Hells Angels v Redbubble

Redbubble’s online market place has survived the Hells Angels’ copyright infringement claims, but did infringe their registered trade marks. The reasoning, however, leaves questions hanging over Redbubble’s business model.

Redbubble provides an online market place. Artists can upload their artwork and potential buyers can browse the site to purchase the artwork or merchandise such as t-shirts and coffee cups emblazoned with the artwork. If a purchase is made for, say, a t-shirt with a particular artwork printed on it, Redbubble’s system arranges for the order to be placed with a fulfiller and ultimately shipped in packaging which bears a Redbubble trade mark.

The claims in this case related to uploaded images of a Hell’s Angels membership card featuring a helmeted death’s head in profile:

and registered trade marks featuring versions of the death’s head: Trade Marks Nos 526530,723291, 723463, 1257992 and 1257993.

At 552 paragraphs long, this post is going to be a high level overview only.

Copyright

A key feature in the case is that Hells Angels Motorcycle Corporation (Australia) Pty Ltd is not the owner of the copyright or the registered trade marks. It contended it was the exclusive licensee in Australia of those rights; the exclusive licences having been granted by Hells Angels Motorcycle Corporation, a US corporation.

The Hells Angels lost the claim of copyright infringement. They did so, however, because they could not prove Hells Angels USA was the owner of the copyright. As a result, Hells Angels Motorcycle Corporation (Australia) Pty Ltd could not be the exclusive licensee.

Reaching this conclusion required Greenwood J to explore, amongst other things, the notion of publication and whether the supply of membership cards was supply of copies of the work to the public. And the non-applicability of the US “work for hire” doctrine in ownership disputes under Australian law.

Redbubble is still in trouble.

First, if the applicants had been able to prove title to the copyright, Redbubble would have infringed.

Contrary to Hells Angels’ arguments, Redbubble was not liable for infringement by uploading the images. That was done by the artists in question. In the examples in question, the acts involved uploading images to websites outside Australia. For example, Example 1 was uploaded by an individual in Virginia in the USA. So the uploaders themselves were not liable as their actions did not involve any act done in Australia. At [428] – [429], Greenwood J ruled that, even though the images were made available online to the public in Australia, the artists (uploaders) did not infringe because they did no act in Australia.

…. the act of the artist in uploading the image to the website and thus making the work available online to the public must be an act “done” (that is, an exercise of the exclusive right), “in Australia” and therefore, none of the artists in the examples in suit can be regarded as a “primary infringer” in the territorial sense contemplated by s 36(1) because the relevant act was not done “in Australia”.

His Honour found, however, that Redbubble would be liable for communicating the images to the public in Australia as it was the person who was responsible for determining the content of the communication for the purposes of s 22(6) when a potential customer in Australia viewed the image on the website. Redbubble’s business model was crucial here. At [435], his Honour explained:

The business model as described by Mr Hosking and its working operation as described by Mr Kovalev makes it plain that Redbubble is not in the nature of an ISP linking a user to remote websites. It is not an intermediary providing a transmission service between particular participants. It owns, operates, manages and controls the website and conducts a transactional enterprise in which it facilitates the uploading of images, the interrogation of those images in Australia, relevantly, by users, with a view to enabling sales to consumers of articles bearing the relevant images. It has a detailed business model in which it derives revenue from each transaction and controls every step of the transactional engagement between an artist and a buyer. It confirms the sale. It facilitates payment. It organises a fulfiller to apply the work to the relevant goods. It facilitates delivery of the goods to the buyer. It generates email responses which not only confirm the order but track every step of the transaction. It affixes its own trade marks to the goods. It says that it does not directly do that but there is no doubt that an essential part of its business model is ensuring that fulfillers affix the Redbubble trade marks to the goods. The labels bearing the trade marks are on the goods as delivered to each buyer. Although I will address the trade mark case shortly, the reference to Redbubble’s trade marks, in this context, is simply to note another feature of the extent of Redbubble’s engagement in and association with each transaction. It is Redbubble’s business. But for the Redbubble website, the transactions would not occur. The artworks would not be available online to consumers in Australia to consider and appraise with a view to purchasing a product bearing the artwork. The entire focus of the business model is to enable works to be made available online so that consumers can pick and choose amongst the works so as to have them applied to goods. It would be difficult to imagine a more directly engaged participant than one deploying the business model adopted by Redbubble. Although Redbubble describes itself as the “agent” of the artist (presumably as principal), the relationship is not, in truth, a relationship of agent and principal. Redbubble acts as an “independent contractor” to “facilitate the transaction” as the Redbubble User Agreement and Appendix A to the Services Agreement makes plain: [245] and [246] of these reasons. The artist, in truth, is not the “seller” in the classic sense in which that term might be understood because Redbubble is the supplier as the facilitator of all of the essential elements of the transaction with the consumer in an analogous way to that discussed in:  International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company [1958] HCA 16;  (1958) 100 CLR 644 at 653; Heidelberg Graphics Equipment Ltd v Andrew Knox & Associates Pty Ltd (1994) ATPR 41326 at 42, 31011, notwithstanding that the nature of the technology is different to the forms of distribution arrangement in those cases.


