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Adidas is suing Pacific Brands, alleging that the latter’s use of 3 stripes on footwear infringes Adidas’ registered trade marks for the “3 Stripes” (the judgment doesn’t identify which trade marks or the Pacific Brands’ product(s) in question).

Adidas gave notice under CM-13 (this is .doc download link, but the terms of the practice note are also set out in the judgment) that it intended to conduct a consumer survey.

Pacific Brands sought an order preventing the survey being undertaken or used. Pacific Brands argued that the survey was a waste of time and money because:

1. it had conceded Adidas had a reputation in the 3 stripes trade mark in Australia; and
2. whether or not the use of the stripes on Pacific Brands’ footwear was use as a trade mark or, if it was, was deceptively similar to Adidas’ trade marks,

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Patentology has a nice summary of the innovation patentee’s successful appeal in Seafood Innovations Pty Ltd v Richard Bass Pty Ltd [2011] FCAFC 83.

One point: it seems like the disclosure in the body of the specification supporting the broadest claim was at a level of generality similar to that upheld by the High Court in the first round of Lockwood. Wonder how that will hold up for future application under the (proposed) Raising the Bar legislation?

Secondly, the (now) infringer’s best line of defence (apart from invalidity) seems to have turned on trying to argue (now unsuccessfully) that incorporating additional integers in the accused gutting machine to those specified in the claim. Bennett J gave it short shrift.

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The fifth decision under the “new” Designs Act 2004 illustrates the operation of that old principle: in a crowded field, small differences may be enough to confer validity, but equally small differences in the accused products will be sufficient to avoid liability.
You will recall that LED Technologies successfully sued Elecspess (and others) for infringing LED’s registered designs for a dual lens lamp, ARD 302359, and a triple lens lamp, 302360 (links to those decisions via here). Well, LED fell out with its Chinese manufacturer, Valens, and found itself a new supplier. Valens, however, didn’t take things lying down and started supplying another of LED’s competitors, Baxter.
As in the earlier case, Baxter challenged the validity of the earlier design; this time arguing that the Statement of Newness and Distinctiveness was unclear and also relying on some different prior art.
The first objection failed.  The perspective view for the two-lens design looks like this:

ARD 302359

The Statement of Newness etc. etc. read:

Separate clip in lenses. Base to take a variety of 2, 3 or 4 combination of lenses for stop, tail, indicator, reverse LED lenses, no visible screws.

At [85], Finkelstein J accepted that the Statement of Newness etc. etc. could have been “better expressed”, but it sufficiently clear and succinct:

…. In my view the statement indicates clearly to the relevantly informed addressee (and probably to anyone familiar with the English language) that the base could be manufactured to take a number of lenses. Reference to “separate clip in lenses”, when read with the phrase “no visible screws”, indicates that the lenses clips in and are not held in place by screws. There is nothing relevantly uncertain contained in the statement. 

There were important visual differences between LED’s designs and the closest prior art. For example, at [104]:

the base of the Rubbolite lamps appeared to provide individual frames for each lens, which is not a feature of the registered designs. … the corners of the Rubbolite lens appeared sharper or squarer than the registered designs but said the difference was minor. … there was a noticeable ledge or lip around the lens (which he referred to as the “lens housing”) which was not shown on the registered designs. The ledge or lip around the lens on the Rubbolite lamps tapered inwards which made it substantially different in appearance when looked at from the side. 

Hence, the registered designs were valid.

Unfortunately (for LED), before Valens started supplying Baxter, it had made some changes to the product. As a result, the products supplied to Baxter were not substantially similar in overall impression to the registered designs. Finkelstein J accepted [105] that there were similarities between the products imported by Baxter and the registered design.  Many of them, however, “were common in the prior art”. Moreover:

[106] There are, to my mind, several important features that lead me to the conclusion that the Baxters lamps are not substantially similar in overall impression to the registered designs. The key features are the prominent cut out pattern on the underside of the designs, which is to be contrasted with the flat closed backs of the Baxters lamps, and the square lenses of the designs having a wide landing between them while the Baxters lights have no landing. Of less significance are the long sides of the frames of the registered designs which have raised edges resulting in a counter-sunk appearance, which is not present on the Baxters lamps. As well, the short sides of the frames of the registered designs are raised at their outer portions and dip down in the central portion, which is not a feature of Baxters’ design. 

[107] Moreover, in my view, it is these features that distinguish the registered designs from the prior art such as to admit of the conclusion that the registered designs are new and distinctive. 

