ESCO’s patent did not make a composite promise and so is not invalid afterall

ESCO has won its appeal from the ruling that its patent lacked utility because the claims did not fulfill all promised advantages.

The Patent

ESCO’s patent relates to a wear assembly for securing a wear member to excavating equipment. Think of it as a way of attaching “teeth” to an excavating bucket and for a design of the “teeth” themselves.

There are 26 claims.

Claim 1 (and its dependent claims)[1] are for a wear member:[2]

a wear member for attachment to excavating equipment. The wear member comprises:
(a) a front end (to contact materials being excavated and to protect the excavating equipment);
(b) a rear end;
(c) a socket that opens in the rear end of the wear member (to receive a base fixed to excavating equipment);
(d) a “throughhole” in communication with the socket;
(e) a lock “integrally connected” in the throughhole and movable without a hammer;
(f) between a “hold position” and a “release position”;
(g) the lock and the throughhole being cooperatively structured to retain the lock in the throughhole in each of the hold and release positions;
(h) irrespective of the receipt of the base into the socket of the wear member or the orientation of the wear member;
(i) a “hold position” (where the lock can secure the wear member to the base); and
(j) a “release position” (where the wear member can be released from the base).

Claim 13 (and its dependent claims)[3] are for the wear assembly:[4] essentially, a wear assembly designed to enable the attachment of the wear member of claim 1 to the bucket.

You may get some idea of what is claimed from these figures. The wear member is 28, shown fitted to the base 15 of the wear assembly.

Utility

The trial Judge

Paragraph 6 of the Specification was the first paragraph under the heading “Summary of the Invention”:

The present invention pertains to an improved wear assembly for securing wear members to excavating equipment for enhanced stability, strength, durability, penetration, safety and ease of replacement. (Full Court’s emphasis)

As to which the expert evidence was:

In relation to enhanced strength, none of the claims would achieve this advantage.

In relation to enhanced stability, claims 3 and 5 may provide a minor stability advantage as set out in paragraphs 14–21 of my first affidavit. ….

In relation to enhanced durability, none of the claims would achieve this advantage.

In relation to enhanced penetration, none of the claims would achieve this advantage.

In relation to enhanced safety, claims 1, 11, 13, 21, and 22 would achieve this advantage.

In relation to enhanced ease of replacement, claims 1, 4, 6, 8, 9, 12, 13, 16, 19, 22, and 25 would achieve this advantage.

In light of this evidence, the trial Judge had found ESCO’s patent invalid because the claims did not achieve all six of benefits promised by paragraph 6 of the Specification.

The Full Court

On appeal, the Full Court accepted the basic premise applied by the trial Judge: a claim is bad for inutility if following the teaching in the Specification does not lead to the promised result. There has been a failure of consideration. So, the Full Court explained at [208]:[5]

first, provided the results promised by the specification can, on the evidence, be achieved and, second, provided that those results can be applied to at least one useful purpose, the patent for the claimed invention does not fail for inutility. If, however, the promised results are unfulfilled or unrealised, the patent for the claimed invention will be bad for inutility

Further, if the Specification properly understood contained a “composite” promise, any claim which failed to achieve any one of the elements of that composite promise would be bad for inutility. At [239]:

We therefore accept that if para 6 of the Patent Application, properly understood having regard to the whole of the Specification including the claims, contains a “composite” promise for the described invention, a failure to attain any one of the elements of the composite promise in any claim defining the invention renders the invention so far as claimed in any claim, inutile.

The question then is – what is the promise of the invention?

It followed from the requirements of s 40, which required the specification to describe the invention fully and claims to define the invention,[6] that identification of the “promise” of the invention required consideration both of the body of the specification and the claims.

That consideration led the Full Court to conclude either that paragraph 6 of the Specification was not the “promise” of the invention. Or, alternatively, if it were, the several elements in paragraph 6 were to be read disjunctively rather than, as the trial Judge had done, conjunctively. In either case, ESCO’s patent was not bad for inutility.

The central consideration here was that the claims were directed to two related, but different entities: claims 1 to 12 being directed to the “wear member” only; claims 13 to 22 being directed to the “wear assembly”. Correspondingly, paragraphs 7 to 20 of the specification dealt with various “aspects” of the invention and, in doing so, paragraphs 15 and 16 identified the “promises” of the invention.

The Full Court considered paragraph 5 of the specification as reciting historical attempts “to enhance the strength, stability, durability, penetration, safety and/or ease of replacement of “such wear members” … with varying degrees of success.” The Full Court then characterised paragraph 6 as continuing that discussion to open the summary of the invention.

Paragraphs 15 and 16 of the specification said:

In one other aspect of the invention, the lock is integrally secured to the wear member for shipping and storage as a single integral component. The lock is maintained within the lock opening irrespective of the insertion of the nose into the cavity, which results in less shipping costs, reduced storage needs, and less inventory concerns.

