IPwars.com

Mainly intellectual property (IP) issues Down Under

Productivity Commission intellectual property arrangements

Part 1 of my article on the Productivity Commission’s Final Report on Intellectual Property Arrangements has been belatedly published in the Australian Intellectual Property Law Bulletin: (2018) Vol. 30 No. 10 p. 210.

Subscription only, I’m afraid.

This part looks at the Productivity Commission’s approach and treatment of patents. Part 2 will deal with copyright, designs and other issues.

This issue of AIPLB also includes a paper by Richard Hamer and Lev Gutkin on patents law in 2016 and Marina Olsen’s review of the Productivity Commission’s recommendations on designs.

Between writing the paper and its publication, the Government has published its response to the Productivity Commission’s report. Despite the Raising the Bar reforms to inventive step, that response included acceptance of the recommendation to change the inventive step requirement yet again. The Government has since published several discussion papers on ways to “reform” inventive step and the requirement for disclosure of the technical advance, a statement of objects and Crown use.

Third Party Blocking Injunctions Review

Third party intermediary injunctions

The government has commenced a review of the regime under s 115A of the Copyright Act 1968 by which copyright owners can seek injunctions ordering ISPs to block access to offshore infringing websites.

The discussion paper raises three questions:

  • How effective and efficient is the mechanism introduced by the Online Infringement Amendment?
  • Is the application process working well for parties and are injunctions operating well, once granted?
  • Are any amendments required to improve the operation of the Online Infringement Amendment?

The discussion paper notes a survey by Kantar Public which reported that the downloading of unlawful content by individuals had fallen by 10% from 2015 to 2017. However, there had been a slight increase for video games. These results were considered consistent with other evidence from Creative Content Australia and Choice. The discussion paper did not that other factors such as increased availability and increasing use of subscription services may also have contributed to the falling levels of infringement.

Submissions are requested by 6 March 2018

Patenting gene association analyses for cattle in Australia

In a mammoth decision, Beach J has held that Branhaven’s patent application, No 2010202253, entitled “Compositions, methods and systems for inferring bovine traits” “is deficient in terms of:

(a) lack of clarity;

(b) a failure to define the invention; and

(c) related to some questions of construction, lack of utility.”

His Honour, however, rejected attacks on the basis of manner of manufacture, novelty, inventive step and fair basis. Branhaven will be given time (usually 60 days) to consider whether it can amend to overcome the objections.

At 949 paragraphs there is more than a little light reading!

The ABC has an excitable summary here.

Meat & Livestock Australia Limited v Cargill, Inc [2018] FCA 51

Confidentiality orders in court proceedings

Motorola is suing Hytera for infringement of its patents relating to mobile phone technology.1 As part of the proceeding, Hytera is seeking to invoke a Digital Mobile Radio Essential Properties Cross Licence Agreement. Hytera has obtained an order that information about various terms in the agreement be kept confidential (I.e., suppressed) for 10 years after the proceeding is decided.

Section 37AF of the Federal Court of Australia Act provides the Court with power to suppress or restrict the publication of evidence. In the case of confidential information, such as trade secrets, the party seeking to restrict access to the information must show under s 37AGthat the restriction “is necessary to prevent prejudice to the proper administration of justice”.

Perram J noted that some scepticism might be felt towards the idea that protection of confidential information met the strict standard of necessity. His Honour accepted, however, case law recognised that commercial sensitivity, especially if it were likely that competitors could benefit from information which made public through the Court system, is a circumstance in which the necessity standard could be met.The integrity of the litigious process might be undermined if parties were precluded from advancing relevant information as a result of the harm potentially flowing from publication. In this case, the agreement in question was still on foot. And the information would place Hytera at a competitive disadvantage in future negotiations with third parties. At [15], his Honour explained:

disclosure of the information would be prejudicial to the proper administration of justice because it would tend to ‘destroy or diminish’ (Origin Energy at 148) the value of confidential information with the possible consequence that commercial parties will be more reticent to approach the Court to settle their disputes. I am therefore satisfied that an order under s 37AF in this case is appropriate.

Perram J was not prepared, however, to grant Hytera’s request that the information be kept sealed for 10 years. There was no evidence about the nature and lifespan of the digital mobile radio technology in issue or the life cycle of the telecommunications standards. Having reviewed the agreement and the substance of the information that had been disclosed, Perram J was prepared to order suppression for three years only. His Honour was prepared to reconsider if further evidence were put on.

If you are going to seek suppression orders – i.e, that information be kept confidential, therefore, you will need to lead evidence which establishes (1) that the information is in fact confidential and (2) there is a real risk of prejudice if the confidentiality is not preserved. Another factor which the Court seems to be mentioning more often was that the affidavit evidence was through the solicitor “on information and belief”, rather than from someone knowledgeable within Hytera itself.

Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (No 2) [2018 FCA 17

  1. Apparently, the trial is scheduled to run for 5 weeks. There are also parallel actions in the USA, China and Germany. ?

Pokemon v Redbubble: the DMCA doesn’t apply Down Under

Pagone J has awarded Pokémon $1 in damages and 70% of its costs from Redbubble for misleading or deceptive conduct and copyright infringement. An interesting aspect of the case is that Redbubble’s implementation of a notice and take down scheme under the DMCA didn’t save it from liability, but did influence the ruling on remedies.[1]

Redbubble provides a print on demand online market place by which artists can upload their works to the Redbubble website and purchasers can then buy the artworks or designs applied to desired products such as t-shirts, cups and the like. A person uploading a work to the marketplace warrants that he or she has the relevant intellectual property rights and indemnified Redbubble against infringement claims.

The evidence showed Google searches in which paid (sponsored) and organic search results listing “Pokémon” products such as t-shirts bearing Pokemon’s Pikachu character[2] which could be ordered from the Redbubble site. The sponsored links were paid for and arranged by Redbubble through the Google Merchant Centre and the products themselves were offered for sale through Google Shopping. From the tenor of the judgment, I think that the designs were uploaded by third parties, but Redbubble arranged the “fulfillers” who printed and shipped the t-shirts (and other products) with the designs printed on them.

Pagone J found that Pokémon owned the copyright in the images of the Pokémon characters depicted on the various products in evidence. Further, the images were uploaded without Pokemon’s consent.

Pagone J found therefore that Redbubble had infringed Pokemon’s copyright and misrepresented, contrary to sections 18[3] and 29(1)(g) and (h) of the Australian Consumer Law, that the products were official or authorised Pokémon products.

In finding that there had been misrepresentations that the products were sponsored or approved by Pokémon, Pagone J referred, amongst other things, to the fact that the “sponsored” links did include the word “sponsored” (although this meant in fact that the products were sponsored by Redbubble, not Pokemon). His Honour also found significance in the fact that:

There was nothing on the Redbubble website to inform the consumer that there was no connection, authorised or otherwise, between Redbubble on the one hand and [Pokemon] (or any other entity authorised to exploit Pokémon products) on the other.

Copyright subsistence and ownership

Pokémon was able to prove it owned the copyright in the artistic works through the evidence of its attorney responsible for obtaining copyright registration in the USA. Although the attorney, Mr Monahan, had not been personally present when any works were created, Pagone J considered his evidence sufficient. At 36, his Honour said:

…. He conceded in cross?examination that he had not stood over the shoulder of any creator and, therefore, that he did not have direct eyewitness, or other direct, knowledge beyond that gained from “detailed consultation with the client” but that “with respect to each series of the cards, [he had] consult[ed] with the client to determine which – for instance, which Japanese card they derive[d] from, or [… where] the artwork comes from”. His specific and direct evidence was that of consulting with the client to determine that the works were made by the Japanese company and were made as the Japanese card, although, as mentioned, he did not fly personally to Japan and had not been witness to the creation process. It had been his specific professional responsibility to obtain and secure registrations in accordance with lawful entitlements and requirements. He was confident in that context of his conclusion that the Pikachu work was not a copy based upon an animation cell because of his experience over many years of consulting with the client as his professional obligations and legal duties. In specific response in cross?examination about being confident in giving evidence that the pose of Pikachu was not derivative of any other pose already published, Mr Monahan said that every investigation he had done about the card making process enabled him to say that the cards were generated on their own and were not derivative of the animation, “common poses notwithstanding”.[4]

Further, unlike Perram J in Dallas Buyer’s Club, Pagone J also accepted that the certificate of copyright registration in the USA identifying Pokémon as the claimant to copyright ownership was sufficient to enliven the presumption under s 126B(3) of the Copyright Act. (Given the history of the provision recounted by his Honour, one might think this should not be too controversial: afterall, how many other countries out there have a copyright registration system?)

Copyright infringement

Pagone J then held that Redbubble had infringed the copyright in three ways. First, his Honour held that Redbubble infringed by communicating the infringing images from its website. Although the images were uploaded by third parties, Redbubble made the communication for the purposes of [s 22(6)][22]: Pagone J distinguished Redbubble’s position from that of ISPs like iiNet at [48]:

In the present case Redbubble does not provide the content of the communications in the sense of being the originator of any of the 29 images on its website said to be infringements of the Pikachu work. In each case the originator was the artist who had placed the image on the Redbubble website. Redbubble, however, was responsible for determining that content through its processes, protocols and arrangements with the artists. Redbubble’s position is not like that of an internet provider. Redbubble is the host of the website with the infringing material. It has a user agreement with artists which deals with matters including the possibility of infringing materials, an IP policy, and a team dedicated to deal with impermissible content.

