Australia’s proposed Media bargaining incentive

Leave a Comment / Because I felt like it / /

In late April, the Commonwealth government announced plans to introduce a “News Bargaining Incentive”.

You may recall that back in 2021 Parliament enacted the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021 (Cth) which, as you might guess, introduced a Code[1] requiring designated digital platforms – Google, Facebook, TikTok to you and me – to negotiate agreements with news organisations to pay for the “use” of Australian news media content. Some commentary on the “legals” here and here.

Well, it ran into a problem. Facebook (or, rather, Meta) dropped professional (for want of a better word) Australian news media from its services and so didn’t have to pay anything.

The new incentive aims to fix that by imposing a tax equal to 2.25% of revenue on social media giants (whether they use Australian news media content or not) and give them a rebate for amounts they pay to Australian news media organisations pursuant to the existing bargaining code.[2]

At this stage, there is a package of draft legislation and explanatory materials for consultation (submissions due 18 May 2026).

There is also a separate consultation being run by the Department of Infrastructure on how to design the scheme for the distribution of revenues generated by the proposed scheme. Unsurprisingly, submissions on that are also due by 18 May 2026.

Some technical details

The legislative package consists of 3 bills:

Paragraphs 1.6 to 1.8 of the (draft) EM summarise what is intended:

1.6 The Administration Bill establishes the framework for the NMI,[3] which includes the following key elements:

· An entity is liable for the NMI in a financial year if the entity or a member of its group provides a “significant social media or internet search service” in Australia and the group has “consolidated revenue attributable to Australia”[4] that exceeds $250 million for the financial year;

· The amount of NMI an entity is liable for in a financial year is calculated by applying the NMI rate to the entity’s “consolidated revenue attributable to Australia” from the third-most-recent financial year before the financial year of the NMI;

· An entity can offset their NMI liability in a financial year by entering into commercial agreements with Australian news media businesses to produce news content or to use their news content.

1.7 The Charge Bill imposes the NMI at a rate of 2.25 per cent on the entity’s “consolidated revenue attributable to Australia” determined under the Administration Bill.

1.8 The Consequential Amendments Bill makes necessary changes to the ADJR Act 1977, ITAA 1997 and the TAA 1953 to support the introduction of the NMI.

The key provision is clause 13 of the Administration Bill which will impose a liability to pay a charge on a “parent entity” for each financial year[5] where:

  1. One or more members of the parent entity’s “service group” provide one or more “significant social media or search services” at any time in the financial year; and
  2. The consolidated revenue attributable to Australia of the service group for the financial year exceeds $250 million.

Clause 14 sets out the amount of the charge: the group’s consolidated revenue attributable to Australia multiplied by the rate set out in the Charge Bill – 2.25%.

The liability will apply from the first 12-month financial reporting period of the parent entity which starts on or after 1 January 2025.

Then, clause 16 would entitle the parent entity to offset any “charge offset” applicable for the financial year against the charge payable for that financial year under clause 13.

Clauses 18 to 20 deal with calculating the “charge offset” – i.e., the amounts paid by members of the service group to third party news businesses for the production or making available of “covered news content”, whether under a negotiated agreement or arbitrated under Part IVBA of the Competition and Consumer Act 2010.

Clauses 22 to 24 set out an anti-avoidance scheme where entities enter into schemes the sole or dominant purpose of which is to gain a charge benefit – paying a lower charge than they would have if they hadn’t entered into the scheme. By clause 22(2) these provisions apply whether the scheme, or any part of it, was entered into or carried out inside or outside Australia. The Commissioner [of Taxation] also gets power to make declarations setting out the amount of charge that an avoider should have paid, or should pay in the future.

Some definitions

There are a raft of definitions (often convoluted) in clause 6 and various cross-referenced clauses. “Social media service” and “search service” get their own clauses, respectively, cll 7 to 9.

To that end: a social media service would be defined by cl 8 as an electronic service (1) the sole or significant purpose of which is to enable online social interaction between 2 or more end-users and [presumably][^f4] (2) the service allows end-users to link to, or interact with, some or all of the other end-users and presumably the service allows end-users to post material on the service.

There are 8 types of electronic service which are excluded from this definition, however. They include email, messaging, voice and video calling, gaming, information sharing about products or services, professional networking ….

A search service would be defined by clause 9 to be an electronic service that:

(a) is an internet search engine service; and

(b) enables searches of the internet “broadly” and not just of a limited database or to compare prices of goods or services; and

(c) does not solely or primarily use large language models (ChatGPT, Gemini, Claude etc.)

Paragraph 1.24 of the EM gives examples of things which are not caught by this definition (apart from ChatGPT, Gemini and Claude (which are not mentioned by name) such as a job search website, a search service on a website limited just to searching that website and an accommodation website search engine that allows searching “only” for the price of accommodation. Does anyone use AirBNB, Booking.com, Expedia et al. just to find the price?

And clause 7 would define a significant social media or search service to be one of those services which:

(a) is not prescribed by the rules; and

(b) in the case of social media services has more than 5 million average monthly active Australian users; or

(c) in the case of search services, has more than 10 million average active monthly Australian users.[6]

An active Australian user for a month means a person who accesses the service from within Australia at least once during the month.

The amount paid by way of the charge will not be deductible.[7]

Apparently, the revenue collected from the ~~taxes~~ charges will be distributed amongst registered news organisations according to the number of their journalists producing core news content for Australian audiences. A draft proposal for the design of this scheme has been outlined by the Department of Infrastructure in a consultation paper raising 15 questions about the suitability and operation of the proposed scheme.

According to press reports, the US government has denounced the scheme as ‘extortion’ but the Prime Minister has declared the government’s intention to proceed with the scheme.

News Bargaining Incentive – draft legislation

Consultation on Revenue Distribution

  1. Now Part IVBA of the Competition and Consumer Act 2010 (Cth).  ?
  2. If Media Watch is to be believed (lid dip: Prof. Ricketson) – ‘Big Tech tantrum’, 4 May 2026 – that’s a significant jump on the 0.6% of its revenue Meta paid when it did participate in the Code (and before it found “better” stories on Facebook).  ?
  3. The pedants amongst us will hope they tidy this up: the EM calls the NMI ‘the news media bargaining incentive charge’ while the Bills variously refer to it as a ‘news media bargaining charge’ or simply a ‘charge’.  ?
  4. Defined in cl. 10 broadly to mean gross revenue of the corporate group attributable to Australia as determined in accordance with accounting standards.  ?
  5. Financial year means the parent entity’s accounting financial year, not the Australian financial year.  ?
  6. It is proposed that the regulations may specify a higher amount than the 5 or 10 million.  ?
  7. Items 2 and 5, Schedule 1 to the Consequential Amendments Bill and sections 12–5 and 26–120 of the ITAA 1997.  ?

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Section 183 Corps Act applies to information not just confidential information

Leave a Comment / Confidential Information / / / , , , , ,

New Aim v Leung: supplier contacts, WeChat, and the reach of s 183

The Full Court has allowed New Aim’s appeal and confirmed that the identity and contact details of its 17 key Chinese suppliers were confidential information, that its former CCO breached his equitable and contractual obligations of confidence by disclosing them to a competitor, and — importantly — that s 183 of the Corporations Act 2001 (Cth) is not simply a statutory re-enactment of the equitable action for breach of confidence. Rather, it applies generally to information obtained in the relevant capacity – as a corporate officer or employee.

What happened

New Aim is a large Australian online retailer sourcing products from hundreds of suppliers in China. Mr Leung worked there for around ten years, ending up as Chief Commercial Officer. When he left in January 2021, Mr Leung declared a “moment” on WeChat, “I am determined to do better and work harder than before, and totally destroy what I built in the past 12 years”.

Mr Leung had not been given a corporate mobile phone by New Aim. As a result, he retained, on his personal phone in his WeChat contacts, the details of individuals associated with a number of New Aim’s suppliers. Between January and July 2021 he disclosed the details of contacts associated with 17 of those suppliers to Broers Group, a newly established online retail competitor set up by a Mr Chen and Mr Dai. The disclosures were typically made by sharing WeChat contacts. By July 2021, Mr Leung had become employed by Broers.

New Aim discovered through its Chief Operating Officer (COO) that Broers and another competitor, Sun Yee (of which Mr Chen was also a director), were selling products apparently identical to New Aim’s, using photographs sourced from New Aim’s own website. New Aim commenced proceedings in September 2021.

So far, this whole saga has had five rounds in court. A successful application for an interlocutory injunction; a first trial which was overturned on appeal[1] and a second trial on remitter, which was the decision under appeal.

By the time of the second trial, New Aim’s pleadings still alleged that the information about all of its suppliers was confidential. The primary judge dismissed all of New Aim’s claims essentially because New Aim had failed to establish that the identity and contact details of all its suppliers as at January 2021 was confidential information. But, although the pleadings had not been amended, it was clear [to the Full Court] that the case had narrowed in practice to the details of the 17 specific suppliers whom Mr Leung admitted he had disclosed to Broers.

