IPwars.com

Mainly intellectual property (IP) issues Down Under

Troubles with the grace period

The Patents Act was amended (in relatively controversial circumstances) to include a 12 month grace period (somewhat a la the USA) so that use or publication of the invention in the 12 months before the complete specification was filed could not be relied on to destroy validity: see s 24(1)(a) and reg.s 2.2(1A) and 2.3.

Assume that a complete application for a standard patent was filed on 13 May 2005.  Then a complete application for an innovation patent, as a divisional from the standard, was filed on 22 November 2006.

Assume further that the first publication of the invention the subject of both applications was in October 2004.

Which complete application does time run (backwards) from?

If the standard application, the innovation patent will be valid; if not, it will be invalid.  If time runs from the date of the complete application for the innovation patent, however, the divisional status of the innovation application will not have all the usually expected effects.

Stone J has found that the relevant application, on the basis of the specific wording of the legislative provisions, is the complete application for the innovation patent:

10 There does not appear to have been any previous judicial consideration of the present question. Both parties submit that, having regard to the context in which they appear, the ordinary and natural meaning of the provisions supports the construction for which they respectively contend. For reasons given below I have concluded that the construction for which the respondent contends is correct, namely, that where the specification filed in respect of a parent application discloses the invention claimed in a divisional application based on the parent, the “complete application” to which cl 2.2(1A) refers is the divisional application. Consequently I would answer the question for determination as follows:

For the purpose of determining the validity of the Australian Innovation Patent No 2006100978 (Innovation Patent), and on the facts stated in the orders made by Bennett J on 11 December 2007, “the filing date of the complete application” within the meaning of reg 2.2(1A) of the Patents Regulations 1991 (Cth) is the filing date of the complete application for the Innovation Patent on 22 November 2006.

28 I reject the applicant’s argument that the respondent’s construction creates an anomaly by providing the innovation patent with the benefits of divisional status whilst depriving it of the grace period benefits otherwise accruing to that status. As the respondent correctly submits, the consequence of its view is that the grace period simply runs from a later date, which may or may not extend past the priority date based on the filing of the parent application. This is said to reflect:

… a decision not to allow divisional applications to benefit more than they already do from the earlier priority date in circumstances where the divisional application is filed more than a year after the parent application.

Be very, very very careful if you have to rely on the grace period!

Mont Adventure Equipment Pty Limited v Phoenix Leisure Group Pty Limited [2008] FCA 1476.

Patent application searching

IP Australia and the US PTO have reached agreement to permit some international searching for US patent applications to be undertaken by IP Australia.

According to IP Australia:

The arrangement, which comes into effect on 1 November 2008, will allow applicants from the US to choose IP Australia to undertake the initial search and examination of their patent application under the Patent Cooperation Treaty (PCT). Applications that may not be covered under the arrangement are certain international applications relating to particular mechanical engineering or analogous fields of technology.

The arrangement starts on 1 November 2008.

A bit more detail here.  Nothing on USPTO site as yet.

Manner of manufacture

The hyper-driven David Brennan is also doing a free lunch time presentation at Allens Arthur Robs in Melbourne on 14 November.

Registration and more details here (pdf).

Attempt to patent the new (?) science of subronics here and check out Prof. Lemley’s take on the issue or bone up on the ACIP review via here.

In-house trade mark lawyer awards

The World Trademark Review has issued a call for nominations for its industry awards.

The nominations are sought for in-house trade mark lawyers and departments.

Further details here and last year’s awards here (pdf).  Have your say (nomination form) here.

the value of copyright: determining shadow prices

Ass. Prof. David Brennan and Dr Rhonda Smith will talk for IPRIA about how to determine a fair price for using IP where the IP owner can’t demonstrate any real harm.

I think a situation like this is where an infringer makes sales of the infringing product, but the IP owner wouldn’t have made those sales and so didn’t “lose” anything.

The talk if at Blake Dawson in the city on 18 November at 6.00 pm.

Registration is free via here.

Resale royalty right

On Saturday, the Age carried a story about the proposed resale royalty right.

The details (yet to be implemented in legislation) are up here (pdf) and here (rtf):

The scheme will start on 1 July 2009.  It will cover:

resales of original works of visual art sold through the secondary art market where the seller has acquired the work after the legislation takes effect. It will not be restricted just to works created after the scheme starts.

If such a qualifying work is resold (in the secondary market) for AUD$1,000 or more, there will be a 5% fee payable to the artist. This is the option the then Government’s 2004 study found would generate the highest level of royalty payments. (There is no indication whether or not the $1,000 will be indexed.)  Liability for payment will be joint and several and will cascade: seller, buyer’s agent, buyer.