Secondly, offering the products for sale online was sufficient to enliven s 38 which, amongst other things, extends to exhibiting “infringing” articles in public by way of trade.

Although there appear to have been some rather unspecific complaints about copyright infringement by Pokémon between 2012 and 2014,[5] Pagone J found that Redbubble knew, or ought reasonably have known, that the products were infringing from the date of the letter of demand from Pokémon’s external solicitors on 25 November 2015.[6]

Thirdly, Pagone J held that Redbubble had infringed Pokemon’s copyright by authorising the manufacture of the infringing products when orders for their purchase were placed.

In this respect, it is worth noting that Redbubble had implemented and acted on a notice and takedown system under the (US) DMCA.[7] Pagone J recognised, therefore, that Redbubble did not expressly authorise infringement and took conscious, considered and reasonable steps, both proactively and responsively, to prevent infringements.[8] These, however, were not enough. At [67], his Honour said:

The business established by Redbubble carried the inherent risk of infringement of copyright of the kind complained of by [Pokemon]. It is true that Redbubble sought to mitigate the risk, but it was an inevitable incident of the business, as Redbubble chose to conduct it, that there were likely to be infringements. It could have prevented them by taking other steps but for business reasons Redbubble chose to deal with the risk of infringement by a process that enabled the infringements to occur. Such infringements were embedded in the system which was created for, and adopted by, Redbubble. There may have been a sound commercial basis for Redbubble to manage the risks of infringement as it did, but in doing so it authorised the infringements which occurred.

Remedies

Pokémon sought $44,555.84 in damages by way of lost royalties for the consumer law breaches and only nominal damages for copyright infringement. As already noted, however, Pagone J awarded only $1 in total.

The evidence did not establish that sales made by Redbubble were lost sales by Pokémon. There was, for example, no evidence that many of the sales were sales of kinds of products sold by Pokémon or its licensees. For example, his Honour said:

…. Many of the items sold through the Redbubble website involved a “mash up” of images, such as the combination of Pikachu and Homer Simpson. The finding of an infringing use of a work, or an impermissible representation in trade, does not necessarily lead to the conclusion that the sale made by the infringement or upon the misrepresentation was necessarily a sale that would have been made by the wronged party. The unreliability of such an assumption in this case can be seen from the fact that the infringements were in the use of the image in mash ups in, and in items that were not sold or authorised for sale by [Pokemon]. ….

Given the notice and take down processes put in place by Redbubble, Pagone J was not prepared to find the infringements were “flagrant”, warranting the award of additional damages under s 115(4)

Pokémon Company International, Inc. v Redbubble Ltd [2017] FCA 1541


  1. Implementation and compliance with the DMCA scheme explicitly affected the ruling on additional damages.  ?
  2. Even if you haven’t played it, you must have seen all those people milling around in parks at lunchtime trying to “capture” these imaginary Pokémon Go “critters”. Pokemon itself has an even longer history. There are also trading card games and a successful television series which has been broadcast in Australia since 2000 and distributed on over 57,000 DVDs.  ?
  3. If you are not sweltering in the southern summer sun, s 18 provides “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” And s 29(1)(g) and (h) prohibit making false or misleading representations in trade or commerce about sponsorship, affiliation or approval.  ?
  4. Curiously, at [44] (when discussing ownership by proof of a certificate), his Honour also said Pokémon had not proved ownership on the basis of authorship.  ?
  5. In fact, Pagone J subsequently found that Redbubble did in fact remove listings when Pokemon notified it that they were infringing.  ?
  6. It is less than clear from the judgment what action Redbubble took in response to the letter of demand. Ordinarily, one would assume that it had continued engaging in the infringing conduct but that seems a bit surprising given Pagone J records that Redbubble did comply with other take down notices once the subject of complaint had been properly identified.  ?
  7. The DMCA, being US legislation, does not provide protection from infringement in Australia under the Australian Copyright Act 1968. Redbubble also purported to operate under the corresponding Australian provisions ss116AA – 116AJ but, of course, it is not a carriage service provider and so they do not apply either.  ?
  8. Cf. esp. Section 36(1A)(c)[s36].  ?

Not a Comedy of Error

Robertson J has overturned the Registrar’s decision to cancel a number of trade mark registrations for VOKES[1] as errors wrongly made in the Register and ruled they were properly registered in Laminar’s name.

Until 2001, Vokes was the registered owner of the trade marks.

On 15 August 2001, it applied to the Registrar under s 216 to have the name of the registered owner changed to AES Environmental Pty Ltd.

