The Copyright Amendments (Disability Access and Other Measures) Bill 2017 has now been passed by both Houses of Parliament.
The bulk of the amendments introduce reforms to improve access to copyright works by people with a disability to give effect to Australia’s obligations under the Marrakesh Treaty – and simplify the statutory licences for collecting societies and educational institutions.
Schedule 2 amends the term of copyright in unpublished works so that they will not remain in copyright indefinitely. The precise term will depend on when the work is first made public, what type of work it is and whether the identity of the author is generally known.
In broad terms, the term will be reduced to 70 years after the author’s death if the work is never made public. If the work was first made public before 1 January 2019, the term can still run for 70 years after the work is finally made public. If the work is first made public on or after 1 January 2019, anonymous works can still get 70 years after publication if they are first published within 50 years of being made.
Now, you might be thinking that CHÉRI marks out Homart’s product from CHANTELLE rather plainly. But the dreaded Red Bull and Peter Bodum cases reared their heads again.
Sales of Careline’s CHANTELLE product had exploded after it adopted its current get-up: from between $25,000 to $60,000 per year to over $2 million in between June 2014 and early 2016 when Homart introduced its competing product.
Homart’s get-up was nothing like the other products in its CHÉRI range. Its get-up was much closer than any other competing product to Careline’s. The boxes of the products were often displayed in stores stacked, with the lid of the top box open so that customers could see the contents.
Accordingly, the branding on Homart’s product was often not visible, at least initially. CHÉRI itself was not thought to be a particularly distinctive mark, especially as both CHANTELLE and CHÉRI began with the same “shhh” pronunciation. Burley J could not accept the explanation for the adoption of the get-up advanced by Homart’s designer.
After a very careful consideration of the evidence, his Honour summarised:
194 The unique combination of features making up the get-up of the CHANTELLE bio-placenta product are eye-catching. They extend to the packaging in open or closed configuration and provide strong visual cues by which a consumer would note and remember the product. From this combination, quite separately to the name, the consumer is informed of the origin, quality and type of goods being purchased. Homart has taken all of those cues.
195 The suggestion conveyed by the get-up is not, in my view, dispelled sufficiently by the use of the CHÉRI Australia brand name. The name CHÉRI Australia is a relatively weak mark for distinguishing otherwise identical products because:
(a) such reputation as Homart has in the mark CHÉRI is weak and has been significantly dissipated by reason of Homart’s choice to use it in packaging distinctly different to the products in the balance of the CHÉRI range (see section 9 above);
(b) the phonetic and visual similarities between the first letters of both the CHÉRI and CHANTELLE marks diminish the effect of the use of different words (see  above). In this context both Chantelle and Chéri are French sounding names. Both commence with “Ch…”. To persons not familiar with French, they are likely to be weak means of distinguishing otherwise identical products (unlike “Andronicus” and “Moccona” in Stuart Alexander). They are likely to be perceived as words that convey little or no meaning (I make this observation without particular regard to the level of English literacy of the target market and assuming it to be roughly on par within native English speakers); and
(c) the addition of the reference to “Australia” has a similar local geographical connotation to “Sydney” as used in the CHANTELLE bio-placenta product.
198 Further, the trade circumstances to which I have referred in section 5 above demonstrate that often the display of the bio-placenta products in stores may not clearly show the trade mark, for instance, when the products are stacked one on top of the other. In those circumstances consumers are likely to use the visual cues provided by the get-up of the packaging to indicate the product which they seek rather than the names.
199 In my view, it is likely that a not insubstantial number of persons within the relevant class, who are aware of the CHANTELLE bio-placenta product, would be diverted from a search for that product by the get-up of the Homart product. They may note that something seems different about the brand name, but be convinced by the other similarities in the get-up that her or his recollection as to the brand name was mistaken. A consumer familiar with the CHANTELLE bio-placenta product may well recall its get-up, but have no or an imperfect recollection of its name and acquire the CHÉRI bio-placenta product believing it to be the CHANTELLE bio-placenta product. This would be especially likely in circumstances where the store does not stock both brands. The rapier of suggestion caused by the similarity in get-up will in those circumstances result in a sale for Homart.
200 Further, the findings that I have expressed in section 8 above (Development of the CHÉRI bio-placenta product) as to Homart’s intention, lead to the application of Australian Woollen Mills. That authority was applied by the Full Court in RedBull at  (Weinberg and Dowsett JJ, Branson J agreeing) who said:
Without wishing to labour the point unduly, we again point out that where a trader, having knowledge of a particular market, borrows aspects of a competitor’s get-up, it is a reasonable inference that he or she believes that there will be a market benefit in so doing. Often, the obvious benefit will be the attraction of custom which would otherwise have gone to the competitor. It is an available inference from those propositions that the trader, with knowledge of the market, considered that such borrowing was “fitted for the purpose and therefore likely to deceive or confuse…”. Of course, the trader may explain his or her conduct in such a way as to undermine the availability of that inference. Obviously, this reasoning will only apply where there are similarities in get-up which suggest borrowing.
