Enforcement

Fearless Girl!

1 Comment / Copyright, Enforcement, Trade marks / / / , , , , , , , , , ,

Beach J has ruled that Maurice Blackburn did not breach any of State Street Global’s rights in the Fearless Girl statue by arranging for a replica to be displayed at the launch of a campaign to address the gender pay gap.

Image of Fearless Girl bronze sculpture in alley with tour group in background
Image by maggavel from Pixabay

In 2016, State Street had commissioned Kristen Visbal to create a life-size bronze statue which became known as “Fearless Girl” in connection with a campaign to promote State Street’s Gender Diversity Index exchange traded fund, known as the “SHE fund”.

The completed statue was installed and unveiled in Bowling Green Park on Wall Street, famously appearing to confront the Charging Bull statue.[1] This had been a wildly successful campaign with, amongst other things, over 4.6 billion Twitter impressions (?) and a “mere” 745 million Instagram impressions (?) in the first 12 weeks!

In 2019, Maurice Blackburn and a number of corporate and super fund backers negotiated an agreement with Ms Visbal for a fee of USD250,000 permitting them to display a Fearless Girl replica in Federation Square Melbourne[2] in connection with a campaign for Equal Pay Day.

After Maurice Blackburn sent out invitations to the unveiling of the Fearless Girl replica in Federation Square, State Street sued Maurice Blackburn and some of its co-funders for pretty much everything they could think of:

  • interference with contractual relations;
  • false, misleading or deceptive conduct in trade and commerce contrary to the Australian Consumer Law and passing off;
  • trade mark infringement; and
  • copyright infringement.

All the claims failed.

Beach J’s reasons for judgment run for some 1191 paragraphs over 274 pages. So, more considered analysis will have to await a later day (or days).

The central issue seems to have been the very specific nature of State Street’s rights to control further reproductions of the work and the careful way Maurice Blackburn had used Fearless Girl.

The terms State Street and the artist had negotiated included a clause granting State Street the exclusive rights:

to display and distribute two-dimensional copies, and three-dimensional Artist-sanctioned copies, of the Artwork to promote (i) gender diversity issues in corporate governance and in the financial services sector, and (ii) SSGA and the products and services it offers. …. (emphasis supplied)

and Ms Visbal also agreed that no other party could be authorised to use “the Artwork” as a logo or brand ….

Beach J held that the way Maurice Blackburn had used Fearless Girl in connection with the Equal Pay Day campaign did not fall within the scope of State Street’s exclusive rights. It also was not use as a logo or brand. Michaela Whitbourn has a nice summary.

However, it looks like there will need to be a further hearing to determine whether, and if so, how Maurice Blackburn may use and display its Fearless Girl replica in the future.

State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No 2) [2021] FCA 137

  1. Those of you out there with long(-ish) memories, might recall that that juxtaposition caused its own ‘moral rights’ controversy. Fearless Girl was later moved in April 2018 to its current position in front of the New York Stock Exchange.  ?
  2. Fed Square, of course, is not without its own controversies!  ?

Fearless Girl! Read More »

The Commonwealth gets nothing on Sanofi’s undertaking as to damages

Leave a Comment / Enforcement, Patents / / / , , , , , , ,

Nicholas J has dismissed the Commonwealth’s application for Sanofi to pay it compensation under the undertaking as to damages when Sanofi obtained an interlocutory injunction against Apotex’ plans to launch clopidogrel in Australia, but the patent was ultimately ruled invalid.

The decision is some 698 paragraphs long, so this going to be the briefest overview of some highlights only.

Some litigious background

Clopidogrel is a medication which can be used to inhibit blood clotting. Sanofi (then called Sanofi-Aventis) had patents protecting it around the world and had generated over US$1 billion in revenues. Sales in Australia being under Sanofi’s Plavix trade mark and BMS’ Iscover trade mark.

In August 2007, Apotex commenced proceedings for the revocation of Sanofi’s Australian patent.[1] Shortly after, Apotex also obtained registration of its generic version of clopidogrel on the Australian Register of Therapeutic Goods. In September 2007, it then applied for listing of its generic clopidogrel in the Pharmaceutical Benefits Scheme (PBS), through which the Commonwealth government subsidises the price of drugs in Australia.

As it missed the cut off date for the next round of listings in the PBS, it withdrew that application with the intention of making a further application before the next round closed on 1 December 2007. An application made in the December round would be for listing on the PBS from 1 April 2008.

In September 2007, however, Sanofi obtained an interlocutory injunction restraining Apotex from importing or selling in Australia pharmaceuticals which included clopidogrel as their active ingredient. Sanofi gave the usual undertaking as to damages as the price for that interlocutory injunction.

At the hearing for the interlocutory injunction, Apotex also gave an undertaking not to make an application for listing in the PBS pending the outcome of the trial. Apotex did not obtain from Sanofi an undertaking as to damages for that undertaking.

At the substantive trial, Gyles J dismissed Apotex’ application for revocation and instead found that it had infringed Sanofi’s patent. In September 2009, however, the Full Court upheld Apotex’ appeal and ordered the patent be revoked.[2] Sanofi’s application for special leave was dismissed by the High Court on 12 March 2010.[3]

Sandoz obtained PBS listing for its generic clopidogrel on 1 April 2010. Apotex did not obtain listing of its product until 1 May 2010. So, in addition to whatever sales it lost between 1 April 2008 and the lifting of the injunction in 2010, Apotex also lost whatever advantages may have flowed from being the first generic mover.

