Denim label G-Star defends brand in court as legal battles over parallel imports heat up

G-Star was back in the Federal Court this week fighting a trademark and copyright infringement claim against Toast Sales in the latest in a spate of parallel import cases as brands take to the courts to protect their intellectual property.

Toast Sales conducted “pop-up” warehouse sales at which it has sold a range of clothing and accessories from different brands, including G-Star.

These were sporadic sales events at locations such as hotel lobbies, conference rooms or vacant retail locations and were promoted as short-term sales with reference to specific identified brands.

Often the sale was promoted by the generic reference to jeans or denim, and the price ranges were prominent.

One of the sales was held in a warehouse next to a Bonds factory outlet, located in a side street in the Melbourne suburb of South Yarra. Jeans were displayed on trestle tables.

Some of the swing tag labels had certain information, such as barcodes and original pricing, ripped off them.

At some of these events, Toast Sales offered for sale and sold G-Star branded products which it purchased from Denim Enterprises, a company that operated G-Star Stores in Australia, Bagga Menswear, a store located in the United Kingdom that went into liquidation, and Attr@ttivo, a Greek company.

Toast Sales accepted that it had infringed “albeit innocently” the copyright of G-Star, however, Justice Middleton found consumers who were familiar with the G-Star brand and its promotion “would not have treated the promotion, sale and presentation of G-star products by Toast Sales as anything other than just that: a retailer selling goods (probably at “bargain” prices) which it had purchased or acquired for resale to the general public”.

“Similarly, if consumers were not familiar with the G-Star brand, it is difficult to see how they could be misled or deceived or likely to be misled or deceived,” Justice Middleton said.

Tony Watson, intellectual property partner at Middletons, told SmartCompany the case was the latest in a series of Federal Court cases which have come down in the last two years about parallel importation, an area where there has been a “real dearth of case law”.

Watson says there have been three recent cases, the first involving Pauls Warehouse and Greg Norman’s Great White Shark brand.

This concerned a licensed manufacturer in India making product which was supplied to someone in Australia. The court found that consent to apply the Great White Shark mark had not been given for those items and so it was a trademark breach.

The second was another Paul’s Warehouse case, this time involving the brand Lonsdale. The Federal Court found that when the Australian trademark was owned by a different company in the Lonsdale group, and where the mark was genuine, the Australian trademark owner had not given their consent to the goods and found that it was a trademark infringement.

Finally, there is the G-Star case. Watson says the case highlights that parallel importation is a matter of “substantial concern” for distributors of products in Australia and brand owners.

“The distributor is the one who builds up the product, as opposed to someone who gets their hands on stock from end of season and sells it in what is not usually a well presented way, which cheapens the brand and, to an extent, rides on all the advertising the distributor does,” says Watson.

Watson says the Paul’s Warehouse and Lonsdale case gives some idea of the scale of the problem as it involved around $3 million worth of stock.

“For our clients, the biggest issue for them, far bigger than counterfeiting, is the impact of parallel imported product on the reputation of the brand,” Watson says.

“Here are three brand owners who have been prepared to take cases to court; it is such a significant issue that they are taking action, which is obviously helpful to everyone to know where the boundaries are.”