201 In the present case, I am satisfied that this was the intention of Homart. As noted in Red Bull at first instance (Conti J) at , the difference between the brand names is not necessarily decisive of an absence of the requisite intention. Nor, as I have noted above by reference to the Full Court decision in Peter Bodum, is the presence of a brand name determinative of an absence of misleading conduct. In the present case, in any action under s 18 of the ACL, one must look at the totality of conduct of the alleged deceiver.
202 I have found that Homart intentionally adopted a get-up for its product for the purpose of appropriating part of the trade or reputation of Careline. The choice of the CHÉRI Australia brand name was not, in the particular circumstances of this case, sufficient.
In the context of the findings at  above, his Honour had earlier noted at  –  that the cause of action could be made out even if the customer’s mistaken impression was dispelled by the time they had reached, or at, the sales counter. Burley J did discount Careline’s argument that the largely Chinese speaking customer base would not appreciate the different wording in Roman characters.
Mortimer J has ruled that print outs of third party websites are inadmissible as hearsay and, if not, excluded under s 135 of the Evidence Act as unduly prejudicial.
Shape Shopfitters is suing Shape Australia for infringement of several registered trade marks which, it says, include SHAPE as the essential feature and the usual passing off-type actions. Both are in the commercial construction business. Shape Australia used to be called ISIS Group Australia, but changed its name in October 2015, as her Honour said “for reasons that are immediately obvious.”
Shape Shopfitters is contending that the use of “Shape” in Shape Australia’s name is likely to lead people to think that Shape Shopfitters is the “shopfitting” arm of Shape Australia, which it is not.
As part of its defence Shape Australia sought to lead evidence of ASIC and Australian Business Register records of other companies and businesses with the word SHAPE in their name. Shape Australia also sought to introduce print outs of the websites of various businesses resulting from Google searches such as “shape building”. Some, but not all, of the print outs were from the Wayback Machine. The print outs purported to be of businesses called Shape Consulting, Shape Builders Pty Ltd, Shape Joinery & Design Pty Ltd, Shape Fitouts Pty Ltd and Shape Finance (Aust) Pty Ltd. You will immediately appreciate that Shape Australia was hoping to show that “shape” itself was not distinctive or to rely on the well-known proposition from the Hornsby Building Information case.
Mortimer J noted that no objection was taken to the ASIC or Australian Business Register print out – presumably, because they were official records.
However, the print outs of the websites of the businesses themselves were hearsay. They were being advanced to show that there were other businesses out there claiming to have and use the names appearing in the print outs. At , her Honour ruled:
the evidence sought to be adduced by the respondent is clearly hearsay within the meaning of s 59 of the Evidence Act. The statements made on various internet sites of other corporations or business entities (including the archived material to which Mr Henry deposes in  of his affidavit) constitute a previous representation made by the person or persons who constructed the website, wrote the text and inserted the graphics. The purpose of adducing evidence of those statements of text and graphics is to prove the existence of a fact it can reasonably be supposed was intended by the drafter of the text and the person who constructed the graphics. The fact is that there were business entities trading on the dates specified (between August and October 2016) in the industries and markets set out on the pages exhibited by Mr Henry, in the locations those webpages identified using the names those webpages identified. It is the actual existence of those business entities, the names they were using, the industries and markets in which they were trading, the services they were offering and the locations in which they were offering those services which the respondent in my opinion seeks to use as part of its case to prove that there was no confusion in the marketplace generated by its use of the word “shape” in SHAPE Australia.
Even if the print outs were not hearsay, Mortimer J would have excluded them under s 135 if the Evidence Act on the basis that their probative value was substantially outweighed by the danger of prejudice to Shape Shopfitting.
the evidence … constitutes no more than a snapshot of what was available through a series of internet searches on a particular date, without any context being available to be tested about the nature of the businesses these searches have turned up. The probative value of such searches is limited on any view. The applicant’s case is a very specific one about what participants in the commercial construction industry may or may not be led to believe concerning the relationship between the applicant and the respondent, and whether the applicant might be seen as no more than a “specialist shop fitting arm” of the respondent. To have evidence in the nature of single date extracts of internet searches showing businesses using the word “shape”, without calling evidence from witnesses who operate or control those businesses, and allowing the applicant to test the similarities or differences between those businesses and its own, between the customer base(s) of those business and its own, and in turn between those businesses and the respondents, is in my opinion to create a danger of unfair prejudice to the applicant. Snapshots of internet searches on particular dates, all of which are between just under and just over a year after the respondent adopted the name “SHAPE Australia” contribute little by way of proof as to what participants in the commercial construction industry were likely to believe about the commercial relationship between the applicant and the respondent since 26 October 2015, but it is not the kind of evidence the applicant can test as it should be able to.
What Shape Australia should have done was get affidavits, or subpoena, from (1) witnesses from the companies it wished to prove existed and (2) consumers who might be searching for the relevant services.
