The Canadian Competition Bureau has published updated guidelines relating to the enforcement of intellectual property rights and the antitrust (competition) rules.
The Bureau does not presume that the exercise of IP rights violates competition rules but, in assessing whether there are competition law ramifications, it distinguishes between two types of conduct: conduct “involving something more than the mere exercise of the IP right, and those involving the mere exercise of the IP right and nothing else.” Special rules, which may be applied in “very rare circumstances” apply to the latter. While the general competition rules apply to the former.
According to the Canadian firm, Tories, the updated guidelines include consideration relating to:
patent litigation settlement arrangements including reverse payment settlements
patent assertion entities
standard essential patents
Why should someone in Australia care?
For one thing (bearing in mind the ACCC’s challenge to Pfizer’s practices when its Lipitor patent was expiring – judgment is reserved in the appeal), the US Supreme Court is expected to hand down a decision this year on how US antitrust laws apply to reverse payment settlements.
For another thing, following the Competition Review here in Australia:
the Government announced its intention to implement the Harper Review’s recommendation that s 51(3) be repealed and, if that happens, the ACCC is supposed to produce its own guidelines; and
in the meantime, at the Government’s direction, the Productivity Commission is undertaking a review of Intellectual Property Arrangements including its alleged anti-competitive effects.
You will probably not be surprised to discover that PRIMARY HEALTH CARE is not registrable as a trade mark. You may, however, be surprised that the successful challenger was the Commonwealth of Australia.
Primary Health Care Limited (PHC) applied to register PRIMARY HEALTH CARE and
Medical centre business management; medical centre business administration; service provider to medical professionals, namely provider of: administrative support services, billing and invoicing services, reception and telephone answering services, patient booking services, patient file management services including management of access to patient files, typing services, account-keeping and book-keeping services, preparation of business reports, systemisation of information into computer databases, professional business consultancy, computerised file management, business and information management services, ordering services, processing of purchase orders.
What PHC did was it bought or built a building for use as a medical practice. It set up the rooms and facilities and provided the staff such as receptionists, book keepers etc. Then it contracted with medical practitioners (mostly GPs) to work from the medical centre, using the staff and facilities PHC made available to provide their services. PHC argued that it used its trade marks only in providing those services to the medical practitioners and the trade marks were not used by it in providing medical services to the medical practitioners’ patients. Thus, it said, it was not using the trade marks for medical services, only for business management and administration services – services for which the expression PRIMARY HEALTH CARE was not an apt description. At :
The applicant’s case is that the Services are all to be provided to health care professionals and are not to include clinical or medical care by those professionals to patients.
This argument was predicated on PHC’s clinics/centres not being called or promoted to the public as PRIMARY HEALTH CARE centres.
Jagot J rejected PHC’s contention. Her Honour accepted that PHC’s marketing was directed to health care professionals rather than the public. Her Honour also accepted that the health care professionals provided the health care services to the patient and jealously guarded their clinical independence in deciding what clinical care to provide to the patient. So PHC was not actually providing medical or health care services to the patients per se. However, it was unrealistic to treat the services PHC provided as being services provided only to the health care professionals. They were also provided to the public. Jagot J explained what her Honour had in mind by reference to the medical centre’s receiptionist – who was employed by PHC. For example at  – :
…. the person paying for the services, the medical professional, is not the only person who receives the services or, at the least, is not the only person concerned with the services. The Services include reception and telephone answering services, patient booking services, patient file management services, information management services, billing and invoicing services, computerised file management, and ordering services, all said to be “to medical professionals”. (emphasis supplied)
Assume then a member of the public who wishes to see a GP who is contracted to and has a practice located in one of the applicant’s medical centres (leaving aside, for the moment, the issue about Idameneo and how the marks have in fact been used). The patient calls the centre and speaks to a receptionist. On the applicant’s case, in answering the call, the receptionist is providing a service only to the GP the patient might wish to see and not to the patient. This is untenable. The GP who ultimately sees the patient pays for the service but the service cannot be said to be a service to the GP only. It is also a service to the patient, the cost of which is borne by the GP, at least insofar as the GP does not seek to recoup those costs in the consultation fee. ….
As a consequence, Jagot J found:
 As such, the focus of the applicant’s case is off target and at odds with the evidence. The consequences of this disconnect run through every aspect of the case. First, the Services cannot be considered as if they exist in isolation because that is not how the Services are provided. Second, no matter how often the applicant repeats it, I am unable to accept that the Services are directed only to GPs and health professionals; the public and other participants in the health care sector are provided with some of the Services and are potentially concerned with all of the Services. ….
