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Mainly intellectual property (IP) issues Down Under

Copyright Amendment (Disability Access and Other Measures) Bill 2017

The bill has finally been introduced into Parliament today.

This follows the release way back in December 2015 of an exposure draft bill.

According to the EM, the main topics covered in this version of the bill are:

  • ” replace the current exception for persons with a disability, and others acting on their behalf, with a fair dealing exception;
  • ” replace the current statutory licences for institutions assisting persons with a print or intellectual disability with a single exception that applies to organisations assisting persons with a disability;
  • ” harmonise and modernise the preservation exceptions for copyright material in libraries, archives and key cultural institutions;
  • “? consolidate and simplify the statutory licences that allow educational institutions to use works and broadcasts;
  • “? allow copyright material to be incorporated into educational assessments conducted online;
  • “? set new standard terms of protection for published and unpublished materials and for Crown copyright in original materials; and
  • “? make minor amendments to update references to Ministers and preconditions for making regulations extending or restricting the operation of the Act in relation to foreign countries.”

Those of you with long memories will notice that the amendments in the exposure draft to bring the safe harbour provisions for “carriage service providers” (see s 116AC to 116AJ) into line with Australia’s obligations under the US Free Trade Agreement (way down in chapter 17 article 29(b)) is missing from that list. The rights holders’ interests were very strongly opposed to that change and, presumably, the Government is betting that President Trump’s America will not be too fussed.

In relation to the term of copyright in unpublished works – currently perpetual (until published) – the Minister explained the intended effect of the amendments:

The bill harmonises the copyright term for works (including a literary, dramatic, musical or artistic work) by creating a new standard term of 70 years from the death of the author, irrespective of whether the relevant work has or has not been made public. This means that an unpublished work will have the same term of copyright protection as a published work. Where the identity of the author remains generally unknown, or the work is made by an international organisation to which the act applies, the standard copyright term will be 70 years from when it is made. However, if this work is made public within 50 years of being created, the copyright term will be 70 years from first being made public. For sound recordings and films, a standard copyright term of 70 years from the year in which the material is made will apply. However, if the sound recording or film is made public within 50 years of being made, the copyright term will be 70 years from first being made public.

Links to the Bill and the EM from here.

CLIPSO CLIPSAL-ed

You may not be surprised to read that Perram J has found that CLIPSO is deceptively similar to CLIPSAL for electrical goods in class 9. This had the consequence that Clipso’s registration for “CLIPSO” was expunged from the Register and CLIPSO itself was found to infringe prospectively. Clipsal’s trade mark registration for the shape of its ‘dolly switch’, however, was not infringed by Clipso’s products.

A significant issue in the case was whether Clipso’s principal, a Mr Kader, was to be believed about how he came up with the mark. Perram J found he was not. Perhaps the most interesting feature of the case, however, is the market by which the issues fell to be assessed.

Some background facts

Clipsal has registered CLIPSAL as a trade mark in respect of all goods in class 9. While it and its predecessors claim to have been using the mark since the 1920s, the registration it relied on in this proceeding dates from 1989. It currently markets some 14,668 electrical products under the trade mark and, in 2011, its annual sales exceeded $500 million. Clipsal had some 77% of the market; its nearest competitors having only 11% each. Clipsal also has a shape mark registered for the shape of its dolly switch:

Clipsal’s Dolly Switch trade mark

in respect of ‘electrical wiring accessories which incorporate a rocker switch … including dimmer switches….’

Mr Kader had been importing electrical accessories since about 2005. The CLIPSO mark came into use, however, in 2008 and Clipso achieved its registration in respect of a range of class 9 goods, principally electrical switches and the like, from October 2008.

The market by which deceptive similarity assessed

Many of Clipsal’s products, and most if not all Clipso’s, are what is known in the trade as ‘Bakelite’. These are (generally) plastic products such as switches, power points and other electrical products. A significant feature of these products is that by law they can be installed only by licensed electricians. Thus, a key plank of Clipso’s defence was the nature of its goods which, it said, were essentially bought by electrical wholesalers and electrical tradies, who were not confused by the two trade marks. CLIPSAL, it was argued, was so famous that no reasonable tradie would mistake CLIPSO for it.

Perram J began by noting trade mark authority had held that an infringer’s conduct fell to be assessed in light of its effect on ordinary purchasers of the products in suit. His Honour noted that misleading or deceptive conduct under the ACL fell to be assessed by reference to the ordinary and reasonable consumer.[1] Acknowledging that other cases may lead to different conclusions, however, in the context of this case Perram J considered that Clipso’s conduct fell to be assessed under all heads according to its impact on the ordinary and reasonable consumer.

Perram J accepted that a large part of the market for Clipsal’s products were electrical wholesalers and electrical installers. For many people having a home or office built, the issue was whether there were light switches, their positioning and number. The actual purchasing decision was left to the builder or contractor. However, Perram J found that there was a (relatively small) but not insignificant section of the general public who were interested in such matters and did take into account the trade source of the products that were being installed in their building and so specified the products they wanted their contractors to install, non-purchasing end-consumers.[2]

A key factor in his Honour’s conclusion on this point was the extent and length of Clipsal’s marketing efforts directed to the general public, not just the trade. In addition to the usual forms of advertising, this included a software program, Cipspec, which Clipsal installed in showrooms and its consultants used to work through with customers the placement and appearance of various CLIPSAL products. At [122] and [123] of his Honour’s reasons, Perram J accepted:

However, the evidence of these witnesses (the marketing director, Mr Quinn, a store manager of an electrical wholesaler, Mr Kalimnios and the electrical wholesaler, Mr Micholos) nevertheless persuades me that the applicants’ efforts in bringing end-consumers into the process as part of its supply chain strategy are likely to have had some success. The evidence of Mr Kalimnios and Mr Micholos (referred to later in these reasons) was attacked on the basis that the firm for which they worked, P&R Electrical, was not independent of the applicants. It is not surprising that an electrical wholesaler might have a substantive commercial relationship with the market leader in electrical accessories, but I would not describe such a relationship as lacking independence. In any event, I do not think that the evidence of either man was adversely affected by this matter.