Now, depending on which side of the case you find yourself, you will be cheering or in tears. But, at the very least one might wonder if that correct approach is really conducting litigation “as quickly, inexpensively and efficiently as possible”? It will be very interesting to see how her Honour deals with Shape Australia’s substantive arguments whether it’s name is too similar to Shape Shopfittings’? Meanwhile, the Registrar can treat the Wayback Machine as valid evidence.
IP Australia has published its Australian Intellectual Property Report 2017.
Some key points:
there were 28,394 applications for standard patents filed in 2016, a one per cent decline from 2015. At the other end, 23,734 patents were granted last year, an increase of 3 per cent from 2015;
there were 2,322 innovation patent applications in 2016 up by 27% from 2015;
there were 71,344 trade mark applications in 2016, down by 3 per cent from 2015 – Madrid filings decreased by 14 per cent;
there were 7,202 design applications filed in 2016, a 3 per cent increase over 2015;
in 2016, IP Australia registered 6,644 designs and certified 978;
the number of PBR applications increased by a whopping 8 per cent: from 359 to 387. IP Australia registered 111 PBRs.
IP Australia has completed a draft of its cost-benefit analysis for Australia joining the Hague Agreement and “will look to share the draft and seek feedback on the research later in 2017”.
There is also a long(-sh) chapter challenging the view that there is an Australian crisis in university-business collaboration. The chapter includes convoluted node diagrams showing the types of collaboration by institution and concludes that, rather than being at the bottom of the OECD rankings, we are merely “middle of the road”; in about 13th place.
With a view to geographical indications, IP Australia and Melbourne University have been building a world-first database linking Australian registered trade marks to a global atlas of place names. Apparently, this database will be released later this year.
On the research front, IP Australia has also released the 2017 edition of “IPGOD”. This year IP Australia should also release a database of pharma substances subject to patent term extensions. IP Australia has also made available the literature review on grace periods it commissioned from the University of California, Davis here (pdf). There is also a paper (pdf) on how grace periods affect innovation.
This is apparently a complicated issue and so the Government has announced it is engaging in a round of consultations led by no less a personage than the Secretary of the Department of Communications and the Arts.
The Secretary is required to report to the Minister on the outcome of the consultations by early June 2017.
Press announcement here and, if you want to try to be invited to the consultations, some contact details here.
Anybody wonder what President Trump would do if he found out we were in breach of the Australia – United States Free Trade Agreement?
The safe harbour provisions protect “carriage service providers” from liability to damages where they merely provide the facilities used by an infringer: see ss 116AC, 116AD, 116AE and 116AF. ?
Accor has trade mark registrations for “Cairns Harbour Lights” and “Harbour Lights”, which it used to promote accommodation at the Harbour Lights complex in, you guessed it, Cairns. It sued Liv Pty Ltd which was renting out apartments owned in the complex by others.
Amongst other things, the trial judge had held that “Cairns Harbour Lights” should be expunged from the Register and the registrations for “Harbour Lights” should be amended to remove some of the services including “accommodation rental services” and “rental of accommodation”. Liv, however was found to infringe through the use of:
(a) “Harbour Lights Cairns”; and
(b) “cairnsharbourlights.com.au”; and
(c) “harbourlightscairns.com.au”; and
The Full Court has now allowed Accor’s appeal, revoking the trial judge’s orders to expunge “Cairns Harbour Lights” and remove some of the services for which “Harbour Lights” is registered.
At 360+ paragraphs, more detailed consideration will have to wait.
One interesting aspect is that the Full Court confirmed that Liv’s use of “keywords” (really metatags) in the source code of its website was trade mark use and so infringing:
323 The title used in the source data is “Cairns Luxury Accommodation – Waterfront Apartments – Harbour Lights – Cairns Queensland”. The primary judge finds that the use of the words “Harbour Lights” in that title appears to be merely a description of the waterfront apartments referred to in the title: PJ at . As to the use of the keyword “Harbour Lights” (as described by the primary judge at  and quoted above), the primary judge regarded that use as also a reference to the apartments as those words appeared in the context of surrounding words such as “Cairns apartments”, “waterfront, luxury apartment” and “harbourside”. Thus, the words were not used as a badge of origin: PJ at .
324 The other words used in the source data as recited at  by the primary judge are these:
“content: = Harbour Lights Apartments in Cairns offer luxury private waterfront apartment accommodation for holiday letting and short-term rental”.
325 As to those words, the primary judge finds that the use of the words “Harbour Lights Apartments” in that phrase was, effectively, use as a business name for a business which offers “accommodation for letting and short?term rental” thus operating as a badge of origin to distinguish Liv’s services from others: PJ at . Such use is use of a mark substantially identical with and deceptively similar to each of the registered trade marks in suit. It is use in relation to each of the Class 36 and Class 43 services other than “commercial real estate agency services”, “agency services for the leasing of real estate properties” and “hotel services”: PJ at . (emphasis supplied)
You may not be surprised to read that Perram J has found that CLIPSO is deceptively similar to CLIPSAL for electrical goods in class 9. This had the consequence that Clipso’s registration for “CLIPSO” was expunged from the Register and CLIPSO itself was found to infringe prospectively. Clipsal’s trade mark registration for the shape of its ‘dolly switch’, however, was not infringed by Clipso’s products.