In another aspect of the invention, the lock is releasably securable in the lock opening in the wear member in both hold and release positions to reduce the risk of dropping or losing the lock during installation. Such an assembly involves fewer independent components and an easier installation procedure. (Full Court’s emphasis)

So, at [291], the Full Court explained:

It seems to us that the language of para 6 consisting of a single sentence under the heading “Summary of the Invention” is not, properly construed, the language of “promises” (as Ronneby would have it) for the invention described in the Specification as a whole, including the 22[7] claims, some of which are concerned only with the wear member and others with the wear assembly. Rather, the language of para 6 is seeking to do something less than that. The language of para 6 resonates with para 5 and seems to be used in the sense of reciting those things to which the invention relates having regard to the design efforts that went before, and thus the relationship between “the invention” and those things recited in para 6 is one of identifying the topics or subject matter to which the invention relates (rather than “promises” for the invention), which, having regard to paras 7 to 20 “describing” the invention (including the best method in conformity with s 40(2)(a)), may or may not find expression in the claims “defining” the invention for the purposes of s 40(2)(b). In that sense, the fully described invention may go beyond the scope of that which is actually claimed. Thus, it is necessary to identify the “teaching” of the Specification and the relationship between the teaching and the claims. Rather, the promises for the invention so far as claimed in, at least, Claim 1 and the dependent claims, are to be found in paras 15 and 16 of the Specification as we explain later in these reasons.

The two different targets of the two sets of claims were also significant for the alternative conclusion that the list of achievements in paragraph 6 should be read disjunctively. The Full Court accepted that the language of paragraph 6 of the specification was appropriate for the claimed wear assemblies achieving all 6 listed benefits. However, the Full Court considered that the language of paragraph 6 was incompatible with the idea that each claim for the wear member must satisfy all 6 promises.

Accordingly, paragraph 6 of the specification should be read disjunctively and the claims were not bad for inutility.

In the course of its lengthy historical review, the Full Court did note that s 7A now required the Specification to disclose a specific, substantial and credible use for the claimed invention for it to be useful. Section 7A had been introduced into the Act by the Raising the Bar Act[8] and so was not relevant to ESCO’s patent. The Full Court noted, however, that s 7A was intended to add additional requirements to the test of utility, not displace the old requirements. Thus, at [231], the Full Court commented:

Rather, the invention [subject to the Raising the Bar Act amendments] must meet the new test and meet the requirements of the existing law: EM p. 44.

I am guessing we shall see significantly more patent specifications in the future which claim that it is “an object of the invention to …” or, perhaps, the invention achieves “one of more of ….” Might be a bit tricky to amend assertions in a patent first filed overseas.

Novelty

ESCO’s novelty appeal was also successful. It was essentially an exercise in construction, turning on whether the locking mechanism in the prior citation was “integral” and moved between two defined points- a “hold position“ and a ”release position”.

ESCO Corporation v Ronneby Road Pty Ltd [2018] FCAFC 46 (Greenwood, Rares and Moshinsky JJ)


  1. Strictly speaking, claims 5, 6 and 9 are independent claims, but nonetheless are for “wear members”.  ?
  2. The explanatory interpolations are the Full Court’s.  ?
  3. Claim 19 is also an independent claim for a wear assembly.  ?
  4. A wear assembly for attachment to excavating equipment comprising: (1) a base fixed to the excavating equipment; (2) a wear member including a front end to contact materials being excavated and protect the excavating equipment, and a rear end to mount to the base fixed to the excavating equipment; and (3) a lock integrally connected to the wear member and movable without a hammer between a hold position where the lock contacts the base and the wear member to secure the wear member to the base and a release position where the wear member can be released from the base, wherein the lock remains secured to the wear member in the release position. (My numbering to deal with formatting limitations)  ?
  5. Citing amongst others LaneFox v Kensington and Knightsbridge Electric Lighting Co (1892) 9 RPC 413.  ?
  6. ESCO’s patent being a pre-Raising the Bar patent, s 40 in it earlier form applied.  ?
  7. Presumably, a typo.  ?
  8. By which I of course mean schedule 1 of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012.  ?

A real estate franchise agreement

2The Court of Appeal has ruled that Century 21 Australia’s arrangements permitting Victorian Realty Group to trade as “Century 21 Complete Properties” was a franchise agreement for the purposes of the Estate Agents Act 1980 (Vic.).

Section 43(5) of the Victorian Estate Agents Act has its own definition of a “franchising agreement”:

franchising agreement means an agreement whereby an estate agent is authorized to carry on business under any name in consideration of any other person entitled to carry on business under that name receiving any consideration whether by way of a share in the profits of the estate agent’s business or otherwise (emphasis supplied)

One of the reasons this is significant is that each party to the franchising agreement is jointly and severally liable for any defalcations, or negligence, by the estate agent : s 43.

Victorian Realty Group (VRG), while trading as “Century 21 Complete Properties” in Craigieburn, had committed a number of defalcations which resulted in 13 of its clients losing money. Those clients were compensated out of the Victorian Property Fund. The Secretary brought proceedings against Century 21 Australia, the franchisor1 under s 43 to recover those payouts.

Under the terms of the franchise agreement, and the incorporated Policy and Procedures Manual, Century 21 Australia granted VRG the right and obligation to trade exclusively under the name Century 21 Complete Properties. There were other rights and obligations to use “Century 21” in the various ‘trademarked’ forms, and to use various systems and participate in the Century 21 marketing plan. In other words, you and I would consider it a pretty typical example of a franchise arrangement.

The trial judge, however, found that the arrangement was not a “franchise agreement” as defined in s 43 because of the words in the definition “under that name”. VRG was authorised only to carry on business under the name “Century 21 Complete Properties”, not just “Century 21”; and “Century 21 Australia”, the franchisor, did not carry on business under that name.

