Re-thinking the role of IP: Francis Gurry lecture

Last week, the 5th Francis Gurry Lecture at the University of Melbourne was given by Dr Francis Gurry, the Director-General of WIPO (and so the highest ranking Australian official in UN organisations), himself. The topic “Re-thinking the Role of IP’.

Dr Gurry’s central theme was that the context in which intellectual property operates has changed so much that the way in which we think about IP and its role in society needs to be reconsidered.

One of the key changes Dr Gurry identified was the economic shift from wealth derived from tangibles to wealth generation deriving from intangibles. As one indicator of this, Dr Gurry pointed out that US industries in the IP field accounted for some 35% of its GDP. Another indicator showed that in 1978 95% of the value of the Standard & Poors 500 came from tangible assets, down to 20% in 2010.

The second key change Dr Gurry identified was the economic shift from the West to the East. China is now the second largest investor in R & D in absolute terms in the world. Japan the third.

The third key change identified was the empowerment of non-state actors. One illustration of this was the Day the Internet went Dark. More than 115,000 websites closed or limited access. More than 2.4 million anti-SOPA tweets were generated. One of my favourite images (lid dip Marty Schwimmer was the impact on the US Congress:

sopa-pipa-one-day

We are seeing a little bit of that here.

Of course, the Department of Homeland Security, or the FBI, also flexed its muscles.

Among the many consequences arising from these changes:

  • much greater focus on IP and much greater intensity – Smartphone wars anyone, industrial espionage
  • much greater attention to what IP rights are granted for and focus mediating what is acceptable to the general public

Although not an example used by Dr Gurry, we have seen that here too. Dr Gurry did point out, however, an apparent paradox:

No one minds, it seems, someone making billions out of new social networking or media technology, but there is widespread social unease at someone making billions out of a new life-saving drug. Which outcome do we want to achieve in the innovation system?

Dr Gurry went on to explain that this changes in turn raised many questions for entitlement, appropriability and policy-making. Dr Gurry’s presentation in written form can be found here (pdf). Definitely repays reading. Lid dip @MsSamMcHugh

 

Update: A video of the lecture and the paper itself can now be found here.

Innovation Patents: what to do?

ACIP has released an options paper on what to do about the innovation patent system.

An innovation patent is a uniquely Australian contribution towards encouraging innovation. You can get one (if you apply for it) for pretty much anything[1] unless it differs from the prior art only in ways that “make no substantial contribution to the working of the [ahem] invention” as explained by the Full Court in the Delnorth case.

As recounted in the options paper, the basic objective of the innovation patent system is to encourage and promote investment in innovation by Australian (especially) SMEs.

The options paper is full of interesting statistics and there is an accompanying economics paper, the Verve report attempting to get some empirical data. For example, only about 25% of innovation patents ever get certified. Also, more than 50% of innovation patents are allowed to lapse by the end of their third year. The proportion of innovation patents granted to foreigners is 35% and rising.

Insofar as the options paper takes a position, it would seem that there is pretty much universal agreement that the level of innovation required to get an innovation patent is too low.

The options paper also appears to discern evidence that innovation patents are being used “strategically” or “tactically”, at least by some applicants.

ACIP is now seeking your views on what to do.

ACIP itself identifies 3 broad options:

(1) do nothing (option A);

(2) abolish the innovation patent system (option B); or

(3) change the innovation patent system (option C).

Option A: do nothing

ACIP notes that it is too soon to tell how the Raising the Bar reforms will affect those seeking innovation patents. Those changes do nothing, of course, to the level of “innovative step”.

The Verve report received 517 responses to its survey of the 3,195 Australian inventors who have taken out innovation patents to protect their “inventions”. Bearing in mind that these are the people that the innovation patent system is supposed to be encouraging, ACIP notes:

The Verve survey has shown that individuals and SME user-groups appear to be generally satisfied with the innovation patent system—albeit this survey occurring prior to the full impacts of the Raising the Bar Act being felt by users of the system.

The biggest problem with this do nothing option, however, is that it doesn’t do anything to address the apparently widely recognised issue that the innovation threshold is too low.

