IPwars.com

Mainly intellectual property (IP) issues Down Under

Selected links from last week

Here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

Copyright

Not categorised

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Selected links from around the web

A selection of (mostly) IP-related links I found interesting last week:

Patents

US Federal Circuit Finds § 101 Patent Eligible Subject Matterin BASCOM

Patenting From China: how Chinese innovators are using the parent system

Copyright

USA: Apple’s New Music Royalty Proposal Would Make Streaming Costlier for Free Services Like Spotify

Vimeo’s Second Circuit DMCA Safe Harbor Win Over Capitol Records

Trade Mark

English High Court summarily dismisses Seretide combination color mark

Internet

USA: “Modified Clickwrap” Upheld In Court–Moule v. UPS

Trade – TPP

TPP at risk from ‘Hatch(ed)’ accusations that Australia’s data exclusivity steals US patents

Living in the future

A Technical Glitch or what might Facebook Live do to the world (as we know it)

The obsolete associate – Law21 or more AI in Big Law

Feel free to leave a comment or email me

A trade mark licence requires actual control

The Full Federal Court has held that the licensor must actually exercise control over the licensee for a trade mark licence to be a valid licence.

The decision is part of a long running global battle between WILD TURKEY and WILD GEESE. The WILD TURKEY interests own and use WILD TURKEY around the world for bourbon whiskey; the WILD GEESE interests use, or want to use, WILD GEESE around the world for Irish whiskey. Instead of the usual battle about who was first to file and whether or not WILD TURKEY was confusingly similar to WILD GEESE or vice versa, there was an unusual twist in this fight: WILD TURKEY tried an end run, tacking on to a registration for WILD GEESE WINES.

Some background

A Mr O’Sullivan QC (and his partners) had established a winery in South Australia under the name WILD GEESE WINES (WGW) in 2000. In due course, WGW set out to register their trade mark. However, the WILD GEESE interests had already registered their trade mark in Australia for whiskey. It was cited against the WGW application and in 2005, WGW brought an application against the WILD GEESE interests’ registration to remove it for non-use. The WILD TURKEY interests had also brought a non-use action against the WILD GEESE interests’ registration.

Mr O’Sullivan (and partners) quickly came to the realisation that they did not to become embroiled in the intergalactic war being waged between WILD TURKEY and WILD GEESE whiskey. Instead, in 2007 WGW assigned its trade mark application and the benefit of its non-use application to the WILD TURKEY interests in return for an exclusive licence to use the trade mark in Australia for wine.

The non-use applications against the WILD GEESE interests’ trade mark was successful and the (now) WILD TURKEY interests registered the WILD GEESE WINES trade mark for wine and spirits that WGW had assigned to them.

In a case of sauce for the goose potentially being sauce also for the turkey, the WILD GEESE interests then brought an application to remove the WGW trade mark for non-use. The WILD TURKEY interests sought to defend that claim on the basis that the use of the trade mark by WGW was authorised use under the Act and so constituted use in the relevant period by the WILD TURKEY interests[1] as registered owner sufficient to defeat the non-use application.

As the removal application by the WILD GEESE interests was filed on 27 September 2010, the three year period in which the WILD TURKEY interests had to show use as a trade mark in good faith ran from 27 August 2007 to 27 August 2010.

Unfortunately for the WILD TURKEY interests, there were a few wrinkles.

WGW produced a merlot under its trade mark in 2004. Due to adverse climate conditions, it did not produce another vintage until 2011. However, wine from the 2004 vintage was for sale (and was sold) in relatively small batches during the non-use period.

Mr O’Sullivan (and his partners) realised that a valid trade mark licence required that the licensee’s use be under the licensor’s control. To that end, Mr O’Sullivan proposed quality control ‘conditions’ for inclusion in the licence:

  • WGW’s wines had to be of sufficient quality to qualify for an export licence from the Australian Wine and Brandy Corporation;
  • WGW had to supply samples of their wine to the WILD TURKEY interests if requested to do so.

Notwithstanding this, the licence arrangements did not have any practical effect on WGW’s operations and the WILD TURKEY interests never requested samples until after the WILD GEESE interests brought their non-use application.

The Registrar upheld the removal application. On appeal, Perram J considered that the Full Court’s decision in Yau Entertainment bound him to find that the possibility of control being exercised was sufficient for a valid licence and so, very reluctantly, allowed WILD TURKEY’s appeal.

The Full Court’s decision

All five judges considered that Yau Entertainment did not rule that the potential for the exercise of control by the licensor was sufficient for authorised use under the Act.

Control

Besanko J gave the leading judgment with which Allsop CJ and Nicholas J agreed.

After a detailed review of the legislative history and the case law, Besanko J concluded at [95] – [98] that “control” for the purposes of s 8 meant actual control. At [95]:

The meaning of “under the control of” in s 8 is informed by the principle stated by Aickin J in Pioneer, that is to say, that the trade mark must indicate a connection in the course of trade with the registered owner. The connection may be slight, such as selection or quality control or control of the user in the sense in which a parent company controls a subsidiary. It is the connection which may be slight. Aickin J was not saying the selection or quality control or financial control which may be slight. I think the principle stated by Aickin J informs the meaning of “under the control of” ….

His Honour acknowledged at [98] that whether there was actual control was a question of fact and degree, but “there must be control as a matter of substance.”

His Honour recognised that this conclusion was different to the conclusion reached under the Trade Marks Act 1994 by the House of Lords in Scandecor. That however was because UK law had taken a different course under the influence of EU law. Similarly, the CJEU’s decision in Ideal-Standard [2] was directed to a very different issue: exhaustion of rights.

WILD TURKEY did not actually exercise control

Besanko J went on to find that the WILD TURKEY interests did not actually exercise control over WGW’s use of the trade mark. Bearing in mind that it was a question of fact and degree, his Honour considered the most significant factor was that the licence arrangement had no practical effect on how WGW conducted itself.