The Court of Appeal unanimously allowed the Secretary’s appeal. As a matter of practicality and commercial reality both VRG and Century 21 Australia were carrying on business under “Century 21”, not just their respective formal names:

50 In its written case, the respondent seemed to accept that the Franchise Agreement was an agreement that would ordinarily be described as, and understood to be, a franchise agreement. The respondent’s written case described the Franchise Agreement as ‘the unambiguous franchise agreement in this case’. That description was, with respect, apposite. While that description does not relieve the Court of its obligation to properly construe and apply the definition of ‘franchising agreement’, it brings into focus the question of what legislative purpose might possibly exist in differentiating between franchise agreements that have different provisions as to trade names and the terms upon which their use is or is not permitted. That said, it is of course the text of the statutory definition that is paramount in the resolution of this proceeding.

51 ‘Century 21’ is a name. Equally, one might describe the relevant circumstances in this case as involving the use of a name being ‘the Century 21 name’. When one examines the Franchise Agreement (including the P&P Manual) it seems to us that that agreement authorised VRG to carry on business under the name ‘Century 21’ or the Century 21 name. Like any franchise agreement, it did so on particular terms. We have already set out the relevant terms in the present case. The existence of those terms does not gainsay the fact that the Franchise Agreement was one which authorised VRG to carry on business under the Century 21 name.

52 Similarly, in our view, the International Agreement entitled the respondent to carry on business under the name ‘Century 21’ or the Century 21 name within the meaning of the statutory definition. In our view, this conclusion accords with the text of the definition construed, as it must be, in its context and by reference to the legislative purpose of the provisions of the Act.

The focus on commercial reality is no doubt to be welcomed. The decision, however, has little direct relevance to the broader definition of “franchise agreement” for the purposes of the Franchising Code of Conduct as that is not tied just to a name. Instead, clause 5 of schedule 1 to the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 applies to agreements which satisfy 3 requirements including (by way of contrast to the Estate Agents Act) the rather more broadly expressed operation of a business substantially or materially associated with a trade mark, advertising or commercial symbol. More fully, a franchise agreement is an agreement:

(b) in which a person (the franchisor ) grants to another person (the franchisee ) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor; and

(c) under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol:

(i) owned, used or licensed by the franchisor or an associate of the franchisor; or

(ii) specified by the franchisor or an associate of the franchisor; and

(d) under which, before starting or continuing the business, the franchisee must pay or agree to pay to the franchisor or an associate of the franchisor an amount including, for example

Secretary to the Department of Justice and Regulation v Century 21 Australia Pty Ltd [2017] VSCA 205

  1. Century 21 Australia had been appointed the master franchisee for Australia by Century 21 International with powers to appoint and manage “Century 21” franchisees here. ??

Don’t file in the wrong applicant’s name

Because, if you do, the Full Court has definitively ruled that the error cannot be rectified and any resulting registration will be irredeemably invalid.

This is the first of at least two rulings departing from the trial judge’s reasons which the Full Court made in the course of dismissing Pham Global’s appeal from the decision to revoke its trade mark registrations and find it infringed Insight Clinical Imaging’s trade marks. So Pham Global still lost, but with ramifications for us all.

Some background

Since 2008, Insight Clinical Imaging has been using the name INSIGHT and its composite mark for its radiology services largely in Perth, WA.[1]

Mr Pham is a radiologist and the sole director of the company through which a radiology business is conducted in NSW. Originally, the company was called AKP Radiology Consultants Pty Ltd. In December 2011, however, Mr Pham applied to register the Insight Radiology mark as a trade mark for radiology services.

Insight Clinical’s trade mark is below on the left. On the right below is the trade mark applied for by Mr Pham.

In March 2012, AKP Radiology Services first started using the Insight Radiology mark for its business.[2]

On 6 June 2013, Insight Clinical lodged its opposition to Mr Pham’s application.

On 17 June 2013, Mr Pham’s company changed its name from AKP Radiology Services to Insight Radiology Pty Ltd.[3] Then, on 1 July 2013, Mr Pham sought to assign the trade mark application to his company.

Insight Clinical Imaging’s opposition was successful before the Office and Mr Pham’s company appealed unsuccessfully. In accordance with the trial judge’s orders, Mr Pham’s company then changed its name to Pham Global Pty Ltd and sought leave to appeal.

While leave was granted, the appeal was dismissed.

Who is the applicant

The trial judge found that the Insight Radiology mark was designed for, and used by, Mr Pham’s company. It even paid the designer.

Mr Pham, however, maintained that it had not been a mistake that the application was made in his name rather than the company’s. There was no evidence that Mr Pham ever actually licensed his company to use the trade mark. Moreover, Mr Pham’s explanation for why he decided to assign the application to his company – “I just did it” – was not accepted. He explicitly rejected the proposition that he made the assignment in response to Insight Clinical’s opposition to registration of the trade mark or that it was a result of a mistake.

Accordingly, her Honour held that Mr Pham was not the owner of the application when it was made, his company was. In line with the decisions in Mobileworld and Crazy Ron’s, however, her Honour found that the assignment of the application to the company before the trade mark was actually registered rectified the error.

On appeal, the Full Court noted that Mobileworld and Crazy Ron’s were both obiter on this point.

