Toyota Jidosha Kabushiki Kaisha v OZI4x4 Pty Ltd (No 3) [2026] FCA 1215

Author: Taylah Wright, Progressive Legal

Author: Lan Pham, Progressive Legal

Toyota Jidosha Kabushiki Kaisha v OZI4x4 Pty Ltd (No 3) [2026] FCA 1215

The Federal Court has recently considered an unusual intersection between trade mark law, drop-shipping and the Australian Consumer Law in Toyota Jidosha Kabushiki Kaisha v OZI4x4 Pty Ltd (No 3).

The decision concerned OZI4X4, a business selling aftermarket four-wheel-drive accessories. Toyota brought proceedings alleging trade mark infringement, misleading and deceptive conduct, passing-off and breach of a previous settlement agreement.

The case is particularly interesting for businesses involved in online retail because the Court reached different conclusions depending on how the products were supplied to customers.

The Background

Toyota Japan was the registered owner of a number of trade marks, including TOYOTA, HILUX and LAND CRUISER. Toyota Australia was an authorised user of those marks in Australia.

OZI4X4 sold aftermarket four-wheel-drive accessories through its website and physical premises. Its business model involved two different methods of supply. In some cases, OZI4X4 received products from suppliers in China and then supplied them to Australian customers. In other cases, the Chinese supplier shipped the products directly to the customer, meaning OZI4X4 never physically possessed the goods.

The proceeding involved three main categories of conduct.

1. The first involved counterfeit HILUX tail lights. OZI4X4 imported the tail lights from China, held them at its premises and sold them to customers.
2. The second involved counterfeit LAND CRUISER armrests. These were sold through OZI4X4’s website but were shipped directly from China to Australian consumers.
3. The third involved online advertising for aftermarket products, including sensor mounts, camera brackets, bull bars, mufflers, headlights and bash plates, which used Toyota trade marks.

The surprising result for drop-shipped products

One of the most significant aspects of the decision concerned the LAND CRUISER armrests.

The Court found that OZI4X4 had not infringed Toyota’s trade marks in relation to the drop-shipped armrests.

The reason was not that the products were genuine. They were counterfeit. Instead, the issue was whether the trade mark had been used in the relevant sense under the Trade Marks Act 1995.

OZI4X4 had never taken physical possession of the armrests. After a customer placed an order, OZI4X4 arranged for its Chinese supplier to send the goods directly to the customer in Australia.

The Court applied the reasoning in Fanatics, LLC v FanFirm Pty Ltd [2024] FCA 764 and found that, in these circumstances, the course of trade had ceased before the goods arrived with the consumer.

This meant that the presentation of the LAND CRUISER mark on the goods when they reached the consumer did not amount to trade mark infringement by OZI4X4.

This is an important distinction for online retailers using a drop-shipping model. The physical movement of a counterfeit product into Australia does not, by itself, necessarily produce trade mark infringement by the retailer where the goods are shipped directly from an overseas supplier to the consumer.

Trade mark law and the Australian Consumer Law produced different outcomes

Although the drop-shipped armrests did not result in trade mark infringement, the Court found that the conduct still contravened the Australian Consumer Law.

The Court found that OZI4X4 represented to consumers that the products it sold were products of Toyota, had Toyota’s sponsorship or approval, or were manufactured to standards authorised by Toyota.

Those representations were false. The Court therefore found contraventions of sections 18, 29 and 33 of the Australian Consumer Law (ACL), contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth).

A business cannot assume that avoiding trade mark infringement will also avoid liability under the Australian Consumer Law.

The Court’s findings demonstrate that the legal analysis under the two regimes is different. The fact that a retailer never physically possesses a product may be relevant to whether there has been trade mark infringement, but it does not necessarily prevent the retailer from being liable for misleading consumers about the origin, approval or quality of the products being sold.

The counterfeit HILUX tail lights were different

The position was different for the HILUX tail lights.

OZI4X4 imported the tail lights from China, received them into its own possession and held them at its premises before selling them to customers.

The Court found that this constituted trade mark infringement. The HILUX mark was being used as a trade mark in the course of trade, including through the importation, offering for sale and sale of the products.

The distinction between the two products therefore came down, in significant part, to the way in which they moved through the business.

The armrests were drop-shipped directly from China to consumers.

The tail lights were imported by OZI4X4, held by OZI4X4 and then supplied to customers.

What about using Toyota’s trade marks to describe compatibility?