One is left in the situation then that the only evidence of the success of the strategy of seeking to increase demand at the consumer end of the market is the existence of the strategy itself. Although I am prepared to accept that some end-consumers do indeed purchase switches and sockets themselves, I do not accept that generally these are the same people who are involved in, or the targets of, Mr Quinn’s supply chain strategy. As best I can surmise, they are instead a small group of people who decide to buy Bakelite products to have an electrician install them, or possibly even a smaller group of unlawful renegades who buy Bakelite products to install themselves.

His Honour was unable to quantify how significant the involvement of such end-users in the market was, but at [129] considered it was not de minimis:

… one is still left with little compelling evidence that any of the end-consumers targeted by the strategy exist beyond the strategy itself and the amount spent on it. I have no particular difficulty describing the strategy as plausible. One can well see that there are likely to be some people who care very much about what the light switches and sockets installed in their homes are to be, whilst there will be others who are benignly indifferent. Amongst the first class, it requires no great mental athleticism to see that their fascinations are likely to be with the Bakelite products at the premium end of the market. Can I infer from these observations that such a class exists and in numbers which are significant? I believe that I can and I do. The widespread fascination with home renovations in some quarters is reflected in the programming that appears on popular television every week. I do not believe that Mr Quinn’s strategy of creating demand and driving it back up the supply chain is some quixotic venture which is pointless. To the contrary, I am prepared to infer that a significant portion of persons building a new house or renovating an existing dwelling do care about which Bakelite products are used.

It was not necessary that these end-users be the people who actually bought the goods in question; it was sufficient that they gave instructions for them to be purchased such as through their contractors. The size of this segment of the market was sufficient to qualify as ‘substantial’. The relevant market, therefore, was a segmented one consisting of electrical contractors, electrical wholesalers and ‘non-purchasing’ end-consumers.

One consequence of this conclusion was that Perram J considered the parts of the market consisting of electrical contractors and wholesalers was a specialised market which would require expert evidence about the conduct and purchasing habits of people in those trade channels. That was not be the case for that part of the market comprised of end-users.

For that part of the market, Perram J went on to hold that CLIPSO was deceptively similar to CLIPSAL. Perram J considered that the two words shared the same root and had very similar pronunciation – the primary stress would fall on the first syllable and the final syllable of both words would be unstressed. There was also expert evidence that some people might perceive CLIPSO as an hypocristic” for CLIPSAL.[3]

As noted above, Clipso argued that CLIPSAL was so well-known in the trade that there would be no confusion. Perram J rejected this on several grounds. First, in the context of s 44 resort could not be had to reputation except where the mark was so well-known as to be ubiquitous and, notwithstanding its market penetration, Perram J was not prepared to find CLIPSAL fell into that exceptional category.[4] Secondly, as his Honour had already held, the market was not limited to those in the trade but also included ordinary (non-purchasing) consumers. Thirdly, there was in any event evidence from people in the trade (well, at least one) that, while they were not necessarily confused, they were caused to wonder whether there was some connection between the two trade marks.[5] Consequently, CLIPSO was deceptively similar to CLIPSAL even for the segments of the market comprised of those in the trade.

Cancellation

These findings together with Perram J’s rejection of Mr Kader’s claims about how he chose the name CLIPSO meant that the CLIPSO registration was cancelled pursuant to s 44, s 60 and s62A.

Mr Kader had claimed that he chose the name while leafing through the list of goods in class 9 in the International Classification and noticing some references to “clips”. He also claimed that he knew very little if anything about CLIPSAL when he applied to register CLIPSO. Perram J found Mr Kader was lying about this based on a number of factors including the strength of Clipsal’s position in the market, Mr Kader’s involvement in the market for at least 3 years and, amongst other things, the fact that each day his trip to work involved passing a very large CLIPSAL hoarding.

Infringement

As s 122(1)(e) provides a defence to trade mark infringement when the sign used is itself a registered trade mark and is being used in respect of the goods for which it is registered, Clipso could not in fact infringe until Perram J’s orders cancelling the registration of CLIPSO were effected on the Register. Therefore, injunctions only would be available.

However, Perram J did go on to find that Clipso’s use of CLIPSO also contravened the prohibitions on misleading or deceptive conduct under the ACL and passing off, but only insofar as the public consisted of (non-purchasing) end-consumers. As Perram J considered those actually engaged in the trade would not be misled or deceived, but only caused to wonder if there was a connection, there was no contravention in respect of those segments of the market.

Use of a shape trade mark

Perram J found that Clipso’s dolly switch very closely resembled Clipsal’s dolly switch which was depicted in its registered trade mark. Nonetheless, his Honour considered Clipso did not use its dolly switch as a trade mark. Perram J accepted that there were many shapes a dolly switch could take so that Clipso’s dolly switch was not dictated by function. Nonetheless, it was not used as a trade mark. At [154], his Honour explained:

Be that as it may, I still do not think that the first respondent was using the switch as a trade mark. Generally speaking, Clipso products were packaged in plastic sleeves emblazoned with the Clipso logo, and then placed in a cardboard box also emblazoned with the Clipso logo. There is no doubt that the word CLIPSO was being used as a badge of origin, which rather detracts from the idea that the switch located within the packaging could also have been operating as a badge of origin.

Perram J was not prepared to find that the shape of the dolly switch itself conveyed an association with Clipsal based on the sheer volume of sales of the product. This was so even though Clipsal’s packaging often included a statement that “The shape of this dolly switch is a trade mark of [Clipsal]”.

Clipsal Australia Pty Ltd v Clipso Electrical Pty Ltd (No 3) [2017] FCA 60


  1. Perram J noted that there could be subtle differences also between passing off and the ACL, but it was sufficient to proceed in this case on the basis that the same test applied for both actions notwithstanding their different bases.  ?
  2. There were also end-consumers who actually bought the products themselves, but they were considered too small a segment to qualify as ‘substantial’.  ?
  3. Apparently, this refers to the practice, particularly prevalent amongst Australians, of modifying words colloquially to suggest familiarity such as “kiddo” for “kid”.  ?
  4. Bridling at [179] – [180] against even that scope for reputation permitted by Henscke.  ?
  5. Relying on the Full Court in Vivo v Tivo.  ?

$3 million!

Last year, we looked at the ACCC’s successful prosecution of Valve (provider of the online gaming platform, Steam) for breach of the consumer guarantees in the ACL. Valve’s contracts for example provided that all fees were payable in advance and not refundable. Valve’s main line of defence was that it was in the US state of Washington and so not bound by the ACL.