The Full Court then noted that longstanding precedent required that grounds of opposition were assessed at the date the application was filed. That meant that, where the ground of opposition was under s 58 that the applicant was not the owner of the trade mark,[4] the applicant when the application was filed had to be the owner of the trade mark. At [32], the Full Court said:

Once it is understood that the legislative scheme operates in the context of established principle that the alternative sources of ownership of a trade mark are authorship and use before filing an application for registration or the combination of authorship, filing of an application for registration and an intention to use or authorise use, the relationship between s 27 and ss 58 and 59 of the 1995 Act becomes apparent. The grounds of opposition in ss 58 and 59 reflect the requirements of s 27. Only a person claiming to be an owner may apply for registration. That claim may be justified at the time the application is made based on either alternative source of ownership. But if the claim is not justified at that time, ss 58 and/or 59 are available grounds of opposition. Moreover, if the applicant is not the owner of the mark at the time of the filing of the application, the assignment provisions in ss 106 – 111 do not assist because they authorise the assignment of the mark and thus pre-suppose, consistent with established principle, that the applicant owns the mark.

Well, it’s a nice simple rule; should be pretty straightforward to apply in practice shouldn’t it? Of course, it does mean that the law for trade marks is way out of step with the law for patents and registered designs, sections 22A and 138(3)(4).[5]

When time permits, I shall try to do a post on the new law of substantial identity.

Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 (Greenwood, Jagot and Beach JJ)


  1. It did not apply to register its trade mark until October 2012.  ?
  2. On 17 June 2013, Mr Pham caused AKP Radiology Consultants to change its name to Insight Radiology Pty Ltd. As a consequence of the first instance decision, however, the name of the company was changed again – to Pham Global Pty Ltd.  ?
  3. Mr Pham’s company also made a further application to register the words INSIGHT RADIOLOGY alone. Insight Clinical has also opposed it, but it appears to be stayed pending the outcome of the court case. (There was also an earlier application in 2008, TM Application No 1236945 for INSIGHT IMAGING / INSIGHT RADIOLOGY. This application was made by a Daniel Moses and a Jason Wenderoth, but lapsed after acceptance without ever becoming registered.)  ?
  4. The same principle applies under s 59, which was also in play.  ?
  5. Foster’s Australia Limited v Cash’s (Australia) Pty Ltd [2013] FCA 527.  ?

Abilify interlocutory injunction continues pending appeal

Last month, Yates J found that Otsuka’s patent for aripiprazole was invalid.[1] As a consequence, his Honour ordered that the interlocutory injunction preventing Generic Health from listing its product on the PBS and selling it be dissolved. Otsuka has appealed and now Nicholas J has granted a stay to preserve the interlocutory injunction pending the appeal.

While not being prepared to characterise Otsuka’s prospects on the appeal as higher than arguable, Nicholas J considered the balance of convenience favoured continuation of the interlocutory injunction.

Otsuka relied principally on the fact that there would be an automatic reduction of 16% the price payable under the PBS for Abilify[2] once Generic Health’s product was listed. It contended that it would not be possible to recover that price drop if its appeal were successful.

Generic Health countered that it risked losing the benefits of first mover advantage if it were enjoined and other generic producers were not. Generic Health’s evidence was that pharmacists would usually only carry one generic brand of each drug and that was likely to be the first brand “in”. This would exacerbate the difficulties in calculating its losses. Nicholas J did not dismiss that argument, but Otsuka said it would be seeking interlocutory injunctions against any other generics who tried to enter the market pending the appeal. Nicholas J noted further that, if Otsuka failed in an injunction applications against a second or further generic, that would be a strong basis to terminate the stay.

The Commonwealth also sought a specific undertaking to pay damages from Otsuka as the price of the injunction. It argues it will suffer loss, in the form of the higher prices payable under the PBS, if Generic Health continues to be enjoined but the appeal ultimately fails.

Nicholas J noted that a case has been stated to the Full Court on whether the Commonwealth can indeed claim under the “usual undertaking as to damages”. Subject to the outcome of that case, his Honour considered the Commonwealth was sufficiently within the scope of the usual undertaking and so did not need a separate, specific undertaking.

Nicholas J increased the security for costs that Otsuka had to provide to Generic Health in the amount of an additional $8.7 million[3] and, in addition, required a security of $6 million separately to the Commonwealth. His Honour also noted that the Commonwealth could apply to extend that security if the appeal was not decied in the first half of 2016.[4]

Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd [2015] FCA 848


  1. Otsuka Pharmaceutical Co., Ltd v Generic Health Pty Ltd (No 4) [2015] FCA 634. Patentology looked at the ‘swiss claims’ aspects of his Honour’s decision.  ?
  2. The commercial name under which aripiprazole is marketed by Otsuka and its licensee.  ?
  3. Otsuka has already provided $6.5 million pursuant to the orders made by Yates J at first instance.  ?
  4. At [35], Nicholas J recored that the Commonwealth estimated its losses from the continuation of the interlocutory injunction would be $6 million over the next 12 months and $15 million over the next 18 months.  ?

FPInnov

Where do you appeal to?

The Registrar of Trade Marks has successfully applied for dismissal of ADJR Act proceedings challenging decisions to revoke registrations and the acceptance of trade marks.

The Registrar used her powers under section 84A to revoke the registration of 8 of FPInnovation’s trade marks. Then the Registrar used her powers under s 84C to revoke their acceptance. (The Group A trade marks.[1]) The Registrar also used her powers under s 38 to recoke the acceptance of four other applications. (The Group B trade marks.) According to the judgment, the decisions to revoke registration and acceptance were all based on the ground that the trade marks were likely to deceive or cause confusion, contrary to s 43.

