US Supreme Court downs Aereo

The US Supreme Court has held (6:3) that Aereo infringes copyright by publicly performing the protected material.

You may recall that Aereo has warehouses full of recording devices which an individual subscriber could rent and record over the air television broadcasts on, then play back to their tv, computer, tablet or smart phone.

In dissent, Scalia J (joined by Thomas and Alito JJ) was highly critical of the “purposive” approach to statutory interpretation adopted by the majority:

The Court’s conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs.  …. That reasoning suffers from a trio of defects ….

So Aereo joins Optus TV Now on the defunct list.

American Broadcasting Cos Inc v Aereo Inc

Lid dip: Marty and Patently-O

 

ACIP on innovation patents

ACIP’s final report into Innovation Patents has been published.

Key points / recommendations:

  • ACIP can’t find evidence to support conclusion that innovation patents promote innovation

 

  • ACIP recommends that, if the innovation patent system be retained:

 

    • there be a new “innovation” threshold:

amending the Patents Act 1990 (Cth) to raise the level of innovation to a level above the current innovative step level, but below the inventive step level that applies to standard patents. A suitable level of innovative step would be provided by the test of inventiveness described by the High Court of Australia in Minnesota Mining & Manufacturing Co v Beiersdorf (Australia) Ltd [1980] HCA 9: (1980) 144 CLR 253; (1980) 29 ALR 29 with a modification to that test to include the current definition of what is relevant CGK. In order to be innovative an invention would need to be non-obvious by reference to CGK either within or outside the patent area but not by reference to prior art information that is not part of CGK at the priority date of the relevant claims of the innovation patent. This would be a lower threshold than is applied to standard patents, where the invention must be non-obvious by reference to the CGK and any piece of prior art.

I suppose that would at least be a test that requires some advance over the prior art and is (at least in theory) something which those of us who started growing up under the 1952 Act should be familiar with.

    • a request for examination must be filed within 3 years
    • the term “patent” be reserved for certified “patents” only;
    • exclude from innovation patents “all methods, all processes and all systems “.

The Government has indicated it will respond in due course.

ACIP’s Innovation Patent Inquiry page.

Link to the Final Report (pdf).

More contempts

Bob Jane and his trading companies were found to be infringing the BOB JANE and JANE FLEET trade marks and had, amongst other things, injunctions ordered against them to stop, to change the various company names and transfer two domain names.

They didn’t.

This time, Besanko J has imposed fines of $25,000 and $15,000 on Mr Jane for his contempts, $25,000 and $15,000 on Bob Jane Global Tyre Corporation (Hong Kong) Limited, $20,000 on Bob Jane Southern Motors Pty Ltd and $2,000 fines on corporate respondents for other contempts. The respondents were also ordered to pay 80% of the applicants costs on an indemnity basis.

Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] FCA 637

Carving up an uncertified halal butcher

Perram J has awarded $10 nominal damages for trade mark infringement against each of Scadilone, White Heaven and Quality Kebabs, but $91,015 additional damages against Quality Kebabs.

The Halal Certification Authority does just that: it certifies that food has been prepared according to the relevant Islamic (halal) requirements. It has a registered trade mark for the use of which, like other such schemes, you pay appropriate licence fees and comply with the standards set.

TM 1005647
TM 1005647

Quality Kebabs makes and sells at wholesale meat products. It supplied some of its products to 2 kebab houses: Scadilone and White Heaven. The employee/sales rep. also provided them with certificates bearing HCA’s trade mark. Unfortunately, Quality Kebabs was not certified by HCA and it had not paid the licence fees.

HCA had sought compensatory damages based on its lost licence fees: about $5000 for a year’s licence from each of the kebab shops and roughly $60,000 from Quality Kebabs because its conduct occurred over parts of 2 different annual licensing periods. Accepting that a lost royalty or licence fee could be appropriate, Perram J refused this.

Damages under s 126(1) are compensatory. There was no likelihood that any of the infringers would have contemplated entering into a licence at those prices so there were no “lost” licence fees. The kebab houses did want assurance that the meat was halal, but that did not necessarily mean they wanted to promote their shops, as opposed to the meat, as halal certified. Perram J found that, if Quality Kebabs had known HCA’s trade mark was registered and licence fees were payable, it would not have used the trade mark. Instead, it would have copied someone else’s certificate. Therefore, there was no basis to infer that HCA had been deprived of its licence fee.

There was also no order for damages for reputational damages. The signs were displayed in only 2 shops for limited periods. There was no evidence that anyone had seen them or even whether or not the meat was in fact halal.

Perram J considered that the additional damages contemplated by s 126(2) were intended to have a deterrent effect.

Scadilone, White Heaven and their principals escaped liability for additional damages as they were innocent infringers. They had simply put up the certificates they were given and removed them, more or less promptly, when complaint had been made.