Sanofi and Apotex settled Apotex’ claims for compensation on the undertaking as to damages out of court.

The Commonwealth’s claims

The Commonwealth also claimed compensation under the undertaking as to damages.

Its case was that Apotex would have been listed on the PBS from 1 April 2008 if Sanofi had not been granted the interlocutory injunctions and so, as a result of the interlocutory injunction, the price payable for clopidogrel:

(a) was not reduced by the statutory reduction to the Approved Price to Pharmacists of 12.5%[4] (i.e. in very loose terms, the Commonwealth paid a price 12.5% higher than it should have been on all sales of clopidogrel between 1 April 2008 and 1 May 2010);

(b) further statutory reductions of 2% each were not triggered on, respectively, 1 August 2009 and 1 August 2010; and

(c) additional price reductions consequent upon the triggering of a statutory price disclosure regime which should have occurred on 1 April 2008.

(From [653] in his Reasons, Nicholas J discusses various scenarios for the calculation of how much the grant of the interlocutory injunction cost the Commonwealth. The lowest amount his Honour would have found in terms of compensation was in the order of $15 million.)

To succeed in its claim, Nicholas J held (at [196]) that the Commonwealth had to show:

· Would the relevant loss have been sustained but for the grant of interlocutory injunction?

· Did such loss flow directly from the interlocutory injunction?

· Could loss of the kind sustained have been foreseen at the time the interlocutory injunction was granted?

Why the Commonwealth lost

The Commonwealth was able to secure a number of witnesses from Apotex. These included the managing director of Apotex Australia, a Mr Millichamp, whose affidavit evidence was to the effect that Apotex was committed to launch its generic clopidogrel in Australia if, having been notified of Apotex’ plans to launch, Sanofi did not obtain an interlocutory injunction.[5]

The problem for the Commonwealth was that Apotex Australia is part of a corporate group controlled by Apotex Canada and the decision on whether or not to launch the product in Australia was to be made by Apotex Canada – specifically its founder and managing director, Dr Barry Sherman.

The evidence did show that in February 2007, Dr Sherman did plan for Apotex to launch its generic clopidogrel in Australia if Sanofi did not get an interlocutory injunction against it. Over time, however, the situation developed further. For example, the evidence included an email Mr Millichamp sent to one of his offsiders on 27 June 2007 when it appeared that the TGA listing was imminent (emphasis supplied) which stated:

[redacted]

[redacted] If we are successful in avoiding an injunction we will plan to launch subject to Barry’s further advice / approval.

If anything changes I’ll let you know.

“Barry” being Dr Sherman. At [251], Nicholas J considered this email indicated that Apotex had not yet decided whether it would launch its clopidogrel product in Australia if Sanofi did not succeed in getting an interlocutory injunction to restrain it.

Secondly, Apotex appears to have been planning to supply Australia from US stocks, but the shelf life of those products would not extend beyond August 2008 which was not very practical – especially when the earliest launch date would be April 2008.

Thirdly, Apotex’ challenge to Sanofi’s patent in the USA had been rejected by the trial judge.

Fourthly, Apotex’ communications to pharmacies did not definitely commit to a launch of the product.

Fifthly, Apotex had not exposed its legal advice on its prospects so Mr Millichamp’s evidence that “we always believed that all of the claims of the patent were invalid”

are not persuasive in circumstances where any legal advice upon which such a belief was based is not in evidence particularly in circumstances where the validity of the US Patent had already been upheld by the US District Court in a decision that was later affirmed on appeal.

Sixthly, at the time of the hearing for the interlocutory injunction in September 2007, the judge had indicated the final trial of substantive issues would be heard in April 2008 and he would give judgment by August 2008.[6] That is, the trial would take place in the same month as the earliest date that Apotex could be in the market if it re-submitted its PBS application before 1 December 2007.

In these circumstances, Nicholas J considered at [286]:

In the absence of evidence from Dr Sherman, I am not persuaded that he would have authorised a launch at risk in circumstances where an interlocutory injunction had been refused, but a final hearing was fixed to commence on 28 April 2008. ….

Rather, Nicholas J considered there was every reason for Dr Sherman to have deferred Apotex’ decision whether to launch or not until the last possible moment.

At this point, the failure (or inability) of the Commonwealth to call Dr Sherman as a witness became decisive all the more so as the Commonwealth was able to produce for cross-examination other Apotex witnesses who did travel from Canada and India. Nicholas J concluded at [347] – [349]:

I conclude that Dr Sherman was a witness who I would have expected to have been available to the Commonwealth and who would have had a close knowledge of relevant facts. In circumstances where the Commonwealth’s decision not to call Dr Sherman was wholly unexplained, I infer that the Commonwealth chose not to call him because it considered that his evidence would not have assisted its case.

I am not prepared to infer, based on the 20 February 2007 email, or any of the subsequent correspondence in evidence which was said to justify the drawing of such an inference, that Dr Sherman was likely to have instructed Mr Millichamp to procure the listing of Apotex’s clopidogrel products with effect from 1 April 2008.