On 23 December 2016, the Court fined Valve $3 million for its breaches: $2.2 million for the contraventions involving the Steam Subscriber Agreement and $800,000 for the contraventions involving the Steam Refund Policy.

This was in a context where, while,the number of accounts developed over the 3 year period of the misconduct, Valve had some 2.2 million Australian accounts (I.e, about $1.36 per account) and had received communications about refunds from over 21,000 accounts. What is more, despite its no refunds policy wording, it had actually paid refunds to some 15,000 accounts. Another factor was Valve’s high-handed approach to its legal position in Australia; apparently deciding it had no liability as a matter of policy without reference to Australian legal advice.

Australian Competition and Consumer Commission v Valve Corporation (No 7) [2016] FCA 1553 (Edelman J)

Merial 2 – most of the claims were obvious too

Previously, we looked at Moshinsky J’s reasons for finding that Intervet was not entitled to the invention claimed in its patent application for a “soft chew” dosage. In what appears to be one of the first judicial considerations of the inventive step requirements introduced by the Patents Amendment Act 2001, Moshinsky J has also allowed Merial’s opposition on the grounds of lack of inventive step.

To recap, claim 1 of Intervet’s patent application was for:

A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.

In addition to challenging Intervet’s entitlement to the claimed invention, Merial successfully argued that Intervet’s patent application lacked an inventive step in light of common general knowledge combined with the “Christensen” patent. The interest in the present case (unless you are in the business of developing soft chews) lies in how Moshinsky J applied the version of s 7(3) as amended by the Patents Amendment Act 2001 operates.

Section 7(2) and 7(3) in their second incarnation provided:[1]

(2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).

(3) The information for the purposes of subsection (2) is:

(a) any single piece of prior art information; or

(b) a combination of any 2 or more pieces of prior art information;

being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant to work in the relevant art in the patent area and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.

The second version of s 7(3) should[2] liberalise the ability of the skilled addressee to combine 2 or more pieces of prior art. It also omitted the words struck out in the quote above which the High Court in Lockwood No 2 considered imposed a significant constraint on what information could be added to common general knowledge. Of those now omitted words, the High Court in Lockwood No 2 explained at [152] that:

… the phrase “relevant to work in the relevant art” should not be construed as meaning relevant to any work in the relevant art, including work irrelevant to the particular problem or long-felt want or need, in respect of which the invention constitutes an advance in the art. The phrase can only be construed as being directed to prior disclosures, that is publicly available information (not part of common general knowledge) which a person skilled in the relevant art could be expected to have regarded as relevant to solving a particular problem or meeting a long-felt want or need as the patentee claims to have done. Otherwise the words of limitation in the last 40 words of s 7(3) would have no role to play. Any piece of public information in the relevant art would be included, as is the case with the much broader and quite different formulation in the cognate provisions in the United Kingdom, which do not depend on the standard of a skilled person’s opinion of the relevance of the information.

This difference in wording between the first and second iterations of s 7(3) does not appear to have been the subject of debate between the parties. Rather, the evidence appears to have proceeded on the basis that it was necessary to show that the skilled addressee could reasonably have been expected to regard the additional information as relevant to the problem of developing a “soft chew” medicament for animals.[3] In addition, Merial pitched its attack on the basis of the modified “Cripps” question approved in Alphapharm. This does not appear to have been contested by Intervet.

On that basis the evidence showed that a skilled addressee, given that task at the priority date, would be both likely to have carried out a search of the patent literature and found the Christensen patent. Merial’s witnesses said that they would have regarded Christensen as relevant to the problem. Intervet’s witness said he would not, on the basis that it did not teach him anything he did not already know.[4] Moshinsky J accepted the evidence of Merial’s witnesses.

Having found that Christensen could be added to common general knowledge, Moshinsky J found that the claims of Intervet’s patent application were obvious. His Honour found that claim 1 for example could be characterised as having several elements:

(a) a flavouring component;

(b) a starch component;

(c) a sugar component;

(d) an oil component;

(e) an emulsifying agent that acts as a forming agent,

wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, and the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.

The inclusion of a flavouring component was taken as a given in such an exercise. All the experts said they would include flavouring in any product developed for such a project – apparently, animals have taste too! All three experts, Merial’s and Intervet’s, agreed that an emulsifying agent would be used as a forming agent.

The water content range, 5 to 7.5% wt, was the range Merial’s experts would aim for in a “soft chew” product. Intervet’s witness gave evidence that the moisture content he would have aimed for was between 18 to 21%, but that was discounted because he had been asked how he would have developed a “semi-moist formulation” rather than a “soft chew” formulation as claimed.

The Christensen patent supplied features (b), (c) and (d). Christensen described formulation by extrusion rather than knock-out. However, all experts agreed that, at the priority date, a knock-out process was known to be preferable to extrusion.

Taking all these matters together as a whole, Moshinsky J was clearly satisfied that the claimed invention was obvious at the priority date. On the other hand, some of the dependent claims would not have been obvious.

For example, claim 2 was for:

The soft chew formulation according to claim 1 characterized in that the emulsifier is a polyethylene glycol (PEG).

PEG was known at the priority date, but not for use in a moulding process for an oral formulation. PEG was not disclosed in Christensen. One of Merial’s experts, Dr Pougnas, gave evidence that he would have considered using it for the emulsifier. The other expert did not mention it and, while Intervet’s expert knew of PEG, he had not had cause to consider it for use in pet foods.

Moshinsky J was not satisfied that the skilled addressee would have been directly led as a matter of course to use PEG in the expectation that it might well produce a useful alternative or better formulation. At [193], his Honour explained:

… I am not satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try PEG in the expectation that it might well produce a useful alternative to or better formulation than the prior art. Dr Pougnas’s evidence did not contain, to my mind, a satisfactory explanation as to why he would have considered PEG in addressing the notional development task. It would be different if, for example, there had been evidence that the common general knowledge included that PEG imparted softness and evidence that, for that reason, the skilled person or notional research team would have tried PEG in the expectation that it might well produce a useful alternative or better formulation. That would provide a logic for trying PEG. However, in the absence of such a rationale, I am not persuaded that the skilled person or notional research team would be directly led as a matter of course to try PEG in the expectation that it might well produce a useful alternative or better formulation. ….

