The Hague Agreement: a cost benefit analysis

IP Australia has published a cost benefit analysis for Australia joining the Hague Agreement for registration of designs.

You are no doubt thinking that sounds very exciting (not). But, even if you are not into registered designs, you SHOULD READ IT. This is the Government’s first attempt at applying the Productivity Commission’s call for any proposals to reform intellectual property laws to be economically justified. As the Report says in the first paragraph of the Executive Summary:

The report assesses the impacts [i.e., the costs and benefits to Australia of joining the Hague Agreement] with reference to the Productivity Commission’s (PC) guiding principles of effectiveness, efficiency, adaptability and accountability. This report is intended to form part of the evidence base in relation to whether Australia should join the Hague Agreement.

So, unless it involves an acronym that is like TPP, this could well be a harbinger of things to come.

And what does it conclude find:

  • IP Australia’s best estimate of the net benefit for Australian designers is $1.7 million;[1]
  • IP Australia’s best estimate of the net cost to Australian consumers from higher prices resulting from the longer term of design protection is $58 million;[2]
  • to add a little bit more spice to the debate, IP Australia’s best estimate of the net cost to Australian IP professionals is $2.5 million;[3] and
  • IP Australia’s best estimate of the net cost to the Australian government of implementing new systems etc. to comply with Hague is $2.8 million.[4]

The big question IP Australia is asking you is how realistic are these estimates?

Now, in arriving at these numbers, the Report does include quite a lot of hard data.
For example, most Australians who file designs overseas do so in the EU, the USA, NZ and China. On the other side of the coin, most incoming design registrations were from the USA, the EU, Japan, NZ, Switzerland and China.[5]

On the other hand, the Productivity Commission reported that less than 20% of registered designs are renewed beyond the first 5 year term.[6] According to IP Australia, however, approximately half of all design registrations are renewed for the second 5 year term and non-residents are more likely to renew than Australians.[7]

Will we become better at designing if we “stick” with our current settings – 19th out of the top 40[8] – or should we “twist” and sign up? Of course, there is an anterior question: do we even care about good design in the first place?

IP Australia is seeking feedback on its cost-benefit analysis and its proposed methodology to elicit additional evidence and views with the aim of finalising the analysis in 2018. You should get your say in by 31 May 2018.

The Hague Agreement Concerning the International Registration of Industrial Designs: A cost-benefit analysis for Australia March 2018


  1. This represents the costs savings from the simplified application procedure and the increased profits from taking new designs overseas. IP Australia estimates the range of benefit is from $0.03 million to $6 million.  ?
  2. This represents how much Australian consumers would pay to overseas owners of registered designs if the term of a registered design was extended from 10 years (currently) to the minimum 15 years required under Hague. IP Australia estimates a resulting range of net outflows from $23 million to $114 million.  ?
  3. IP Australia anticipates that “IP professionals” will garner some extra work at the examination stage but will lose work at the filing stage as the Hague Agreement provides for one central application to WIPO rather than multiple individual application to each separate jurisdiction. IP Australia estimates a range from a benefit of $0.3 million to a cost of $12 million.  ?
  4. The Government (presumably that means IP Australia) will incur costs between $2.3 and $3.4 million in upgrading its IT systems.  ?
  5. Report p. 10. It’s not clear from this part of the Report whether Australian applicants filed in all, some or only one of those destinations.  ?
  6. Productivity Commission, Intellectual Property Arrangements: Final Report, p. 337. These were the figures from ACIP as at 2013.  ?
  7. Report p. 11. In 2010, 66% of non-residents renewed. How the discrepancy between the Productivity Commission’s figures (i.e.,
    ACIP’s figures) came about is not clear.  ?
  8. Report Appendix 3 table 4.1.  ?

Should Michelin’s X block Continental’s Xking?

Over at the IPKat, there is a report about a CJEU decision upholding Michelin’s opposition based on its “X” trade mark to the registration of Continental’s “XKING” mark (below on the right), both in respect of tyres.