At [107]:

The quality control provision in the Licence Agreement is that the wine be of a sufficient standard to obtain the approval for export of the AWBC. There was no evidence of the precise content of that standard. It was not an exacting standard as the approval rate shows (at [51] above).[3] The primary judge considered that the standard involved no more than a rejection of what he called truly undrinkable wine (at [55]). It is plain that the standard had no effect on Mr O’Sullivan’s wine making practices. He was interested in making good to high quality wine. At no time during the relevant period did [WILD TURKEY] contact Mr O’Sullivan about the wine he was making or selling or both. There was never any request by [WILD TURKEY] for samples under cl 3.1 or for the product to be supplied to the Australian Wine Research Institute under cl 3.2. [WILD TURKEY] never asked Mr O’Sullivan for any information about the use of the trade marks or Mr O’Sullivan’s wine making operations generally. There was no monitoring by [WILD TURKEY] and nothing to suggest that [WILD TURKEY] took steps to ascertain whether the terms in cl 3 were being complied with. I do not think s 8(3) was satisfied by the existence of cl 3 in the Licence Agreement.

The conditions in the licence that WGW could use the trade mark only for wine it manufactured and only on wines sold in Australia were restrictions, but they were not restrictions that went to the quality of what was produced necessary to maintain the connection in the course of trade with the (putative) licensor. At [108], his Honour explained:

…. These are restrictions but not ones like controls on quality or manufacturing process which might suggest a connection between the registered owner and the use of the trade marks in connection with the provision or dealing with goods in the course of trade. There is no evidence that [WILD TURKEY] monitored or informed itself as to whether WGW was only selling Australian wine in Australia. These requirements do not give rise to control. WGW was not permitted to amend or abbreviate the trade marks or use them in a scandalous fashion. These provisions seem to me to be standard provisions to be expected in a licence agreement for trade marks. There is no evidence of monitoring by [WILD TURKEY] of these provisions and they do not amount to control within s 8. Finally, the provision about standard liability insurance and [WILD TURKEY]’ ability to terminate the Licence Agreement for a material breach is not sufficient to constitute control under s 8 of the Act.

Thus, the use by WGW was not authorised use and the registrations for WILD GEESE for wines should be removed for non-use.

Some other points

Nicholas J agreed with Besanko J’s reasons. Nicholas J also pointed out that the use which would defeat a non-use application under s 92 had to be use as a trade mark in good faith. His Honour considered that the failure by the WILD TURKEY interests to exercise actual control over WGW would be a factor disqualifying that use from being use in good faith. As this line of attack was not actually argued by the WILD GEESE interests, his Honour did not decide the case on this basis. nonetheless at [132], his Honour said:

However, in considering whether or not the registered owner has exercised sufficient control over another person’s use of a mark so as to defeat an attack on the grounds of non-use, it is important to recognise that the boundary between “use” and “use in good faith” by the registered owner cannot be defined by a bright line. This is because the question whether there has been any use by the registered owner may itself depend on whether the control it is said to have exercised was real or genuine control as opposed to something that was merely token or colourable.

Allsop CJ agreed with both Besanko J and Nicholas J.

Katzmann J also found that authorised use required the licensor actually to exercise control over the licensee. That had plainly not happened in this case. Her Honour did accept that the WILD TURKEY interests’ request for samples in 2011 (after the non-use period and after the WILD GEESE interests had filed their non-use application) could lead to ‘a “‘retrospectant’ circumstantial inference”’[4] that control was actually exercised. But the inference that control had not been exercised was also open and, as the WILD TURKEY interests had not shown the inference they contended for was more probable than not, they would still lose. Her Honour pointed out that the wine show medals that the WILD TURKEY interests relied on to support the good quality of the wines did not survive scrutiny. The judges’ comments at the wine shows included:

Very disappointing class with no highlights. From this class it would appear to be unsuited to the region. No wines showed any varietal character or even just brightness of fruit and character.

Perhaps more importantly, there was no evidence that the WILD TURKEY interests had any idea that WGW’s wines had won any medals or whether the wine was of good, bad or indifferent quality.

Greenwood J also concurred in the result, but was not prepared to condemn the licensing arrangements between the WILD TURKEY interests and WGW in the strong terms used by the trial judge.

Wrap up

So, if you are acting for a trade mark licensor, make sure that it actually exercises control over its licensee(s). And, at least when the control relied on is quality control, make sure the control goes to the quality of the goods or services provided under the licence. The use won’t be authorised use otherwise. In that case, the licensor won’t be able to rely on it to defeat a non-use application as in this case. Even if that is not a risk, there will also be the danger that use which is not authorised use may render the trade mark deceptive and liable to cancellation.

If you have a comment or a question, please feel free to post it in the comments section. Or, if you would prefer, email me.

Lodestar Anstalt v Campari America LLC [2016] FCAFC 92 reversing Skyy Spirits LLC v Lodestar Anstalt [2015] FCA 509


  1. Section 7(3).  ?
  2. IHT Internationale Heitztechnik GmbH & Anor v Ideal-Standard GmbH & Anor [1994] 1 ECR 2789.  ?
  3. In the year ending 30 June 2010, only 40 wines out of 18,019 wines tested ultimately failed to receive export approval, and the figure in the following year was 43 wines out of 14,569 wines tested.  ?
  4. Referring to Heydon J at [76] in Gallo.  ?

Selected links from the last week

I am going to try an experiment. With the rise of “week in review” style blogposts and your day job probably means you don’t have all day to watch Twitter streaming by, here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

  • MACCOFFEE? We’re not lovin’ it, says General Court here

    The “Mac” family of trade marks are too well known for someone esle to register MACCOFFEE in the EU

  • “Own Name” defence in Singapore–when “honest practices” does the heavy lifting here
  • CJEU says operators of physical marketplaces may be forced to stop trade mark infringements of market-traders

    although you could contrast that to Dowsett J’s decision

  • Book Review: The law and practice of trademark transactions – A global and local outlook

Not categorised

  • Employees Bound By Clickthrough Agreements–ADP v. Lynch (USA)

Bit of a slow week in the northern hemisphere, but I hope you find some interesting. If you did or have a question, leave a comment or send me an email

Court of Appeal orders ISPs to block access to trade mark infringing websites

The Court of Appeal[1] has confirmed that the court’s general power to grant injunctions can be invoked by trade mark owners to get orders against ISPs to block internet access to website that have infringing content.

