Licensing relief

The Full Court has restored some commercial sanity to trade mark licensing in Australia and ruled that Manassen, the parent company, was an authorised user of the TRIDENT trade marks owned by Trident Foods (the subsidiary). This is an important ruling as it is a common arrangement for a corporate group’s trade marks to be held by an IP “holding company” which is often not the parent of the group.

Trident Seafoods, a large American corporation, has its trade mark:

blocked in Australia by Trident Foods’ TRIDENT registrations. It therefore tried to get Trident Foods’ registrations removed for non-use.

The trial judge found that Trident Foods had not used its trade marks in the relevant period, but exercised her Honour’s discretion against removal. Her Honour found that Trident Foods did not use its trade marks itself; they were used by Manassen, which was Trident Foods’ parent. The trial judge considered that the arrangements did not constitute the exercise of control by Trident Foods over Manassen to qualify as authorised use under section 8. Trident Seafood appealed her Honour’s decision not to order removal. The Full Court held that her Honour had erred and should have found Manassen’s used was authorised use and so the removal action failed because Trident Foods proved use of its trade marks in the relevant period. It also held that there was no error in the exercise of the discretion not to remove the registrations.

There was licensed use

At [44], the Full Court set out the trial judge’s findings that Manassen was not Trident Foods’ authorised user:

I am not satisfied that the evidence identified by Trident Foods shows that Manassen’s use of the “TRIDENT” trade mark has been “under the control of” Trident Foods within the meaning of s 8 for the following reasons:

(1) The corporate relationship between Trident Foods and Manassen does not place Trident Foods in a relationship of control over Manassen; rather, the converse is the case. The commonality of directors does not, without more, permit Trident Foods to exercise control over Manassen.

(2) Ms Swanson’s evidence is in the nature of assertion. It does not include any particular illustration of conduct by Trident Foods amounting to actual control of the use of the “TRIDENT” trade mark.

(3) The fact that Ms Swanson considered it unnecessary to give directions, whether by reason of the existence of the VQM Manual or otherwise, is not relevant to the question of whether Manassen had obligations to Trident Foods in relation to the use of the “TRIDENT” trade mark.

(4) Any control that Ms Swanson might personally exercise by virtue of her membership of the Innovations Council (which was asserted but not demonstrated) does not prove control by Trident Foods.

(5) The identification of Trident Foods as trade mark owner on products supplied by Manassen does not prove use of the trade mark under the control of Trident Foods.

(6) Assuming that the VQM Manual is owned by Trident Foods jointly with other corporate entities in the Bright Group, Trident Seafoods did not demonstrate that the VQM Manual conferred any relevant control on Trident Foods over Manassen.

(7) I am not satisfied on the evidence that there was an unwritten licence agreement in place, notwithstanding the recitals to the 3 November 2017 agreement. The affidavit evidence does not support the accuracy of the recital as to that unwritten agreement.

At [44], the Full Court noted that Lodestar required actual control over the use of the trade mark to qualify as authorised use under section 8. Whether there was actual control was a question of fact and degree. However, control could arise “where there was obedience to the trade mark owner “so instinctive and complete that instruction was not necessary”.

At [45], the Full Court considered the relevant issue was not which company controlled the other, but whether or not Trident Foods had control over the use of the trade marks by Manassen even though Trident Foods was its wholly owned subsidiary. The Full Court held that there was relevant control. The two companies were acting with “unity of purpose”. Here:

  • the two companies had common directors;
  • as directors of Trident Foods, those directors had obligations to maintain the value of its trade marks (which were valued in its books at $10 million)

    To that end Trident Foods necessarily controlled Manassen’s use of the marks by reason of the simple fact that it owned the marks and its directors, who were also Manassen’s directors, must have had one common purpose, being to maximise sales and to enhance the value of the brand.
    So it was “commercially unrealistic” in these circumstances not to infer the common directors necessarily wished to ensure the maintenance and enhancement of the value of the brand (emphasis supplied)

  • further, every packet sold by Manassen bore a notice that the trade marks were owned by Trident Foods
  • the corporate relationship, the commonality of directors and the shared processes between the two companies meant it was not surprising there were no particular instances of actual control being exercised over Manassen
  • It was inconceivable that Manassen was using the trade marks without the knowledge, consent and authority of Trident Foods

As a result, the Full Court considered it was not accurate to characterise Trident Foods as merely acquiescing in Manassen’s use of the trade marks rather than controlling that use. At [51]:

Mere acquiescence denotes passive acceptance of Manassen’s use but the corporate relationship, common directorships and arrangements between the companies required active engagement by those directors to protect Trident Foods’ valuable goodwill ($10 million in the books of Trident Foods, PJ [161(1)]). Trident Foods’ active consent and authority must constitute an unwritten licence for use of the marks.