Inducing breach of contract

An interesting twist to this case, was that LED also tried to “get” Baxter for inducing the (ex-) Chinese supplier, Valens, to breach its contract with LED.

Essentially, LED argued it had agreed with Valens that Valens would not supply anyone else in Australia or New Zealand with products made using the moulds for the products supplied to LED. The evidence on this point was less than ideal, with the judge being rather critical of the witnesses. There was also a dispute between LED and Valens over who owned what. Ultimately, his Honour accepted that there was a deal that LED would be supplied exclusively for Australia and New Zealand so the supply of products to Baxter was in breach of the agreement. However, Baxter itself did not procure the breach: Baxter did not know Valens was re-using the moulds: to the contrary, it was paying Valens for new moulds.

It is rather hard to reconcile the story in Elecspess on how the designs came into existence and came to be manufactured with the evidence in this case. Of course, as the parties in the two cases are different, each must be decided on its own evidence. I guess, in terms of ownership of the registered designs, there is commonality in that LED’s principal, Mr Ottobre, was the author of the original conception. Matters get rather murky after that.  At [30], LED apparently started selling the lamps made by Valens in “early 2004”, but the priority date of the designs is 22 June 2004.

LED Technologies Pty Ltd v Roadvision Pty Ltd [2011] FCA 146

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For DGTEK v Digiteck I, see here.

Non-use

Lander J considered that the goods covered by Hills’ registration should be limited as a result of non-use for the statutory period of 3 continuous years under s 92.

One interesting point on this part of the case is that Bitek had sought removal of all goods in its original application for removal. It accepted that evidence filed by Hills showed use in relation to some goods. Hills argued therefore the non-use application must fail since the application was directed to all goods.

Lander J rejected that argument:

Following a review of the cases, Lander J rejected these arguments:

[295] Hills’ argument that if the Court considered Bitek’s argument that the class of goods should be narrowed would result in a denial of procedural fairness should be rejected. Bitek’s concession means that it cannot have the relief it sought in the application but in seeking to argue that it is entitled to have the restricted relief it is thereby narrowing the scope of the inquiry. In those circumstances it could not be a denial of procedural fairness to allow the matter to proceed by reference to a narrower class of goods.

[296] I also reject Hills’ submission that the application must fail because there is evidence of use of some of its goods. I accept Bitek’s argument that the Court may exercise its discretion under s 101(2) to narrow the scope of the registration where the applicant establishes that a ground exists in relation to only some of the goods to which the application relates.

The power to excise some, but not all goods, was consistent with the policy of Part 9: to ensure that Register (and freedom to trade) was not cluttered with unused marks: [304] and consistent with the terms of s 101(2).

Lander J then refused to exercise a discretion against non-removal, apparently on the basis that any reputation that had been generated in respect of the goods on which there had been use did not spill over on to the goods for which there had not been use:

Bitek submitted that s 101(3) does not save Hills’ registration because there is no evidence of use of similar or closely related goods. The only evidence of use relates to a limited group of products which Bitek mainly excluded from its application for removal.

[316] In my opinion, Hills’ argument should be rejected. The fact that it has used its mark in respect of goods which are similar to those goods marketed by Bitek is not in my opinion to the point.

[317] The circumstance which is addressed in s 101(4) is whether Hills has used the mark in respect of similar goods to those to which the application relates. In Hills’ case it has not used the goods except in relation to set-top boxes, remote controls, digital video recorders with hard drive, televisions, CD and MP3 players, DVD players, micro sound systems, iPod docking speakers and web-based cameras. I do not think there is any evidence to suggest any use of any similar goods to those proved used by Hills which ought to be retained in the statement of goods.

Perhaps rather surprisingly given the finding of non-use in respect of some products, Lander J considered Hills’ specification of goods should be amended to read:

Digital and electronic products including set top boxes, remote controls, digital video recorders with hard drive, televisions, CD and MP3 players, DVD players, micro sound systems, iPod docking speakers and web-based cameras. (my emphasis)

Infringement

Lander J accepted he was bound be the decision in Gallo that removal of a mark for non-use operated only from the date of removal of the mark from the Register.

Bitech admitted it had used DIGITECH since 2003 in respect ofantennas, cables (including speaker, coaxial, data and security), plasma TV brackets, leads, AV switch selectors, connectors, wall plates of various types, splitters, TV mounting hardware, video senders, video intercoms, industry tools, remote controls, multi-switches, set-top boxes, cable ties and cable clips.