On 12 October 2005, Laminar submitted to the Registrar an assignment of the trade marks from AES to it and Laminar became the registered owner.

In December 2014, Vokes applied to the Registrar under s 81 to have the registration in the name of Laminar cancelled and the registrations restored into Vokes’ name.

The application under s 216 in 2001 had not been made because Vokes changed its name to AES. Rather, it seems Vokes had assigned the trade marks to BTR in 1998 and BTR wanted to assign them in 2001 to AES. There were no assignment documents, or at least none were submitted to the Registrar. So, it seems Vokes / BTR / AES were trying to use s 216 as a kind of short cut. AES subsequently assigned the trade marks to Laminar.

The Registrar pointed out that there was authority that s 216 could not be used to register transfers by assignment , it was only for situations where there had been a change in the name of the entity on the Register.[2] Accordingly, the Registrar held that the registration of the trade marks in the name of AES had been wrongly made and so ordered that change of name of the registered owner to be rectified.

Laminar appealed.

Robertson J clearly thought it a bit rich for Vokes to be coming back to correct the Register some 13 years after its own ruse.

HIs Honour held that the power to correct “errors or omissions” under s 81 was not triggered by the events in 2001. On the basis of the information then before the Registrar, there had been no error.

At [60], his Honour said:

There was no finding by the delegate that in August 2001, and by reference to what the Registrar then knew, there had been an error made by the Registrar. The error was on the part of the person submitting the form in circumstances where there had not, in truth, been a change of name and address: as found by the delegate, Vokes had not changed its name. This was not brought to the Registrar’s attention, so far as the delegate found, before December 2014 when Vokes made its application under s 81.

And then, by way of further explanation, at [65]:

Contrary to the conclusion of the delegate in the present case at [23], in my opinion there was no jurisdictional error on the part of the Registrar in 2001. It is true that there was not a change in the name of the registered owner of the registered trade marks but the Registrar did not know that nor should she have known it: the submission was not pressed before me that it was plain on the face of the form that there was no change of name in the registered owner. If there were no jurisdictional error then it follows that the decisions to record changes of the owner’s name on the Register were not decisions which “had no legal foundation and are no decisions at all” as found by the delegate as a consequence of his conclusion that the decisions were tainted by jurisdictional error.

Therefore, the power under s 81 was not enlivened.

In any event, Robertson J ruled that, if he were wrong in that conclusion, the intervening events (i.e., the assignment from AES to Laminar) meant that the Registrar’s power under s 81 was no longer available. A “person aggrieved” had other remedies they could pursue.

The decision in Mediaquest, which had been relied on by the Registrar, was distinguished. That case involved an application to record an assignment where the objection to the registration of the assignment was made within one month of the assignment being recorded.

Laminar Air Flow Pty Ltd v Registrar of Trade Marks [2017] FCA 1447


  1. There were also registrations for UNIVEE and VOKES VEE-GLASS.  ?
  2. Citing the continuing effects of Crazy Ron’s at [123].  ?

EIFY: terms of use

Following on from this week’s earlier post about the copyright issues in the EIFY case, McDougall J also held the “clickwrap” agreement was enforceable, but the breach did not result in any compensable loss.

You will remember that EIFY and 3D Safety provide competing web-based induction services for the construction industry. The principals of 3D Safety had accessed EIFY’s site in the course of developing its websites for Mirvac and Thiess.

Before a browser could access the web-based induction services provided by EIFY, he or she had to check a box acknowledging that he or she had read and agreed to the terms and conditions of use. McDougall J found this sufficient to form an agreement.

The registration details a user was required to input included an ABN and at least one of the 3DSafety principals had entered in his company name as well.

The terms and conditions, however, followed the modern form of drafting, referring to “you” and “your”. At [324] – [325], McDougall J found that this gave rise to a binding contract only with the particular user and not his or her company:

324 The strong impression conveyed by the terms of use overall is that they are directed to regulating the basis on which each person who has access to the website exercises that access. The terms of use appear to distinguish between those who access the website (“you”) and those with whom EIFY “enters into agreements” (“Clients”).

325 In the absence of any express acknowledgment, either in the registration webpages or in the terms of use themselves, that an individual who registers and thereafter accesses the site accepts the terms of use not only in his or her own right but also on behalf of his or her employer, I think that Mr Andronos’ submission on this point is correct. By clicking to acknowledge their acceptance of the terms of use, Messrs Conacher and Morrow indicated that they personally accepted those terms. That must mean that they agreed to accept those terms of use as regulating their personal access to the website. It does not follow, and I do not find, that by doing so they agreed to bind Services or Systems to those terms of use.