So, Trident Foods demonstrated that it had used its trade marks (through its authorised user, Manassen) during the relevant non-use period.

The discretion not to remove under s 101(3) & (4)

If it had been necessary, the Full Court also rejected Trident Seafoods’ argument that the trial judge should not have exercised her discretion against removal. In reaching that conclusion, the trial judge had properly taken into account the length and extent of Trident Foods’ reputation in the TRIDENT trade marks and the potential for confusion if Trident Seafoods introduced its trade mark into the market place.[1] At [37]: the Full Court explained:

The criticisms of the primary judge are unfounded. The primary judge did identify the relevant context and the evidentiary foundation for her conclusion about confusion. Trident Seafoods’ asserted error constitutes nothing more than a disagreement with the evidence the primary judge considered should be given weight and her characterisation of the relevant context. At PJ [161] the primary judge identified, amongst other things, that the Trident marks have a substantial reputation in Australia having regard to the brand’s “high penetration in Australian households that it is probably in most households at some point during the year”, the fact that there is “not an independent retail channel in Australia that does not carry a ‘TRIDENT’ brand product”, “‘TRIDENT’ branded products are on promotion with independent retailers every month of the year, across the range”, and “‘TRIDENT’ is the number 1 selling brand for sweet chilli sauce, dates and coconut cream”. The primary judge also referred expressly to the competing contentions of Trident Seafoods about the potential for confusion at PJ [159] to [165]. It must be taken from the primary judge’s conclusion at PJ [179], particularly PJ [179(5)] that the primary judge was not persuaded by Trident Seafoods’ submissions about the prospect of confusion. We also do not accept that, in the circumstances identified by the primary judge at [161], there was insufficient evidence for the primary judge to conclude that removal of the marks would create a prospect of confusion in the minds of consumers. The primary judge’s finding at [179(5)] that “confusion is likely to be experienced by consumers who purchase food products at supermarkets because the ‘TRIDENT’ mark is likely to be associated in the minds of those consumers with an array of food products (not necessarily assumed to be limited to, for example, tinned products or tinned products of a particular variety) emanating from a single supplier and available for purchase at supermarkets” is unassailable. The finding was not only open on the evidence but, in our view, was correct. The fact that her Honour did not consider the TRIDENT brand had any residual reputation in respect of fish is not inconsistent with and does not undermine this conclusion.

The Full Court also rejected Trident Seafoods’ arguments that the trial judge had erred in treating mussels, oysters and oyster sauce as falling within “fish” and “fish products”. Trident Seafoods based its arguments on dictionary definitions of these terms. However, a “fair reading of the Nice Classifications discloses that molluscs and crustacean were treated as within the meaning of “fish” and other dictionary definitions also included molluscs and crustaceans within the meaning of ”fish”.

Trident Seafoods Corporation v Trident Foods Pty Ltd [2019] FCAFC 100 (Reeves, Jagot and Rangiah JJ)


  1. Trident Seafoods currently markets its products in Australia under the trade mark “Bountiful”.  ?

check your e-filing receipts carefully

Now that IP Australia has essentially moved to electronic lodgement, a recent case shows that you need to check your e-receipts carefully. The decision may also prove useful to understanding the Registrar’s obligation to give a party an opportunity to be heard.[1]

Facts

Foxtel instructed their lawyers to file a notice of intention to oppose a trade mark filed by Unicom. Foxtel’s instructions were to file on the last day available to oppose. The notice was prepared and on the last day for filing a legal secretary submitted it through eServices. A transaction receipt was received by return.

Ten days later the in-house lawyer at Foxtel rang up the lawyers, alerting them to the fact that Unicom’s trade mark was now registered. Checking the Register revealed that no notice of intention to oppose had been received. The legal secretary:

then checked her files and the transaction receipt. As it turned out, the receipt was not for the lodgement of the notice of intention but concerned a different transaction altogether. Subsequent review of the electronic log provided by IP Australia indicates that although the process for filing the notice of intention had been commenced, the payment had not been received and lodgement had timed out before the filing was complete.

The lawyers then promptly wrote to the Registrar requesting that the registration of Unicom’s trade mark be revoked under s 84A and s 84B, providing an explanation and subsequently filed the proposed Statement of Grounds and Particulars of Opposition (if the registration were revoked).

The Registrar then wrote to Unicom’s attorneys indicating that, having regard to Foxtel’s intention to oppose and the explanation why that had not been effected, her she intended to revoke the registration, but giving Unicom an opportunity to be heard.