As ACIP notes, letting people get an innovation patent in Australia for something which is not patentable anywhere else does nothing to encourage Australian businesses to compete overseas. It should also be borne in mind that an innovation patent over something will probably have the effect of meaning its price will be higher than it would otherwise have been.

Option B: abolish the innovation patent system

There is a nice catalogue of what one might think were compelling reasons why this is a good option. There is also a summary of arguments against it.

This (or a variation on it) is widely perceived to be the option proposed late last year by IP Australia. The options paper indicates that the majority of non-confidential submissions to IP Australia and to ACIP didn’t support IP Australia’s proposal.

The options paper also includes a curious page suggesting that the designs registration system could be amended to permit the registration of functional designs. I (perhaps mistakenly) had thought the Franki Committee’s recommendations were implemented by the Designs Amendment Act 1981 s 11 (inserting new s 18) and s 5 (inserting a new definition of ‘design’) and find their current embodiment in s 7(2) of the Designs Act 2003. The “problem”, if it be a problem, with designs registration is that it protects only the visual appearance of a product, not its function. The new Act doesn’t seem to be any different in that respect to the old Act and it was plainly a deliberate policy choice.[2]

Option C: change the innovation patent system

The problem here, at least insofar as the level of innovation is concerned, is what should that new level be and how on earth would the Courts ever work it out. ACIP plainly didn’t like the suggestions of the Law Council, IPTA or FICPI on this front.

The options paper also raises for further consideration changing or limiting the remedies: no injunction or no interlocutory injunctions, but continued exposure to pay damages or account for profits; limiting the ability to recover pecuniary remedies to the period after certification. Oh dear!

ACIP would like to hear your views by 4 October 2013. It is also planning to hold workshops for public consultation during September.

Options Paper here (pdf)

Verve report here


  1. Patents Act 1990 s 18(2) and (3) exclude some things from patentable subject matter and, apart from the level of innovation prescribed in s 7(4), there are a few other largely technical requirements to satisfy too.  ?
  2. See e.g. recommendations 24, 25 and 26 of the ALRC’s Designs report. Of course, the limitation of the designs registration system to visual appearance only seemed to be one of the main complaints about the system identified by the ALRC: see e.g. 2.44 of the ALRC’s report and 3.49 and 6.5.  ?

FPInnov

Where do you appeal to?

The Registrar of Trade Marks has successfully applied for dismissal of ADJR Act proceedings challenging decisions to revoke registrations and the acceptance of trade marks.

The Registrar used her powers under section 84A to revoke the registration of 8 of FPInnovation’s trade marks. Then the Registrar used her powers under s 84C to revoke their acceptance. (The Group A trade marks.[1]) The Registrar also used her powers under s 38 to recoke the acceptance of four other applications. (The Group B trade marks.) According to the judgment, the decisions to revoke registration and acceptance were all based on the ground that the trade marks were likely to deceive or cause confusion, contrary to s 43.

Section 84D confers a right of appeal to the courts[2] from a decision to revoke registration under ss 84A and 84C. there is no appeal from a decision to revoke acceptance under s 38. In the normal course, however, the trade mark would go through the examination process and a decision to refuse an application would also be subject to an appeal to the courts under s 35.[3] These “appeals” of course are really hearings de novo on the merits rather than appeals proper.

FPInnovation did not choose to exercise these appeal rights: instead it sought judicial review under the ADJR Act – that is, a challenge essentially to the “procedural” soundness of the decisions.[4]

The Registrar successfully applied to have the ADJR Act proceedings dismissed under s 10(2) and s 16 on the basis that the options for “appeals” which allowed for determinations on the merits provided a more suitable and efficacious avenue for review. Cowdroy J explained the purpose of the legislative scheme:

The legislative purpose is, as Katzmann J said at [67] in 1–800-Flowers, clear. Parliament intended with respect to decisions to revoke the acceptance of applications for registration ‘that any challenges be made to the decision to refuse or limit registration, not to the anterior decision to revoke acceptance’. The intent with respect to decisions to revoke the registration of trade marks is equally as clear; that is, the affected trade mark owner should file an appeal under s 84D. Such processes are, in the words of Finn J in Wyeth Australia at [44], ‘deliberately contrived’ by the legislature. It is against this background that the Court must consider the prejudice claimed by FPInnovation.

