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Parallel Importing Post Trips: Convergence and Divergence in Australia and New Zealand

Published online by Cambridge University Press:  17 January 2008

Louise Longdin
Louise Longdin
Affiliation:
Senior Lecturer in Commercial Law, University of Auckland. This is an updated (to 1 June 2000) version of a paper presented at the Fordham Eighth Annual Conference on International Intellectual Property Law and Policy in April 2000. While all errors are mine, my thanks go to Professor Hugh Hansen, Fordham Law School and Professor Ian Eagles, University of Auckland, for help and interest extended towards this research.
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In a famous act of studied neutrality the framers of the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS)1 left nations adhering to the Agreement completely free, in Article 6 of that document, to determine the extent to which they would allow the parallel importation of products affected by intellectual property rights which had been lawfully placed on the market outside the jurisdiction.2 The hands off approach embodied in Article 6 came as no surprise to commentators and TRIPS watchers. What to do about parallel importing has always been an issue which has deeply divided the world's trading nations and continues to be the subject of vigorous debate within them.3 Intellectual property owners and their licensees are uniting across national borders not just to defend historically entrenched advantages but also to portray these advantages as so much a part of the post TRIPS order that their extension (at home as well as abroad) seems both natural and inevitable. Importers and would-be importers outside existing distribution networks not unnaturally remain sceptical of arguments which threaten to replace tariffs and import restrictions with private law barriers to entry, barriers backed by both civil and criminal sanctions. In Australia and New Zealand these self-interested opponents of parallel importing have, in recent years, been joined in their scepticism by competition regulators and policy makers eager to bring to bear on the debate economic insights derived from detailed analyses of the impact of such restrictions both on particular product markets and the national economy as a whole. Increasingly too, the wider consuming public has begun to see that grey markets have charms hitherto invisible behind now removed protectionist walls.

Type
Articles
Information
International & Comparative Law Quarterly , Volume 50 , Issue 1 , January 2001 , pp. 54 - 89
Copyright
Copyright © British Institute of International and Comparative Law 2001

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References

1. New Zealand and Australia are both signatories to the TRIPS Agreement of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) set out in Annex 1C to the Marrakesh Agreement signed on 15 Apr. 1994. TRIPS, which entered into force with the World Trade Organisation (WTO) replacing GATT on 1 Jan. 1995, stipulates minimum standards relating to the form, scope, duration and enforcement of intellectual property rights for all WTO members. Article 6 of TRIPS states that “(f)or the purposes of dispute settlement under this Agreement … nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights”.

2. Under the “international exhaustion” system once a legal copy of a product has been put into circulation somewhere in the world with the consent of the right owner, the rights in relation to that copy are exhausted, see Rothnie, W., Parallel Imports (Sweet & Maxwell, London 1993)Google Scholar. The “national exhaustion” doctrine, on the other hand, dictates that rights are to be exploited territorially and hence authorisation for importation must be obtained for each and every country: Gervais, D., The TRIPS Agreement: Drafting History and Analysis (Sweet and Maxwell, London 1998) 61Google Scholar. Although a ban on the international exhaustion of rights was quite out of the question for Switzerland and Hong Kong some Members wanted express assurance that they were free to act on their own initiative in this regard. See Heinemann, A., “Trade Related Aspects of Intellectual Property Rights” in Beier, F-K. and Schricker, G. (eds) From GATT to TRIPS, Studies in Industrial Property and Copyright Law, Vol. 18 (Max Planck Institute, Munich 1996) 401, 421Google Scholar. During the TRIPS negotiations, Australia also put forward strong arguments in favour of international exhaustion supported by evidence prepared by its own Prices Surveillance Authority (PSA). Document prepared for the Committee of Experts on a Possible Protocol to the Berne Convention, BCP/CEIII/2, 12 Mar. 1993. See Gervais, idem, 62.

3. When the question of under what circumstances intellectual property rights are to be treated as exhausted after first sale was subsequently revisited in relation to copyright, the framers of the World Intellectual Property Organisation (WIPO) Copyright Treaty 1996 again left Contracting Parties with an unfettered discretion under Art.6(2) to decide whether or not it lies in their interest to opt for national or international exhaustion of rights. The 1996 WIPO Performers and Phonograms Treaty (WPPT) also preserves the freedom of Contracting Parties to determine the conditions under which the exclusive right to distribute phonograms and performances recorded in phonograms will be exhausted. Neither New Zealand nor Australia, however, is presently a signatory to WCT or WPPT.