 … the reality is that, at least insofar as the Services are concerned, the applicant is providing services to medical professionals within its centres, to patients of those centres, and to all other participants in health care who interact with any medical professional in one of its centres. The fact that the applicant (or Idameneo) receives payment for the provision of the Services directly from the medical professional does not mean that the Services are provided only to the medical professional. Nor does the fact that medical professionals understand that they alone provide clinical or medical services to patients mean that the Services are not provided to patients. The reasoning involved seems to involve a false syllogism: (i) only medical professionals provide clinical services to patients, (ii) the Services are not clinical services, (iii) therefore, the Services are necessarily not services to patients. Propositions (i) and (ii) may be accepted, but they do not lead to proposition (iii).
Therefore, when deciding what the ordinary signification of the words PRIMARY HEALTH CARE was, the relevant public was not just the health care professionals to whom the services were promoted but all other participants in the health care system including patients and potential patients.
For the public so defined, Jagot J then went on to find that the expression PRIMARY HEALTH CARE was directly descriptive and so not inherently adapted to distinguish at all under the old form of s 41(3) or capable of distinguishing under s 41(5) or in fact distinctive under s 41(6).
At first blush her Honour’s ruling that the Services were being provided to the public (other than the medical practitioners) might seem questionable because, so far as I can make out from the judgment, no member of the public (apart from the medical practitioners of course) actually sees the sign PRIMARY HEALTH CARE being used as a trade mark. For example, patients were not given bills or receipts or prescriptions with PRIMARY HEALTH CARE emblazoned on them. Nor does it seem that the receptionist (or other ancillary staff) wore uniforms with the sign on them. If keywords are not used as a trade mark because they are “invisible”, one might think that the unseen expression PRIMARY HEALTH CARE was also not being used as a trade mark for the services provided to the public. As the Commonwealth pointed out, however, PRIMARY HEALTH CARE could be used on, for example, the uniforms if the trade mark were registered. So, taking into account fair notional use renders the “invisiblity” argument untenable.
Perhaps the crucial consideration is that the services being provided by the receptionist and the other “ancillary” staff are just so closely bound up with the health care services being provided by the medical practitioner to be part of those services or taking their character from the primary services being offered at the clinic. This indeed appears to be what her Honour had in mind. So for example, her Honour said at :
there is an unreal distinction at the heart of the applicant’s case between the provision of the Services and the provision of clinical or medical care. The distinction is unreal because the Services are part of the overall service a patient receives when attending a medical centre and, to some extent, are also part of the medical or clinical care a patient receives. It is part of medical care that a GP be able to access clinical records for a patient. It is part of medical care to ensure new records are accessible in the future. It is part of medical care for a patient’s referral to be properly recorded, stored and managed. It is part of medical care for the centre to have available necessary medical supplies. ….
and at :
in the real world context in Australia (at least) the Services are inextricably bound up with the provision of medical and clinical services by general practitioners and allied healthcare professionals, including through medical centres and medical practices – they are ‘part and parcel’ of the practice of general medicine and allied healthcare in the community, of primary health care.
That way of looking at things, with respect, seems in accord with the reasons why the Full Court in the Chifley Tower case rejected the argument that an hotel was engaged in providing property management services.
Jagot J went on to find that an additional ground for refusing registration was that the trade marks were deceptive or confusing. They were deceptive or confusing because, although they were so closely bound up with the provision of medical services, the specification of services did not include medical services. On the other hand, use of the trade marks would be congtrary to law in contravention of s 18 of the Australian Consumer Law because use of the mark misrepresented that PHC provided medical services and further that PHC was responsible for the medical services provided by the medical practitioners at the centres.
The “Services”. In the course of the proceeding the specification of services went through a number of revisions. This is just the starting one, but it indicates the nature of what PHC wanted registration for. ?
There was a factual dispute whether PHC used PRIMARY HEALTH CARE as the name of 3 or 7 of its medical centres, but this seems to have been regarded as essentially de minimis. ?
Putting a simple box around the words didn’t improve matters. ?
This led PHC in one of its revised specifications of services to seek to “disclaim” such use under s33(2) and s 55(1)(b). ?
Katzmann J “gets” the Internet and helps to bring Australian trade mark law well and truly into the 21st century: buying keywords for search engine advertising is not trade mark use. some instances of the use of the trade mark in the sponsored links, however, did infringe.
Malouf is business which helps people who get a bad credit report repair or correct that report.
Veda is a credit reporting agency. Amongst other things, it has registered VEDA in class 36 as a trade mark for:
Financial services; provision of credit risk, financial and asset information and reports; credit scoring and risk assessment services; information provision, advice, research, appraisal, analysis, credit enquiry and consultation ….