Ultimately, his Honour found that Bitek infringed by reason of its use on set-top boxes and remote controls, but not the other products.

Consistently with his Honour’s earlier findings, DIGITECH was of course deceptively similar to DGTECH. Apart from set-top boxes and remote controls, the goods for which Bitek had used its trade mark were either covered by its own (now) registration (s 122(1)(fa)) – and all use had been after the application date – or were not shown to be within the scope of Hills’ registration or goods of the same description. S 120(3) also could not be invoked as Hills’ trade mark was not well-known.

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

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The JIPLP blog has a succinct online article, by Brian Whitehead and Richard Kempner, analysing Floyd J’s decision in Schütz (UK) Limited v Werit UK Limited, Protechna SA [2010] EWHC 660 on whether a defendant’s activities amounted to permissible repair or reconditioning of a patented product or infringement.

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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.

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One month after the appeal was heard, the Full Court has rejected Nature’s Blend’s appeal that Nestlé used Luscious Lips as a trade mark.

Nature’s Blend argued first that the trial judge had wrongly focused on the character of Nestlé’s use instead of the proper meaning of the Nature’s Blend mark. As the mark was registered for all confectionery, not just “lips”, it was said to be inherently distinctive. The Full Court, however, rejected this requirement and re-affirmed that the test was to examine whether or not the way Nestlé used the mark (the “impugned use”) would be understood by ordinary consumers as functioning as a badge of origin.

Nestlé’s Luscious Lips are part of its ‘Retro Party Mix’ pack. The expression ‘luscious Lips’ appeared only on the back of the packaging in the expression:

That’s right! All your old favourites are back, so put on those flares & get ready to party! Up to 7 lolly varieties including … cool COLA Bottles, those radical Racing Cars, yummy Honey flavoured Bears, totally freeeekie Teeth, luscious Lips, partying Pineapples and outrageous Raspberries.

You can see the front of the packaging at the product’s very own facebook page.

Nature’s Blend contended that the trial judge had improperly diluted the significance of the ‘luscious Lips’ expression on the Nestlé packaging by reference to the presence of other, more prominent brands.

This issue can be tricky because the Courts have long held that one does not take into account extraneous matters such as disclaimers or the presence of other trade marks when considering the question of deceptive similarity. On the question of use as a trade mark, it is permissible.

While the Full Court acknowledged that the fact that other trade marks were used more prominently on the packaging did not preclude ‘luscious Lips’ from being used as a trade mark, the characterisation of the impugned use depended on the particular usage in question in its own particular setting. In this case, the presence of ALLEN’s and Retro Party Mix did in fact undercut the likelihood that consumers would read ‘luscious Lips’ as a trade mark.

The Full Court also agreed that Nestlé had used the trade mark in good faith as a description.

Nature’s Blend Pty Ltd v Nestlé Australia Ltd [2010] FCAFC 117 (Stone, Gordon and Mckerracher JJ)

Comment on decision at first instance.

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Back in October, Jessup J found Chiropedic’s design for a mattress and base (registered under the 1906 Act) valid and infringed, by only 2 of a number of Radburg’s competing mattresses.

The first point of interest is the impact of a statement of novelty. A second point of interest is the impact of trade variants or “features commonly used in the trade”. Thirdly, his Honour ruled on the costs to be taken into account in the course of an account of profits.

This was the representation in the design (ADR 127723)

There was the usual statement of monopoly, limiting the design to the features of shape or configuration.

Unusually, there was also a statement of novelty:

Novelty is claimed in the shape and configuration of the upper layer of the mattress portion of the mattress and base as indicated by the beading as shown in the representations.

Chiropedic (the design owner) contended that novelty or originality of its design was not limited by this statement and, even if it were, validity and infringement still fell to be assessed by consideration of the design as a whole citing, in support, the judgment of Davies and Whitlam JJ in Richsell v Khoury at [7].