Michelin X v Continental Xking

You should read the report, if for no other reason, than the revelation of the EU’s “scientific” approach to trade mark conflicts.

Putting to one side the peculiar procedural posture the CJEU seems to take in these kinds of ‘appeals’, Merpel quite rightly thunders about scope afforded to ‘descriptive’ marks. After pointing out that it has taken 5 years to get to this point, Merpel says:

The end result here is that one trader with a weakly distinctive trade mark for the single letter X, distinguished from the letter of the alphabet only by the merest stylisation, can prevent the registration (and potentially use) of a stylised mark XKING. It must also follow that the same trader can prevent other X-formative marks, especially if the other element is in some way laudatory (and the word “king” is hardly at the top of the laudatory scale). Might it be said that this hands too strong a right to the trader?

Merpel makes a cogent case for the rejection of the opposition. What I wonder about, however, is what is the ordinary consumer likely to recall imperfectly? Would the ordinary consumer recall the mark is just an “X” alone so that the inclusion in Continental’s mark of rather bland “KING” is sufficient to dispel any potential for confusion? Or is the putative consumer likely to be struck by the common use of the hollow (or white) X? Under our version of trade mark law, all that is required is a (significant?) number of people being caused to wonder and the nature of the recollection is explained by Latham CJ:[1]

They will compare the actual mark which they see upon goods which are offered to them with the memory of the other mark, which they will retain in a more or less distinct form… The court must endeavour to put itself in the position of ordinary purchasers of goods who have noticed a trade mark as being distinctive of particular goods, but who have not compared that mark with any other mark, and who are quite probably not aware of the fact that another more or less similar mark exists.

[socialpoll id=”2454828″]

If you’re really motivated, leave a comment explaining why!


  1. Jafferjee v Scarlett [1937] HCA 36; 57 CLR 115 at 122.  ?

Google gets EUR2.43 billion fine

The European Commission has fined Google EUR2.43 billion (approx. AU$3.6 billion) for misusing its market power over internet searches.

According to the Commission, Google has over 90% market share for internet searches in the EU.

The Commission found that Google had abused this dominant position in internet searching by promoting results for its own Google comparison shopping service over results for competing comparison shopping services.

At this stage, the Commission’s press release and Factsheet are available.

While this is no doubt the start of a long legal process, Ben Thompson at Stratechery has an interesting, succinct analysis of the application of competition rules to Internet players here which is well worth reading.

Keywords – Marks & Spencer infringes INTERFLORA TM

Marks & Spencer has been found to have infringed Interflora’s trade mark in the UK by ‘buying’ ads triggered by Google searches for the keyword INTERFLORA.

An example of the ads Arnold J found infringing:

Keyword search results
CLICK to enlarge

In Google France, the CJEU established that an advertiser would infringe a registered trade mark when its ads were triggered by a trade mark as a keyword where: [1]

“82 The essential function of a trade mark is to guarantee the identity of the origin of the marked goods or service to the consumer or end user by enabling him to distinguish the goods or service from others which have another origin (see, to that effect, Case C–39/97 Canon [1998] ECR I–5507, paragraph 28, and Case C–120/04 Medion [2005] ECR I–8551, paragraph 23).

83 The question whether that function of the trade mark is adversely affected when internet users are shown, on the basis of a keyword identical with a mark, a third party’s ad, such as that of a competitor of the proprietor of that mark, depends in particular on the manner in which that ad is presented.

84 The function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party (see, to that effect, Céline, paragraph 27 and the case-law cited).

85 In such a situation, which is, moreover, characterised by the fact that the ad in question appears immediately after entry of the trade mark as a search term by the internet user concerned and is displayed at a point when the trade mark is, in its capacity as a search term, also displayed on the screen, the internet user may err as to the origin of the goods or services in question. In those circumstances, the use by the third party of the sign identical with the mark as a keyword triggering the display of that ad is liable to create the impression that there is a material link in the course of trade between the goods or services in question and the proprietor of the trade mark (see, by way of analogy, Arsenal Football Club, paragraph 56, and Case C–245/02 Anheuser-Busch [2004] ECR I–10989, paragraph 60).