4. The bilateral Australia New Zealand Closer Economic Relations Free Trade Agreement signed in 1983 (CER as it is commonly known in both countries) requires that initiatives taken on trade matters by either Australia or New Zealand are not to impede trade between the two countries. 1 Jul. 1990 supposedly heralded a new free trading regime between Australia and New Zealand when licensing and tariff barriers were dismantled.

5. Commerce Act 1986 (NZ), ss.36(2) and 45 and Trade Practices Act 1974 (Cth), s.51(3). There are important differences between the two countries' exempting provisions, however: see Eagles, I., “Intellectual Property and Competition Policy: The Case for Neutrality” in **Rickett, C.E.F. and Austin, G.W. (eds) International Intellectual Property and the Common Law World (Hart Publishing, Oxford, 2000) 285.Google Scholar

6. The New Zealand road to this destination was somewhat more tortuous than the Australian. Infelicitous drafting in S.10(2) of the Copyright Act 1962 (NZ) required Pritchard J in the High Court in Barson Computers (NZ) Ltd v. John Gilbert & Co Ltd [1985] 4 I.P.R 533 to decide between two interpretations as to who was, for consent purposes, the “maker” of parallel imported goods. Was it the importer of the goods or the person who actually made them? His controversial finding that copyright would be infringed if the importer rather than the copyright owner had made the goods in the country of importation was subsequently built into the Copyright Act 1994, S.12(3). (An earlier English decision based on the counterpart United Kingdom provision and a somewhat similar fact situation had gone the other way, see CBS UK Ltd v. Charmdale Record Distributors Ltd [1981] Ch.91. An exhaustive criticism of the differences between the English, Australian and New Zealand approaches to this complex issue is provided by Laddie, H., Prescott, P. and Vitoria, M., The Modern Law of Copy right and Designs, Butterworths, London, 2nd ed 1995, paras 18–20, 18–32—18–38.)Google Scholar In Australia the only obstacle to effective restriction on parallel importing was doubt as to whether a statutory ban on importation without the licence of the copyright owner could be circumvented by assuming an implied licence from the copyright owner by the mere fact of legal sale outside the jurisdiction. The question was resoundingly answered in the negative by the High Court in Interstate Parcel Express Co Pty Ltd v. Time-Life International (Nederlands) BV (1977) 138 C.L.R. 534. The Court in that case was faced with a fact situation involving two sales of books in commercial quantities by the copyright owner in the United States to a known exporter for on sale to an unauthorised distributor in Australia. Despite the fact that the first tranche of books was sold with no restriction on resale, the Court was not prepared to imply a licence (in keeping with the principle in Betts v. Willmott (1871) L.R. 6 Ch. 239) and found infringement.

7. For a detailed history, see Melle, A. van in “Parallel Importing in New Zealand: Historical Origins, Recent Developments and Future Directions” [1999] E.I.P.R. 63Google Scholar. For a succinct account of the pre-reform Australian position see McKeogh, J., Intellectual Property in Australia (2nd ed., Butterworths, Sydney, 1997) 204–205.Google Scholar

8. In New Zealand the aim of the exercise was not infrequently presented as one of preserving the value of existing investments in copyright licences against all imports whatever their source. Such was the reasoning adopted by Pritchard J in Barson Computers (NZ) Ltd v. John Gilbert & Co Ltd, supra n.6, 551.

9. Van Melle, op. cit., supra n.7. For an unconvincing attempt to read such a requirement into the legislation, see Remington Arms Company Inc and Sportways Distributors Ltd v. Reloaders Suppliers Ltd (unreported Auckland High Court decision, 29 Jan. 1997, CP 384/95).

10. Coull, M. J., “New Zealand's Approach to Parallel Imported Goods and the Copyright Amendment Act 1998” (1999) 29 V.U.L.R. 253, 279.Google Scholar

11. Price Surveillance Authority Inquiry into Book Prices—Final Report (Canberra, Dec. 1989).Google Scholar

12. Blainey, G. in his eponymous work The Tyranny of Distance, Macmillan, Melbourne, 1968.Google Scholar

13. In deciding to focus on availability only the legislature seems to have relied on an earlier report by the Copyright Law Review Committee (CLRC) into parallel importing restrictions generally. See CLRC Report into the Importation Provisions in the Copyright Act 1968 (Canberra, Sept. 1988).Google Scholar

14. See Copyright Amendment Act 1991 (Cth) inserting new ss.44A and 122A into the parent legislation, the Copyright Act 1968. The provisions were subsequently replaced by the Copyright Amendment Act 1998 (No 104), s.3 and sch. 10, item 1.

