Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.






Monday, December 16, 2013

'It’s so good, I put my name on it': the unexpected pitfalls of registering a personal name as a trade mark

by Lawyer Tessa Meyrick

When famous boxer-cum-entrepreneur, George Foreman, sold the rights to his name to the makers of the eponymous 'Lean Mean Fat-Reducing Grilling Machine'  in 1999 for upwards of US$110 million, it's safe to assume the heavy-weight could afford to officially hang up his gloves.

A recent Federal Court judgment reminds us, however, that if you hope to rely on your name to put food on your plate in retirement, you're best to think carefully before prematurely giving away your right to use it.

Thursday, December 12, 2013

Through the looking glass: will 2014 be the year of clarity for software patents?

By Anthony Selleck, Senior Associate and Patent Attorney

We reported in June about the decision of the United States Court of Appeal for the Federal Circuit in CLS Bank v Alice Corporation Pty Ltd, where the court split evenly on the question of whether a computer-implemented escrow service was patentable subject matter. 

Now, in a more recent development, the United States Supreme Court has granted a writ of certiorari and will hear Alice Corporation's appeal against the decision of the Federal Circuit. The question presented to the Supreme Court for decision is whether computer-implemented inventions (including claims to systems, machines, processes and items of manufacture) are directed to patent-eligible subject matter according to US patent law.

The significance of a decision by the United States Supreme Court on this issue cannot be understated. We are also awaiting the result of two decisions (Research Affiliates and RPL Central) of the Australian Full Federal Court that are both concerned with the same question. That means 2014 could very well be the year of clarity for software patents.

Tuesday, December 10, 2013

Method in the madness

The Australian Patent Office has for many years granted patents for methods of medical treatment of the human body. The status quo was recently challenged in a case that was appealed to the High Court.

In a significant decision, the High Court, by a majority of 4:1, has confirmed that methods of medical treatment of the human body and claims to methods of treatment for second or later medical uses of previously known products are patentable inventions in Australia, providing certainty for medical and pharmaceutical inventors that their innovations will continue to be protected.

The High Court also considered the issue of indirect infringement in the context of method claims. The narrow interpretation of indirect infringement may lessen the scope for enforcing valid claims covering methods of treatment.

Allens has produced a Focus article examining this case in greater detail.

Wednesday, December 4, 2013

Fast threads and fine cars

By Kimberley Evans, Trade Mark Attorney

Car lovers know that BUGATTI is a trade mark that is all about cars.

But since at least 1989, apparently it has also been about clothing.

Earlier this year, Bugatti GmbH (Bugatti) brought trade mark infringement proceedings against Shine Forever Men Pty Ltd (Shine Forever) for its sale of men's clothing marked with the BUGATCHI UOMO trade mark in Australia since 2010. The BUGATCHI UOMO goods sold by Shine Forever were manufactured by Bugatchi Uomo Apparel Inc. (BUA) in Canada and imported into Australia by Shine Forever for distribution. BUA is the applicant for the BUGATCHI UOMO trade mark in Australia* and has used the BUGATCHI UOMO trade mark in at least Canada since 1976.

Friday, November 22, 2013

Stronger patents, faster

By Lester Miller, Senior Associate

'I could have done that!' saith the Rock Star, upon grasping the breadth of a patent claim, 'Where's the invention?'. In some cases, it's a valid point , economically made. We update you with several measures that applicants, third parties and governments are taking to improve the quality of patents.



Third-party observations


The depth of searching resources is a major factor in patent quality. Third parties can submit information that is relevant to a patent application to an official body – WIPO for international patent applications, or local and regional patent offices. That information can be taken into account during examination.

Wednesday, November 13, 2013

Thinking inside the Box: the case for a Patent Box in Australia

By James Gonczi, Lawyer

With the recent change in Australia's Federal Government, Allens has been considering what ideas our new government might be coming up with. In the intellectual property space, one potentially big development is the suggestion that the Abbott Government might be considering whether to introduce a 'Patent Box' in Australia.

The so-called Patent Box isn't exactly a new idea. The United Kingdom and several other European countries have already adopted a Patent Box and even President Obama has this item on his agenda now that the Government shutdown is concluded (at least for now). The Patent Box has already been under consideration in the United States Congress. H.R 2605, a Bill to amend the Internal Revenue Code to allow a deduction for patent box profit, was introduced to Congress on 28 June 2013. Australia is definitely playing catch-up.

Friday, November 8, 2013

Ooh là là: King Louis the 5th more famous for sunglasses than Louis Vuitton?

By Kimberley Evans, Trade Mark Attorney

In Louis Vuitton Malletier v Sonya Valentine Pty Ltd [2013] FCA 933, Louis Vuitton attempted to prevent the importation and sale of sunglasses by Sonya Valentine, alleging trade mark infringement and misleading and deceptive conduct. The sunglasses in question bore the following flower emblem:



and/or the words 'LOUIS V', while Louis Vuitton holds trade mark registrations for LOUIS VUITTON and the following logo:





Wednesday, November 6, 2013

All that glitters, part 2: when five stars is not good enough

By James Gonczi, Lawyer

For coffee enthusiasts, we bring an update on a recent dispute over the CINQUE STELLE and ORO trade marks owned by Cantarella Bros Pty Ltd, of 'VITTORIA' brand fame. 'Cinque Stelle' means 'Five Stars' in Italian. 'Oro' is the Italian word for 'Gold'.

Modena imports coffee products, some of which use the words 'Cinque Stelle' and 'Oro' on packaging and other marketing materials. Cantarella sued Modena for trade mark infringement, which Modena denied. Modena also cross claimed for cancellation or removal of the CINQUE STELLE and ORO trade mark registrations on various grounds, including that they were not inherently adapted to distinguish Cantarella's products from those of other traders.

Wednesday, October 16, 2013

Colour in context: Cadbury's most recent stoush with Nestlé over the colour purple

By Lawyer Tessa Meyrick

Nestlé has successfully challenged Cadbury's attempt in the United Kingdom to register the colour purple as a trade mark in relation to chocolate bars and drinking chocolate.

Having been given its first Royal Warrant in 1854 as the 'manufacturer of cocoa and chocolate to Queen Victoria', Cadbury first introduced its 'Dairy Milk' purple wrapping in 1914 as a tribute to the Monarch herself. The chocolate goodies have been cloaked in a very regal purple ever since, making it surely the longest running cross-marketing campaign in history.

But what Queen Vic giveth, the Lords taketh away.

Thursday, September 5, 2013

Evidence-gathering method found to be patentable subject matter

By Senior Associate Anthony Selleck

Another chapter in the ongoing saga of software and business method patents was written last week, with the Australian Federal Court (Justice Middleton)  giving judgment in the case RPL Central Pty Ltd v Commissioner of Patents. The court, in overruling a decision of the Commissioner of Patents, found that a method for assisting individuals to obtain official accreditation of existing skills, experience, knowledge and educational qualifications was patentable subject matter under the Australian Patents Act 1990.  The decision is the opposite result to that found in two other recent cases involving the patentability of software and business methods that we have been following at Scintilla (see our earlier posts on the decisions in Research Affiliates and Alice Corporation). 

Friday, August 30, 2013

NZ Patents Bill heralds international harmony, but limits scope of protection for some computer inventions

By Partner Chris Bird

Five years after its introduction, and after its third reading, the new Patents Bill was passed by the New Zealand Parliament on 27 August 2013.

The story so far


The current New Zealand Patents Act is 60 years old, and was modeled on the now repealed UK Patents Act of 1949. It has a low threshold for patentability compared with most other countries, thus leading to broader patent rights being granted in New Zealand than elsewhere. The new Bill is intended to create a more balanced patent system, in line with other developed countries, and to protect inventions and encourage innovation.

Tuesday, August 20, 2013

Offers to Compromise: an exercise in discretion

By Lawyer Rob Clark

Regular Scintilla readers may remember John Kismet Jashar, his company Kismet International Pty Ltd, Mr McMahon and those piles of guano. In short, the court had found that while Mr McMahon had infringed the registered trade marks of Mr Jashar in selling his guano, Mr Jashar had been unable to prove that the sales of Mr McMahon's guano occurred because of this infringing use. The upshot was that Mr Jashar was entitled to a mere $5000 for reputational damage, substantially less than the damages he sought.