Section 84D confers a right of appeal to the courts[2] from a decision to revoke registration under ss 84A and 84C. there is no appeal from a decision to revoke acceptance under s 38. In the normal course, however, the trade mark would go through the examination process and a decision to refuse an application would also be subject to an appeal to the courts under s 35.[3] These “appeals” of course are really hearings de novo on the merits rather than appeals proper.

FPInnovation did not choose to exercise these appeal rights: instead it sought judicial review under the ADJR Act – that is, a challenge essentially to the “procedural” soundness of the decisions.[4]

The Registrar successfully applied to have the ADJR Act proceedings dismissed under s 10(2) and s 16 on the basis that the options for “appeals” which allowed for determinations on the merits provided a more suitable and efficacious avenue for review. Cowdroy J explained the purpose of the legislative scheme:

The legislative purpose is, as Katzmann J said at [67] in 1–800-Flowers, clear. Parliament intended with respect to decisions to revoke the acceptance of applications for registration ‘that any challenges be made to the decision to refuse or limit registration, not to the anterior decision to revoke acceptance’. The intent with respect to decisions to revoke the registration of trade marks is equally as clear; that is, the affected trade mark owner should file an appeal under s 84D. Such processes are, in the words of Finn J in Wyeth Australia at [44], ‘deliberately contrived’ by the legislature. It is against this background that the Court must consider the prejudice claimed by FPInnovation.

Cowdroy J considered thar any prejudice FPInnovation suffered from any defects in the decision-making process to revoke registration and/or acceptance should be cured by the subsequent decisions on the merits. In addition:

FPInnovation contends that certain factual findings would again have to be contended for should re-examination of the trade mark applications occur. Whilst this is true, it is a necessary consequence of the process of review intended by Parliament. It also ensures that the central issue in the overall dispute between the parties is resolved, namely whether the trade marks should ultimately be registered, and as a corollary, whether those trade marks in relation to the categories for goods and services for which they were, or were proposed to be, registered are likely to deceive or cause confusion. These are questions that the Court cannot entertain on judicial review.

FPInnovation Pty Ltd v Registrar of Trade Marks [2013] FCA 826


  1. They were for marks in class 36 such as KFH, Kuwait Finance House and amislamic. (Revocation of acceptance seems at best implied by s 84C(5). So may be, it was under s 38.)  ?
  2. That is, the Federal Court or the Federal Circuit Court.  ?
  3. Given the terms of s84C(5), re-examination would seem to be mandatory on revocation under s 84A.  ?
  4. See the grounds here.  ?

Q1?

Mr Spagnuolo has been granted “special” leave to appeal to the Full Court from Reeves J’s dismissal of his opposition to Mantra registering Q1 for a range of accommodation, travel and holiday services.

Some background

Q1 is another one of those “iconic” high rise apartment buildings on the Gold Coast. Its 78 levels boast 526 residential apartments, a retail shopping plaza and a resort / conference complex.

In addition to operating the resort/conference part of the building under Q1 RESORT & SPA, Mantra also has arrangements for renting out 193 of the privately owned apartments.

Mr Spagnuolo owns two of the apartments himself and has arrangements to rent out a number of others’ apartments. He operates his rental business under the name Q1 Holidays Gold Coast and also holds the domain name q1holidaysgoldcoast.com.au.

Mantra’s predecessor applied to register 3 trade marks, Nos 1228706, 1228707 and 1228708 for a range of services in classes 36, 39, 35 and 43. (Not sure why they were in three different applications. has there been a change of practice about these things?)

The Registrar’s delegate had upheld Mr Spagnuolo’s opposition, but Reeves J overturned that decision on appeal.

Why?

While a party may appeal to the Court from the Registrar’s decision in an opposition proceedings as a matter of right, there is no automatic right of appeal from the Court’s decision at first instance. Leave is required: s 195(2).  It is fairly unusual for unsuccessful opponents to the registration of a trade mark to get leave to appeal to the Full Court.

One key factor in why Logan J granted leave was the legal point Mr Spagnuolo wants to run: he argues that Q1 is not inherently adapted to distinguish Mantra’s services as other people wanting to rent out their properties in the Q1 building will legitimately want to use Q1 too. That is, Mr Spagnuolo wishes to contend that Q1 is not inherently adapted to distinguish under s 41 because the Q1 building is not owned by one person. As a result of the disparate ownership of the properties comprising the Q1 building, therefore, Q1 may be the name of “a locality”.

According to Logan J and the parties, this question has not been the subject of judicial decision.

Another consideration was that there were conflicting decisions in the Office and at first instance, with the Registrar’s delegate allowing the opposition and Reeves J rejecting it.

After some rumblings about the potential for litigants with deep pockets to oppress those “not as well financially provided”, Logan J also pointed out that the parties had filed extensive evidence in the court proceedings, the benefit of which would be lost if Mr Spagnuolo was not permitted to appeal and was left to start revocation proceedings anew.

Finally, Logan J granted Mr Spagnuolo an extension of time in which to file his application for leave to appeal. Under the “old” Rules, an applicant for leave had 21 days to file the application. Under the new rules (in force since August 2011), however, applications for leave must be filed within 14 days. That wasn’t an obstacle in this case as Mr Spagnuolo’s advisers filed only 1 week late so there wasn’t really any special prejudice Mantra could point to.