The interesting point (for Australians) is that, like Australia, UK law has a specific statutory power authorising injunctions against ISPs to block access only to websites that infringe copyright. There is no corresponding provision in the Trade Marks Act 1994 (UK). Instead, section 37(1) of the Senior Courts Act 1981 (previously the Supreme Court Act 1981) provides:

The High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to be just and convenient to do so.

The IPKat has a preliminary summary here.

The main question the Court of Appeal’s decision raises for us is whether an Australian court might be persuaded to make similar orders against ISPs to block access to website which infringe trade marks (or other IP). Australian courts have powers to grant injunctions corresponding to s 37 of the Superior Courts Act.[2]

On the other hand, Parliament has also only recently introduced the specific statutory provision in the context of copyright infringement and that provision is tightly focused for policy reasons against overseas websites which have infringement as their primary focus.

And, it appears that the Court of Appeal was heavily influenced by the obligations imposed on national law by art. 11 of the EU’s Enforcement Directive to require ISPs to take steps to stop infringing activity. That specific legislated obligation does not apply here. That there may be different philosophies at play may also be seen in what appears to be the different approach in the EU to the liability of market operators for infringing conduct by stall holders.[3]

A second point emerging from a very quick skim of the 214 paragraphs is that Kitchin and Jackson LJJ held that the ISPs should be liable for the costs of implementing and maintaining the blocks. Briggs LJ dissented on this point insofar as it required the ISPs to bear the costs of complying (apart from designing and installing the software). As Jackson LJ pithily put it in agreeing with Kitchin LJ, that is “part of the price which the ISPs must pay for the immunities which they enjoy”. This may point up another difference in the legal environment: ISPs in the EU have assumed obligations to block access to websites such as those dealing in paedophilia. In addition, the safe harbours regime for ISPs applies generally, not just for copyright infringement as in Australia.

Finally, so far, there haven’t been any orders in the site blocking cases brought under s 115A yet.

If you have a comment or a question, please feel free to post it in the comments section. Or, if you would prefer, email me.

Cartier International AG v British Sky Broadcasting Limited [2016] EWCA Civ 658


  1. For England and Wales, not New South Wales, Victoria, Queensland or ….  ?
  2. Australian courts have corresponding powers: for example, s 23 of the Federal Court of Australia Act 1977 provides “The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate.” There are, of course, counterpart provisions in the Federal Circuit Court Act and the State Supreme Court Acts: see Victoria and NSW.  ?
  3. Compare this CJEU decision to Dowsett J’s decision at first instance.  ?

Repackaging into tobacco plain packaging is still parallel importing

The Full Court has dismissed Scandinavian Tobacco’s appeal from Allsop CJ’s ruling that Trojan’s repackaging of various genuine cigar products into conformity with Australia’s plain packaging laws is legitimate.

Scandinavian Tobacco is the owner, amongst other things, of the Henri Wintermans, La Paz and Cafe Creme cigar brands. Trojan bought genuine products in Scandinavian Tobacco’s genuine packaging overseas. As that genuine packaging did not comply with Australia’s tobacco plain packaging laws, Trojan removed that packaging and replaced it with packaging that did conform. Amongst other things, this involved Trojan placing The relevant trade mark – Henri Winterman, La Paz or Cafe Creme – on the packaging in the font style and size permitted under the legislation.

The Full Court considered that Trojan was using the Scandinavian Tobacco trade marks as trade marks within the meaning of s 120 by importing and offering the repackaged goods for sale. So Trojan would infringe if the s 123 defence did not apply. However, the s 123 defence did apply.

Use as a trade mark

Case law in the 1930s had established that using a trade mark in relation to goods to which the trade mark owner had applied the goods was not infringing use of the trade mark. So there was no infringement of CHAMPAGNE HEIDSIECK to import and sell genuine products marked CHAMPAGNE HEIDSIECK by the trade mark owner – even if they were a different quality to those put on the market within the jurisdiction by the trade mark owner.[1] Similarly, there was no infringement to use the trade mark YEAST VITE in the expression “YEAST TABLETS a substitute for YEAST-VITE”.[2] Numerous decisions of Australian courts under the 1955 Act proceeded on that basis.

The Scandinavian Tobacco Full Court agreed with four previous Full Courts that the introduction of s 123 into the 1995 Act – there having been no counterpart in the 1955 Act – has led to a change in the law. At [56], their Honours ruled:

In our opinion, under the provisions of the 1995 Act, a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of manufacture will have used the mark as a trade mark. It follows that, on this issue, we are not satisfied that the position under the 1995 Act is other than as stated in Montana, Gallo, Sporte Leisure and Lonsdale.

As their Honours explained at [58]:

Section 123 of the 1995 Act gives the Champagne Heidsieck principle an express statutory footing that, in our view, leaves no scope for the principle to be given any more expansive operation by reference to cases decided under different legislation including Champagne Heidsieck itself: see Sporte Leisure at [71] and Lonsdale at [62]-[63] where reference is made to the difficulties involved, as a matter of statutory construction, in attributing to the Champagne Heidsieck principle a broader operation that travels beyond the scope of s 123. Under the 1995 Act, the question of whether or not a registered mark is infringed by the commercial importation or sale of genuine goods (what Clauson J described as “those upon which the plaintiff’s mark is properly used”) must now be determined by reference to s 123(1). If the respondent who is selling what are said to be genuine goods is held to be outside the protection of s 123(1), then the respondent will not avoid liability for trade mark infringement on the basis that he or she is not using the relevant mark unless there is something else about the context in which the use occurs that (as in Wingate) might lead to a different conclusion.

The Scandinavian Tobacco Full Court noted that was the way the English Court of Appeal in Revlon v Cripps and Lee Ltd had treated the introduction of a counterpart “consent” defence into the UK Trade Marks Act.

The Scandinavian Tobacco Full Court perceived a lack of enthusiasm for the “old” cases in the High Court’s decisions, such as Gallo, under the 1995 Act. In addition, their Honours noted their conclusions was consistent with the position expressed by Aickin J, sitting alone, in the Pioneer case:

Thus if Pioneer Australia had done no more than import the goods and sell them by retail it would have used the mark, but in fact it did much more as the evidence referred to above demonstrates.

