deceptive conduct provision may give rise to numerous remedies, including an award of damages and injunctive/remedial relief.

Key Takeaways

It has become common practice for traders to import and resell goods from overseas manufacturers. In fact, the lower acquisition cost of international stock has almost made importing products a commercial necessity if one wishes to sustain their business.

If you suspect that your merchandise may infringe another’s rights, it is crucial to assess the product yourself, lest you find yourself on the defensive end of a lawsuit.

Questions? Let our intellectual property lawyers know on 1300 544 755.

Vanja Simic

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