Finally, Logan J granted a stay on Reeves J’s direction that the trade marks proceed to registration:

… Mantra IP has only briefly enjoyed the benefits of the judgment. Before then, its applications stood rejected. It was not greatly pressed, on its behalf, that there was any particular commercial harm that it would suffer beyond the obvious one of its position being unclear until there was a final judgment. It seems to me there would be much potential for mischief in the marketplace in the event that there were not a stay.

Spagnuolo v Mantra IP Pty Ltd [2012] FCA 1038

Apple v Samsung in the High Court 2

Apple’s application for special leave to appeal from the Full Federal Court’s decision to discharge the interlocutory injunction granted by Bennett J will be heard on Friday, 9 December 2011 in Sydney.

In granting the stay on the Full Federal Court’s orders, Heydon J pointed out that the fact that 2 experienced patent judges had reached opposition conclusions, in circumstances which his Honour characterised as the appeal court not disturbing Bennett J’s findings of fact, indicated Apple’s case was not without some prospects of success.

Perhaps more interesting at the level of tea leaf reading, Heydon J expressed his personal concern that no expedited final hearing was ordered in this case:

Secondly, to my mind at least, it is deeply troubling that there was no expedited final hearing in this case. Precisely why there was not, on my perhaps limited acquaintance with the materials, is a somewhat murky question. But why it is that no expedited final hearing took place and how the courts below dealt with the fact that no expedited final hearing took place is a matter of some public interest in the sense in which Ms Howard was using that expression and is a matter which may be thought worthy of close investigation on the special leave hearing.

The Full Federal Court appeared to discount Samsung’s resistance to an expedited hearing.

Apple Inc v Samsung [2011] HCATrans 326

Apple and Samsung in the High Court

The High Court has extended the stay on the Full Federal Court’s dissolution of the injunction against Samsung’s Galaxy Tab 10.1 for another 7 days.

Samsung gets Oz injunction discharged

The Full Federal Court (Dowsett, Foster and Yates JJ) has allowed Samsung’s appeal from Bennett J’s decision and discharged the interlocutory injunctions against the Galaxy Tab 10.1.

On a first read, it looks like a “close run” thing. It also appears the grant of (interlocutory) injunctions for patent infringement in Australia may well be increasingly influenced in the future by the sorts of issues highlighted by the US Supreme Court in KSR v Teleflex (although that case was not referred to).

A factor which appears to have played high importance in the Full Court’s thinking was the recognition (by both parties) that the awarding of the interlocutory injunction in this case was effectively final relief:

49.   In the present case the parties accept that the orders made below are effectively final in that the commercial viability of the Galaxy Tab 10.1 in the Australian market will be lost. We doubt whether the grant of interlocutory relief in the present case avoids frustration of the Court’s process. When one keeps in mind that the Court must seek to do justice to both parties, such a consequence for Samsung can hardly be described as other than a frustration of the Court’s process. In our view, the task facing her Honour was not simply to grant or refuse an injunction. The task was to protect the Court’s process from frustration, as best as could be done in the circumstances, following the guidelines laid down by the High Court in the cases to which we will refer in the next section of these reasons. An “all or nothing” outcome was unlikely to produce that result.

Followed at [50]:

In this case, given the primary judge’s findings as to the merits of both parties’ cases and the even weighting attributed by her Honour to the relevant factors under consideration in her assessment of the balance of convenience, an arrangement which shared the risk of loss was the best that could be done to avoid frustration of the Court’s process, at least in the absence of any conduct by either party which effectively made it the author of its own misfortune. The question, then, was whether Samsung’s conduct in refusing an early trial on the conditions offered, together with whatever may be made of the “eyes wide open” factor and the fact that Apple relies on two patents rather than one leads to the conclusion that Samsung should be denied a trial on the merits. …. (emphasis supplied)

then [51]:

…. Where the merits and the question of convenience are fairly evenly balanced, there will be no injustice in requiring that the party seeking relief demonstrate good prospects of success before imposing almost certain prejudice on the other side.

The strength of Apple’s case

Apple argued that Samsung’s importation and sale of the Galaxy Tab 10.1 would infringe:

Claim 6 provided:

6. A touch panel having a transparent capacitive sensing medium configured to detect multiple touches or near touches that occur at a same time and at distinct locations in a plane of the touch panel and to produce distinct signals representative of a location of the touches on the plane of the touch panel for each of the multiple touches, the transparent capacitive sensing medium comprising:
a first layer having a plurality of lines that are electrically isolated from one another and formed from a transparent conductive material; and
a second layer spatially separated from the first layer and having a plurality of lines that are electrically isolated from one another and formed from a transparent conductive material, the second conductive lines being positioned transverse to the first conductive lines, the intersection of transverse lines being positioned at different locations in the plane of the touch panel, each of the conductive lines being operatively coupled to capacitive monitoring circuitry,
wherein the first layer and the second layer are disposed on two sides of an optically transmissive member.

On this part of the case, the question was whether or not either or both of 2 layers in the Galaxy Tab 10.1’s screen (described as layer D and layer E) satisfied the requirement of “an optically transmissive member”.

