The foreign manufacturer is generally the “first user” and therefore the “true owner” of the trade mark in Australia under section 58 of the Trade Marks Act 1995 (“Act”). This is because the goods are generally labelled with the manufacturer's details. As a consequence, the foreign manufacturer would win an opposition case or a cancellation case against a local distributor.
Distributors who attempt to register the trade marks without the knowledge or consent of the foreign trade mark owner could lose an opposition or cancellation case on the basis of section 62A of the Act which prohibits trade mark applications being filed in “bad faith”. The test of “bad faith” is defined as “conduct falling short of acceptable commercial standards”. Trying to deprive foreign owners of their trade mark rights in Australia would probably fail this test.
Sometimes a manufacturer will allow an Australian distributor to become the registered owner of its marks in Australia. The registrations can be then be used to block the parallel importation of the manufacturer's goods into Australia.
Under section 128 of the Trade Marks Act 1995, a foreign manufacturer cannot initiate an infringement action in Australia against “genuine goods” which are acquired overseas and imported into Australia by third parties. However, if the distributor is the owner of registrations, the distributor can take legal action against parallel importers.
Manufacturers are typically reluctant to assign their trade marks in Australia to their distributor, but they may do so if the distribution agreement includes a provision that the distributor must re-assign the trade mark to the foreign owner when the agreement terminates.
An Australian distributor should have a distribution agreement with a foreign manufacturer to address these issues.