326 In short, Messrs Conacher and Morrow were bound by the terms of use. [3D Safety was] not.

The terms of use included clause 5:

  1. Access and Interference
    You agree that you will not use any robot, spider, other automatic device, or manual process to monitor or copy our web pages or the content contained herein without our prior written permission. You agree that you will not use any device, software or routine to interfere or attempt to interfere with the proper working of our Site. You agree that you will not take any action that imposes an unreasonable or disproportionately large load on our infrastructure. Much of the information on our Site is updated on a real time basis and is proprietary or is licensed to e-Induct® by our Clients or third parties. You agree that you will not copy, reproduce, alter, modify, create derivative works, or publicly display any content from our Site without the prior written permission of e-Induct or of the party authorised to grant such permission.

McDougall J was rather critical of the drafting of this clause. Nonetheless, he was able to find that Conacher and Morrow (the principals of 3D Safety)[1] had accessed EIFY’s site and breached the terms. However, this did not help EIFY.

This was because McDougall J found that the only breach of the terms had been accessing confidential information. The confidential information was confidential to EIFY’s clients, not to EIFY. As a result, his Honour considered EIFY would not be able to establish any loss to be compensated through damages.

EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310 (McDougall J)

  • By the time of the trial, Morrow had in fact ceased being a director and only held some shares.  ?

Safe harbours to be Extended

The Commonwealth Government introduced the Copyright Amendment (Service Providers) Bill 2017 into Parliament today.

As its name suggests the purpose of the Bill is to extend the class of persons who can claim the benefits of the safe harbour provisions in the Copyright Act 1968 provided in sections 116AA to 116AJ.

The way the amendments will work is essentially to remove the references to “carriage service provider” and replace them with a new reference to “service provider”.

For this purpose, “service provider” will be defined to mean:

116ABA Definition of service provider

(1) Each of the following is a service provider:

(a) a carriage service provider;

(b) an organisation assisting persons with a disability;

(c) the body administering a library, if:

  (i) all or part of the collection comprising the library is accessible to members of the public directly or through interlibrary loans; or

  (ii) the principal purpose of the library is to provide library services for members of a Parliament;

(d) the body administering an archives;

(e) the body administering a key cultural institution;

(f) the body administering an educational institution.

However:

(2) If a service provider is not:

(a) a carriage service provider; or

(b) an organisation assisting persons with a disability; or

(c) the body administering an educational institution, being an educational institution that is a body corporate;

this Division only applies to activities that the service provider carries out because of its relationship to the relevant library, archives, key cultural institution or educational institution mentioned in subsection (1).f you are not one of those people, you will be able to claim the benefit of the safe harbours

If your name is Google or Facebook, or you are some other provider of services inflicting user generated content on the world, you won’t qualify.

The new definition of “service provider” may be compared with the definition enshrined in the Australia – US Free Trade Agreement in Article 17.11.29(xii) (scroll down):

(xii) For the purposes of the function referred to in clause (i)(A), service provider means a provider of transmission, routing, or connections for digital online communications without modification of their content between or among points specified by the user of material of the user’s choosing,[1] and for the purposes of the functions referred to in clause (i)(B) through (D),[2] service provider means a provider or operator of facilities for online services or network access.

This is because, the Government has pointed out, copyright industries are highly valuable for Australia. Accordingly, the consultation process will continue:

In so doing, the Government will be mindful of the need to ensure the rights of creators are properly protected. Australia’s copyright framework ensures that creators can receive a fair return for their work. Australia’s copyright industries make a significant contribution to our economic and cultural life, including collectively generating approximately $122.8 billion in economic activity, $6.5 billion in exports and employing more than 1 million Australians.

Bill (pdf)

EM (pdf)

Minister’s Press Release

Other links


  1. That is a 116ac Category A type activity.  ?
  2. That is a Category B, Category C or Category D type activity.  ?

Copyright And Computer Software

McDougall J, in the New South Wales Supreme Court, has dismissed mployeeIFY’s claims that 3DSafety infringed copyright in the “look and feel” or structure of EIFY’s website. If you are preparing terms and conditions for website use, you should read that part of his Honour’s decision too.

Amongst other things, EIFY provides web-based induction services for construction sites. Apparently, before a new employee or contractor can enter a building site and start work, he or she must undergo an induction process and pass certain tests. Historically, these induction processes were conducted “face to face” when the employee or contractor arrived on site for the first time. EIFY developed a web-based service for people to work through before they attended on site. The service included online tests to ensure that the worker had assimilated the required knowledge.

In 2011, EIFY and 3DSafety entered into a joint venture to integrate their respective systems. The joint venture vehicle was “Group”. However, the joint venture fell over fairly quickly and apart from some work for existing clients was inactive.

