Prosecco, GIs and the possible EU FTA

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

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

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

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

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

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

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

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

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

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

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

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

WTO upholds Australia’s tobacco plain packaging laws

The Dispute Resolution Panel has rejected the complaints by Honduras, the Dominican Republic, Cuba and Indonesia against Australia’s tobacco plain packaging laws.

Summary (just outlines the provisions contested and rejected). The complainants had:

  1. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 2.2 of the TBT Agreement;
  2. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 6quinquies of the Paris Convention (1967);
  3. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 15.4 of the TRIPS Agreement;
  4. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 16.1 of the TRIPS Agreement;
  5. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 20 of the TRIPS Agreement;
  6. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 10bis of the Paris Convention (1967);
  7. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 22.2(b) of the TRIPS Agreement; and
  8. not demonstrated that the TPP measures are inconsistent with Australia’s obligations under Article 24.3 of the TRIPS Agreement.

Full text via here.

TRIPS Agreement

On to the Appellate Body?

Productivity Commission’s Final Report

Updated to fix some broken links

The Productivity Commissions’s final report into “Intellectual Property Arrangements” has been published.

An overview and  recommendations is here.

The full report is here.

The key points sign off with a stirring call to action – or harbinger of what’s to come:

Steely resolve will be needed to pursue better balanced IP arrangements.

The Government has announced it is undertaking further consultations with us about the Commission’s recommendations and wants to hear your views by 14 February 2017. I wonder how many bunches of roses they will receive?

 

Selected links from last week

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

Patents

Trade marks

  • Is the US Olympic Committee’s [#TwitterBan Fair or Foul?](https://t.co/kmG0Avith) compare
    Telstra ‘Go to Rio’ campaign cleared by Federal Court, AOC case dismissed

Copyright

Remedies

  • Want An Enforceable Online Contract? Don’t Use A Footer Link Called “Reference”–Zajac v. Walker (USA)

Designs

Not categorised

Future of the profession

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

NZexit?

The Commerce Select committee of the NZ Parliament has recommended that NZ should not continue with the proposed Single Application and Examination Processes for patent applications in both Australia and NZ. The committee, however, did support continuing with the single trans-Tasman patent attorney regime.

As IP Australia points out, Australia passed the IP Laws Amendment Act 2015 to implement this process. The Patents (Trans-Tasman Patent Attorneys and Other Matters) Bill was introduced into the NZ Parliament last year.

The NZ government’s response to the recommendation is not known at this stage.

The Consumer Guarantees in the ACL apply to computer games downloaded from overseas’ vendors

The ACCC – the consumer watchdog – has successfully sued Valve for misleading or deceptive conduct in relation to its Steam gaming platform. The representations were along the lines of statements made in the terms and conditions like:

“ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT REFUNDABLE IN WHOLE OR IN PART”.

The ACCC’s case was that such statements were misleading because they were inconsistent with a consumer’s rights to return defective goods and receive a refund. These rights arose (in the case of defective goods) since s 54 of the Australian Consumer Law incorporates into all supplies of goods in trade or commerce to consumers in Australia a guarantee that the goods are of acceptable quality. If they are not, s 259, amongst other things, confers a right of action for compensation where the deficiency in quality could not be remedied or was a major failure and s 263 provides an entitlement to a refund.

Valve is based in Washington State, USA. It argued its arrangements with Australians were not subject to the Australian Consumer Law. There were 3 reasons:

  1. Valve’s conduct did not occur in Australia and it did not carry on business in Australia;
  2. The Steam Subscriber Agreement was governed by the law of Washington State in the USA and so the Australian Consumer Law did not apply; and
  3. The software games were not “goods”.

Conflicts of law rules did not exclude Australian Consumer Law

In (very) broad terms, section 67 of the Australian Consumer Law says that the consumer guarantee provisions of the Australian Consumer Law continue to apply where the proper law of the contract would be Australia (but for the terms of the contract which provide otherwise) or the terms of the contract provide that the laws of some other country govern the contract.

As noted above, Valve’s contract with subscribers (i.e., someone who “buys” a game through Steam to download or play) provided that the governing law of the contract was the law of the state of Washington in the USA and its courts had exclusive jurisdiction.

The parties accepted that this clause could not be relied on in face of s 67. However, Valve argued that nonetheless the “proper law” of the contract was the law of the state of Washington and not somewhere in Australia.

Edelman J noted that at common law, the proper law of a contract was that which had the closest and most real connection with the transaction. This was determined by consideration of:

matters including (i) the places of residence or business of the parties, (ii) the place of contracting, (iii) the place of performance, and (iv) the nature and subject matter of the contract (437). Each of these is considered in turn.

Valve’s customers, at least those who gave evidence for the ACCC, were resident in NSW, Victoria and Tasmania. Valve, however, had its offices in Washington State, USA and did not have offices in Australia. Edeleman J acknowledged also that it was seeking to enter into contracts with people from all over the world and was aiming to do so on consistent terms.