A significant issue in the case was whether Clipso’s principal, a Mr Kader, was to be believed about how he came up with the mark. Perram J found he was not. Perhaps the most interesting feature of the case, however, is the market by which the issues fell to be assessed.
Some background facts
Clipsal has registered CLIPSAL as a trade mark in respect of all goods in class 9. While it and its predecessors claim to have been using the mark since the 1920s, the registration it relied on in this proceeding dates from 1989. It currently markets some 14,668 electrical products under the trade mark and, in 2011, its annual sales exceeded $500 million. Clipsal had some 77% of the market; its nearest competitors having only 11% each. Clipsal also has a shape mark registered for the shape of its dolly switch:
in respect of ‘electrical wiring accessories which incorporate a rocker switch … including dimmer switches….’
Mr Kader had been importing electrical accessories since about 2005. The CLIPSO mark came into use, however, in 2008 and Clipso achieved its registration in respect of a range of class 9 goods, principally electrical switches and the like, from October 2008.
The market by which deceptive similarity assessed
Many of Clipsal’s products, and most if not all Clipso’s, are what is known in the trade as ‘Bakelite’. These are (generally) plastic products such as switches, power points and other electrical products. A significant feature of these products is that by law they can be installed only by licensed electricians. Thus, a key plank of Clipso’s defence was the nature of its goods which, it said, were essentially bought by electrical wholesalers and electrical tradies, who were not confused by the two trade marks. CLIPSAL, it was argued, was so famous that no reasonable tradie would mistake CLIPSO for it.
Perram J began by noting trade mark authority had held that an infringer’s conduct fell to be assessed in light of its effect on ordinary purchasers of the products in suit. His Honour noted that misleading or deceptive conduct under the ACL fell to be assessed by reference to the ordinary and reasonable consumer. Acknowledging that other cases may lead to different conclusions, however, in the context of this case Perram J considered that Clipso’s conduct fell to be assessed under all heads according to its impact on the ordinary and reasonable consumer.
Perram J accepted that a large part of the market for Clipsal’s products were electrical wholesalers and electrical installers. For many people having a home or office built, the issue was whether there were light switches, their positioning and number. The actual purchasing decision was left to the builder or contractor. However, Perram J found that there was a (relatively small) but not insignificant section of the general public who were interested in such matters and did take into account the trade source of the products that were being installed in their building and so specified the products they wanted their contractors to install, non-purchasing end-consumers.
A key factor in his Honour’s conclusion on this point was the extent and length of Clipsal’s marketing efforts directed to the general public, not just the trade. In addition to the usual forms of advertising, this included a software program, Cipspec, which Clipsal installed in showrooms and its consultants used to work through with customers the placement and appearance of various CLIPSAL products. At  and  of his Honour’s reasons, Perram J accepted:
However, the evidence of these witnesses (the marketing director, Mr Quinn, a store manager of an electrical wholesaler, Mr Kalimnios and the electrical wholesaler, Mr Micholos) nevertheless persuades me that the applicants’ efforts in bringing end-consumers into the process as part of its supply chain strategy are likely to have had some success. The evidence of Mr Kalimnios and Mr Micholos (referred to later in these reasons) was attacked on the basis that the firm for which they worked, P&R Electrical, was not independent of the applicants. It is not surprising that an electrical wholesaler might have a substantive commercial relationship with the market leader in electrical accessories, but I would not describe such a relationship as lacking independence. In any event, I do not think that the evidence of either man was adversely affected by this matter.
One is left in the situation then that the only evidence of the success of the strategy of seeking to increase demand at the consumer end of the market is the existence of the strategy itself. Although I am prepared to accept that some end-consumers do indeed purchase switches and sockets themselves, I do not accept that generally these are the same people who are involved in, or the targets of, Mr Quinn’s supply chain strategy. As best I can surmise, they are instead a small group of people who decide to buy Bakelite products to have an electrician install them, or possibly even a smaller group of unlawful renegades who buy Bakelite products to install themselves.
His Honour was unable to quantify how significant the involvement of such end-users in the market was, but at  considered it was not de minimis:
… one is still left with little compelling evidence that any of the end-consumers targeted by the strategy exist beyond the strategy itself and the amount spent on it. I have no particular difficulty describing the strategy as plausible. One can well see that there are likely to be some people who care very much about what the light switches and sockets installed in their homes are to be, whilst there will be others who are benignly indifferent. Amongst the first class, it requires no great mental athleticism to see that their fascinations are likely to be with the Bakelite products at the premium end of the market. Can I infer from these observations that such a class exists and in numbers which are significant? I believe that I can and I do. The widespread fascination with home renovations in some quarters is reflected in the programming that appears on popular television every week. I do not believe that Mr Quinn’s strategy of creating demand and driving it back up the supply chain is some quixotic venture which is pointless. To the contrary, I am prepared to infer that a significant portion of persons building a new house or renovating an existing dwelling do care about which Bakelite products are used.