The Full Court (Moshinsky, Thawley and Button JJ) allowed the appeal finding, first, that her Honour should also have addressed whether or not the information about the 17 suppliers was confidential information. Finding that particular information was confidential, as a result Mr Leung breached the equitable obligation of confidence, his contractual obligations and, s 183 of the Corporations Act.

Why the 17 suppliers’ details were confidential

The primary judge’s error was to analyse the confidentiality question only by reference to the broad pleaded class — all suppliers as at January 2021, including historical and underperforming ones — when the case had been opened, conducted, and closed by both parties on the basis that what mattered was the 17 specific suppliers whose details Mr Leung had actually disclosed.

Once attention was directed to those 17, the factors bearing on confidentiality looked quite different:

The suppliers were reliable and current. Unlike the broader class, which included historical suppliers and those dropped because of high fault rates or lack of profitability, the 17 suppliers were active, reliable suppliers of products suitable for the Australian market. Their contacts were disclosed to Broers precisely because Mr Leung regarded them as suppliers with which Broers should trade.

Finding them required substantial effort. It was common ground that identifying suppliers in China capable of supplying products suitable for the Australian market required effort and could take several months. New Aim led detailed evidence about its multi-step process for identifying, sampling, testing, and approving each supplier. The nine step process involved:

(a) Step 1 involved analysing industry and internal data for the purpose of proposing new products: Ho 1 at [26]. Sometimes new products would be suggested by an existing supplier:.

(b) Step 2 involved New Aim’s Buyer Team in China identifying a range of suppliers potentially suitable for the product line. This was achieved through searches on business-to-business websites, business-to-consumer websites and attendance at the Canton Trade Fair.

(c) Step 3 involved the Buyer Team developing a shortlist of suppliers through consideration of publicly available information and sometimes through direct contact with suppliers. Reports would be prepared to propose new suppliers.

(d) Step 4 involved contacting the shortlisted suppliers to ascertain further information including unit prices, minimum order requirements and timing limitations.

(e) Step 5 involved the Buyer Team preparing a Value Chain Analysis report, containing key financial data for each product and supplier, and a Product Proposal report, containing key information such as production time, pricing, payment terms, deposit amount and ability to comply with compliance certificates. Step 5 also involved a range of quality and safety assessments. New Aim ordered samples from a range of suppliers to compare quality and safety, usually assessed by its QC Team. The Compliance Team assessed the product to ensure that it met New Aim’s standards and any relevant legal or regulatory standards. New Aim might apply for relevant regulatory certificates where required. It might engage third parties to assist where testing was required.

(f) Step 6 involved approving the supplier and placing a first order. Approval was provided by Mr Leung when he was Head of the Buyer Team.

(g) Step 7 involved the Buying Team negotiating the terms of payment with the supplier.

(h) Step 8 involved New Aim’s QC Team or a third party QC company engaged by New Aim reviewing the products before they were shipped to Australia.

(i) Step 9 involved New Aim making the products available for sale to Australian consumers on a range of online platforms: at [46]. New Aim then monitored progress and sales. A part of this involved creating “fault reports”: at.

New Aim’s General Manager – Channel and Category, Ms Ho, confirmed that process applied to each of the 17 suppliers specifically and exhibited over 12,000 pages of business records to support her evidence.

New Aim took steps to protect the information. Two measures stood out. First, New Aim white-labelled its products and allocated its own SKUs (Stock Keeping Units), which meant that competitors, purchasers, and others inspecting New Aim’s products could not identify the underlying suppliers. The Full Court accepted this was a strong indicator that New Aim treated supplier identity as confidential — and that employees in the Buyer Team (which Leung headed) must have known it. Secondly, access to the New Aim Purchasing System, which contained supplier information, was password-controlled. Mr Leung himself had discussed the need to restrict access further and had told Mr Huang (the COO) that he was concerned about the risk of an employee using commercially sensitive supplier information to assist a competitor after leaving.

At [111], the Full Court acknowledged that New Aim could have protected its interests better such as by providing Mr Leung with a company issued phone or imposing restrictions on his use of his personal phone. That did not gainsay, however, that it had taken steps to preserve the confidentiality of the relevant information and Mr Leung was personally aware of its confidential nature.

The industry treated supplier information as confidential. Both parties’ experts agreed that businesses in the e-commerce space importing from China generally kept supplier information confidential and took steps such as white-labelling to protect it.

The information was not Mr Leung’s general know-how. Mr Leung argued the information was just part of his general know-how which a person in his position would inevitably acquire over time.

Accepting that general know-how fell outside the scope of protectable confidential information, the Full Court held that was not this case. The specific information about the particular 17 suppliers was not information that an ordinary person of average intellgience and honesty would regard as knowledge “not readily separable from his general knowledge”.[2] There was no evidence Leung had memorised the contacts. Rather, they were stored in his phone in his WeChat app and the details were supplemented by remarks identifying the products they supplied. The information was readily identifiable and separable from the general body of Mr Leung’s know-how. At [119], their Honours said:

…. What the evidence establishes is that, for the benefit of Broers, he used knowledge acquired through his employment at New Aim as to which contacts were likely to be suitable and useful, together with the WeChat information he retained about those contacts, to connect Broers with the relevant suppliers. In that way, he used New Aim-derived supplier information to shortcut the process that would otherwise have been required to identify and access suitable suppliers. That use was more than the application of general skill or experience. It involved the deployment, for a competitor’s benefit, of specific supplier information, and means of contact or access, retained through his employment.

The respondents conceded that if the first three elements of the breach of confidence action (identified information, quality of confidence, receipt in circumstances importing an obligation of confidence) were established, the disclosure was a misuse.

The contractual obligation

Mr Leung’s contract of employment also included a general duty of confidentiality. Its terms did not specifically single out supplier details.

As the parties had conducted the case on the basis that any relief would be the same as the relief for breach of the equitable duty, it was unnecessary to explore whether or not equity would generally intervene where there was both a contractual obligation and an equitable obligation.

Accordingly, the Full Court held this obligation was also breached for the reasons that Mr Leung had breached his equitable obligation of confidence.

Section 183: information, not just confidential information

The Full Court then allowed New Aim’s appeal against the trial judge’s finding that s 183 of the Corporations Act failed because her Honour found that s 183 applied only to confidential information and, as already noted, her Honour held that Mr Leung had not used any confidential information.

Importantly, however, the Full Court did not allow the appeal just because the information was confidential. Rather, it ruled that s 183 applied to “information” and was not limited just to protecting confidential information.

Section 183(1) of the Corporations Act provides that a person who obtains information because they are or were a director, officer or employee of a corporation must not improperly use that information to gain an advantage for themselves or someone else, or to cause detriment to the corporation.

The Full Court explained at [124] that s 183 required three matters to be addressed:

(i) precise identification of the information said to have been obtained by the relevant person;

(ii) examination of whether that information was obtained because the person is or was a director, officer or employee of the corporation; and

(iii) examination of whether the person improperly used the information either: (a) to gain an advantage for themselves or someone else; or (b) to cause detriment to the corporation.

The Full Court pointed out that:

  • Section 183 refers to “information” only;
  • There are other provisions in the Corporations Act which refer specifically to “confidential information” where that type of information is intended – see s 1317AE and s 829B; and
  • Section 183 was properly seen as statutory extension of the fiduciary duties of corporate officers and did not have its origins in confidential information. In that connection, the Full Court noted that the relevant fiduciary duties at common law ceased when the corporate officer’s position terminated. The statutory duty, however, continued after termination.

At [137] – [149], the Full Court carefully reviewed an earlier Full Court’s ruling in Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd [2009] FCAFC 2; 81 IPR 1, which has been taken as limiting s 183 to improper use of confidential information only. The Full Court considered that it had not been directly submitted to the Futuretronics Full Court that s 183 was limited to confidential information only. Rather, the Full Court considered at [149] that the Futuretronics Full Court should be understood as deciding that s 183 did not apply because the relevant information had not been improperly used.

Accordingly (at [148]:

Section 183 is expressly framed in terms of information obtained because of a particular corporate position. Improper use is assessed objectively according to the standards of conduct that would be expected of a person in the relevant position. What would be expected is determined from the viewpoint of a reasonable person. The question is: what would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case ….[3] (emphasis supplied)

In answering that question, the confidential nature of the information is relevant to the question of improper use, and the more confidential the information the easier it will generally be to establish impropriety, but it is not a threshold requirement for the provision to apply at all.

On the facts, the Full Court had no difficulty finding a contravention. Leung knew the supplier information was commercially valuable. He knew New Aim had taken steps to protect it. He had himself expressed concern about the risk of employees using such information after they left — and then proceeded to do exactly that. He disclosed the contacts of 17 suppliers to New Aim’s competitor in order to give that competitor a head-start, and to advance his own interests in relation to his new or prospective employment with Broers. That was an improper use of information obtained because of his position. As the Full Court put it, a reasonable person in Leung’s position — a departing CCO with ten years’ experience in New Aim’s supply chain — would have regarded doing what Leung did as a breach of the standards of commercial conduct expected of such a person.

The Full Court also noted that the impropriety was amplified by Leung’s suggestion to a Broers employee that Broers copy product images from New Aim’s website — something that, as the parties had already agreed, Broers and Sun Yee proceeded to do.

