Harper Review: Government Response

Yesterday (November 24), the Government published its response to the Competition (Harper) Review.

According to the response, “Harper” made 5556 recommendations; the Government has accepted 39 of them in full, 5 in part and the remainder are still under advisement.

In the intellectual property field, the item receiving most press (here and here) is the Government’s acceptance of the recommendation to remove all remaining restrictions on parallel importing books. At the moment,[1] the importation of a genuine book published first in Australia or within 30 days of first publication overseas may be blocked provided the copyright owner complies with the convoluted regime to supply copies in response to an order. This guarantees availability, but still leaves the copyright owner free to set the price it charges the person placing the order.

Harper recommended:

Restrictions on parallel imports should be removed unless it can be shown that:

• the benefits of the restrictions to the community as a whole outweigh the costs; and

• the objectives of the restrictions can only be achieved by restricting competition.

Consistent with the recommendations of recent Productivity Commission reviews, parallel import restrictions on books and second?hand cars should be removed, subject to transitional arrangements as recommended by the Productivity Commission.

Remaining provisions of the Copyright Act 1968 that restrict parallel imports, and the parallel importation defence under the Trade Marks Act 1995, should be reviewed by an independent body, such as the Productivity Commission.

What the Government plans:

The Government supports the removal of parallel import restrictions on books. The Government will progress this recommendation following the Productivity Commission’s inquiry into Australia’s intellectual property arrangements (see Recommendations 6 above) and consultations with the sector on transitional arrangements.

The terms of reference for the inquiry provide that the Productivity Commission is to have regard to the findings and recommendations of the Harper Review in the context of the Government’s response, including recommendations related to parallel import restrictions in the Copyright Act 1968 and the parallel importation defence under the Trade Marks Act 1995.[2]

Harper’s recommendation 6 was a reference to the Productivity Commission to undertake a 12 month long “overarching review of intellectual property” focusing on

competition policy issues in intellectual property arising from new developments in technology and markets; and the principles underpinning the inclusion of intellectual property provisions in international trade agreements.

The Government response notes that in August it had already made this reference to the Productivity Commission.[3] The response on this point is curiously even-handed. The Productivty Commission:

is to have regard to Australia’s international arrangements, including obligations accepted under bilateral, multilateral and regional trade agreements to which Australia is a party. The global economy and technology are changing and there have been increases in the scope and duration of intellectual property protection. Excessive intellectual property protection can result in higher costs for Australian businesses and consumers and inhibit innovation. However, weak intellectual property protection can lead to under?investment in research and development (R&D) which also stifles innovation. A comprehensive evaluation of Australia’s intellectual property framework is needed to ensure that the appropriate balance exists between incentives for innovation and investment and the interests of both individuals and businesses, including small businesses, in accessing ideas and products. (emphasis supplied)

However, an independent inquiry into the processes for negotiating intellectual property provisions in treaties is not necessary: there are already robust processes in place and publishing an independent cost benefit analysis before the negotiations have concluded might tip our hand in the negotiations.

Section 51(3) gained a slight reprieve. Harper’s recommendation 7 was that it be repealed (and a new power for the ACCC to create block exemptions be introduced). Despite Prof. Harper’s injunctions that this is old news and we should just, er, do it, the Government thinks it should wait and see what the Productivity Commission says. Anyone betting the Productivity Commission won’t recommend …?

The Government also supports conferring a power to grant block exemptions on the ACCC:

A block exemption removes the need to make individual applications for exemption. The exemption is granted if the competition regulator considers that certain conditions are satisfied: either that the category of conduct is unlikely to damage competition; or that the conduct is likely to generate a net public benefit.

A block exemption power that supplements the existing authorisation and notification frameworks will be helpful in establishing ‘safe harbours’ for business. Block exemptions will reduce compliance costs and provide further certainty about the application of the CCA. They are an efficient way to deal with certain types of business conduct that are unlikely to raise competition concerns, either because of the parties engaged in the conduct or the nature of the conduct itself.

So, in the interests of promoting competition, we are going to introduce a European-style power for the regulator to design the marketplace.