There is no doubt that the Pioneer ruling was a landmark decision in Australia accepting the validity of trade mark licensing. For many years, however, Aickin J’s acceptance that a trade mark could be validly used to denote source in both the trade mark owner and one or more authorised users, rather than the trade mark owner alone, was considered rather problematical, albeit arguably contemplated by the definition of a trade mark under the 1955 Act[3]. That Janus-like approach appears very difficult to maintain in the face of the definitions in s 7 and s 8 of the 1995 Act.

Their Honours also noted the problems that defendants might have, bearing in mind the onus of proving the elements of the defence. However, they considered that the evidential burden could shift quickly as the trade mark owner would usually ve best placed to give the relevant evidence.

The s 123 defence

The Full Court upheld Allsop CJ’s ruling that the s 123 defence applied. Section 123(1) provides:

(1) In spite of section 120, a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.

The repackaged cigars were goods which ST itself had applied its trade marks to, or in relation to. So the requirements of s 123 were literally satisfied. ST argued, however, that s 123 applied only in relation to goods while the trade mark owner’s trade mark was actually applied to them. Once it was removed (such as by repackaging), therefore, s 123 had no operation.

The Full Court, however, pointed out that a trade mark owner could legitimately use its trade mark in relation to goods and did not necessarily have to apply the trade mark actually to the goods. Examples of this could be use of the trade mark on an advertisement or a document, rather than on the goods themselves. The Full Court held, therefore, that there was no express or implied limitation in the words of s 123. The temporal requirement in s 123 would be satisifed if at some point before the alleged infringer used the trade mark the trade mark owner (or someone with the trade mark owner’s consent) applied the trade mark to the goods or used it in relation to them. At [65], their Honours explained:

The language of s 123(1) refers to a mark that has been applied to or in relation to goods by or with the consent of the registered owner. The operation of the section is not expressly or impliedly confined to a situation in which the goods still bear the mark as applied by the owner. The temporal requirement of the section will be satisfied if at some time in the past, which may be after the time of manufacture, the mark has been applied to or in relation to goods by or with the consent of the owner. If those goods are later sold by a person in circumstances which involve him or her using a mark that was previously applied by or in relation to the goods by the owner then s 123(1) will be engaged.

Section 123 did not provide a defence to the type of infringement prescribed by s 121.[4] Therefore, the words of s 123 were not to be read down by reference to s 121.

The Full Court considered that Scandinavian Tobacco’s concerns that its goodwill may be harmed by Trojan’s repackaging exercise were not matters falling for consideration under the terms of s 123. Rather, such issues would need to be addressed through passing off and the consumer protection laws.

Passing off

The claim in passing off (and under s 18 of the ACL), however, also failed. The trial judge had found the repackaging did not misrepresent that Scandinavian Tobacco had repackaged, or authorised the repackaging of, the cigars. In this respect, Scandinavian Tobacco’s own evidence was unhelpful as it appears that Scandinavian Tobacco Australia itself had engaged in repackaging other brands of cigars for which it was not an authorised distributor.

Wrap up

I think this is the first case since Montana that has gone to trial which the parallel importer has won. Then again it is also the first case since Montana that actually involved parallel imports.

The Full Court’s interpretation of s 123 is at least straightforward and avoids the complicated notice procedure applying in the EU. The “new”[5] concept of use as a trade mark apparently introduced by the 1995 Act will mean some careful thought needs to be given to “old” cases on what constitutes trade mark use, unless the High Court becomes motivated to revisit the reservation left open in [33] and [34] of the Gallo decision. It will interesting to see if trade mark owners start to explore the use of conditions under s 121 or are willing to assign the Australian trade marks as in Montana in attempting to circumvent the operation of s 123.

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2016] FCAFC 91


  1. Champagne Heisieck et cie Monopole SA v Buxton [1930] 1 Ch 330.  ?
  2. Irving’s Yeast-Vite Ltd v FA Horsenail (1934) 51 RPC 110 (HL), a decision adopted and applied by the High Court in, for example, the [Tub Happy][tub] case.  ?
  3. That definition referred to a mark used so as to “indicate a connexion in the course of trade between the goods and a person who has the right, either as proprietor or as registered user, to use the mark, whether with or without an indication of the identity of that person”.  ?
  4. Section 121 empowers the trade mark owner to impose condition which may run with the goods to prevent those subsequently acquiring them from doing acts in breach of the conditions.  ?
  5. Bearing in mind this is the fifth Full Court decision adopting this position.  ?

Productivity Commission reports on IP (in draft)

The Productivity Commission has released its draft report into Intellectual Property Arrangements.

You will be startled to learn that the Productivity Commission has discovered Australia is a net importer of intellectual property. We buy more IP from the rest of the world than we sell to it. Fig. 2 in the Report indicates Australian IP earned AUD1 villion from overseas, but we paid out about AUS4.5 billion for the use of their IP. The Productivity Commission then notes that we provide surprisingly strong IP protection for a country in our position.[1] This finding guides the Productivity Commission’s recommendations which might broadly be characterised as: take the least restrictive option in terms of IP protection (where our international obligations permit).

The Productivity Commission explained its position this way:

Intellectual property (IP) arrangements need to balance the interests of rights holders with users. IP arrangements should:[2]

• encourage investment in IP that would not otherwise occur;

• provide the minimum incentives necessary to encourage that investment;

• resist impeding follow-on innovation, competition and access to goods and services. (emphasis supplied)

So, for example, after much gnashing of economists’ teeth about the (let’s face it, indefensible) term of copyright protection, the Productivity Commission considers that the appropriate term of protection is somewhere between 15 and 25 years.[3] However, what it actually recommends is rather more limited:

4.1: remove the current unlimited term of protection for published works.[4]

5.1: implement Parliament’s At What Cost? IT pricing and the Australia Tax recommendation to make it clear that it is not an infringement of copyright to circumvent geoblocking.

5.2 repeal the remaining parallel import restrictions for books.

5.3 amend the Copyright Act 1968 to replace the current fair dealing exceptions with a broad exception for fair use.

The latter two, so far, have elicited the loudest complaints here and here.[13] Meanwhile, the US’ Register of Copyrights is celebrating the first anniversary of her Fair Use Index.