His Honour also expressed doubts as Dr Pougnas might be “too inventive”, having at least 13 patents to his name. He also admitted to being involved in some experimental work at the priority date, the details of which he was not at liberty to disclose. The research project did not form part of the common general knowledge. Moshinsky J was concerned, however, that that experience might explain why Dr Pougnas was willing to consider using PEG.

Moshinsky J’s decision does show the importance when assessing obviousness of ensuring the expert one advances is appropriately skilled and tasked. As it was sought to add only one piece of prior art to common general knowledge, the Christensen patent, it does not explore how much the second (2001 Act) version of s 7(3) liberalised the willingness of the Courts to combine prior art which did not form part of the common general knowledge. It was not necessary for Moshinsky J to explore the significance of the omission from the second version of s 7(3) of the words which the High Court focused on in Lockwood (No 2). The parties and hence his Honour appear to have proceeded on the basis that the skilled addressee must regard the prior art as relevant to the problem, or long felt want, that the patentee was seeking to address through the invention.

Merial, Inc. v Intervet International B.V. (No 3) [2017] FCA 21


  1. It has of course been superseded by the version introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.  ?
  2. That appears to be the plain intendment of the amended wording, but I don’t think we have authoritative judicial confirmation how that works, yet.  ?
  3. See e.g. [162].  ?
  4. I’m not sure why that doesn’t suggest that the relevant knowledge was not therefore part of the skilled addressee’s skill set?  ?

Third party website blocking Down Under – second look

Following up last week’s quick note, a closer look at Nicholas J’s decision in Roadshow Films v Telstra ordering the ISPs to block access to a number of offshore websites on the basis that they were primarily sites which infringe, or facilitate the infringement of, copyright (which unhelpfully didn’t publish last year on schedule)Oh well, hopefully better late than never!

There were two separate actions: one brought by Roadshow Films and the second brought by Foxtel. Both proceedings sought orders against essentially three groups of ISPs: Telstra, Optus and TPG. Roadshow also sought orders against M2. Roadshow was seeking orders under s115A compelling the ISPs to block their subscribers’ access to a number of SolarMovie sites (which in the end resolved back solarmovie.ph). Foxtel was seeking the injunctions to block access to various Pirate Bay, Torrenz, TorrentHound and IsoHunt websites.

The ISPs did not contest the injunctions, but there were disputes about some of the terms.

The injunctions

Nicholas J therefore ordered that each of the ISPs take reasonable steps to disable access to “the Target Online Location”. By way of example, the Target Online Location in the Roadshow matter was defined as the online location or online locations known as “SolarMovie” that are or were accessible:

(A) at the following URLs:

  (I) https://www.solarmovie.is

  (II)    http://www.solarmovie.com;

  (III)   http://www.solarmovie.eu; and

  (IV)    https://www.solarmovie.ph;

  (together, the Target URLs);

(B) at the following IP Addresses:

  (I) 185.47.10.11;

  (II)    205.204.80.87;

  (III)   188.92.78.142; and

  (IV)    68.71.61.168;

  (together, the Target IP Addresses);

(C) at the following Domain Names:

  (I) solarmovie.is;

  (II)    solarmovie.com;

  (III)   solarmovie.eu; and 

  (IV)    solarmovie.ph.

Order 3 then provided that the ISP would be deemed to have taken reasonable steps if it took any one or more of the following steps:

(a) DNS Blocking in respect of the Target Domain Names;[1]

(b) IP Address blocking or re-routing in respect of the Target IP Addresses;[2]

(c) URL blocking in respect of the Target URLs and the Target Domain Names;[3] or

(d) any alternative technical means for disabling access to a Target Online Location as agreed in writing between the applicants and a respondent.

It seems from his Honour’s reasons that the ISPs expect to use DNS Blocking.

After the hearing in June, the particular Solarmovie sites went offline. Nicholas J was satisfied, however, that s 115A still permitted him to make orders blocking access. In contrast, his Honour did not consider there was sufficient evidence to block access to some of the Pirate Bay URLs associated with “CloudFlare”, but which had always been inactive. Nichols J accepted that these websites gave rise to “suspicion”, but it was not strong enough to warrant ordering an injunction.

Landing pages

Nicholas J further ordered that the ISPs must redirect communications attempting to view the “blocked” websites to a landing page. The ISP could choose to set up its own landing page but, if it did not wish to incur those costs, it was required to notify the relevant applicant. Once notified, the relevant applicant had to set up a landing page stating that access to the website had been disabled because the Court has found that it infringes, or facilitates the infringement of, copyright.

Whack-a-mole

Given the ease with which a website can be shifted to a new address, Roadshow and Foxtel sought orders that they add to the list of blocked addresses by letter to the ISPs.

Unlike the English courts, Nicholas J considered that an extension of the orders to other websites should require the involvement of the Court. Accordingly, his Honour ordered that applications to extend the orders to new iterations should be made to the Court on affidavit with proposed short minutes of order to extend the injunctions. This imposes some constraint on the use of such injunctions by enabling the ISPs to object.

How long

Nicholas J ordered that the scheme set in place should run for an initial period of 3 years. Six months before that expiry, however, the applicants can provide affidavit evidence to set out their case for an extension. The ISPs then have an opportunity to object or, if no objection is forthcoming, the Court may order an extension.

Costs

Roadshow and Foxtel did not seek costs. The respondents did.

Nicholas J considered that the costs of the ISPs incurred in setting up the technical requirements for the scheme to operate were simply costs of doing business and so to be borne by them. They were costs that would have to be incurred independently of these particular actions.

However, his Honour ordered that each ISP could charge $50 for each domain name included in the orders. His Honour considered that, as each ISP proposed to use DNS Blocking, a uniform figure should be used. $50 was a bit lower than some ISPs wanted and a bit higher than others.[4]

Nicholas J also ordered that the applicants pay the ISPs costs of the proceeding relating to the method for extending the regime to new iterations of a website and compliance costs.