In Kismet International Pty Ltd v Guano Fertiliser Sales Pty Ltd (No 2) [2013] FCA 705, Justice Murphy dealt with the issue of costs. We focus here on one aspect – Offers to Compromise.

Thursday, August 15, 2013

What's in an image? English High Court finds passing off in Rihanna v Topshop

By Lawyer Jonathan Adamopoulos

The High Court of England and Wales, in Fenty & Ors v Arcadia Group Brands (t/as Topshop) & Ors [2013] EWHC 2310 (Ch), has found that Topshop, a fashion retailer, engaged in passing off when offering for sale t-shirts bearing the image of famous pop singer Rihanna. This is a warning to retailers when selling merchandise associated with celebrities even when the merchandise does not infringe registered trade marks.

Monday, August 12, 2013

Protecting privacy in the digital era


By Lawyer Tessa Meyrick

The arrival late last month of the new heir to the throne was unsurprisingly attended by a flurry of media interest in the UK and beyond, with reports of the royal birth apparently accounting for a staggering 5 per cent of online news content consumed globally on 22 July 2013. When the (yet-to-be-named) Prince George of Cambridge made his first media appearance the following day, every portal, page, RSS and Twitter feed continued to be jammed with details of the Prince's BMI, speculations as to his naming (commiserations to those who'd put their cash on 'James'), and even the Royal swaddle he left wrapped in. 

Somewhere amongst all this emerged concern (including from the media itself) over how the Royal parents are to construct some semblance of an ordinary life for the Little Prince once the natal storm has passed. In the UK Government's official response to the news of the birth, Lord Hill of Oareford, Leader of the House of Lords, shared with his peers a hope that the Prince (and his no doubt fatigued parents) be given some privacy. The media agreed, with one major UK newspaper at pains to stress that 'no one, and certainly not the media, would want to deny the Duke and Duchess some time alone with their baby son'.

Tuesday, August 6, 2013

Federal Court confirms new formulations are eligible for patent term extension


By Senior Associate Alison Beaumer

In its recent decision in Spirit Pharmaceuticals Pty Ltd v Mundipharma Pty Ltd [2013] FCA 658, the Federal Court held that a patent claiming a new and inventive controlled release formulation of oxycodone had been validly granted an extension of term under section 76 of the Patents Act 1990 (Cth). Oxycodone is an opioid drug used to provide pain relief and the controlled release formulation is marketed as OxyContin. Allens acted for the respondents (other than the Commissioner of Patents) in the proceedings. Spirit has now appealed the decision.

The central issue in the case was whether the controlled release formulation was 'a pharmaceutical substance per se' within the meaning of s70(2)(a) of the Patents Act. Spirit contended that only an active pharmaceutical ingredient (API), such as oxycodone itself, and not a formulation, could be 'a pharmaceutical substance per se'.


Wednesday, July 31, 2013

Government backs franchising reform

By Lawyer Nadia Guadagno

The Federal Government has recently accepted most of the recommendations proposed by the recent independent Review of the Franchising Code of Conduct (the Code). Our previous post described three of the more significant recommendations made by the review and the concerns that they sought to address. In this post, we consider the Government's official response to each of these recommendations.


Monday, July 29, 2013

Could an Expert Panel Opinion be the answer for effective patent enforcement in Australia?

By Senior Associate Louise Brunero

Significant costs, delays and a high degree of uncertainty of outcome are major concerns for those involved in patent enforcement in Australia.

Attempts to find a solution to the difficulties for those enforcing patent rights in Australia has been the topic of independent reviews, government response, court and practitioner input and, most recently, academic consideration. We explore here whether the most recent offering on this topic, Australian Patent Enforcement – A Proposal For An Expert Panel Opinion – Part 1, addresses the difficulties or whether the proposal potentially creates a further hurdle for parties to overcome as they pursue patent enforcement in the courts.

Tuesday, July 23, 2013

Coffee cup court case hits corrugations

By Senior Associate Lester Miller

Access to justice has been a deciding factor for a Federal Court judge in making an order for the Registrar of Designs to complete a second examination of a registered design, rather than have the issues proceed in court. Surprisingly, the argument for the change of venue was made by the sole director of a company, representing himself and the company, both of whom had been alleged to have infringed the design.

Thursday, June 27, 2013

A step backward for patentable subject matter?

By Senior Associate Tom Reid and Law Graduate Israel Cowen

In February we reported that a Federal Court of Australia decision holding that isolated nucleic acid encoding a gene was patentable represented 'a step forward for patentable subject matter'. Now, the US Supreme Court has ruled in a corresponding case that isolated genomic nucleic acid is not patentable, prompting the question: does this decision represent a step backward?

The US Supreme Court decision in Association for Molecular Pathology v Myriad Genetics Inc, which was handed down on 13 June 2013, involved claims in Myriad's US patents relating to the isolated BRCA genes that were at issue in Australia in February. To recap, mutations in these genes indicate a predisposition to breast and ovarian cancers.

The unanimous reasoning of the US Supreme Court was that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated. Under US law, natural phenomena, like laws of nature and abstract ideas, are unpatentable per se.

Wednesday, June 26, 2013

Changes may be on their way to the franchise industry

By Lawyer Nadia Guadagno

A comprehensive review of the Franchising Code of Conduct has recently been completed and publicly released. The Review of the Franchising Code of Conduct makes 18 recommendations covering a wide range of matters and which, if implemented, will result in significant changes to franchising parties' rights and obligations, as well as the Code's enforcement.  Three of the more significant recommendations are discussed below. 

On 17 June, the government released an Industry Consultation paper which discusses the recommendations, puts forward options in relation to each of them and seeks further information from stakeholders, franchisors and franchisees. The due date for responses is 9 July 2013.

Monday, June 17, 2013

Is software patentable? Go ask Alice

By Senior Associate and Patent Attorney Anthony Selleck

Courts in the United States and Australia continue to wrestle with the issue of whether software and business methods constitute patentable subject matter.

The most recent development is a closely watched decision of the United States Court of Appeal for the Federal Circuit in CLS Bank v Alice Corporation Pty Ltd. The US case comes hot on the heels of the decision of the Australian Federal Court in Research Affiliates v The Commissioner of Patents, which we reported on.

Alice Corporation is an Australian company which owns a number of US patents covering computerised trading platforms. The platforms are used to conduct financial transactions in which a third party settles obligations between the two contracting parties so as to eliminate certain types of risk associated with the transaction. One example is 'settlement risk', being the risk to each party in an exchange that only one of them will actually pay its obligation, leaving the paying party without its principal or the benefit of the counterparty’s performance. The patents in suit address that risk by relying on the trusted third party to ensure the exchange of either both parties’ obligations, or neither obligation.

In accordance with good drafting practice for software and business method patents, the patents in suit included multiple categories of claims, including 'methods', 'systems' and 'computer readable storage mediums containing computer programs'. At first instance, the court found all three categories of claims invalid for not being directed to patentable subject matter under section 101 of the US Patent Code. In particular, the court concluded that the claims were directed to the 'abstract idea' of employing an intermediary to facilitate simultaneous exchange of obligations in order to minimise risk.

On appeal to the Court of Appeal for the Federal Circuit, seven of the 10 judges agreed with the trial judge that the method and computer-media claims were merely abstract ideas and thus not eligible for patent protection. However, the court was split evenly on the question of whether the system claims were patent eligible, such split resulting in the trial judge's decision being affirmed.

A number of slightly different tests for determining patent-eligibility were formulated in the various judgments, all of which appear to be aimed at preventing the grant of patents that monopolise abstract ideas or 'fundamental concepts'. For example, the test formulated by Chief Judge Rader focused on 'whether a claim includes meaningful limitations restricting it to an application, rather than merely an abstract idea'. The key to this inquiry for software and business method inventions is 'whether the claims tie the otherwise abstract idea to a specific way of doing something with a computer, or a specific computer for doing something'. Under this test, the system claims were patent eligible, but the method and media claims were not.

The patent-eligibility tests expressed in CLS Bank v Alice Corporation, have echoes in the Australian Research Affiliates decision. In particular, both courts recognise that purely 'abstract ideas' are not eligible for patent protection, whereas applications of such ideas may very well constitute patentable inventions. However, the split among the court in CLS Bank v Alice Corporation is a stark illustration of the uncertainties that arise when this seemingly simple test is applied to inventions that involve computer software and financial innovation.