18.1 expand the safe harbours to online service providers.[5]

Patents

The Productivity Commission reports that there are 120,000 active patents registered in Australia. 93% of these have been granted to non-residents. There are also 25,000 – 30,000 applications each year; of which about 60% ultimately proceed to grant.

According to the Productivity Commission, however, there are too many granted patents which do not contribute social value and are not “additional” – in the sense that they would not have been made if there was no patent protection.[6]

This needs to be remedied. However, the Productivity Commission acknowledges that international agreements put constraints on our freedom of action. There are 10 recommendations for patents.

The key recommendation for standard patents is yet another go at raising the threshold of inventive step.

an invention is taken to involve an inventive step if, having regard to the prior art base, it is not obvious to a person skilled in the relevant art.

This looks very similar to what we already have. As the Productivity Commission envisages matters, however, there are important differences. First, it reverses the onus currently expressed in s 7(2). According to the Productivity Commission, the current position is the opposite of where the onus lies in the USA, Japan, the EU and the UK (amongst others). Rather than a challenger having to prove the invention is obvious, therefore, the patentee will have to prove it is not.

Secondly, the Productivity Commission sees the current requirement that there be only a scintilla of invention being raised. The Productivity Commission sees this low threshold being reflected in the limitation on “obvious to try” being something which the skilled addressee would be directly led as a matter of course. Instead, the Productivity Commission considers that the test should be at least:

whether a course of action required to arrive at the invention or solution to the problem would have been obvious for a person skilled in the art to try with a reasonable expectation of success (as applied by the Boards of Appeal of the EPO).[7]

This change would be buttressed with appropriate comments in the Explanatory Memorandum and, additionally, the insertion of an objects clause into the Act. The latter would be intended to ensure that the Courts focused on the social objectives of the Patents Act including, in particular, the public interest.[8]

On the more colourful fronts, the Productivity Commission also recommended repeal of the abomination innovation patent and amendment of s 18 explicitly to exclude from patentable subject matter business methods and software.[9]

Pointing to analysis which estimates the net present value to R & D of the extension of term for a pharmaceutical patentat at year 10 at $370 million – of which only $7.5 million would accrue to Australia because our industry is so small – while the cost to the Australian government and consumers of the same extension of term is estimated at $1.4 billion, the Productivity Commission also wants a significant tightening up of the regime for extending the term of pharmaceutical patents. The Productivity Commission also opposes any extension of the period of data protection for therapeutic goods, including biologics.[10]

The Productivity Commission also recommends exploring raising the renewal fees payable, particularly in later year’s of a patent’s life.

Registered designs

The Productivity Commission considers the registered design system deficient but, as we have committed to it internationally and there is no better alternative, we are stuck with it.

However, continuing the net importer theme, Australia should not go into the Hague system “until an evidence-based case is made, informed by a cost–benefit analysis.”

Trade marks

I’m just going to cut and paste here: the Government should:

  • restore the power for the trade mark registrar to apply mandatory disclaimers to trade mark applications, consistent with the recommendation of the Advisory Council on Intellectual Property in 2004 (the only people that won’t support this are in the place that counts – IP Australia)
  • repeal part 17 of the Trade Marks Act 1995 (Cth) (Trade Marks Act)
  • amend s. 43 of the Trade Marks Act so that the presumption of registrability does not apply to the registration of marks that could be misleading or confusing
  • amend the schedule of fees for trade mark registrations so that higher fees apply for marks that register in multiple classes and/or entire classes of goods and services.
  • require the Trade Marks Office to return to its previous practice of routinely challenging trade mark applications that contain contemporary geographical references (under s. 43 of the Trade Marks Act). Challenges would not extend where endorsements require goods and services to be produced in the area nominated
  • in conjunction with the Australian Securities and Investments Commission, link the Australian Trade Mark On-line Search System database with the business registration portal, including to ensure a warning if a registration may infringe an existing trade mark, and to allow for searches of disclaimers and endorsements.

Also, s 123 should be fixed up so that parallel importing does not infringe.

Like the rest of us, the Productivity Commission is bemused by the Circuits Layout Act and recommends implementing “without delay” ACIP’s 2010 recommendation to enable “essentially derived variety declarations to be made in respect of any [plant] variety.”

On competition policy, s 51(3) should be repealed and the ACCC should develop guidelines on the application of our antitrust rules to IP.

Innovatively, the Productivity Commission also recommends free access to all publications funded directly by Government (Commonwealth, State or Terriroty) or through university funding.

There are also at least 17 requests for further information.

If you are inspired to make a further submission, you should get it in before 3 June 2016.[11]


  1. Not much discussion here whether the best way to get more technological development is through a strong IP regime or to,scrap the IP system and fully commit to free riding.  ?
  2. Despite the tentative nature of this declaration, it is the first “Main key points”.  ?
  3. Draft finding 4.2.  ?
  4. The Government is trying to do this – see schedule 3 of the exposure draft of the Copyright Amendment (Disability Access and Other Measures) Bill (pdf).  ?
  5. See schedule 2 of the Disability Access and Other Measures bill.  ?
  6. You will have to read Appendix D to find out how the Productivity Commission works out which patents are socially valuable and “additional”.  ?
  7. The EPO cases the Productivity Commission referred to are T 149/93 (Retinoids/Kligman) (1995) at 5.2 and T 1877/08 (Refrigerants/EI du Pont) (2010) at 3.8.3.  ?
  8. Here, the Productivity Commission notes that the Full Federal Court rejected reference to the public interest in Grant.  ?
  9. Dr Summerfield tells you why he thinks that’s a bad idea over here and of course, the Europeans (including the UK in that) do not have all sorts of complications carrying out their nice, clean exclusion.  ?
  10. In an interesting departure from its overarching premise that patents do not really contribute much to innovation because there are other protections such as lead time and trade secrets, the Productivity Commission warns that reliance on data secrecy is sub-optimal compared to patent protection.  ?
  11. Bearing in mind they have to submit their Final Report to Government by 18 August 2016.  ?
  12. In between buying your books from Amazon and Bookdepository, some references to the larger economic issues affecting booksellers here.  ?

Primary Health Care is not registrable as a trade mark

You will probably not be surprised to discover that PRIMARY HEALTH CARE is not registrable as a trade mark. You may, however, be surprised that the successful challenger was the Commonwealth of Australia.