Quality Kebabs was a different case, however. Having reviewed the factors set out in s 126(2),[1] Perram J held this was an appropriate case for an award of additional damages:

…. If the damages were to be fixed at the level of the applicant’s wholesale licence fee this would strip Quality Kebabs of the benefit it has received of using the trade mark without having to pay for it but it would not, in my opinion, be a sufficient deterrent. It would mean that an infringer could acquire, in effect, a compulsory licence to use a trade mark subject only to paying for it. It would create a ‘use now’ and ‘pay later’ state of affairs. That situation would eliminate the capacity of the trade mark owner to control who used its trade mark.

To achieve the deterrent effect and having regard to the other factors, Perram J increased the damages by a factor of 50% over the applicable licence fees. Thus, about $60,000 for the licence fees that should have been paid for the two years in which the infringements occurred plus a further $30,000.[2]

There was no award for damages under the ACL. Although the conduct was plainly misleading, Perram J found there was no evidence that HCA’s reputation had suffered any damage.

Halal Certification Authority Pty Limited v Scadilone Pty Limited [2014] FCA 614

Lid dip: James McDougall


  1. S 126(2) is in similar, but not identical, terms to s 115(4) of the Copyright Act 1968.  ?
  2. … the applicant’s fee in those years was an annual one of $27,090 and $33,580 respectively. Although Quality Kebabs only used the trade mark for the 13 month period between August 2012 and September 2013 I do not think that these fees should be subject to a pro rata reduction. Had Quality Kebabs followed the correct path of obtaining the applicant’s permission it would have had to have paid both annual fees in full.  ?

A patents case goes to the High Court

The High Court has granted special leave to Alphapharm to appeal from the Full Federal Court’s decision to allow Lundbeck to apply to extend the term of its Lexapro patent 10 years late. The High Court was not interested at all in the exercise of the discretion to allow a 10 year extension. the question is whether a power to extend time exists at all.

The extension of term provisions for pharmaceutical patents are found in s 70 and s 71(2). Section 71(2) provides that:

An application for an extension of the term of a standard patent must be made during the term of the patent and within 6 months after the latest of the following dates:

(a) the date the patent was granted;

( b) the date of commencement of the first inclusion in the Australian Register of Therapeutic Goods of goods that contain, or consist of, any of the pharmaceutical substances referred to in subsection 70(3);

(c) the date of commencement of this section.

It was common ground that Lundbeck’s application was outside the latest of the possible dates.

However, the Patents Act also provides a power to grant extensions of time in s 223.

Lundbeck’s problem – if it turns out to be a problem – is that s 223(11) says that s 223 cannot be used to extend the time for doing “prescribed actions” and reg. 22.11 specifies as one of the prescribed actions:

filing, during the term of a standard patent under subsection 71(2) of the Act, an application under subsection 70(1) of the Act for an extension of the term of the patent;

In the Federal Court,[1] Yates J at [50] found that Lundbeck’s “application” for an extension of time fell outside this because it really involved 2 requirements:

The making of an application under s 70(1) of the Act is governed by two time limits: the application must be made “during the term of the patent” and within six months of the applicable date in s 71(2)(a) to (c). Both time limits must be observed in order to make an application.

While the requirement that the application be made “during the term of the patent” was caught and so excluded by s 223(11), the second requirement – within 6 months of the applicable date – was not.

The High Court (Kiefel J and Keane J) have granted Alphapharm special leave to argue that, as a matter of construction, there was really only one application.

Lundbeck boldly tried to argue that special leave should not be granted because the issue raised no question of general importance: there not that many applications for an extension of time to apply for an extension of the term of a pharmaceutical patent. Kiefel J retorted sharply:

KIEFEL J: But the extension of a patent is itself an important matter, is it not?

MR NIALL: It is.

KIEFEL J: Very important.

It does raise an interesting question. The extended term expired back in December 2012. Alphapharm and others, however, had entered the market when the original term of the patent expired on 13 June 2009 and before Lundbeck’s application for an extension of time in which to file its application to extend the term had been finalised. Therefore, it would appear that the potential exposure of the generics companies to damages awards (or an account of profits) is up for grabs; i.e., another 3 years.

Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCATrans 79

Lid dip: Opinions on High

Some other commentaries: here, here and here.


  1. Aspen Pharma Pty Ltd v H Lundbeck A/S [2013] FCAFC 129 (Jessup and Jagot JJ agreeing).  ?

Graduated response coming Down Under?

According to iiNet, it is.

It would appear from documents obtained by ZDnet and, perhaps, the Fairfax press, that it is certainly one of the “options” being developed by the Attorney-General’s Department.

The Attorney-General did say back in February that he was looking at a number of ways to combat online piracy in light of the High Court’s decision in the iiNet case. Presumably, the development of the various options has progressed somewhat by now although, so far as I am aware, it is not something that has been thrown open to public comment.

The ZDnet article refers to the positive experience apparently experienced with the scheme in the USA. The Fairfax article notes Rebecca Giblins’ research indicating the costs of such schemes appear to be all out of proportion to their impact.

It would be a pity if the development of all these options means that we are not going to get the “through and exhaustive exercise in law reform” so that the Copyright Act will be shorter, simpler and easier to use and understand that the Attorney did foreshadow in February.

Meanwhile, in the UK, a Minister assisting with IP matters has raised the prospect of search engines being required to exclude from search results, or at least the first page of the results, web-sites against which blocking orders have been obtained.