His Honour next considered that the place of contracting was Washington State as that was the place where the electronic communication from the customer was received to form the contract. That is, presumably, the transaction was one where the customer made an offer to “buy” the game and the contract was formed when Valve accepted the transaction in Washington State.[1]

So, while the proper law of the contract was Washington State, USA, s 67 of the ACL applied.

Valve was carrying on business in Australia

Even though his Honour found that the proper law of the contract was Washington State in the USA, Edelman J nonetheless found that Valve both engaged in conduct in Australia and was carrying on business in Australia and so subject to the Australian Consumer Law.

You can see where this is going at [4]:

…. There are some difficult issues involved in determining whether “conduct” is in Australia, but even if Valve’s conduct was not conduct in Australia, the Australian Consumer Law would apply if Valve carried on business in Australia. Valve said that it does not carry on business in Australia despite Valve (i) having more than 2 million user accounts in Australia, (ii) generating potentially millions of dollars in revenue from Australia, (iii) owning, and using, servers in Australia, with original retail value of US $1.2 million, (iv) having relationships with businesses in Australia, and (v) paying tens of thousands of dollars monthly to Australian companies in expenses for running its business in Australia.

conduct in Australia

Despite the difficulties in determining where conduct takes place, Edelman J was able to find that Valve engaged in conduct in Australia. The conduct in question was the making of representations. The representations were made in the place(s) where they were received (otherwise, if no-one saw or heard the representation, there would be no conduct). Here, however, representations about “no refunds” were made directly to customers in Australia in “chat” sessions and when they signed up for accounts and “bought” games to download: [2]

…. The purchase of a game also required a consumer to click on a box that agreed to the terms of the SSA. The consumer provided Valve with his or her location as Australia at the time of purchase. Indeed, Valve priced some games differently in Australia (ts 120–121). The consumer might be told by Valve that “This item is currently unavailable in your region” (Court Book 347).

carrying on business in Australia

Accepting that “carrying on business” could have different meanings depending on the context, Edelman J accepted the approach advanced earlier by Merkel J in Bray:

… the ordinary meaning of “carrying on business” usually involves (by the words “carrying on”) a series or repetition of acts. Those acts will commonly involve “activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis” ….

That was undoubtedly the case here. See the matters referred to in paragraph 4 above.[3]

Software downloads are “goods”

Computer programs are specifically included in the definition of “goods” for the purposes of the ACL. Valve argued, however, that what it was really supplying were services including the motion picures and audio which portrayed the images and sounds which the gamer interacted with.

Edelman J agreed that the film and audio files were not a computer program for these purposes, adopting the definition of a computer program as a set of instructions from the Copyright Act.

Under the ACL, however, it is not a question whether the supply is substantially a supply of services. Rather, the question is whether or not it involves a supply of goods. If so, the way the definitions are written, it doesn’t matter whether there is also a supply of services.

Valve further contended that it did not supply goods as all the subscriber had was a licence to use the software and, citing Cowell, a bare licence is purely a contractual right; not the supply of any property. One problem with this argument was that s2 of the ACL defined supply to include lease, hire or hire-purchase; terms sufficiently wide to encompass a licence. Another problem was that the argument did not take into account that subscribers could download games to play offline. They “physically” had the goods.

Valve therefore breached the consumer warranties implied by the ACL into each arrangement.

Interesting question whether foreighn companies systematically supplying goods or services over the internet to Australia will need to be registrered as a foreign company carrying on business in Australia under s 601CD of the Corporations Act? One may wonder about the practical ramifications flowing from that.

Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 (Edelman J)


  1. OK, that is an old-fashioned characterisation of the contractual formation, but Edelman J relied more specifically on UNCITRAL Model Law on Electronic Commerce 1996 with additional article 5bis as adopted in 1998 and the electronic transaction provisions in Australian laws such as Electronic Transactions Act 1999 (Cth) s 14B.  ?
  2. Ward Group v Brodie & Stone was distinguishable, at least because in Valve, there were (2.2 million) real purchasers. Gutnick was also distinguished as directed to different issues.  ?
  3. Catalogued again at [199] – [204].  ?

Authentic TPP text (legally verified)

Prof. Sam Ricketson pointed out to me that DFAT posted the legally verified version of the TPP on its website back on 26 January 2016.

This is the legally verified English text, but there will be equally authentic French and Spanish versions too. However, the English version prevails if there are any inconsistencies.

The legally verified text supersedes the version published back in November 2015.

Australia Wins Philip Morris’ Challenge Against tobacco plain packaging

The IPkat reports that Australia has won the claim Philip Morris brought against the Tobacco Plain Packaging laws under the investor dispute resolution clause of the Australia – Hong Kong Business Investment Treaty.

As the IPkat’s report notes, the dispute resolution panels under the WTO are still in train.

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

Full text of TPP here.

IP chapter here.

Lid dip: Prof. Cotter