It was not necessary that these end-users be the people who actually bought the goods in question; it was sufficient that they gave instructions for them to be purchased such as through their contractors. The size of this segment of the market was sufficient to qualify as ‘substantial’. The relevant market, therefore, was a segmented one consisting of electrical contractors, electrical wholesalers and ‘non-purchasing’ end-consumers.
One consequence of this conclusion was that Perram J considered the parts of the market consisting of electrical contractors and wholesalers was a specialised market which would require expert evidence about the conduct and purchasing habits of people in those trade channels. That was not be the case for that part of the market comprised of end-users.
For that part of the market, Perram J went on to hold that CLIPSO was deceptively similar to CLIPSAL. Perram J considered that the two words shared the same root and had very similar pronunciation – the primary stress would fall on the first syllable and the final syllable of both words would be unstressed. There was also expert evidence that some people might perceive CLIPSO as an hypocristic” for CLIPSAL.
As noted above, Clipso argued that CLIPSAL was so well-known in the trade that there would be no confusion. Perram J rejected this on several grounds. First, in the context of s 44 resort could not be had to reputation except where the mark was so well-known as to be ubiquitous and, notwithstanding its market penetration, Perram J was not prepared to find CLIPSAL fell into that exceptional category. Secondly, as his Honour had already held, the market was not limited to those in the trade but also included ordinary (non-purchasing) consumers. Thirdly, there was in any event evidence from people in the trade (well, at least one) that, while they were not necessarily confused, they were caused to wonder whether there was some connection between the two trade marks. Consequently, CLIPSO was deceptively similar to CLIPSAL even for the segments of the market comprised of those in the trade.
These findings together with Perram J’s rejection of Mr Kader’s claims about how he chose the name CLIPSO meant that the CLIPSO registration was cancelled pursuant to s 44, s 60 and s62A.
Mr Kader had claimed that he chose the name while leafing through the list of goods in class 9 in the International Classification and noticing some references to “clips”. He also claimed that he knew very little if anything about CLIPSAL when he applied to register CLIPSO. Perram J found Mr Kader was lying about this based on a number of factors including the strength of Clipsal’s position in the market, Mr Kader’s involvement in the market for at least 3 years and, amongst other things, the fact that each day his trip to work involved passing a very large CLIPSAL hoarding.
As s 122(1)(e) provides a defence to trade mark infringement when the sign used is itself a registered trade mark and is being used in respect of the goods for which it is registered, Clipso could not in fact infringe until Perram J’s orders cancelling the registration of CLIPSO were effected on the Register. Therefore, injunctions only would be available.
However, Perram J did go on to find that Clipso’s use of CLIPSO also contravened the prohibitions on misleading or deceptive conduct under the ACL and passing off, but only insofar as the public consisted of (non-purchasing) end-consumers. As Perram J considered those actually engaged in the trade would not be misled or deceived, but only caused to wonder if there was a connection, there was no contravention in respect of those segments of the market.
Use of a shape trade mark
Perram J found that Clipso’s dolly switch very closely resembled Clipsal’s dolly switch which was depicted in its registered trade mark. Nonetheless, his Honour considered Clipso did not use its dolly switch as a trade mark. Perram J accepted that there were many shapes a dolly switch could take so that Clipso’s dolly switch was not dictated by function. Nonetheless, it was not used as a trade mark. At , his Honour explained:
Be that as it may, I still do not think that the first respondent was using the switch as a trade mark. Generally speaking, Clipso products were packaged in plastic sleeves emblazoned with the Clipso logo, and then placed in a cardboard box also emblazoned with the Clipso logo. There is no doubt that the word CLIPSO was being used as a badge of origin, which rather detracts from the idea that the switch located within the packaging could also have been operating as a badge of origin.
Perram J was not prepared to find that the shape of the dolly switch itself conveyed an association with Clipsal based on the sheer volume of sales of the product. This was so even though Clipsal’s packaging often included a statement that “The shape of this dolly switch is a trade mark of [Clipsal]”.
Perram J noted that there could be subtle differences also between passing off and the ACL, but it was sufficient to proceed in this case on the basis that the same test applied for both actions notwithstanding their different bases. ?
There were also end-consumers who actually bought the products themselves, but they were considered too small a segment to qualify as ‘substantial’. ?
Apparently, this refers to the practice, particularly prevalent amongst Australians, of modifying words colloquially to suggest familiarity such as “kiddo” for “kid”. ?
Bridling at  –  against even that scope for reputation permitted by Henscke. ?