Roadshow Films Pty Ltd v Telstra Corporation Ltd [2016] FCA 1503 (Nicholas J)


  1. Nicholas J defined DNS Blocking as “a system by which any user of a respondent’s service who attempts to use a DNS resolver that is operated by or on behalf of that respondent to access a Target Online Location is prevented from receiving a DNS response other than a redirection as referred to in order 5.” Apparently, at [13], “ISPs can block access to specific online locations entered into the address bar of the Internet browser, by configuring their DNSS to either return no IP Address so that an error message is displayed to users or so that users are directed to a predetermined IP Address that differs from that designated by the specific online location’s IP Address.”  ?
  2. At [15], his Honour explained that IP Address Blocking involves the ISP not routing outbound traffic to the specified address. This apparently can be problematic as it can also block access to other websites stored on the server with the specified address. Hello ASIC, anyone?  ?
  3. At [14], Nicholas J described URL Blocking as comparing the destination address specified in a “packet” of data being routed across the internet to a list of addresses to be blocked and, if there is a match, blocking transmission.  ?
  4. This amount is an interesting contrast to the figures quoted by the Court of Appeal in the Cartier case in England at [19] which ranged from (in GBP) three figures to six figures each year. See also [129] – [150] of Cartier.  ?

Not “hired to invent” so no entitlement – Merial v Intervet

In Australia, we are often told our US clients get title through the “work made for hire” or the “hired to invent” doctrines under US law. Intervet has failed in its attempt to rely on the latter doctrine in its unsuccessful attempt to patent a “soft chew” medicament for pets. Moshinsky J also accepted Merial’s opposition on grounds of lack of inventive step. This post will deal with the entitlement issue. Lack of inventive step case, based on the 2001 amendments, will be the subject of a later post.

Some background

In 2002, Intervet was part of the Akzo group. Most of its R & D activities were carried out at its plant in Delaware. However, a Ms Cady was based in New Jersey and had responsibility for developing formulations for commercialisation. She did not, however, have a laboratory. She had worked with a Mr Pieloch of Pharma Chemie to develop products before. Ms Cady engaged Pharma Chemie to develop a palatable “soft chew” dosage form for companion animals such as horses and dogs.

A formulation was developed. Intervet made a provisional application in the USA, naming a Mr Huron, Ms Cady and Mr Pieloch as inventors.[1] Like Ms Cady, Mr Huron was an employee of Intervet. When the PCT came to be filed on 13 August 2003, Mr Huron, Mr Pieloch and Ms Cady were named as the inventors.

Intervet’s in-house patent attorney sent a copy of the PCT specification to Mr Pieloch was a request to sign a declaration acknowledging that Intervet owned all the rights. Pharma Chemie and Mr Pieloch rejected the request, asserting through their lawyers:[2]

It is our client’s position that Pharma Chemie invented the soft chew technology as described in the above-referenced patent application in 1992, and continued its work on the technology through the 1990’s and into the new millenium [sic]. All of the work on this technology was completed prior to Pharma Chemie’s entry into the Manufacturing and Supply Agreement with Intervet in 2002. Pharma Chemie also invented the manufacturing procedure described in the patent application cited above, and provided Formax with this information well prior to its entry into the development agreement with Intervet in 2002.

Pharma Chemie is therefore the owner of the technology described in the above-referenced patent application, not Intervet. For this reason, Mr. Pieloch will not agree to sign the Declaration and Power of Attorney for this application. ….

Intervet made various attempts to prosecute the US application without Mr Pieloch’s signature. These did not progress, however, and the application in the USA ultimately lapsed. The Australian application, the subject of Merial’s opposition, was at least a divisional from the original PCT application.

Claim 1 of the patent application was for:

A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.

Merial has lost its opposition to the application before the Commissioner and appealed to the Court. Both Mr Huron and Ms Cady had left Intervet by this time, and Ms Cady was one of the witnesses for Merial.

Entitlement

Section 15 requires that the grantee of a patent derive its title ultimately from all of the inventors. Although Intervet had identified Mr Pieloch as one of the three inventors, Merial’s opposition succeeded because Intervet could not claim title from Mr Pieloch whom Moshinsky J found was the sole inventor.

Moshinsky J accepted Mr Pieloch’s evidence that he had developed the technology used for Intervet’s product through his company, Pharma Chemie, before Ms Cady engaged Pharma Chemie to develop Intervet’s product. Pharma Chemie had used its own technology to make a “soft chew” which used Intervet’s additive. So, at least as claimed in Intervet’s application, Pharma Chemie was the inventor of the relevant technology.[3] Mr Pieloch was careful to eschew any claim to the specific product which embodied Intervet’s additive, but the claims were very much broader than that.

Intervet argued it was nonetheless entitled to the invention through an assignment in a Manufacturing and Supply Agreement under which Pharma Chemie developed the product. Alternatively, Intervet argued the assignment was implied under the US “hired to invent” doctrine.

Manufacturing and Supply Agreement

Intervet’s main problem with this argument was that it could not produce the agreement. Instead, it relied on evidence of other agreements with Pharma Chemie (after the event and relating to other projects) which did include express assignments and the importance to companies like Intervet of ensuring they had the rights to their products locked down.

Moshinsky J was not persuaded:

a) Mr Pieloch was adamant that Pharma Chemie had already developed the technology the subject of the application before the projects with Intervet and had even applied for a patent over it.

b) In re-examination, Mr Pieloch expressly denied that he had ever signed an assignment in the terms claimed by Intervet over the relevant technology (as opposed to the specific product using Intervet’s additives).

c) In 2003 in correspondence about the PCT application, Pharma Chemie’s lawyers had explicitly denied there was any such term and Intervet had not challenged that denial then or until the present proceedings.

d) If there had been such an express assignment, Intervet would have taken steps to keep it safe and secure and would have asserted it aginst Pharma Chemie when Pharma Chemie’s lawyers denied the assignment as long ago as 2003.

Hired to invent

Intervet next argued that US law implied a term to assign into the agreement by which Pharma Chemie developed the products for Intervet.

As foreign law, whether or not US law would in fact imply such a term was a question of fact to be determined on the evidence. Both Intervet and Merial advanced lawyers’ opinions on this question.