The claims against Broers and Sun Yee

New Aim brought derivative breach of confidence claims against Broers and Sun Yee. Those claims were dismissed at first instance as a consequence of the dismissal of the claim against Leung. The respondents sought to have them dismissed outright, contending that the inference that Mr Chen and Mr Dai knew — or were wilfully blind to the likelihood — that the information Mr Leung provided was confidential, was not available on the evidence.

The Full Court declined to dismiss the claims. The circumstances were sufficient to raise a rational inference of awareness or wilful blindness. Both Messrs Chen and Dai had known Leung for years and knew his history at New Aim. They were both aware of Leung’s WeChat “moment” declaring that he intended to “totally destroy what I built in the past 12 years”. Broers had followed Leung’s suggestion and copied New Aim’s product images. Whether the full inference should be drawn, in light of all the evidence, was a matter for determination on remitter. Accordingly, the Full Court remitted these claims for further hearing.

New Aim Pty Ltd v Leung [2026] FCAFC 49] (Moshinsky, Thawley and Button JJ, 20 April 2026)

  1. New Aim Pty Ltd v Leung [2023] FCAFC 67; 171 IPR 511. The principal error in the first trial was that the judge had focused on the location of the information rather than its nature and content.  ?
  2. Citing Printers and Finishers Ltd v Holloway [1965] 1 WLR 1 at 6; RPC 239 at 256 (Cross J); Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 at 246 (Megarry VC) and Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; 73 IPR 236 at [41].  ?
  3. Citing R v Byrnes [1995] HCA 1; 183 CLR 501 at [25].  ?

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ZIP TM High Court appeal

Leave a Comment / Trade marks / / / , , ,

The High Court has granted Zip Co Limited and Zipmoney Payments Pty Ltd leave to appeal the Full Federal Court’s decision in Firstmac Limited v Zip Co Limited [2025] FCAFC 30 (Perram, Kaatzmann and Bromwich JJ).

Here are the grounds in the Notice of Appeal:

Ground 1: The Full Court erred in finding that the Appellants had not established the honest concurrent use defence to trade mark infringement under ss 122(1)(f) or (fa) of Trade Marks Act 1995 (Cth).

Ground 2: The Full Court erred in finding that the date for assessing the honest concurrent use defence is the date of first infringement, rather than a later date such as the date the defence is raised.

Ground 3: The Full Court erred in dismissing the Appellants’ claim for cancellation of the Respondent’s trade mark 1021128 for ZIP (Firstmac Mark) under s 88(2)(c) of the Act.

I also understand that Fanatics LLC has applied for special leave to appeal from the Full Federal Court’s decision in Fanatics, LLC v FanFirm Pty Limited [2025] FCAFC 87 (Burley, Jackson and Downes JJ)

In that decision, Fanatics LLC had some limited success in overturning the trial judge’s ruling that that sale from Fanatics LLC’s website of non-Fanatics branded merchandise (such as NFL jerseys) infringed FanFirm’s registration of “Fanatics” for clothing. The finding that Fanatics LLC infringed by offering for sale from its website “Fanatics” branded garments, however, was upheld. Fanatics LLC also lost its appeal on the defences under ss 122(1)(a) and s 122(1)(f) / (fa) invoking s 44(3) as well as its attempt to have FanFirm’s trade mark cancelled.

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Patent Claims

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Having published his monograph on Copyright, David Brennan has now turned to patent law. Patent Claims – Interpretation, Validity and Infringement is the title of his new book coming in July from Federation Press.

According to the Forward from Hon. D M Yates SC (the recently retired Federal Court Judge):

… this work is more than a textbook. It is an exposition on patent claims in which the author’s masterful exploration of, and mature insights into, his subject becomes, equally, the reader’s journey to a greater and deeper understanding of patent law. For this reason, this new work will be of enduring benefit to students and practitioners alike. Indeed, it is a work that should not only be consulted in everyday practice but read from beginning to end.

Patent Claims Interpretation, Validity and Infringement ISBN 9781760025540.

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Is there a Lenah Game Meats constructive trust?

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The short answer is: not in this case in which Snaden J awarded The Game Meats Company $130,000 damages against Farm Transparency International for trespass but rejected Game Meats’ claim to a Lenah Game Meats constructive trust over the copyright in videos made by Farm Transparency during the trespass. The case also challenges whether the victim of the trespass can get an injunction against communicating the fruits of the trespass.

What happened

Game Meats operates abattoirs, including a halal abattoir at Eurobin.

Farm Transparency is a not-for-profit charity dedicated to educating the public about animal exploitation and the prevention of cruelty to animals.

As one of its directors, Mr Delforce, put it, Farm Transparency’s overarching wish is to “…end all forms of business that involve causing harm to animals”.

To that end, Ms McDonald-Eckersall, its Strategy and Campaigns Director, developed Farm Transparency’s “Shut Down Slaughterhouses” campaign.[1] As part of this campaign, between January and April 2024, Farm Transparency operatives (including Mr Delforce and Ms McDonald-Eckersall) broke into the Eurobin abattoir and installed video cameras to record the animal slaughtering process.

In May 2024, Farm Transparency provided some of the footage from those cameras to the Commonwealth Department of Agriculture as part of a complaint about the nature of Game Meats’ operations.

A few days later, Farm Transparency provided 14 minutes of the footage to Channel 7 which broadcast a story on its Albury station, but without the footage. Farm Transparency also posted the 14 minutes of footage with commentary on its Facebook page and on its website with a press release.

Game Meats obtained injunctions ex parte against the continued publication of these materials. Game Meats then sought injunctions and exemplary damages for trespass, injunctions and damages for contraventions of the prohibitions on misleading or deceptive conduct or the tort of injurious falsehood and, finally, it sought a declaration that a constructive trust arose over the copyright in the footage obtained through the trespass.

The decision

By the time of the trial, Farm Transparency admitted liability for trespass and Snaden J ordered damages totalling $130,000 ($30,000 damages and $100,000 in exemplary damages) for the trespass.

Snaden J, however, dismissed the claims for injurious falsehood, misleading or deceptive conduct and for beneficial ownership of the copyright in the footage as a cinematograph film.

The Lenah Game Meats constructive trust

Lenah Game Meats is authority for the principle that an interlocutory injunction cannot be granted except for the protection of some legal or equitable right or interest.

Similarly to the present case, Lenah Game Meats involved an attempt to stop the broadcasting of footage of the operations of the abattoir obtained through unlawful trespassing.[2] In the course of their reasons, Gummow and Hayne JJ said in obiter at [102] (with the individual agreement of Crennan and Callinan JJ):

A cinematograph film may have been made, as in Lincoln Hunt, in circumstances involving the invasion of the legal or equitable rights of the plaintiff or a breach of the obligations of the maker to the plaintiff. It may then be inequitable and against good conscience for the maker to assert ownership of the copyright against the plaintiff and to broadcast the film. The maker may be regarded as a constructive trustee of an item of personal (albeit intangible) property, namely the copyright conferred by s 98 of the Copyright Act. ….

Snaden J noted, therefore, that whether or not a constructive trust would arise depended very much on the particular facts of the particular case.

His Honour noted that, after Lenah Game Meats, Hall J had refused to find a constructive trust arose of footage and photographs taken by trespassers in Windridge Farm Pty Ltd v Grassi.

In Windridge Farm, Hall J found that the trespassers did not intend to use the footage for publication (but to facilitate an investigation) and there was no evidence of damage resulting from their conduct. At [129], Hall J said:

Apart from the unlawfulness of the entry onto the premises by the defendants, the evidence does not establish the type of circumstances to which Gummow and Hayne JJ in Lenah] adverted. These circumstances include matters which constitute either an invasion of the legal or equitable rights (such as the right to confidentiality) of the owner or occupier of premises or facts that establish a breach of any equitable obligation operating between (in this case) the plaintiff and the defendants at the time the film and the photographs were made or taken.

First, at [174] – [175] Snaden J rejected breach of confidence as a basis for intervention. While breach of confidence could be invoked to restrain the publication of confidential information “improperly or surreptitiously obtained”,[3] Game Meats had not submitted what was depicted in the footage was confidential nor could it realistically do so.[4]

Next, Snaden J considered there might be situations where how the footage had been obtained (his Honour’s emphasis) could give rise to a sufficient equity. At [177], his Honour explained:

But for the absence of authority, I would have been disposed to the view that it should. For the best part of two centuries, courts of equity have been prepared to grant relief against defendants possessed of information obtained by reason of “…a breach of trust, confidence or contract”: Prince Albert v Strange (1849) 1 Mac & G 25; 41 ER 1171, 1178 (Cottenham LC). The fact that information has been obtained through the commission of a crime or tort might not, by itself, suffice to warrant equivalent relief: Lenah, 230–1 [55] (Gleeson CJ); Smethurst v Commissioner of the Australian Federal Police (2020) 272 CLR 177 (“Smethurst”), 219–20 [94] (Kiefel CJ, Bell and Keane JJ). But there is, in my view, much to commend the submission that, subject to discretionary considerations, equity might intervene to grant relief in relation to information that is directly obtained:

(1) as the intended consequence of wrongful conduct; and

(2) for the purposes of using it to visit prejudice upon the victim against whom that conduct was carried out.

