Posts Tagged ‘Australia’

ACCC loses antitrust case against Pfizer

Friday, February 27th, 2015

Flick J has ruled that Pfizer did not breach antitrust rules by trying to maintain sales of Lipitor after it came off patent.

Pfizer’s patent on atorvastatin (Lipitor) was due to expire on 18 May 2012.[1] Its analysis showed it was facing a revenue cliff: from $771 million a year in 2011 to $70 million a years by 2015. Pfizer came up with a 3-part plan:

  1. in the 18 months prior to expiry, it stopped supplying Lipitor through wholesalers and started supplying pharmacies directly (thereby earning the wholesale margin for itself);
  2. it offered a 5% discount to those pharmacies it supplied + a 5% “rebate” credited to an accrual fund. The “rebate” was repayable to the pharmacy if it committed to buy from Pfizer a specified proportion of its anticipated generic atorvastatin needs after the patent expired – the amount of “rebate” repaid would vary according to the proportion of generic needs committed to and the time frame for the commitment. For example, the pharmacy would receive 100% if it committed to taking 75% of its anticipated needs for 12 months. but only 50% if it committed to taking 75% for only 6 months.
  3. Pfizer also made a bundled offer – it could offer to supply both Lipitor and its generic product “atorvastatin Pfizer”.

The ACCC brought action alleging by implementing this plan, Pfizer had contravened:

  • section 46 of the Competition and Consumer Act (CCA), which prohibits a corporation with a substantiall degree of power in a market from taking advantage of that power for proscribed anti-competitive purposes; and
  • section47 of the CCA which prohibits exclusive dealing that has the purpose or effect of substantially lessening competition in a market.

Flick J has dismissed the ACCC’s action.

Relevant market

His Honour found that the relevant market was the market for the supply to community pharmacies in Australia of atorvastatin as the ACCC contended. Pfizer argued the market was the market for the wholesale supply of pharmaceutical products and over the counter products to community pharmacies.

Substantial degree of power in the market

His Honour also found that Pfizer had a substantial degree of power in that market until late 2011 and had taken advantage of that power by implementing its scheme. Pfizer did not have a substantial degree of power in the market from January 2012 on wards.

Before January 2012, Pfizer was the only supplier of atorvastatin and the constraints on the price it could charge imposed by the PBS was “not sufficient to render its market power anything other than “substantial”.” Flick J recognised that there was no precise date which could be identified as the point where Pfizer’s market power ceased to be substantial. By late 2011, however, that power was no longer “enduring” as the expiry date of the patent loomed closer. By February 2012, Ranbaxy was able to enter the market offering its generic atorvastatin for sale[2] and the other intending generic suppliers had registered their products on the Therapeutic Goods Register and were starting sales discussions with potential customers.

Flick J found Pfizer took advantage of its power to impose the direct sales to pharmacies model because the pharmacies were opposed to it, but Pfizer was able to impose it on them as the only possible source of atorvastatin. Similarly, the rebate scheme took advantage of that power because it created an expection of payments in the future on terms that were unclear and yet to be decided. Flick J found that the amount of money accumulated within the rebate scheme by the time the patent expired was very substantial – $35 million – a powerful incentive to buy product from Pfizer. One might wonder, however, why the position would have been any different if the terms on which the rebate could be claimed had been clear.

No anti-competitive purpose

Even in the period before January 2012 when it had a substantial degree of power in the market, however, there was no contravention of 2 46 because it did not take advantage of its market power for a proscribed anti-competitive purpose.

Pfizer also did not contravene s 47 because in implementing the scheme it did not have the purpose of substantially lessening competition.

Rather than having a purpose of deterring competition by the generics, Flick J accepted that Pfizer was motivated by rationale business objectives. For example, selling directly to pharmacies rather than through wholesalers:

But my question, Mr Latham, was directed to Lipitor and generic atorvastatin, not some dream of establishing a generics business? — But once again you’re asking me to make a decision on – on one product, when I have seven products, over $1 billion, coming off patent. And it’s not just Pfizer Australia. It’s around the world. And to try to get the best business organisation that’s going to deliver continuing operations through those generic products, plus, they have these additional benefits of being closer to pharmacy. Going through the licensee doesn’t tick that important box.

The requirement to take 75% of the pharmacies needs to qualify for the “rebate” also did not have an anti-competitive purpose. Rather, Flick J found that the requirement had been reduced from 100% to 75% – sacrificing $30 million in potential revenue – to enable the pharmacy to establish a second source of supply.

s 51(3)

Section 51(3) exempts from s 47 conditions in, amongst other things, licences of patent to the extent they relate to the invention to which the patent relates or articles made according to the invention.

Although its operation did not fall to be determined because there was no contravention of s 47, Flick J would have found it did not apply in this case. His Honour considered that the sale of atorvastatin to the pharmacies would not involve any licence. More importantly, his Honour would have held that the condition was collateral to the patent and so outside the scope of the exemption.