15. As defined in S.10(1) of the Copyright Act 1968 (Cth) as inserted by s.2 of the Copyright Amendment Act 1991 (No 174) which came into force on 23 December 1991. A non infringing book is a book made otherwise than under a compulsory licence, without infringing the copyright subsisting in any “work” or “published edition' in a country specified in the [Copyright] Regulations, S.10(1).

16. Under s.44A(9) of the Copyright Act 1968 (Cth), the term “book” does not include: (a) a book whose main content is one or more musical works with or without any related literary, dramatic or artistic work; or (b) a manual sold with computer software for use in connection with software; or (c) a periodical publication.

17. Under s.29(1)(a) of the Copyright Act 1968 books are deemed published when supplied to the public by sale or otherwise. S. 29(5) provides that publication in Australia or in any country shall not be treated as other than first publication by reason only of an earlier publication elsewhere if the two publications took place not more than 30 days apart.

18. Copyright Act 1968 (Cth), ss.44A(1), (6) and (9). Overseas “published editions” are covered by counterpart provisions in ss.112A(1)(6) and (9).

19. Such control can relate to both hard copy and paperback versions of non-infringing books.

20. The narrow exemptions and tight criteria to determine whether or not supply is being maintained are set out in ss.44A and 112A of the Copyright Act 1968 (Cth).

21. Bailey & Co v. Boccacio Pty Ltd (1984–1986) 61. P.R. 279Google Scholar. Attempts in that case to use trademark law to achieve the same result were not successful, see infra n.115 and corresponding text.

22. In contrast to the position in New Zealand, ersatz design protection via copyright law is now almost impossible to obtain in Australia.

23. By the Copyright Amendment Act (No 1) 1998 (Cth). The amendments came into effect on 1 Feb. 2000.

24. See Copyright Act 1968 (Cth), S.10(1) for definitions of “accessory” and “non-infringing accessory”.

25. The relaxation of restrictions for sound recordings has required further tinkering with the definition of “accessory” under the statute (idem) in order, according to the Explanatory Memoranda to the Copyright Amendment (Importation of Sound Recordings) Bill 1999, “to prevent copyright owners blocking the importation of “enhanced” compact discs. See infra n.77 and corresponding text.

26. Under the Copyright Act 1968 (Cth), S.132(6A) persons convicted of the offence of parallel importation may be fined 550 penalty units (or five times that sum in the case of a corporation) and face imprisonment for up to five years.

27. For a detailed exposition of their structure and effect, see Park, I., “The Cacophony of Parallel Importation” (1999) 10 A.I.P.R. 91, 97Google Scholar and van Melle, op. cit, supra n.7, 76.

28. The Australian Intellectual Property Review Committee has recommended in its Interim Report (Apr. 2000) 23 that restrictions on parallel importation in the copyright legislation be repealed both as between types of copyright material and as between the industries and activities that rely on copyright protection and those that do not.

29. Cabinet and other papers obtained under the Official Information Act 1982 (NZ) reveal that while most New Zealanders were completely unaware of the existence even of the pending legislation, let alone its details, the New Zealand government gave the United States (which had the most to lose when exclusive franchises were lost) full details of the provisions several hours in advance of the public announcement on Budget night. See Gardiner, J., “Shelving Hopes for Bargains”, The Weekend Herald, 1–208 1998, A 15.Google Scholar

30. Study of Parallel Importing prepared for the Ministry of Commerce and the Department of Justice (1994) 34.Google Scholar

31. Parallel Importing, A Theoretical and Empirical Investigation, Report to the Ministry of Commerce, prepared by the New Zealand Institute of Economic Research (1998).

32. This was partly because of the intervening work done by the Price Surveillance Authority in Australia, supra n.11.

33. Supra n.30, 59–60.

34. Idem, 56.

35. Ibid.

36. They did concede that this depended on whether consumers were sufficiently aware of the source of the product to shoot the right messenger if there were variations in quality between differently sourced copyright goods. Idem, 39, 60.The point is not without its resonance in trademark law, infra n.135.

37. In the case of compact discs the Report's authors thought that consumer effects might balance each other out. Idem, 58.

38. The NZIER thought it unlikely that distributors possessing such power would not already be using it to charge higher prices in these particular cases rather than cross subsidise across products under cover of parallel importing restrictions. The conclusion was deductive rather than empirical and appears only in the Executive Summary. Idem, (iii).