3DSafety subsequently secured contracts to provide web-based induction processes for Thiess and Mirvac. EIFY had evidence that at least two of the principals of 3DSafety had accessed sites prepared by EIFY repeatedly during the design process for the resulting websites. EIFY sued 3DSafety and those principals for breach of confidential information, breach of contract (the terms on which a browser was permitted to access EIFY’s website) and copyright infringement.

The copyright claims

In the end, EIFY claimed copyright in 5 types or categories of works in 8 different versions of its system:

  1. the structure or sequence or organisation of each System;
  2. the layout, format and “look” of the web pages implementing the System;
  3. the source code for the web pages;
  4. the object code for the web pages; and
  5. 34 images reproduced on 3DSafety’s websites for Thiess and Mirvac.

In the result, each claim failed.

Source code and object code

EIFY’s claims failed because there was no attempt in its evidence to compare the source code, or the object code, in the 3DSafety product to any version of EIFY’s product. There was also no evidence that 3DSafety ever had access to the source code or object code for any of the EIFY products.

At [410], McDougall J explained:

The high point of the evidence is an assertion by Professor Braun that “[i]n cases where the screens are very similar, the underlying Object Code in the Video RAM is also very similar”. Even assuming the requisite degree of similarity (and Professor Braun’s evidence, to the extent it was admitted, does not prove this), it does not follow that the object code underlying the screens in the 3D Safety online induction system (or any other functional part of that system) results from any act that could constitute an infringement of any copyright that subsists in the object code underlying the screens in any versions of the e-Induct System.

Seventeen years into the 21st century, if you want to prove infringement of the copyright in a computer program, you really do need to compare the code said to infringe to the code you are claiming copyright in.[1]

The structure, sequence or organisation of the EIFY System

McDougall J understood this to be a claim to copyright in the EIFY System as identified in paragraph 33AB of EIFY’s pleading which defined that structure in the following terms:

33AB The plaintiff’s expression of the Concept is by means of the following structure (or sequence or organisation):

(a) the preparation of a data base structure to cater to the requirements of the system;

(b) the creation of a system of modules and elements written in computer code to produce object code which creates the user interface in the appropriate sequence for the logical process;

(c) the inclusion in the user interface of digitized images to either provide information to the user for the particular stage of the induction process or to illustrate or enhance the induction procedure;

(d) a user registration process by the user entering personal information into a web interface backended by a data base to store the information, to link the employee to an employer;

(e) the acquisition of an access code (token) by the user or their employer;

(f) the collection of data and other information particular to the user as required for access to the workplace site to which the induction refers;

(g) the validation of the user’s ability to undertake the induction by verifying the existence of a pre-existing access code (token) and verification of the user’s identity;

(h) the commencement of the induction process once the token or access code is verified;

(i) a two factor authentication to confirm the user’s identity, via text message to a mobile phone or mobile device;

(j) the inclusion of user selectable actions to permit the user to move through the induction process and voiceover with relevant controls;

(k) the inclusion of safeguards at each stage of the induction process to ensure the user has correctly assessed the information, risks and requirements of each stage of the induction process, and to prohibit the user moving forward from one stage to the next without successfully completing a prior stage; and

(l) a final result screen to illustrate the final result of the induction procedure undertaken by the user, and including an option such as printing out a certificate or induction card

As with novels, plays and films, McDougall J accepted that “textual” infringement was not the only way copyright could be infringed. At [412], his Honour cited Arnold J’s decision in SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch) to that effect:

…. I accept that copyright protection is not limited to the text of the source code of the program, but extends to protecting the design of the program, that is, what has been referred to in some cases as its “structure, sequence and organisation”. …. But there is a distinction between protecting the design of the program and protecting its functionality. It is perfectly possible to create a computer program which replicates the functionality of an existing program, yet whose design is quite different.

McDougall J also accepted that the application of the “structure, sequence, organisation” approach poses particular problems in the context of computer programs because it was perfectly possible to emulate the functionality of a computer program, even its ease of use, without copying (or even access) to the underlying code.[2] His Honour accepted Jacob LJ’s summation in Nova Productions Ltd v Mazooma Games Ltd [2007] EWCA Civ 219 at [52]:

Pumfrey J in Navitaire was quite right to say that merely making a program which will emulate another but which in no way involves copying the program code or any of the program’s graphics is legitimate.

In the absence of analysis of the code, McDougall J concluded that EIFY’s case confused the functionality of the respective programs with the protectable elements of the design of EIFY’s software. At [423], McDougall J said:

Returning to the distinction that Arnold J drew in SAS Institute at [232][110] , 3D Safety’s online induction programs for Thiess and Mirvac may well have replicated the functionality of EIFY’s existing online induction program. It does not follow that 3D Safety has thereby copied the design of EIFY’s program, and such other evidence as there is does not prove copying of design as opposed to replication of functionality.