What actually happened

In the event, Pfizer went from selling 100% of the prescribed atorvastatin (as Lipitor) in March 2012, to 32% of prescription in April and settling around 22 – 23% by June 2012. While Pfizer antiticpated marketing advantages in being the only supplier likely to supply generic atorvastatin in pills the same shape, size and colour as Lipitor, the evidence showed it held 100% of the generic market until September 2012, after which its share fell away to 16 – 17% by March/April 2013.

Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 113


  1. PBS figures for the year to June 2012 showed Lipitor was the highest cost to the scheme ($593 million) followed by rosuvastatin ($359 million) and ranibizumab ($308 million).  ?
  2. Pfizer and Ranbaxy had settled other litigation on terms which enabled Ranbaxy to enter the market before the patent expired.  ?

High Court to review patenting of isolated genes in Australia

Monday, February 16th, 2015

According to a media release by Maurice Blackburn,[1] the High Court has granted Ms D’Arcy special leave to appeal the decision that Myriad’s BRCA patent for isolated genes is patentable subject matter, as a manner of manufacture, in Australia.

At first instance, Nicholas J upheld the patentable subject matter of the patent. His Honour’s decision was affirmed by a Full Bench of the Federal Court.

The transcript of the special leave application is not yet up.

Lid dips: Phillips Ormonde Fitzpatrick and Dr Summerfield.

D’Arcy v Myriad Genetics Inc.


  1. The law firm representing Ms D’Arcy the appellant. The High Court’s summary (pdf) of Results of Special Leave applications confirms the grant.  ?

Regency still loses its MPEG appeal

Wednesday, December 24th, 2014

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

Coke v Pepsi – “second” look

Monday, December 8th, 2014

Last week, Besanko J dismissed Coca-Cola Co’s claims that PepsiCo’s “Carolina” bottle shape infringed Coke’s trade marks, and was passing off and misleading or deceptive conduct.

Contour v Carolina

Some background

Coca-Cola Co relied on four trade marks: TM Nos 63697, 767355, 1160893 and 1160894 registered in class 32 for non-alcoholic beverages. The first two might be thought of as 2D representations of the shape of Coca-Cola Co’s “Contour” bottle, which has been in use in Australia since 1938.

1287.2

The second two were essentially the silhouette of the bottle; one image in white, the other in black.

1287.3

PepsiCo had introduced its Carolina bottle shape into Australia in August 2007 on a very small scale. It seems not to have been on the market at all between May 2008 and February 2009, when it was reintroduced on a larger, but still small scale. The Carolina bottle shape had apparently not been the subject of any advertising or promotion. At the time when PepsiCo introduced the Carolina bottle, there were 4, perhaps 6, other bottles used for soft drinks in the market with “waists of varying degrees” so the Contour bottle was not unique in that respect.

The trade mark infringement claims

Besanko J found that PepsiCo was using the Carolina bottle shape as a trade mark, but did not infringe because it was not deceptively similar to Coca-Cola Co’s trade marks.

In deciding that PepsiCo was using the overall shape of the Carolina bottle as a trade mark, Besanko J noted that the relevant goods were the beveage, a formless substance, and the bottle was just a container. So, the cases like Philips v Remington where the shape was the shape of the goods themselves did not apply. At [213], his Honour found that the shape was distinctive and intended to be so.

Besanko J was not prepared to find, however, that PepsiCo used the silhouette of the Carolina bottle as a trade mark. A number of factors played into this conclusion. His Honour accepted that the outline or shape of the bottle may be one of the first things seen by a consumer from a distance. However, that was not enough in itself. Among the factors that led to the finding, his Honour noted at [215]:

…. All bottles have an outline or silhouette and the fact that a bottle has a waist is not so extraordinary as to lead to the conclusion that that feature alone is being used as a trade mark.

and at [216]:

…. the outline or silhouette of the Carolina Bottle is likely to become less important in the consumer’s mind as he or she approaches the refrigerator or cooler and focuses on word marks, logos, and brands. As I have said, the fact that an aspect of a product may be seen at one point does not lead to the conclusion that consumers would see it as a badge of origin.

deceptive similarity

Besanko J agreed with the Full Court’s analysis of the shape depicted in TM Nos 63697 and 767355:

  • the sides of the bottle are curved rather than flat;
  • there is fluting on the top and lower portions of the bottle and no fluting in a central section;
  • the top and lower portions of the bottle have the same number of flutes; and
  • the bottle has a flat base and banded neck.

In contrast, PepsiCo’s Carolina bottle did not have flutes or the clear band; it had a horizontal “wave” feature and its waist was both more gradual and extended higher up the bottle. These differences at [235] were “significant”.

At [240], his Honour rejected Coca-Cola Co’s argument that the overall impression consumers would take away from the Carolina bottle was of “a bottle having a low waisted contoured shape”. Instead:

I do not accept that that is the view which would be held by the ordinary consumer. In my opinion, the waist, the horizontal wave feature, and, to a lesser extent, the frustoconical neck are the significant features of the Carolina Bottle.