For these purposes, a ‘ resale’ will include:

all resales involving art market professionals, public institutions or organisations, and all resales subsequent to the first transfer of ownership, regardless of whether the first transfer was made by sale, gift or any other means.   

A ‘work of visual art’ will be:

work of art original works of graphic or plastic art, such as a painting, a collage, a drawing, a limited edition print, a sculpture, a ceramic, an item of glassware or a photograph. This definition reflects similar arrangements in the EU. 

To qualify, the author will have to be an Australian or permanent resident (or their heirs) – I wonder if this will require qualification at the time the work was made?

The fact sheet indicates the possibility of reciprocity under foreign schemes.  It suggests this might have something to do with the Berne Convention.  A resale royalty (or droit de suite) is not covered by art. 6bis, but art. 14ter.

Joshua Gans looks at the economics here.  Anyone familiar with ‘artist’s rights’ legislation in Australia could have told him that artists, like children and the mentally incompetent, won’t be getting any right to ‘opt out’.  The fact sheet confirms:

The right will be inalienable and unable to be waived. 

The then Government’s 2004 study estimated that the scheme now proposed to be adopted would have captured 72% of sales at public auction in Australian in 2003. 823 artists would have benefited, with an average royalty of $3,300.  One artist would have generated a royalty of $207,000 and, at the other extreme, another $40.  Administration costs would have been $600,000. This is much higher than the UK estimates of £1 million start up costs and £50,000 pa on-going.

For those of you concerned that this might be the end of the auction market in Australia, a UK study (where a (somewhat different) scheme is operating, didn’t think so.

Jammie Thomas wins – sort of?

Ms Thomas, a single mother of two, is was the first person successfully prosecuted to a substantive trial by the RIAA in the USA for copyright infringement by P2P file “sharing” – using KaZaa, she downloaded and “shared” 24 copies of protected sound recordings.

The jury awarded RIAA statutory damages of US$220,000 by the jury (or $9,250 per song file downloaded).

Well, (pending the appeal), it’s all coming unstuck – a bit.  The trial judge, of his own motion (they do things differently over there?), recalled the matter, heard further argument and has granted a retrial on the basis that his instruction to the jury was erroneous. 

Jury Instruction No. 15 was as follows:

“The act of making copyrighted sound recordings available for electronic distribution on a peer?to?peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown.”  

The error appears to be in those words “regardless of whether actual distribution has been shown”.  

US copyright law, like much in the US I guess, is rather different.  The US Copyright Act does not include a “making available” right (see art. 8 WCT and arts 10 and 14 WPPT).  In the funny way they do things there, copyright owners do not get an exclusive right to communicate a work electronically; rather they get – in addition to publication and reproduction rights – (1) a right to publicly perform it and (2) to distribute copies: see 17 USC §106, in particular (3):

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”   

The “public performance” right is how they provide control over broadcasting.  It turns out, however, that distributing copies requires that there be an actual distribution, not just a making available for distribution.

Four comments:

First, the trial judge has granted a new trial.  

Even on the narrow approach taken by the trial judge (putting to one side the potential for an appeal), Ms Thomas seems to be extremely exposed.  For example, the RIAA argued that the error didn’t matter because Ms Thomas infringed the copyright by downloading the recordings: an exercise of the reproduction right.  The trial judge noted that may well be right, but it was impossible to tell whether the jury awarded the US$220,000 damages on the basis of infringing the reproduction right or the erroneous instruction no. 15, or some combination of factors.

Similarly, the only proof of “distribution” was the copy downloaded by the RIAA’s private investigator.  Ms Thomas argued that this could never be a distribution because the copyright owner (and its authorised agents) can’t infringe its own copyright.  The trial judge rejected this:

The Court holds that distribution to MediaSentry can form the basis of an infringement claim.  Eighth Circuit precedent clearly approves of the use of investigators by copyright owners.  While Thomas did not assist in the copying in the same manner as the retail defendant in Olan Mills – by actually completing the copying for the investigator – or as the retail defendants in RCA/Ariola – by assisting in selecting the correct tape on which to record and helping customers copy – she allegedly did assist in a different, but substantial manner.  Plaintiffs presented evidence that Thomas, herself, provided the copyrighted works for copying and placed them on a network specifically designed for easy, unauthorized copying.  These actions would constitute more substantial participation in the infringement than the actions of the defendants in the Eighth Circuit cases who merely assisted in copying works provided by the investigators.   