His Honour would, if necessary, have also found Redbubble liable for authorising the conduct if it had been infringing.

Trade Marks

Secondly, Greenwood J found Redbubble liable for infringement of the Hells Angels’ registered trade marks on works such as t-shirt designs featuring the death’s head logo.

The crux of this finding came back to Redbubble’s business model. Greenwood J accepted that the artist who uploaded the image was using the trade mark as a trade mark. Unlike the copyright test, there was no requirement that the artist be in Australia. However, so was Redbubble.

At [460] – [461], his Honour explained:

As to Redbubble, that company is “in the business” of facilitating the supply of products bearing the uploaded image of Ms Troen (in this example) or, put another way, Redbubble is in the business of facilitating the supply of clothing bearing, put simply, the registered trade marks of HAMC US (in this example). Redbubble is not the “seller” of artwork. However, it is the supplier, in the sense that it is responsible for all of the transactional supplyside elements of a transaction for the supply of goods bearing the applied works. (emphasis supplied)


Redbubble has created a business model designed to enable users, in Australia (and, for that matter users in all jurisdictions in which the website is accessible), to find images through the website comprised of, in this example, Ms Troen’s image made up of the identified trade marks of HAMC US. Redbubble enables images containing the relevant trade marks to be presented to buyers of particular goods (nominated by the artists from the website categories of those goods to which the work can be applied) expressly for the purpose of facilitating the supply of goods (clothing, in this example) to which the marks are applied. It does so by and through the functions and protocols of the website engaged by Mr Hansen (and other potential viewers of the image), in Australia.

His Honour elaborated on why Redbubble’s conduct attracted liability at [462] – [469]. While this and two other examples infringed, his Honour found that, on the particular facts, Example 2 was not infringing use.

Greenwood J’s reasons also include an extended consideration of whether Hells Angels Australia was an authorised user; ultimately concluding it was.

Greenwood J, however, rejected Hells Angels’ claims that use of “Hells Angels” as search terms, or key words, within the Redbubble site was infringing. At [542] explaining:

542. …. However, I am not satisfied that this use, in itself, is use of the word marks as a trade mark, at this point in the functionality of the website. I take that view because I am not satisfied that using the term as a search term to find a relevant image is use of the term as a “badge of origin” of Redbubble. It is, undoubtedly, a use which is designed, quite deliberately, to lead a consumer by the “search nose” to images, marks, devices, livery and badging somehow or other connected with the Hells Angels Motorcycle Club.

….

544. … use of the word marks … as a search term is a search step along the way to use of the image and thus the registered trade marks, as trade marks but use of the word marks at the point of searching is not, in itself, in my view, use as a trade mark. (original emphasis)

It appears that, at the stage of entering the search term, it is not being used to identify things offered under the aegis of the Hells Angels, but just to locate things about the Hells Angels in some way.

This is the second ruling at first instance where Redbubble has been found to infringe.

While Redbubble’s business model does leave it exposed along the lines indicated above. It is worth noting that Greenwood J awarded only nominal damages of $5,000 in respect of two of the three infringements. His Honour did not allow even nominal damages in respect of the third infringement, Example 4, as it was online for a short period, viewed only 11 times and no sales resulted.

Greenwood J expressly rejected any claim for exemplary damages. His Honour does not go into reasons. Perhaps, Redbubble’s business model did protect it. The evidence was clear, for example, that Redbubble had a policy relating to infringement claims and implemented it promptly.

Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited  [2019] FCA 355

Invalidity cross-claim blocks interlocutory injunction

The Full Court has upheld Burley J’s refusal to grant Sanofi-Aventis an interlocutory injunction over Alphapharm’s SEMGLEE insulin solution for an injector pen. The significance here is that this is an unusual case where the (alleged) infringer’s cross-claim has negatived the patentee’s prima facie case of infringement. The Full Court also affirmed his Honour’s approach to balance of convenience issues.