For a respondent to realise the benefit that was intended to materialise from conduct of that kind would, I think, aptly be described as unconscionable (or unconscientious: see Lenah, 244–5 [98] (Gummow and Hayne JJ)).

However, Snaden J held that this was not a case where a constructive trust arose.

First, at [179], Snaden J noted that obtaining the footage through trespass had not been sufficient in Windridge and Smethurst. While the absence in Windridge of a purpose to shame or damage the abattoir was a difference to the present case, it was not sufficient. At [180], his Honour concluded:

…. The court should, I think, be very slow to favour a result that deviates from what transpired in those cases in the absence of some clearly apparent distinguishing feature or features.

Secondly, Snaden J was influenced at [181] by the absence of precedent recognising the proposed constructive trust. It was not appropriate for a judge at first instance to indulge “in the kind of ‘bold step’ that trial judges should ordinarily leave for higher consideration”.

Injurious falsehood and misleading or deceptive conduct

The claims for injurious falsehood and misleading or deceptive conduct failed because Snaden J found that the publications did not falsely represent that Game Meats condoned animal cruelty or was systematically cruel to the animals it slaughtered at the abattoir.

The injurious falsehood claim failed for the further reason that Farm Transparency did not make the representations in the publications maliciously. Snaden J accepted that there was no element of personal spite against Game Meats. However, his Honour rejected Farm Transparency’s claim that it did not intend harm to Game Meats. On the contrary, Farm Transparency’s very objective was to shame Game Meats and reduce custom for its products by exposing its production practices.

Even so, this was not enough – the intention to injure had to be without just cause. And that was not the case. At [131], his Honour explained:

The making of each of the Three Publications was effected to further the political ends to which FTI is committed. Whatever might be said of those ends, they cannot be impugned as unjust or improper in any sense recognised by law. It is a feature of societies the world over—and liberal democratic societies in particular—that people with shared ideological, religious, commercial or other values will group together with a view to spreading them or having them lawfully imposed upon others. That reality does not bespeak relevant injustice or impropriety.

Game Meats’ claims would also have run into difficulties proving it had suffered damage. Partly because of the state of its evidence, partly because of the speed with which the trial was brought on including the swift court action to secure interlocutory injunctions and partly because Farm Transparency had undertaken that it would not restore the footage to public view until final determination of the proceeding.

What happened to the injunction

The claims of copyright and injurious falsehood having failed, Game Meats sought an injunction to restrain Farm Transparency from publishing the footage obtained through the trespass. Game Meats argued this was necessary to prevent Farm Transparency from realising the benefits of its trespassing.

The interlocutory injunction was dissolved and no further injunction was granted!

Citing Patrick Stevedores at [33], Snaden J accepted that an injunction might be granted where the damage caused by tortious conduct is ongoing and is “extreme or at all events very serious”.

His Honour noted that Gageler, Gordon and Edelman JJ in Smethhurst had considered the invasion of Ms Smethurst’s privacy provided a sufficient interest for an injunction requiring the police to return her phone and the data it held. The police had seized the phone by executing a search warrant which was subsequently found to be invalid and so committed trespass. However, their Honours were in the minority.

At [204] – [206], Snaden J observed that the majority in Smethhurst, Kiefel CJ, Bell, Keane and Nettle JJ, accepted an injunction could be awarded where the trespass was completed only if its effects were serious and ongoing. Kiefel CJ, Bell and Keane JJ in particular had ruled the trespass did not support an injunction and there was no other right to be vindicated:

The public interest in both the investigation and the prosecution of crime would not suggest as appropriate an order that the information be taken from the [Australian Federal Police (“AFP”)] and given to the plaintiffs. The prospect that criminal conduct may be disclosed is a sufficient reason to decline the relief sought.

In the present case, the acts of trespass – at least as against the Eurobin premises – were well and truly completed although Snaden J considered it was very likely Farm Transparency would engage in similar acts against other premises.

On that basis, his Honour held that further acts of publishing the footage could not be characterised as continuations of the original trespass. And further, his Honour considered Game Meats could not establish the consequences of such publication(s) would be sufficiently serious.

As to the first point, his Honour accepted Farm Transparency’s submission:

It is correct to observe that obtaining of the footage was made possible by the trespass. However, once trespassing, the respondent did not commit any further breach of the law by filming what was there to be observed nor invade any further rights of the applicant. The respondent was not an outlaw whilst trespassing. The law treats the acts of trespass, and filming (even if whilst a trespasser), as distinct and not interrelated. One cannot slide as between those two separate matters, despite them arising from the same factual matrix.

At [214], Snaden J accepted that submission and explained at [215]:

There is a distinction that must be drawn between the commission of the tort—that is to say, the unauthorised entrance by FTI’s agents onto the Eurobin Premises and the installation there of the covert recording equipment that was thereupon installed—and the publishing of information obtained as a result thereof. The latter involves no interference with any legal right that GMC possesses and is not, in and of itself, tortious. The injury that inheres to GMC’s prejudice as a result of the trespasses is, at most, FTI’s possession of the footage; not its publication. (original emphasis)

At [216], Snaden J illustrated his proposition with the analogy that an injunction could not be granted against Mr Delforce or Ms McDonald-Eckersall to stop them telling others what they had seen during their trespasses.

In addition, Snaden J considered Game Meats could not show its injury from further publication would be sufficiently serious. At [214], his Honour explained:

…. If FTI were to publish the footage that it obtained as the fruit of its unlawful trespass, the consequences for GMC are difficult to pinpoint. I would accept, at a level of generality, that they would unlikely be positive. But the extent to which they might sound in immeasurable or extreme damage to GMC’s goodwill would depend on all manner of circumstances, not the least being the manner in which GMC sought to counter any public backlash. I do not consider it possible to conclude that the damage to GMC’s goodwill would be so significant as to clear the hurdle that needs to be cleared.

So, apart from the damages award, Farm Transparency is free to use the fruits of its trespassing with, it appears, impunity.

As a final point, although it was unnecessary to his decision, Snaden J noted he would have rejected Farm Transparency’s argument that its continued use of the footage was protected by the implied constitutional freedom of expression about matters of politics or government.

It might be questioned how allowing a trespasser to continue using the fruits of their trespassing promotes the objectives of the civil prohition on committing a trespass. This appears to be recognised by his Honour’s reaction at [177] “in the absence of authority”. Even so, one might wonder, with respect, whether telling someone what one had seen is comparable in nature and impact to showing a video. One might also wonder whether acts of unrestricted publication are comparable to disclosure to authorities or use in an investigation.

There’s an appeal

Game Meats and Farm Transparency have both appealed (VID 92/2025).

The Game Meats Company of Australia v Farm Transparency International Ltd [2024] FCA 1455 (Snaden J)

  1. Ms McDonald-Eckersall had previously achieved fame, or notoriety, through the Animal Rebellion campaign which disrupted McDonald’s national supply chain in the UK “costing the company millions”.  ?
  2. Snaden J noted that the injunction rejected by the High Court in Lenah Game Meats was an injunction against the broadcaster. However, the interlocutory injunction against the trespassers themselves was left undisturbed (because they did not appeal).  ?
  3. Citing Gleeson CJ at [34] in Lenah Game Meats.  ?
  4. This conclusion seems to be reinforced by the High Court’s ruling in Lenah Game Meats and the subsequent decision Farm Transparency International Ltd v New South Wales [2022] HCA 23; 277 CLR 537 at [41]; a case involving an unsuccessful challenge to the constitutional validity of sections 11 and 12 of the Surveillance Devices Act 2007 (NSW).  ?

Is there a Lenah Game Meats constructive trust? Read More »

Zipped: Firstmac v Zip Co

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Firstmac has won its appeal and the Zip Co companies have been found to infringe Firstmac’s ZIP registered trade mark.

For obvious reasons, this is just going to be a fairly bald summary.

Infringement

First, the Full Court held that Zip Co’s formative ZIP marks such as ZIP PAY, ZIP MONEY and:

were deceptively similar to Firstmac’s ZIP trade mark.

The honest concurrent user defence

Secondly, the Full Court held that Zip Co companies were not honest concurrent users for the purposes of section 44(3)and so the defence based on sections 122(1)(f) and (fa) failed. On this point, the Full Court emphasised that the onus was on Zip Co to establish it was an honest concurrent user; not on Firstmac to prove it was not.

The reasons for the failure of the honest concurrent user defence also meant that Zip Co could not rely on the defence under section 122(1)(a) for use in good faith of its own name.

Cancellation because Firstmac’s mark had become deceptive

Thirdly, the Full Court accepted that as a result of Zip Co’s reputation, the use of ZIP by Firstmac would be deceptive or confusing for the purposes of section 88(2)(c). The Full Court, however, exercised the discretion under section 89 and refused to order cancellation.