Arnold J found on the evidence that a significant section of the public were confused and so Marks & Spencer infringed.

It is not possible to do justice in a blog post to the full range of reasons[2] contributing to his Lordship’s conclusion. Some that stand out follow.

Arnold J accepted (at [316]) that the majority of UK internet users appreciated the difference between paid ads and natural or organic search results, but there was still a significant proportion of internet users in the UK who did not. His Lordship also accepted that “nowadays” the majority of consumers appreciate .

nowadays the majority of consumers appreciate [they are being presented with ads by competitors to the brand they had searched for]. But I consider that a significant proportion do not. (emphasis supplied)

Secondly, the nature of the INTERFLORA brand appears to have been crucial. As you will no doubt be familiar, INTERFLORA is a network. It operates through a network of agents who are usually (always?) branded under their own names and trade marks. Those customers who were not buying online from “interflora.co.uk” or “interflora.com”, for example, would typically go into a retail outlet operating under its own name (and which may display the INTERFLORA name and logo).

The significance of this (at [297] and [299]) was that there was great potential for those customers who realised they were dealing with Marks & Spencer when they clicked on the ad mistakenly to think it was part of the INTERFLORA network.

That potential was in fact borne out by the evidence. In particular, there was evidence from “Hitwise data” that people who (1) searched on the keyword INTERFLORA and (2) as a result clicked on a Marks & Spencer ad generated in response to the search (3) were between 44 and 106 times more likely than the average visitor to the M & S flowers site to leave the M & S site without purchasing and instead go on to an INTERFLORA site.

At [304] – [306], his Lordship accepted the propositions that:

a significant number of consumers in Segment A decided after they had clicked through to the M & S website that it was not where they wanted to be and went to the Interflora website instead. The second is that the reason for this change of mind was that those consumers had clicked through from the M & S advertisement because they assumed from the appearance of the advertisement in response to their search that M & S was part of the Interflora network, but they realised that that was not the case when they clicked through to the M & S website and saw no reference to Interflora.

and such “initial interest” confusion was itself enough for trade mark infringement.

Thus, while Google doesn’t infringe by ‘selling’ keywords, the advertiser may and, in this case on Arnold J’s findings, did.

What, if anything, does it mean for us?

First off, the judgment is full of fascinating details about the “AdWords” and “search” market and the strategies that businesses deploy. For example, it appears that Google held around 90% of the global search (and paid advertising relating to search) market, with Bing and Yahoo! trailing out of site. There are also discussions of market research reports and Ofcom studies into what consumers understand when using the internet.

It is not clear whether Arnold J’s reasoning will provide us with much assistance here. First, while EU law does not appear to require use as a trade mark to infringe, the origin function referenced by the CJEU in Google France appears similar to our concept of use as a trade mark – as a badge of origin or to identify the trade source.[3]

Secondly, it seems doubtful that the considerations identified in [84] of Google France would be relevant at all under our law. The idea of examining whether the “normally informed and reasonably attentive internet users” could ascertain the trade source from the ad, or do so “only with difficulty”, indicates that the content of the advertisment may make it clear that the trade mark owner is not the source of the advertised product. However, a registered trade mark is infringed in Australia even if the trade source is made clear, for example by a disclaimer or other identifying factor. The type of analysis being engaged in under EU law is rather more like what would take place in a passing off action or action for misleading or deceptive conduct.[4]

Thirdly, our law does recognise the idea of “initial interest confusion”,[5] but the number of people who apparently went to M & S’ website and “clicked away” does rather highlight the difficulties with the concept as applied to web searches: clicking the back button, or even doing another web search in the browser, is not so costly as walking out of the shop, hopping back in your car and going looking for the intended destination.

Arguably, the most significant point could be the starting point identified at [288] – the Court of Justice’s recognition that:

keyword advertising is not inherently or inevitably objectionable from a trade mark perspective. On the contrary, the case law of the CJEU in this field recognises that, as a general rule, keyword advertising promotes competition ….