Burley J found a clear case that Alphapharm’s product fell within claim 1 of Sanofi-Aventis’ patent. His Honour found, however, that Alphapharm’s cross-claim that the patent was invalid for lack of novelty was sufficiently strong that “it was doubtful” Sanofi-Aventis had made out a prima facie case of infringement.

Since the Interpharma case, cross-claims by alleged infringers that the patent is invalid have not enjoyed much success as the Court has approached matters on the basis that it is the patentee’s “title” to interlocutory relief which is in issue.

What was different here was that the invalidity cross-claim was not “merely” a triable issue. It was of such strength that Burley J considered (provisionally) the patent was invalid. The Full Court explained the correct approach at [14]:

…. A case for invalidity which is merely arguable, of itself, does not undermine the existence of a prima facie case of infringement which has otherwise been found to exist. However, a sufficiently strong case of invalidity may well qualify the conclusion that there is a prima facie case of infringement at all. Far from reasoning contrary to the approach in Interpharma and Janssen, the primary judge was applying the same reasoning, albeit with an outcome not to Sanofi’s liking because his Honour was satisfied that Alphapharm’s case on invalidity was sufficiently strong to qualify (indeed, virtually to negate altogether) Sanofi’s prima facie case of infringement. Further, it is Sanofi’s submissions which have conflated the relevance of the competing cases on invalidity. What is relevant is the strength of the case that the claim or claims said to be infringed are invalid. The primary judge at [118] found that “the lack of novelty case advanced by Alphapharm is sufficiently strong (at the provisional level) to qualify (in the sense contemplated in Interpharma at [17]) the conclusion that Sanofi has a probability of success”. ….

Sanofi-Aventis argued that the weight of the balance of convenience in its favour was a factor in considering its prima facie case of infringement. This argument failed both at the level of principle and on the facts.

First, the Full Court accepted that the strength of a plaintiff’s prima facie case is relevant to consideration of the balance of convenience. Balance of convenience, however, did not affect the assessment of the strength of the prima facie case of infringement. At [8], the Full Court explained:

…. The strength of the prima facie case is relevant to the balance of convenience, but the weighing process involved in evaluating where the balance of convenience lies does not affect the assessment of the existence or strength of the prima facie case. As was said in Samsung at [59] “[t]he critical integer in the test …is the need for the Court to assess the strength of the probability of ultimate success on the part of the plaintiff. The strength of that probability will depend upon the nature of the rights asserted and the practical consequences likely to flow from the grant of the injunction which is sought”. ….

Secondly, Burley J had apparently considered the respective losses relatively finely balanced on the question of balance of convenience, but had ultimately considered the difficulties of calculating Alphapharm’s losses outweighed the difficulties in calculating Sanofi-Aventis’.

In particular, the Full Court considered that Burley J had not inappropriately undervalued Sanofi-Aventis’ position as a long standing incumbent. For example at [51], their Honours explained:[1]

… Sanofi had not demonstrated a sufficient likelihood of success in all of the circumstances to justify the preserving of the status quo. Each case turns on its own facts so it is not the point that in GenRx and Warner Lambert the preservation of the status quo was given considerable weight. In neither case was the strength of the prima facie case undermined in the same way as in the present case. In neither case was there a suggestion of market circumstances similar to the present case given the primary judge’s reference in [174] to the real possibility of Alphapharm’s prospective market disappearing as a “significant aspect” of this matter. Faced with the primary judge’s reasons, Sanofi’s submission that his Honour failed to take into account the disruption of the status quo as a material consideration is untenable. His Honour weighed all those matters but the balance favoured Alphapharm not Sanofi.

Sanofi-Aventis Deutschland GmbH v Alphapharm Pty Ltd [2019] FCAFC 28 (Jagot, Yates and Moshinsky JJ)


  1. One can only speculate how the 1336 paragraphs Jagot J had to write to work out the quantum on an undertaking as to damages in Sigma v Wyeth concentrated her Honour’s appreciation of this issue!  ↩

A designs case – spare parts

Burley J has handed down our first case dealing with the “spare parts” defence in the Designs Act 2003.

At 709 paragraphs, any considered analysis will have to wait for another day (or days). In the meantime, here are his Honour’s conclusions:

707. In these reasons, I conclude that GMGTO has failed to establish the bulk of its claim for design infringement. Despite extensive forensic examination of the business of SSS, it has not established infringement in respect of the importation, keeping for sale or offering for sale of the impugned SSS products in respect of any of the SSS respondent companies. In its claim for infringement by selling, GMGTO has established infringement in respect of 4 representative transactions made by SSS Sydney, 2 representative transactions entered into by SSS Melbourne (but only in part in relation to Transaction 17) and 2 representative transactions entered into by SSS Queensland. The parties must now, on the basis of these reasons, attempt to agree on a formula by which the balance of the transactions the subject of GMGTO’s claim might be resolved. They should also confer and attempt to agree to directions to bring these proceedings to a close. 