Both parties’ witnesses agreed that, under US law, a court could imply a term requiring an assignment. Intervet’s independent expert’s, a Mr Blackburn’s, evidence was that:

US law generally permits a court to imply a contract term in appropriate circumstances to handle developments and contractual gaps; one application of this principle is the “employed to invent” or “hired to invent” doctrine, which requires or obligates an inventor to assign an invention resulting from the development of a product that it was engaged to perform where the inventor was hired specifically to make the invention; while there is no binding precedent directly on point holding that a non-employee or independent contractor can be employed to invent or hired to invent, the reasoning of Standard Peeks and Dubilier suggest that the substance of the relationship between the parties and how the invention is made is the controlling factor.[4]

Merial’s expert, Mr Kowalski, contended that the case law relied on by Mr Blackburn applied only to the employer-employee relationship and did not extend to agreements with independent contractors.

Moshinsky J accepted that the cases relied on by Intervet dealt only with situations involving the employer-employee relationship, but his Honour was not satisfied that they were necessarily so limited. Moshinsky J had earlier noted that Mr Kowalski was Merial’s lawyer and had been involved in the preparation of Mr Pieloch’s affidavits for Merial. At [48(e)], his Honour considered that Mr Kowalski’s evidence at times appeared to be an exercise in advocacy and therefore generally preferred the evidence of Mr Blackburn where there were differences between them.

Having decided to proceed on the basis “that the “hired to invent” doctrine is capable of application notwithstanding that Pharma Chemie is a corporate entity and independent contractor rather than an employee”, Moshinsky J nonetheless held at [127] that no term to assign should be implied:

…. Mr Blackburn emphasised that what “controls” is the nature of the contractual relationship between the parties and how the invention was made; and that the critical fact is whether the contract specifically required the invention to be made. In the present case, I have found that Pharma Chemie was not engaged by Intervet Inc to develop a soft chew dosage form; it was engaged, rather, to incorporate Intervet Inc’s active ingredients into a formulation, using Pharma Chemie’s soft chew technology (see [89] above). Further, I have found that the Manufacturing and Supply Agreement referred to in Ms Marsh’s letter dated 16 September 2003 related to the development projects referred to in these reasons as the Horse Project and the Dog Project (see [75] above). It appears from the 16 September 2003 letter that the agreement contained (in paragraphs 1.4 and 9.3) express provisions relating to the assignment of intellectual property rights to Intervet Inc subject to prescribed conditions. In light of these express provisions, there is no room to imply a term (in this or any other agreement relating to the Horse Project or the Dog Project) requiring Pharma Chemie to assign to Intervet Inc any invention resulting from the projects. I have also found above that there was no response to the 16 September 2003 letter (see [80] above). If Intervet Inc had had a basis to contend that, contrary to the propositions set out in the letter, it acquired rights to an invention under the Manufacturing and Supply Agreement (or any other agreement) it is likely that it would have responded. This provides further support for the proposition that a term is not to be implied in the Manufacturing and Supply Agreement or any other agreement to the effect that Pharma Chemie was required to assign to Intervet Inc any invention resulting from the projects.

Accordingly, although the “hired to invent” doctrine could apply in principle, it did not apply on the facts.

It is worth contrasting the approach taken by Moshinsky J based on the application of US law to the arrangements between Intervet and Pharma Chemie with that applied in copyright by the Full Court in Enzed Holdings. In Enzed Holdings, the Full Court held that ownership of copyright in an artistic work in Australia fell to be determined according to Australian law. So, even though the artistic work in question was created in New Zealand, it was irrelevant that under New Zealand law ownership vested in the commissioning party not the author.[5] This approach would not have saved Intervet in this case, however, as the reasons Moshinshky J found to reject the “hired to invent” argument should lead to the same conclusion under Australian law.

Merial, Inc. v Intervet International B.V. (No 3) [2017] FCA 21


  1. By the time of the trial, both Mr Huron and Ms Cady worked for competitors of Intervet and gave evidence for Merial.  ?
  2. 16 September 2003 letter from Pharma Chemie’s lawyer to Intervet’s inhouse patent attorney.  ?
  3. Patents Act 1990 s 15.  ?
  4. Referring to Standard Parts Co v Peck, 264 US 52 (1924) and United States v Dubilier Condenser Corp, 289 US 178, 187 (1933).  ?
  5. In contrast to Enzed Holdings, the US 2nd Circuit Court of Appeals applied the law of the place where the work was made to determine entitlement to copyright in the USA in *Itar-Tass v Russian Kurier Inc (1998) 43 IPR 565.  ?

Productivity Commission’s Final Report

Updated to fix some broken links

The Productivity Commissions’s final report into “Intellectual Property Arrangements” has been published.

An overview and  recommendations is here.

The full report is here.

The key points sign off with a stirring call to action – or harbinger of what’s to come:

Steely resolve will be needed to pursue better balanced IP arrangements.

The Government has announced it is undertaking further consultations with us about the Commission’s recommendations and wants to hear your views by 14 February 2017. I wonder how many bunches of roses they will receive?

 

Third party website blocking – down under

Nicholas J has published his reasons granting the film companies injunctions against the ISPs ordering them to block access to third party offshore “solarmovie”, pirate bay, torrenz, torrenthound and isotorrent sites.

Roadshow Films Pty Ltd v Telstra Corporation Limited [2016] FCA 1503

Intellectual Property Laws Amendment Bill 2017 – exposure draft

IP Australia has published an exposure draft of an Intellectual Property Laws Amendment Bill 2017 and the proposed accompanying regulations, explanatory memorandum and statement. So that everyone at IP Australia has something to do when they come back from their summer hols, you have to get your comments in by 22 January 2017.

A large part of the changes seem to be about aligning the administrative processes under the different statutory regimes According to the EM:

The patents, trade marks, designs and plant breeder’s rights (PBR) systems have a number of different administrative processes and rules specific to each IP right. A number of these differences are unnecessary or too onerous. Some processes take too long to resolve. This needlessly increases complexity, uncertainty and cost for users of the IP system.

This Bill will align and streamline the processes for obtaining, maintaining and challenging IP rights. Using similar processes for the different IP rights will make the IP system simpler and assist businesses dealing with more than one right. A simpler IP system will decrease administration costs for the Australian Government and reduce the regulatory burden for businesses that use it. The Bill will also enable greater use of electronic systems to manage and monitor IP rights.