The next statement from the Australian courts on the issue is likely to come from the Full Federal Court, in the event that leave to appeal in the Research Affiliates decision is granted. It will be very interesting to see if the Australian court can, in considering patent-eligibility in the context of the securities index construction methodology in issue in Research Affiliates, arrive at a more unanimous view than the US court did in CLS Bank v Alice Corporation.

In the meantime, we refer you to the view expressed in our earlier post, that applications of novel algorithms in many fields of computer science will fall comfortably on the right side of the line of patentability. We expect this will continue to be so, irrespective of the outcome of the Full Court's decision about the particular invention in issue in Research Affiliates.

Wednesday, June 12, 2013

Super powers defeat bad faith

By Lawyer Michelle Freeman

In a recent Federal Court appeal against a decision by a delegate of the Registrar of Trade Marks, Justice Bennett ordered that registration of the word mark 'superman workout' be refused on the ground of bad faith under the Trade Marks Act 1995 (Cth) (the TMA).

Cheqout Pty Limited sought to register the mark in Class 41 in relation to 'conducting exercise classes; fitness and exercise clinics, clubs and salons; health club services (exercise)'. The appellant, DC Comics, originator of the well-known 'Superman' character and associated media and merchandise, had never registered any iteration of its 'Superman' marks in relation to such services. Nonetheless, DC Comics sought relief under TMA sections 43, 60 and/or 62A. DC Comics succeeded on the s62A ground.

Deception and confusion


Sections 43 and 60 both concern deception and confusion, but differ in that s43 is a ground for rejection of an application and s60 is a ground for opposition to a registration. DC Comics conceded that a failure on the s60 ground would also constitute failure under s43, allowing Justice Bennett to make judgment on s60 alone.

Her Honour considered definitions of the word 'superman' (and 'superwoman', and also associated plural forms) and concluded that the terms are descriptive of 'values' associated with the DC Comics' character (without suggesting the character itself) or descriptive of German philosopher Nietzsche's conceptual 'super man' (or the Ubermensch). Without the associated 'get-up' of the DC Comics' character (such as the distinctive blue-and-red suit), Justice Bennett found that no 'real, tangible risk of confusion' for the consumer existed when the words 'superman' and 'workout' were used together. DC Comics' appeal on these grounds failed.

Bad faith


Section 62A provides that a trade mark registration may be opposed where the application was made in bad faith. DC Comics argued that use of the mark 'superman workout', in combination with a shield device containing the letters 'BG' on Cheqout's website and a DVD cover, demonstrated that the original application to register was made in bad faith. The court considered the shield device to 'closely resemble' the well-known 'S' shield device owned by DC Comics.

Justice Bennett considered the 2012 case of Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2), in which Justice Dodds-Streeton clarified that the bad-faith intention of the registrant must exist at the time of registration, the onus of proving bad faith rests with the opponent to registration, and the standard of proof required is the balance of probabilities. Section 62A has only been in operation since 2006, and there has been little consideration of the provision by the courts. In Fry, Justice Dodds-Streeton cited UK authority in noting that dishonesty is not a prerequisite to a finding of bad faith, although it may indeed be present, and bad faith can be 'conduct falling short of the standards of acceptable commercial behaviours observed by reasonable and experienced persons'.

Justice Bennett considered that an inference could be drawn from the use of the 'BG' shield and the word mark together that Cheqout intended to 'strengthen the allusion to [DC Comics'] Superman' and thereby gain an advantage. Accordingly, this use was evidence that the application to register the word mark had been in bad faith.

Future guidance


'Bad faith' is not defined in the TMA, and judicial consideration of s62A has been scant. In combination with the principles extracted by Justice Dodds-Streeton in Fry, this decision provides helpful guidance as to when bad faith may be found to exist.

The decision also demonstrates that the question of whether or not the use of a mark causes deception or confusion is irrelevant to the consideration of whether an application was made in bad faith under s62A.

Friday, May 31, 2013

Less design turns out not to be enough for Apple

By Senior Associate Lester Miller

A recent case shows that registered design protection should be sought for the first model in any product range, since later design refreshes may be improvements without themselves qualifying for monopoly protection. Without a design registration for your first model, your range may be left with no protection at all.


Good design


Designers will know all 10 of Dieter Rams' principles of good design, and may even settle on one being more important than the others – the title of his book, as little design as possible. In 2010 the world’s foremost Rams adherent, Sir Jony Ive and his 14-strong team at Apple, simplified the design of their 2008 LED Cinema Display. The designs were identical in every way except one: the glass on the later model was extended to the front face edges so that rather than an aluminium-rimmed screen, the screen's front face presented to a user a smooth, flat plate of glass.

As Rams says: less, but better. A side-by-side comparison is below:



 
                                                   
                  2008 design                                             2010 design

It may be difficult to make out, but the dark perimeter on the left picture represents a thin rim around the Display when viewed from the front, whereas the rim cannot be seen from the front on the 2010 design (ignore the dashed rectangle).

Good registrations


The registered design system protects the appearance of products that are new and distinctive. With the Designs Act 2003, Parliament intended to broaden the scope of registered designs by directing, among other things, that the similarities between designs be given more weight than the differences. In this way, arguably stronger designs were certified, which were less liable to revocation.

Other considerations can, in some cases, mean that, from the point of view of the informed user, the quality or importance of a small feature was strong, or there was a distinct lack of freedom of the designer, some designs are registered of apparently narrow scope, rather than being revoked.

The new Apple Display design was not objected to on the basis of lack of newness by virtue of the frameless feature, but it was the question of distinctiveness which troubled the Hearing Officer. 

Good evidence?


Apple couldn’t really take a trick in the hearing, and some of its evidence may be said to have taken the form of own goals.

First, the Hearing Officer was faintly critical of Apple's overstatement of the single difference between the designs in saying it four different ways.

Secondly, the Hearing Officer put a stop to Apple’s attempt, and those of other applicants in future, to make arguments based on magnified and reoriented representations of the prior art and the designs. The practice has been allowed to date, based on an incorrect IP Australia decision. All the information the Hearing Officer had to hand was clear enough and couldn’t be improved by an inappropriate amplification. The Hearing Officer's decision, he said, has to be made on the quality of prior art information to hand if it was identified by an Examiner.

Thirdly, evidence by Apple’s own expert informed user, a retail manager, was mostly rejected, and ultimately was used against Apple. For example, the Hearing Officer asserted that the person overreached their capacity as an expert and finally stood for the proposition that most informed users of electronic goods were more interested in technical specifications than appearance. Unfortunately for Apple, its own submissions regarding informed users were taken to reinforce that notion.

Fourthly, the Hearing Officer's own enquiries on www.cnet.com fatally reinforced that informed users prioritised technical specifications over appearance. Nobody in his sample seemed to notice the improved rimless form of the display.

The Hearing Officer succinctly discussed the weighting he assigned to each one of the factors to which he should have regard. In summary, he found that Apple had plenty of freedom to innovate and he applied greater weight to the similarities than the differences, in particular light of the legislative intention of the Designs Act to strengthen design protection. The Hearing Officer even gave Apple the benefit of the doubt regarding an imperfectly drafted Statement of Newness and Distinctiveness. Ultimately, the design was revoked because, after applying those tests and weightings, it was found to be substantially similar in overall impression to its predecessor.

Lessons


The decision shows that IP Australia will now be unwilling to be shown magnified images of any prior art or registered design materials that they already have to hand. It is not to be for the parties to adduce their own evidence of the prior art found by an Examiner.

The decision may give hope to designers that IP Australia is willing to broaden the scope of design registrations.

Finally, it seems that Apple now has no design protection for its LED Cinema Display range in Australia - there is no record on IP Australia’s database showing that Apple obtained design protection in Australia for the 2008 model.

Monday, May 20, 2013

Sins of the publisher

By Lawyer Rob Clark

The Corby family is back in the news, following recent litigation against Allen & Unwin, publishers of an 'expose' of the Corby family, Sins of the Father.

The Corby family sued Allen & Unwin, in two separate proceedings for defamation and copyright infringement. The decision in the copyright infringement proceedings was swiftly handed down following trial in Corby v Allen & Unwin Pty Ltd [2013] FCA 370.