708. I have concluded that SSS has substantially failed to establish its case on the cross-claim. It has established that there were unjustified threats insofar as they relate to designs that were never certified, which involves the threats made to Panel House, Carparts and Torq. SSS has also established an unjustified threat in relation to copyright infringement in the case of Holmart. I will hear submissions from the parties as to the appropriate relief to grant, if any.

GM Global Technology Operations LLC v S.S.S. Auto Parts Pty Ltd [2019] FCA 97

Cartel conduct and IP licences and assignments

Will your assignments and licences of intellectual property, such as in a typical franchise agreement, expose your client to liability for cartel conduct or will you be ready to apply for an authorisation?

One of the bills pending before Parliament contains the long pursued (by the ACCC) repeal of s 51(3) of the Competition and Consumer Act 2010.

Section 51(3) exempts from most of the prohibitions in Pt IV of the Competition and Consumer Act terms and conditions in assignments and licences of intellectual property which most of us take for granted.

The rationale for repeal is that most transactions involving IP do not have anti-competitive effects or purposes and, if they do, they should not be exempt from the competition laws.

Rodney De Boos, a consultant at DCC with many years’ experience in licensing and commercialisation of IP, however, points out that this explanation was developed before the provisions banning cartel conduct were introduced into the Act. And, he contends, typical arrangements in IP agreements which allocate, for example, territories or customers will constitute cartel conduct and so need authorisation if the parties are not to be in breach of the cartel provisions.

As Rodney explains, a cartel provision are certain types of specified provisions between competitors.

Now, it may well be that an assignor and assignee, or a licensor and licensee, will not be competitors. There are many types of arrangements, however, where the Competition and Consumer Act will deem them to be competitors. An obvious example is the case of a franchisor who has retail outlets (either itself or through a related body corporate) as well as retail franchisees. Other arrangements involving IP could also be similarly problematical.

You can read Rodney’s concerns in more detail here.

The bill repealing s 51(3) has already passed the House of Representatives and is due to be debated by the Senate in the sittings coming up.

Prosecco, GIs and the possible EU FTA

The last few weeks have seen increasing rumblings within Australia about some of the consequences if a possible Free Trade Agreement with the EU goes through.

One of the main features the EU is seeking is expanded protection for the thousands of “GIs”, or geographical indications, recognised in the EU.

The potential impact of the EU FTA requiring Australian producers to stop calling their non-Italian products ‘prosecco’, a GI in the EU, has been generating some media excitement: see:

Professor Mark Davison and colleagues have a paper forthcoming in the AIPJ exploring the validity of the claims to protection [SSRN paper here]

We have been here before – when the EU-Australia Wine Agreement knocked out use of names like ‘champagne’ in return for greater access to the EU for Australian sparkling and other wines.

When the second version of that agreement replaced the 1994 version, the National Interest Assessment pointed out:

8. In 2006-07, Australia exported 421 million litres of wine to the EC with a value of $1.3 billion, and imported 10.2 million litres with a value of $168 million. Key regulatory and intellectual property issues related to trade in wine between Australia and the EC are currently regulated by the 1994 Agreement. 

9. The Agreement offers a number of advantages to Australian wine-growers, which will help consolidate their access to the EC market at a time when the domestic industry still faces concerns about an over-supply. The new Agreement also resolves several outstanding issues not covered by the 1994 Agreement, and thus will help maintain a mutually beneficial trade relationship with the EC.

10. In particular, the Agreement obliges the EC to permit the import and marketing of Australian wines produced using 16 additional wine-making techniques. It also sets out a simpler process for recognition of further techniques, with an option for disputes to be resolved by a binding arbitration. Under the 1994 Agreement, by contrast, the process for authorisation of new wine-making practices has no binding dispute settlement procedure, and no new practices have been authorised under the 1994 Agreement. This has been particularly problematic for Australian wines produced with an important wine-making technique involving the use of cation exchange resins to stabilise the wine. This technique was provisionally authorised for 12 months under the 1994 Agreement, and this authorisation has since had to be periodically extended for 12-month periods.

11. The Agreement also obliges the EC not to impose any new wine labelling requirements that are more restrictive than those which apply when the proposed Agreement comes into force. This means that industry will not face the difficulties and additional costs that might arise if the EC was permitted to introduce more onerous wine labelling requirements.