A laudable objective! But, there are some 23 Parts and 596 items in the exposure draft bill alone. However, lots of them are plainly necessary changes such as replacing “reject” with “refuse” in the PBR Act, but there are others which will have more impact.

Overall, the broad topics addressed are:

  • Part 1 relating to renewals and terminology
  • Part 2 relating to re-examination and re-consideration
  • Part 3 relating to extensions of time
  • Part 4 relating to written requirements
  • Part 5 relating to the filing requirements
  • Part 6 relating to Official Journals
  • Part 7 relating to amendments of applications or other documents
  • Part 8 relating to signature requirements
  • Part 9 relating to computerised decision-making
  • Part 10 relating to addresses and service of documents
  • Part 11 relating to examination of patent requests and specifications
  • Part 12 relating to requirements for patent documents
  • Part 13 relating to acceptance of trade mark applications
  • Part 14 relating to registration of designs
  • Part 15 relating to unjustified threats of infringement
  • Part 16 relating to ownership of Plant Breeder’s Rights and entries in the Register
  • Part 17 relating to trade mark oppositions
  • Part 18 relating to seizure notices
  • Part 19 relating to publishing personal information of registered patent or trade marks attorneys
  • Part 20 relating to (criminal) prosecutions
  • Part 21 relating to the Secretary’s role in the Plant Breeder’s Rights Act
  • Part 22 relating to updating references to Designs Act
  • Part 23 abolishing the Plant Breeder’s Rights Advisory Committee.

I have no hope of trying to cover all that. Some of the things that caught my eye:

Part 15 introduces substantive changes to “unjustified threats”. The provisions in the Trade Marks Act will be amended to remove the defence of bringing infringement proceedings with due diligence. This will bring the trade marks regime in line with that for patents, designs and copyright. A corresponding regime is to be introduced for PBR.

Part 15 will also introduce a right for a victim of an unjustified threat to seek additional damages. What will be a flagrantly unjustified threat should be fun to explore.[1] Curiously, this remedy is not proposed for copyright.[2]

Part 13 proposes to reduce the period for acceptance of a trade mark, but expand the grounds for deferment. Items 421, 423 and 425 of the exposure draft regulations propose to reduce the period under reg. 4.12 from 15 months to 9 months after an adverse first report. However, item 427 inserts a new ground for deferring acceptance on the basis that:

(1A) The Registrar may, at the request of the applicant in writing, defer acceptance of an application for registration of a trade mark if:

(a) the request is made within the period applicable under regulation 4.12 or that period as extended under section 224, 224B or 224C of the Act; and

(b) the Registrar reasonably believes that there are grounds for refusing the application under section 41 or 177 of the Act; and

(c) the applicant is seeking to gather documents or evidence as to why the applicant considers there are no grounds for so refusing the application.

For renewal and re-examination (Part 2), apparently, it is possible to request examination of a registered design even after it has already been examined and certified. A formal re-examination process will be introduced. A re-examination regime is also proposed for PBR. The regimes for re-examination of patents and trade marks will also be clarified.

For re-examination (Part 3)

The EM says there are three broad issues with the current regimes:

> There are three broad issues with the extension of time system. The first issue is the differences in the number and types of extensions available between the IP rights. This increases complexity and confusion as to which extension is applicable and what evidence is required for supporting the request in a given situation. The second issue is the administrative burden placed on customers and IP Australia. Short extensions rarely have a significant impact on third parties, yet require the same declarations from applicants and assessment by IP Australia as long extensions. The third issue is that the protection for third parties that used an invention or trade mark while the IP application or right was lapsed or ceased can be inadequate or burdensome to obtain.  

The EM then says the main changes are:

  • repeal the ‘despite due care’ extension for patents;
  • remove the Commissioner’s and Registrar’s discretion for all general extensions, for all rights. This will
  • simplify the process and ensure compliance with the Patent Law Treaty and Patent Cooperation Treaty;
  • require all requests for extensions to be filed within two months of the removal of the cause of the failure to comply, to ensure there are no unreasonable delays;
  • improve the compensation for third parties that use inventions when a patent lapsed or ceased to reduce the burden on third parties;
  • expand the protection against infringement for third parties that use a trade mark while it was ceased to include while a trade mark application was lapsed;
  • introduce a streamlined process for short extensions, but ensure IP Australia can review and remake a decision on an extension of time;
  • prevent applicants from obtaining consecutive ‘short’ extensions for the same action;
  • provide general extensions and corresponding third party protection for PBRs.

Part 6 plans repeal of the requirements to publish information in the Official Journals, replacing them instead with an obligation to publish some information on the website or other electronic means.

Part 7 plans changes to the processes for amendments of information entered on the Registers and in documents. Perhaps alarmingly, these include plans to allow rights owners to make some changes to the Registers themselves!

Part 9 proposes introducing the potential for computerised decision making. An example of what is intended is the situation where an application has been accepted and the opposition period has expired without an opposition being filed. In such a situation “the computer” will “decide” to grant the right (presumably after,checking the fee has been paid). This seems intriguing, but you will have to go to a proposed legislative instrument to find out what decisions can be (have been) automated.

No doubt there will be something else to meet your curiosity lurking in the details!

You can find links to the exposure draft documents here. Remember though, get your submissions by 22 January 2017.


  1. Of course, in line with the existing provisions for additional damages for infringements, it may be possible to “score” even if the threat itself is not flagrant.  ?
  2. It can’t be because copyright falls under a different department because the exposure draft amends the Copyright Act to allow for electronic notifications (“notice” is also deprecated in this new simplified regime) relating to customs seizures – see Part 18.  ?

Henley Arch v Lucky Homes – part 2

You will recall that Beach J ordered Lucky Homes and the Mistrys to pay Henley Arch $34,400 by way of compensatory damages and Lucky Homes to pay $25,000 and Mr Mistry $10,000 by way of additional damages for infringing Henley’s copyright in its Amalfi plan. An earlier post looked at the Mistry’s claim to apportion liability (refused) and their cross-claim against Lucky Homes for misleading or deceptive conduct. This post adds some comments on the damages awards.

Some background

You will recall that the Mistrys had their first house built for them by Henley according to one of Henley’s designs. When they came to build their next, “dream” home, they began negotiating with Henley to use its Amalfi design. Just before they signed up with Henley, however, they met with Lucky Homes. Within a very short space of time, the Mistrys signed up with Lucky Homes to have it build for them what was in effect an Amalfi home with “some” changes.[1] The changes did not avoid copyright infringement.