The swiftness of the decision was likely due to the infringement of copyright being clear cut. The book reproduced five photographs which were the property of one of Mercedes Corby (Schapelle's sister), Michael Corby Jnr (Schapelle's brother) and Rosleigh Rose (Schapelle's mother). The judge effectively found that Allen & Unwin knowingly launched the book at risk of not checking whether they had a licence from the copyright owner, or, in most cases, who the copyright owner was. The Corby family were awarded more than $50,000 in damages and additional damages (less than the $300,000 originally sought).

As the infringement was so straight forward, there are few lessons to take away from the decision, aside from the fact that if you want to launch a book knowingly at risk of copyright infringement, be prepared to wear the consequences, including significant additional damages.

The discussion in regards to the moral rights claim, however, was more interesting.

Moral rights


Since 2000, moral rights have sat alongside copyright in the Copyright Act in Australia but are usually forgotten or dismissed as copyright's melodramatic little Gallic brother, concerned with artistic 'honour' and 'integrity' rather than money. There is some truth to the view, given the difficulty of proving certain aspects of moral rights, and fairly extensive exceptions to the application of the rights. However, there has been some action of late in the field of moral rights, with the decision of Perez v Fernandez [2012] FMCA 2. That decision involved the rapper Pitbull using the right of integrity of authorship (the right not to have one's work subject to 'derogatory treatment') to gain $10,000 in damages (in addition to damages for copyright infringement) from a DJ who had inserted a promotion for his own services into one of Pitbull's songs.

The relevant moral right in the Corby litigation was the right of attribution, or the right (in those proceedings) of a photographer to have their name placed reasonably prominently with their photograph when it is reproduced. As Allen & Unwin in most cases did not know who the copyright owner was, they certainly could not satisfy the right of attribution. The publisher tried to argue that it did not need to attribute the names because the standard practice in the publishing industry was not to (one of the significant exceptions to the application of the rules). The judge rejected this argument because the publisher had not failed to attribute because of the industry practice; it had failed to attribute because it did not bother to check who the photographers of the photos were.

Despite the obvious and flagrant breach of the right of attribution, the judge awarded no damages. This was because Corby family's grievance was not directed at the fact that they, as artists, had been wronged by the lack of attribution of their names to their photos – rather it was directed towards the subject matter of the book. In fact, the judge found, they would have preferred that their names not be attributed with the photographs, as this may have suggested that they somehow approved of or were affiliated with the book.

The case emphasises the principles which underlie moral rights, which are quite distinct from copyright. Allen & Unwin arguably flagrantly ignored and infringed both the copyright and moral rights of Mercedes, Michael and Rosleigh, yet only one of those infringements led to any monetary award. Therefore, this decision will do little to change the somewhat secondary status of moral rights.

Thursday, May 16, 2013

Use it or lose it – lessons in how to use a trade mark in the course of trade

By Lawyer Tessa Meyrick

It pays for owners of registered trade marks to remember that the golden rule in maintaining a healthy portfolio is 'use it or lose it'.

A trade mark can be removed from the register if the trade mark has not, at any time during the last three years (ending one month before the non-use application) been used, or been used in good faith, by its registered owner or licensee. Since you can't prove a negative (well, maybe you can, but that's a subject for another blog), where an allegation of non-use is made, section 100 of the Trade Marks Act 1995 places the burden on the party opposing the removal of the trade mark to prove the positive. That is, it is the opposing party's job to establish that the mark has in fact been used, or used in good faith, by its registered owner or licensee in relation to the goods and/or services in respect of which the mark is registered. 

Much can be said – both from a commercial and public policy point of view – about the strategy of registering a trade mark pre-emptively (because you anticipate that you'll want to use the mark at some point in the future), defensively (to prevent someone else from using the trade mark), or even 'just-in-case' (throwing a wide net over the goods and services in respect of which a mark is registered, 'just in case' you might want to broaden or shift the focus of your business later).  Unless you are in a position to establish that the mark has been used as a trade mark (as a 'badge of origin') in the course of trade, however, these strategies may ultimately disappoint.

A recent decision of the Australian Trade Marks Office gives some clarity to what's required in order to establish use in the course of trade by providing a handy warning of what kind of use will not constitute use in that sense. (There's that positive/negative thing again).

US-based children's apparel company, The Gymboree Corporation, and its Australian subsidiary applied to have the GYMBAROO trade mark partially removed from the register on the ground of non-use. In opposing the application, child development centre franchisor Toddler Kindy Gymbaroo Pty Ltd in effect conceded that the GYMBAROO mark had indeed not been used on the goods or (with a few exceptions) in relation to the services the subject of the application, but submitted that it 'commonly' used those goods in connection with many of the goods and services in relation to which it did use the trade mark. For example: Kindy sends newsletters to the parents of the children attending its classes; the newsletters are presumably made of 'paper, cardboard and goods made from these materials' (Class 16), constitute 'printed matter' (Class 16) and feature 'photographs' (also, Class 16); the newsletter is ancillary to the service Kindy provides. Kindy uses the trade mark in relation to the service of providing child development classes. Kindy therefore argued that it uses the trade mark in relation not only to 'newsletters', but also to 'paper, cardboard and goods made from these materials', 'printed matter' and 'photographs', in the course of trade.

The Delegate responded delicately: 'at the heart of Kindy's arguments … lie certain misconceptions about what constitutes use of the trade mark in the course of trade'; namely, using your trade mark on or in relation to a good that you 'make use' of in the course of operating your business is not the same as using your trade mark in relation to those goods 'in the course of trade'. So, for example, emblazoning your trade mark on a company car does not constitute use of the trade mark in relation to motor vehicles in the course of trade. Likewise, a book might be composed of paper, glue etc, but the publisher is not dealing in those materials in the course of trade – it is dealing in books.

Ultimately, where the evidence showed that Kindy had been a mere consumer of a particular good (as part of the manufacture of another), the Delegate determined that the registration for that good be removed: newsletters were in; 'paper, cardboard and goods made from these materials', 'printed matter' and 'photographs' were out.

Kindy's submissions may well have been driven by the realisation that it had made absolutely no relevant use of – to use another example – 'plastic materials for packaging' (Class 16) in the course of trading as a child development centre business, but that it was still keen to protect its 'just-in-case' registrations and thought it was worth a shot. That said, and to be fair to Kindy, the concept of 'use in the course of trade' underpinning those submissions is not entirely fanciful; we have elsewhere commented on the Federal Court's willingness to take a broad reading of the expression, finding even a small amount of promotional conduct in Australia to constitute use in the course of trade. Still, it is consistent even with that broad reading that the goods or services in question must bear a close connection to the particular trade in which the trade mark owner is engaged.

Opponents to a non-use application cannot rely on an established use in the course of trade in relation to one good in order to make a claim that the trade mark is also used in relation to the goods that have been consumed as part of the manufacture of the first good.

Monday, May 13, 2013

Release of Australian Intellectual Property Report 2013

By Lawyers James Gonczi and Anastasia Hardman

IP Australia recently released the Australian Intellectual Property Report 2013. This annual report provides key statistics about Australia's IP system and considers how Australia measures up in terms of IP protection against other countries.

The report identified several key trends, including that:
  • innovation in Australia is increasingly being driven from beyond our shores, with a majority of patent and design applications coming from overseas applicants;
  • commercial opportunities continue to attract Australian innovators in North America, and increasingly in Asia; and
  • Australia's IP system ranks highly in comparison with other countries, however Australian businesses are lagging behind their counterparts in other OECD countries in terms of investment in innovation and ideas.
Some of the most interesting of this year's statistics are considered in more detail below.

IP applications in Australia


Patents 
  • A staggering 90 per cent of the 26,358 standard patent applications in 2012 were made by non-residents.
  • US residents filed the highest number of applications in Australia (11,376).
  • Patent applications from South Korea and China increased by 48 per cent and 34 per cent respectively. 
  • Applications for innovation patents have risen steeply, from 1341 in 2009, to 1856 in 2012. Most of the increase is as a result of overseas filings, with China accounting for more than half of the total increase. 
Designs  
  • 59 per cent of design applications are made by overseas and non-resident applicants.
  • Applications by Australian residents have declined slightly since 2006.
Plant Breeder's Rights (PBR) 
  • More non-residents applied to register Plant Breeder's Rights than did Australians, however of the successful registrations, 56 per cent were registered to Australian applicants.
Trade Marks  
  • Trade mark applications now exceed pre-GFC levels.
  • Australian residents filed 66 per cent of total applications for 2012.
  • The majority of non-resident applications originated in USA, UK and Germany, with the UK and Japan showing the biggest growth.