Malouf bought advertisements for its business on Google search results pages using the Google AdWords program. Through that program, the advertiser selects terms – keywords – for which, when someone does a “Google” search including one of those keywords, they will pay to have their advertisement appear as an advertisement – a sponsored result – in the search results pages. The keywords Malouf chose included VEDA and 85 other terms using it such as “contact veda”, “veda credit score” etc. Mr Malouf explained his strategy:
So, with Veda approximately anywhere from 20 to 40 per cent — which is published on their website — of people may have an adverse credit history with a credit reporting body. A lot of them don’t know that they’ve got bad credit. So, potentially, one in five customers that are trying to contact Veda may be our target market. … [W]e want to have our ad showing up — anyone trying to contact Veda — because, potentially, one in five of those customers may be wanting to fix their credit file.
Over time, the advertisements Malouf paid to place took 3 forms. Until October 2014, they were along the lines of these sponsored links:
After September/October 2014, the sponsored links did not feature “Veda” in the text.
This gave rise to two main issues: (1) did the use of “keywords” infringe and (2) did the uses in the actual advertisements (sponsored links) infringe?
Katzmann J held that Malouf’s “purchase” of keywords using VEDA did not infringe Veda’s trade marks. It was not use as a trade mark. Her Honour gave 3 reasons:
First, all Malouf did was select the keywords and provide them to Google. In doing that, objectively, it was not using the words to distinguish its services from those of other providers. “Rather, it has used them to identify internet users who may have an interest in using [Malouf’s] services.”
Second, anyone could acquire the keywords, not just Malouf. This was not determinative, but it was a consideration. What it meant was that anyone, including any of Malouf’s competitors could also “buy” the same keyword(s). Thus, the keywords were not performing the function of a trade mark: distinguishing (identifying) the trade source to the exclusion of all others.
Thirdly, and perhaps most significantly, the keywords were invisible to consumers. Katzmann J explained:
… the proposition that using words which are invisible and inaudible, indeed imperceptible, to consumers is using them as a trade mark makes no sense. How could the keywords be understood to be used to distinguish the services of one trader from those of another when the keywords are indiscernible? How could it appear to consumers that, by Malouf’s designation of the Veda keywords to Google, the words are used to denote a connection in the course of trade between Malouf’s services and the services provided by another trader, or to distinguish its services from the services of others, when the consumers have not seen or otherwise perceived the keywords?
Also, when the consumer did not search on the term VEDA alone, how would he or she know which term(s) generated the search results?
At this point, Veda relied on Accor. Katzmann J, however, pointed out, first, that Accor involved metatags, not keywords. More significantly, her Honour noted Accor was inconsistent with Kenny J’s ruling in Complete Technology where Kenny J had said:
I do not accept that the use of any of CTI’s Registered Trade Marks in Green Energy’s metatags would constitute a trade mark infringement for the purposes of s 120(1). Metatags are invisible to the ordinary internet user, although their use will direct the user to (amongst other websites) Green Energy’s website. Once at the Green Energy website, then, in the ordinary course, the internet user will be made aware that the website is concerned with Green Energy’s services. It cannot, therefore, be said that the use in a metatag of CTI’s Registered Trade Marks is a use that indicates the origin of Green Energy’s services.Thus, metatag use is not use as a trade mark …. (emphasis supplied by Katzmann J)
Katzmann J agreed with Kenny J’s analysis.
Katzmann J then rejected Veda’s reliance on 2 New Zealand cases and the CJEU’s decision in Google France. They were decisions in a different context and, in any event, the English courts since Google France had held that keywords did not infringe.
Whether the sponsored links which used Veda in their text infringed turned on the nature of the actual use.
Malouf had used expressions like “Clean Your Veda File”, “Fix My Veda History”, “Get Your Veda Report File”, “Veda Credit File Repairs”, but also “The Veda Report Centre” and “The Veda-Report Centre”.
Katzmann J held that the uses like “Clean Your Veda File” were descriptive and used in a descriptive rather thant trade mark sense:
In all but the advertisements featuring “The Veda Report Centre”, I am not satisfied that Malouf has used the Veda Trade Marks as trade marks. Rather, it seems to me that they have been used to describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark. …. the Veda Trade Marks have not been used by Malouf to distinguish its services from those provided by others but to describe the kind or character of the services it provides. ….
The Veda Report Centre, however, was a different case. That was used as a badge of origin to market the Malouf business under the Veda name.
The second conclusion seems to me, with respect, uncontroversial. I also personally agree with the first conclusion that the descriptive uses were not infringements too. In the “old days”, that would have been beyond controversy as the case law clearly established that use of the trade mark Yeastvite in an expression such as “Substitute for Yeastvite” was not use as a trade mark – use of a registered trade mark to refer to the products which the trade mark owner marked with the trade mark was not trade mark use. What the North Americans call “nominative fair use”.