Primary Health Care Limited (PHC) applied to register PRIMARY HEALTH CARE and

Primary Health Care logo
Primary Health Care logo

in class 35 for:[1]

Medical centre business management; medical centre business administration; service provider to medical professionals, namely provider of: administrative support services, billing and invoicing services, reception and telephone answering services, patient booking services, patient file management services including management of access to patient files, typing services, account-keeping and book-keeping services, preparation of business reports, systemisation of information into computer databases, professional business consultancy, computerised file management, business and information management services, ordering services, processing of purchase orders.

What PHC did was it bought or built a building for use as a medical practice. It set up the rooms and facilities and provided the staff such as receptionists, book keepers etc. Then it contracted with medical practitioners (mostly GPs) to work from the medical centre, using the staff and facilities PHC made available to provide their services. PHC argued that it used its trade marks only in providing those services to the medical practitioners and the trade marks were not used by it in providing medical services to the medical practitioners’ patients. Thus, it said, it was not using the trade marks for medical services, only for business management and administration services – services for which the expression PRIMARY HEALTH CARE was not an apt description. At [53]:

The applicant’s case is that the Services are all to be provided to health care professionals and are not to include clinical or medical care by those professionals to patients.

This argument was predicated on PHC’s clinics/centres not being called or promoted to the public as PRIMARY HEALTH CARE centres.[2]

Jagot J rejected PHC’s contention. Her Honour accepted that PHC’s marketing was directed to health care professionals rather than the public. Her Honour also accepted that the health care professionals provided the health care services to the patient and jealously guarded their clinical independence in deciding what clinical care to provide to the patient. So PHC was not actually providing medical or health care services to the patients per se. However, it was unrealistic to treat the services PHC provided as being services provided only to the health care professionals. They were also provided to the public. Jagot J explained what her Honour had in mind by reference to the medical centre’s receiptionist – who was employed by PHC. For example at [55] – [59]:

…. the person paying for the services, the medical professional, is not the only person who receives the services or, at the least, is not the only person concerned with the services. The Services include reception and telephone answering services, patient booking services, patient file management services, information management services, billing and invoicing services, computerised file management, and ordering services, all said to be “to medical professionals”. (emphasis supplied)

Assume then a member of the public who wishes to see a GP who is contracted to and has a practice located in one of the applicant’s medical centres (leaving aside, for the moment, the issue about Idameneo and how the marks have in fact been used). The patient calls the centre and speaks to a receptionist. On the applicant’s case, in answering the call, the receptionist is providing a service only to the GP the patient might wish to see and not to the patient. This is untenable. The GP who ultimately sees the patient pays for the service but the service cannot be said to be a service to the GP only. It is also a service to the patient, the cost of which is borne by the GP, at least insofar as the GP does not seek to recoup those costs in the consultation fee. ….

As a consequence, Jagot J found:

[64] As such, the focus of the applicant’s case is off target and at odds with the evidence. The consequences of this disconnect run through every aspect of the case. First, the Services cannot be considered as if they exist in isolation because that is not how the Services are provided. Second, no matter how often the applicant repeats it, I am unable to accept that the Services are directed only to GPs and health professionals; the public and other participants in the health care sector are provided with some of the Services and are potentially concerned with all of the Services. ….

[65] … the reality is that, at least insofar as the Services are concerned, the applicant is providing services to medical professionals within its centres, to patients of those centres, and to all other participants in health care who interact with any medical professional in one of its centres. The fact that the applicant (or Idameneo) receives payment for the provision of the Services directly from the medical professional does not mean that the Services are provided only to the medical professional. Nor does the fact that medical professionals understand that they alone provide clinical or medical services to patients mean that the Services are not provided to patients. The reasoning involved seems to involve a false syllogism: (i) only medical professionals provide clinical services to patients, (ii) the Services are not clinical services, (iii) therefore, the Services are necessarily not services to patients. Propositions (i) and (ii) may be accepted, but they do not lead to proposition (iii).

Therefore, when deciding what the ordinary signification of the words PRIMARY HEALTH CARE was, the relevant public was not just the health care professionals to whom the services were promoted but all other participants in the health care system including patients and potential patients.

For the public so defined, Jagot J then went on to find that the expression PRIMARY HEALTH CARE was directly descriptive and so not inherently adapted to distinguish at all under the old form of s 41(3) or capable of distinguishing under s 41(5) or in fact distinctive under s 41(6).[3]

At first blush her Honour’s ruling that the Services were being provided to the public (other than the medical practitioners) might seem questionable because, so far as I can make out from the judgment, no member of the public (apart from the medical practitioners of course) actually sees the sign PRIMARY HEALTH CARE being used as a trade mark. For example, patients were not given bills or receipts or prescriptions with PRIMARY HEALTH CARE emblazoned on them. Nor does it seem that the receptionist (or other ancillary staff) wore uniforms with the sign on them. If keywords are not used as a trade mark because they are “invisible”, one might think that the unseen expression PRIMARY HEALTH CARE was also not being used as a trade mark for the services provided to the public. As the Commonwealth pointed out, however, PRIMARY HEALTH CARE could be used on, for example, the uniforms if the trade mark were registered. So, taking into account fair notional use renders the “invisiblity” argument untenable.[4]

Perhaps the crucial consideration is that the services being provided by the receptionist and the other “ancillary” staff are just so closely bound up with the health care services being provided by the medical practitioner to be part of those services or taking their character from the primary services being offered at the clinic. This indeed appears to be what her Honour had in mind. So for example, her Honour said at [119]:

there is an unreal distinction at the heart of the applicant’s case between the provision of the Services and the provision of clinical or medical care. The distinction is unreal because the Services are part of the overall service a patient receives when attending a medical centre and, to some extent, are also part of the medical or clinical care a patient receives. It is part of medical care that a GP be able to access clinical records for a patient. It is part of medical care to ensure new records are accessible in the future. It is part of medical care for a patient’s referral to be properly recorded, stored and managed. It is part of medical care for the centre to have available necessary medical supplies. ….

and at [121]:

in the real world context in Australia (at least) the Services are inextricably bound up with the provision of medical and clinical services by general practitioners and allied healthcare professionals, including through medical centres and medical practices – they are ‘part and parcel’ of the practice of general medicine and allied healthcare in the community, of primary health care.