2 years gaol for contempt

The Full Federal Court has reduced Mr Vaysman’s punishment for contempt from 3 years to 2 years imprisonment for repeatedly breaching injunctions not to infringe trade mark and copyright.

In 2003, Deckers Outdoor Corporation (the owner of the UGG Australia trade mark) sued Mr Vaysman, members of his extended family and various companies they operated through for infringing its trade mark and copyright. Those proceedings were settled by consent. Injunctions against trade mark infringement and copyright infringement had been ordered.

In 2004, Deckers Outdoor Corporation again sued Mr Vaysman, members of his family and the companies through which they operated for breach of the terms of settlement reached in 2003. Those proceedings were also settled by consent.

In 2007, Deckers Outdoor Corporation sued Mr Vaysman, members of his family, their companies and a number of others for the third time: for infringement of its trade marks and copyright and breaches of the prior terms of settlement.

Essentially, notwithstanding the two sets of earlier proceedings, the undertakings not to infringe and the injunctions against infringement, Mr Vaysman et al. had continued with their infringing activity making counterfeit UGG boots unabated at all. The proceedings involved two main aspects: the civil claims for infringement of trade mark and copyright and contempt charges for breaches of court orders made in both the earlier proceedings and also the 2007 proceedings (e.g. continuing the infringing activity in defiance of an interlocutory injunction).

Before the contempt charges were heard and the punishments handed down, there had been judgment against the Vaysman parties on the civil claims for infringement including an order for the corporate vehicle and Mr Vaysman jointly and severally to pay $3 million in compensatory damages and for the corporate vehicle to pay $3.5 million in additional damages pursuant to s 115(4) of the Copyright Act. (The corporate vehicle was by this stage being wound up.)

In relation to the most serious contempt, charge 18, the trial judge had found:

Charge 18 – Between December 2005 and (at least) November 2007 Mr Vaysman caused and encouraged the use of a factory in Roper Street Moorabbin for manufacturing and selling counterfeit footwear.  He did so contrary to consent orders to which he was a party which were made by the Court on 12 March 2004.  During this period, as I found in Deckers Outdoor Corporation Inc. Farley (No 5) [2009] FCA 1298 (“Deckers (No 5)”) at [84]-[92], over 30,000 pairs of counterfeit boots were sold with the profit on those sales amounting to over $3 million.

As Mr Vaysman was found to be in overall control of the whole operation, the trial judge sentenced him to 3 years’ imprisonment for this contempt. (Other charges of contempt were also established, but received much lighter punishments to be served concurrently with the punishment on charge 18.

By the time the contempt charges came to be heard in 2010, Mr Vaysman was no longer in Australia.

After the punishments for contempt were imposed, Mr Vaysman’s father, a 74 year old in ill-health and found by the Court to be of previously unblemished character, successfully appealed a sentence of a term of 18 months’ imprisonment. Gray and Bromberg JJ, considering imprisonment very much a last resort, imposed a fine of  $50,000, but ordered that the roughly 2 months or so he had already served in prison stand in lieu of the fine. Besanko J agreed that the sentence needed to be reduced, but would have reduced the sentence to a term of 12 months.

Mr Vaysman returned to Australia in June 2013. He was imprisoned pursuant to the contempt order. He sought leave to appeal (a long time out of time).

Besanko J, with whom Siopis J agreed, granted leave and considering the 3 year sentence manifestly excessive having regard to other sentences for contempt, ordered the sentence be reduced to two years. Besanko J did not consider that Federal Court sentencing practices needed to be adjusted for consistency with State court sentences. Nor did his Honour think any discount should be made having regard to the award of additional damages.

Dowsett J took a different approach.

His Honour considered that, to the extent that Federal Court sentences for contempt, were more lenient than comparable State courts, the Federal Court standard should be lifted. Focusing on the punitive nature of awards of additional damages, however, his Honour considered there an element of double counting or double jeopardy in not taking into account the additional damages award when fixing the contempt penalty. Dowsett J would have reduced the prison sentence from 3 years to 2 years and 3 months.

Vaysman v Deckers Outdoor Corporation Inc [2014] FCAFC 60

Dr Gurry re-appointed

Last week, 8 May, WIPO’s General Assembly re-elected Dr Francis Gurry to a second 6 year term, beginning 1 October 2014 as Director-General of WIPO.

Congratulations, Dr Gurry!

In his acceptance speech, Dr Gurry highlighted the challenge facing WIPO:

I believe that the fundamental challenge that we face as an Organization is to achieve a shared understanding of the contribution and value of intellectual property to economic, social and cultural development. This is by no means an easy task. Many obstacles lie in the path – different competitive interests in an economy in which knowledge- and technology-intensive industries account for an increasing 30% share of global economic output; asymmetries of wealth, opportunity and knowledge; historical and contemporary trust deficits; and the reality of a multi-speed and multi-tiered world in which multilateralism, while being the highest expression of inclusiveness and legitimacy, is nevertheless the slowest solution.

It would appear this means continued development of the international agenda on specific issues.

Press Release

Acceptance Speech