Besanko J was not prepared to find that outline or silhouette of the bottle was the essential feature of thes trade marks. Rather, the vertical flutes and the clear belt band were as prominent. At [238]:

…. It cannot be said, for example, that a bottle with a waist is so extraordinary, or a bottle with vertical flutes and a clear belt band so common, that the outline or silhouette should be considered the essential feature.

However, Besanko J also found that the Carolina bottle was not deceptively similar to the silhouette marks represented in TM Nos 1160893 and 1160894. His Honour found that the Carolina bottle was distinctive in itself and, therefore, not deceptively similar. So, at [247], his Honour said:

Even if the outline or silhouette is the only feature of the marks, or is the essential idea of the marks, the comparison is with the sign the alleged infringer has used as a trade mark. In this case, I have found that is the whole shape of the Carolina Bottle. The following are the distinctive features of the Carolina Bottle which I think are distinctive but are not part of the registered marks:

(1) the Carolina Bottle has a gently curving waist at a higher point than that in the marks and does not have an abrupt pinch near the base;

(2) the Carolina Bottle has a cylindrical shoulder, not a curved shoulder;

(3) the Carolina Bottle has a frustoconical neck, not a curved neck;

(4) the Carolina Bottle has a twist top enclosure, not a cap lid seal; and

(5) the Carolina Bottle has a distinctive horizontal embossed wave pattern across the bottom half of the bottle.

Then, at [248], his Honour pointed out that the first 4 factors related to the silhouette and “it seems to me … the outline or silhouette of the Carolina Bottle would not be deceptively similar to either [trade mark].”

I am not at all sure, with respect, that the question is whether the accused sign is distinctive in its own right. Perhaps this means that, in a market where there are other low waisted bottles, the differences were sufficiently important that consumers would not be caused to wonder whether there was a connection with the trade mark owner.

Passing off / misleading or deceptive conduct

On this part of the case, Besanko J thought it was difficult to see why the ordinary consumer would not make his or her purchase on the basis of the [famous] brand names, device marks or logos. However, “not without some hesitation”, his Honour was prepared to find at [270] that a sufficient number of consumers who select a bottle from the store’s refrigerated drinks cabinet themselves “may well make their selection based on overall bottle shape” as a result of their minimal involvement in the purchase.

There was no likelihood of deception or confusion, however, as the shape of the bottles was too different. At [271]:

The difficulty for [Coca-Cola Co] is that, even accepting that and accepting that both bottles will contain dark brown cola and be sold within a similar, if not the same, context, I do not think that such a consumer would be misled or deceived, or would be likely to be misled or deceived, in the case of overall bottle shape because I think he or she would detect quite clearly the difference between the Contour Bottle and the Carolina Bottle. The most noticeable difference between the two bottles is that the Contour Bottle has the very distinctive fluting and the Carolina Bottle has the distinctive horizontal waves. Other noticeable features are the different shaped neck and shoulders and the fact that the waist on the Contour Bottle is lower and more pinched. In other words, if overall bottle shape is the cue, I do not think that there is any real likelihood of deception.

The role of intention

On all 3 aspects of the case, Coca-Cola Co contended that PepsiCo had intentionally designed the Carolina bottle to take advantage of the reputation in the Contour bottle. While Besanko J noted there were features of the relevant PepsiCo executive’s evidence “which caused me to scrutinise it carefully”, his Honour was not prepared to find an intention to deceive or cause confusion.

In any event, Besanko J did not think the resemblance of the Carolina bottle to the Contour shape was sufficiently close for PepsiCo’s intentions to lead to findings of infringement, passing off or misleading or deceptive conduct.

Coca Cola Company v PepsiCo Inc (No 2) [2014] FCA 1287

Apple can’t register APP STORE as a trade mark in Australia

Friday, December 5th, 2014

Yates J has rejected Apple’s attempt to register APP STORE in Australia as a trade mark for retail store services featuring computer software provided via the internet or for use on handheld mobile devices and the like.

Apple applied to register APP STORE in Australia on 18 July 2008 for retail store services featuring computer software […] in class 35 and related services in classes 38 and 42, TM App No 1252301. The application claimed Convention priority from 7 March 2008. Apple’s “App Store” launched in Australia on 11 July 2008 – that is, one week before the application was filed – with the release of the iPhone 3G. The Registrar rejected the application on the grounds that the trade mark lacked any inherent capacity to distinguish and, there having been no use prior to 11 July 2008, it was not factually distinctive of Apple as at the claimed Convention priority date.

Yates J, as noted, has rejected Apple’s “appeal” on the basis that APP STORE is not capable of distinguishing the services specified in the application.[1] As one would expect, his Honour’s decision provides an excellent tutorial on how one should approach questions arising under s 41 including, apart perhaps from questions of onus, the new form.

The relevant date

Yates J held that capacity to distinguish fell to be assessed at the filing date of the application not, as the Registrar contended based essentially on s 72, on the priority date applicable as a Convention application. This was potentially significant as there had been no use of the trade mark at the priority date, but there had been at least one week’s use at the filing date.