One might add, if one turns to the definition of “computer program” in the Copyright Act 1968:

“computer program ” means a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.

it would seem to follow that one should be comparing the structure, sequence and organisation of the set of statements or instructions constituting the program.

“look and feel”

McDougall J noted there was already Australian authority rejecting protectability of the “look and feel” of a computer program.[3]

EIFY, however, argued that American case law provided for such protection and so StatusCard should not be followed. McDougall J rejected this submission for two reasons.

First, at [428] – [429] McDougall J pointed out that the US Copyright Act defined copyright subject matter differently to the approach taken in the Australian Act. Under the Australian Act, s 31 requires identification of something which fits within the specific category of a “literary work” – the pigeonhole approach. §102 of the US Act, however, defines copyright subject matter inclusively, not exhaustively.

Secondly, McDougall J pointed out at [430] that cases in the US subsequent to Whelan v Jaslow had questioned, or even refused to accept, that copyright extended to the “look and feel” of a program.

Turning to EIFY’s case, McDougall J held at [431] – [432] that the “Structure” of its System as defined was not itself a literary work. Further, its case impermissibly sought to conflate the “structure, sequence or organisation” of the System with those elements of the underlying program. Accordingly, this part of EIFY’s case failed too.

The 34 Images

There doesn’t seem to have been much debate that the 34 images in question were copies of the images EIFY claimed copyright in. The problem was that EIFY did not own copyright in the images.

It turned out that the original images had been created either by Group or by an entity called Clearsite, for Mirvac when Group was operating and had a contract to create a web-based induction service for a Mirvac site. Group of course was not EIFY, being the failed joint venture vehicle.

The evidence showed that employees of Clearsite had created a number of the images in question. Clearsite had been commissioned to create the images by Group, not EIFY, had invoiced Group and had been paid by Group.

Clearsite did execute an assignment of its copyright to EIFY. This did not help for two reasons.

First, at [446] – [448] the terms of the assignment defined the intellectual property assigned as the intellectual property resulting from the provision of consultancy services by Clearsite to EIFY. The images in question, however, had been created in the course of providing consultancy services to Group, not EIFY.

Secondly, the assignment was made on 14 May 2015. The allegedly infringing use of the images took place before that date. The assignment, however, did not include an assignment of the rights to sue for past infringements.

There may be a short post on a couple of points arising from the dispute over the “terms of use” later in the week.

 

EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310 (McDougall J)


    1. There are now more recent cases, but really you can’t go past Ibcos Computers Limited v Barclays Mercantile Highland Finance Limited [1994] FSR 275; 29 IPR 25 for a comprehensive tutorial on proving ownership, copying and substantial part.  ?
  1. At [414 – [420] citing in particular Navitaire Inc v Easyjet Airline Co [2004] EWHC 1725 (Pumfrey J).  ?
  2. Referring to StatusCard Australia Pty Ltd v Rotondo [2009] 1 Qd R 599 at [87].  ?

My Angel is a …*

Rares J has ordered that Centrefold Entertainment’s trade mark registration for CENTREFOLD, No 1695466, be expunged from the Register on the grounds that it is not capable of distinguishing “Entertainment’s” services.

Both Entertainment and Metro are in the business of providing “promo models” and adult entertainment services.[1] Metro promoted its services under the sign “Centrefold Strippers”. Having secured its registration for CENTREFOLD, Entertainment sued Metro for infringement. Things did not turn out how it hoped!

Entertainment argued that CENTREFOLD was a “covert and skilful allusion to its services, not descriptive of them.” It argued that the ordinary meaning of the word was of a person or the particular pages in particular types of magazine.

Rares J rejected this argument on the grounds that the word registered was a “noun” and not an adjective. However, Entertainment used the word in an adjectival sense as part of the composite mark “Centrefold Entertainment”. Hmmm.

Perhaps more compellingly, his Honour pointed out at [93] that there were at least three businesses in the adult entertainment field using names which included CENTREFOLD: Centrefold Lounge, Centrefold Strippers (i.e., Metro) and Centrefold Entertainment itself.

Also, the evidence showed that models who had achieved the status of being Centrefolds, promoted themselves as such and could often command a premium for their services.

In these circumstances, the word was not metaphorical or allusive. At [101], his Honour explained:

“Centrefold” is an ordinary English word that is apt to describe the kinds, qualities and characteristics of performers, models and others, as persons who appear, or have appeared or are prepared to appear, nude or scantily clad before strangers and in pages of magazines. Any supplier of adult entertainment services of the kind comprised in the designated services, without improper motive, might desire to use the word “centrefold” to describe that supplier’s services. That is because of the ordinary signification of the word: Cantarella 254 CLR at 358 [58].[2]

Next, his Honour held that Entertainment’s use of “Centrefold” was not sufficiently substantial to warrant registration under (the “new” version of) s 41(4).