Innocent infringers

The Mistrys claimed they were ‘innocent infringers’ and invoked the protection of s 115(3) which provides:

Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

This “defence” has both a subjective element and an objective element. The Mistrys had to prove that they were not actually aware what they did was an infringement and they had no reasonable grounds for suspecting it was.

These are not easy tests to satisfy and it is very rare for them to be invoked successfully.

The Mistrys failed to satisfy the objective requirement. The pre-contract documents they signed with Henley included clauses stating that the information they were provided with was confidential and the exclusive property of Henley. Further, the pro forma plans and the plans prepared specifically for their land each included a copyright notice: “© Henley Arch P/L”. Beach J considered at [193] these clauses and notices would have put reasonable persons in the position of the Mistrys on notice that Henley claimed copyright and its permission was required to use them. That is, the Mistrys could not show they had no reasonable grounds for suspecting they would infringe copyright.

His Honour went further. At [194], Beach J considered that a reasonable person in the Mistrys’ shoes, about to spend $250,000 on a new build would not have acted on Lucky Homes’ assurances that it would change the plans sufficiently to avoid infringement “without checking with a lawyer” first. His Honour explained:

the assurances given by Mr Shafiq that only 15 to 20 changes were required ought not to have been relied on by persons who were proposing to spend nearly $250,000 based on that assurance, without checking it with a lawyer, particularly in the light of the specific acknowledgements set out in the various versions of the tender documents that they had notice of. The fact that the Mistrys did rely upon Mr Shafiq’s representations does not establish the objective limb of “no reasonable grounds”. Moreover, to say that they relied upon Mr Shafiq’s statements does not necessarily entail that they had no suspicions about whether they could use the Amalfi Avenue floorplan. In my view, whatever Mr Shafiq said, the Mistrys had reasonable grounds for suspecting that the use of that floorplan constituted an infringement. At the least, they have not discharged the onus of proving that they had no reasonable grounds for suspecting.

S 115(2) damages

Damages under s 115(2) are in the alternative to an account of (the infringer’s) profits. S 115(2) damages are compensatory; they are to put the copyright owner back in the position it would have been in if there had been no infringement (so far as a monetary award can do that).

Beach J considered that the “lost profits” method was the appropriate measure in this case. That is, the profit Henley lost on the Amalfi house it would have built if the Mistrys had gone ahead was the appropriate measure.

As the “lost profit” here was the loss of a chance or opportunity, Beach J noted that there were two steps to the inquiry. First, a determination whether there had in fact been a lost opportunity. Then, secondly, the value of that opportunity. His Honour explained at [213]:

where one is utilising the lost profits method based upon the loss of a chance or opportunity, there are two questions to consider. The first question is whether there has been such a lost opportunity. This is determined on the balance of probabilities. The second question is what is the value of that lost opportunity. That is to be decided on the possibilities or probabilities of the case (Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ and at 365 to 368 per Brennan J). But some estimation or even educated guesswork under either question may be required and is justifiable.

The Mistrys of course said they never would have contracted with Henley. They had become too frustrated with delays and the price for the house with the facade they really wanted was too high ($10,000 higher than the more basic option).

Beach J rejected this claim. His Honour pointed out that, until they met with Lucky Homes, the Mistrys had been anxiously pressing Henley to finalise the contract documentation, even demanding it move up the settlement date. His Honour also rejected the Mistrys’ complaints about the delays in process as “implausible”. Amongst other things, Henley couldn’t finalise the buidling contract until the certificate of title to the land had issued to the Mistrys and that had occurred only a week or two before the Mistrys were introduced to Lucky Homes. This was to be the Mistrys’ “dream home”. They were anxious to get its construction underway. If Lucky Homes hadn’t turned up, Beach J did not think it realistic that the Mistrys would have abandoned the process with Henley and start all over again.

However, Beach J also rejected Henley’s argument that it was practically certain the Mistrys would have bought the house from Henley. Instead, at [221], his Honour considered the profit Henley would have made needed to be discounted by 20% “to reflect some aspect of uncertainty as to whether the Mistrys would have proceeded with Henley Arch absent the infringing conduct.”

On the question of quantum, Beach J considered that EBIT (earnings before interest and tax) was the appropriate measure.

When it comes to calculating profits, there is usually a ding dong battle over how much should be excluded from the gross profits to allow for overheads. Beach J side-stepped that fight here. In a context where Henley was building about 1,000 homes a year, it was unlikely that there would have been any increase in its overheads building the home for the Mistrys, a single house.

Henley’s evidence was that the total profit after allowing for variable (direct) costs it would have made was $48,231.83 (ex GST). There were some evidential disputes about this, but his Honour considered it was reasonable. At [235], Beach J declared it should be reduced by 10% to allow for contingencies and to reflect the uncertainty in the estimates advanced, and rounded that calculation down to $43,000.

That had to be further discounted by 20% to reflect his Honour’s finding that there was only an 80% chance the Mistrys would indeed have bought the house from Henley. Thus the award of $34,400.

Additional damages

Unlike damages under s 115(2), damages under s 115(4) may include a punitive element – to punish the wrongdoer and to deter others.

Henley contended that $250,000 would reflect the culpability of Lucky Homes and $75,000 that of Mr Mistry. Beach J considered these amounts wholly disproportionate. Accepting the degree of culpability involved and, amongst other things, taking into account the (un)likelihood of repetition of the conduct and the parties’ respective abilities to pay, his Honour ordered that Lucky Homes pay $25,000 by way of additional damages and Mr Mistry $10,000.

You will remember that, on the Mistrys’ cross-claim, Beach J ordered that Lucky Homes only had to be accountable for 50% of the additional damages awarded against Mr Mistry. This was because Mr Mistry’s participation in Lucky Homes’ creation of a copy of Henley’s pro forma plan without Henley’s copyright notice and his unsatisfactory approach to giving evidence meant Mr Mistry should bear some proportion of the sanction himself.

Beach J did not consider Mrs Mistry’s involvement in the infringing conduct warranted any award of additional damages.

Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217


  1. The infringing conduct came to light because the Mistrys sued Henley in VCAT to recover their deposit!  ?