The Court also considered OZI4X4’s advertising of aftermarket products.

Not every reference to a Toyota trade mark was automatically found to be trade mark infringement.

The Court emphasised that whether a mark is being used “as a trade mark” is an objective question that depends on the surrounding context. There was no universal requirement that particular words must always be used to avoid trade mark use.

The Court found that a number of OZI4X4’s advertisements infringed Toyota’s trade marks because the marks were being used as badges of origin.

However, certain advertisements conveyed that the products were suitable for or compatible with particular Toyota vehicles rather than suggesting that the products themselves originated from Toyota.

Those advertisements did not constitute trade mark infringement.

This is a useful reminder for businesses selling aftermarket products to include “suitable for” or “compatible with” before mentioning the make or model of – for example- the vehicle. Referring to a brand in advertising and using that brand as an indication of the source of the product are not necessarily the same thing.

A previous settlement agreement came back into the picture

There was another significant feature of the case. This was not the first proceeding between Toyota and OZI4X4.

The parties had previously entered into a settlement agreement under which OZI4X4 and Mr Safi, OZI4X4’s sole director, agreed to cease and desist from selling or advertising products bearing Toyota trade marks.

The agreement also permitted references to Toyota trade marks for aftermarket products where the reference was made in good faith to indicate the intended purpose of the goods and the trade mark was preceded by “suitable for” or “compatible with” in text of equal size and prominence.

Despite that agreement, similar conduct occurred again.

The Court found that the respondents had breached the settlement agreement. The obligations were joint and several, meaning Mr Safi was liable for the joint contractual obligation even though he was not personally liable for all of the underlying trade mark infringement as a joint tortfeasor.

The previous conduct was also relevant to the Court’s assessment of additional and exemplary damages.

Was the director personally liable?

The Court drew an important distinction between different forms of personal liability.

Mr Safi was OZI4X4’s sole director, but that alone was not enough to make him personally liable as a joint tortfeasor for the company’s trade mark infringement or passing off.

The Court found that there was insufficient evidence of the level of personal involvement required in the specific infringing sales and advertisements.

However, Mr Safi was found to be knowingly concerned in certain contraventions of the Australian Consumer Law.

In particular, the evidence showed that sales of the counterfeit armrests continued after Toyota had sent a letter of demand on 27 October 2022. The Court found that Mr Safi had actual knowledge of the relevant issue and had the ability to stop the sales.

He was therefore personally liable for certain ACL contraventions even though he was not found to be a joint tortfeasor for the trade mark infringement or passing off.

The consequences were significant

The Court awarded substantial damages against OZI4X4 and Mr Safi.

The judgment against OZI4X4 was $171,180, including $4,800 in pre-judgment interest.

The judgment against Mr Safi was $21,180, including $4,800 in pre-judgment interest.

The awards against OZI4X4 included compensatory and additional damages for trade mark infringement, damages for contraventions of the ACL, compensatory and exemplary damages for passing-off, and damages for breach of the settlement agreement.

The Court awarded $100,000 in additional damages for trade mark infringement. In assessing that amount, the Court took into account the fact that the infringing conduct had continued over several years, that Toyota had previously taken action against OZI4X4, and that the earlier settlement had not deterred further conduct.

The Court also considered the need for specific and general deterrence.

A further $100,000 in exemplary damages was awarded for passing off, with $50,000 of that amount being concurrent with the statutory additional damages relating to the counterfeit HILUX tail lights.

Key takeaways for businesses

The decision highlights several practical issues for businesses selling aftermarket products online.

• The structure of a supply chain matters.A drop-shipping arrangement can produce a different result under Australian trade mark law from a model where the retailer imports and holds the goods before selling them.
• Trade mark law is not the whole picture.Even where a particular supply arrangement does not amount to trade mark infringement, representations made to consumers about the source, approval or sponsorship of products may still give rise to liability under the Australian Consumer Law.
• Context matters when using another party’s trade mark.A reference to a trade mark to indicate compatibility is different from using the mark in a way that suggests the product itself originates from the trade mark owner.
• Previous enforcement action matters.Businesses that continue similar conduct after receiving notice of a trade mark owner’s rights, particularly after entering into a settlement agreement, may face significantly greater consequences.

The Toyota v OZI4x4 decision is therefore a useful reminder that the legal risks associated with aftermarket products do not end with the question of whether a trade mark has technically been infringed. The way products are sourced, supplied, advertised and represented to consumers can engage several different areas of law at the same time.

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