Unicom replied; arguing that something is not regarded as filed under the eServices system until and unless a filing receipt is issued. It also contended that the proposed revocation was outside the power conferred by s84A. After considering the submissions, the Registrar decided not to revoke the registration.

Foxtel, through its lawyers, then obtained a copy of Unicom’s submissions through s 217A and made an application for judicial review under s 5 of the ADJR Act and/or s 39B of the Judiciary Act.

Decision

Burley J has dismissed Foxtel’s application.

Foxtel’s first argument was that it had been denied procedural fairness because it was not provided with an opportunity to respond to Unicom’s submissions before the Registrar changed her mind and decided not to revoke the registration.

The Registrar denied that it owed Foxtel any duty of procedural fairness. She was under no obligation to make a decision under s 84A and, in any event, the terms of s 84A required her to give an opportunity to be heard only to the registrant and people with interests recorded under Part XI.

At [40], Burley J held the Registrar did owe Foxtel a duty of procedural fairness, but the failure to provide it with Unicom’s submissions was not a material breach of that duty.

A duty to provide procedural fairness arises whenever the exercise of a statutory power affected a person’s rights, interests or legitimate expectations unless the duty has been excluded by plain words or necessary intendment.

The public interest in the purity of the Register – that the Register should not be clogged with invalid trade marks – meant Foxtel had a sufficient interest that required it be accorded procedural fairness. At [49], Burley J explained:

…. The “interest” of Foxtel is in persuading the Registrar that, in all the circumstances that existed when the trade mark was registered, the trade mark should not have been because, but for the error in filing the notice of intention to oppose there would have been an opposition on foot at the time of registration (s 84A(1)). In my view this is a form of possible adverse affectation that is sufficient to qualify as an interest to attract the protection of the rules of procedural fairness.

That s 84A did specify some people whom had to be given an opportunity to be heard did not lead an implication that Foxtel was not owed a duty. An intention to exclude natural justice was not to be inferred from the presence in the Act of rights which “are commensurate with some [only] of the rules of natural justice”.[2] While not obliged to make a decision under s 84A, the Registrar was obliged to accord Foxtel natural justice having embarked on the exercise.

While Burley J accepted Foxtel’s argument that it was owed a duty of procedural fairness, his Honour did not accept it had been denied natural justice.

Foxtel argued that, as the Registrar indicated to Unicom she would revoke the registration if Unicom did not respond, Unicom’s submissions must have been material to the Registrar’s change of mind – deciding not to revoke. Therefore, Foxtel argued that the failure to disclose Unicom’s submissions before the Registrar decided not to revoke the registration denied it natural justice.

Burley J examined the reasons the Registrar gave for deciding not to revoke; these had been outlined only in short form in the letter advising her decision. From that letter, his Honour found that the Registrar had in fact rejected Unicom’s arguments on the construction of s 84A and accepted Foxtel’s construction. Therefore, Foxtel had not been denied natural justice on the point.

Burley J was not prepared to accept Foxtel’s argument that the short form letter did not set out the real reasons for the decision, especially in circumstances where Foxtel had not sought a statement of reasons from the Registrar under ADJR Act s 13.

Burley J next rejected Foxtel’s argument that the Registrar’s decision was an improper exercise of power because it was so unreasonable that no reasonable person could have exercised the power that way.

Here, Foxtel’s conscious decision to instruct that the notice of intention to oppose be filed on the last day of the opposition period – not an uncommon practice – loomed large.

Burley J accepted that the scheme of the Act reflected an intention that the Register be pure. His Honour noted, however, that the Act and reg.s also provided for deadlines for filing documents in oppositions and, in addition, provided a further opportunity for objectors to seek rectification through s 88. His Honour also pointed out that the Explanatory Memorandum linked s 84A(6) – which explicitly states the Registrar has no duty to consider whether to revoke a registration under s 84A – to the objectives of the section:

…. Revocation of registration under section 84A is not intended to provide a way of settling competing claims to ownership of a trade mark. This can be pursued through the courts, with section 86 of the Trade Marks Act providing for the Federal Court to cancel a registered trade mark. Nor is it intended to be a mechanism for parties to file de facto oppositions after a trade mark has been registered. This provision is only intended to provide an administrative mechanism to undo a registration where it was wrongly registered.

The Registrar’s letter stated that she had considered “all of the circumstances” and so taken into account all mandatory considerations. Further, as already noted, the procedure was not intended to provide a mechanism “for parties to file de facto oppositions after a trade mark has been registered” and Foxtel could still seek rectification under s 88. In these circumstances, Burley J held the Registrar’s decision was not so unreasonable that no reasonable person would have exercised the power that way.

Rather than take up the invitation to seek rectification under s 88, Foxtel has appealed (NSD795/2019).