Capacity to distinguish

Yates J began by pointing out that whether something has inherent capacity to distinguish depends on the occasion and circumstance. It turns on both the nature of the particular mark itself and also the nature of the particular goods or services specified in the application.[2]

To overcome the Registrar’s rejection, Apple relied on evidence from a linguistics expert, analysis of internet usage on Google Trends and in the Internet Archive and a Newspoll online survey

Apple’s primary argument was that the expression “app store” could not be fully understood by simply combining the meanings of its component parts “app” and “store”. At [88]:

…. In other words, the combination “app store” does not have a “compositional” meaning. According to him, “the compound APP STORE can only be fully?understood non?compositionally”. ….

The argument here was that, while the term “app” had been used as “clipped” form of application since 1985, that usage was restricted to specialised computer circles. In addition, the word “store” meant a physical place where one went to buy goods or services: Apple’s App Store introduced a new meaning: an online, virtual “place” where one did not so much buy things as a “licence” to use software. That is, in more traditional terms, the expression is at best “allusive” rather than directly descriptive.

On the evidence, however, Yates J found that both “app” and “store” had relevantly well-understood descriptive meanings in the relevant sense for the general public at the filing date. There was evidence at [121] – [123] that before the filing date “app” had been used in 83 articles in publications such as PC World, Technology Review, Rolling Stone and Atlantic Monthly to refer to software applications running on PCs in the Windows environment. At [181], his Honour found:

well before 2008, the word “app” had a well-established and well-understood meaning as a shorthand expression for computer software that is application, as opposed to operating, software. I do not accept that, at the filing date, this use of the word was restricted to computer experts. I am satisfied that it was the received meaning for many interested users of computer software and certainly for those involved in the trade of supplying computer programs, including by retail.

and at [190]:

I am not persuaded that the word “store”, as used in APP STORE, ushered in a new meaning of that word. On the evidence, I am satisfied that, at the time that Apple applied for the APP STORE mark, the word “store” had a well-established and well-understood meaning among traders and the general public that was not confined to the traditional notion of a physical store, but extended, as well, to an online store for the provision of goods or services.

His Honour gave as examples Amazon.com’s launch of its e-Books store in 2000, its software download store launched in 2001 and Apple’s own iTunes Music Store launched in 2003.

Consequently, his Honour concluded that members of the public seeking to acquire application software at the filing date would have understood APP STORE to be no more than a description of a trade channel. It had no inherent capacity to distinguish:

I am satisfied on the balance of probabilities that, at the filing date, members of the public seeking to acquire application software would have understood APP STORE as no more than an expression to describe a trade channel – a store – by or through which application software could be acquired. The fact that the “acquisition” would have involved the acquisition of rights by way of licence does not, in my view, bear upon the matter.

Even if Apple was the first to use the combined expression, which Yates J does not seem to have been convinced it was, “the words in combination bore no more than their ordinary signification when applied to the designated services in Class 35.”

While his Honour drew on the Full Federal Court’s ruling in Oro / Cinque Stelle overturned by yesterday’s ruling in the High Court, these factual findings of what the terms and combined expression would mean to members of the public, unless somehow overturned, would appear to be fatal to any appeal.

Acquired distinctiveness (secondary meaning)

Yates J considered the evidence on acquired distinctiveness “opaque”. There was no real evidence about how the press releases issued with the launch of the store were used or of any other advertising or promotional steps undertaken. His Honour was prepared to accept that people had done internet searches in the week following launch of the term “app store” and “perhpas many persons” had come to associate the App Store service with Apple, but that was not enough.

The Newspoll survey

The Newspoll survey was drawn from an online pool of people who were willing to participate in market surveys for reward. It disclosed that some 65% of participants associated the term “App Store” with a particular company or brand[3] and at least 88% of those nominated Apple as the company or brand. There were at least 2 main problems with this survey. First, it was conducted in 2011 – 3 years after the relevant date – “well after the relevant period” at [223]. Secondly at [224] – [231], applying cases like Woolworths v BP and Chocolaterie Guylian, it was not enough to demonstrate that the expression APP STORE was associated with Apple; it was necessary to show the nature of that association was to identify the trade source of the product – i.e., as a badge of origin.

The ‘pro-active’ role of the Registrar

Apple criticised the active role the Registrar took in this case: going to the lengths of filing her own expert evidence in answer to Apple’s expert and relying on affidavits provided by solicitors acting for Microsoft. Such an active role is indeed unusual in such appeals. Yates J, however, did not accept that the Registrar’s role could fairly be described as “partisan”. His Honour pointed out that the Registrar is entitled to appear as a party and what role she should take when doing say would depend on the circumstances of particular cases:

In the present appeal, a large body of evidence, including expert evidence, was adduced by Apple. The Registrar was not bound to accept either the completeness or the correctness of that evidence. If, as here, there was a genuine alternative case available on the facts or evidence which materially qualified the case brought by Apple, then that alternative case could only be advanced by evidence adduced by the Registrar in the appeal, including by way of expert evidence, bearing in mind the nature of the proceeding as a hearing de novo. I do not think that the Registrar should be criticised for advancing a case for the Court’s consideration. To deny the Registrar that opportunity would be to deny the Court the opportunity to make findings on an appropriately-informed basis. This is not to encourage the Registrar, as a party to such an appeal, to make the case before the Court more factually complex or extensive than it need reasonably be or to take other than appropriately measured steps in the conduct of the litigation. Quite clearly, appropriate judgment must be exercised in considering what evidence is truly necessary, and what forensic decisions should be taken, to fulfil the Registrar’s role, which must be to take reasonable steps under the Act to protect the public interest in respect of the registration of trade marks in Australia. I do not think that the Registrar has over-stepped the mark in this case. ….

