Will unsuccessful opponents be estopped?

As noted previously, the “Raising the Bar” bill aims to change the standard of proof required for acceptance of a patent application and for successful opposition from the prevailing “practically certain” or “clear” standard to a balance of probabilities.

Currently, an unsuccessful opponent is not estopped from bringing revocation proceedings, largely because of the difference in onus applying at the opposition versus revocation stage: Genetics Institute v Kirin-Amgen at [17] and note Clinique at [13] (trade mark). At [17], the Full Court in Kirin-Amgen said:

17       During the hearing there was some discussion as to the possibility of the owner of a patent the grant of which was unsuccessfully opposed, defending a revocation proceeding instituted by the pre-grant opponent by raising an issue estoppel in respect of the findings of fact of the single judge. In the present case, however, the respondent has conceded that no issue estoppel would apply to the findings of fact of Heerey J in any revocation proceeding instituted by the applicant in respect of the patent. In any event, the difference between the issue determined by his Honour in the pre-grant opposition proceeding, and the issue that would arise for determination in any revocation proceeding instituted by the applicant, is in our view sufficient to preclude the operation of issue estoppel principles in that second proceeding. The overriding issue in the pre-grant opposition proceeding before Heerey J was whether it was practically certain that the patent to be granted on the specification would have been invalid on the ground that the content of the specification was not in accordance with the requirements of s 40 of the Patents Act 1952 (Cth) (Genetics Institute Inc v Kirin-Amgen Inc (No 3) (1998) 156 ALR 30 at 39-41). Even if revocation of the patent was subsequently sought by the applicant on the virtually identical ground of non-compliance with subs 40(2) or subs 40(3) of the current Act (see par 138(3)(f) of the Act), the issue for determination by the judge hearing that revocation application would be whether the patent should be revoked for the specification’s non-compliance with subs 40(2) or subs 40(3). The decision of Heerey J that it was not practically certain that the patent should be so revoked would be inconclusive of this issue. Accordingly, there would be no scope for the operation of an issue estoppel in relation to the decision of Heerey J in any post-grant revocation proceeding instituted by the applicant in respect of the current patent. (emphasis supplied)

What the Full Court said in the emphasised passages was obiter as the point was conceded. Given the reason why the Court accepted the concession, however, it may well be that an unsuccessful opponent will be estopped from from bringing revocation proceedings in those cases where the “practically certain” standard no longer applies.

The absence of discovery and, usually, cross-examination and, possibly, the very nature of opposition proceedings may however lead to a contrary conclusion: see the Court of Appeal’s ruling in Special Effects v L’Oreal (commentary by IPkat and Birds), albeit

(a) involving an opposition in the Registry and not the Court; and

(b) recognising the possibility that the revocation proceedings may be stayed as an abuse of process.

The fact the earlier UK proceeding was in the Registry and did not involve discovery or cross-examination could be a highly important point of distinction as cross-examination and, sometimes, discovery do occur when opposition proceedings are appealed to the Court.

When the change takes effect, prospective opponents would still be very well advised to consider carefully whether to oppose, or keep their powder dry, and, if they do oppose, do it properly right from the start. Of course, even under the current standard, a half-hearted opposition can seriously prejudice the outcome of both the opposition and subsequent revocation proceedings.

 

The Raising the Bar Bill

Senator Carr introduced the Intellectual Property Laws (Raising the Bar) Bill 2011 into Parliament today.

Press release

Download the text of the Bill and EM from here (choose your own format).

You will remember that (according to the Press Release) the main objects of the Bill include:

  • raising patent standards to ensure Australian innovators are well placed to take their inventions to the world;
  • increasing penalties for trade mark counterfeiters;
  • improvements to border security measures for goods that infringe copyright and trade marks;
  • providing free access to patented inventions for researchers; and
  • cutting red tape and delays when seeking an IP right.

While there have no doubt been modifications to the text of the Exposure Draft (and Patentology flags a big change to the transitional provisions for the new patentability standards), you can get a very good feel for what the various parts of the Bill are trying to achieve:

in relation to patents from Dr Summerfield’s 8 part series over at Patentology:

  1. Part 1: inventive standard
  2. Part 2: usefulness
  3. Part 3: provisional specifications
  4. Part 4: enablement
  5. Part 5: claims supported by description
  6. Part 6: experimental use
  7. Part 7: miscellanea including standard of proof
  8. Part 8: transitional

Kim Weatherall also commented on a number of aspects, exploring in particular the (proposed) trade mark criminal offences.