This case is the reverse of the Katy Perry case.[1] Both Full Courts did reject reliance on the old law “blameworhy” conduct cases in applying section 88 and considered that “blameworthy” conduct was one, but not the only, consideration to be taken into account in the exercise of the discretion under section 89.

In the Katy Perry case, the (differently constituted) Full Court found that Ms Taylor knew of Ms Hudson’s reputation as Katy Perry and that artists such as Ms Hudson exploited their celebrity through the sale of branded merchandise such as t-shirts and the like. Consequently, in applying for her trade mark with that knowledge, Ms Taylor was precluded from relying on section 89. For example, the Full Court said at [317]:

We consider that Ms Taylor’s act of filing the trade mark application with knowledge of Ms Hudson, her reputation, and her mark in circumstances where she also knew that popular music stars, such as Ms Hudson, lend their names (and trade marks) to be used in connection with clothes and sell merchandise at their concerts, and accepted such conduct as a common practice, is sufficient not to enliven the discretion under s 89.

See also at [342] – [343].

In contrast, Firstmac was not infected with such knowledge when it registered its trade mark; the Zip buy now pay later business not even being in existence at that time. At [175], the Full Court explained:

… where, as here, the primary judge found that Firstmac was without fault, and we have found that the respondents did not prove that their use of the Firstmac Mark was honest, to exercise the discretion to remove the Firstmac Mark would reward “the assiduous efforts of a misappropriating user”. To pick up on what Brennan J said in Murray Goulburn at 389, it would place a premium on those efforts.

The Full Court also examined the other mandatory considerations prescribed under section 89(2).

Removal for non-use

Fourthly, the Full Court held that Firstmac had proved use of its trade mark through advertising and promotion of its re-launched product such as:

Accordingly, Firstmac had satisfied its burden under section 100(1)(c) to defeat Zip Co’s action for non-use.

Firstmac Limited v Zip Co Limited [2025] FCAFC 30 (Perram, Katzmann and Bromwich JJ)

  1. Killer Queen, LLC v Taylor [2024] FCAFC 149; 306 FCR 199 (Yates, Burley and Rofe JJ). ?

Zipped: Firstmac v Zip Co Read More »

Cantarella lost its appeal and the ORO trade mark

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The fallout from the High Court’s ruling that ORO is distinctive for coffee continues. In round 2 of the ORO trade mark saga (Lavazza edition), Cantarella has lost its appeal from Yates J’s ruling to expunge its ORO trade marks.

The tantalising issue of the relationship between s 58 (ownership) and honest concurrent use, however, has been left dangling.

A recap

Cantarella owns two registered trade marks for ORO in Australia in respect of coffee. TM 829098 and TM 1583290.

The earlier of the two, the 098 mark, was filed on 24 March 2000. However, Cantarella’s evidence was that it first began using ORO as a trade mark for its coffee products “at least” from 20 August 1996.

Having successfully sued Modena and fended off the ownership and distinctiveness challenges to its registrations, Cantarella sued Lavazza for infringement of these trade marks by selling in Australia LAVAZZA qualità ORO coffee in packaging such as:

Four images of packaging for coffee showing the trade marks "Caffè Molinari" and ORO

At trial, Yates J found this packaging involved use of ORO as a trade mark but did not infringe Cantarella’s trade marks because they were invalidly registered as Cantarella was not the owner:

The registration of a trade mark may be opposed on the ground that the applicant is not the owner of the trade mark.

Who used the trade mark first

The key fight in the appeal, as at trial, was whether Caffè Molinari’s products had used “ORO” as a trade mark in Australia before Cantarella’s first use on 20 August 1996.

In the Modena case,[1] evidence from Molinari’s senior executive only showed use after that date. In this case, however, Yates J accepted evidence from two different Molinari employees and two witnesses from CMS / Saeco that CMS / Saeco, a coffee business in Coburg Victoria, had in fact imported shipments of the Molinari product before Cantarella’s first use. So, in contrast to the Modena case, Cantarella was not the owner of the trade mark ORO in Australia[2] and its trade marks were invalidly registered.

For the most part, this conclusion turned on Yates J’s assessment of the creditworthiness of the witnesses which, despite some question marks, the Full Court considered it was not appropriate to disturb.

The Full Court rejected Cantarella’s argument that the finding about the date of Molinari’s first use in Modena was conclusive. It was a factor, but needed to be weighed in the balance with all the other relevant evidence.

Cantarella attacked the evidence from the Molinari witnesses who advanced data from Molinari’s records and set out in Excel spreadsheets. The issue here was that the invoices and shipping documents were no longer available for the sales before the priority date of Cantarella’s use. One of the Molinari witnesses also admitted that the spreadsheet might record “pro forma” invoices. Apparently, these were what we might call quotes, sent to customers and which only became sales if the customers accepted them. The Molinari witnesses were unable to say whether the relevant entries were sales or “pro forma” invoices.

The Full Court, however, pointed out that “pro forma” invoices of this kind would still count as use of the trade mark as offers to sell. (Also, there was the evidence of the CMS / Saeco witnesses that orders were placed and product in the packaging was received.)

Did Molinari use ORO as a trade mark in Australia

Next, Cantarella challenged Yates J’s ruling that ORO was used as a trade mark on the Molinari 3 kg packaging:

Close up views showing "Miscela di Caffè" in small type and ORO underneath but in much larger type.
Molinari’s Miscela Di Caffè ORO composite usage

Cantarella argued that this was use only of a composite mark “Miscela di Caffè ORO”.

As with the finding about when Molinari first used ORO in Australia, Cantarella was unsuccessful in challenging Yates J’s acceptance of the evidence that Molinari’s 3kg packaging in 1995 and 1996 took the form of the 2007 packaging.

On that basis, the Full Court dismissed Cantarella’s appeal on this ground, explaining at [93]:

We have had regard to the primary judge’s finding, applying Modena, that the word ORO is inherently distinctive and capable of acting as a badge of origin when used in relation to coffee. We have had regard to the prominence given to the word ORO both in the context of the packaging as a whole, and relative to the words MISCELA DI CAFFÈ in the much smaller font. We have also had regard to the appearance of what Cantarella calls the composite expression as it appears on both the front and back of the 3kg packaging, where the relevant words are differently arranged. In each case the word ORO appears much more prominently than the words MISCELA DI CAFFÈ. We consider the word ORO simpliciter acts as a badge of origin. We therefore agree with the primary judge’s finding on this topic.

Use as part of a composite mark

To succeed on the s 58 ground, Lavazza had to show not just that Molinari was the first user of ORO as a trade mark in Australia, but also that it had used it continuously and not abandoned it.

During the Modena litigation, howeve, Molinari had changed its packaging to use the expression “QUALITÀ ORO” – which Cantarella had not challenged. Thus, the evidence showed a progression of uses:

Caffè Molinari’s QUALITA ORO branding vs the Miscela di Caffè ORO branding

Cantarella contended these were use of the composite mark “QUALITÀ ORO” only, not ORO alone.

Lavazza did not try to argue that “QUALITÀ ORO” was substantially identical to ORO (and so might invoke s 7(1)).[3] Rather, it argued these later forms of packaging were use of ORO itself.

At [113], the Full Court explained:

The fact that the mark in question may appear as a component of a larger mark does not preclude a finding that it has been used as a trade mark. Whether or not there has been such use will depend on the circumstances and the overall impression conveyed.

Then, the Full Court accepted Molinari had used ORO itself as a trade mark in the later forms of packaging. Their Honours noted this depended on matters of impression about which minds might reasonably differ but “on balance” agreed with Yates J’s finding explaining at [114]:

In the case of both the 6077 and 6021A/6021E products, the word ORO is given prominence by the use of a larger font and, in the case of 6021A/6021E, ORO occupies a central position on the pack separated from the word QUALITÀ by the horizontal line immediately above the word ORO. We also note that the word ORO is given prominence across the relevant product range including on packaged coffee products 1525E, 6091 (as depicted in J [201], being the December 2003 1kg packaging) and 6071. The use across the range is consistent with the use of ORO as a sub-brand within the Molinari range of packaged coffee.

No exercise of the discretion against removal

The Full Court then rejected Cantarella’s appeal from Yates J’s refusal to exercise the discretion under s 88 not to remove the registrations.

At [141], the Full Court recorded the long established proposition that, once a ground for cancellation is established, the registration should be cancelled unless sufficient reason appears for leaving it on the Register. The trade mark owner having the onus to show sufficient reason.

As this was a discretionary judgment, this required Cantarella to show legal error. The Full Court considered Cantarella failed to demonstrate any error and so this ground failed.

The main reason advanced by Cantarella was its reputation arising from its long use. However, the Full Court at [148] agreed with Yates J that this was not a matter of significant weight.

Assuming Cantarella had a strong reputation, it still retained the ability to prevent misrepresentation through passing off and the prohibition on misleading or deceptive conduct. And so, there was no compelling necessity for the marks to remain on the Register.

The unresolved issue

Cantarella sought to argue for the first time on appeal that it should be considered a joint owner of ORO at common law as a result of its long use as an honest concurrent user.

That is, Cantarella sought to throw into question the relationship between s 58 and s 44(3).