Cowdroy J considered thar any prejudice FPInnovation suffered from any defects in the decision-making process to revoke registration and/or acceptance should be cured by the subsequent decisions on the merits. In addition:

FPInnovation contends that certain factual findings would again have to be contended for should re-examination of the trade mark applications occur. Whilst this is true, it is a necessary consequence of the process of review intended by Parliament. It also ensures that the central issue in the overall dispute between the parties is resolved, namely whether the trade marks should ultimately be registered, and as a corollary, whether those trade marks in relation to the categories for goods and services for which they were, or were proposed to be, registered are likely to deceive or cause confusion. These are questions that the Court cannot entertain on judicial review.

FPInnovation Pty Ltd v Registrar of Trade Marks [2013] FCA 826


  1. They were for marks in class 36 such as KFH, Kuwait Finance House and amislamic. (Revocation of acceptance seems at best implied by s 84C(5). So may be, it was under s 38.)  ?
  2. That is, the Federal Court or the Federal Circuit Court.  ?
  3. Given the terms of s84C(5), re-examination would seem to be mandatory on revocation under s 84A.  ?
  4. See the grounds here.  ?

New gTLD process: brand owners beware

Jonathan Bailey, of Plagiarism Today fame, has a post over at the Blog Herald: “Why We Don’t Need More Domain Extensions“.

As of last month, 4 new gTLDs had already been approved but more than 1,000 have made it passed the “initial evaluation stage”. Private auctions for new gTLDs where there is more than one applicant are starting.

The new gTLDs aren’t here yet but scary as it is, this is going to happen.

So, if you are a brand owner – or advise brand owners – and you haven’t been thinking about how you are going to deal with this, Jonathan’s post really serves as a timely warning to get your thinking cap on:

  • are you going to try and register any (and if so which) of your trade marks in any of these new gTLDs?
  • what steps are you going to take, if any, to make sure someone else is not registering one (or more) of your trade marks in one of these new gTLDs?

 

ICANN’s new gTLD timeline.

ICANN’s current status of applications listing.

Searchengineland’s take.

The power of a registered trade mark

If you have tried to buy, sell or rent property in Australia in the last 10 years (at the least!), like some nearly 7 million other Australians you have no doubt come across realestate.com.au, the web-portal run by REA Group. Real One also competes in that space.[1]

Bromberg J has held that Real One’s logos:

Real One 2nd logo
Real One 2nd logo
Real One 1st logo
Real One 1st logo

did not “pass off”[2] REA Group’s logos:

559.1

Nor did they infringe REA Group’s registered trade mark: [3]

TM No 1478263
TM No 1478263

However, the use of Real One’s URL in ads like this:

Real One Ad
Real One Ad

did infringe the registered trade mark! [4]

Bromberg J held that the uses both in the first line and the second line of the advertisment infringed. In contrast to his Honour’s rejection of the claim for misleading or deceptive conduct, Bromberg J explained at [241]:

In my view, the display of the term “realestate1.com.au” in the heading of a sponsored link would have been regarded by many consumers to be the trading and domain name of the business whose link it was. One of the central distinguishing features of REA’s realestate.com.au trade marks is the idea that the term “realestate.com.au” is both a brand name and a domain name at the same time. When Real Estate 1 used “realestate1.com.au” as a trading name, it took up that precise idea. In that context consumers are likely to pay substantive attention to “.com.au” because it serves the function of identifying the brand whose domain name is also being used as a brand. The whole of the domain name is likely to be read or at least scanned. In a circumstance such as that, there was in my view, a real danger of confusion on the part of a consumer familiar with REA’s realestate.com.au trade marks. That principally arises because in a scanning process of the kind which can occur on a search results page, the “1”, which is not very distinct in the context of a domain name in ordinary type face, is likely to be missed by some consumers.