Australians filing overseas


Australians appear to be taking their innovations elsewhere, reflecting the continued importance of the USA as a market for Australian innovations, as well as the increasing market opportunities and regional advantages arising in a rapidly developing Asia.
Patents
  • Australians filed 58 per cent more patent applications overseas than in Australia.
  • 44 per cent of overseas applications were in the USA, while 30 per cent were in Asia.
Trade Marks
  • Almost 40 per cent of Australian trade mark filings overseas are in Asia, with China receiving 19 per cent of the total overseas applications and New Zealand receiving 17 per cent.  

 

State of play in Australia

Patents
  • In 2012, the number of patent applications rose in all states other than South Australia and the Northern Territory. 
  • NSW, Victoria and Queensland were the states of origin of more than 90 per cent of the applications in 2012, with most of these applications being made from their capital cities.
  • Growth was highest in the east coast states. Queensland showed the biggest real growth (22 per cent). The number of applications from Tasmania grew by 40 per cent, but this was from base of less than 100 applications.
  • In Australia, 30 per cent of patent applications generate 90 per cent of market value.
Trade marks
  • Most trade mark applications originated in NSW and Victoria, with the majority of these applications being made from their capital cities.
  • There was a 2.6 per cent rise in Australian trade mark applications from 2011 to 2012.
  • Queensland and South Australia represent the two biggest growth states for trade mark applications between 2011 and 2012, with 7 per cent and 9 per cent increases respectively. Trade mark applications from Tasmania and the Northern Territory rose by 20 per cent and 30 per cent respectively, but this was from a low base.
IP and innovation in Australia
  • In the latest Global IP Index, Australia's system ranked third in terms of effectiveness and administrative performance.
  • Innovative firms are increasingly using IP rights to protect their ideas. Commercialised inventions in Australia are on average 40 per cent – 50 per cent more valuable when protected by patents.
  • However, Australia lags behind other OECD countries in IP innovation. For example, in the US intangible capital (such as IP, research and design) is equal to 91 per cent of tangible assets (such as machinery and factories). In Australia that number is as low as 4 per cent.
Trade opportunities
  • In 2011, Australia spent $8.3 billion on technology imports, while earning only $4.9 billion in IP and technology exports. This represents a potential growth opportunity for Australian companies willing to invest in innovation.
  • Australia has strong potential as a producer and exporter of innovative agricultural products.  However, growth of Australian products in Asia is limited by the weak protection of plant breeders' rights in the region.
  • Despite the positive ranking of Australia's IP system, Australia's trade opportunities are affected by issues such as the length of time taken to grant patents in Australia. Patents granted in 2012 took an average of three-and-a-half years from filing for IP Australia to grant a patent.
The Australian IP Report 2013 has provided a very useful snapshot of Australia's IP system, particularly by placing it into its appropriate regional and global context. Over the coming year IP Australia will be seeking to expand on this picture, with a particular focus on issues such as consumer understanding of IP and the efficiency of global IP systems. Allens will seek to update you as new data or analysis becomes available. 

Thursday, May 9, 2013

All that glitters is guano?

By Lawyer Rob Clark

Guano seller proves you should not leave your damages claim up to kismet*

The recent Federal Court decision of Kismet International v Guano Fertilizer Sales [2013] FCA 375 is a salutary lesson to plaintiffs of the need to provide evidentiary support for a claim for damages.

Guano is a phosphate fertiliser created from bird and bat droppings. The proceedings involved two sellers of guano which originated from the same region of Indonesia. The applicant, John Jashar, had sold guano under the name 'Guano Gold' or 'Guano Kwik Start' since 1996, and had a substantial reputation in the relevant market for the sale of guano under those marks. The respondent, James McMahon, placed two advertisements in a local classifieds advertising 'Guano Gold' fertiliser from 2009-2011. Mr Jashar sued Mr McMahon for misleading and deceptive conduct and passing off.

Mr McMahon admitted the misleading and deceptive conduct, the goodwill and reputation of Mr Jashar in the marks and the passing off claim – he had mistakenly believed the trade mark to refer to the type of guano sold by the Indonesian seller, rather than the guano of Mr Jashar. Therefore, the only issue at trial was the remedy for the misleading and deceptive conduct and passing off. Mr Jashar sought to argue that he should get damages for lost sales, damages for loss of reputation and an injunction.

In order to make out the claim to lost sales, it was incumbent on Mr Jashar to prove that the lost sales were due to the use of his trade mark by Mr McMahon. Despite this, no evidence was put on by Mr Jashar. He simply sought to rely on the methodology for assessing damages discussed in GM Holden v Paine, where Justice Gordon essentially assumed that proven sales of the infringer were lost sales of the trade mark owner, subject to a discount to take into account varying circumstances.

Justice Murphy rejected this approach in the circumstances of the case, finding that such methodology was only suitable where it was difficult to provide evidence in relation to lost sales. This was not the case in the present circumstances, as Mr McMahon put on detailed evidence from a number of individuals who, between them, purchased the majority of the guano sold by Mr McMahon. Those people said that they had not been influenced to buy the product based on Mr McMahon's use of trade mark 'Guano Gold' – most had purchased from Mr McMahon because the guano was cheaper than Mr Jashar's or that they did not like dealing with Mr Jashar. Further, Mr McMahon did not extensively promote his guano under the trade mark, only referring to it as 'Guano Gold' in his advertisements, which were small, and on some of the packing of guano – though most of the guano sold was sold in bulk without packaging. In discussions with purchasers Mr McMahon referred to his product as guano, as did his purchasers.

Overall, Justice Murphy was unable to find that any of the sales of guano by Mr McMahon were motivated by the use of Mr Jashar's trade mark, and therefore that they were lost sales of Mr Jashar. Justice Murphy  found that while it would often be difficult to provide evidence in relation to damages and in those situations the court would do the best job it could, this did not excuse an applicant from having to provide evidence where it was available, and certainly to rebut evidence which is put on by the respondent.

In relation to the reputational damage claim, Justice Murphy awarded Mr Jashar a mere $5000 in damages due to that fact that the guano was treated largely as a commodity by purchasers and the fact that, on the evidence before the court, most purchasers did not care what trade mark the guano was sold under. Justice Murphy refused to award an injunction because Mr McMahon had already ceased selling the guano under the trade mark.

While Kismet v Guano breaks no new legal ground regarding damages, it is a useful reminder for those contemplating or conducting litigation that evidence regarding damages cannot be an afterthought following proof of infringement. The remedy is what makes the litigation worthwhile, and the applicant has the onus of proof. For Mr Jashar, kismet has not been kind.

* fate

Tuesday, April 23, 2013

Google updates AdWords policy

By Lawyer Sarah Lux

As of today, Google has a new policy on the 'invisible' use of trade marks as AdWords (keywords purchased by advertisers to trigger the display of advertisements in Google search results).

Google's approach around the world has been to allow competitors to use each others' trade marks as AdWords. Until yesterday, however, this general policy did not apply in Australia, where a trade mark owner could complain about and ultimately prevent the use of its registered mark as an AdWord by a competitor. From today, Google's general policy has been extended to Australia.

The changes to Google's policy mean that:
  • Google will no longer prevent the use by an advertiser of another person's registered trade mark as an AdWord; and
  • AdWords that had previously been restricted as a result of a trade mark complaint will no longer be restricted.

Today's policy change also applies in China, Hong Kong, Macau, Taiwan, New Zealand, South Korea and Brazil, which had similarly been carved out of Google's general policy regarding AdWords.

In all of these jurisdictions, Google will continue to investigate, and in some cases restrict, use of trade marks within the text of sponsored advertisements on Google, as distinct from the invisible keywords used to trigger the display of those advertisements.

Today's changes follow Google's recent High Court win against the ACCC, on which we reported in a recent Focus article. The High Court cleared Google from liability for misleading or deceptive conduct arising from the publication of certain sponsored advertisements. This led commentators to anticipate the lessening of intervention by Google in trade mark disputes, which has been reflected in today's policy change.