Last year, we looked at the ACCC’s successful prosecution of Valve (provider of the online gaming platform, Steam) for breach of the consumer guarantees in the ACL. Valve’s contracts for example provided that all fees were payable in advance and not refundable. Valve’s main line of defence was that it was in the US state of Washington and so not bound by the ACL.
On 23 December 2016, the Court fined Valve $3 million for its breaches: $2.2 million for the contraventions involving the Steam Subscriber Agreement and $800,000 for the contraventions involving the Steam Refund Policy.
This was in a context where, while,the number of accounts developed over the 3 year period of the misconduct, Valve had some 2.2 million Australian accounts (I.e, about $1.36 per account) and had received communications about refunds from over 21,000 accounts. What is more, despite its no refunds policy wording, it had actually paid refunds to some 15,000 accounts. Another factor was Valve’s high-handed approach to its legal position in Australia; apparently deciding it had no liability as a matter of policy without reference to Australian legal advice.
A Following up last week’s quick note, a closer look at Nicholas J’s decision in Roadshow Films v Telstra ordering the ISPs to block access to a number of offshore websites on the basis that they were primarily sites which infringe, or facilitate the infringement of, copyright (which unhelpfully didn’t publish last year on schedule). Oh well, hopefully better late than never!
There were two separate actions: one brought by Roadshow Films and the second brought by Foxtel. Both proceedings sought orders against essentially three groups of ISPs: Telstra, Optus and TPG. Roadshow also sought orders against M2. Roadshow was seeking orders under s115A compelling the ISPs to block their subscribers’ access to a number of SolarMovie sites (which in the end resolved back solarmovie.ph). Foxtel was seeking the injunctions to block access to various Pirate Bay, Torrenz, TorrentHound and IsoHunt websites.
The ISPs did not contest the injunctions, but there were disputes about some of the terms.
Nicholas J therefore ordered that each of the ISPs take reasonable steps to disable access to “the Target Online Location”. By way of example, the Target Online Location in the Roadshow matter was defined as the online location or online locations known as “SolarMovie” that are or were accessible:
(A) at the following URLs:
(III) http://www.solarmovie.eu; and
(together, the Target URLs);
(B) at the following IP Addresses:
(III) 22.214.171.124; and
(together, the Target IP Addresses);
(C) at the following Domain Names:
(III) solarmovie.eu; and
Order 3 then provided that the ISP would be deemed to have taken reasonable steps if it took any one or more of the following steps:
(a) DNS Blocking in respect of the Target Domain Names;
(b) IP Address blocking or re-routing in respect of the Target IP Addresses;
(c) URL blocking in respect of the Target URLs and the Target Domain Names; or
(d) any alternative technical means for disabling access to a Target Online Location as agreed in writing between the applicants and a respondent.
It seems from his Honour’s reasons that the ISPs expect to use DNS Blocking.
After the hearing in June, the particular Solarmovie sites went offline. Nicholas J was satisfied, however, that s 115A still permitted him to make orders blocking access. In contrast, his Honour did not consider there was sufficient evidence to block access to some of the Pirate Bay URLs associated with “CloudFlare”, but which had always been inactive. Nichols J accepted that these websites gave rise to “suspicion”, but it was not strong enough to warrant ordering an injunction.
Nicholas J further ordered that the ISPs must redirect communications attempting to view the “blocked” websites to a landing page. The ISP could choose to set up its own landing page but, if it did not wish to incur those costs, it was required to notify the relevant applicant. Once notified, the relevant applicant had to set up a landing page stating that access to the website had been disabled because the Court has found that it infringes, or facilitates the infringement of, copyright.
Given the ease with which a website can be shifted to a new address, Roadshow and Foxtel sought orders that they add to the list of blocked addresses by letter to the ISPs.
Unlike the English courts, Nicholas J considered that an extension of the orders to other websites should require the involvement of the Court. Accordingly, his Honour ordered that applications to extend the orders to new iterations should be made to the Court on affidavit with proposed short minutes of order to extend the injunctions. This imposes some constraint on the use of such injunctions by enabling the ISPs to object.
Nicholas J ordered that the scheme set in place should run for an initial period of 3 years. Six months before that expiry, however, the applicants can provide affidavit evidence to set out their case for an extension. The ISPs then have an opportunity to object or, if no objection is forthcoming, the Court may order an extension.
Roadshow and Foxtel did not seek costs. The respondents did.
Nicholas J considered that the costs of the ISPs incurred in setting up the technical requirements for the scheme to operate were simply costs of doing business and so to be borne by them. They were costs that would have to be incurred independently of these particular actions.
However, his Honour ordered that each ISP could charge $50 for each domain name included in the orders. His Honour considered that, as each ISP proposed to use DNS Blocking, a uniform figure should be used. $50 was a bit lower than some ISPs wanted and a bit higher than others.
Nicholas J also ordered that the applicants pay the ISPs costs of the proceeding relating to the method for extending the regime to new iterations of a website and compliance costs.
