In the Lonsdale Case, “Lonsdale” branded clothing and footwear was manufactured at the direction of the German licensee of Lonsdale Sports Limited (Lonsdale Sports). Lonsdale Australia was (and is) the owner of the relevant trade marks in Australia. The respondents in that case, “Paul’s Retail” operated the “Paul’s Warehouse” chain of stores in Australia.
The particular licence granted to the German licensee of Lonsdale Sports permitted it to promote, distribute and sell goods marked with certain “Lonsdale” trade marks in several of European countries. In August 2011, the German licensee entered into an agreement with a Cyprus-registered company named Unicell Ltd. Pursuant to that agreement the German licensee sold almost 300,000 units of Lonsdale goods to Unicell Ltd. Paul’s Retail acquired all of them (Paul’s Goods) through a US-based intermediary named TMS LLC.
Although Unicell was registered in Cyprus, title in the Paul’s Goods passed from the German licensee to Unicell Ltd in the Peoples Republic of China (PRC). The Paul’s Goods never entered Europe. They were shipped from the PRC to Colombo, Sri Lanka and then processed and reloaded in Sri Lanka before being shipped to Sydney, Australia through Singapore. Over 100,000 units of the Paul’s Goods were seized by the Australian Customs and Border Protection Service under notifications lodged by Lonsdale Australia.
One of the key issues in the case was whether the Australian trade marks had been applied to the Paul’s Goods with the consent of the registered owner of those marks. That was important because section 123 of the Trade Marks Act 1995 (Cth) provides a defence to infringement if the relevant trade marks were applied to the goods with the consent of the registered owner of the trade marks.
In the Lonsdale Case, the Court upheld Lonsdale’s argument that the Paul’s Goods had been sold in the PRC, which was outside the licensed territory of the German licensee of Lonsdale Sports and therefore not within the terms of the consent given by Lonsdale Sports. The Full Court said that to interpret the licence agreement in the contrary manner contended for by Paul’s Retail would be to deny the “evident intention of the [contracting] parties that the authorised supply of goods bearing the mark[s] should be confined to the defined geographic area”. Because Lonsdale Sports had not given its consent, there could be no consent by the owner of the Australian trade marks, Lonsdale Australia.
The Lonsdale Case has been followed in subsequent cases, including in the recent decision of Chief Justice Allsop in Scandinavian Tobacco Group Eersel Bv v Trojan Trading Company Pty Ltd  FCA 1086 at  to 2. In that case, Allsop CJ held that:
“The natural reading of s 123 is one that looks to (a) the use of a trade mark in relation to goods (b) the similarity of the goods to those in respect of which the trade mark is registered (c) an enquiry whether the trade mark has been applied to, or in relation to, the very goods as in (a); and (d) whether that application was with the consent of the registered proprietor.”
His Honour held that section 123 provided a complete defence to the claims of trade mark infringement in that case.