In my opinion, the Commonwealth’s case suffers from an evidentiary deficiency which cannot be made good by drawing inferences from correspondence written by Dr Sherman in the lead up to the hearing of the interlocutory application. In particular, I do not think it can be inferred that if Dr Sherman had known that the trial of the patent proceeding would commence in the same month that Apotex Australia obtained a PBS listing of its clopidogrel products (triggering a 12.5% statutory price reduction), that he would have, in those circumstances, authorised Apotex Australia to obtain such a listing before judgment was delivered or, at least, until the trial had concluded (by which time he and his colleagues and his legal advisers may have had a clearer view of the strength of Sanofi’s case).

In the result, at [351], Nicholas J held that the Commonwealth’s claim must be dismissed.

Some other matters

Having dismissed the claim, Nicholas J went on to consider a number of other matters, albeit by way of obiter dicta.

Apotex’ undertaking not to seek PBS listing was not direct loss

The fact that Sanofi did not give an undertaking as to damages in return for Apotex’ undertaking not to seek PBS listing if an interlocutory injunction restraining sale was made would have provided a second basis for dismissing the Commonwealth’s claim.

Nicholas J accepted that the losses claimed by the Commonwealth were a foreseeable consequence of the interlocutory injunction, however, they were not a sufficiently direct consequence of it.

Apotex had recognised that, if an interlocutory injunction restraining sale was granted, there was no point seeking PBS listing. It would not be able to give the guarantee of supply required to obtain PBS listing and so any listing would fail or be revoked. In addition, it might expose it to increased damages having to compensate Sanofi for the profits lost on the automatic 12.5% reduction in price.

While Nicholas J accepted the Commonwealth’s loss was a reasonably foreseeable consequence of the interlocutory injunction, his Honour held it did not result directly from the injunction in the relevant sense. At [445], his Honour explained:

Even if it is accepted, as I have found, that the first Apotex undertaking would never have been given if the interlocutory injunction had not been granted, it does not follow that the Commonwealth’s loss flowed directly from the interlocutory injunction. The terms of the interlocutory injunction did not prevent Apotex Australia from applying for a PBS listing of its clopidogrel products or from taking any other steps to obtain such a listing. Doing so would not have involved a breach of the interlocutory injunction. The Commonwealth’s loss was a natural and direct consequence of Apotex Australia not being able to apply to list its clopidogrel products on the PBS with effect from 1 April 2008, which was the precise conduct to which the first Apotex undertaking was directed, but not something the interlocutory injunction expressly or implicitly prohibited. This strongly suggests, in my view, that the loss alleged by the Commonwealth in this case was an indirect consequence of the interlocutory injunction.

It is worth considering the ramifications of that conclusion. First, it has been held that it is not an infringement of the patent for someone to apply for PBS listing of a drug containing the protected invention.[7] Further, the Commonwealth is not in a position to require a generic company to refrain from giving an undertaking not to seek PBS listing unless there is an undertaking as to damages. Thirdly, His Honour’s reasoning would apply equally to the losses claimed by Apotex under the undertaking as to damages, not just the Commonwealth’s. If you are acting for a ‘generic’ in this situation, therefore, make sure any undertaking as to damages extends to any undertaking not to seek PBS listing.

Sanofi argued that, even if it did not get an interlocutory injunction, the Minister (or delegate) would refuse listing of Apotex’ product in the PBS on the grounds of patent infringement until the outcome of the proceeding was known. Sanofi’s own witnesses, however, admitted such an outcome was unlikely. Instead, Nicholas J considered an application for listing would most likely have been approved if Apotex had given the necessary guarantee of supply. At [419], Nicholas J said:

I do not think it likely that the Delegate would have refused the application on the basis that a trial of the patent proceedings would shortly take place or that a judgment might be expected to be given some time between May 2008 and August 2008. In my view the Delegate is likely to have been most influenced by two matters: first, the willingness of Apotex Australia to provide an assurance of supply and, second, the absence of any interlocutory injunction restraining any such supply. I think it unlikely that a Delegate would have questioned the ability of Apotex Australia to either comply with its assurance of supply or comply with its obligations under the guarantee of supply. So far as the latter was concerned, I consider it most likely that the Delegate would have proceeded on the basis that, in the event that there was some failure on the part of Apotex to supply during the guaranteed period, then it would be open to the Minister in that situation to exercise one or more of the powers available under the relevant provisions of the NHA including the power to delist the Apotex Australia clopidogrel products and the power to reverse the 12.5% statutory price reduction.

Another area of dispute between the parties was what would have happened if the interlocutory injunction had not been granted but, as in fact happened, the trial judge found Apotex infringed. Mr Millichamp from Apotex gave evidence Apotex would have applied to have the Apotex product delisted. Sanofi argued that, in that situation, it would have been able to get the 12.5% automatic price reduction reversed. The Commonwealth contended that reversal was unlikely. There was a at least one prior case where the price reduction had been reversed before the price reduction became automatic. In the unexplained absence of the person who was the relevant decisionmaker within the Government at the time,[8] Nicholas J considered at [529] the chance the Commonwealth would not have reversed the price reduction to be less than 10%.

Sanofi disputed that interest was payable on compensation ordered under the undertaking as to damages. While his Honour did not finally decide the point, Nicholas J indicated at [697] that he would have ordered Sanofi to pay simple interest on the sum awarded on the basis that it would have been just and equitable to do so.

In light of the evidence that it would take only 2 to 3 weeks for Apotex to have written its own Product Information, Nicholas J would not have denied the Commonwealth recovery because the Product Information (and other stipulated regulatory disclosures) infringed Sanofi’s copyright.[9] His Honour considered at [643] there was “good reason to believe” that no interlocutory injunction would have been granted to restrain copyright infringement in that time frame.

Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) (No 5) [2020] FCA 543

  1. Australian Patent No 597784 for the dextro-rotatory enantiomer of methyl alpha–5 (4,5,6,7-tetrahydro (3,2-c) thieno pyridyl) (2-chlorophenyl)-acetate, a process for its preparation, and pharmaceutical compositions containing it.  ?
  2. One curiosity of this outcome is that Sanofi’s corresponding patents in Canada and the USA were both upheld as valid and infringed.  ?
  3. Further interlocutory injunctions were put in place pending the outcomes of the appeals.  ?
  4. In essence, while there was only one source of clopidogrel – Sanofi (and BMS as a licensee) – clopidogrel was listed in the PBS in formulary F1. As soon as a second, competing source obtained listing, Sanofi’s listing would be moved into formulary F2 with an automatic price reduction of 12.5% imposed by statute. See [144] – [145]. Paragraphs [36] – [77] contain a useful explanation of how the pricing of products listed on the Pharmaceutical Benefits Scheme works and, in particular, the automatic reductions on pricing that apply when a second (usually generic) drug is listed.  ?
  5. The evidence disclosed that Apotex’ strategy, having successfully developed its generic clopidogrel (and having at least a further 18 months to complete development of a product based on a different salt), was (1) to secure ARTG listing then in short order (2) to apply for PBS listing, (3) to launch to the trade on an “at risk” basis – i.e. ensure the trade knew Apotex might have to withdraw the product if Sanofi’s patent was valid and (4) then to put Sanofi on notice of its plans to launch by bringing the revocation proceeding. An explicit part of the strategy was to secure the benefit of the undertaking as to damages if Sanofi did block sales through an interlocutory injunction.  ?
  6. The trial judge reached the statutory age for retirement in that month.  ?
  7. Warner-Lambert Company LLC v Apotex Pty Ltd (2017) 249 FCR 17  ?
  8. The fact that the person was no longer working for the Commonwealth was not a sufficient justification for the failure to call her.  ?
  9. The Copyright Act 1968 was subsequently amended to preclude the use of copyright against such materials. See now s 44BA.  ?

The Commonwealth gets nothing on Sanofi’s undertaking as to damages Read More »

Repeal of s 51(3)

Leave a Comment / Antitrust, Copyright, Designs, Enforcement, IP generally, Patents, Trade marks, Trade Practices / / / , , , , , , , , ,

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.

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Staying arbitration: Kraft, Bega, Warner Bros and Mad Max

Leave a Comment / Enforcement / / / , , , ,

In the face of misleading and deceptive conduct litigation in Australia, O’Callaghan J has granted injunctions restraining Kraft from pursuing its arbitration claims in New York against Bega’s sale and promotion of Bega Peanut Butter in what Kraft alleges is misleading or deceptive get-up.

Kraft had been selling peanut butter in Australia under the Kraft brand for over 50 years. It had about 65% of the peanut butter market in Australia valued at over Australian $110 million per year.

In 2012, however, Kraft restructured its operations globally into a grocery business and a snack food business. The snack food business was operated by Mondelez.

Mondelez was given a licence to use the Kraft brand on, amongst other things, peanut butter which included the right to use the get-up Kraft had been using. The licence was due to expire at the end of December 2017.

Before the licence expired, Mondelez sold its Australian and NZ business to Bega. Bega began marketing its peanut butter in the get-up shown below:

 

Kraft peanut butter

Bega peanut butter

 

 

 

 

 

 

 

 

Kraft’s licence to Mondelez included a dispute resolution clause that all disputes arising under, or in relation to, the licence should go through the familiar three-tiered resolution process of consultation, mediation and, if not resolved, binding arbitration in New York:

Step Process: Any controversy or claim arising out of or relating to this Agreement, or the breach thereof (a “Dispute”), shall be resolved: (a) first, by negotiation and then by mediation as provided in Section 7.2; and (b) then, if negotiation and mediation fail, by binding arbitration as provided in Section 7.3. Each party agrees on behalf of itself and each member of its prospective Group that the procedures set forth in this Article VII shall be the exclusive means for resolution of any Dispute. The initiation of mediation or arbitration hereunder will toll the applicable statute of limitations for the duration of any such proceedings.

Kraft sought to initiate the dispute resolution process with Bega. Amongst other things, Kraft contends in the arbitration that Bega’s use of the Bega Trade Dress is in breach of the licence from Kraft to use the Kraft Peanut Butter Trade Dress. Kraft goes on to allege:

  1. Bega’s use of virtually identical trade dress on its peanut butter is likely to cause and is causing confusion, mistake or deception as to Kraft’s sponsorship and/or endorsement of Bega’s peanut butter product.

Considering that Bega was not complying with the process, Kraft launched proceedings in the Federal Court for the Southern District of New York to compel Bega to mediation. Bega, while reserving the right to claim it was not subject to the arbitration agreement, told the New York court it would participate in the mediation process.

In parallel with these developments, however, Kraft also commenced proceedings in Australia against Bega alleging that the promotion of the Bega peanut butter in the Bega get-up in Australia contravened the prohibitions on misleading or deceptive conduct in the Australian Consumer Law. According to Kraft, Bega’s advertisements and use of the Bega get-up misrepresented that Kraft peanut butter is now Bega peanut butter or is being replaced by Bega peanut butter and the Kraft brand has changed to Bega.