12. Finally, the Agreement obliges the EC to recognise and protect new Australian wine Geographical Indications. A Geographical Indication is a label or sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due to that place of origin.

How it will play out this time, who knows? As usual, the Australian government is keeping its position largely secret from us. The EU, however, is quite open about what it is seeking (Compare DFAT here and here and here to EU proposed text here see esp. article X.22 and from X.31 and generally).

Section 105(1A) passes its test

While some of us have been sweltering on the beach or disporting in the northern snows, Beach J has granted Branhaven’s application to amend its patent application for compositions and methods of inferring bovine traits following Meat & Livestock Australia’s opposition.

You will recall that Beach J had earlier rejected MLA’s attack based on manner of manufacture, novelty and inventive step. However, his Honour upheld the challenges based on lack of clarity and, to an extent, utility.

Branhaven applied to amend under s 105(1A) of the Patents Act 1990.

MLA opposed; in broad terms arguing that Branhaven was too late, there was no power to amend at this stage; the amendments were not permissible in any event and, as a matter of discretion, should not be allowed even if the Court did have power.

Prior to the Raising the Bar Amendments, the Court had power under s 60(4) to hear an appeal from the Commissioner’s decision in an opposition. The Court was restricted, however, to dealing with the application in the form the subject of the opposition before the Commissioner. If the opposition was successful but on grounds that could be cured, any application to amend had to be remitted to the Commissioner.[1] Two of the amendments introduced by Raising the Bar were s 105(1A) and s 112A. Section 105(1A) provides:

If an appeal is made to the Federal Court against a decision or direction of the Commissioner in relation to a patent application, the Federal Court may, on the application of the applicant for the patent, by order direct the amendment of the patent request or the complete specification in the manner specified in the order.

MLA argued that, after such a hotly contested ‘appeal’ and detailed reasons, Beach J was in effect functus officio. Amongst other things, MLA’s application was not made during the appeal and the Court therefore had no power to deal with the amendment application.

Beach J has rejected all these attacks. In the course of doing so, his Honour recognised it would not be appropriate to remit the matter to the Commissioner (even if there were power). His Honour also found that s 105(1A), like s 105(1) but unlike the Commissioner’s powers under s 60, was discretionary. His Honour’s reasons also explored the types of considerations that might affect the exercise of that discretion in the context of an application instead of a granted patent.

At this stage, it is not known if MLA will seek to appeal.

Meat & Livestock Australia Limited v Cargill, Inc (No 2) [2019] FCA 33

A computer related invention is patentable

Robertson J has allowed Rokt’s appeal and held that its ‘computer implemented method for linking a computer to an advertising message by way of an intermediate engagement offer ….” was a manner of manufacture and so patentable subject matter.

The Commissioner had found (and here) that Rokt’s patent was not a manner of manufacture as required by s 18(1)(a) and so refused grant.

On the appeal, Robertson J found Rokt’s claims were patentable subject matter in application fo the principles from Research Affiliats and RPL Central on the facts.

Crucial to his Honour’s decision was evidence that computer systems at the priority date in December 2012 did not work in the way claimed, which was not just a routine use of the technology.

In response to the Commissioner’s argument that the method was just a business method, Robertson J said at [205]:

The invention solved not only a business problem but also a technical problem. As to the latter, it provided a single platform in which user engagement data could be coupled with transactional data and user context data to provide a personalised ranking of engagement offers to the user. This technical problem of providing this single platform was solved by introducing the tracking database and the objects database and designing the ranking engine and the engagement engine which accessed and manipulated the data in the two databases to rank and select engagement offers. The ranking engine optimised the personalised output for the consumer.  Critically, the ranking engine implemented a ranking algorithm which ranked the retrieved object by a combination of an engagement score and revenue score. I also accept the evidence Professor Verspoor gave, which is summarised at [46]-[54], [104]-[107], [134]-[135] and [145] above.

On the evidence, Robertson J found that known, exiting components were integrated into a new system in an innovative and previously unknown way. At [213], his Honour explained:

Taken in isolation, a database, a client-server architecture, the running of the Javascript program on a publisher’s website and the creation of a ranking engine to rank abstract data to achieve an ordered list were each known as at December 2012 but, in combination, the distinction between engagement offers and general advertising, coupled with the algorithms making use of background data for personalisation and ranking was a new combination of new and previously existing components and a new use of computer technology.