39. Idem, 60. The NZIER also thought that even pirated imports would have little impact on investment in innovation overseas given the size of the New Zealand market. Idem, 58. In the case of books there was also the possibility that greater availability would reduce the incentive for infringing photocopying. Idem, 41, 53.

40. Idem, 50, 54.

41. Idem, 42, 52, 57.

42. Idem, 51, 58. Defectiveness seems to have been judged by lack of adherence to the standards in international conventions, presumably the Berne Convention for the Protection of Literary and Artistic Works 1886, (Berne Convention) and TRIPS itself.

43. New Zealand consumers did not (and do not) have the limited relief of a “spare parts” exception along the lines laid down by the House of Lords in British Leyland v. Armstrong Patents Ltd [1986] A.C. 577, a doctrine decisively rebuffed by New Zealand judges in Mono Pumps (New Zealand) Ltd v. Karinya Industries Ltd (1986) 7 I.P.R. 25; Dennison Manufacturing v. Alfred Holt & Co Ltd (1987) 10 I.P.R. 613.Google Scholar

44. The self referential logic behind this result is set out in Eagles, I. and Longdin, L., Law in Business and Government in New Zealand (Palatine, Auckland, 2nd ed. 1996) 335.Google Scholar

45. Johnson and Associates v. Bucko Enterprises [1975] 1 N.Z.L.R. 311.Google Scholar

46. Products v. Frank M Winstone (Merchants) (1984) 3 I.P.R. 390.Google Scholar

47. O Manufacturing Co v. Lincoln Industries [1984] 1 N.Z.L.R. 641.Google Scholar

48. Beckmann v. Mayceys Confectionery Ltd (1995) 33 I.P.R. 543.Google Scholar

49. Halliday and Bailey v. Hafele (NZ) Ltd. Unreported, Auckland High Court, M 1797/97, 12 Mar. 1998.

50. Importation for private use was not of course an infringement. Copyright Act 1994 (NZ), s.35.

51. Composite Developments (NZ) Ltd v. Kebab Capital Ltd [1996] 7 T.C.L.R. 186.Google Scholar

52. Lyntec Holdings Ltd v. Wills [1997] B.C.L. 228.

53. Copyright Act 1994 (NZ), S.12(3) as amended by the Copyright (Removal of Prohibition on Parallel Importing) Amendment Act 1988 (NZ), s.5(1).

54. As amended by the Copyright (Removal of Prohibition on Parallel Importing) Amendment Act 1988 (NZ), s.5(2).

55. Idem, s.6(2) repealed S.131(8) of the parent Act.

56. Putting pressure on the government to lift restrictions were dealers in secondhand cars from Japan who had shipments of cars sailing to New Zealand rerouted to Fiji rather than have them face seizure on New Zealand wharves.

57. Copyright (Removal of Prohibition on Parallel Importing) Amendment Act 1988 (NZ), s.9.

58. S. 310 of the Trade Act 1974 (repealed and reactivated from time to time along with Title VII of the Omnibus Trade and Competitiveness Act of 1988) gives power to the United States Trade Representative associated with the State Department and Commerce Department to investigate and impose sanctions on countries whose trading practices prejudice United States interests. That country's sanctions may include increased duties, the imposition of import restrictions or loss of most favoured nation status.

59. The National Business Review, 4 Feb. 2000.

60. Ginsburg, J., “Creation and Commercial Value: Copyright Protection of Works of Information” (1990) 90 Col. L. Rev. 1865, 1866.CrossRefGoogle Scholar

61. Barty, A. and Christie, A., “Some Suggestions for Simplifying the Copyright Legislation” (1997) 8 A.I.P.J. 31Google Scholar. See also the Australian Copyright Law Review Committee Report on Simplification of the Copyright Act 1968, PART 2 Categorisation of Subject Matter and Exclusive Rights, and Other Issues, Feb. 1999.

62. The amendments use the term “book” without defining it, save to exclude such things as sheet music, software manuals and magazines (see the legislative details of exclusions set out supra n.16).

63. Both the Australian and New Zealand statutes recognise the need for a fall back position where the country of origin has a copyright regime covering the imported work.

64. See definition of “non infringing book” in the Copyright Act 1968 (Cth), s.10.

65. Normally the place where the book is written, idem, s.22(1).

66. Where the “copy country” has no copyright law covering sound recordings then it is the consent of the copyright owner in the original recording country which needs to be given. Should importers be doubly unlucky and find that neither country protects sound recordings, the Australian statute allows them to rely on the consent of the “maker” of the recording in certain circumstances. See Copyright Act 1968 (Cth), s.10(1).