In the Australian proceedings, Bega cross-claimed and also sought injunctions ordering Kraft not to prosecute the arbitration proceedings. After careful consideration of the principles for ordering a party not to engage in arbitration, O’Callaghan J has granted that anti-arbitration injunction.

O’Callaghan J considered that the question of the ownership of the packaging and get-up was the central issue raised in both Kraft’s notice of arbitration and the proceeding under s 18 of the Australian Consumer Law.

If the question in the arbitration proceeding had simply been that the licence had expired and Bega had no right to use the get-up, there may not have been an overlap. As noted above, however, Kraft’s notice of arbitration went much further with allegations of false representations.

Kraft argued that its claims under s 18 of the ACL do not arise under or in relation to the contract, but are independent statutory causes of action. O’Callaghan J pointed out at [91] that whether the statutory cause of action was independent of, or in relation to, the contract depended on whether there was a nexus or connection between the contract and the contraventions which gave rise to the misleading or deceptive conduct claim.

In this case, there was such a connection as whether or not Bega’s conduct was misleading turned on the operation of the licence agreement. At [95], his Honour pointed out the alleged misrepresentations could only be false or misleading by virtue of the operation and effect of the terms of the licence agreement. Accordingly at [96]:

Kraft’s pleaded case in this proceeding is one in which it seeks to agitate a dispute which is properly to be characterised as being “in relation to” the master agreement. For that reason, in my view, Kraft should have invoked the dispute resolution provisions of the master agreement with respect to the claims made in this proceeding. It was not, as it contended, bound to bring the proceeding in this court.

Having found that the court proceeding and the arbitration addressed the same or at least overlapping subject matter, his Honour went on to find that it was appropriate to grant an injunction against pursuing the arbitration while the consumer law proceeding was on foot.

First, O’Callaghan J rejected any argument that it was necessary to show, in cases where parties had set up an arbitration process, an exceptional case or that the power to grant an injunction should be viewed through a “different prism”.

Secondly, his Honour acknowledged the tension between courts’ desire to hold parties to their bargains (i.e. respect the arbitration clause) and “deep and strong antipathy” to situations which could give rise to inconsistent verdicts.

Here, Kraft was the author of its own predicament. It could have (and should have) included its misleading and deceptive conduct claims in its arbitration notice, but instead had chosen to bring separate and additional proceedings in Australia. At [109]:

Kraft ought to have included the claims made in this proceeding under the Australian Consumer Law in its notice of arbitration because those claims, contrary to Kraft’s submission, do fall within the ambit of the arbitration clause in the master agreement. Instead, Kraft chose to initiate this proceeding, and then to prosecute it, including by filing a statement of claim and a reply to Bega’s defence, participating in procedural directions, seeking discovery, filing a notice to produce, consenting to the filing by Bega of a counterclaim (in which the issue of ownership of the trade dress issue is squarely raised) and then filing a defence to that counterclaim. As Bega submitted, Kraft is the party responsible for the bringing of both proceedings. It alone is the author of the possibility or probability of duplicated litigation and inconsistent findings. Each of those considerations also weighs significantly in favour of restraining the arbitration, at least until this proceeding is determined.

O’Callaghan J then went on to consider whether there were any equitable considerations that weighed against granting an injunction.

Finally, O’Callaghan J rejected Kraft’s argument that, instead of seeking an injunction against the arbitration proceedings, Bega should have applied under s 7(2) of the International Arbitration Act 1974 (Cth) for orders to stay the Australian proceeding. At [166]:

I reject that submission. First, Bega had no obligation to seek a stay under s 7 of the International Arbitration Act 1974 (Cth) or otherwise. Secondly, if the stay application was bound to have succeeded on those grounds, one would have thought it rather suggests that Kraft should not have brought the proceeding in this court in the first place.

After a subsequent hearing, O’Callaghan J rejected Kraft’s contention that the injunction against progressing the arbitration proceeding should only apply so long as Kraft’s application in the Australian proceeding was on foot. Kraft argued that Bega’s cross-claim was “a matter for Bega” and should not bear on the injunction. As his Honour noted, Kraft openly admitted the point here was that it may well discontinue its claim in Australia.

O’Callaghan J pointed out that the assessment of inconsistency was not made just on Kraft’s claim, but the pleadings as a whole. At [69], O’Callaghan J explained:

In assessing whether, and if so, to what extent, the issues in the two proceedings overlap, the scope of the relevant issues necessarily includes all the issues raised by the parties, including by Bega in its defence and counterclaim, and by Kraft in its statement of claim, reply and defence to counterclaim. That is so because when a foreign party brings a proceeding in an Australian court, it submits not only to its jurisdiction in respect of its own action, but also in respect of any cross-claim that a respondent brings: ….

Bega’s cross-claim and Kraft’s defence to it raised essentially the same central question as raised in Kraft’s claim and the arbitration proceeding: the ownership and rights to use the get-up in dispute.

A more conventional outcome is illustrated by Warner Bros Feature Productions Pty Ltd v Kennedy Miller Mitchell Films Pty Ltd, in which the NSW Court of Appeal ordered a stay of the court proceedings in favour of arbitration.

In Warner, George Miller and Doug Mitchell are in dispute with the Warner group over payments for their roles in producing and directing Mad Max: Fury Road. The Court of Appeal dealt with a construction fight whether the arbitration clause formed part of the contract or not. Finding it did, on Warner’s application the Court ordered a stay of the NSW proceedings.