In McCormick, Kenny J had ruled that the new “plain English” version of the Act which put “honest concurrent user” in Part 4 of the Act dealing with grounds of rejection and “ownership” in Part 5 dealing with grounds of opposition meant that s 58 was in effect in a separate sphere from honest concurrent user and independent and superior to that ground. So that, even if an applicant established it was an honest concurrent user, it still could not be validly registered in the face of a successful s 58 opposition.

The Full Court refused leave for Cantarella to argue this for the first time on appeal.[4] At [134], however, their Honours did say:

The preferable solution to this difficulty may be to read s 58 and s 44(3) together to form a harmonious legislative scheme in which s 58 is read subject to s 44(3): Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] – [71] per McHugh, Gummow, Kirby and Hayne JJ citing (inter alia) Ross v The Queen (1979) 141 CLR 432 at 440 per Gibbs J. That would involve recognising that s 58 does not apply in the circumstances where s 44(3) has been satisfied. But it is not necessary to resolve this issue in the present case because even if s 58 operates subject to s 44(3), the requirements of s 44(3) were not shown to have been met in this case. (emphasis supplied)

The problem for Cantarella was that it had not led any evidence explaining how it had come to adopt ORO and so of honest concurrent user would not be available.

I guess we shall have to wait and see whether a special leave application is forthcoming and, if it does, its fate.

Cantarella Bros Pty Ltd v Lavazza Australia Pty Ltd [2025] FCAFC 12 {Nicholas, Jackson and Rofe JJ)

  1. Modena was Molinari’s exclusive distributor in Australia. The High Court’s decision, of course, laid down the law in Australia to determine when a mark has no inherent capacity to distinguish and held ORO was inherently distinctive for coffee. Consequently, Modena’s defence to infringement failed.  ?
  2. The owner being the first person either to use the mark in Australia as a trade mark for the relevant goods or services or to apply to register it with the intention of using it as a trade mark here: Re Hicks’s Trade Mark (1897) 22 VLR 636 at 640; Food Channel Network Pty Ltd v Television Food Network GP (2010) 185 FCR 9 (Keane CJ, Stone and Jagot JJ) at [49] – [55], Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd (2017) 251 FCR 379 (Greenwood, Jagot and Beach JJ) at [18] – [19].  ?
  3. If the Registrar or a prescribed court, having regard to the circumstances of a particular case, thinks fit, the Registrar or the court may decide that a person has used a trade mark if it is established that the person has used the trade mark with additions or alterations that do not substantially affect the identity of the trade mark.  ?
  4. In fact, the issue was raised in obiter dicta by Yates J at [647] – [649].  ?

Cantarella lost its appeal and the ORO trade mark Read More »

Aldi’s ‘benchmarking’ strategy

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Moshinsky J has held that the packaging for three of Aldi’s Mamia Baby Puffs products infringed Hampden’s copyright in the packaging for Little Bellies Puffs products. However, the packaging in another eight of Aldi’s Mamia products did not infringe the copyright in the packaging for various Baby Bellies products. Moshinsky J also held that Aldi was liable for additional damages for the proven infringements in light of Aldi’s ‘benchmarking’ strategy.

There was also an issue about ownership.

Illustration of the infringing packaging

Illustration of the non-infringing packaging

Some of the background

As you no doubt know, Aldi stores largely carry private label brands (i.e., Aldi’s own in-house brands). One of its private label brands is the Mamia range of baby products.[1]

In 2018, Aldi had embarked on a redesign of the packaging for the products in this range, starting with nappies and wipes.

In 2019, Aldi had moved on to the packaging for its snacking range. As part of this exercise, Aldi identified Hampden’s Little Bellies as the market leader. This led to Aldi instructing its design contractor, Motor Design:

Snacking range architecture needs to follow Baby Bellies with real photography.

This led, in 2020, to Aldi commencing to sell a number of Mamia food products – two varieties of Rice Cakes, three varieties of Fruit Snack Cereal Bars and three varieties of Fruit & Oat Bars.

In July 2020, Aldi also decided to introduce baby puffs products into its Mamia range. As with the earlier snacking products, Aldi identified and used the Bellies puffs products as the reference or benchmark products. Aldi launched three puffs products in August 2021. (It appears the packaging design went through at least 6 versions.)

The Puffs packaging

As noted above, Moshinsky J found that Aldi’s packaging for the blueberry, apple and cinnamon and carrot puffs infringed the copyright in Hampden’s corresponding Baby Bellies products.

The packaging for the blueberry puffs products illustrates this:

At [180], Moshinsky J found Aldi’s packaging reproduced the following layout and design elements of the Baby Bellies packaging:

(a) a small, oval-shaped cartoon character, with a large, light-coloured belly;

(b) a solid white background;

(c) a two-column layout;

(d) a rounded, childlike font;

(e) on the left side, text elements of varying sizes, “stacked” vertically;

(f) on the right side, photographic images of the product and ingredients, in a vertical composition; and

(g) a number in the upper-right corner.

His Honour considered at [181] that the combination of these elements cumulatively involved a degree of creativity or originality and, considered together, were qualitatively significant.

In so finding, Moshinsky J rejected Aldi’s argument that Hampden was seeking to protect the idea or ‘look and feel’. His Honour accepted at [183] that the elements were not taken precisely by Aldi but, nonetheless, all were present in Aldi’s packaging:

Aldi’s characterisation of the applicants’ claim as residing in the ‘look and feel’ of the Applicants’ Works rested on a submission that none of the listed design elements was taken ‘precisely’ by Aldi. I do not accept that submission. Each element listed above is present in item 9 of the Impugned Works. It is true that the identification of those elements involves some degree of abstraction, but the elements are not identified at so high a level of abstraction as to venture into the protection of ideas rather than their expression.

And, at [184], his Honour pointed out that focusing on the differences was contrary to Designer Guild where Lord Hoffmann had stated:[2]

…. In the present case, [the question] is whether the features which the judge found to have been copied from Ixia formed a substantial part of Ixia as an artistic work. That is certainly a question of judgment or impression. But why, in answering that question, should it be relevant to consider whether Ixia did or did not look like Marguerite?

The non-Puffs packaging

In contrast to the findings in relation to the puffs packaging, Moshinksy J held that the packaging for the other products did not reproduce a substantial part of the copyright in Hampden’s Little Bellies products.

For example, the Mamia rice cakes products did not infringe the copyright in either the Baby Bellies blueberry puffs or the Little Bellies products

The Mamia rice cakes products reproduced the layout and design elements of:

(a) a solid white background;

(b) a rounded, childlike font;

(c) on the bottom left, a green oblong shape with writing in it;

(d) on the right side, photographic images of the product and ingredients, in a vertical composition; and

(e) a number in the upper-right corner.

Unlike the puffs packaging, however, at [198] Moshinsky J considered what had been taken was not a substantial part of the copyright. Even in combination, they did not produce something of sufficient creative significance.

At [197], his Honour had earlier drawn attention to significant differences in the Aldi design:

Unlike the Impugned Puffs Works, items 1 and 2 of the Impugned Works do not reproduce the design element of a small, oval-shaped cartoon character. The owl in items 1 and 2 of the Impugned Works is much larger, and does not resemble the cartoon character in item 1 of the Applicants’ Works. While it might be said that a large, light-coloured belly (with writing in it) has been reproduced, I do not consider that this can be considered separately from the character itself, which is not reproduced. Further, unlike the Impugned Puffs Works, items 1 and 2 of the Impugned Works do not reproduce a two-column layout. The ingredients near the bottom of the image stray into the middle of the work, and the MAMIA brand name is central, such that there is not a clear impression of two columns.

Turning to consideration of Hampden’s non-puff packaging:

Moshinsky J noted that the competing designs did both feature a large, oval-shaped cartoon character with a large, light coloured belly but Aldi’s design did not feature photographic images of the products in a vertical arrangment on the right side of the work.

At [203], Moshinsky J considered that the number of design elements that had been reproduced was too few to conclude that a substantial part of Hampden’s copyright had been reproduced:

…. Although the impugned work reproduces the design element constituted by a large, oval-shaped cartoon character, with a large, light-coloured belly (with writing in it), which may be considered to be a creative or original element, the other elements that have been reproduced are commonplace. While the question is to be approached qualitatively, the number of layout and design elements that have been reproduced can be relevant to the qualitative assessment. Here, the number of elements that have been reproduced is too few to conclude that the layout and design elements that have been reproduced, even if taken together, constitute a substantial part of item 2 of the Applicants’ Works.

Additional damages

As noted above, Moshinsky J found that it was appropriate to order additional damages against Aldi under s 115(4) in respect of the infringements. The infringements were flagrant and there was a need to deter similar infringements.

Aldi directed Modern Design to use the Hampden products as the benchmark products and both the Aldi personnel responsible for the range and the Modern Design personnel had referred closely to Hampden’s designs.