First, his Honour distinguished Perram J’s proposition in the Solahart case that usually one can ignore the inclusion in a sign of elements like “www” and “.com.au” as merely “accoutrements” of the domain name system and so not matters that the public would pay attention to. Unlike the situation before Bromberg J, however, that observation was not made in a context where the .com.au element formed part of the registered trade mark.[5]

Second, I can certainly see that the bold “headline” (the first line) in Real One’s advertisment is plainly being used as a trade mark. But the use in the second line???

Yes, I know that cases have held that domain names / URLs are the Internet’s equivalent of a sign or billboard. That can certainly be true and, in the first line of the advertisement, the URL is plainly being used in that way, but surely with respect in the second line the URL is no more than an address.

Third, one might express some alarm that anyone can stop someone else using the term “real estate” (in connection with real estate services). There are, after all only 387 other registered trade marks in class 36 alone which include the words “real estate”. On the Internet, there is also at the least realestateview.com.au. Bromberg J’s first answer in [241] above is that it was not just the use of “real estate” that gave rise to liability: it was the use of that term and “.com.au” in combination and the comparative insignificance of the “1” in Real One’s URL.

Bromberg J did, however, recognise the problem and said at [247]:

As my conclusions demonstrate, registration of REA’s realestate.com.au marks has effectively given REA a monopoly over two highly descriptive terms when used in combination. Those terms are likely to be the most common terms on a search results page where a search has been conducted for a residential real estate portal. The protection conferred by REA’s trade marks over the use of “realestate” and “.com.au” in combination, provides REA with a monopoly over the term “realestate” in circumstances where its rivals seeking also to use “realestate” or a close variant thereof as a second-level domain, do not forego the advantages of using “.com.au” in their domain names. The natural advantage of a domain name which incorporates “realestate” to the commercial success of property portals will be apparent from observations I have already made. There is also a natural advantage in the use of the suffix “.com.au”. It is troubling that terms that are highly descriptive of a particular area of commerce and which provide significant commercial advantage should not be readily available for use by all who seek to participate in that commerce. However, in the absence of a successful challenge to the registration of REA’s realestate.com.au trade marks, whilst that may be troubling, REA is nevertheless entitled to the protection of the monopoly which has been conferred upon it.

The question has to be asked, however, on what basis could REA group’s logo be revoked or refused registration? Given the device elements (and the large number of other, competing devices), it would surely be held to be capable of distinguishing. The “good” old days (i.e., before the 1995 Act) were at least better in this respect: the Registrar could impose disclaimers to ensure these sorts of monopolies should not arise.

Two short points in conclusion:

His Honour did also find that Real One’s “real commercial” logo infringed REA group’s registration for its “real commercial” logo.

It would seem that Real One is still able to operate from its “.net.au” URL.

REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559


  1. Bromberg J found at [258] that the principal of Real One adopted the name to pressure REA group into buying him out at some point, but also went on reluctantly to find no accessorial liability (akin to authorising).  ?
  2. For simplicity, I will treat that term as covering the actions for misleading or deceptive conduct (now under s 18 of the ACL formerly known as s 52 of the Trade Practice Act 1974) which, of course, was really the focus of that part of the case.  ?
  3. The number doesn’t seem to be identified, but TM Nos 811931 and 1075935 are for the mark in black and white and TM No. 1478263 is for the colour version reproduced in his Honour’s reasons.  ?
  4. Also contrast this result with the Thredbo Resort’s failure to stop ThredboNet using Thredbo in domain names to market rental accommodation at Thredbo village: Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2013] FCA 563 – Thredbo Resort having only pending opposed applications.  ?
  5. Decision under the UDRP have reached similar positions.  ?

Patentable subject matter reform

IP Australia has issued an Issues Paper on the proposed amendments to the Patents Act:

(1) to insert an “objects” clause; and

(2) to exclude from patentable subject matter inventions which it would be “offensive” to commercially exploit.

These plans arise out of a recommendations made by ACIP which the Government announced it accepted. The consultation now is on the wording to implement those policies.

