Printer Error! Intellectual property and recycled printer cartridges, Part 2

By Richard Hoad, Deborah Polites

01 Mar 2018

Seiko Epson sets out some limitations on the extent to which trade mark owners will be able to enforce their rights in relation to trade marks impressed into the products themselves.

Look closely at a "recycled" printer cartridge and you may find the original manufacturer's trade mark impressed into the plastic. Is the sale of such printer cartridges an infringement of the original equipment manufacturer's trade mark? This was the issue confronted in a recent Federal Court case.

In Seiko Epson Corporation v Calidad Pty Ltd [2017] FCA 1403 (29 November 2017), the Federal Court considered the legal implications of Calidad's sales of refurbished cartridges for Epson printers. Spent Epson printer cartridges were legitimately obtained by a third party outside Australia, refilled and modified so that they would work again, and then sold in Australia as cartridges suitable for Epson printers.

We have already considered Seiko's claims of patent infringement in relation to the refurbished cartridges. Seiko also alleged that the sale of the refurbished cartridges infringed its trade marks, involved an offence under the Trade Marks Act relating to unauthorised tampering with trade marked goods, and contravened the Australian Consumer Law. Justice Burley rejected these claims, emphasising the importance of making a common sense, practical assessment of the likely impact on consumers when considering questions of trade mark infringement.

Miniscule brand inside packaging is not trade mark use

The EPSON trade mark was impressed into the plastic of the cartridges themselves by Seiko. When the cartridges were refurbished, some efforts had been made to remove or obscure the EPSON trade mark either by marking the plastic or by placing stickers over it. Seiko argued that these attempts had been ineffectual, and that the sale of the refurbished cartridges bearing the EPSON trade mark infringed Seiko's trade mark rights.

Justice Burley accepted that the EPSON trade mark remained visible on some of the cartridges. However, it was a "miniscule" representation of the trade mark. In order for a trade mark to be infringed, the infringer must be using the trade mark "as a trade mark", that is, as a "badge of origin" to indicate the source of the product. Justice Burley considered that the "miniscule" EPSON trade mark, as it appeared on the repurposed cartridges, was not being used "as a trade mark" in this context.

Of particular importance was the fact that the refurbished cartridges were sold inside boxes marked clearly with the CALIDAD trade mark. The boxes also had a description of the product as an "alternative to Epson". The boxes were sealed with a sticker and the cartridge inside was in an additional plastic wrapping. Only when those layers of wrapping were removed would the tiny word EPSON on the product be seen. Both parties agreed that, even if the trade mark is not visible at the point of sale, there may still be infringement if the trade mark is seen later and is recognised as a badge of origin. In the present case, however, Justice Burley held that "it is probable that a consumer would not discern the minute word Epson on the cartridge" and that, even if consumers did so, they would be unlikely to regard it as a badge of origin.

Calidad's changes did not amount to illegal tampering

Seiko also argued that Calidad had contravened section 148 of the Trade Marks Act 1995. That section makes it an offence to deal with products on which a registered trade mark has been tampered with (unless the trade mark owner has given its permission). In essence, the types of "tampering" which are subject to the prohibition are applying the trade mark, altering or defacing the trade mark, and obscuring the trade mark.

Justice Burley did not accept this argument. On one analysis, the conduct may have fitted within the letter of section 148. The EPSON trade marks had been deliberately removed or obscured, and Calidad was clearly dealing with the goods by selling them. However, Justice Burley noted that the intent of the set of legislative provisions was to address a very different issue: that of criminal counterfeiting or fraudulently selling products from one manufacturer as those of another.

The present situation was starkly in contrast. It could well have been misleading for the products to have been sold without the trade marks being obscured or removed. Justice Burley noted the "jarring irony" in Seiko's arguments: "On the one hand [Seiko] contends that the use of Epson infringes its trade mark… and yet on the other hand it contends that it is a criminal offence to remove or obscure that mark".

Justice Burley observed that the refurbished products were no longer Epson products but rather had become Calidad products, and that the EPSON trade mark was never used, or intended to be used, as a badge of origin on the Calidad products. The process of obscuring the EPSON trade mark took place on the Calidad products rather than the Epson products. In Justice Burley's words, "[b]efore the word Epson was obscured its presence was an artefact of the process by which it was manufactured. Its removal did not amount to a removal of a trade mark that could serve as a badge of origin".

A threshold question also arose as to whether the provision in section 148 gave rise to a private right of action for Seiko to obtain relief from Calidad. Justice Burley determined that it did not.

No contravention of the Australian Consumer Law

Finally, Seiko argued that various statements in Calidad's marketing material amounted to false and misleading representations that products were "new", in contravention of section 29 of the Australian Consumer Law. This claim was unsuccessful. The advertising statements regarding "new" cartridges were considered by the Court to refer to products that were newly available in Calidad's product range. There was no evidence to suggest that they were a representation that the products were not recycled cartridges, and there was no evidence that consumers were unaware of how the products were made.

Recycling and the risk of IP infringement

Seiko Epson sets out some limitations on the extent to which trade mark owners will be able to enforce their rights in relation to trade marks impressed into the products themselves. Where repurposed products are sold clearly and genuinely under a competitor's brand, trade mark law may not be of assistance to restrain this activity. The assessment to be made is whether the original trade mark is operating as a trade mark when the refurbished goods are sold. As always, however, the touchstone will be the impression on purchasers in the particular circumstances, and whether consumers are likely to be misled.

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