In her affidavit, Aldi’s witness had attempted to explain what Aldi meant by ‘benchmarking’:

… development of a Private Label product (or rebranding an existing Private Label product) also involves consideration of the packaging used by competitors. As part of this process a benchmark product is usually identified within the market. This is a product selected by Aldi or the Agency from amongst the range of on-trend products within an on-trend category which have been identified during the market investigation process I have described above. The purpose of the benchmark is to enable us to identify cues that customers may associate with the product type generally and then adapt them to develop the Aldi Private Label product. These cues can include:

(a) the packaging size;

(b) the use of colours known to relate to quality or characteristics – for example, purple is used for salt and vinegar flavours; and

(c) the presentation of aspects of packaging such as product name and key ingredients, and also the expected age range for consumers of the product.

(Moshinsky J’s emphasis).

Things did not improve in her cross-examination.

At [128], Moshinsky J found that he had difficulty accepting the witness’ evidence. Rather, his Honour inferred that ‘benchmarking’ meant:

a process of developing a packaging design that resembled the packaging of the benchmark product (albeit not too closely, because that would infringe the law).

It is also worth noting that Aldi’s legal advice had been that version 4 of the puffs packaging was too close to the Bellies packaging. The internal comment by Modern Design’s designer was “No shit”.

Aldi considered that a further design removing text from the owl’s tummy and amending that wording “should now move it far enough away from the benchmark”.

At [231], Moshinsky J found that Aldi had used the designs which had been developed by a trade rival for its own advantage. It took the risk that its use would exceed what the law allows. Consequently, Moshinsky J found Aldi’s conduct to be flagrant. In addition, Aldi continued selling the products in the infringing packaging after receipt of Hampden’s letter of demand.

An owership issue

Hampden, as its name might suggest, is an IP holding company. Its related company, Every Bite Counts (EBC), had arranged for B&B Studio to design the packaging for nine of the Bellies products in 2017 / 2018.

It also appears that B&B Studio prepared drafts or versions of four other packaging designs. These were sent to another company, Lacorium, where a Mr Mota amended or revised these to produce the final packaging designs for these four products.

Moshinsky J (at [144]) held that the terms of the B&B Studio assignment to Hampden that copyright “shall be assigned” on payment in full of the contract price were effective to assign copyright to EBC once the payment was made.

Aldi argued that “shall be assigned” was in effect an agreement that there would be a further document to effect the design on the basis of Acohs v Ucorp at [193]-[195]. However, Moshinsky J considered that the context in Acohs was very different and distinguishable.

In 2021, EBC purported to assign the copyright in the designs to Hampden with effect from 2018. At [145], MOshinsky J pointed out the assignment could not have retrospective effect but held it was effective to assign EBC’s rights to Hampden from the date of the deed. This also included the right to sue for past infringements.

Moshinsky J was prepared to treat the designs finalised by Mr Mota as works of joint authorship. Section 10(1) defines:

work of joint authorship means a work that has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors.

At [135], Moshinsky J stated that the collaboration required for joint authorship “does not require the authors to work directly with one another.” Accordingly:

alterations made by Person A to an earlier work created by Person B can, depending on the circumstances, result in a work of joint authorship of Person A and Person B together.

At [150], his Honour recorded that the works were based on the designs prepared by B&B Studio “and involved only limited input from Mr Mota”. Although his contribution was limited, it was sufficient to constitute him an author. Furthermore, the B&B Studio employees had provided feedback to Mr Mota on his drafts. As a result, Moshinsky J considered that the works were the product of collaboration between B&B Studio employees and Mr Mota and the works were works of joint authorship.

Although Lacorium had not assigned copyright to Hampden, as works of joint ownership both B&B Studio and Lacorium were the intial owners of the copyright and B&B Studio had assigned its rights to Hampden in a separate document. Accordingly, Moshinsky J held that Hampden had standing to sue for infringement as the owner of the interest in the copyright originally vesting in B&B Studio.

What happens next

Whether either side will appeal – or, rather, seek leave to appeal – is not clear yet as it appears final orders on the infringement findings have not yet been made.

Moshinsky J dismissed Aldi’s cross-claim in respect of unjustified threats on the basis of three letters as they were directed to the puffs packaging which he had found infringed. However, there is, or may be, an outstanding issue in relation to a fourth letter which is yet to be resolved.

Meanwhile, in the UK

The Court of Appeal has allowed Thatcher’s Cider’s appeal finding that Aldi’s benchmarking strategy took unfair advantage of Thatcher Ciders well-known trade mark.

Hampden Holdings I.P. Pty Ltd v Aldi Foods Pty Ltd [2024] FCA 1452

  1. You may have come across an earlier imbroglio in which Aldi’s Chazoos Cheezy Twists infringed the Twisties trade mark although, more recently, its Moroccanoil product packaging was exonerated.  ?
  2. Extracted by his Honour at [170].  ?

Aldi’s ‘benchmarking’ strategy Read More »

The undertaking as to damages: Cth v Sanofi

Leave a Comment / Enforcement, Patents / / / , , , , , , ,

The High Court (by 3:2) has dismissed the Commonwealth’s attempt to claim $325 million from Sanofi on the undertaking as to damages Sanofi gave when granted an interlocutory injunction against Apotex’ introduction of generic clopidogrel.

In the High Court, the main point was when it is appropriate for the High Court to overturn concurrent findings of fact by the primary (trial) judge and the intermediate court of appeal (here, the Full Federal Court). Apart from that (somewhat rarefied) issue, there are two more generally applicable points to consider.

Some background

Sanofi had a patent in Australia (amongst other places) for the drug clopidogrel which Sanofi marketed as Plavix and was used for the treatment of heart attacks and stroke.

Around the time Apotex obtained registration of its generic clopidogrel in the Australian Register of Therapeutic Goods (ARTG), it began Court proceedings against Sanofi seeking revocation of Sanofi’s patent. Sanofi cross-claimed for infringement and sought an interlocutory injunction.

On 25 September 2007, Gyles J granted Sanofi the interlocutory injunction restraining Apotex from infringing the patent pending trial on Sanofi giving “the usual undertaking as to damages”.[1] Earlier, in the course of the hearing on the interlocutory injunction application, Apotex in effect gave an undertaking not to apply to register its clopidogrel in the Pharmaceutical Benefits Scheme (PBS) if Sanofi was granted the interlocutory injunction against infringement.

After the trial on substantive issues, Gyles J found Sanofi’s patent valid and infringed. In August 2008, therefore, Gyles J granted a final injunction against Apotex infringing the patent.

On appeal, however, the Full Court found Sanofi’s patent invalid so it was revoked and the injunction was rescinded.

First, Apotex claimed damages on the undertaking on the basis that it had lost sales as a result of the interlocutory injunction. Sanofi and Apotex reached agreement compromising that claim without a Court determination.

Secondly, although it was not a party to the litigation, the Commonwealth also brought a claim under the undertaking. The basis of its claim was that Sanofi’s clopidogrel was listed in the PBS. Therefore, the Commonwealth paid pharmacists a subsidy for each prescription of clopidogrel.

When the first generic product was listed in the PBS, however, that would automatically trigger a 12.5% reduction in the subsidy payable for prescriptions of the drug.[2]

Because Apotex did not apply to list its generic clopidogrel in the PBS, those price reductions were not triggered. Accordingly, the Commonwealth claimed that it had suffered loss by reason of the granting of the interlocutory injunction amounting to (for present purposes) the 12.5% price reduction that did not occur multiplied by the volume of Sanofi’s sales between the date of the interlocutory injunction and the patent being declared invalid. Something like:

$ = (P – 0.875P[3]) x Q

where:

P = the price payable by the Commonwealth to phatmacies by subsidy through the PBS; and

Q = the volume or number of units sold by Sanofi between 1 April 2008 and 1 April 2010 when Apotex was finally granted a listing in the PBS. (1 April 2008 was the earliest date, but for the interlocutory injunction, Apotex could have been listed in the timings of these things.)

The Courts below

Both Nicholas J and the Full Federal Court dismissed the Commonwealth’s application.

The Commonwealth’s claim was dismissed because Nicholas J found that the Commonwealth did not prove Apotex would have sought PBS listing and commenced selling its generic clopidogrel if the interlocutory injunction had not been granted.

The Commonwealth failed on this point because as the claimant it had the onus of proving that it had actually suffered loss. However, it failed to discharge that onus because it did not call as a witness, Dr Sherman, who was the founder and CEO of the Apotex group of companies and, the evidence showed, it would have been his decision whether or not Apotex would launch “at risk” of being sued for infringement.[4] There was some evidence in February 2007 Dr Sherman had directed Apotex proceed with launching its product in Australia. There was some further evidence from June / July 2007, however, suggesting some doubt whether Apotex would in fact launch especially in light of litigation between the parties in the USA and Canada (which Apotex eventually lost).

The High Court

The decisive issue in the High Court was whether or not the circumstances warranted the High Court intervening to overturn concurrent findings of fact made by the primary judge and not disturbed by the Full Federal Court on appeal.

At [1], the plurality (Gordon A-CJ, Edelman and Steward JJ) summarised the principle:

The principled approach taken by this Court, reaffirmed in these reasons, is common to many ultimate appellate courts in the common law tradition. That principle is that, absent special or exceptional circumstances such as plain injustice or clear error, this Court will not engage in a detailed review of concurrent factual findings of lower courts.