67. Copyright Act 1994 (NZ), s.35. The link it will be noted is conjunctive not disjunctive.

68. Copyright Act 1968 (Cth), ss.37 and 102.

69. Supra n.20 and corresponding text.

70. Even before the restrictions were lifted the prohibition against parallel importation in the Copyright Act 1994 (NZ), ss.35 and 131 which both refer to the importing of “objects” did not cover the downloading from the Internet of works in non-physical digital form.

71. In response to this threat right holders have sought to expand the rights which attach to copyright ownership. Particularly important is the extension of the right of authorising communication to the public in the WCT (supra n.3). Article 8 of that document provides: “[A]uthors of literary and artistic works shall enjoy the exclusive right of authorising any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them” (emphasis supplied). The provision envisages the making available of all kinds of digitised material by a variety of distribution channels (cable, satellite, telephone lines or packaged media such as CD-ROMs and CDs) and exploitation via computers, television sets and other electronic platforms. In the Internet context, the right would apply where end users dictate when they surf for material rather than the person who is responsible for putting the material on-line. Under WPPT (supra n.3) producers of phonograms and performers whose performances are recorded in phonograms are also granted a counterpart right to make their works available on-line to unrelated persons who may have individual access from different places and at different times to the publicly accessible site. See Arts 7, 10 and 14. As mentioned above (see n.3) both treaties preserve the freedom of contracting parties to determine the conditions under which the copyright owner's new expanded exclusive right of authorising communication to the public will be exhausted. Contracting parties can, thus, opt for either national or international exhaustion of rights after first sale and decide whether or not it lies in their interest to allow parallel importation of digital copies of works. See L Longdin, “Shooting the Messenger Now and Then: Copyright Infringement and the On-line Service Provider”, in Rickett and Austin op.cit, supra n.5, 63.

72. Copyright Act 1994 (NZ), ss.35 and 131. Supra n.71.

73. Copyright Act 1968 (Cth), ss.37 and 102. MacQueen, H. L., in “Copyright and the Internet” in Edwards, L. and Waelde, C. (eds), The Law of the Internet: Regulating Cyberspace (Hart Publishing, Oxford 1997) 67, 81–82Google Scholar posits that there would be no infringement under the United Kingdom's Copyright, Designs and Patents Act 1988 (from which New Zealand's copyright statute was originally cloned) if such passing on was done electronically because it would not amount to even transient copying.

74. The WPPT (supra n.3) could also extend the notion of underlying works to performances recorded in phonograms. If and when the Australian government becomes a signatory to WPPT, the sound recording amendments would presumably require further tinkering to require that the recording of the performance onto a phonogram was not an infringing bootleg copy by the law of the country in which the recording was made.

75. Copyright Amendment (Importation of Sound Recordings) Bill 1999, Sch. 1, cl.10AB(1)

76. Ibid.

77. The Bill seeks to lead judges through the technological maze by providing an illustrative (but non-exhaustive) list of the factors to be weighed in deciding what mechanisms can “ordinarily” be used to play which articles. These include the nature of the article, the way it is marketed, the nature of the sound recording and the nature of the cinematographic film contained in the article. The list raises more questions than it answers. Idem, c1.10AB(2).

78. This time it would be the unauthorised importer who would be seeking out the “technowheeze”. No doubt the proponents of such a step would argue that this particular Australian problem could be avoided by including both films and sound recordings in the class of cultural icons on which import restrictions would continue to be imposed. This would simply shift the definitional problem sideways. It does not dispose of the more general point that technology specific drafting is too easily undone by the very technology it hopes to constrain.

79. In New Zealand it is the blessing of the New Zealand copyright owner which must be obtained in such cases under the Copyright Act 1994 (NZ), S.12(5A). In Australia the consent of the copyright owner in the original recording country must be obtained, Copyright Act 1968 (Cth), s.10AA(b). Where no copyright is recognised in the latter country as well, free access to the Australian market depends on the consent of the maker of the sound recording, idem, s.10AA(c).

80. The first limb of s.5 A requires only proof of consensual manufacture by the copyright owner or equivalent right holder in that jurisdiction. Copyright Act 1994 (NZ), s.12(5A)(a).

81. While a defective right might not be “equivalent” to the New Zealand right this will not avail those seeking to resist the parallel import. S. 12(5A)(a) posits equivalence as an alternative rather than a cumulative test.