You do need to bear in mind that these commentaries were on the text of the Exposure Draft and it was intended that anomalies identified through the Exposure Draft would be corrected in the Bill so, as I have already noted, there will be changes. Nonetheless, these comments should give you a good fell for what was being intended and issues that might be thrown up.

As you will see from the commentaries on the exposure draft, there are a host of issues to be considered. Time doesn’t permit anything but a cursory attempt on a couple of points here:

Item 113 of Sch 6 will replace the current s 41 of the Trade Marks Act (requiring a trade mark to be capable of distinguishing) with a new provision intended to reverse Blount and ensure that there is a presumption that a trade mark is registrable. It does this by requiring the Registrar to be satisfied that the trade mark is not capable of distinguishing before the Registrar can reject the application on this ground.

So clause 41(2) says “A trade mark is taken not to be capable of distinguishing … only if ….”

(Now I look at it, I wonder how long before it will be before someone tries to argue that “taken not to be capable of distinguishing” means something different to (and less than) “is not capable of distinguishing”. Oh well. Surely that one would be dispatched over the fence for six?)

While the Bill does seek to change the standard of proof against patent applications and patent oppositions from the existing “practically certain to fail” or “clear” type standard to the usual “balance of probabilities (see e.g. items 14 and 15 of Sch 1), no such amendment is proposed for trade mark oppositions. Therefore, the current state of uncertainty on this issue will continue (contrast e.g. Hills v Bitek at [43] – [55] to Sports Warehouse v Fry at [26] – [40]) , even though the school of thought favouring the “practically certain” or “clear” standard was imported from the Patents Act.

The bill will also introduce a whole new regime of oppositions to the registration of trade marks.

Item 18 of Sch. 3 will replace s 52 so that there is an obligation to file a Notice of Opposition which the Registrar, not the opponent, will serve on the applicant. Item 19 will introduce a new s 52A. This will require an applicant to file a notice of intention to defend or the application will lapse.

According to the EM, the regulations (when they are promulgated) will include power for the Notice of Opposition to specify the particulars of the grounds of opposition. The EM explains:

Opponents are currently required to state the grounds on which they intend opposing an application when they file their notice of opposition. However, they are not required to set out the particulars of those grounds. Frequently, this means that the opponent sets out all possible grounds, whether or not they have any intention of relying on them. As a result, the trade mark applicant may be faced with a number of grounds to deal with and no indication of which are key to the opposition until late in the opposition proceedings and sometimes not until the hearing

makes it difficult for the applicant to prepare their case. It also increases costs as the applicant is obliged to prepare a case in response to all grounds raised in the statement of grounds, including those on which the opponent may no longer rely.

The amendment addresses this problem by allowing for regulations to be made to require the opponent to file a statement of particulars of the grounds on which they intend to oppose. This will help focus oppositions earlier, reducing costs and unnecessary effort for the applicant.

The EM talks of the regulations conferring a power to require particulars. Whether this will be a discretionary power to be exercised on a case by case basis or an obligation on all opponents will need to await the terms of the regulations themselves. For example, the EM on items 24 and 25 states that opponents will be required to file both statements of grounds and particulars and  the last paragraph of the EM on item 17 states that the particulars will be required to be filed within 1 month of the filing of the Notice of Opposition.

The regulations will also apparently include a power to amend the statement(s) of grounds and particulars. However, the EM on items 24 and 25 states:

The regulations will only permit the opponent to amend the statement of grounds and particulars under tightly controlled circumstances.

The Federal Magistrates Court will get original jurisdiction in matters under the Designs Act and the Trade Marks Act alongside its existing original jurisdiction in copyright and (what used to be called) trade practices matters.

 

 

Microsoft v i4i – US Supreme Court decides

Microsoft has lost its appeal to the US Supreme Court.

Microsoft had argued it should have to prove its claim that i4i’s patent was invalid by “a preponderance of the evidence”.

Under the US Patent Act, however, a patent having been granted after examination by the Commissioner is “presumed valid”. The US Supreme Court has ruled that “presumed valid” in this context had a settled common law meaning which Congress was presumed to have adopted. As a result, Microsoft had to make its invalidity case “by clear and convincing evidence”. That is, there is a strong presumption of validity in the USA.

Microsoft Corp v i4i Limited Partnership

Initial commentary by Patently-O.

The case initially attracted international attention as Microsoft was ordered to stop selling versions of Word which had the capability of opening a .XML, .DOCX, or .DOCM file (“an XML file”) containing custom XML. This presumably means that Microsoft will have to pay the US$290 million damages awarded against it for infringement.