Monday, April 22, 2013

Apple appeals unappealing 'app store' outcome

By Lawyer Sarah Lux

Today will mark the first directions hearing in what is likely to be a hotly contested Federal Court appeal by Apple, Inc. against the recent rejection by the Australian Trade Marks Office of its application to register the mark APP STORE in classes 35, 38 and 42.
 
Background

Earlier this year, a Delegate of the Registrar of Trade Marks found that the mark APP STORE is not capable of distinguishing Apple's software retail services (class 35), telecommunication services (class 38) or web-based services (class 42), and rejected the application under sub-section 41(6) of the Trade Marks Act 1995 (Cth).

Apple's experience in the Office was vexed. Its application was originally objected to by the Examiner under section 44 of the Act, on the basis that it was too close to existing registered trade mark 1156967 for APPSTORE. Apple subsequently purchased that mark, the objection was withdrawn and the application was accepted. However, this acceptance was revoked by the Registrar under sub-section 41(6) of the Act in respect of class 35 services (retail store services featuring computer software), on the basis that APP STORE is only to some extent capable of distinguishing those services. Apple's evidence of use was regarded by the Examiner as insufficient to overcome this objection, and Apple requested a hearing before a Delegate of the Registrar.

Decision

The hearing produced an unfavourable outcome for Apple. The Delegate not only upheld the objection in relation to class 35 services, but went much further, deciding that APP STORE has no capacity at all to distinguish any of the services in classes 35, 38 or 42 to which the application related, pursuant to the much more stringent ground of objection under sub-section 41(6) of the Act.

The Delegate noted that APP STORE can be defined in ordinary English as 'a store (or retail outlet) that sells or provides computer application programs', and considered that the term is 'relatively straight forward, easily defined and well understood by modern digital-savvy consumers'. She pointed to examples from Apple's own evidence that indicated that Apple has sometimes used the mark descriptively.

Apple had pointed out that the previous registration it had acquired for APPSTORE had not attracted any similar distinctiveness objection at the examination stage. However, the Delegate responded that 'it is not possible to ascertain whether the examiner ever assessed or conducted appropriate research to determine if the expression APPSTORE had any descriptive meaning.' In addition to insinuating that the prior mark had been registered in error, the Delegate suggested that the fact that APPSTORE was previously registered by a third party actually supported the conclusion that traders other than Apple would legitimately wish to use the term in relation to their goods and services.

The Delegate noted Apple's evidence that over 850 million applications had been downloaded in Australia through Apple's Australian App Store service since its launch in July 2008, and accepted that the APP STORE mark had been used extensively in Australia.  (It is worth noting that the App Store launch occurred only seven days before the application's priority date, and that strictly only use within that seven day period should have been relevant to the sub-section 41(6) objection).  However, the Delegate noted that in most cases APP STORE was used in combination with the well known trade mark APPLE, as well as other expressions such as iTunes, iPhone, iPad or iMac. This made APP STORE a 'limping mark', which was not on its own distinctive of Apple's services.

The Delegate concluded that APP STORE was descriptive, and that Apple had not demonstrated through evidence that the mark had acquired a meaning related to Apple which overshadowed its descriptive meaning. The application was therefore rejected in relation to all three applied-for classes under sub-section 41(6).

Comment

Apple will have an opportunity to put on new evidence for the Federal Court appeal, which will be a hearing de novo of this application. Overcoming a section 41(6) objection tends to require very substantial evidence of the acquired meaning of a mark, which Apple may not be able to provide in light of the fact that there were only seven days of use between the launch of the App Store in Australia and the date of the application.

Apple is likely to focus instead on demonstrating that APP STORE is at least to some extent capable of distinguishing its retail, telecommunications and web-based services. To do so, it will emphasise the novelty of the APP STORE mark and concept as at the priority date, and may also put on evidence from third parties attesting to recognition of the trade mark meaning of APP STORE in the market at that time. This would complement the evidence it put before the Office from a linguistics professor, that APP STORE did not have a commonly understood or used meaning in 2008.

Some commentators have suggested that the decision may be moot, as Apple could rely on existing registration number 1156967 for APPSTORE to protect its mark. However, as noted above, the Delegate's reasons insinuate that the prior mark may have been registered in error. Apple faces some risk that a competitor will use this opportunity to apply for cancellation of the APPSTORE mark on the basis that it was wrongly registered. The mark could also be challenged on the basis of non-use, if the space between the words APP and STORE which appears in Apple's uses of the mark is regarded as a key feature.

The Federal Court appeal may also shed light on Apple's strategy in approaching this application. The Examiner's original objection applied only to class 35 goods, and it would have been open to Apple to pursue a divisional application to register APP STORE in classes 38 and 42, which would have proceeded to registration. Apple may have chosen not to avail itself of this opportunity on the basis that having all three classes considered together by the Office, and ultimately by the court, might increase the likelihood that the most descriptive component of the application (in relation to class 35) might be accepted together with the more distinctive component (in relation to classes 38 and 42). 

The Australian decision and appeal occur within an international context of legal battles in relation to use of the APP STORE mark. Apple and Amazon are embroiled in litigation in the US over the 'Amazon Appstore', with a trial scheduled for August. Apple's US application to register APP STORE, which has been opposed by Microsoft, will remain in limbo by agreement between the parties until the dispute between Apple and Amazon is resolved.

A version of this article first appeared in the World Trademark Review Daily on 8 April 2013

Thursday, April 18, 2013

The clock is ticking - time for trade mark owners to keep watch

By Senior Associate Mark Williams

A recent decision of the Australian Trade Marks Office, along with the Raising the Bar legislative changes, has placed greater pressure on trade mark owners to keep a watch on the trade mark activities of their competitors.

In Bridgestone Corporation v Zylux Distribution Pty Ltd 2013 ATMO 19, a Trade Marks Hearing Officer considered Bridgestone's application for a late extension of time in which to oppose a trade mark application based on 'an error or omission by the person applying for an extension of time, or by that person's agent'. In denying the application, the Hearing Officer confirmed that case law which states that there must be a causal connection between the error by the agent, and the opponent's failure to file the notice of opposition.

Bridgestone was not aware of the existence of the Zylux application due to an error by its agent in referring an examination report. Despite submissions from its representative that, if it had been aware of the Zylux application before the opposition deadline, Bridgestone would have opposed, the Hearing Officer noted the absence of any evidence demonstrating that:

  • Bridgestone had undertaken any search of the Register prior to filing; or
  • Bridgestone or its representative considered it appropriate to keep a watch for similar marks on the Australian Register.

In light of the Raising the Bar legislative amendments which came into effect on 15 April 2013, which shortened the opposition deadline to two months from the date of advertisement of acceptance, it is now even more important for trade mark owners to keep a watch out for applications for similar trade marks. To this end, it would be prudent for trade mark owners to consider implementing monthly trade mark watches which can be conducted by reference to mark, class(es) or party name.

Wednesday, April 17, 2013

Optus' banned 'TV Now' service would likely be legal in the USA

By Senior Associate Jesse Gleeson

In a major blow for US TV networks, the US Court of Appeals for the Second Circuit has refused to grant a preliminary injunction against streaming television provider Aereo. This presents a contrast with the Australian Full Federal Court decision in relation to the Optus TV Now service.

Online video is now mainstream and looks set to take a more significant share of eyeballs from conventional TV. For example, Netflix's recent political thriller House of Cards, starring Kevin Spacey and directed by David Fincher (The Social Network), which had a production budget of more than $100 million, is only available online. 

Free-to-air and pay TV providers are making huge amounts of video available through their own services (see ABC's iView and Foxtel GO), and also services like Apple TV.

This presents huge opportunities and challenges for content owners and broadcasters. Indeed, companies are launching services which try to avoid licensing content. One way to do this is for companies to contend that their services are internet-based equivalents of watching and recording television at home.

Australia is not immune. For instance, Telstra paid approximately $153 million for the online and mobile rights for AFL games and a significant amount for similar rights in relation to NFL. However, Optus subsequently launched an unlicensed service which allowed its users to view broadcast AFL and NFL matches, without paying a cent in licence fees. Optus's TV Now service was essentially an online video recorder operated by Optus and its subscribers, which allowed customers to record their own individual copies of free-to-air television content on Optus's servers and view it later on mobile devices. Particularly important for time-sensitive content such as AFL matches, customers could stream near-live.