While not finally deciding the point, the Full Court considered that Apple’s case on this point was unlikely to succeed:

121.  It is sufficient for us to express the view that, on the present state of the evidence, there is a real and substantial prospect that the importation into and supply in Australia of the Galaxy Tab 10.1 will not infringe claim 6 of the Touch Screen Patent. We have referred to a number of difficulties that confront Apple in making good its case on infringement. It may well be that, on a final hearing, Apple will meet these difficulties. But difficulties they are. Whilst we would not be prepared to say that Apple’s case on infringement is not open to be argued, the difficulties to which we have referred do affect the assessment at the present time of the probability that, if on a final hearing the evidence remains the same, Apple will be found to be entitled to final injunctive relief for infringement of that claim. If Apple has established a prima facie case at all (which we doubt), it is founded upon a construction argument which, if the evidence remains as it is, is unlikely to succeed at trial.

On the other hand, Samsung’s case on the alleged invalidity of claim 6 equally fell short (of course, Samsung would not be liable for infringement if it holds the line on Apple’s positive obligation to prove the infringement):

  1. It is not necessary at this point to resolve the debate between the parties as to whether the reference in the Leeper Article about detecting the presence of “multiple fingers” is to multiple fingers at multiple locations or multiple fingers at a single contact point. It is enough to say that there is some reasonable degree of uncertainty about what the Leeper Article actually discloses in that regard. Moreover, even if one were to assume that the article is referring to the detection of multiple touches or near touches that occur at the same time and at distinct locations in a plane of the touch panel – which on the present state of the evidence would be a generous assumption – there is, importantly, no apparent disclosure in the Leeper Article that the ClearPad is configured to produce distinct signals for each of the multiple touches that are representative of the location of each of those touches.
  2. In our view it follows from that state of affairs that Samsung has not established a prima facie case that the Leeper Article anticipates the touch panel claimed in claim 6 of the Touch Screen Patent.

Samsung’s case on the “Mulligan patent application” was equally suspect: esp. [149] – [150].

The Heuristics patent:

1. A computer-implemented method, comprising:

at a computing device with a touch screen display,
detecting one or more finger contacts with the touch screen display,

applying one or more heuristics to the one or more finger contacts to determine a command for the device; and

processing the command;
wherein the one or more heuristics perform the functions of:

determining that the one or more finger contacts correspond to a one- dimensional vertical screen scrolling command rather than a two-dimensional screen translation command based on an angle of movement of the one or more finger contacts with respect to the touch screen display; and
determining that the one or more finger contacts correspond to a two dimensional screen translation command rather than a one-dimensional screen translation command, based on an angle of movement of the one or more finger contacts with respect to the touch screen display.

and

55. A computer-implemented method of any one of claims 1 to 26, wherein
the one or more finger contacts correspond to a finger gesture with an initial movement and a subsequent movement, and wherein
the function of determining that the one or more finger contacts correspond to a one-dimensional vertical screen scrolling command rather than a two-dimensional screen translation command includes identifying the entire finger gesture as the one-dimensional vertical screen scrolling command and basing the determination on the angle of movement of the initial movement of the finger gesture, and wherein
the function of determining that the one or more finger contacts correspond to a two-dimensional screen translation command rather than a one-dimensional vertical screen scrolling command includes identifying the entire finger gesture as the two-dimensional screen translation command and basing the determination on the angle of movement of the initial movement of the finger gesture.

The issue here is whether or not the Galaxy Tab 10.1 employs gestures based on “the angle of movement”. According to the Full Court, there was no factual dispute between the parties about how gestures worked (or for those familiar with the “other” system, don’t):

155 There seems to be no dispute that, in the Galaxy Tab 10.1, the process for determining the relevant command is as follows. A first user contact on the screen is detected and an X (horizontal) channel and a Y (vertical) channel are generated around the touch point. The touch panel logic then identifies the location of the user’s second touch point at a pre-defined period of time after the first contact is detected. The location of the second touch point is then compared with the locations of the X and Y channels previously generated by the first touch. The software then interprets this as an instruction for screen movement, relevantly a one-dimensional screen scrolling command or a two-dimensional screen translation command, and then processes the command accordingly.

The Full Court considered it was “difficult to discern” Apple’s reading of its claims in this and so concluded that Apple had not established a prima facie case on infringement: [160].

Balance of convenience factors

The factors considered here were

  • whether Samsung had unreasonably refused a proposal for an early trial;
  • whether Samsung’s conduct in entering the market with its “eyes wide open” to the potential for infringement were disentitling; and
  • Apple’s reliance on 2 patents instead of 1.

As to the proposal for an early trial, the Full Court considered that the various proposals were too shifting, too limited and ultimately too unclear to be operative:

190.  …. Had the offer been of a final hearing on all issues, and had the time for preparation been reasonable, the position may have been otherwise. In the circumstances of this case we cannot see how Samsung’s conduct in refusing the offer of an early trial could properly be weighed in the balance of convenience. In those circumstances we consider that her Honour erred in principle by taking into account that irrelevant consideration.

The Full Court gave careful consideration to the “eyes wide open” contention, but concluded her Honour was right to give it little weight:

196.  …. Finally, in the present case, the most compelling features are the assessments of the strengths and weaknesses of the respective cases and the equality of likely detriment. Other considerations pale into insignificance beside those matters.

The Full Court could not see how asserting 2 patents rather than 1 put Apple in any better position (it might be interpolated: both with the issues identified above).

Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156

Lid dip: Peter Clarke

 

DGTEK v Digiteck I

Lander J has upheld the Registrar’s decision to allow Bitech to register DIGITEK for

“TV installation accessories including external TV antennas, none of the foregoing being set-top boxes” in class 9

in the face of Hills’ prior registration for DGTEC, DGTEK and DGTECH in respect of

“Digital and electronic products including televisions, video players, DVD players, CD players, decoders and cameras” also in class 9.

While the competing marks were deceptively similar, they were not in respect of the same goods or goods of the same description. At [110]:

…. The goods are fundamentally different. The brown goods which comprise the Hills products are goods which are digital and electronic and provide the display to the consumer visually or audibly. Bitek’s goods are as they have said; goods which allow the brown goods to function. They provide support of varying types to the brown goods.

At [114]:

It is right as Hills contend that the goods are interdependent and they rely on each other for their functionality. However, that does not take the matter far. Whilst the goods cannot operate on their own, they are not interchangeable. They are not “commonly used as alternatives or substitutes” for each other:… They each have their uses which are quite separate and distinct even though when they are put together they assist to perform the end function: ….

His Honour also rejected argument that the goods passed through the same trade channels, distinguishing the Gallo Full Court’s finding that beer and wine were similar goods because:

[126] …. the clear impression I have is that goods of the kind under the Hills’ mark are marketed at the retail level and by direct advertising to consumers. TV installation accessories are mainly sold to professional installers at the wholesale level. A retail store may have for sale some accessories but only as a side line.
[127] Where a retail store does have TV accessories for sale it does not display them in the same manner as brown goods. Brown goods are used as the bait for consumers. Consumers want to see the product which will at least from the consumers’ point of view deliver the visual image or audible sound. TV installation accessories do not have the attraction from a sales point of view that brown goods have.
Lander J agreed with Kenny J’ ruling in McCormick that the s 60 ground of opposition could defeat an application independently of the operation of s 44(3).
However, his Honour rejected Hills’ opposition on the basis of the old form of s 60: although Hills proved it had more than $20 million of sales under its DGTECH mark of set top boxes, there was simply no proof that it had a reputation in the mark, the sales might well have resulted from the fact that Hills had a marketable product (apparently it was the only set top box in the market at the time). His Honour noted Kenny J had recognised in McCormick that it was often common to infer reputation from sales and advertising figures. It was not appropriate, however, to do so in this case:
[195] The evidence by itself does not prove any reputation at all. It may tend to prove that the goods sold under the mark are very marketable goods. In this case the goods being marketed under the DGTEC mark were set-top boxes which having regard to changes in the industry were marketable to persons who wanted to upgrade their analogue equipment.
[196] I do not think the bald evidence supports a finding of a reputation in the mark.
[197] In my opinion, the Hills’ mark had not acquired a reputation in Australia of the kind that is contemplated in s 60. The mark had only been used on set-top boxes prior to the priority date and although Hills, and previously the company, had sold in excess of $20 million worth of set-top boxes, there is no evidence that the mark under which the set-top boxes had been sold had a reputation of the kind contemplated in this section.
[198] For that reason alone, I would have dismissed Hills’ objection under s 60.

Striclty obiter

Even if Hills had established a reputation, Bitek’s mark would not have been like to deceive or cause confusion as a result of that reputation, so the old form of s 60 still would not have applied.

[208] Assuming, contrary to my opinion, that the Hills’ mark had acquired a reputation, it had only acquired, at the priority date, a reputation in respect of set-top boxes. Hills did not contend for any other reputation. If that was the case, the use of the Bitek mark in respect of its goods was not likely to deceive or cause confusion because the goods were unrelated to a set-top box. Bitek’s goods specifically excluded set-top boxes. A consumer wishing to acquire a TV installation accessory or external antenna bearing the Bitek brand would not in my opinion be likely to be confused or deceived as to the origin or provenance of those products because of Hills’ mark’s reputation in set-top boxes. For that further reason, Hills could not rely upon s 60 to defeat Bitek’s application for registration.

In case it became necessary on appeal, Lander J would have rejected Bitek’s attempt to rely on s 44(3) honest concurrent user or “other circumstances”.

Bitech failed on “honest concurrent user”  and “other circumstances” because the use occurred after the priority date.

Under “other circumstances”, Bitek sought to rely on the inconvenience it would suffer through loss of the goodwill it had built up. If it had been permissible to take use after the priority date into account under “other circumstances”, Lander J would still have rejected this:

[187] However, I would not have exercised my discretion in favour of Bitek under s 44(3)(b) even if events after the priority date were relevant for two reasons. First, because Bitek had not used the mark prior to the priority date. It did not make any sales under the brand. Secondly, its case was that its goods are not sold by reference to its mark. As Hills contended, Bitek’s case was that the consumers of its goods are unlikely to be concerned with brands because brands are unimportant with TV installation accessories.

[188] If that is so, then it seems to me that little goodwill could have attached to the brand or the mark since it has been used and in those circumstances where there is a finding under s 44(1), there would be insufficient evidence to support the exercise of discretion in favour of the applicant for registration. If Bitek is right that its consumers do not depend upon brand or mark, then little would be lost to Bitek in arranging for a mark which is not deceptively similar to the Hills’ mark.

Hills Industries Limited v Bitek Pty Ltd [2011] FCA 94

ps The decision also addresses removal for non-use and infringement issues which, in view of the length of this post, will need to be the subject of a later post.