On this view, it was only the very special nature of INTERFLORA as a ‘network’ that convicted Marks & Spencer.

Interflora Inc v Marks and Spencer plc [2013] EWHC 1291 (Ch)


  1. See also [226] – [267] (esp.) of Arnold J’s judgment  ?
  2. Embracing some 318 paragraphs! His Lordship does start drawing the threads together at [295].  ?
  3. See *e.g. Optical 88 (No 2)* at [212].  ?
  4. See *e.g. Optical 88 (No 2)* at [99] and Crazy Ron’s at [86] – [88].  ?
  5. For example Southern Cross v Toowoomba at [5] but, at least in the context of misleading or deceptive conduct / passing off (yes, I know this is a post about registered trade marks) some brake may be imposed on that in at least some cases.  ?

Licensing recorded music

While the European Commission is trying to reduce the number of licensors you have to deal with (and so reduce transaction costs), the Australian legislation as interpreted by the courts is causing them to proliferate:

IPKat on Max Planck comments on draft directive on collective rights management

Phonographic Performance Company of Australia Limited v Commercial Radio Australia Limited [2013] FCAFC 11

Yes, I know the EU is grappling with territorial issues and not, or not just, subject matter issues and, if someone were trying to set up an umbrella licence in Australia, it would be important to know who had what rights to include, but …

ECJ’s first case on Registered Community Design

Case C-281/10 PepsiCo v Grupo Promer Mon Graphic

The excellent Class 99 blog has a summary focusing on the concept of “informed user”.

The IPkitties are typically loquacious.

Lid dip: Ray Hind

EU bans stem cell patents

The European Court of Justice has ruled that human embryonic stems cells are not patentable subject matter in the EU.

Article 6 of the Biotechnology Directive, 98/44/EC, provides:

1. Inventions shall be considered unpatentable where their commercial exploitation would be contrary to ordre public or morality; however, exploitation shall not be deemed to be so contrary merely because it is prohibited by law or regulation.

2. On the basis of paragraph 1, the following, in particular, shall be considered unpatentable: (a) processes for cloning human beings; (b) processes for modifying the germ line genetic identity of human beings; (c) uses of human embryos for industrial or commercial purposes; (d) processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes.

A Mr Brüstle had a patent in Germany relating to isolated and purified neural precursor cells, processes for their production from embryonic stem cells and the use of neural precursor cells for the treatment of neural defects. It would appear this involved use of isolated and purified precursor cells having neural or glial properties, obtained from embryonic stem cells. That in turn appears to have involved removal of stem cells from the embryo at the blatocyst stage which, in turn, resulted in destruction of the embryo.

Greenpeace sought to invalidate it.

The ECJ had to consider first the meaning of human embryo:

– any human ovum after fertilisation, any non-fertilised human ovum into which the cell nucleus from a mature human cell has been transplanted and any non-fertilised human ovum whose division and further development have been stimulated by parthenogenesis constitute a ‘human embryo’ within the meaning of Article 6(2)(c) of the Directive;

However:

– it is for the referring court to ascertain, in the light of scientific developments, whether a stem cell obtained from a human embryo at the blastocyst stage constitutes a ‘human embryo’ within the meaning of Article 6(2)(c) of the Directive.

Secondly, the ECJ considered that the use of human embryos in research for patentable subject matter was prohibited by paragraph 6(2)(c), but use for the development of therapeutic or diagnostic purposes applied to human embryos could be patentable if useful.

Thirdly, the ECJ ruled that:

Article 6(2)(c) of the Directive excludes an invention from patentability where the technical teaching which is the subject-matter of the patent application requires the prior destruction of human embryos or their use as base material, whatever the stage at which that takes place and even if the description of the technical teaching claimed does not refer to the use of human embryos.

IPKat here; Scientific American here; Patent Docs here.  Lid dip Ian Pascarl and Penny Smith

S 18(2) of our Act provides:

(2) Human beings, and the biological processes for their generation, are not patentable inventions.