Australian television networks and content owners commenced proceedings in the Federal Court. While the trial judge held that the service was legal by virtue of time shifting exceptions in the Copyright Act, the Full Federal Court overturned that decision and the High Court then denied special leave. We have reported previously on the TV Now decision (see our reports on denial of special leave and the decision of the Full Federal Court, as well as our post on Telstra's latest app), so we won't recap the detail here.

We have been following with great interest a US service called Aereo. Aereo provides each subscriber with remote access to a tiny dedicated television aerial, which receives free-to-air television broadcasts, and streams that content live to web browsers and mobile devices. It also offers personal video recorder functionality much like Optus did. Various US TV networks commenced copyright infringement proceedings against Aereo.

The US Court of Appeals for the Second Circuit just handed down a decision denying preliminary injunctive relief against Aereo. While the proceedings will likely continue on (and further appeal avenues exist for the plaintiff broadcasters), the court's judgment suggests that services such as Aereo's will ultimately be held to be legal in the US.

The Aereo decision relies heavily on the same court's decision in the Cartoon Network LP v CSC Holdings (the Cablevision Case) decision in 2008. There, the court held that creating temporary buffer copies for customers, creating permanent copies for customers and transmitting the broadcast to customers did not infringe copyright. In Aereo, the plaintiffs only pressed the transmission argument in the preliminary injunction application. That argument relies on the transmission being 'to the public'. The court held that Aereo's service records and transmits content for each subscriber individually, and did not constitute transmission to the public.

In the Australian TV Now case, it was not necessary for the plaintiffs to prove transmission to the public. It was sufficient that copies of the broadcasts were made. The key controversy was whether Optus could rely on the time shifting exception in section 111 of the Copyright Act, and in turn on whether it was Optus or the subscriber (or both) making the relevant recordings.

Notwithstanding Aereo's litigation success thus far, it would take a brave entrepreneur to set up a similar service in Australia, at least as the law in Australia currently stands. The Australian Law Reform Commission is looking at this issue in the context of a broader review of digital copyright issues, with a report due in November 2013. We would not bet on any consequent legislative changes paving the way for Aereo-type services. 

Thus, while networks and content owners doing business in Australia face significant challenges from piracy and also legitimate online competitors, their shareholders can sleep a little easier knowing that they will not likely have to compete with services like Aereo.

Tuesday, April 16, 2013

The importance of playing by the rules

By Lawyer Joel Barrett

There's no guarantee that the Federal Court will admit evidence that fails to comply with the Federal Court Rules, no matter how material it is to your case or how much prejudice its exclusion will cause. Generic Health Pty Ltd, a generic pharmaceutical supplier, found that out the hard way in Justice Jagot's recent decision in Bayer Pharma Aktiengesellschaft v Generic Health Pty Ltd.

The case involved a patent covering a pharmaceutical contraceptive. The patentee, Bayer Pharma Aktiengesellschaft, markets the product as YASMIN, and Generic Health started selling its own version – ISABELLE – in February 2012, 11 years before the patent was due to expire. Bayer sued for patent infringement and Generic Health naturally cross-claimed for patent invalidity.

The decision is relatively straightforward. On the facts, Justice Jagot found that Generic Health failed to establish any of its pleaded grounds of invalidity: lack of inventive step, lack of a manner of manufacture and lack of fair basis. Essentially, ISABELLE infringes a valid patent. The interesting part is that Generic Health might have succeeded on lack of novelty, but we will never know because Justice Jagot ruled Generic Health's only evidence on that point inadmissible in an earlier interlocutory skirmish, and Generic Health had no option but to abandon the argument at trial.

In early March 2013, Generic Health had sought leave to rely on the affidavit of Mr Burgess, who had observed an experiment in Pune, India in September 2012 involving the manufacture of tablets in accordance with information in a piece of prior art, which Generic Health claimed anticipated the patent and thus destroyed its novelty. Bayer argued that Generic Health hadn't complied with rule 34.50 of the Federal Court Rules, which basically requires a party who proposes to tender 'experimental proof of fact' as evidence to first apply for certain orders, including orders about the time and place of the experiment, who must be permitted to observe it, and so on. The party must then comply with the orders or obtain leave of the court, otherwise evidence regarding the experiment's conduct and results will likely be inadmissible.

Generic Health argued that rule 34.50 was not enlivened because Mr Burgess' evidence only related to the experiment involving manufacture of tablets, and so didn't constitute 'experimental proof of fact'. The relevant fact, Generic Health contended, concerned the dissolution rates of those tablets, and the dissolution tests were conducted after, and separately from, the experiment. Justice Jagot disagreed with that characterisation, finding that the tablets were manufactured for the purpose of carrying out the subsequent dissolution tests, so the experiment was plainly part of the 'experimental proof of fact'.

So rule 34.50 applied, and Generic Health obviously hadn't complied with it. After much correspondence between the parties leading up to the Pune experiment, during which Bayer repeatedly argued that rule 34.50 was engaged, complained that an experiment outside Australia wouldn't be cost-effective and emphasised that it would be inappropriate for Generic Health's parent company to conduct the experiment, Generic Health proceeded with the experiment anyway. Although Generic Health advised Bayer of the impending experiment in a letter, it failed to disclose that it would be taking place the very next day, which Justice Jagot noted 'effectively [denied Bayer] any opportunity to be present during the manufacturing process and to observe what Mr Burgess had the opportunity of observing'.

Despite its failure to comply with rule 34.50, Generic Health argued that it would be heavily prejudiced if Mr Burgess' affidavit was not admitted, which would far outweigh any prejudice suffered by Bayer if the affidavit was allowed. While Justice Jagot accepted that excluding the evidence would prejudice Generic Health, her Honour refused to admit the evidence for several reasons, including that Bayer was prevented from observing the experiment 'when it would always have been in the power of [Generic Health] to give [Bayer] that opportunity', Bayer would be considerably prejudiced by admission of the affidavit due to the importance of the novelty issue to Bayer's defence of the invalidity claim, the affidavit was inscrutable (in that Mr Burgess simply observed an experiment conducted by other people, and couldn't be meaningfully cross-examined on the experiment's conduct), and the evidence might be unfairly prejudicial to Bayer under section 135 of the Evidence Act 1995 (Cth).

Her Honour stated that as early as August 2012, when Justice Yates foreshadowed in a directions hearing that the potential evidence probably wouldn't be accepted at trial if it didn't comply with rule 34.50 and that 'the risk is with [Generic Health] on that', Generic Health should have either taken steps to comply with the rule or sought an interlocutory determination on the 'experimental proof of fact' issue.

So remember: eat your greens, never run with scissors and always comply with the Federal Court Rules.

Friday, April 12, 2013

Pharmaceutical Patents Review - clarification

An earlier post stated that in its draft report, the Pharmaceutical Patents Review Panel had recommended against making the patent term extension regime under sections 70-79A of the Patents Act available for formulation patents and patents for methods of treatment.

The post should have stated that the Panel had recommended against making the extension regime available for patents for method of manufacture or methods of treatment. Formulation patents are already potentially eligible for an extension, and the Panel's draft report recommends that continue.

Thursday, April 11, 2013

Bad news for pharma originators

By Senior Associate Tom Reid

The Pharmaceutical Patents Review Panel has released its draft report on Australia's pharmaceutical patents system, and while it remains to be seen what the final recommendations will be, and what will become of them in an election year, the draft will generally be unwelcome news for originators.

As we reported in an earlier Focus, the Review was commissioned by Mark Dreyfus, then the Parliamentary Secretary for Innovation and now the Attorney-General. The terms of reference were to evaluate whether the patents system 'is effectively balancing the objectives of securing timely access to competitively priced pharmaceuticals, fostering innovation and supporting employment in research and industry'. The draft report follows a period of public submissions and hearings in response to an issues paper issued last November. The issues paper and written submissions are available.

The focus of the review is the extension of term provisions in sections 70-79A of the Patents Act. To compensate the patentee for the time taken up with obtaining regulatory approval, a patentee may extend the term of a patent for a pharmaceutical substance per se, or a pharmaceutical substance produced by a process involving the use of recombinant DNA technology, by up to five years. The rationale is to make the patents system more technology-neutral. Even so, the provisions provide a maximum effective term for eligible patents of only 15 years.