82. Berne Convention for the Protection of Literary and Artistic Works 1886, (Berne Convention). As is well known, this instrument, together with its subsequent revisions, sets out for its adherents minimum standards governing the works in which copyright will subsist and the various economic rights to be exclusively reserved to owners. Signatories to TRIPS who are not Berne Union members are nevertheless required to adhere to the provisions of the Berne Convention (Paris Revision 1971).

83. Van Melle, op. cit, supra, 77.

84. As van Melle, idem, points out. Nor do the provisions deal with the situation where the underlying work is in the public domain but the “copy country” is neither a member of Berne not TRIPS compliant but vests copyright in the sound recording in its owner in contravention of TRIPS. Idem.

85. Copyright Act 1994 (NZ), s.12(5A)(iii).

86. Interestingly enough neither the book amendments nor the labelling rules feel the need to do this, referring only to the consent of the copyright owner.

87. Copyright Act 1968 (Cth), S.130A.

88. Avel Pty Ltd v. Multicoin Amusements Pty Ltd (1990) 18 I.P.R. 443, 446, 465; Broederbund Software v. Computermate (1991) 22 I.P.R. 215, 228. This is not to say that defendants may not sometimes have to bear the burden of explaining away inculpatory facts introduced by the plaintiff. Such outcomes are no more than the application of the ordinary distinction between substantive and evidentiary burdens in rather specialised fact situations, Lorenzo and Sons Pty Ltd v. Roland Corporation (1992) 23 I.P.R. 376, 380, 382. This raises some interesting questions in relation to the labelling and book importation provisions. If the substantive onus does not shift (and it must be conceded that no express provision is made for this) plaintiffs will often find themselves disproving what is in form a double negative, i.e. that the challenged item was not non-infringing. Faced with this tortured legislative logic, Australian courts might perhaps have been expected (if squarely faced with the issue) to place the onus of proving non-infringement where the structure of the amendments would seem to demand, i.e. on the defendant. This runs up against the counter argument that having expressly shifted the onus in relation to one form of parallel importing liberalisation, the legislature must be presumed to have taken the view that not only it fell elsewhere in the other two reform scenarios but also that this was not a matter demanding its attention.

89. The shifting of the onus to defendants has not been received with unalloyed joy in Australia even by those generally opposed to parallel importation reforms. See for example, I. Park, op.cit, supra n.27, 101 who takes the view that the easing of the burden for plaintiffs is marginal only.

90. Potter, A., “Copyright Amendment Breaches International Obligations” (1998) 2 N.Z.I.P.J. 12, 15.Google Scholar

91. The alternative reading of S.12(4) that the pre-existing copyright that the plaintiff has to demonstrate is copyright in the country of origin scarcely bears analysis. S.12(4) applies to all forms of infringement not simply those with a foreign dimension.

92. There are two aspects to such an inquiry: (i) what was the foreign copyright law and how did it apply to the goods in question and (ii) did the defendant know that some other law might apply and understand the effect of that other law correctly if she did. Strictly speaking, the second goes to mens rea. This important distinction appears to have been ignored by New Zealand judges, see cases cited infra n.95.

93. Copyright Act 1994 (NZ), s.35.

94. Husqvarna Forest & Garden Ltd v. Bridon (NZ) Ltd, see n.45 above, 226. Van Melle's description of the test as subjective (op.cit., supra n.7) overstates the position. As applied, the test would seem to be that conceptual hybrid frequently found in common law jurisprudence, the subjective test objectively applied. Crystal Glass Industries Ltd v. Alwinco (Unreported Hamilton High Court decision, A 236/78, Pritchard J) which van Melle cites in favour of a purely subjective test predates the rewriting (in 1994) of the copyright statute.

95. Husqvarna, idem. See also Business Machines Corp v. Computer Imports [1989] 2 N.Z.L.R. 394,418. No reason is given for this logical leap in either case and the decisions are hard to justify and seem to blur the distinction made earlier between application of the foreign law to the imported goods and the defendant's understanding of that law. Error of law is irrelevant to proving whether the copy is infringing but it does not obviously follow that the reasonableness of the error is irrelevant to the reasonableness of the defendant's belief.

96. Copyright Act 1968 (Cth), ss.37 and 102.

97. Under Art. 35 of TRIPS Members agree to provide protection to layout designs in accordance with certain Articles of the IPIC including Article 6(5) which deals with exhaustion of rights and provides that “… any Contracting Party may consider lawful the performance, without the authorisation of the holder of the right, of [the act of importing, selling or otherwise distributing for commercial purposes a protected layout design (topography) or an integrated circuit in which a layout design (or typography) is incorporated] where the act is performed in respect of a protected layout design (or topography), or in respect of an integrated circuit in which such a layout design (topography) is incorporated, that has been put on the market by, or with the consent of, the holder of the right.