In this case, unlike Kraft v Bega, the party seeking to enforce the arbitration clause, Warner, had not brought the potentially inconsistent proceedings – Miller and Mitchell did.

Kraft Foods Group Brands LLC v Bega Cheese Limited [2018] FCA 549

Kraft Foods Group Brands LLC v Bega Cheese Limited (No 2) [2018] FCA 615

Staying arbitration: Kraft, Bega, Warner Bros and Mad Max Read More »

Patent cases in the Federal Court

Leave a Comment / Enforcement, Patents / / / , , ,

Kelvin Tran from Litimetrics has published some fascinating statistics about patent litigation in the Federal Court of Australia.

For example, since 2010, 472 cases have been commenced in the Federal Court involving patent issues. Mr Tran points out that number “compares” to 160,000 granted standard patents and 1,400 certified patents.

The publication also includes a breakdown of numbers by registry, length of proceedings, time to resolution and the average number of typical events such as directions hearings, interlocutory applications and the like. They may be useful if you have to prepare a budget or a costs disclosure statement. To view Mr Tran’s statistics, you should go here.

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IP Amendment (Productivity Commission Part 1 …) Bill – exposure draft

1 Comment / Enforcement, Patents, PBR, Trade marks / / / , , , , , , , ,

IP Australia has released an exposure draft bill and regulations to implement some of the Productivity Commission’s recommendations from its Intellectual Property Arrangements report. Intended to be the Intellectual Property Laws Amendment (Productivity Commission Response Part 1 and Other Measures) Bill 2017.[1]

According to the news release, the amendments will:

  • commence the abolition of the innovation patent system (PC recommendation 8.1)
  • expand the scope of essentially derived variety declarations in the Plant Breeder’s Rights (PBR) Act (PC recommendation 13.1)
  • reduce the grace period for filing non-use applications under the Trade Marks Act (PC recommendation 12.1(a))
  • clarify the circumstances in which the parallel importation of trade marked goods does not infringe a registered trade mark (PC recommendation 12.1(c))
  • repeal section 76A of the Patents Act, which requires patentees to provide certain data relating to pharmaceutical patents with an extended term (PC recommendation 10.1)
  • allow PBR exclusive licensees to take infringement actions
  • allow for the award of additional damages, under the PBR Act
  • include measures intended to streamline a number of processes for the IP rights that IP Australia administers,

and everyone’s favourite “a number of technical amendments”.

On the parallel imports front, the bill would introduce a new s 122A to replace s 123(1) with the object of overruling the Federal Court’s case law severely restricting the legality of “parallel imports” since the 1995 Act came into force. It’s a “doozy”.

For example, it attempts to reverse the onus of proof that the courts have imposed on parallel importers by providing that

at the time of use, it was reasonable for the [parallel importer] to assume the trade mark had been applied to, or in relation to, the goods by, or with the consent of, a person who was, at the time of the application or consent (as the case may be):

(i) the registered owner of the trade mark; or

(ii) an authorised user of the trade mark; or

(iii) a person authorised to use the trade mark by a person mentioned in subparagraph (i) or (ii), or with significant influence over the use of the trade mark by such a person; or

(iv) an associated entity (within the meaning of the Corporations Act 2001) of a person mentioned in subparagraph (i), (ii) or (iii).

 

I suppose “reasonable to assume” does at least require some objective support for the “assumption”.

The second part – (iii) and (iv) above – is trying to deal with the situation where the registered owner assigns the trade mark to someone in Australia, but with the capability of calling for a re-assignment.[2]

This will require considerable flexibility by the Courts in interpreting “significant influence”.

If you have made such and assignment, or your client has, you had better start re-assessing your commercial strategy, however. The transitional arrangements say the amendment will apply to any infringement actions brought after the section commences. Moreover, this will be the case even if the “infringing act” took place before the commencement date.

Comments should be submitted by 4 December 2017.

Exposure draft bill

Exposure draft EM

Exposure draft regulations

Exposure draft explanatory statement

  1. Seems like the “short title” of bills are reverting to the old form “long” titles!  ?
  2. For example, Transport Tyre Sales Pty Ltd v Montana Tyres Rims & Tubes Pty Ltd [1999] FCA 329.  ?

IP Amendment (Productivity Commission Part 1 …) Bill – exposure draft Read More »

Print outs of third party websites ruled inadmissible

Leave a Comment / Enforcement, Trade marks / / / , , , , , , , , ,

Mortimer J has ruled that print outs of third party websites are inadmissible as hearsay and, if not, excluded under s 135 of the Evidence Act as unduly prejudicial.

Shape Shopfitters is suing Shape Australia for infringement of several registered trade marks which, it says, include SHAPE as the essential feature and the usual passing off-type actions.[1] Both are in the commercial construction business. Shape Australia used to be called ISIS Group Australia, but changed its name in October 2015, as her Honour said “for reasons that are immediately obvious.”

Shape Shopfitters is contending that the use of “Shape” in Shape Australia’s name is likely to lead people to think that Shape Shopfitters is the “shopfitting” arm of Shape Australia, which it is not.