Jessup J reviewed the cases referred to in Richsell, but discovered that they did not actually deal with it. His Honour found considerably greater assistance in the Franki Report which had led to the introduction of the concept:

On the other hand we were of the opinion that the Registrar should be given power to require a ‘statement of novelty’ to be lodged. By ‘statement of novelty’ we mean a statement dealing with the features of a design that may be said to provide the basis for the design being new or original. For example, if in a design for a chair the significant feature is in the shape of the two front legs and attention is drawn to this fact in a statement of novelty, while there would be no infringement of the design unless the infringing article satisfied the tests for infringement of the chair as a whole, nevertheless it is reasonable to assume that, in testing the novelty and originality of the design, attention would be directed to the two front legs and that this feature of the design would be given particular weight in testing infringement, although an infringement could not be proved unless the relevant tests were satisfied in respect of the whole chair. (my emphasis)

and Slade LJ’s consideration in Sommer Allibert of the similar concept in the UK legislation (the latter of which had not been referred to in Richsell or Polyaire). Accordingly, Jessup J held:

[22] …. The argument which Davies and Whitlam JJ rejected in that case was that, in making the comparison required by s 17(1), one should look only at the features for which novelty had been claimed. It is one thing to say that the registered owner should not be permitted to use his or her own statement of novelty for the purpose of shutting the court’s eyes to the appearance of a complete design, and to do so to his or her own advantage. It is another thing altogether to say that the registered owner should not be held to such a statement of novelty when the court comes to consider what aspects of the registered design are new or original. The court’s eyes would then be open to the complete design, of course, but it should, in my view, assess that design against the prior art with a particular emphasis upon those features that the registered owner himself or herself, at the point of registration, considered to be novel.

Paying particular attention to the features identified in the Statement of Novelty, his Honour went on to find the design valid over the prior art. For example, it had a relatively square look where the horizontal surface met the upper line of beading, while the prior art was relatively curved. Similarly, the proportion of the upper layer to the lower lower of the mattress was significant over the prior art.

These findings had particular significance when it came to considering infringement. One of Radburg’s designs was found to be identical to the registered design. A second was an obvious imitation. A number of others, however, escaped liability as they either had similar convex curvature to the prior art rather than the square look of the registered design or the upper layer of the mattress was a significantly smaller proportion of the mattress; many of them also had quite different ribbing.

One striking visual difference was discounted in the comparisons: the mattresses in some of the prior art had three layers, not two; so that the mattress could be flipped over and used. The evidence established, however, that the omission or inclusion of the bottom or third layer was a variant commonly resorted to in the trade. Another feature, an “inward set” was apparently visible to those in the trade on fastidious inspection, but his Honour found it did not strike the eye and was an immaterial variation.

Finally, on the principles to be applied in the account, Jessup J ruled that the respondent’s bills of materials should be used (where available) on the principle that they reflected as closely as possible the actual costs incurred and so, where the evidence showed that margins earned on different product lines were not uniform, the respondent would not generate a windfall profit.

Chiropedic Bedding Pty Ltd v Radburg Pty Ltd [2009] FCA 1163

So far as I can see, no application for leave to appeal has been filed.

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Foster J has ruled that Bitech’s patent for an apparatus that simulates log flames or coal fire in electric or gas fired domestic room heaters is valid, but not infringed.

An essential feature of the patent was that the simulated flames resulted from reflected light, however, the alleged infringements used directly projected light, not reflected light and consequently did not infringe.

The novelty attack failed because the relevant prior art did not possess all the features claimed. The attack on obviousness failed because s 7(3) was not available – the complete specification was filed before the 1990 Act came into force and so the Alphapharm rules were all that was relevant.

Of potentially greater interest, if there had been infringement, Foster J would have found the importer and retailer (Bunnings) were engaged in a common design.

Somewhat bizarrely, on of the respondents denied it had imported the allegedly infringing products, but led no evidence on the point. As a result, Foster J has foreshadowed some consequences in costs for putting the applicant to proof on this point.

Bitech Engineering v Garth Living Pty Ltd [2009] FCA 1393

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IP Australia has published a second round of consultation paper (pdf) on its proposals for reform of intellectual property laws and procedures in Australia.

Topics covered include:

• Getting the Balance Right
  Exemptions to Patent Infringement
  Resolving patent opposition proceedings faster
  Resolving trade mark opposition proceedings faster
  Resolving divisional applications faster
• Getting the Balance Right
• Exemptions to Patent Infringement
• Resolving patent opposition proceedings faster
• Resolving trade mark opposition proceedings faster
• Resolving divisional applications faster

Submissions are due by 12 February 2010.

In a move definitely to be encouraged, the proposed drafting instructions have also been published (pdf) for comment.

(Links to the “Word” version as well as the pdf version and the previous round of consultation papers via here.)

Some further papers will be published soon on:

• Flexible Search and Examination
• Streamlining the Patent Process

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