Under Australian law, a person alleging a granted patent is invalid has the onus of proof on the usual balance of probabilities standard.

A person opposing the grant of a patent, however, has to establish their case on the clear and convincing or practically certain standard. The exposure draft of the “Raising the Bar” amendment legislation proposes changing that standard, and the standard for acceptance, to the balance of probabilities standard too. (See items 14 and 15 of Sch. 1 (pdf) and pp 26 – 30 of the (draft) EM (pdf).

Patently-O speculates from the voting alignment of the current Court that the US Supreme Court is now shifting “to the right” or “pro-patentee”.

Upholding a patent opposition on appeal

Adrian Crooks, at IPnow, provides his summary of Besanko J’s ruling in Aspirating IP v Vision Systems [2010] FCA 1061.

The onus on appeal from a trade mark opposition

If there were any doubt about it, the Full Federal Court has confirmed that the person opposing the registration of a trade mark bears the onus of proving a successful ground of opposition on appeal to the Court. (As a side note, I think this is the new Chief Justice’s first IP decision, at least since joining this Court.)

The Food Channel Pty Ltd (Channel) had applied to register TM 967804:

TM 967804
TM 967804

in class 16 for printed matter. During the application process, it assigned the trade mark application to The Food Channel Network Pty Ltd (Network). Both companies were related entities as a Mr Lawrence was the sole director and shareholder of both.

The registration of TM 967804 was opposed by Television Food Network GP (Television), a US entity. Television is the owner of TM 881666 for TELEVISION FOOD NETWORK and TM 881667, both registered in classes 9, 38, 41 and 42 and  TM938228 for services in class 41. TM 881667 and 938228 were for devices:

TM 881667
TM 938228

The Registrar rejected Television’s opposition. The trial judge, however, upheld the appeal finding that Network bore the onus of establishing it was the owner of the trade mark, had used it in good faith and that it was confusingly similar to Television’s trade marks.

The onus point

The Full Court (Keane CJ, Stone and Jagot JJ) dealt with this point quite quickly as inconsistent with the the presumption of registrability established by s 33, long standing principle and the legislative scheme.

The Full Court rejected Television’s argument that the difficulties facing an opponent attempting to establish lack of ownership (s 58) or lack of intention to use (s 59) meant that an evidential onus should shift to the applicant. While the Court appeared to accept that an evidential onus might arise under s 59 where the opponent raises a prima facie case of lack of intention, it considered the difficulties that could arise in the context of s 59 did not attend s 58 which was usually directed to showing that someone else, often the opponent, had used the trade mark first.

The not the owner point

The difficulty which Television seized on here was the assignment from Channel to Network and some evidence in chief from Mr Lawrence:

1. I am the Founder and Managing Director of Food Channel Network Pty Ltd (The Food Channel) and am authorized to make this affidavit. [Network] is based in Queensland Australia.
5. In 1996, and with the advent of pay television being developed in Australia, The Food Channel trademark was created and a logo device attached to its name. In 1997 after filing the required documentation with our then solicitors MALLESON STEPHEN JACQUES which was then AIPO – (Australian Industrial Property Organisation) and after their search of the database that was conducted, it was concluded that there was no applications [sic] that had been filed or applications that were pending for the trademark – The Food Channel. The Food Channel trademark proceeded to registration without any opposition. The Food Channel is a REGISTERED AUSTRALIAN TRADEMARK – NUMBER 733265 – The Food Channel trademark has been registered in Australia since 1997 and is registered until 2017 when it again comes up for renewal. Annexed hereto and marked annexure H. ….

Television’s argument was that Mr Lawrence defined “The Food Channel” as Network in his affidavit and deposed that it was The Food Channel (i.e., Network) which created and used the trade mark.

The trial judge had found that, the onus being on Network and it not being clear from Mr Lawrence’s evidence who created the trade mark, the ground of opposition was successfully made out.

The Full Court noted that Mr Lawrence had drawn his affidavit himself and commented:

61 The courts should be cautious to allow the legal fiction of the corporate veil to defeat registration in a case where one of a group of companies, all controlled by the same directing mind and will, used the mark prior to the other. This is particularly so where, as here, the conclusion that the words The Food Channel in Mr Lawrence’s affidavit meant Network and only Network depends on a single opening definition in an affidavit drafted by a layperson, in a case where Network was the sole respondent attempting to answer a notified ground of opposition that Network was not the owner of the mark, and where any distinctions Mr Lawrence drew between his companies were few, random and confused. In this case, this evidence does not establish that Network was the prior owner through use. It may establish that Network used the mark at a time before registration, but it doesn’t negate the possibility that Channel was, in fact, also a user (and indeed the first user) of the mark before registration. Further, there is no evidence as to how the mark was used by Network. Use needs to be in relation to the goods or services claimed; on the only evidence before the Court, there was “no set formula” with regard to use. This tends against a conclusion that any mark was used by Mr Lawrence, Network or Channel to distinguish one company’s goods from another. Finally, the requirement of prior user as a trademark is that it is used to distinguish one’s goods from another’s: if Network did use the mark, there does not seem to be evidence of an attempt to use it in such a manner as to distinguish its goods from those of Channel. And of course, it is inherently unlikely that Mr Lawrence, as the directing mind and will of both companies, would have had any such an intention.

62 To treat Mr Lawrence’s statement that Network ‘created’ and ‘used’ the mark as exclusive of permitted use by Channel is counter-intuitive, given her Honour’s observation at [77] that the “evidence …is that Mr Lawrence tended to confuse his own business interests with those of his companies, and appeared to randomly use companies and trade marks depending on the circumstances…”.

This with respect pragmatic approach may be constrasted with the very strict approach taken by a rather different Full Court in Crazy Ron at [109] – [127].

As the Full Court noted, further, to the extent there was any confusion about ownership, it fell to Television to clarify the position since the onus lay on it as the opponent.

(It would appear from the Register that TM 733265 was in fact registered by Channel and subsequently assigned to Network.)

The no intention to use point

The trial judge’s finding that Network had no intention to use the trade mark when it was filed was tied up with the confusion in Mr Lawrence’s evidence about who created the trade mark.

Mr Lawrence did give evidence that “The Food Channel” had provided recipes bearing the trade mark to butchers for distribution by the butchers to their customers. It was not clear whether or not the recipes were sold to the butchers or there was some other quid pro quo. However, the Full Court accepted that this uncontested evidence demonstrated that there had in fact been use of the trade mark in the course of trade.

Trade mark comparison

Finally, the Full Court found that Network’s trade mark was not deceptively similar to Television’s trade marks when viewed as a whole – they neither looked nor sounded similar – and having regard to the differences in the goods and services specified.

Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58 (Keane CJ, Stone and Jagot JJ)

Sea-horse shaped chocolate not a trade mark

Having secured an International Registration, Guylain tried to register a chocolate in this shape

as a trade mark in Australia through the Madrid Protocol (TM App 936483).

Sundberg J, on appeal from the Registrar’s refusal, has also rejected it as incapable of distinguishing Guylain’s goods (pralines and chocolate, to be precise) under s 41.

Not inherently adapted — enough

First, Sundberg J was satisfied that the sea-horse shaped chocolate was inherently adapted to distinguish to some extent, but not enough to be distinctive.

Guylain argued:

31. its shape is a “fanciful stylised” representation of a seahorse, which “depart[s] radically from the shape of seahorses found in nature”. The departure, it says, arises from two particular features of its chocolate shape:
(a) the tail that wraps up behind the spine of the creature, rather than forwards; and
(b) the solid and “chunky” appearance, as opposed to the more slender and elongate shape of a real seahorse.

31. … its shape is a “fanciful stylised” representation of a seahorse, which “depart[s] radically from the shape of seahorses found in nature”. The departure, it says, arises from two particular features of its chocolate shape:

(a) the tail that wraps up behind the spine of the creature, rather than forwards; and

(b) the solid and “chunky” appearance, as opposed to the more slender and elongate shape of a real seahorse. (my emphasis)

Accepting this to some extent, Sundberg J considered nonetheless:

[77] …. there is a danger that first impressions will be sidelined when an analysis of a shape’s individual components or features is undertaken. In this case, the immediate impression one has of the mark in suit is of an ordinary seahorse. I would not expect most ordinary consumers to know that the tails of seahorses do not curl backwards, only forwards. I think most would know that seahorses have a tail and expect that they curl up in some direction. Accepting that the tail and the stocky appearance might, to a studious observer, appear unusual, I consider on balance that the average consumer would see it as a relatively ordinary representation of a seahorse. The possibility for confusion therefore between Guylian’s shape and any other seahorse shapes is, I think, a real one. (my emphasis)

Test this for yourself: do you think either of these would be deceptively similar to Guylain’s shape (if it were registered)?