Apple Inc. v Registrar of Trade Marks [2014] FCA 1304


  1. This too was decided under the “old” form of s 41 not the new form introduced by the [Raising the Bar Act][rtb].  ?
  2. Although not referred to specifically by his Honour, this is well illustrated by “North Pole” in respect of “bananas” in contrast to, say, “Whopper” in respect of hamburgers.  ?
  3. There was considerable variation among age groups: 90% of those aged 18 to 34, 81% of those aged 35 to 49 and 60% of those aged 50 to 64.  ?

ORO and CINQUE STELLE are registrable as trade marks for coffee in Australia

Wednesday, December 3rd, 2014

In what might (with respect) be seen as a surprising decision, the High Court, by majority,[1] has allowed Cantarella’s appeal and restored its trade mark registrations for ORO and CINQUE STELLE in respect of coffee to the Register of Trade Marks. Gageler J dissented and would have dismissed the appeal.

Modena, which had been importing and selling Caffe Molinari’s Oro and Cinque Stelle “brands”, was found to have infringed Cantarella’s registrations[2] but for its successful cross-claim invalidating the registrations on the grounds that the marks were not capable of distinguishing the products.[3] As a result of the High Court’s decision, therefore, this infringed Cantarella’s rights:[4]

Unknown

Some facts

Cantarella registered ORO and CINQUE STELLE as trade marks for coffeee in Australia in, respectively, 2000 and 2001. Cantarella had first started using ORO to designate one of its lines of VITTORIA coffee in 1996 and CINQUE STELLE in 2000.

Caffe Molinari has been selling its Caffe Molinari Oro blend of coffee in Italy since 1965 and its Caffe Molinari Cinque Stelle blend since 1997. Its Caffe Molinari Oro products had been imported into Australia since 1996 and the Caffe Molinari Cinque Stelle products after their introduction.

Mr Pagent, one of the principals of Modena, had been selling VITTORIA products, including ORO and CINQUE STELLE in one of his previous businessnes since the mid–1990s. After he sold those businesses, through Modena he began importing and selling Caffe Molinari’s products in the UK and then, from 2009, in Australia. By the time the litigation started, there were literally “dozens” of “ORO” coffee brands in the market.

The legal question

In the High Court, the question was whether ORO and CINQUE STELLE iwere “capable of distinguishing” Cantarella’s coffee products under s 41.[5] That in turn turned on whether each was “inherently adapated to distinguish [coffee] … from the [coffee products] … of other persons”.

Both the majority and Gageler J agreed that “inherently adapted to distinguish” was to be interpreted in accordance with the longstanding case law and the statement of the basic test from the Clark Equipment case. That is:

by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.

The words in italics were emphasised by the majority. Their Honours held that those italicised words imposed an additional and limiting requirement to the test for signs which lacked inherent adaptation to distinguish. It was not enough that another trader might with improper motives wish to use the sign, the sign must also have direct reference to the quality or some other characteristic of the products in question. So, at [59], French CJ, Hayne, Crennan and Kiefel JJ said:

The principles settled by this Court (and the United Kingdom authorities found in this Court to be persuasive) require that a foreign word be examined from the point of view of the possible impairment of the rights of honest traders and from the point of view of the public. It is the “ordinary signification” of the word, in Australia, to persons who will purchase, consume or trade in the goods which permits a conclusion to be drawn as to whether the word contains a “direct reference” to the relevant goods (prima facie not registrable) or makes a “covert and skilful allusion” to the relevant goods (prima facie registrable). When the “other traders” test from Du Cros is applied to a word (other than a geographical name or a surname), the test refers to the legitimate desire of other traders to use a word which is directly descriptive in respect of the same or similar goods. The test does not encompass the desire of other traders to use words which in relation to the goods are allusive or metaphorical. In relation to a word mark, English or foreign, “inherent adaption to distinguish” requires examination of the word itself, in the context of its proposed application to particular goods in Australia.

In the case of foreign words, as here, their meaning translated into English was relevant, but not necessarily critical.[6] What was critical was the meaning conveyed by the foreign term, if any, to those “who will be concerned with the relevant goods”. That is, what is the ordinary meaning, if anything, of that foreign word or expression to those in Australia who will purchase, consume or trade in the relevant products?