The wrinkle here is that, with the introduction of s 123 into the Act, the High Court has left open the question whether that “old” law is still “good” law. Following that, a number of Full Courts – in which the question did not arise because the goods in question were in fact pirate or counterfeit goods, not genuine goods – have proceeded on the basis that the “old” rule no longer applies.
Even if the Full Court (assuming there is an appeal) continues down that, with respect, heretical path, all may not be lost as Malouf did invoke s 122 in its defence. In reaching her Honour’s, with respect eminently sensible conclusion, Katzmann J did note that it was unclear from the case law how s120 related to s 122. In any event, her Honour found that Malouf could rely on the s 122 defence except in relation to the usage “The Veda Report Centre”. Katzmann J rejected Veda’s arguemnt that the sheer number of keywords showed a systematic and targetted attempt to undermine the registered trade mark. Almost all of those uses were not infringements.
As with the trade mark infringement case, the allegations of misleading or deceptive conduct all failed except in respect of the “Veda Report Centre” usage in the sponsored links.
No April Fool’s. Now, maybe some of you (like me) are thinking, “Wait a minute, there must be ‘gazillions’ of trade marks for toys with PLAY in them. That’s true, but the second syllables of the verbal elements are just too close, both visually and aurally. As Moshinsky J explained:
In my view, the fact that there are other trade marks for goods in class 28 containing ‘PLAY’ as part of the word, does not assist in resolving the matter. Accepting that it is a crowded market for toys, games and playthings where the word ‘PLAY’ is used as an element of the trade mark, and therefore more attention than usual may be paid to the second syllable, there is nevertheless a closer degree of similarity between the trade marks in issue here and the marks referred to in paragraph  above. In the present case, the second syllable of each mark (‘GRO’ and ‘GO’ respectively) is visually and phonetically very similar, while in the other cases (for example, PLAYSKOOL and PLAYBOY) the second syllable is quite different.
The different shaped backgrounds and colours and arrangement of the verbal element(s) were not signficant matters.
A couple of other points.
Playgo is based in Hong Kong. It sold and supplied its products to Myer, Woolworths and Big W there (presumably FOB or some similar arrangement). It argued therefore that it did not use its trade mark in the course of trade in Australia as property in the goods passed on delivery in Hong Kong.
Moshinsky J rejected this argument. When Playgo sold its product to Myer and the others, it knew they were intending to import them into Australia for sale at retail. Moshinsky J considered this was just a straightforward application of Gallo and Estex. Until the goods passed into the hands of the ultimate consumers, they were still in the course of trade and the PLAYGO trade mark operated to denote Playgo as the trade source.
Perhaps surprisingly given this conclusion, however, his Honour considered that Playgo was not liable as a joint tortfeasor with Myer, Woolworths or Big W for the infringements committed by their use. Selling the goods to them, with knowledge of what they intended to do with them (i.e., import them into Australia for retail sale) did not have sufficient commonality of purpose to amount to a common design, to “acting in concert together”; it was merely facilitation:
Nevertheless, in my view, the facts do not establish that Playgo Enterprises and Myer engaged in a ‘common design’ to offer for sale and sell toys bearing the Playgo Device Mark. The relationship between Playgo Enterprises and Myer was merely that of vendor and purchaser. The Supply Agreement appears to be a standard agreement for the sale and purchase of goods; there are no special features which involve Playgo Enterprises in the process of offering for sale and sale of the goods to customers. The facts do not indicate that Playgo Enterprises played any role in the offering for sale or sale of the goods to customers. It is true that Playgo Enterprises sold goods bearing the Playgo Device Mark to Myer, and knew that they were to be offered for sale and sold to customers in Australia. Nevertheless, in my view, that is insufficient to amount to a ‘common design’ because Playgo Enterprises did not engage in any acts in furtherance of the alleged common design. At most, Playgo Enterprises facilitated the infringement by selling the goods to Myer; but mere facilitation is not enough to establish joint tortfeasorship.
Although it is not referred to in the judgment, presumably the other limb of joint tortfeasorship – directing, procuring or inducing the infringement – would also fail in the absence of some positive act (other than selling to the importer for importation in Australia and sale)? If so, that illustrates that the common law principles are much less help to the right holder than the statutory prohibitions in copyright law and patent law against authorising infringement and, even more so, s 117 of the Patents Act 1990.
In Cooper v Universal Music, for example, the provision of links on a website which browsers could use to download infringing content did constitute infringement where the website was designed to enable anyone, including the primary infringers, to place the links on the website. ?