The Review Panel's draft recommendations include cutting the maximum extension term to save cost to the Pharmaceutical Benefits Scheme. The savings could, it is suggested, be directed to subsidising the local pharmaceutical industry directly, the Review Panel's complaint being that the existing system is not effective in fostering local R&D. The draft report further recommends against making the patent term extension regime available for other types of pharmaceutical patents, such as patents for methods of manufacture or methods of treatment.

The draft report characterises the additional cost to the PBS of pharmaceutical patent term extensions as an 'indirect subsidy' to the pharmaceutical industry. We query whether any savings to the PBS generated by reducing that 'indirect subsidy' would, in reality, be used the way proposed. But in any event, any extension is a quid pro quo for the period at the front end of the patent term during which the patentee is unable to market the patented pharmaceutical. The cost to the PBS during that period is nil. Moreover, originators would contend that the fact extensions are available only for a limited class of pharmaceutical patents, the cap on the maximum effective term under the legislation, the time value of money, and the risk that pharmaceutical science will have moved on by the time the extension comes into effect all mean that the compensation they offer can never be total.

Another question is whether the recommendations take proper account of the value of Australia's strong IP regime to its overall trading position. As a net importer of technology, Australia's patent system is of proportionately greater benefit to foreign patentees. But Australia may reasonably expect that by offering foreign patentees substantially equivalent recognition and protection here as they may expect to receive at home – and the draft report finds that, on average, pharmaceutical patents generally have a similar effective term, resulting in a similar exclusive period in the market, in Australia, the US and the UK – it will receive favourable treatment in other areas of trade.

The Review Panel makes a number of draft findings and recommendations in other areas, including in relation to the efficacy of existing avenues to challenge patent validity, the granting of 'follow-on' patents (or 'evergreening'), the exclusivity provided in respect of safety and efficacy data submitted to the Therapeutic Goods Administration, contributory infringement, and an infringement exemption for manufacturing for export. Notably, the draft report includes recommendations that:
  • the Federal Government put in place financial incentives for generics to challenge patents;
  • the Federal Government establish two new permanent bodies, one an 'external patent oversight committee' responsible for reviewing IP Australia's decisions and processes to address concerns regarding the quality of 'follow-on' patents, and the other a 'Pharmaceutical System Coordinating Committee' responsible for reporting to Parliament on the success and effectiveness of the patent, marketing approval and PBS systems;
  • patentees voluntarily agree as an interim measure not to sue for infringement where a party manufactures solely for export to a country where no equivalent patent exists; and
  • a generic not be liable for contributory infringement where it takes reasonable steps to ensure that an unpatented product that it supplies is not used for a patented indication (with reasonable steps to be presumed where the product is not labelled as being for use for any patented indication) – this last being a recommendation that also received support from some originators.
Submissions in response to the draft report are due by 30 April 2013, with the final report expected in May 2013. This blog will follow the progress of the Review.

Thursday, April 4, 2013

Australian fashion shakes its money maker

By Senior Associate Lester Miller

Fashion designers have quadrupled their usage of the registered designs system in the last decade, and 80 per cent of those users are Australian.

Our wallets are gratefully resting unopened in the eye of a sartorial storm, between the Melbourne and Sydney fashion celebrations. We took pause to reflect on the usage and users of Australia's registered design system, and enquire whether fashion designers find the system useful.

Overall Australian design protection

We interrogated the IP Australia designs database for this review. Overall, in the last 15 years, design applications have increased 55 per cent, as shown below in Figure 1.

The composition of the innovators overall is quite different from those in the patent system, where foreign applicants outweigh Australian applicants by roughly 10 to 1. Up until very recently, registered designs were filed equally by Australians and foreign applicants - in 2006 it was a 50/50 split. In the years from then to today, design applications by Australians have dropped by about 10 per cent but the number of foreign applicants have increased by about 30 per cent.



Figure 1 – Registered design applications in Australia 1998 - 2012


Australian fashion design leading the way

In fashion, that trend has been reversed - the number of Australian applicants has grown to be a whopping 80 per cent.

Digging down sector by sector in Figure 2, we see fashion apparel, which in 1998 was a fairly minor player in the registered design system at 5 per cent of total users, has now doubled in relative size to 10 per cent of overall users. Depending on which section of the graph you segment, fashion industry tripled or quadrupled its design application total. Also, 80 per cent of the applications were not filed as Paris Convention applications from overseas, which indicates that the applicants were Australian.

The red line in Figure 2 below is fashion apparel filings, which sharply increased from a flat line in the high 100s a decade ago to the 500 – 600 range today.

Other sectors

Another sector similarly sharply increasing its use of the design system, albeit with a higher volatility, is the recording devices category which includes smartphones: the lilac line. Packaging (dark green) and hardware (dark blue) innovators have also taken increasing advantage of the design system to protect their designs, with a steady uptake in their use of the system from a high base.

Small industry users are seen in the flatter lines along the base of the graph – camera designers and sunglasses (optical category – violet) who, according to our research appear to register designs prolifically in the United States but not in Australia. Pharma product makers have also commenced a small increase in their use of the system, on a par volume-wise with adornments (body and landscape).



Figure 2 – Australian registered design applications by Sector 1998 - 2012

Protecting the bottom line

IP Australia implemented the 'Fashion Rules' design promotion campaign in the mid-noughties. It seems likely it has put registration and legal protection of their creative work on the radar of fashion designers. The success of Review Australia in asserting its design rights in at least some of its Federal Court cases also may also have had some effect. 

The widespread availability of technology to facilitate copying has also likely spurred many to action to protect their designs.

Businesses that have design integrated into their vision and strategy have unmistakably been growing at a faster rate than those where it is incidental, according to Brandon Gien of the Australian International Design Awards. 

The 55 per cent growth in registration of designs generally, and the four-fold growth in fashion apparel over the last decade or so, may be an indication that businesses are taking protection of the design contribution to their bottom line increasingly seriously.

Wednesday, March 20, 2013

When a strong case is not enough

By Senior Associate Tom Reid

Justice Foster's recent decision in Snack Foods Limited v Premier 1st Pty Ltd illustrates that when seeking an interlocutory injunction, a strong prima facie infringement case alone may not be enough.

Snack Foods Limited owned a registered trade mark for the words POPPED CORNERS in classes covering various snack foods. The mark was registered in June 2011. At the time of the hearing, the applicants had not yet launched any snack product under the mark. The launch was due in March 2013. In the meantime, Premier 1st had entered into an agreement with Medora (a US company) to distribute Medora's US range of snack products in Australia under the mark POPCORNERS. Premier 1st began marketing in October 2011 ahead of an anticipated November 2012 launch.

Snack Foods and its licensee sued for infringement. Premier 1st and Medora denied infringement and cross-claimed for cancellation of the registration. The Snack Foods companies sought an interlocutory injunction, and when Premier 1st withdrew a previous voluntary undertaking not to launch the POPCORNERS products, an urgent interim injunction. The hearing of the interim application was ultimately enough to dispense with the issue.

The three traditional elements of the test for obtaining an interlocutory injunction, set out in Castlemaine Tooheys Ltd v South Australia, are that the applicant show (i) that it has a prima facie case, (ii) that it will suffer irreparable harm if the injunction is not granted, and (iii) that the balance of convenience favours the granting of the injunction. While those three elements are commonly separately articulated, courts such as that in the Samsung v Apple appeal have tended to emphasise their interdependence.

In this case, Premier 1st conceded that the Snack Foods companies had a strong prima facie infringement case. However, balance of convenience factors were, in Justice Foster's view, more than sufficient to outweigh that concession. The Snack Foods companies failed to provide more than speculative evidence of the harm they might suffer through dilution and consumer confusion (in part because they had not themselves yet launched any product). By contrast, Premier 1st led evidence that an injunction would likely cost it a critical supply contract with Woolworths and potentially put it into liquidation. Justice Foster also took the view that Premier 1st and Medora had a 'real prospect' of success on their cross-claim for cancellation.
An interesting complication in the case was that from January 2012, a third party, Dainty, had sold a product under the mark POPCORNERS, including in Coles and Woolworths. It had stopped doing so in November 2012 after receiving a demand from the Snack Foods companies. Noting that timing, Justice Foster was also critical of the Snack Foods companies' delay in taking action against Premier 1st and Medora, and their decision to seek interlocutory relief instead of opting to press for an early final hearing.

The case is a stark reminder that for IP owners, a successful enforcement strategy involves more than a strong substantive claim.