Then, at [71], their Honours explained:

…. Once the “ordinary signification” of a word, English or foreign, [if any, to those in Australia who purchase or consume or trade in such products] is established an enquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly[90]. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a monopoly of it[91]. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish. (footnote citations omitted)

The problem (for Modena) in this case is that apparently there are only 350,000 people in Australia speaking Italian at home.[7] However, the trial judge found:[8]

only a “very small minority” of English speakers in Australia would understand the meaning of the words, and that the Italian language is not “so widely spread” that the words would be generally understood as meaning “gold” and “five stars” respectively.

As a result, the majority explained at [73]:

Like “TUB HAPPY” in respect of cotton goods, “ORO” and “CINQUE STELLE” were not shown to convey a meaning or idea sufficiently tangible to anyone in Australia concerned with coffee goods as to be words having a direct reference to the character or quality of the goods.

Gageler J’s dissent

In broad terms, Gageler J, especially at [92] – [95] disagreed that the words from Clark Equipment emphasised by the majority were an additional and limiting requirement. Rather they were merely a “parenthetical reference”, a subset of the overall test which focussed:

on the extent to which the monopoly granted on registration of a trade mark would foreclose options otherwise available to rival traders acting in the ordinary course of their businesses without any desire to benefit from the applicant’s reputation.

For example, his Honour pointed out that in Clark Equipment itself, which conerned the trade mark MICHIGAN, there was no evidence that any other trader manufactured the farm machinery in question in Michigan. Indeed, as the trade mark was registered in the USA, no-one probably could.

Extraordinary or just a decision on its facts

Given the trial judge’s finding of fact, one could argue that this case is just a decision on its facts.

That overlooks the important difference in principle on how one tests inherent adaptation to distinguish between the majority and Gageler J. It is also hard to resist an impression that Gageler J’s approach adopted a broader or more “multicultural” perspective.

One consequence of the decision is that Caffe Molinari’s products, which had been imported into Australia since 1996 / 1997 have been found to infringe so many years after the event even though Cantarella’s trade marks were registered after the infringing conduct commenced.[9] Of course, as s 124 and s 44 illustrate, an assiduous infringer cannot gazump a trade mark owner.

Another “oddity”: Cantarella accepted that it could not stop Modena using QUALITA ORO, presumably because it is descriptive?

Further, by 2011, the evidence showed dozens of other traders in Australia using Oro or D’oro to identify their coffee products. These included Lavazza Qualità Oro, Caffè Incas Oro, Coffee Mio Brazil Oro …. A number of these uses appear to have predated Cantarella’s registrations. There were also one or two Five Stars or 5 Stelle and, of course, hundreds of businesses have Five Star in their names.[10]

French CJ, Hayne, Crennan and Kiefel JJ discounted these; for example at [75]:

The evidence led by Modena purporting to show that rival traders used (or desired to use) the word “oro” to directly describe their coffee products showed no more than that the word “oro” or the form “d’oro” had been employed on internet sites and coffee product packaging in respect of coffee products in a range of composite marks featuring Italian words which ostensibly were distinguishable aurally, visually and semantically. Further, the presence on the Register, before Cantarella’s trade mark “ORO” was registered, of another proprietor’s composite mark “LAVAZZA QUALITA ORO plus device” and Cantarella’s own composite mark “MEDAGLIA D’ORO” in respect of coffee products fell well short of proving that the word “oro”, standing alone, is understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of such goods. (emphasis supplied)

One might hope that, being “distinguishable aurally, visually and semantically”, these other traders’ uses would not infringe Cantarella’s trade marks. But, putting Woolworths Metro to one side, one does not usually avoid infringement by making it clear from the surrounding circumstances that the trade source is different from, (i.e., not) the trade mark owner.[11] Correspondingly, would someone who uses “5 star” to designate its premium coffee infringe?

Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48


  1. French CJ, Hayne, Crennan and Kiefel JJ.  ?
  2. Cantarella Bros Pty Limited v Modena Trading Pty Limited [2013] FCA 8.  ?
  3. Modena Trading Pty Ltd v Cantarella Bros Pty Ltd [2013] FCAFC 110.  ?
  4. As the trial judge, Emmett J discussed at [130] – [144], the packaging of the Molinari products made extensive use of ORO or CINQUE STELLE alone in many other respects.  ?
  5. This was s 41 in the form as originally enacted not in its current form following the commencement of the “Raising the Bar” amendments.  ?
  6. At [48] – [49].  ?
  7. This figure was apparently taken from the 2001 Census. As Gageler J pointed out in dissent [103], even this figure made Italian the second most spoken language in Australia.  ?
  8. French CJ, Hayne, Crennan and Kiefel JJ at [61].  ?
  9. The evidence is not entirely clear about the extent, if any, to which Modena’s use was different to what Caffe Molinari originally did. Gageler J and, according to his Honour, the Full Federal Court were prepared to infer it was not relevantly different.  ?
  10. Per Gageler J at [111].  ?
  11. Saville Perfumery Ltd v June Perfect Ltd (1939) 1B IPR 440; 58 RPC 147.  ?

