Regency still loses its MPEG appeal

Although it rejected the primary judge’s interpretation of s145 of the Patents Act 1990, the Full Court has nonetheless dismissed Regency’s appeal seeking to terminate its licence of MPEG patents.

In 2009, Regency took a licence of a bundle of patents from the MPEG patent pool so that it could make, amongst other things, DVD and Blu-Ray players. All the patents were necessary to make MPEG–2 compliant equipment, but they related to different inventions. By July 2012, some of the patents, but not all, had expired. Regency sought to terminate the licence early, relying on s145.

Section 145 provides:

(1) A contract relating to the lease of, or a licence to exploit, a patented invention may be terminated by either party, on giving 3 months’ notice in writing to the other party, at any time after the patent, or all the patents, by which the invention was protected at the time the contract was made, have ceased to be in force.

(2) Subsection (1) applies despite anything to the contrary in that contract or in any other contract.

The Full Court agreed with Regency that the trial judge`s interpretation of,s145 was wrong but, even so, the right to terminate the licence under s145 did not accrue until all the patents licensed at the time the licence was granted had expired. As there were patents still on foot, therefore, Regency did not have the right under s145 to terminate.

The Full Court considered that the reference to “a patented invention”, an expression not defined in the Patents Act was simply a reference to an invention that was patented, rather than something which was patentable subject matter.

Further, s23(b) of the Acts Interpretation Act 1901 meant that the reference to the singular – a patented invention – could be read as including the plural. While recognising that s145 was intended to protect licensees from being unfairly required to pay licence fees after the patents had expired, Bennett and Pagone JJ pointed out that, as the licensor could also invoke s145, a licensee could be exposed to even greater unfairness if the licence could be terminated after the expiry of one or only some patents:

30 … if MPEG were entitled to terminate the licence when one of the patents or all of the patents for one of the inventions had expired, Regency would be in the position that, having implemented the Standard, it would be required to cease exploitation of the outstanding patents or negotiate a fresh licence.

31 The primary judge recognised the lack of commercial reality and potential unfairness in such circumstances and so do we. It would lead to the absurd result that parties wishing to negotiate for a patent pool would necessarily have to enter into multiple contracts or face the uncertainties and possible damage caused upon the expiry of a single patent of that patent pool. This would be of particular difficulty for a licensee which had “tooled up”, or entered into financial obligations on the faith of the right to exploit the necessary patent, and could also affect third party end users of a product.

Earlier at [25], Bennett and Pagone JJ had emphasised the importance of certainty provided by contracts:

Regency points to commercial and policy reasons why a licensee should not continue to pay royalties where an invention the subject of the licence is no longer the subject of a subsisting patent. However, this possible disadvantage to a licensee can be taken into account during negotiations for a contract. Regency negotiated a licence fee that included patents now expired but must be taken to have been aware of the expiry of patents during the term of the Contract when it negotiated that fee. This is supported by the fact that the October 2009 amendment to the Contract provided for royalty rates, those rates decreasing over specified periods of time in recognition of the ever approaching end to each of the patents (as observed by the primary judge at [11]).

While this case did not explicitly turn on questions of misuse of market power, that analysis does not bode well for the ACCC`s pending antitrust action against Pfizer.

Nicholas J delivered a concurring judgment.

Regency Media Pty Ltd v MPEG LA, L.L.C [2014] FCAFC 183

Google not liable for sponsored links

The High Court has unanimously allowed Google’s appeal from the Full Federal Court’s ruling that Google was liable for misleading or deceptive statements in sponsored links.

According to the Court’s summary (pdf):

The High Court unanimously allowed the appeal. Google did not create the sponsored links that it published or displayed. Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.

French CJ, Crennan and Kiefel JJ delivered the principal judgment, Hayne J and Heydon J each delivered separate concurring opinions.

Google Inc v Australian Competition and Consumer Commission [2013] HCA 1

Not a bad way to start off the legal year!

Google v ACCC

Following on from yesterday’s post, @davidstarkoff points out that:

  • the transcript of the special leave application can be found here; and
  • in due course, the submissions will appear here.

The hearing of the appeal has been fixed for 11 September 2012.

ACCC v Google

Apparently, back on 25 June the High Court granted Google special leave to appeal from the Full Federal Court’s ruling that Google is liable for the misleading ads placed by advertisers.

Maybe the internet will be able to keep working in Australia after all.

Austlii is only up to 20 June, at the time of posting.

Lid dip “Law Geek Down Under

Agreements to block parallel imports

According to the Age today, a number of (fashion) importers have agreed with their overseas manufacturers that the manufacturers will not supply orders to online purchasers in Australia:

Importers close door on overseas online stores by Rachel Wells.

The Gerry Harvey-esque arguments about how GST makes local retailers uncompetitive get a run again but, as previously noted, Prof. Gans is not convinced by that (in the context of digital downloads).

This announcement seems like particularly good timing given Senator Conroy’s plans to have somebody inquire into something.

Maybe this is not exclusive dealing in contravention of s 47 of the Competition and Consumer Act 2010 because does not have the purpose, and it is not likely to have the effect, of substantially lessening competition, but:

(a) I hope they talked to the lawyers before they started making what might be thought of as “admissions”; and

(b) the record companies didn’t get away with the argument.

I guess we can look forward to some further instalments in this story.

Does anyone think Google is advertising the sponsored links?

The Full Federal Court in Australia does.

The ACCC has successfully appealed the Google Adwords case for misleading and deceptive conduct.

So, for example, Alpha Dog Trainging has been operating a dogtraining business for 12 years. Dog Training Australia (Ausdog) bought ads on the keywords Alpha Dog Training through Google’s Adwords program. One ad generated was:

Alpha Dog Training 
DogTrainingAustralia.com.au All Breeds. We come to you. No dog that can’t be trained. 

Instead of being taken through through to Alpha Dog Training’s website, however, a user who clicked on the ad was taken through to Ausdog’s website.

A clear case of misleading or deceptive conduct by Ausdog.

Because of its role in “selecting” which ads got placed in what order, Google has also been found liable.

Prof. King, formerly an ACCC commissioner, highlights why and thinks the Court got it seriously wrong.

Did we just kill the Internet in Australia?

ACCC v Google Inc. [2012] FCAFC 49 (Keane CJ, Jacobson and Lander JJ)

Adwords and Keywords

Prof. Gans over at CoreEcon takes issue with Eric Clemons’ paper in which Prof. Clemons appears to be arguing that Google’s business model – using sponsored links and paid advertising triggered by keywords and the like – is based on misdirection.

Now, if Prof. Clemons were right, that could be a reason for contending that the use of trade marks in keywords etc. is (at least) misleading or deceptive conduct. But, as noted, Prof. Gans puts a very big question mark over this.

Now, neither of the Professors is dealing with the legal arguments, but I do wonder why people would click on (keep clicking on) Google’s sponsored links on the scale which they apparently do if the sponsored links etc. were in fact misdirecting them.

Whatever happened to the case which the ACCC brought against Google here? 

IPKat overlooks the work in progress in the EU here.