Foxtel Management Pty Limited v Registrar of Trade Marks [2019] FCA 605 (Burley J)


  1. Reg. 21.15 applies where the Act or the reg.s “provide for a person to be heard”.  ?
  2. Citing Annetts v McCann [1990] HCA 57; 170 CLR 596 at [2].  ?

Repeal of s 51(3)

The bill repealing (amongst other things) s 51(3) of the Competition and Consumer Act did get passed and has received royal assent.

The repeal takes effect on 13 September 2019.

So, if you thought you were relying on s 51(3)’s protection, you have a bit less than 6 months to get your house in order.

Your licences and assignments of IP rights probably will not get you into trouble for the most part unless you have market power. But that is not exactly a hard and fast rule so you should discuss your arrangements with your lawyers ASAP.

As discussed in this post, one area of potentially significant concern is where the IP holder has its own retail outlets and also licenses other retail outlets – e.g. not uncommon for franchisors who have their own outlets and franchisees. There is a concern that may give rise to criminal cartel conduct.

If you want to know about the prohibitions on cartel conduct, Ian Wylie has published a paper “Cartel conduct or Permissible Joint Venture?

On Tuesday, the ACCC also announced it hopes to publish draft guidelines by “mid-2019” and finalise them before 13 September. Amongst other things, these proposed guidelines will outline:

how the ACCC proposes to investigate and enforce Part IV in relation to conduct involving intellectual property rights. They will also provide hypothetical examples to illustrate conduct that the ACCC considers is likely or unlikely to contravene Part IV.

Trade Mark 2,000,000

IP Australia has published details of Trade Mark No. 2,000,000:

Trade Mark No. 2000000

I am not sure whether the sequence has been unbroken right from Trade Mark No. 1. Even so, the meter has ticked over and it is definitely a milestone of sorts.

It does seem a little strange, in these days of tobacco plain packaging laws, that someone is pursuing a trade mark registration for a new brand, but it does also extend to smoker’s articles and e-cigs.

By way of interest, Trade Mark No. 1,000,000 was filed by Anchor Foods on 23 April 2004.

That is, it took almost 100 years to get to the 1,000,000 mark; but it took only 15 years for the next million.

I wonder whether “Northern Lights” will achieve the same degree of notoriety as the equally colourful “Golden Lights“.

Lid dip: Dave Stewart

ps. Trade Mark No 1 is still there and, all right, it was only filed on 2 July 1906 so strictly speaking it took just under 98 years to clock up 1 million.

Hells Angels v Redbubble

Redbubble’s online market place has survived the Hells Angels’ copyright infringement claims, but did infringe their registered trade marks. The reasoning, however, leaves questions hanging over Redbubble’s business model.

Redbubble provides an online market place. Artists can upload their artwork and potential buyers can browse the site to purchase the artwork or merchandise such as t-shirts and coffee cups emblazoned with the artwork. If a purchase is made for, say, a t-shirt with a particular artwork printed on it, Redbubble’s system arranges for the order to be placed with a fulfiller and ultimately shipped in packaging which bears a Redbubble trade mark.

The claims in this case related to uploaded images of a Hell’s Angels membership card featuring a helmeted death’s head in profile:

and registered trade marks featuring versions of the death’s head: Trade Marks Nos 526530,723291, 723463, 1257992 and 1257993.

At 552 paragraphs long, this post is going to be a high level overview only.

Copyright

A key feature in the case is that Hells Angels Motorcycle Corporation (Australia) Pty Ltd is not the owner of the copyright or the registered trade marks. It contended it was the exclusive licensee in Australia of those rights; the exclusive licences having been granted by Hells Angels Motorcycle Corporation, a US corporation.

The Hells Angels lost the claim of copyright infringement. They did so, however, because they could not prove Hells Angels USA was the owner of the copyright. As a result, Hells Angels Motorcycle Corporation (Australia) Pty Ltd could not be the exclusive licensee.

Reaching this conclusion required Greenwood J to explore, amongst other things, the notion of publication and whether the supply of membership cards was supply of copies of the work to the public. And the non-applicability of the US “work for hire” doctrine in ownership disputes under Australian law.

Redbubble is still in trouble.

First, if the applicants had been able to prove title to the copyright, Redbubble would have infringed.

Contrary to Hells Angels’ arguments, Redbubble was not liable for infringement by uploading the images. That was done by the artists in question. In the examples in question, the acts involved uploading images to websites outside Australia. For example, Example 1 was uploaded by an individual in Virginia in the USA. So the uploaders themselves were not liable as their actions did not involve any act done in Australia. At [428] – [429], Greenwood J ruled that, even though the images were made available online to the public in Australia, the artists (uploaders) did not infringe because they did no act in Australia.