Their Honours went on to find that the appeal did “not concern any individual rights, nor expose any plain injustice or clear error.” At [44] – [123], their Honours reviewed the findings and concluded at [124] that the facts found in the lower courts were “not only open and free from clear error but also are compelling.”

On the other hand, both Jagot J and Beech-Jones J considered there had been such an error.

Some observations of significance

Although the Court’s conclusions meant it was unnecessary to deal with Sanofi’s notice of contention, all Judges expressed views on some aspects “because it is important to do so”.

The Commonwealth was entitled to claim under the undertaking as to damages

The first significant point is that all judges considered the Commonwealth was a “person” which could legitimately claim the losses it claimed to have suffered on the undertaking as to damages even though it was not a party to the litigation.

Sanofi had argued that the losses claimed by the Commonwealth did not “directly flow” from the grant of the interlocutory injunction and so were outside the scope of the undertaking.

All judges were concerned that the test for who could claim on the undertaking not be rigidly confined to a formulaic approach. As the plurality explained at [169], the losses claimed by the Commonwealth (if they had been proved) fell plainly within the scope of the undertaking as to damages:

…. If, absent the interlocutory injunction, Apotex would have applied for listing of its clopidogrel products on the PBS (which the concurrent findings below were that it would not have) then it was common ground at the time of the hearing of the interlocutory injunction that it would have been inevitable that Apotex’s products would have been listed and that, consequently, there would have been a 12.5% price reduction for clopidogrel products listed on the PBS and subsidised by the Commonwealth. As Sanofi accepted in this Court, Sanofi, Apotex and Gyles J knew that a loss that the Commonwealth might suffer as a result of the interlocutory injunction would be loss arising from this price reduction. This was therefore the very loss to third parties “adversely affected” that was reasonably contemplated at the time the interlocutory injunction was granted and therefore within the scope of the undertaking. ….

How much could the Commonwealth have claimed for

The second point of has wider ramifications as applies to any interlocutory injunction and does not turn on the Commonwealth’s role in subsidising the price payable for medicines.

While the Commonwealth claimed $358 million, the plurality explained that if the Commonwealth had proved Apotex would have launched “at risk”, the Commonwealth’s losses would have been $11 million only.

This was because the undertaking as to damages applied only to losses flowing from the grant of the interlocutory injunction. In this case, however, the interlocutory injunction was extinguished by the grant of the final injunction in August 2008. So the Commonwealth could not claim damages after the final injunction was granted and the undertaking as to damages released.

David Shavin KC points out that in Sigma v Wyeth (No 3), the Full Court (Bennett, Nicholas and Yates JJ) explained that any release from the undertaking as to damages should be stayed pending the outcome of any appeal. In response to the primary Judge and a subsequent single Judge sitting in the appellate jurisdiction on an interlocutory basis, their Honours said at [10]:

The effect of the primary judge’s orders was to release the respondents from the undertakings as to damages even though the appellants made clear an appeal would be brought and there existed the possibility that the injunctive relief granted by the primary judge might be set aside on appeal. In such circumstances we think it would seldom, if ever, be appropriate to order that a party be released from an undertaking as to damages. The preferable course is for the undertaking to be left in place to operate in accordance with its terms.

Wyeth argued that the supersession of the interlocutory injunction by the final injunction and the release from the undertaking as to damages followed as a result of the primary judge’s findings that the patent was valid and infringe. At [13], Bennett, Yates and Nicholas JJ rejected this bluntly:

The respondents were unable to point to any authority in support of this submission. In our opinion it must be rejected. The respondents’ submission seeks to give the usual undertaking as to damages an operation that has the potential to cause substantial injustice in circumstances where an interlocutory injunction is obtained on the basis of a case which cannot be sustained on appeal. In the present case, the primary judge released the respondents from the undertakings as to damages on the basis that they had in each case established an entitlement to injunctive relief on a final basis. Once it was determined, as it was on appeal, that the respondents were not entitled to such relief then there can be no basis for not setting aside the primary judge’s order releasing the respondents from their undertaking as to damages.

Subsequently, Nicholas J refused to release an undertaking as to damages pending any appeal. In a different proceeding, Yates J specifically ordered that the undertaking as to damages remain in place “until further order”.

If you have the benefit of an undertaking as to damages and lose the trial but may be appealing at the very least therefore seek to preserve the undertaking as to damages until further order.

Commonwealth of Australia v Sanofi [2024] HCA 47

  1. GPN-UNDR: the applicant undertakes to the Court “to submit to such order (if any) as the Court may consider to be just for the payment of compensation, (to be assessed by the Court or as it may direct), to any person, (whether or not that person is a party), affected by the operation of the order or undertaking or any continuation (with or without variation) of the order or undertaking” and to pay the compensation so assessed.  ?
  2. Further reductions could and would be triggered when other events happened.  ?
  3. The 12.5% was just the initial reduction on the listing of the first generic product in the PBS. A cascading series of reductions came into play as other events occurred.  ?
  4. Dr Sherman and his wife appear to have died in suspicious circumstances but that was in December 2017 some months after the hearing on the Commonwealth’s claim and well after deadlines for filing evidence.  ?

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A Designs Law Treaty

Leave a Comment / Designs / /

On 22 November 2024, the Diplomatic Conference adopted the Riyadh Designs Law Treaty.

The text as adopted is available here.

Perhaps the most notable point (apart from this long drawn process finally reaching a conclusion) is that the Treaty does not include a provision about the term of protection.

Before the Conference convened, the draft text had two competing proposals. One requiring members to provide design protection for at least 15 years. The second option provided members with the ability to choose between TRIPS (10 years) and 15 years. In the result, no agreement could be reached and the Treaty does not include either. Instead, paragraph 1 of article 2 provides:

>[No Regulation of Substantive Industrial Design Law] Nothing in this Treaty or the Regulations is intended to be construed as prescribing anything that would limit the freedom of a Contracting Party to prescribe such requirements of the applicable substantive law relating to industrial designs as it desires.

On the concrete side, Article 3(2) provides:

>This Treaty shall apply to industrial designs that can be registered as industrial designs, or for which patents can be granted, under the applicable law.

More practically, the Treaty read with the regulations does prescribe a closed list of documents and requirements for filing an application. By Article 4, each Member may require that an application contain some or all of:

>(i) a request for registration;

>(ii) the name and address of the applicant;

(iii) where the applicant has a representative, the name and address of that representative;

(iv) where an address for service or an address for correspondence is required under Article 5(3), such address; DLT/DC/26 page 7

(v) a representation of the industrial design, as prescribed in the Regulations;

(vi) an indication of the product or products which incorporate the industrial design, or in relation to which the industrial design is to be used;

(vii) where the applicant wishes to take advantage of the priority of an earlier application, a declaration claiming the priority of that earlier application, together with indications and evidence in support of the declaration that may be required pursuant to Article 4 of the Paris Convention;

(viii) where the applicant wishes to take advantage of Article 11 of the Paris Convention, evidence that the product or products which incorporate the industrial design or in relation to which the industrial design is to be used have been shown at an official, or officially recognized, international exhibition;

(ix) any further indication or element prescribed in the Regulations.

Rule 2 in the Regulations also includes a list of 16 other matters which may be permitted and Rule 3 provides for the permissible forms of representation.

Article 4(2) also permits a requirement to disclose in the application:

>an indication of any prior application or registration, or of other information, including information on *traditional cultural expressions and traditional knowledge*, of which the applicant is aware, that is relevant to the eligibility for registration of the industrial design.

To secure a “filing date”, the requirements under Article 6 are that the application contain in a language admitted by the receiving Office:

>(i) an express or implicit indication to the effect that the elements are intended to be an application;
(ii) indications allowing the identity of the applicant to be established;
(iii) a sufficiently clear representation of the industrial design;
(iv) indications allowing the applicant or the applicant’s representative, if any, to be contacted.

A jurisdiction whose laws immediately before it accedes to the Treaty require the following may also continue these requirements:

>(i) an indication of the product or products which incorporate the industrial design, or in relation to which the industrial design is to be used;
(ii) a brief description of the reproduction or of the characteristic features of the industrial design;
(iii) a claim;
(iv) the payment of the required fees;
(v) indications concerning the identity of the creator of the industrial design.

Article 8 also permits members to require that the application be filed in the name of the creator of the design. But this requirement may be satisfied by filing an application which includes a name of the creator as appellant or an assignment signed by the creator.

Article 7 also provides for a grace period of 12 months before the filing date, or priority date if priority is claimed from an earlier date, for disclosures made by the creator or his/her successor in title or by person who obtained the disclosed information directly or indirectly from the creator or his/her successor. This is consistent with section 17 of the Designs Act 2003 since the amendments introduced by the ACIP Implementation Act back in 2021. An alternative proposal providing for a grace period only in the case of disclosure at international exhibitions and the like was rejected.

Article 10(1) and Rule 6 provide that a member may a design to remain unpublished for at least 6 months.

The Treaty enters into force once 15 countries have acceded to it.

A Designs Law Treaty Read More »

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