In this case, the evidence showed that the use of computers was integral to the invention, not just incidental. At [208] – [210], Robertson J said:

The use of computers was integral, rather than incidental, to the invention in the sense that there is an invention in the way in which the computer carries out the business scheme: see RPL Central at [107]. It was not feasible to store and manage large amounts of tracking data collected from real-time interactions with digital devices and manipulate large quantities of data for context-sensitive decision-making without the use of computers. The data bank that was the source of engagement objects and historical/tracking data was a critical component of the invention. I accept the applicant’s submission that the computer was not merely acting as an “intermediary” but that the substance of the invention involved the new functioning given to the computer. I accept Professor Verspoor’s evidence summarised at [55]-[57] above.
Storage and manipulation of data at the magnitude and speed that was required to implement the method could only be done on a computer or computers. The data analysis claimed in the patent could not be performed without a computer or computers, particularly having regard to the gathering, manipulation and subsequent use of the data by the engagement engine.
The user interactions took place on the user’s computer and it was integral to the invention that data be collected, and engagement offers presented, through that computer. The transmission and receipt of data over the internet to and from the advertising system could also only be done using computers.

Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988

Hague consultations – outcome

IP Australia has published a report on the results of its consultations on the economic consequences of Australia joining The Hague Agreement for the international registration of industrial designs.

In short, there’s a bit of minor tweaking, but the outcome is pretty much the same. The revised best estimate:

  • net benefit to Australian designers is $3 million (up from $1.7 million)
  • net cost to Australian consumers is $39.7 million (down from $58 million)
  • net cost to Australian IP professionals is $2.5 million (unchanged)
  • net cost to the Australian Government is $2.8 million (unchanged).

Perhaps one of the most interesting aspects of the report is an analysis of all infringement court cases involving patents, trade marks or registered designs since 2008:

Rate of infringement cases by registered IPR

There have been far less design infringement cases but, having regard to the number of registered designs, litigation is in approximately the same proportion as trade mark infringement cases,[1] but approximately only one third the rate of patent litigation.

Another surprising aspect: the New Zealand Intellectual Property Association also made submissions – which appear to have been rather influential – which strongly opposed Australia joining the Hague system.

Finally, the report is at pains to say that the costs benefit analysis of joining Hague is only one factor being considered. Anyone want to put money on Australia joining (before we sign up to anothere one-way trade agreement with, this time, the EU)?


  1. The report gets a bit over-excited by the high proportion of certified designs which get litigated – well, duh!  ?

Shades of green – 2

Last week’s post looked at the substantive reasons for the rejection of Frucor’s attempt to register a shade of green as a trade mark for energy drinks. There were also a couple of points about grounds of opposition and amendment of applications on appeal worth noting.

image002.jpg

You will remember that Frucor’s application included a green swatch, copied from its New Zealand trade mark application, which was for a different colour than the colour identified by the written description under reg. 4.3(7), Pantone 367c.

What’s a ground of rejection (for opposition purposes)

In addition to the grounds of opposition provided by sections 58 to 62A, as you will know s 57 provides that an application may be opposed on any of the grounds on which the application could have been rejected during examination.

Coca-Cola argued that the inconsistency between the graphic representation of the mark and the written description was itself a ground of rejection.

The basis for this argument was that s 33 required the Registrar to reject an application where the application had not been made in accordance with the Act. It argued the Registrar should have rejected the application because the inconsistency meant that Frucor’s application had not been made in accordance with the Regulations as required by s 27(2)(a).

Yates J rejected this argument at [136]ff. The grounds of rejection contemplated by s 57 were, relevantly, those provided by s 39s 44. (They even appear under a heading “Grounds for rejecting an application”.)

The power to amend

Frucor had not sought to amend its application to substitute a swatch of the correct colour before the Registrar during the examination process. It did apply to amend, however, during the appeal to the Federal Court.

Yates J, citing the approach taken by Heerey J under the Patents Act in Genetics Institute,[1] held that the Court had power to consider the amendment application under s 197 even though there had not been an application to amend before the Registrar. At [195], his Honour explained:[2]

…. I do not see how an appeal to this Court from a decision of the Registrar in opposition to registration proceedings under the Trade Marks Act differs materially from an appeal to this Court from a decision of the Commissioner in opposition to grant proceedings under the Patents Act. Whilst I acknowledge that, in the present case, an application under s 63 of the Trade Marks Act was not before the Registrar, the registrability of the mark the subject of the application was in contest. In the proceedings below, the Registrar had the power to permit the application to be amended subject to the constraints placed upon the exercise of that power by the Act. Given the nature of the “appeal” to this Court, the Court’s power to quell the controversy as to the registrability of the mark—the subject matter of the appeal—cannot be more limited than the Registrar’s power. Further, it cannot matter that the Registrar was not asked to exercise the power of amendment, just as it cannot matter that an opponent might seek to raise additional or new grounds of opposition, or that the parties might seek to adduce different evidence to the evidence that was before the Registrar or raise new or different arguments. The opposition proceeds afresh before the Court on the subject matter that was before the Registrar and is adjudicated upon accordingly.

