Parallel importing, trade marks and Australian Consumer Law: how the cookie crumbled

A Bondi pop-up store recently made headlines for selling cookies from the popular U.S. brand Crumbl Cookies (Crumbl). The incident offers a useful reminder for established international businesses to protect, defend and monitor their brand usage in Australia.

The pop-up, promoted through a TikTok account with the handle @CrumblSydney, announced their Australian presence with the phrase ‘Crumbl is landing in Australia’. Reports suggest trade marks registered to Crumbl were used to promote the pop up, although the organisers state that they didn’t use them in any marketing activities. Crumbl has a number of trade mark registrations and applications on foot in Australia, including their flagship logo featuring the words ‘crumbl cookies’, combined with a drawing of a baker’s face and hat. Crumbl also use a distinctive light pink colour on their packaging and marketing collateral.

With the viral hype surrounding this one-off opportunity to purchase the cookies, the eye-watering price of AUD $17.50 per cookie was not enough to deter fans from queuing for hours in North Bondi for the opportunity to purchase the popular product.

Unfortunately, however, all was not as it seemed.

As we now know, the pop-up store had no affiliation with Crumbl. Instead, it was operated by private individuals who purchased a large volume of Crumbl cookies from one of the flagship stores in Hawaii, packed them in their suitcases to Australia and offered them for sale. Customers took to TikTok to film in real time their first bite of the delicious treat, only to be underwhelmed by the quality and freshness of the product. Crumbl quickly took to social media to confirm there was no association or affiliation between the pop up store and Crumbl.

Where trade marks are legitimately applied offshore to product packaging, parallel importing is difficult to challenge in Australia. This did not stop, however, the pop-up owners facing significant public backlash from individuals who believed they were purchasing cookies directly from the Crumbl owners.

So what are the legal options from an intellectual property perspective? In this case, Crumbl has announced they won’t be pursuing any potential claim against the pop-up and are instead planning to officially enter the Australian market.

However, circumstances such as these provide useful reminders for established international businesses about defending their brand in Australia. There are many factors to think about, including the following considerations.

Proactive trade mark registration

International businesses intending to launch products or services in Australia should strongly consider registering their trade marks in advance (both bare word versions and logos), particularly because the period between the date of filing an application and securing the trade mark registration can be lengthy, in some cases, years.

Businesses should also be cautious not to leave themselves open to a non-use action, where another party (often a business attempting to register a similar mark) can apply to have the original mark removed from the register where it has been registered for a continuous period of three years and not used during this time. Ensuring that the business maintains an Australian presence, even if it has not conducted a fully-fledged launch, can assist with preventing successful non-use applications.

Even a limited Australian presence can help to establish that a business has a reputation for the goods or services in question in Australia. This is also relevant if a business seeks to bring a claim of passing off against another business. For example, U.S. business In-N-Out Burgers was able to successfully bring a passing off claim against Hashtag Burgers (trading as “Down-N-Out”) by maintaining a small Australian presence through a pop-up store.

Trade mark infringement and parallel imports

Parallel importers who have legitimately purchased goods sold internationally will generally be able to re-sell the goods in the original seller’s packaging in Australia. This is the case even if that packaging displays a registered trade mark of the original seller and the parallel importer does not have an express agreement with the original seller.

However, parallel importers that include registered trade marks of the original seller (other than their own) in advertising or promotional materials may infringe the trade marks of the original seller. In addition, copyright infringement may be another available legal avenue where copyright may subsist in, for example, a logo forming part of the trade mark, and that trade mark has been reproduced in advertising or promotional materials separately created by the parallel importer.

Certainly, by proactively registering trade marks in Australia (both the bare word mark as well as combined words with logos), original sellers increase their opportunity for challenging the unauthorised use of their marks, and potentially prevent the registration of substantially identical or deceptively similar marks.

Australian Consumer Law actions

The Australian Consumer Law (ACL) prohibits businesses from, amongst other matters, making false or misleading representations that goods have a sponsorship, approval or affiliation. Businesses are also prohibited from making false or misleading representations that the business has a sponsorship, approval or affiliation that it does not in fact have. For example, Global Retail Brands Australia found themselves at the pointy end of successful misleading or deceptive conduct and passing off claims for launching a store under the name House Bed & Bath in a shopping centre that also had a Bed Bath ‘N’ Table store. In this Crumbl cookie case, notwithstanding that the pop up store was selling the legitimate Crumbl product, the question remains about whether the public fully understood that the pop up store had no affiliation or connection with the original Crumbl seller.

Unless there is an agreement with the original seller to the contrary, parallel importers face a risk that their conduct or representations mislead consumers into believing they are purchasing goods or services from the original seller, or from a business affiliated with the original seller, rather than an organisation that has no association with the original seller.

Protecting businesses’ goodwill and reputation

There is great value for businesses in proactively registering trade marks as a method of defending their brand in Australia. There is also value in businesses proactively monitoring the market in Australia for conduct or representations that may be damaging to the core brands of the business. Both are important steps in protecting the goodwill and reputation generated by businesses over many years and minimising the risks of third parties profiting from these endeavours.