That way of looking at things, with respect, seems in accord with the reasons why the Full Court in the Chifley Tower case rejected the argument that an hotel was engaged in providing property management services.

Jagot J went on to find that an additional ground for refusing registration was that the trade marks were deceptive or confusing. They were deceptive or confusing because, although they were so closely bound up with the provision of medical services, the specification of services did not include medical services. On the other hand, use of the trade marks would be congtrary to law in contravention of s 18 of the Australian Consumer Law because use of the mark misrepresented that PHC provided medical services and further that PHC was responsible for the medical services provided by the medical practitioners at the centres.

Primary Health Care Limited v Commonwealth of Australia [2016] FCA 313 (Jagot J)


  1. The “Services”. In the course of the proceeding the specification of services went through a number of revisions. This is just the starting one, but it indicates the nature of what PHC wanted registration for.  ?
  2. There was a factual dispute whether PHC used PRIMARY HEALTH CARE as the name of 3 or 7 of its medical centres, but this seems to have been regarded as essentially de minimis.  ?
  3. Putting a simple box around the words didn’t improve matters.  ?
  4. This led PHC in one of its revised specifications of services to seek to “disclaim” such use under s33(2) and s 55(1)(b).  ?

Keywords Are Not Trade Mark Use

Katzmann J “gets” the Internet and helps to bring Australian trade mark law well and truly into the 21st century: buying keywords for search engine advertising is not trade mark use. some instances of the use of the trade mark in the sponsored links, however, did infringe.

Malouf is business which helps people who get a bad credit report repair or correct that report.

Veda is a credit reporting agency. Amongst other things, it has registered VEDA in class 36 as a trade mark for:

Financial services; provision of credit risk, financial and asset information and reports; credit scoring and risk assessment services; information provision, advice, research, appraisal, analysis, credit enquiry and consultation ….[1]

Malouf bought advertisements for its business on Google search results pages using the Google AdWords program. Through that program, the advertiser selects terms – keywords – for which, when someone does a “Google” search including one of those keywords, they will pay to have their advertisement appear as an advertisement – a sponsored result – in the search results pages.[2] The keywords Malouf chose included VEDA and 85 other terms using it such as “contact veda”, “veda credit score” etc. Mr Malouf explained his strategy:

So, with Veda approximately anywhere from 20 to 40 per cent — which is published on their website — of people may have an adverse credit history with a credit reporting body. A lot of them don’t know that they’ve got bad credit. So, potentially, one in five customers that are trying to contact Veda may be our target market. … [W]e want to have our ad showing up — anyone trying to contact Veda — because, potentially, one in five of those customers may be wanting to fix their credit file.

Over time, the advertisements Malouf paid to place took 3 forms. Until October 2014, they were along the lines of these sponsored links:

Malouf Sponsored Link type 1
Malouf Sponsored Link type 1

After September/October 2014, the sponsored links did not feature “Veda” in the text.

This gave rise to two main issues: (1) did the use of “keywords” infringe and (2) did the uses in the actual advertisements (sponsored links) infringe?

Keywords

Katzmann J held that Malouf’s “purchase” of keywords using VEDA did not infringe Veda’s trade marks.[3] It was not use as a trade mark. Her Honour gave 3 reasons:

First, all Malouf did was select the keywords and provide them to Google. In doing that, objectively, it was not using the words to distinguish its services from those of other providers. “Rather, it has used them to identify internet users who may have an interest in using [Malouf’s] services.”

Second, anyone could acquire the keywords, not just Malouf. This was not determinative, but it was a consideration. What it meant was that anyone, including any of Malouf’s competitors could also “buy” the same keyword(s). Thus, the keywords were not performing the function of a trade mark: distinguishing (identifying) the trade source to the exclusion of all others.

Thirdly, and perhaps most significantly, the keywords were invisible to consumers. Katzmann J explained:

… the proposition that using words which are invisible and inaudible, indeed imperceptible, to consumers is using them as a trade mark makes no sense. How could the keywords be understood to be used to distinguish the services of one trader from those of another when the keywords are indiscernible? How could it appear to consumers that, by Malouf’s designation of the Veda keywords to Google, the words are used to denote a connection in the course of trade between Malouf’s services and the services provided by another trader, or to distinguish its services from the services of others, when the consumers have not seen or otherwise perceived the keywords?

Also, when the consumer did not search on the term VEDA alone, how would he or she know which term(s) generated the search results?

At this point, Veda relied on Accor. Katzmann J, however, pointed out, first, that Accor involved metatags, not keywords. More significantly, her Honour noted Accor was inconsistent with Kenny J’s ruling in Complete Technology where Kenny J had said:

I do not accept that the use of any of CTI’s Registered Trade Marks in Green Energy’s metatags would constitute a trade mark infringement for the purposes of s 120(1). Metatags are invisible to the ordinary internet user, although their use will direct the user to (amongst other websites) Green Energy’s website. Once at the Green Energy website, then, in the ordinary course, the internet user will be made aware that the website is concerned with Green Energy’s services. It cannot, therefore, be said that the use in a metatag of CTI’s Registered Trade Marks is a use that indicates the origin of Green Energy’s services.Thus, metatag use is not use as a trade mark …. (emphasis supplied by Katzmann J)

Katzmann J agreed with Kenny J’s analysis.

Katzmann J then rejected Veda’s reliance on 2 New Zealand cases and the CJEU’s decision in Google France. They were decisions in a different context and, in any event, the English courts since Google France had held that keywords did not infringe.

Sponsored links

Whether the sponsored links which used Veda in their text infringed turned on the nature of the actual use.

Malouf had used expressions like[4] “Clean Your Veda File”, “Fix My Veda History”, “Get Your Veda Report File”, “Veda Credit File Repairs”, but also “The Veda Report Centre” and “The Veda-Report Centre”.

Katzmann J held that the uses like “Clean Your Veda File” were descriptive and used in a descriptive rather thant trade mark sense:

In all but the advertisements featuring “The Veda Report Centre”, I am not satisfied that Malouf has used the Veda Trade Marks as trade marks. Rather, it seems to me that they have been used to describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark. …. the Veda Trade Marks have not been used by Malouf to distinguish its services from those provided by others but to describe the kind or character of the services it provides. ….