This practical approach is, with respect, to be welcomed in the interests of efficiency and, if followed, would obviate the need to introduce into the Trade Marks Act a counterpart to s 105(1A) of the Patents Act which, in turn, arose because Courts applying NEB had ruled a Court hearing an appeal from an opposition before the Commissioner had no power to deal with an amendment application.

Even though the power existed, Yates J at [206] denied Frucor’s application to amend. The substitution of “a markedly different green-coloured swatch” for the existing swatch would substantially affect the identity of the trade mark and so was prohibited by s 65(2).

Frucor also made a very late application to the Court to amend the application on the basis of s 65A.

The very late stage of the application and the lack of any utility (as the application would fail the distinctiveness requirement in any event) were fatal.

In contrast to his Honour’s practical approach to allowing consideration of an amendment under s 65 through s 197, however, Yates J considered allowing a party to bring an application under s 65A for the first time in the Court would subvert the statutory process for the consideration of such amendments by the Registrar prescribed by s 65A. Section 65A contemplated publication of the amendment application in the Official Journal and opposition proceedings before the Registrar.

In further contrast to Yates J’s views about s 65A, it may be noted that Courts dealing with amendment applications under s 105(1A) have directed the amendment applicant to publish the application in the Official Journal so that the Commissioner and any potential opponents may intervene.[3] The difference is of course that the Patents Act through s105(1A) expressly tells the Court to deal with the request to amend because of the inefficiencies and delays which had resulted.

As previously noted, it does not appear that Frucor has appealed.

Frucor Beverages Limited v The Coca-Cola Company [2018] FCA 993


  1. Which Yates J noted was apparently endorsed by the Full Court in New England Biolabs at [50].  ?
  2. See also at [200] – [201] and [204].  ?
  3. A recent example is Electronic Tax-Free Shopping Ltd v Fexco Merchant Services (No 3) [2017] FCA 569 at [2] – [3].  ?

Shades of green

Frucor’s attempt to register the colour green as the predominant colour applied to its “V” energy drinks has failed. The colour being applied for was not properly defined and, consequently, had not been used as a trade mark. Yet again, consumer survey results did not help.

image002.jpg

Frucor’s application included a green swatch, copied from its New Zealand trade mark application and, in accordance with reg. 4.3(7) a written description:

The mark consists of the colour green (Pantone 376c), as shown in the representation attached to the application, applied as the predominant colour to the goods, their packaging or labels.

The fundamental problem was that the green colour of the swatch was not Pantone 376c.

What’s the trade mark

Frucor argued that the written description should be given priority over the coloured swatch as a matter of construction of the trade mark application.

Its argument was that any trader looking at the Register would realise the colour swatch was inherently unreliable due to the potential for corruption through scanning, printing etc. Consequently, anyone looking at the Register would recognise that Pantone 376c was the subject colour.

Yates J considered this analysis was informed by Frucor’s subjective intention. The matter needed to be determined objectively. Reg. 4.3 required the application to set out a representation of the mark and, in that context, r. 4.3(7) required a description of the mark “as represented”. It was the representation which was primary. At [122], his Honour concluded:

…. A person inspecting the Register is entitled to act on the assumption that the trade mark applicant’s own depiction of colour in the representation accompanying the application is accurate.

Once the person inspecting the Register appreciated there was an inconsistency between the graphic representation and the description, there was no way to resolve the disconformity.

“V” green had not acquired distinctiveness

As the application was for a single colour mark, this meant that Frucor could not possibly demonstrate its trade mark had acquired distinctiveness under s 41(6)(a), the old (or pre-Raising the Bar version).[1] At [145], his Honour explained:

As the Full Court explained in Woolworths/BP at [79], it is important to appreciate that it is the use of the mark applied for, as a trade mark, that determines what can be registered. In that connection, the Full Court emphasised that the mark that is the subject of the application for registration must conform to the mark that was, for the purposes of s 41(6), used before the filing date. Because, in the present case, the mark is defined ambiguously—its features are uncertain and cannot be determined objectively—it is not possible for Frucor to establish the factual condition of s 41(6)(a) by reference to its own particular use of “V” Green. It follows that, for that reason alone, registration should be refused in the present case.