An objects clause

The consultation paper proposes 2 alternative “objects” clauses:

Option 1

…. the purpose of the legislation as being to provide an environment that promotes Australia’s national interest and enhances the well-being of Australians by balancing the competing interests of patent rights holders, the users of technology, and Australian society as a whole.

Option 2

the purpose of the patent system is to provide an environment that enhances the well-being of Australians by promoting innovation and the dissemination of technology and by balancing the competing interests of patent applicants and patent owners, the users of technology, and Australian society as a whole.

Now, one could very well wonder what possible help either of these statements might give a court if they were enacted. The consultation paper even notes that the Parliamentary Draftsman is rather ambivalent about the value of objects clauses in general:

Some objects provisions give a general understanding of the purpose of the legislation…Other objects provisions set out the general aim or principles that help the reader to interpret the detailed provisions of the legislation.

The first option is what ACIP proposed. ACIP considered its proposal a simplified version of the Objects identified in art. 7 of TRIPS:

The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.

The consultation paper thought that Option 1 does not sufficiently recognise the economic and social welfare concerns of patent law and did not sufficiently recognise the interests of patent applicants as well as patent owners (formerly known in Olde English as patentees). As the consultation paper explains:

The economic goals of the patent system are to promote economic growth, trade and investment by encouraging innovation and the dissemination of knowledge and technology.

The patent system encourages innovation by giving patentees a period of market exclusivity in which to recoup their development costs through commercialisation of their inventions. In exchange, patentees are required to disclose the details of their inventions to the public. The patent system contributes to social welfare by providing Australians with access to new technologies and developments that otherwise would not have occurred and that improve our quality of life (for example new pharmaceuticals and medical technologies and improvements to safety and waste management technologies).

However, the patent system will only meet its economic goals if the positive effects of the patent system in stimulating investment in innovation and providing society with access to new technology are balanced against the potential negative effects of patents restricting access to follow-on innovation and increasing costs, and so restricting supply of new patented technologies.

This is better, at least the first 2 paragraphs (if one bears in mind that economists – to the extent they accept the role of patents – think of the market exclusivity as providing an incentive rather than a “reward”). The third paragraph is rather more ambivalent.The danger the third paragraph raises is that it could be used as a basis for excluding something from patentability because someone might use the patent to raise prices or the other evils identified. But, while there are some provisions in the Patents Act that address, or attempt to deal with, these issues, in many respects they seem more properly the territory of (take a deep breath) competition law.

Offensive commercial exploitation

What the consultation proposes is a new exclusion to be added to s 18:

…  for an invention the commercial exploitation which would be wholly offensive to the ordinary reasonable and fully informed member of the Australian public.

Wholly offensive?

Apparently, the test of the ordinary reasonable and fully informed member of the Australian public is intended to ensure that the exclusion is “applied in a consistent, predictable and neutral manner”. However, it is also proposed to assist the Commissioner by explicitly empowering the Commissioner  in his or her discretion to seek “non-binding” advice on ethical matters.

What seems to trigger the exclusion commercial exploitation in an wholly offensive way rather than at the specific subject matter itself. At what point is the appropriateness of the commercial exploitation determined? Will it be enough that the invention could be exploited in an wholly offensive way? The BRCA controversy erupted when Myriad announced it was going to start charging licence fees for its products. Would the ordinary, reasonable and fully informed Australian have considered its patent wholly offensive before that announcement? This rather suggests that the problem falls within the second type issue identified by ACIP: about how the patent is used, are better dealt with through Crown Use and other compulsory licence arrangements.

 

If you have views you want to inflict, they should be submitted by 27 September 2013.

Find the issues paper here.

Apple and that ITC ban

Well written piece in The New Yorker outlining the role of the US International Trade Commission in patent disputes and President Obama’s veto of the ITC’s order to block imports of “older” Apple products.

Mind you, make sure you are not eating your cornflakes over breakfast or sipping your decaf skinny latte when you get to the paragraph:

Samsung’s lawyers may take their talents to Seoul, Tokyo, London, or other venues in which home-court advantage is increasingly important ….

Prof. Wegner apparently saw it differently.

Lid dip: Miguel Belmar