…. the act of the artist in uploading the image to the website and thus making the work available online to the public must be an act “done” (that is, an exercise of the exclusive right), “in Australia” and therefore, none of the artists in the examples in suit can be regarded as a “primary infringer” in the territorial sense contemplated by s 36(1) because the relevant act was not done “in Australia”.

His Honour found, however, that Redbubble would be liable for communicating the images to the public in Australia as it was the person who was responsible for determining the content of the communication for the purposes of s 22(6) when a potential customer in Australia viewed the image on the website. Redbubble’s business model was crucial here. At [435], his Honour explained:

The business model as described by Mr Hosking and its working operation as described by Mr Kovalev makes it plain that Redbubble is not in the nature of an ISP linking a user to remote websites. It is not an intermediary providing a transmission service between particular participants. It owns, operates, manages and controls the website and conducts a transactional enterprise in which it facilitates the uploading of images, the interrogation of those images in Australia, relevantly, by users, with a view to enabling sales to consumers of articles bearing the relevant images. It has a detailed business model in which it derives revenue from each transaction and controls every step of the transactional engagement between an artist and a buyer. It confirms the sale. It facilitates payment. It organises a fulfiller to apply the work to the relevant goods. It facilitates delivery of the goods to the buyer. It generates email responses which not only confirm the order but track every step of the transaction. It affixes its own trade marks to the goods. It says that it does not directly do that but there is no doubt that an essential part of its business model is ensuring that fulfillers affix the Redbubble trade marks to the goods. The labels bearing the trade marks are on the goods as delivered to each buyer. Although I will address the trade mark case shortly, the reference to Redbubble’s trade marks, in this context, is simply to note another feature of the extent of Redbubble’s engagement in and association with each transaction. It is Redbubble’s business. But for the Redbubble website, the transactions would not occur. The artworks would not be available online to consumers in Australia to consider and appraise with a view to purchasing a product bearing the artwork. The entire focus of the business model is to enable works to be made available online so that consumers can pick and choose amongst the works so as to have them applied to goods. It would be difficult to imagine a more directly engaged participant than one deploying the business model adopted by Redbubble. Although Redbubble describes itself as the “agent” of the artist (presumably as principal), the relationship is not, in truth, a relationship of agent and principal. Redbubble acts as an “independent contractor” to “facilitate the transaction” as the Redbubble User Agreement and Appendix A to the Services Agreement makes plain: [245] and [246] of these reasons. The artist, in truth, is not the “seller” in the classic sense in which that term might be understood because Redbubble is the supplier as the facilitator of all of the essential elements of the transaction with the consumer in an analogous way to that discussed in:  International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company [1958] HCA 16;  (1958) 100 CLR 644 at 653; Heidelberg Graphics Equipment Ltd v Andrew Knox & Associates Pty Ltd (1994) ATPR 41326 at 42, 31011, notwithstanding that the nature of the technology is different to the forms of distribution arrangement in those cases.


His Honour would, if necessary, have also found Redbubble liable for authorising the conduct if it had been infringing.

Trade Marks

Secondly, Greenwood J found Redbubble liable for infringement of the Hells Angels’ registered trade marks on works such as t-shirt designs featuring the death’s head logo.

The crux of this finding came back to Redbubble’s business model. Greenwood J accepted that the artist who uploaded the image was using the trade mark as a trade mark. Unlike the copyright test, there was no requirement that the artist be in Australia. However, so was Redbubble.

At [460] – [461], his Honour explained:

As to Redbubble, that company is “in the business” of facilitating the supply of products bearing the uploaded image of Ms Troen (in this example) or, put another way, Redbubble is in the business of facilitating the supply of clothing bearing, put simply, the registered trade marks of HAMC US (in this example). Redbubble is not the “seller” of artwork. However, it is the supplier, in the sense that it is responsible for all of the transactional supplyside elements of a transaction for the supply of goods bearing the applied works. (emphasis supplied)


Redbubble has created a business model designed to enable users, in Australia (and, for that matter users in all jurisdictions in which the website is accessible), to find images through the website comprised of, in this example, Ms Troen’s image made up of the identified trade marks of HAMC US. Redbubble enables images containing the relevant trade marks to be presented to buyers of particular goods (nominated by the artists from the website categories of those goods to which the work can be applied) expressly for the purpose of facilitating the supply of goods (clothing, in this example) to which the marks are applied. It does so by and through the functions and protocols of the website engaged by Mr Hansen (and other potential viewers of the image), in Australia.