Yates J would have rejected the application even if one assumed there was no ambiguity and the colour claimed was Pantone 376c.

Yates J accepted that Frucor’s use of “V” green was substantial, consistent and conspicuous. At [163], his Honour had “no doubt that … those familiar with Frucor’s “V” energy drinks would have associated “V” Green as the colour of Frucor’s core energy drink product.” (emphasis supplied)

Yates J held, however, that this extensive use and recognition was not use as a trade mark.[2] First, at [164] the “consistent presence” and “dominating display” of the “V” logo was what consumers would recognise as performing the function of the badge of origin for the goods.

Accepting that there could be more than one trade mark for a product, the second consideration was the role colour played in the soft drink market including energy drinks, soft drinks, sports drinks, fruit juices and bottled water.

Packaging and labels in this field are often brightly coloured. Soft drink producers used colour to denote a range of things: sometimes product flavour, more generally some “varietal characteristic”. Frucor itself had different varieties of “V” which were presented in different liveries (scroll down): red for berry flavoured, silver for sugarfree, black and also a yellow in addition to “V” green which was reserved for the “hero” of the range. So at [166]:

…. Although Frucor’s use of “V” Green was pervasive and no doubt fundamental to its whole marketing strategy, it was, nonetheless, reminiscent of its core product. In this way, Frucor’s use of “V” Green was essentially descriptive, not distinctive in the trade mark sense. It denoted the core product in the “V” energy drink range. I am not persuaded that, somehow, consumers would understand that colour in relation to the core product was being used differently to colour in relation to other varieties within the “V” energy drink range, or any differently from how colour was and is used descriptively across the range of non-alcoholic beverages sold through trade channels such as supermarkets and convenience stores.

So at [167], even though more than one trade mark could be used on any given product, the “V” green colour did not function as a trade mark.

What the market survey didn’t prove

Frucor’s evidence from a market research consultant based on two surveys did not help. His evidence showed, for example, that some 77% of the survey respondents identified Pantone 376c with a brand of energy drink and and 85% of those identified the drink as Frucor’s “V” energy drink. As a result, the expert concluded that Pantone 376c was part of Frucor’s “brand identity”, having properties that went well beyond decorative or functional attributes so that it distinguished Frucor’s products from other traders’.

The main problem was that evidence the public associated, or even identified, a particular colour with a “brand” by itself is not enough to establish that the colour is functioning as a trade mark. At [171], his Honour explained:

… evidence of an association (or, I would add, identification) of a sign, including a colour, with a particular product does not mean, without more, that the sign is functioning or has functioned as a trade mark in relation to that product. One needs to have an understanding of how the sign was used, in the proper context and setting, before that conclusion can be drawn. Moreover, the conclusion is not purely a factual one.

The last sentence in that extract points out that whether something is used as a trade mark is a legal conclusion.

If you are going to advance someone to give evidence that a colour has been used as a trade mark – as Frucor’s market survey expert purported to do, you will also need to demonstrate that the witness properly understands the legal concept. More practically, if you are trying to convert your colour into a trade mark, you need to educate your public that it is being used as your trade mark. At it’s most rudimentary level (and bearing in mind the range of other issues), can you tell your customers to “look for” you product by reference to its colour?[3]

Market survey blues

Approaching the matter in this way enabled Yates J to avoid having to deal with the numerous criticisms about the survey methodology raised by Coca-Cola. A couple of points, however, do emerge.

At [168], Yates J was sceptical that the sample used in the surveys was representative. Frucor’s expert had not bailed up survey respondents randomly in the street or at the shopping centre. Rather, as is quite common in marketing, they were drawn from a panel of people who had signed up to participate in surveys.

That criticism is all the more compelling given the second point. Yates J was not at all comfortable accepting Coca-Cola’s criticisms of Frucor’s survey methodology in the absence of support from Coca-Cola’s own expert evidence.

It does not appear that Frucor has appealed.

Frucor Beverages Limited v The Coca-Cola Company [2018] FCA 993


  1. Presumably, the same reasoning would apply under s41(3) in the “new” version.  ?
  2. At [148], Yates J recalled that this required “an understanding, from an objective viewpoint, of the purpose and nature of the use, considered in the context of the relevant trade” citing Woolworths/BP at [77].  ?
  3. See for example the evidence in Philmac about its khaki and then terracotta plastic pipe fittings leading to the conclusion at [40]. For more recent US practice see here.  ?