98. Both New Zealand and Australia preclude dual protection for layout designs as “artistic works”. See definition of “artistic work” in s.2 of the Copyright Act 1994 (NZ) which expressly excludes works that are “layout designs” within the meaning of s.2 of the Layout Designs Act 1994 (NZ). See also Copyright Act 1968 (Cth), s.10(1).

99. See ss.8 and 24(1) for the meaning of “commercially exploited”.

100. New Zealand's counterpart provisions are ss.3 and 19(1).

101. Australian Circuit Layouts Act 1989(Cth), s.24(2); Layout Designs Act 1994 (NZ), S.19(2).

102. Ironically, under the present Australian copyright regime, computer programs can be parallel imported if they are hardwired or incorporated into compact discs but not if they are contained on floppy disks. While hardwired computer programs can be sold in both Australia and New Zealand after their importation they cannot be copied by the importer. Nor can they be rented where the rental of the computer program is the principal or one of the principal purposes of the rental and where the program can be readily copied by the hirer, see Copyright Act 1994 (NZ), s.9(2); Copyright Act 1968 (Cth), s.31.

103. (1992) 23 I.P.R. 353.Google Scholar

104. (1996) 35 I.P.R. 161. The case was heard in conjunction with Sega Enterprises Ltd v. Gottlieb Electronics Pty Ltd.Google Scholar

105. At the time of the decision, the same situation would have obtained in New Zealand. While the definition of a cinematographic film in the Australian legislation is narrower than its New Zealand counterpart in some respects it is also wider in that it includes sounds embodied in a soundtrack associated with visual images. While the general lifting of the ban on parallel importing may have rendered the distinction nugatory the new government's inclusion of computer programs in its foreshadowed category of creative works to be once again protected against parallel imports may revive the issue.

106. Rothnie, W., “Grey Privateers Sink into Black Market: Parallel Imports and Trade Marks” (1990) 1 I.P.J. 72.Google Scholar

107. While the notion of what is protected as a trade mark has now been extended in most jurisdictions well beyond a label on goods to trade dress or get up, it must be remembered that trade mark law does not extend to the protection of products per se. It protects only the means of identifying the origin or source of those products. Thus if importers remove the trade mark from dumped products and sell them without it there is no infringement under trade mark law.

108. Sumpter, P., “Reality and the Law: The Vexed Question of Trade Mark Infringement by Parallel Importation” (1999) 2 N.Z.I.P.J 97Google Scholar; Wood, P. and Scholes, K., “Parallel Importing—The Legal and Commercial Consequences of the Government's Decision to Lift the Ban” (1998) 2 N.Z.I.P.J. 5Google Scholar. Cf Glennie, E.R.H., “The Use of Trademark Law to Prevent the Parallel Importation of Goods” (1999) 9 Auckland U. L. Rev. 1091.Google Scholar

109. (1999) 43 I.P.R. 481.Google Scholar

110. This took the form of a deed of option to repurchase which was to become operative if Transport Tyres ceased to be a distributor or acted in such a way as to damage Ohtsu's worldwide goodwill in the marks. Transport Tyres was also forbidden to assign the trade marks to anyone else without Ohtsu's prior written consent. After two years the option could be exercised at will.

111. Transport Tyres, no doubt wisely given the legal uncertainties which attended the case, had made an undertaking not to import post assignment tyres until the litigation was concluded.

112. The Trade Marks Act 1995 (Cth), s.123. The predecessor statute, the Trade Marks Act 1955, contained no such explicit defence although something similar had been constructed by reading down the use provision to mean use as a trade mark. See for example, Shell Co of Australia v. Esso Standard Oil (1963) 109 C.L.R. 407.Google Scholar

113. Davison, M. J., “Parallel Importing of Trade Marked Goods—An Answer to the Unasked Question” [1999] A.I.P.J. 146.Google Scholar

114. R and A Bailey & Co Ltd v. Boccaccio Pty Ltd, supra, n.21; Atari Inc and Futuretronics Australia Pty Ltd v. Fairstar Electronics Pty Ltd (1982) 1 I.P.R. 291Google Scholar; Delphic Wholesalers Pty Ltd v. Elco Foods Co Pty Ltd (1987) 8 I.P.R. 545Google Scholar. Cf. Atari v. Dick Smith (1980) 33 A.L.R. 20Google Scholar (interlocutory proceeding) and Fender Australia Pty Ltd v. Bevk (1989) 15 I.P.R. 257Google Scholar in which parallel importation was found to constitute infringement.