His Honour elaborated on why Redbubble’s conduct attracted liability at [462] – [469]. While this and two other examples infringed, his Honour found that, on the particular facts, Example 2 was not infringing use.

Greenwood J’s reasons also include an extended consideration of whether Hells Angels Australia was an authorised user; ultimately concluding it was.

Greenwood J, however, rejected Hells Angels’ claims that use of “Hells Angels” as search terms, or key words, within the Redbubble site was infringing. At [542] explaining:

542. …. However, I am not satisfied that this use, in itself, is use of the word marks as a trade mark, at this point in the functionality of the website. I take that view because I am not satisfied that using the term as a search term to find a relevant image is use of the term as a “badge of origin” of Redbubble. It is, undoubtedly, a use which is designed, quite deliberately, to lead a consumer by the “search nose” to images, marks, devices, livery and badging somehow or other connected with the Hells Angels Motorcycle Club.

….

544. … use of the word marks … as a search term is a search step along the way to use of the image and thus the registered trade marks, as trade marks but use of the word marks at the point of searching is not, in itself, in my view, use as a trade mark. (original emphasis)

It appears that, at the stage of entering the search term, it is not being used to identify things offered under the aegis of the Hells Angels, but just to locate things about the Hells Angels in some way.

This is the second ruling at first instance where Redbubble has been found to infringe.

While Redbubble’s business model does leave it exposed along the lines indicated above. It is worth noting that Greenwood J awarded only nominal damages of $5,000 in respect of two of the three infringements. His Honour did not allow even nominal damages in respect of the third infringement, Example 4, as it was online for a short period, viewed only 11 times and no sales resulted.

Greenwood J expressly rejected any claim for exemplary damages. His Honour does not go into reasons. Perhaps, Redbubble’s business model did protect it. The evidence was clear, for example, that Redbubble had a policy relating to infringement claims and implemented it promptly.

Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited  [2019] FCA 355

Invalidity cross-claim blocks interlocutory injunction

The Full Court has upheld Burley J’s refusal to grant Sanofi-Aventis an interlocutory injunction over Alphapharm’s SEMGLEE insulin solution for an injector pen. The significance here is that this is an unusual case where the (alleged) infringer’s cross-claim has negatived the patentee’s prima facie case of infringement. The Full Court also affirmed his Honour’s approach to balance of convenience issues.

Burley J found a clear case that Alphapharm’s product fell within claim 1 of Sanofi-Aventis’ patent. His Honour found, however, that Alphapharm’s cross-claim that the patent was invalid for lack of novelty was sufficiently strong that “it was doubtful” Sanofi-Aventis had made out a prima facie case of infringement.

Since the Interpharma case, cross-claims by alleged infringers that the patent is invalid have not enjoyed much success as the Court has approached matters on the basis that it is the patentee’s “title” to interlocutory relief which is in issue.

What was different here was that the invalidity cross-claim was not “merely” a triable issue. It was of such strength that Burley J considered (provisionally) the patent was invalid. The Full Court explained the correct approach at [14]:

…. A case for invalidity which is merely arguable, of itself, does not undermine the existence of a prima facie case of infringement which has otherwise been found to exist. However, a sufficiently strong case of invalidity may well qualify the conclusion that there is a prima facie case of infringement at all. Far from reasoning contrary to the approach in Interpharma and Janssen, the primary judge was applying the same reasoning, albeit with an outcome not to Sanofi’s liking because his Honour was satisfied that Alphapharm’s case on invalidity was sufficiently strong to qualify (indeed, virtually to negate altogether) Sanofi’s prima facie case of infringement. Further, it is Sanofi’s submissions which have conflated the relevance of the competing cases on invalidity. What is relevant is the strength of the case that the claim or claims said to be infringed are invalid. The primary judge at [118] found that “the lack of novelty case advanced by Alphapharm is sufficiently strong (at the provisional level) to qualify (in the sense contemplated in Interpharma at [17]) the conclusion that Sanofi has a probability of success”. ….

Sanofi-Aventis argued that the weight of the balance of convenience in its favour was a factor in considering its prima facie case of infringement. This argument failed both at the level of principle and on the facts.

First, the Full Court accepted that the strength of a plaintiff’s prima facie case is relevant to consideration of the balance of convenience. Balance of convenience, however, did not affect the assessment of the strength of the prima facie case of infringement. At [8], the Full Court explained:

…. The strength of the prima facie case is relevant to the balance of convenience, but the weighing process involved in evaluating where the balance of convenience lies does not affect the assessment of the existence or strength of the prima facie case. As was said in Samsung at [59] “[t]he critical integer in the test …is the need for the Court to assess the strength of the probability of ultimate success on the part of the plaintiff. The strength of that probability will depend upon the nature of the rights asserted and the practical consequences likely to flow from the grant of the injunction which is sought”. ….