  1. Copyright Act s 44A.  ?
  2. The Government also said it would not proceed with the recommendation about second hand cars, in the interests of consumer protection and community safety.  ?
  3. Indeed, you should already be putting the finishing touches on your submissions in response to the Issue Paper since they are due on Monday!  ?

Section 155 notices

Under s 155 of the Competition and Consumer Act 2010, the ACCC can issue a notice to a person requiring them to provide information and answer questions. Failure to comply, or knowingly furnishing false or misleading information in response, is a criminal offence.

Natural Food Vending Pty Ltd was served with one such notice and failed to comply. Davies was its sole director and was convicted of aiding, abetting, counselling or procuring that failure.

The Act provides for a maximum fine of 20 penalty units ($2200) or up to 12 months imprisonment. Reeves J considered that the particular offending in this case did not warrant a sentence of imprisonment. His Honour further considered that a fine, given Davies’ impecuniosity, would effectively lead to his imprisonment on his default. Accordingly, Reeves J has now sentenced Davies to 200 hours community service provided he does not commit another offence during the service period.

Australian Competition and Consumer Commission v Davies (No 2) [2015] FCA 1290

The official Text Of The Trans Pacific Partnership (TPP) Has Now Been Published

Full text of TPP here.

IP chapter here.

Lid dip: Prof. Cotter

The word yellow is descriptive of online directories

Telstra has lost its appeal in the “Yellow” case.

The Full Court upheld the trial judge’s conclusion that the word “yellow” lacked any capacity to distinguish print or online directories under (the old version of) s 41. However, the Full Court accepted that the word “yellow” had become sufficiently distinctive of Telstra by reason of use and promotion after the date of the application that it would have been registrable if it had had some inherent capacity to distinguish.

Following the High Court’s ruling in “Oro/Cinque Stelle“, the Full Court agreed with the trial judge that the word “yellow” signifies the colour yellow and the evidence showed that the colour yellow signified print and online directories. Consequently, the word itself was descriptive. At [117], in considering the ordinary signification of the word, the Full Court said:

We would say at the outset that it was appropriate for Telstra to proceed on the basis that capacity to distinguish could not be decided by reference to inherent adaption alone even if the Court accepted all of its arguments. The word yellow describes a colour and, even without evidence, it would be appropriate to infer that at least some other traders might wish to use that colour. Furthermore, there was at the very least evidence in this case of not infrequent use of the colour yellow in connection with print and online directories.

The Full Court then considered that the evidence of use by other traders in print and online directories confirmed that consumers did in fact consider the word “yellow” descriptive of such directories. Like the trial judge, the Full Court took into account the usage of traders overseas as well as within Australia, although it may have been to support the good faith of the local traders’ use.

Survey and acquired distinctiveness – s 41(5)

If the word “yellow” had had some capacity to distinguish print and online directories, the Full Court would have allowed Telstra’s appeal that it had become sufficiently distinctive under s 41(5) by use after application. A 2008 survey (not the 2007 survey relied on by the primary judge) showed that after several years of use including millions of dollars of expenditure on advertising, at least 12% of the survey respondents identified (associated?) the word “yellow” with Telstra’s directory unprompted. A further 4%, making 16% in total, had similar unprompted association.

The Full Court distinguished British Sugar and held that would be sufficient. (The report does not disclose the terms of the question that elicited those responses.) Arguably, makes a nice contrast to the Oro/Cinque Stelle case.

What about .com.au

In dismissing a second, cross-appeal in which yellowbook.com.au was found to be deceptively similar to Telstra’s Yellow Pages trade mark, the Full Court treated the domain name “accoutrement” .com.au as largely insignificant for the purposes of the deceptive similarity analysis.

The interesting point here is that the Full Court considered this may not always be the case. It was appropriate to disregard the element here in the context where the services were online directories and consumers were shown largely to disregard such elements.

The question of onus

The Full Court also seems to have resolved the ongoing disputes about the onus of proof. The Full Court held that the opponent has the onus of proving that a proposed trade mark has no inherent capacity to distinguish. It further held that that onus was on the balance of probabilities, not the practically certain standard which some courts at first instance have applied.

Telstra Corporation Limited v Phone Directories Company Australia Pty Ltd [2015] FCAFC 156 (Besanko, Jagot and Edelman JJ)