As a result of that prohibition, the Deputy Commissioner has rejected the patentability of

40. Claims 10 to 23 are directed to a method of growing preblastocyst human embryos. It is a method applied to a human embryo. The method has clear advantages in better simulating the natural environment, and reducing apoptosis of cells in the blastocyst, resulting in greater success in implantation, and babies of greater body mass and having fewer complications compared to IVF babies born without the benefit of the method – all of which demonstrates that the process is one that directly relates to the generation of a human being. The process is a biological process – it is a process involving the presence of a chemical such that the in vitro environment better simulates the natural fallopian tube environment. I am satisfied that these claims fall within the ambit of `biological processes for {the generation of human beings}’ as proscribed by s.18(2).

Fertilitescentrum AB and Luminis Pty. Ltd [2004] APO 19. There is presumably some scope to patent embryonic stem cells at least where they do not relate to the biological processes for the generation of human beings. Thus, in H Bion Inc v Commissioner of Patents [2010] FCA 539 a patent application entitled “Embryonic Stem Cell Line and Method of Preparing the Same was accepted. The acceptance was subsequently withdrawn, however, on grounds of fraud or misrepresentation. The decision does not make it clear what the fraud related to.

 

 

 

 

 

Talk on keywords, adwords and trade marks

For anyone who may find some value in them, I have posted the slides from my IPSANZ talk ‘Of Keywords, Adwords and Trade Mark Infringers at Slideshare.

Class actions and antitrust

Following on from the post earlier this week about the findings that AstraZeneca had misused its market power in the EU over Losec, the Full Federal Court in Australia (Moore, Jessup and Dodds-Streeton JJ) has largely upheld an appeal against the primary Judge’s decision to strike out a Statement of Claim.

Unlike the AstraZeneca case, this case does not involve allegations of misuse of market power relating to a patented product; it concerns allegations about a price-fixing cartel for rubber compounds.

One interesting aspect about the case is that the litigation in Australia derives from a European Commission finding that Bayer AG and others had engaged in a global price fixing cartel for the rubber compounds. The applicants in this case allege that that cartel had ramifications in Australia causing them damage.

Another interesting aspect is that the applicants are bringing a class action to recover damages for the impact of the alleged cartel in Australia. In the IP field, we have recently seen the class action mechanism deployed to challenge the validity of patenting genes. Incidentally, the applicants’ solicitors in that case are the same as the applicants’ solicitors in this action.

Wright Rubber Products Pty Ltd v Bayer AG [2010] FCAFC 85

Misusing a patentee’s market power

The Court of General Instance (formerly (?) the EU’s CFI) has upheld the European Commission’s ruling that AstraZeneca abused its dominant position in the market by practices designed to block or delay generic drugs competing with Losec from entering the market.

The abusive practices were:

  1. submitting deliberately misleading statements to patent agents, national patent offices and national courts in order to acquire or preserve supplementary protections certificates for omeprazole to which AstraZeneca was not entitled or to which it was entitled for a shorter duration; and
  2. requesting (and obtaining) the withdrawal of regulatory marketing authorisations for Losec capsules and replacing those marketing authorisations with marketing authorisations for Losec MUPS tablets.

The result of the second practice was to delay entry on to the market of competing generic products as they could not use the abridged marketing approval process.

The Court did reduce, however, the fine from Euros 60 million to Euros 52.5 million.

The case concerned patents for omeprazole, the patent protection for which has generated some controversy in Australia.

Like the EU, Australian law does provide for supplementary protection certificates and there is the potential for abridged marketing approval processes for generics (pdf – e.g). Art. 82 of the Treaty also has some resemblance to s 46 of the TPA and, while we might think that the EU has a fairly idiosyncratic approach to determining market power, the Hoffman-La Roche ruling relied on by the Court of General Instance has been referred to with approval by the High Court in Australia.

Case T?321/05 AstraZeneca AB v Commission

which has been conveniently summarised by Linklaters and Gibson Dunn.

Now, we might think this is an application of the peculiar EU approach to