To those who might wonder who on Earth would want to sell a chocolate in a sea-horse shape if it hadn’t been for Guylain’s success, Sundberg J had earlier explained:

71   … In my view, it is quite possible that as at the priority date other traders might want to depict a seahorse, along with starfish, crabs, prawns for example, in a way that is similar enough to cause potential confusion in the minds of consumers. …. [after noting that no-one in Australia was in fact selling sea-horse shaped chocolates at the priority date, his Honour continued] ….  It might be thought that that fact, together with the fact that Guylian had been selling its seahorse shape in Australia for a long time (since the 1980s), would diminish the likelihood that, as at 2002, other legitimately motivated traders might in the ordinary course of their business wish to sell seahorse chocolate shapes. However, the absence of other seahorses on the market does not in my view mean it was unlikely that others may in the future wish to depict that particular sea creature. (His Honour’s emphasis)

Not qualified under s 41(5) either

Guylain has been selling its sea-horse shaped chocolates in Australia since 1980 as part of its sea shells range. In recent years, reatail sales of the sea shells range had exceeded tens of millions of dollars each year and millions of dollars were spent each year on advertising and promotion. The sea-horse shaped chocolate was not sold by itself, however. There seem to have been some rather small sales of sea-horse shaped chocolates by other brands, at various points, although they seem to have been after the priority date.

Nonetheless, survey evidence before the Court showed that 40% of the sample identified the sea-horse shaped chocolates as coming from Guylain, unprompted. Conversely, all the other brands mentioned accounted for only 13% of the sample; the highest of these, Lindt, reached 1.7% and no other brand reached 1%.

Given that level of association, why wasn’t the sea-horse shape distinctive of Guylain?

Because, following Woolworths v BP (No 2), the association must be shown to have arisen from use of the sea-horse as a trade mark, not just use. His Honour quoted with approval from Jacob LJ’s explanation of the distinction in the Vienetta case:

There is a bit of sleight of hand going on here and in other cases of this sort. The trick works like this. The manufacturer sells and advertises his product widely and under a well-known trade mark. After some while the product appearance becomes well-known. He then says the appearance alone will serve as a trade mark, even though he himself never relied on the appearance alone to designate origin and would not dare to do so. He then gets registration of the shape alone. Now he is in a position to stop other parties, using their own word trade marks, from selling the product, even though no-one is deceived or misled.

As in that case, his Honour found that Guylain had not in fact used its sea-horse shape as a trade mark and the public would not have understood it as being used in that way. For example, his Honour found that this wasn’t use of the sea-horse shape as a trade mark:

The fact that other traders, such as Darrell Lea, sold sea-horse shaped products in boxes with their own brands on them contributed to this conclusion, as did the prominence of the Guylain and, in many case, a stylised ‘G’ on the packaging. Sales of Guylain’s sea shell range in sea-horse shaped boxes didn’t help either as the evidence did not suggest the sales were particularly significant.

The presumption of registrability

Sundberg J also addressed the “presumption of registrability” wars, which his Honour broke down into 2 parts.

First, his Honour explained that s 33 requires that the trade mark be registered unless the Registrar is satisfied that a ground of rejection exists. Thus, in the case, of the distinctiveness inquiry under s 41, the trade mark must be registered unless the Registrar is satisfied that the trade mark is not sufficiently inherently adapted to distinguish as to be capable of distinguishing. If the Registrar was satisfied that the trade mark had insufficient inherent adaptation, the words of s 41(5) and 41(6) plainly imposed the onus on the applicant to satisfy the Registrar that the trade mark had in fact become distinctive (s 41(6)) or otherwise did have the necessary capacity. See [21]. The wonders of plain English drafting!

Secondly, Sundberg J joined the gang (so far comprising Finkelstein and Gyles JJ) rejecting any standard other than the Registrar being satisfied on the balance of probabilities.

The role of the Registrar

Somewhat unusually, the Registrar went to the lengths of filing evidence about other uses of sea-horse shaped chocolate. Those practitioners who have seen their valiant efforts in scrambling around the internet to assemble evidence snidely dismissed will note that the Registrar was reduced to much the same course.

Interestingly, Sundberg J noted:

54. …. Although differing as to the weight such evidence should be given, the parties also appeared to accept more generally that evidence of events taking place after the priority date, whether that be the applicant’s use of the mark itself or use of other similar or otherwise relevant shapes by rival traders, may be relevant to whether the seahorse shape is capable of distinguishing Guylian’s goods. This was an appropriate course to take. In my view, evidence of what other traders were selling prior to, at or subsequent to the priority date has the ability to rationally affect, albeit with varying degrees of weight, the conclusion one might reach about the extent to which a mark is inherently adapted to distinguish under s 41(3) of the Act. ….

Chocolaterie Guylian N.V. v Registrar of Trade Marks [2009] FCA 891