Secondly, Burley J had apparently considered the respective losses relatively finely balanced on the question of balance of convenience, but had ultimately considered the difficulties of calculating Alphapharm’s losses outweighed the difficulties in calculating Sanofi-Aventis’.

In particular, the Full Court considered that Burley J had not inappropriately undervalued Sanofi-Aventis’ position as a long standing incumbent. For example at [51], their Honours explained:[1]

… Sanofi had not demonstrated a sufficient likelihood of success in all of the circumstances to justify the preserving of the status quo. Each case turns on its own facts so it is not the point that in GenRx and Warner Lambert the preservation of the status quo was given considerable weight. In neither case was the strength of the prima facie case undermined in the same way as in the present case. In neither case was there a suggestion of market circumstances similar to the present case given the primary judge’s reference in [174] to the real possibility of Alphapharm’s prospective market disappearing as a “significant aspect” of this matter. Faced with the primary judge’s reasons, Sanofi’s submission that his Honour failed to take into account the disruption of the status quo as a material consideration is untenable. His Honour weighed all those matters but the balance favoured Alphapharm not Sanofi.

Sanofi-Aventis Deutschland GmbH v Alphapharm Pty Ltd [2019] FCAFC 28 (Jagot, Yates and Moshinsky JJ)


  1. One can only speculate how the 1336 paragraphs Jagot J had to write to work out the quantum on an undertaking as to damages in Sigma v Wyeth concentrated her Honour’s appreciation of this issue!  ↩

A designs case – spare parts

Burley J has handed down our first case dealing with the “spare parts” defence in the Designs Act 2003.

At 709 paragraphs, any considered analysis will have to wait for another day (or days). In the meantime, here are his Honour’s conclusions:

707. In these reasons, I conclude that GMGTO has failed to establish the bulk of its claim for design infringement. Despite extensive forensic examination of the business of SSS, it has not established infringement in respect of the importation, keeping for sale or offering for sale of the impugned SSS products in respect of any of the SSS respondent companies. In its claim for infringement by selling, GMGTO has established infringement in respect of 4 representative transactions made by SSS Sydney, 2 representative transactions entered into by SSS Melbourne (but only in part in relation to Transaction 17) and 2 representative transactions entered into by SSS Queensland. The parties must now, on the basis of these reasons, attempt to agree on a formula by which the balance of the transactions the subject of GMGTO’s claim might be resolved. They should also confer and attempt to agree to directions to bring these proceedings to a close. 


708. I have concluded that SSS has substantially failed to establish its case on the cross-claim. It has established that there were unjustified threats insofar as they relate to designs that were never certified, which involves the threats made to Panel House, Carparts and Torq. SSS has also established an unjustified threat in relation to copyright infringement in the case of Holmart. I will hear submissions from the parties as to the appropriate relief to grant, if any.

GM Global Technology Operations LLC v S.S.S. Auto Parts Pty Ltd [2019] FCA 97

Cartel conduct and IP licences and assignments

Will your assignments and licences of intellectual property, such as in a typical franchise agreement, expose your client to liability for cartel conduct or will you be ready to apply for an authorisation?

One of the bills pending before Parliament contains the long pursued (by the ACCC) repeal of s 51(3) of the Competition and Consumer Act 2010.

Section 51(3) exempts from most of the prohibitions in Pt IV of the Competition and Consumer Act terms and conditions in assignments and licences of intellectual property which most of us take for granted.

The rationale for repeal is that most transactions involving IP do not have anti-competitive effects or purposes and, if they do, they should not be exempt from the competition laws.

Rodney De Boos, a consultant at DCC with many years’ experience in licensing and commercialisation of IP, however, points out that this explanation was developed before the provisions banning cartel conduct were introduced into the Act. And, he contends, typical arrangements in IP agreements which allocate, for example, territories or customers will constitute cartel conduct and so need authorisation if the parties are not to be in breach of the cartel provisions.

As Rodney explains, a cartel provision are certain types of specified provisions between competitors.

Now, it may well be that an assignor and assignee, or a licensor and licensee, will not be competitors. There are many types of arrangements, however, where the Competition and Consumer Act will deem them to be competitors. An obvious example is the case of a franchisor who has retail outlets (either itself or through a related body corporate) as well as retail franchisees. Other arrangements involving IP could also be similarly problematical.

You can read Rodney’s concerns in more detail here.

The bill repealing s 51(3) has already passed the House of Representatives and is due to be debated by the Senate in the sittings coming up.

Prosecco, GIs and the possible EU FTA

The last few weeks have seen increasing rumblings within Australia about some of the consequences if a possible Free Trade Agreement with the EU goes through.