Nicholas J defined DNS Blocking as “a system by which any user of a respondent’s service who attempts to use a DNS resolver that is operated by or on behalf of that respondent to access a Target Online Location is prevented from receiving a DNS response other than a redirection as referred to in order 5.” Apparently, at , “ISPs can block access to specific online locations entered into the address bar of the Internet browser, by configuring their DNSS to either return no IP Address so that an error message is displayed to users or so that users are directed to a predetermined IP Address that differs from that designated by the specific online location’s IP Address.” ?
At , his Honour explained that IP Address Blocking involves the ISP not routing outbound traffic to the specified address. This apparently can be problematic as it can also block access to other websites stored on the server with the specified address. Hello ASIC, anyone? ?
At , Nicholas J described URL Blocking as comparing the destination address specified in a “packet” of data being routed across the internet to a list of addresses to be blocked and, if there is a match, blocking transmission. ?
This amount is an interesting contrast to the figures quoted by the Court of Appeal in the Cartier case in England at  which ranged from (in GBP) three figures to six figures each year. See also  –  of Cartier. ?
In Australia, we are often told our US clients get title through the “work made for hire” or the “hired to invent” doctrines under US law. Intervet has failed in its attempt to rely on the latter doctrine in its unsuccessful attempt to patent a “soft chew” medicament for pets. Moshinsky J also accepted Merial’s opposition on grounds of lack of inventive step. This post will deal with the entitlement issue. Lack of inventive step case, based on the 2001 amendments, will be the subject of a later post.
In 2002, Intervet was part of the Akzo group. Most of its R & D activities were carried out at its plant in Delaware. However, a Ms Cady was based in New Jersey and had responsibility for developing formulations for commercialisation. She did not, however, have a laboratory. She had worked with a Mr Pieloch of Pharma Chemie to develop products before. Ms Cady engaged Pharma Chemie to develop a palatable “soft chew” dosage form for companion animals such as horses and dogs.
A formulation was developed. Intervet made a provisional application in the USA, naming a Mr Huron, Ms Cady and Mr Pieloch as inventors. Like Ms Cady, Mr Huron was an employee of Intervet. When the PCT came to be filed on 13 August 2003, Mr Huron, Mr Pieloch and Ms Cady were named as the inventors.
Intervet’s in-house patent attorney sent a copy of the PCT specification to Mr Pieloch was a request to sign a declaration acknowledging that Intervet owned all the rights. Pharma Chemie and Mr Pieloch rejected the request, asserting through their lawyers:
It is our client’s position that Pharma Chemie invented the soft chew technology as described in the above-referenced patent application in 1992, and continued its work on the technology through the 1990’s and into the new millenium [sic]. All of the work on this technology was completed prior to Pharma Chemie’s entry into the Manufacturing and Supply Agreement with Intervet in 2002. Pharma Chemie also invented the manufacturing procedure described in the patent application cited above, and provided Formax with this information well prior to its entry into the development agreement with Intervet in 2002.
Pharma Chemie is therefore the owner of the technology described in the above-referenced patent application, not Intervet. For this reason, Mr. Pieloch will not agree to sign the Declaration and Power of Attorney for this application. ….
Intervet made various attempts to prosecute the US application without Mr Pieloch’s signature. These did not progress, however, and the application in the USA ultimately lapsed. The Australian application, the subject of Merial’s opposition, was at least a divisional from the original PCT application.
Claim 1 of the patent application was for:
A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
Merial has lost its opposition to the application before the Commissioner and appealed to the Court. Both Mr Huron and Ms Cady had left Intervet by this time, and Ms Cady was one of the witnesses for Merial.
Section 15 requires that the grantee of a patent derive its title ultimately from all of the inventors. Although Intervet had identified Mr Pieloch as one of the three inventors, Merial’s opposition succeeded because Intervet could not claim title from Mr Pieloch whom Moshinsky J found was the sole inventor.
Moshinsky J accepted Mr Pieloch’s evidence that he had developed the technology used for Intervet’s product through his company, Pharma Chemie, before Ms Cady engaged Pharma Chemie to develop Intervet’s product. Pharma Chemie had used its own technology to make a “soft chew” which used Intervet’s additive. So, at least as claimed in Intervet’s application, Pharma Chemie was the inventor of the relevant technology. Mr Pieloch was careful to eschew any claim to the specific product which embodied Intervet’s additive, but the claims were very much broader than that.
Intervet argued it was nonetheless entitled to the invention through an assignment in a Manufacturing and Supply Agreement under which Pharma Chemie developed the product. Alternatively, Intervet argued the assignment was implied under the US “hired to invent” doctrine.
Manufacturing and Supply Agreement
Intervet’s main problem with this argument was that it could not produce the agreement. Instead, it relied on evidence of other agreements with Pharma Chemie (after the event and relating to other projects) which did include express assignments and the importance to companies like Intervet of ensuring they had the rights to their products locked down.