That is, by using KaZaa, Ms Thomas placed (whether knowingly or not) unauthorised copies of the recordings in her “shared” file so that other KaZaa users could access it and copy it.  That would be sufficient for liability for distribution if a copy were shown actually to be distributed.  A retrial was necessary, however, because it wasn’t possible to tell how much that infringing act contributed to the damages award and how much as a result of the erroneous Jury Instruction No. 15.

Secondly, the trial judge’s interpretation of the distribution right seems somewhat narrower than what some people had been arguing: that distribution required distribution of physical copies, not transmission of electrons.

Thirdly, Ms Thomas’ imaginary Australian cousin, would not have much hope: see e.g. ss 31(1)(a)(iv) and 85(1)(c) of the Copyright Act 1968, bearing in mind the “communicate” is defined in s 10910 to mean

make available online or electronically transmit (whether over a path, or a combination of paths, provided by a material substance or otherwise) a work or other subject-matter, including a performance or live performance within the meaning of this Act.

and there would also be the small matter of the reproduction of the infringing copy on her computer.

She would not of course be exposed to statutory damages.  As Howard Knopf, over at Excess Copyright notes, the trial judge is extremely upset about the imposition of statutory damages in this context.

Although if the imaginary Australian cousin continued after receipt of a letter of demand “additional damages” might loom large: see Review v Innovative Lifestyle at [55] – [65] (a registered designs case).

Finally, trade war?  Well, not yet.  Who knows whether there will be an appeal and how long it will take.  In any event, the making available right is in the WIPO Copyright Treaty and the WIPO Performers and Phongrams Treaty.  These are not obligations that are required to be implemented by TRIPS and so are not subject to the WTO dispute resolution procedures.

But hey, may be Australian copyright owners could lobby the Australian government and get it to take matters up under the Free Trade Agreement procedures.  One can imagine (well fantasise is perhaps more accurate) that the US administration and Congress would be terrified at the offence to their treaty partner’s rights amidst all that Wall Street “flu”.  At least, it might be something to poke them back in the eye with (in due course and providing they are not wearing lipstick).

Case is Capitol Records Inc v Jammie Thomas here.

Barefoot deeper into the drink

Not only did E & J Gallo fail in its infringement action against Lion Nathan’s Barefoot Radler mark for beer, but Lion Nathan successfully applied to get E & J Gallo’s trade mark removed for non-use.  Various grounds were advanced to support the use of the trade mark.  The surprising thing about this second part of the case, however, is that wine labelled with E & J Gallo’s trade mark was actually sold in Australia during the relevant non-use period.

(For the background and the first part of the case see here.)

The non-use period ran from 2004 to 2007.  E & J Gallo had acquired the trade mark by assignment in January 2005.  Neither E & Gallo’s predecessor, nor E & J Gallo had exported wine under the trade mark to Australia in the relevant period.  

What happened was that E & J Gallo’s predecessor had exported some 60 cases of wine to Germany in 2001.  Somehow, some of this wine made its way to Australia and was offered for sale, and sold, by someone known as Beach Avenue Wholesalers.

Flick J rejected the contention that the fact of the offering for sale and sale by Beach Avenue Wholesalers was sufficient to constitute use of the trade mark.  His Honour also rejected the contention that Beach Avenue Wholesalers, someone who neither E & J Gallo nor its predecessor ever knew of or heard about was an authorised user of the trade mark.

His Honour distinguished Estex Clothing Manufacturers Pty Ltd v Ellis & Goldstein Ltd (1967) 116 CLR 254 on the grounds that the trade mark owner there had consciously projected its goods into the course of trade in Australia.

One interesting thing about this approach is it is directly at odds with the cases, and reasoning, on why parallel imports don’t infringe trade marks: the fact that the trade mark owner had put the goods on the market anywhere was and is sufficient.

An appeal from Flick J’s decision is scheduled for hearing in November, NSD1085/2008

Innovation review

I’m still wading my way through the Innovation Review.

Meanwhile Duncan Bucknell is highly critical, particularly of recommendation 7.2:

Recommendation 7.2: Patent law should be reviewed to ensure that the inventive steps required to qualify for patents are considerable, and that the resulting patents are well defined, so as to minimise litigation and maximise the scope for subsequent innovators.

As Duncan points out, what does this actually mean?  Well, Ben Roxborough at IPRoo thinks we should pay much more attention to this recommendation as it appears to be, or be very close to, what IP Australia thinks should happen.  Follow Ben’s link from here.

If that is right, then there must be a very good chance that, whatever it means, it is going to happen.

One certainly can’t quibble with the idea that patents should be certain and clear in scope.  Indeed, Besson & Meurer contend that one of the main reason why the patent system in the USA is not working properly is precisely because patents there are not clear and certain in scope. (Blog summaries here and here.)