115. Supra n.109, 498.

116. See Fender Australia Pty Ltd v. Bevk (1989) 15 I.P.R. 257Google Scholar. The legislation on which this case was decided, like its United Kingdom counterpart at the time, depended on consensual use (Trade Marks Act 1955 (Cth), s.62). The court in Fender saw marks as rights rather than signs, a viewpoint which clearly cannot survive Montana.

117. Trade Marks Act 1995 (Cth), s.88(2)(b).

118. Supra n.109, 491.

119. Pursuant to the Trade Marks Act 1995 (Cth), S.123(1). It will be remembered that this provision draws a distinction between applying a mark to goods and applying it in relation to goods.

120. Supra n.109, 499. The Australian Intellectual Property Review Committee has recommended in its Interim Report (Apr. 2000) supra n.28, 25 that the trade marks legislation be amended so as to ensure that assignment provisions are not used to circumvent the intent to allow parallel importation of legitimately marked trade marked goods.

121. For a detailed exploration of this unlikely scenario see Davison, op. cit, supra n.113, 149, 153.

122. [1980] F.S.R. 85.

123. [1989] R.P.C. 497.

124. Trade Marks Act 1938 (UK), s.4(3)(a). The defence is no longer included in the Trade Marks Act 1994 (UK).

125. See, Fender Australia Pty Ltd v. Bevk, supra n.116.

126. Davison op. cit., supra n.113,15 argues that the Fender court may have misconstrued the predecessor statute. Even provisions based on use would appear to leave little room for arguments based on goodwill.

127. Trade Marks Act 1955 (NZ), s.8 (3)(a). The defence is identical to that provided in the Trade Marks Act 1938 (UK), s.4(3)(a). It is not reproduced in the Trade Marks Act 1994 (UK).

128. South Pacific Tyres (NZ) Ltd v. David Craw Cars Ltd [1992] 24 I.P.R. 99.Google Scholar

129. Supra n.123. The case was seemingly followed but not mentioned by Fisher J in South Pacific Tyres, ibid.

130. [1930] 1 Ch. 330. Followed by Wylie J in Tamiya Plastic Model Co v. Toy Warehouse Ltd (1987) 2 T.C.L.R. 45Google Scholar, a case which preceded Colgate Palmolive, supra n.123.

131. Fisher J in South Pacific Tyres, supra n.128, resolved both issues in favour of the New Zealand registered user, but alas only for interlocutory purposes.

132. Fair Trading Act 1986 (NZ), s.9 (FTA); Trade Practices Act 1974 (Cth), s.52 (TPA).

133. Consumer Guarantees Act 1993 (NZ), s.12; FTA, s.13(e); TPA, s.53(ea)(g).

134. FTA, S.13(2); TPA, s.53(a)(aa).

135. FTA, s.13(j); TPA, s.53(eb).

136. FTA, s.13(e).

137. Colgate Palmolive, supra n.123; Wilkinson Sword Ltd v. Cripps and Lee [1982] F.S.R 16; Yardley and Co v. Higson [1984] F.S.R. 304.

138. The situation in the Fender case, supra n.116. (Passing off does not seem to have been pleaded in that case.)

139. Plaintiffs have sometimes sought to convince courts that there is a composite goodwill covering products and their accompanying services which the defendant is trying to appropriate. Such arguments were rejected in Tamiya Plastic Model Co v. Toy Warehouse Ltd, supra n.130. See also the decision of the Supreme Court of Canada in Consumers Distributing Co Ltd v. Seiko Time Canada Ltd (1984) 10 D.L.R. (4th) 191.

140. Commercial coyness did not lead to liability in Tamiya Plastic, ibid. As a matter of general principle Australian courts seem reluctant to construe silence as amounting to misleading or deceptive conduct at least in arms length transactions. See Rhone Poulenc Agrochimie v. UIM Chemicals (1986) FCR 477 cf. Gregory v. Rangitikei District Council [1995] 2 N.Z.L.R. 208Google Scholar; Mark Construction Ltd v. Christchurch City Council (1995) 5 N.Z.B.L.C. 103, 738.Google Scholar

141. Tamiya Plastic, idem, 53.

142. The English Court of Appeal made such a stipulation in Sony KK v. Saray Electronics (London) Ltd [1983] F.S.R. 302.

143. TPA, s.52.