The Veda Report Centre, however, was a different case. That was used as a badge of origin to market the Malouf business under the Veda name.

The second conclusion seems to me, with respect, uncontroversial. I also personally agree with the first conclusion that the descriptive uses were not infringements too. In the “old days”, that would have been beyond controversy as the case law clearly established that use of the trade mark Yeastvite in an expression such as “Substitute for Yeastvite” was not use as a trade mark – use of a registered trade mark to refer to the products which the trade mark owner marked with the trade mark was not trade mark use. What the North Americans call “nominative fair use”.

The wrinkle here is that, with the introduction of s 123 into the Act, the High Court has left open the question whether that “old” law is still “good” law.[5] Following that, a number of Full Courts – in which the question did not arise because the goods in question were in fact pirate or counterfeit goods, not genuine goods – have proceeded on the basis that the “old” rule no longer applies.[6]

Even if the Full Court (assuming there is an appeal) continues down that, with respect, heretical path, all may not be lost as Malouf did invoke s 122 in its defence. In reaching her Honour’s, with respect eminently sensible conclusion, Katzmann J did note that it was unclear from the case law how s120 related to s 122. In any event, her Honour found that Malouf could rely on the s 122 defence except in relation to the usage “The Veda Report Centre”. Katzmann J rejected Veda’s arguemnt that the sheer number of keywords showed a systematic and targetted attempt to undermine the registered trade mark. Almost all of those uses were not infringements.

As with the trade mark infringement case, the allegations of misleading or deceptive conduct all failed except in respect of the “Veda Report Centre” usage in the sponsored links.

Lid dip: James McDougall

Veda Advantage Limited v Malouf Group Enterprises Pty Limited
[2016] FCA 255


  1. Veda also has registrations for VEDA ADVANTAGE, VEDACHECK and VEDASCORE.  ?
  2. Hal Varian explained how AdWords advertising works in 2009 and with more polish in 2014.  ?
  3. The claim was brought under s 120(1), the allegation under s 120(2) was abandoned during the trial.  ?
  4. The full list is at [161] of her Honour’s judgment.  ?
  5. See E. & J. Gallo Winery v Lion Nathan Australia Pty Limited (2010) 241 CLR 144; [2010] HCA 15 at [33] – [34].  ?
  6. The cases are discussed by Allsop CJ in Scandinavian Tobacco at [65] – [71].  ?

Playgro v Playgo

PLAYGRO v PLAYGO

Well, you’ll never guess what? It turns out that:

playgo

is deceptively similar to:

playgro

No April Fool’s. Now, maybe some of you (like me) are thinking, “Wait a minute, there must be ‘gazillions’ of trade marks for toys with PLAY in them. That’s true, but the second syllables of the verbal elements are just too close, both visually and aurally. As Moshinsky J explained:

In my view, the fact that there are other trade marks for goods in class 28 containing ‘PLAY’ as part of the word, does not assist in resolving the matter. Accepting that it is a crowded market for toys, games and playthings where the word ‘PLAY’ is used as an element of the trade mark, and therefore more attention than usual may be paid to the second syllable, there is nevertheless a closer degree of similarity between the trade marks in issue here and the marks referred to in paragraph [94] above. In the present case, the second syllable of each mark (‘GRO’ and ‘GO’ respectively) is visually and phonetically very similar, while in the other cases (for example, PLAYSKOOL and PLAYBOY) the second syllable is quite different.

The different shaped backgrounds and colours and arrangement of the verbal element(s) were not signficant matters.

A couple of other points.

Playgo is based in Hong Kong. It sold and supplied its products to Myer, Woolworths and Big W there (presumably FOB or some similar arrangement). It argued therefore that it did not use its trade mark in the course of trade in Australia as property in the goods passed on delivery in Hong Kong.

Moshinsky J rejected this argument. When Playgo sold its product to Myer and the others, it knew they were intending to import them into Australia for sale at retail. Moshinsky J considered this was just a straightforward application of Gallo and Estex. Until the goods passed into the hands of the ultimate consumers, they were still in the course of trade and the PLAYGO trade mark operated to denote Playgo as the trade source.

Perhaps surprisingly given this conclusion, however, his Honour considered that Playgo was not liable as a joint tortfeasor with Myer, Woolworths or Big W for the infringements committed by their use. Selling the goods to them, with knowledge of what they intended to do with them (i.e., import them into Australia for retail sale) did not have sufficient commonality of purpose to amount to a common design, to “acting in concert together”; it was merely facilitation:

Nevertheless, in my view, the facts do not establish that Playgo Enterprises and Myer engaged in a ‘common design’ to offer for sale and sell toys bearing the Playgo Device Mark. The relationship between Playgo Enterprises and Myer was merely that of vendor and purchaser. The Supply Agreement appears to be a standard agreement for the sale and purchase of goods; there are no special features which involve Playgo Enterprises in the process of offering for sale and sale of the goods to customers. The facts do not indicate that Playgo Enterprises played any role in the offering for sale or sale of the goods to customers. It is true that Playgo Enterprises sold goods bearing the Playgo Device Mark to Myer, and knew that they were to be offered for sale and sold to customers in Australia. Nevertheless, in my view, that is insufficient to amount to a ‘common design’ because Playgo Enterprises did not engage in any acts in furtherance of the alleged common design. At most, Playgo Enterprises facilitated the infringement by selling the goods to Myer; but mere facilitation is not enough to establish joint tortfeasorship.

Although it is not referred to in the judgment, presumably the other limb of joint tortfeasorship – directing, procuring or inducing the infringement – would also fail in the absence of some positive act (other than selling to the importer for importation in Australia and sale)?[1] If so, that illustrates that the common law principles are much less help to the right holder than the statutory prohibitions in copyright law and patent law against authorising infringement[2] and, even more so, s 117 of the Patents Act 1990.

Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited [2016] FCA 280


  1. See e.g. Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd [1999] FCA 898; 44 IPR 481 at [41], [52].  ?
  2. In Cooper v Universal Music, for example, the provision of links on a website which browsers could use to download infringing content did constitute infringement where the website was designed to enable anyone, including the primary infringers, to place the links on the website.  ?