Given Australia’s role as an IP importer, and bearing in mind we have the innovation patent too, one can’t really quibble with the idea that we shouldn’t be granting standard or “real” patents for things that wouldn’t get patented overseas – well, I suppose one can quibble, but I’m not at all sure what would be the justification for allowing patents in Australia which are not patentable elsewhere.  

(As an aside, I wonder how requiring more inventiveness, if it can be defined, fits in with having innovation patents – which are certainly real – but for rather more limited, limited terms.)

In the Alphapharm case (see esp. [80 -81], however, the majority of the High Court pointed out that there didn’t seem to be a “standard” international approach.  On the other hand, there is some evidence emerging that it may be easier to get patents in Australia than Europe and Japan but, possibly, not the USA.

If that is what the evidence does suggest, one might then have to go on to ask (amongst other things) how much of the difference is due to, say, EU-centric rules like no patents on computer programs as such?

Now, I have previously mentioned that Prof. Mark Lemley provides one of the clearest explanations I have come across on whay that is not a good idea (listen to podcast #62).  And that was in the context of considering patentable subject matter.

And guess what, that is the subject of another Australian governmental review.  So, it looks like change is coming.  Perhaps, you should get involved?

On recommendation 7.3:

Recommendation 7.3:  Professional practitioners and beneficiaries of the IP system should be closely involved in IP policy making.  However IP policy is economic policy. It should make the same transition as competition policy did in the 1980s and 90s to being managed as such.

I can’t do better than quote the new DG:

In this regard, it is useful to remember that intellectual property is not an end in itself. It is an instrumentality for achieving certain public policies, most notably, through patents, designs and copyright, the stimulation and diffusion of innovation and creativity on which we have become so dependent, and, through trademarks, geographical indications and unfair competition law, the establishment of order in the market and the countering of those enemies of markets and consumers: uncertainty, confusion and fraud. In the end, our debates and discussions are about how intellectual property can best serve those underlying policies: whether modifying the international framework will enhance or constrain innovation and creativity and contribute to their diffusion, and whether it will add confusion, rather than clarity, to the functioning of the market.

Unfortunately, that doesn’t tells us in any particular case whether more protection or better exceptions are required.  It does, however, remind us what the rules are trying to balance.

The Secret – more forum wars

Late in July, Sundberg J found that Australia was clearly an inappropriate forum to litigate the dispute over ownership and infringement of copyright in the film and the book, The Secret.  Now there is an appeal on foot.

To recap: interests associated with Ms Rhonda Byrne commenced proceedings in Australia claiming to be the owner of copyright in the film of The Secret.  Drew Heriot was the director of the film – there is a dispute between the parties over whether he was employed by one of the Byrne interests or the respondent in this proceeding.  In any event, the Heriot interests brought parallel proceedings in the USA.

Sundberg J considered Australia was clearly an inappropriate forum.  Broadly, this was on the basis that it was necessary to have regard to the whole dispute between the parties, not just the component of the litigation relating to Australia.  On that basis, by far the greater amount of damages at stake were those for infringement in the USA (the book has featured on Oprah, amongst others) and only the US court would have power to amend or correct the US Register of Copyrights.  The judge in the US has apparently reached a similar conclusion.

Now, the question in Australia is who should hear the application for leave to appeal: a single judge or the Full Court.  Heerey J has directed that the matter go before a Full Court and, subject to any directions by the Full Court, be heard concurrently with, or immediately before, the appeal.

His Honour considered that the Byrne interests would suffer substantial prejudice if it turned out that Sundberg J’s decision was wrong:

9 However the US proceeding will deal not only with copyright ownership, but with questions of infringement and damages, issues which do not arise in the Australian proceeding. There will be a significant burden, both financial and otherwise, on the applicant in having to contest that proceeding. Moreover, as Mr Batt for the applicant points out, his client’s Australian proceeding was commenced first, seeking a remedy under Australian legislation arising out of events which allegedly took place in Australia. The opportunity for the applicant to contest, and possibly win, the Australian proceeding, without having to defend the more extensive US proceeding, is something of real value, the loss of which arguably amounts to real injustice, supposing Sundberg J’s decision to be wrong. Apart from anything else, victory in the Australian proceeding may create some issue estoppel in favour of the applicant, or give it leverage in commercial negotiations.

Heerey J did avoid the question of whether the decision was in fact wrong.  It was not the subject of detailed submissions by either party.  In any event, experience taught that the two questions could not often be treated in a vacuum.  Moreover, there was a chance the matter could be dealt with in the November sittings if not before.

TS Production LLC v Drew Pictures Pty Ltd [2008] FCA 1329

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