As part of its defence Shape Australia sought to lead evidence of ASIC and Australian Business Register records of other companies and businesses with the word SHAPE in their name. Shape Australia also sought to introduce print outs of the websites of various businesses resulting from Google searches such as “shape building”.[2] Some, but not all, of the print outs were from the Wayback Machine. The print outs purported to be of businesses called Shape Consulting, Shape Builders Pty Ltd, Shape Joinery & Design Pty Ltd, Shape Fitouts Pty Ltd and Shape Finance (Aust) Pty Ltd. You will immediately appreciate that Shape Australia was hoping to show that “shape” itself was not distinctive or to rely on the well-known proposition from the Hornsby Building Information case.[3]

Mortimer J noted that no objection was taken to the ASIC or Australian Business Register print out – presumably, because they were official records.[4]

However, the print outs of the websites of the businesses themselves were hearsay. They were being advanced to show that there were other businesses out there claiming to have and use the names appearing in the print outs. At [24], her Honour ruled:[5]

the evidence sought to be adduced by the respondent is clearly hearsay within the meaning of s 59 of the Evidence Act. The statements made on various internet sites of other corporations or business entities (including the archived material to which Mr Henry deposes in [24] of his affidavit)[6] constitute a previous representation made by the person or persons who constructed the website, wrote the text and inserted the graphics. The purpose of adducing evidence of those statements of text and graphics is to prove the existence of a fact it can reasonably be supposed was intended by the drafter of the text and the person who constructed the graphics. The fact is that there were business entities trading on the dates specified (between August and October 2016) in the industries and markets set out on the pages exhibited by Mr Henry, in the locations those webpages identified using the names those webpages identified. It is the actual existence of those business entities, the names they were using, the industries and markets in which they were trading, the services they were offering and the locations in which they were offering those services which the respondent in my opinion seeks to use as part of its case to prove that there was no confusion in the marketplace generated by its use of the word “shape” in SHAPE Australia.

Even if the print outs were not hearsay, Mortimer J would have excluded them under s 135 if the Evidence Act on the basis that their probative value was substantially outweighed by the danger of prejudice to Shape Shopfitting.

the evidence … constitutes no more than a snapshot of what was available through a series of internet searches on a particular date, without any context being available to be tested about the nature of the businesses these searches have turned up. The probative value of such searches is limited on any view. The applicant’s case is a very specific one about what participants in the commercial construction industry may or may not be led to believe concerning the relationship between the applicant and the respondent, and whether the applicant might be seen as no more than a “specialist shop fitting arm” of the respondent. To have evidence in the nature of single date extracts of internet searches showing businesses using the word “shape”, without calling evidence from witnesses who operate or control those businesses, and allowing the applicant to test the similarities or differences between those businesses and its own, between the customer base(s) of those business and its own, and in turn between those businesses and the respondents, is in my opinion to create a danger of unfair prejudice to the applicant. Snapshots of internet searches on particular dates, all of which are between just under and just over a year after the respondent adopted the name “SHAPE Australia” contribute little by way of proof as to what participants in the commercial construction industry were likely to believe about the commercial relationship between the applicant and the respondent since 26 October 2015, but it is not the kind of evidence the applicant can test as it should be able to.

What Shape Australia should have done was get affidavits, or subpoena, from (1) witnesses from the companies it wished to prove existed and (2) consumers who might be searching for the relevant services.

Now, depending on which side of the case you find yourself, you will be cheering or in tears. But, at the very least one might wonder if that correct approach is really conducting litigation “as quickly, inexpensively and efficiently as possible”? It will be very interesting to see how her Honour deals with Shape Australia’s substantive arguments whether it’s name is too similar to Shape Shopfittings’? Meanwhile, the Registrar can treat the Wayback Machine as valid evidence.

Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 2) [2017] FCA 474

  1. In which I include the usual misleading or deceptive conduct actions under the Australian Consumer Law too.  ?
  2. It is not clear whether the search was just of the two words or the two words in quotation marks.  ?
  3. At [25].  ?
  4. At [13].  ?
  5. Noting that at least 2 prior decisions had ruled internet archive materials inadmissible: Athens v Randwick City Council [2005] NSWCA 317 and E & J Gallo Winery v Lion Nathan Australia Pty Limited [2008] FCA 93.  ?
  6. I.e., the Wayback Machine print outs.  ?

Print outs of third party websites ruled inadmissible Read More »

The Federal Circuit Court can grant Mareva injunctions

Leave a Comment / Copyright, Enforcement / / / , , , , ,

The Federal Circuit Court can issue mareva injunctions[1] under s 14 and s 15 of the Federal Circuit Court Act 1999.

Mr Vartzokas is an architect. Through his company he agreed to provide architectural services in connection with the development of a 5 storey apartment block in Prospect Rd Adelaide to the developer, Nazero Contructions Pty Ltd.

He provided the services and sent in his bill for $48,100.

Mr Younan seems to have been the principal of Nazero Constructions and was the person with whom Mr Vartzokas dealt.

With some difficulty, Mr Vartzokas managed to extract payments totalling $25,000 from Mr Younan. When Mr Vartzokas sent in his final bill for the remaining $23,100 with the final drawings, the drawings were endorsed with the statement:[2]

These drawings are the copyright property of the architect and are not to be reproduced or copied without prior written license of the architect.

Needless to say (this is a court case afterall), Mr Vartzokas was not paid his outstanding $23,100.

Instead, he was contacted by a Mr Chen on behalf of Yi Hong Pty Ltd, which was about to purchase the Prospect Rd property and wanted to engage Mr Vartzokas to provide further architectural services in relation to it.