One of the main features the EU is seeking is expanded protection for the thousands of “GIs”, or geographical indications, recognised in the EU.

The potential impact of the EU FTA requiring Australian producers to stop calling their non-Italian products ‘prosecco’, a GI in the EU, has been generating some media excitement: see:

Professor Mark Davison and colleagues have a paper forthcoming in the AIPJ exploring the validity of the claims to protection [SSRN paper here]

We have been here before – when the EU-Australia Wine Agreement knocked out use of names like ‘champagne’ in return for greater access to the EU for Australian sparkling and other wines.

When the second version of that agreement replaced the 1994 version, the National Interest Assessment pointed out:

8. In 2006-07, Australia exported 421 million litres of wine to the EC with a value of $1.3 billion, and imported 10.2 million litres with a value of $168 million. Key regulatory and intellectual property issues related to trade in wine between Australia and the EC are currently regulated by the 1994 Agreement. 

9. The Agreement offers a number of advantages to Australian wine-growers, which will help consolidate their access to the EC market at a time when the domestic industry still faces concerns about an over-supply. The new Agreement also resolves several outstanding issues not covered by the 1994 Agreement, and thus will help maintain a mutually beneficial trade relationship with the EC.

10. In particular, the Agreement obliges the EC to permit the import and marketing of Australian wines produced using 16 additional wine-making techniques. It also sets out a simpler process for recognition of further techniques, with an option for disputes to be resolved by a binding arbitration. Under the 1994 Agreement, by contrast, the process for authorisation of new wine-making practices has no binding dispute settlement procedure, and no new practices have been authorised under the 1994 Agreement. This has been particularly problematic for Australian wines produced with an important wine-making technique involving the use of cation exchange resins to stabilise the wine. This technique was provisionally authorised for 12 months under the 1994 Agreement, and this authorisation has since had to be periodically extended for 12-month periods.

11. The Agreement also obliges the EC not to impose any new wine labelling requirements that are more restrictive than those which apply when the proposed Agreement comes into force. This means that industry will not face the difficulties and additional costs that might arise if the EC was permitted to introduce more onerous wine labelling requirements.

12. Finally, the Agreement obliges the EC to recognise and protect new Australian wine Geographical Indications. A Geographical Indication is a label or sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due to that place of origin.

How it will play out this time, who knows? As usual, the Australian government is keeping its position largely secret from us. The EU, however, is quite open about what it is seeking (Compare DFAT here and here and here to EU proposed text here see esp. article X.22 and from X.31 and generally).

Section 105(1A) passes its test

While some of us have been sweltering on the beach or disporting in the northern snows, Beach J has granted Branhaven’s application to amend its patent application for compositions and methods of inferring bovine traits following Meat & Livestock Australia’s opposition.

You will recall that Beach J had earlier rejected MLA’s attack based on manner of manufacture, novelty and inventive step. However, his Honour upheld the challenges based on lack of clarity and, to an extent, utility.

Branhaven applied to amend under s 105(1A) of the Patents Act 1990.

MLA opposed; in broad terms arguing that Branhaven was too late, there was no power to amend at this stage; the amendments were not permissible in any event and, as a matter of discretion, should not be allowed even if the Court did have power.

Prior to the Raising the Bar Amendments, the Court had power under s 60(4) to hear an appeal from the Commissioner’s decision in an opposition. The Court was restricted, however, to dealing with the application in the form the subject of the opposition before the Commissioner. If the opposition was successful but on grounds that could be cured, any application to amend had to be remitted to the Commissioner.[1] Two of the amendments introduced by Raising the Bar were s 105(1A) and s 112A. Section 105(1A) provides:

If an appeal is made to the Federal Court against a decision or direction of the Commissioner in relation to a patent application, the Federal Court may, on the application of the applicant for the patent, by order direct the amendment of the patent request or the complete specification in the manner specified in the order.

MLA argued that, after such a hotly contested ‘appeal’ and detailed reasons, Beach J was in effect functus officio. Amongst other things, MLA’s application was not made during the appeal and the Court therefore had no power to deal with the amendment application.

Beach J has rejected all these attacks. In the course of doing so, his Honour recognised it would not be appropriate to remit the matter to the Commissioner (even if there were power). His Honour also found that s 105(1A), like s 105(1) but unlike the Commissioner’s powers under s 60, was discretionary. His Honour’s reasons also explored the types of considerations that might affect the exercise of that discretion in the context of an application instead of a granted patent.

At this stage, it is not known if MLA will seek to appeal.

Meat & Livestock Australia Limited v Cargill, Inc (No 2) [2019] FCA 33