I’m wearing a white Polo Ralph Lauren business shirt with blue pinstripes. It has a blue embroidered polo player logo. A relative bought it for me as an “out of season” design from an outlet store in California, probably for a price far cheaper than anywhere in Sydney.

Would it be legal if my relative buys bulk boxes of these embroidered good value shirts from the United States, and retails them in Sydney?

I’ll answer this question shortly, inspired by last month’s court decision in The Polo/Lauren Company L.P. v Ziliani Holdings Pty Ltd [2008] FCA 49. This case is the first time an Australian court has ruled on what is a label for the purposes of sections 37(1), 38(1) and 44C of the Copyright Act 1968 (Cth).

My focus here is not technical. Instead, I want to talk about how to gain intellectual property protection for products, make money with IP and win in court if you have to go there.

Listen first to what I said in 2005 in the above short video made at our firm’s Keeping it Real client seminar on branding.

Simply stated for non-lawyers, here’s what happened in the Polo/Lauren case.

In May 2006 Mr Adam Ziliani, a shopkeeper and importer, opened a shop in the Sydney suburb of Chatswood. I grew up in this suburb. His idea was to stock legitimate designer product bought cheaply overseas. He bought stock of embroidered polo logo clothing from the United States as it seems that is all he could initially get his hands on before his store opened.

In late May 2006 Davies Collison Cave, solicitors for The Polo/Lauren Company L.P., started their written claims against Mr Ziliani and his company of which he was the sole director, Ziliani Holdings Pty Ltd.

No doubt what followed involved lots of communications back and forth, legal bills, and a few deals done between the parties. But enough remained unresolved to result in a need for a court hearing.

In court the little guy won. Ziliani, represented by Richard Cobden SC, successfully convinced Justice Rares of the Federal Court to rule for them.

Simply stated, the judge was convinced that the embroidered polo player logo was a label, not a work separate from the label. Thus Polo/Lauren failed in its attempt to use copyright law to stop Ziliani retailing legitimate Polo shirts.

Briefly, this result was achieved on the basis of Australian copyright law changes made years ago. The law was changed with the effect that if copyright was held only in a label it could not be used to block trade in legitimate products which contain copyright elements. To illustrate, if a product is legitimate and it is sourced overseas and bought into Australia then its sale can’t be prevented using copyright law if the only copyright in the product is in just a label.

There is complexity as importers have to take care with other law that may still result in legal issues, eg trade practices law and passing off law. However, Ziliani seems to have avoided any problem with such laws, or he did a pre-trial deal avoiding them.

So what is the key practical lesson for Polo/Lauren and others who want to profit from copyright? If your product depends just on copyright law and you want to win against parallel importers then build legal design into your product. Look for example at Burberry and Louis Vuitton products. They build legal design into their products. Their IP is their design.

Call if you want to discuss how you can build legal design into your product. Avoid lawyers, patent attorneys or trade mark attorneys who offering merely off the rack commoditised services. Your real interests are not sufficiently close to theirs.

Noric Dilanchian