Mr Chen provided Mr Vartzokas with copies of the working drawings for the property which Mr Chen had obtained from Mr Younan in connection with the proposed purchase and wanted Mr Vartzokas to work on.

Mr Vartzokas recognised the drawings as being the ones he had prepared for Mr Younan and Nacero Constructions. Only the authorship was attributed to “JB Archi-Build”!

Unbeknownst to Mr Vartzokas, around the time Mr Vartzokas was having trouble extracting his initial payments from Mr Younan, Mr Younan caused a new company, Nazero Group SA Pty Ltd to be incorporated. Nazero Constructions sold the Prospect Rd property to Nacero Group for $1,017,500. Nacero Constructions then changed its name to Zeecat Constructions.

When Mr Chen provided the “JB Archi-Build” drawings to Mr Vartzokas, Mr Vartzokas discovered the existence of Nacero Group and that it was in the process of selling the Prospect Rd property to Yi Hong for $1,190,000. Settlement on the contract was due the next day following the hearing.

Mr Vartzokas sued seeking a mareva injunction to require the proceeds from the sale (after paying out the bank holding a registered mortgage over the property) be paid into the Federal Circuit Court pending trial of Mr Vartzokas’ copyright infringement claims.

Judge Brown granted the mareva injunction ex parte. On the question whether Mr Vartzokas had demonstrated a real risk that the assets would be dissipated and the Court’s process frustrated, his Honour pointed to the sneaky swap in ownership of the Prospect Rd property between Mr Younan’s companies, his failure to pay all Mr Vartzokas’ bills and continued use of the drawings without payment or recognition:

[35] I am also satisfied that the applicant has established a prima facie case that there is a real risk of assets being dissipated, if the relief sought is not granted. In my view, the significant evidence in this regard arises as a consequence of the change of name of Nazero Constructions Pty Ltd, which coincided with that entity not honouring the invoices submitted to it by the applicant. This failure to pay its debt, to the applicant, ultimately led to the winding up of the company concerned.

[36] More significantly, after the company had been liquidated, Mr Younan incorporated an entity with a similar name and transferred the land at Prospect to it. At the same time, Mr Younan appears to have been intent on developing the land in a similar manner to that which envisaged the intellectual input of Mr Vartzokas, but without either payment or recognition to him.

[37] In all these circumstances, I am satisfied that there is a significant risk that, if the injunction sought is not made, the proceeds of sale of the Prospect property will not be available to the applicant to either satisfy any award of damages to which he is entitled or to provide any accounting for the profits made on the sale of the land concerned, which, at least on a prima facie basis, seems to have included his architectural designs to be utilised on the property’s development.

His Honour also noted there was no prejudice to third parties as the bank mortgagee would get paid its due before money’s were paid into court.

Vartzokas Architects Pty Ltd v Nacero Group SA Pty Ltd [2017] FCCA 849

  1. Yes, I know we are supposed to call them an asset preservation order, but really ….  ?
  2. The usual implied licence can be excluded by an express written term to the contrary: Devefi v Mateffy Perl Nagy  ?

The Federal Circuit Court can grant Mareva injunctions Read More »

Kickass Torrents website blocked – third party injunctions

Leave a Comment / Copyright, Enforcement / /

Burley J has granted Universal Music’s application[1] ordering the ISPs to block access to Kickass Torrents’ websites.

This is the second decision under s 115A of the Copyright Act 1968 empowering copyright owners (and their agents) to seek injunctions against third parties (i.e. ISPs and telcos) to block access to offshore infringing websites.

Putting to one side stylistic matters, his Honour’s orders appear in substance to be the same as the orders previously made by Nicholas J against “solarmovie” and “The Pirate Bay” (some discussion here).[2]

The Copyright Council also reports that Roadshow Films has brought a new case seeking third party blocking injunctions against 41 websites including “Watchseries”, “Putlocker” and “MegaShare”.

Universal Music Australia Pty Limited v TPG Internet Pty Ltd [2017] FCA 435 (Burley J)

  1. and also the applications by APRA and various other copyright holders.  ?
  2. The ISPs get 10 business days, rather than 7, to respond to applications by the copyright owners to extend the injunctions to “whack-a-mole” sites – see paragraph 12.  ?

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$3 million!

1 Comment / Enforcement / / / , , ,

Last year, we looked at the ACCC’s successful prosecution of Valve (provider of the online gaming platform, Steam) for breach of the consumer guarantees in the ACL. Valve’s contracts for example provided that all fees were payable in advance and not refundable. Valve’s main line of defence was that it was in the US state of Washington and so not bound by the ACL.

On 23 December 2016, the Court fined Valve $3 million for its breaches: $2.2 million for the contraventions involving the Steam Subscriber Agreement and $800,000 for the contraventions involving the Steam Refund Policy.

This was in a context where, while,the number of accounts developed over the 3 year period of the misconduct, Valve had some 2.2 million Australian accounts (I.e, about $1.36 per account) and had received communications about refunds from over 21,000 accounts. What is more, despite its no refunds policy wording, it had actually paid refunds to some 15,000 accounts. Another factor was Valve’s high-handed approach to its legal position in Australia; apparently deciding it had no liability as a matter of policy without reference to Australian legal advice.

Australian Competition and Consumer Commission v Valve Corporation (No 7) [2016] FCA 1553 (Edelman J)

$3 million! Read More »