Dallas Buyers Club sues to identify internet subscribers

Wednesday, November 19th, 2014

When the (inaptly named) Online Copyright Infringement Discussion Paper was released, Minister Turnbull was reported as suggesting copyright owners should sue the downloading end-users.

Last month, Dallas Buyers Club LLC was reported to have started that process. It has commenced proceedings against various telcos and ISPs seeking preliminary discovery from them of the identities of their customers who were using IP (as in Internet Protocol) addresses at times Dallas Buyers Club LLC says illegal copies of the film were being downloaded from those addresses.

Last Monday, Perram J rejected an application by some journalists and others for access under FCR r 2.29 to most of the documents on the court file. His Honour noted the usual rule that affidavits are not “public” until they have been used in court and the potential privacy sensitivities or releasing, amongst other things, subscriber identification information at this very early stage of the proceeding.

Apparently, Dallas Buyers Club LLC’s application for preliminary discovery will be heard all the way off on 17 – 18 February 2015.

For cases where the record companies successfully obtained preliminary discovery from the Universities of some student details alleged to be engaging in infringing activities, see Sony v University of Tasmania here, here, here and here.

On a slightly different tack, it was reported on 19 November that some Universities have been suspending staff and student access to the internet, and in at least the case of UNSW, issuing fines where “internet piracy” has been discovered.

Dallas Buyers Club, LLC v iiNet Limited (No 1) [2014] FCA 1232

Alphapharm may have a big bill coming

Tuesday, November 18th, 2014

The High Court has dismissed Alphapharm’s appeal from the Full Federal Court’s ruling granting Lundbeck an extension of time to apply to extend the term of the escitalopram patent. It was close though: 3 to 2.

You will recall that Lundbeck applied 10 years late to extend the term of its pharmaceutical patent. So, not only was Lundbeck applying to extend the term of its patent (under s70), it was applying for an extension of time in which to make that application. In granting special leave, the High Court accepted that, if the power were available, the circumstances justified the 10 year extension. The question was a matter of statutory interpretation: was there power to extend.

Section 71(2) specifies when an application to extend the term of a pharmaceutical patent must be made:

(2) 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.

Lundbeck’s application was made within the term of the standard patent (with 1 day to spare), but well outside the dates specified in paragraphs (a) – (c).

Section 223 confers a general power to extend the time for making an application. Under s 223(11), however, the power cannot be used to extend time in relation to “prescribed actions”.[1] One of those prescribed actions related to s 71(2):

(b) 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; ….

Crennan, Bell and Gageler JJ, after noting the long history in patents legislation of the power to apply for an extension of time, even after the time had expired, as an important safety valve in the system, ruled that s 71(2) specified 2 requirements. The first time requirement is that the application must be filed within the term of the standard patent. The second time requirement was that the application must also satisfy at least one of the requirements set out in paragraphs (a) – (c).

Crennan, Bell and Gageler JJ held, however, that reg. 22.11 applied only to the first requirement: that the application was made within the term of the standard patent. Their Honours considered this was important otherwise a “gap” could arise between when a patent expired but was then restored. That would be highly undesirable.[2] In contrast, there was no policy reason why reg. 22.11 should apply to the second time requirement. At [71]:

There is nothing in any of the extrinsic materials, or in the long policy debates on simplifying extensions of term, which would suggest any rationale for excluding the second time requirement from the remedial power to extend time under s 223(2)(a). Alphapharm’s senior counsel conceded, correctly, that if Alphapharm’s construction of reg 22.11(4)(b) were correct, the remedial power in s 223(2)(a) could never apply to extend time in relation to the second time requirement, no matter what the quality or provenance of any “error or omission” made in respect of that time. Alphapharm’s construction would introduce an inexplicable asymmetry between a patentee and a competitor opposing a s 70(1) application. An opponent can access the general remedial power to extend times cast upon it in mandatory terms[102]. Had it been the legislature’s intention to exclude the second time requirement in s 71(2) from the general remedial power in s 223(2)(a), that would have been simple to accomplish.

Accordingly, s 223 could be invoked as Lundbeck had satisfied the first time requirement (and so did not need it to be extended) but needed an extension in relation to the second time requirement – which reg.22.11 did not apply to.

In dissent, Kiefel and Keane JJ rather tersely said at [111]:

s 71(2) cannot reasonably be read as referring to two actions. There is but one action referred to in s 71(2) – making an application for extension of the term of a patent. That one action is to be done on a date that satisfies the two requirements as to time set out in s 71(2). It is that action to which s 223(2) would apply, were it not for reg 22.11(4)(b).

Their Honours did explain why they considered policy and historical considerations did not lead to a different conclusion. Of potentially more general interest, however, their Honours took a different stand on the role of statutory interpretation at [121]:

In any event, as was said in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd, legislative history and extrinsic materials cannot displace the meaning of statutory text; nor is their examination an end in itself. (footnote omitted)

While acknowledging the primary role of the text, Crennan, Bell and Gageler JJ invoked the more nuanced role of context espoused in CIC Insurance and Project Blue Sky.

A big bill coming? After the standard term of the patent expired but before the expiry of the extended term, Alphapharm and other generics commenced marketing their own versions of the drug.

Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42


  1. The “prescribed actions” are found in reg. 22.11.  ?
  2. See Crennan, Bell and Gageler JJ at [68].  ?

Parallel imports

Wednesday, October 8th, 2014

Well, it seems the 10th anniversary of IPwars has come and gone! Yes, the first IPwars blogpost (on the now defunct iBlog system) was back on 4 October 2004, inspired by Marty Schwimmer, Denise Howell, Evan Brown, Ernie the Attorney and others who were originally “Between Lawyers” but have since moved on to podcasting, video casting and other, bigger things.

In the meantime, my article on Trade Marks and Parallel Imports has been published in Volume 22 No. 1 of the Competition & Consumer Law Journal starting at p. 54. It is essentially an overview of the Federal Court’s case law on s 123(1) to date.

In the same issue of the CCLJ, you will also find articles by:

  • David Brennan “Shifting shades of grey – International price discrimination and Australian copyright” law starting at p. 1; and
  • Matthew Taylor and Arlen Duke “Refocussing the parallel import debate” starting at p. 54.

I am afraid the online versions of these papers are behind the LexisNexis paywall.

Happy anniversary! and thanks for stopping by, especially those of you who have left a comment.

Zima is a registrable trade mark

Thursday, September 25th, 2014

Mastronardi applied to register ZIMA as a trade mark in class 31 for tomatoes. The Registrar refused the application on the grounds that it was not inherently adapted to distinguish. Gordon J has now upheld Mastronardi’s appeal and directed the trade mark be registered.

Unknown

ZIMA sofar as anyone knows is an invented word; it has no meaning at all. Apparently, however, it is only ever used in relation to one “variety” of tomato. The Registrar refused the application on the basis that:

“the word ZIMA appears to be a reference to a single kind of tomato plant and its fruit” and that the trade mark “lacks any inherent adaptation to distinguish the Applicant’s tomatoes as it appears to be an appropriate description of the goods in respect of which it is to be used”.

As the trade mark had not been used in Australia before the date of the application to register it, therefore, it failed.

The question fell to be determined under the old form of s 41 (although it should be the same under the (it is hoped, more clearly expressed) new form. Thus, a sign is registrable as a trade mark if it is “inherently adapted to distinguish”. Both Mastronardi and the Registrar accepted on the appeal that, even under the old form of s 41, a sign is presumed to be inherently adapted to distinguish unless the Registrar (or the Court) is (positively) satisfied it is not.

A sign would not be inherently adapted to distinguish if other traders in such products would legitimately wish to use it to refer to those products even if they were not the applicant’s products. The issue turns on:

the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.[1]

Consequently, Gordon J explained there were two questions that needed to be addressed:

(1) how would ZIMA be understood as at 25 July 2011[2] by ordinary Australians seeing it for the first time used in respect of tomatoes; and

(2) how likely is it that other persons, trading in tomatoes and being actuated only by proper motives, will think of the word ZIMA and want to use it in connexion with tomatoes in any manner which would infringe a registered trade mark granted in respect of it?

As it was an wholly invented word, with no meaning, the answer to the first question was easy: it wouldn’t convey any meaning.

The Registrar argued on the second question that ZIMA was in fact, and was treated by other traders, as the name of a particular variety of tomato. The expert evidence before the Court, however, disclosed that “variety” in the context of tomatoes was a very rubbery (no pun intended?) term and, while there were a few varieties of tomato registered under the Plant Breeder’s Rights Act, thousands were not.

More directly, Mastronardi’s evidence was that it did not source its ZIMA brand tomatoes from just one variety. In Australia, there are apparently 50 different cultivars of orange grape tomatoes; Mastronardi used only six of these and only two were supplied to it exclusively. Moreover, when it launched its product in Australia, it had been very careful in its usages referring to its ZIMATM golden grape tomatoes or sweet orange grape tomatoes or golden snacking tomatoes.

So, it followed that other tomato suppliers had a range of terms they could use to describe their own sweet orange/golden grape tomatoes and, therefore, ZIMA was inherently distinctive.

Her Honour’s decision highlights the importance of careful use of trade marks, particularly if there is a risk the trade mark may become the commonly accepted term for a variety or type: the trade mark should be used as an adjective and not as a noun (or verb). This is a problem that practices in the pharmaceutical industry have had to grow up to develop – a different name for the active ingredient to the “brand” name[3] – but, as this case shows, of potentially much wider application.

It is also interesting that her Honour has directed that the trade mark be registered rather than accepted and advertised.[4]

Mastronardi Produce Ltd v Registrar of Trade Marks [2014] FCA 1021


  1. Kitto J in Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 at 514.  ?
  2. The date of Mastronardi’s application to register its trade mark in Australia.  ?
  3. See also s. 25.  ?
  4. Which in some cases carries the risk of opposition.  ?