Moshinsky J was not persuaded:
a) Mr Pieloch was adamant that Pharma Chemie had already developed the technology the subject of the application before the projects with Intervet and had even applied for a patent over it.
b) In re-examination, Mr Pieloch expressly denied that he had ever signed an assignment in the terms claimed by Intervet over the relevant technology (as opposed to the specific product using Intervet’s additives).
c) In 2003 in correspondence about the PCT application, Pharma Chemie’s lawyers had explicitly denied there was any such term and Intervet had not challenged that denial then or until the present proceedings.
d) If there had been such an express assignment, Intervet would have taken steps to keep it safe and secure and would have asserted it aginst Pharma Chemie when Pharma Chemie’s lawyers denied the assignment as long ago as 2003.
Hired to invent
Intervet next argued that US law implied a term to assign into the agreement by which Pharma Chemie developed the products for Intervet.
As foreign law, whether or not US law would in fact imply such a term was a question of fact to be determined on the evidence. Both Intervet and Merial advanced lawyers’ opinions on this question.
Both parties’ witnesses agreed that, under US law, a court could imply a term requiring an assignment. Intervet’s independent expert’s, a Mr Blackburn’s, evidence was that:
US law generally permits a court to imply a contract term in appropriate circumstances to handle developments and contractual gaps; one application of this principle is the “employed to invent” or “hired to invent” doctrine, which requires or obligates an inventor to assign an invention resulting from the development of a product that it was engaged to perform where the inventor was hired specifically to make the invention; while there is no binding precedent directly on point holding that a non-employee or independent contractor can be employed to invent or hired to invent, the reasoning of Standard Peeks and Dubilier suggest that the substance of the relationship between the parties and how the invention is made is the controlling factor.
Merial’s expert, Mr Kowalski, contended that the case law relied on by Mr Blackburn applied only to the employer-employee relationship and did not extend to agreements with independent contractors.
Moshinsky J accepted that the cases relied on by Intervet dealt only with situations involving the employer-employee relationship, but his Honour was not satisfied that they were necessarily so limited. Moshinsky J had earlier noted that Mr Kowalski was Merial’s lawyer and had been involved in the preparation of Mr Pieloch’s affidavits for Merial. At [48(e)], his Honour considered that Mr Kowalski’s evidence at times appeared to be an exercise in advocacy and therefore generally preferred the evidence of Mr Blackburn where there were differences between them.
Having decided to proceed on the basis “that the “hired to invent” doctrine is capable of application notwithstanding that Pharma Chemie is a corporate entity and independent contractor rather than an employee”, Moshinsky J nonetheless held at  that no term to assign should be implied:
…. Mr Blackburn emphasised that what “controls” is the nature of the contractual relationship between the parties and how the invention was made; and that the critical fact is whether the contract specifically required the invention to be made. In the present case, I have found that Pharma Chemie was not engaged by Intervet Inc to develop a soft chew dosage form; it was engaged, rather, to incorporate Intervet Inc’s active ingredients into a formulation, using Pharma Chemie’s soft chew technology (see  above). Further, I have found that the Manufacturing and Supply Agreement referred to in Ms Marsh’s letter dated 16 September 2003 related to the development projects referred to in these reasons as the Horse Project and the Dog Project (see  above). It appears from the 16 September 2003 letter that the agreement contained (in paragraphs 1.4 and 9.3) express provisions relating to the assignment of intellectual property rights to Intervet Inc subject to prescribed conditions. In light of these express provisions, there is no room to imply a term (in this or any other agreement relating to the Horse Project or the Dog Project) requiring Pharma Chemie to assign to Intervet Inc any invention resulting from the projects. I have also found above that there was no response to the 16 September 2003 letter (see  above). If Intervet Inc had had a basis to contend that, contrary to the propositions set out in the letter, it acquired rights to an invention under the Manufacturing and Supply Agreement (or any other agreement) it is likely that it would have responded. This provides further support for the proposition that a term is not to be implied in the Manufacturing and Supply Agreement or any other agreement to the effect that Pharma Chemie was required to assign to Intervet Inc any invention resulting from the projects.
Accordingly, although the “hired to invent” doctrine could apply in principle, it did not apply on the facts.
It is worth contrasting the approach taken by Moshinsky J based on the application of US law to the arrangements between Intervet and Pharma Chemie with that applied in copyright by the Full Court in Enzed Holdings. In Enzed Holdings, the Full Court held that ownership of copyright in an artistic work in Australia fell to be determined according to Australian law. So, even though the artistic work in question was created in New Zealand, it was irrelevant that under New Zealand law ownership vested in the commissioning party not the author. This approach would not have saved Intervet in this case, however, as the reasons Moshinshky J found to reject the “hired to invent” argument should lead to the same conclusion under Australian law.
Referring to Standard Parts Co v Peck, 264 US 52 (1924) and United States v Dubilier Condenser Corp, 289 US 178, 187 (1933). ?
In contrast to Enzed Holdings, the US 2nd Circuit Court of Appeals applied the law of the place where the work was made to determine entitlement to copyright in the USA in *Itar-Tass v Russian Kurier Inc (1998) 43 IPR 565. ?