Bear in mind that the trade mark was registered from 22 May 2015.

It appears to have been common ground that Entertainment had not used “Centrefold” alone before it applied to register its trade mark.

Secondly, until about March 2014 (i.e. just over a year before the filing date of the trade mark), the principal of Entertainment had been running two businesses, “XXX Princess” and “Centrefold Entertainment”. XXX Princess was the business promoting the adult entertainment services – by reference to XXX Princess. As part of a deliberate strategy, Centrefold Entertainment’s website and Facebook page did not explicitly promote adult entertainment services. It was only from March 2014 that Entertainment’s website explicitly promoted adult entertainment services by reference to its composite mark (see below). In that period (March 2014 to May 2015), the evidence showed Entertainment had only 2,000 customers. Rares J ruled at [107]:

It is unlikely that the limited use of “centrefold” in Entertainment’s dealings with perhaps, at maximum, the 2,000 individuals who made the bookings (but none of whom, on the evidence, ever received a tax invoice), would have brought its name to their attention, or that of others who may have telephoned the business, as a brand or trade mark rather than, if at all, as a mere reference to a business name. This limited usage would not have brought into the public consciousness the use of “centrefold” as a brand or trade mark in association with the designated services of Entertainment.

The evidence also showed that neither Entertainment nor Metro spent much (if anything) by way of Google AdWords on “centrefold”, focusing their expenditure instead on “strippers” and “waitresses”. There was also evidence a mere 0.39% of hits on Metro’s “Centrefold Strippers” website came via “centrefold”.[3]

Now that all seems uncontroversial. There are some potentially problematic issues.

First, here is one of Entertainment’s Facebook posts from 6 May 2013:

It appears that that was essentially the form of Entertainment’s page from at least early 2012.

One might think that was use of the composite mark as a trade mark for adult entertainment services, albeit not use of the trade mark as registered alone. It seems that the phone number appearing in the ads was a common phone number for XXX Princess and Entertainment and, as already noted, Entertainment’s case seems to have been that the performers were actually arranged by “XXX Princess”. That said, I am rather mystified what Entertainment’s page was doing.

Secondly, there was some evidence of a period late in 2012 where the principal of Entertainment answered the telephone to those calling in to book a performer “Centrefold Entertainment”. It appeared likely that, if the caller was surprised they had not reached XXX Princess, that some business patter was deployed to dispel any confusion. His Honour unsurprisingly, with respect, characterised that use in effect as de minimis.

Thirdly, Entertainment’s evidence was that from September 2012, invoices to all customers were sent out under the composite mark. There was a glitch in the system, however, so it appears no-one received them. Somehow, the performers and Entertainment got paid.

There was also evidence from at least one of the performers that she sent (at least) one invoice for her services into Entertainment by reference to the composite mark. Rares J, however, discounted this as evidence of use on the basis that which entity they were billing was hardly of any moment to the performers and they were rather confused about which company or website they were providing their services through.

The passing off and ACL claims by each party against the other failed on a straightforward application of the Hornsby Building Information Centre case.

By reference to the use of the word “may” in s 126, Rares J considered that the power to grant an injunction was discretionary. If his Honour had not found the trade mark invalid, Rares J would have refused an injunction on the basis of “lack of clean hands”. In promoting its services on the web, Entertainment used photographs of scantily clad young ladies. 90% of the photographs, however, were not of any of its models. They were photographs found on the Internet, including from sources such as “Sports Illustrated”. The Court would not condone such deceptive practices through the coercive power of an injunction.

Metro Business Centre Pty Ltd v Centrefold Entertainment Pty Ltd [2017] FCA 1249

  • with apologies to Seth Justman and the J Geils Band.

  1. Apparently, a “promo model” is someone who provides his or her services to promote a business by, for example, handing out advertising or business cards in a public venue, or acting as an adornment at an event, such as appearing in a manufacturer’s clothing or livery at a trade or motor show. They do not appear naked, or partially naked and get paid $20 – $30 per hour. An adult entertainer (or, often, a “stripper”) would perform naked or partially naked and could earn 10 to 20 times that for a 20 – 30 minute show.  ?
  2. Entertainment’s case was no doubt “assisted” by its principal’s evidence to the effect that he had never heard the term being used to describe “centrefolds”!  ?
  3. The Google Analytics report showed almost 830,000 hits on the website for the relevant period.  ?
%d bloggers like this: