The Event owners have sought a commitment from the government to protect against the unauthorised commercial use of certain indicia and images associated with the respective events to help them secure and maintain event sponsorship.
If sponsors do not have certainty that they are the only businesses that can directly benefit from association with the Events, they may withdraw their sponsorship or decide not to support the Events. A decrease in sponsorship revenue could increase the need for financial assistance from the Australian Government and/or state and territory governments to stage the events.
Generally speaking, a person cannot use a major sporting event’s 5 protected indicia or images for commercial purposes during the 6 event’s protection period, unless the person is an official user for 7 the event (that is, either an event body or an authorised person for 8 the event).
The remedies provided include injunctions, damages, corrective advertising and a regime for Customs seizure.
Clause 14 explains that:
Doing any of the following is not alone sufficient to suggest the existence of a sponsorship arrangement, or the provision of other support, for the purposes of paragraph 12(1)(c):
(a) using protected indicia or images for the primary purpose of criticism or review;
(b) using protected indicia or images for the primary purpose of providing information, including through reporting news and 14 presenting current affairs.
Seafolly is in the news again: this time as the winner. In her last decision before retiring, Dodds-Streeton J has ordered that City Beach pay Seafolly $250,333.06 by way of damages for infringing copyright in 3 Seafolly designs: the English Rose artwork, the Covent Garden artwork and the Senorita artwork.
The English Rose artwork and the Covent Garden artwork were both patterns or ornamentation printed on the fabric. The Senorita artwork, however, was in effect stitched on to the garment using shirring and smocking. Dodds-Streeton J, however, rejected City Beach’s defence based on sections 74 and 77 of the Copyright Act. Apart from all the other issues, her Honour’s application of the Full Court’s decision in the Polo/Lauren case struck me as particularly important.
Seafolly’s Senorita artwork:
City Beach’s Richelle embroidery:
The subsistence point
As you can see, the Senorita design is pretty simple in appearance. City Beach’s argument was that this simple design was the more or less inevitable outcome of using the type of industrial sewing machine used to produce it. According to the evidence, however, it involved significant trial and error to produce because smocking fabric was very difficult to work with, smocking did not always involve using triangles or diagonals and City Beach’s expert conceded “there was a huge array of different ‘cams’ which could produce an almost indefinite variety of patterns.” Her Honour rejected City Beach’s attack, therefore:
416 …. the Senorita embroidery was not the inevitable outcome of the operation of an industrial sewing machine. Nor was the work so rudimentary and simple as to be unprotectable because, in essence, there was no meaningful distinction between the subject matter and the form of expression.
The use of the sewing machines, therefore, appears to involve use of the machine to implement the human idea more in the vein of Coogi or a wordprocessor to record the text than as an automatically generated entity like the phone books in PDC. The second point made by her Honour seems to pick up the High Court’s point that the ordering of title and time of television program in chronological order did not involve sufficient creativity (or intellectual effort) to qualify as original.
The copyright/design overlap
City Beach’s defence based on the copyright/design overlap provisions failed also, because the Senorita design when sewn on to the bikinis was not a corresponding design.
When the Designs (Consequential Amendments) Act 2003 introduced the current form of s 74 and s 77, it was hoped that the old problems about whether something constituted a “design” and whether it had been “applied to” an article had been sidestepped. All that was necessary, was to identify an artistic work which had been embodied in the features of shape or configuration of the product. Rares J, at first instance in the Polo case adopted that too simplistic (as we now know) approach to find that the 700 or so stitches used to embroider the Polo logo on to a shirt qualified. This was set right by the Full Court on appeal.
Dodds-Streeton J acknowledged that the Full Court’s observations were obiter. Her Honour also acknowledged that the Full Court’s reasoning “is not consistently explicit, but must be inferred”. Her Honour considered that the Full Court’s reasons:
470 …. in substance indicate that it is the features of shape or configuration of an artwork (not a label on which the artwork is reproduced) that must be relevantly embodied in a product, which will occur when the product (in the present case, a garment) is made in the shape or configuration of the artwork.
Thus, the diamond pattern was not a corresponding design because, when stitched on to Seafolly’s bikinis, it did not define the shape or configuration of the bikini as a garment.
In reaching this conclusion, Dodds-Streeton J had to interpret the Full Court’s declaration at  that a design must be conceptually distinct from the product in which it was embodied to qualify as ‘embodied’ for the purposes of s 74. That created a problem in the present case as Dodds-Streeton J considered the stitching, or smocking, could not have existed independently of the garment:
473 It is true that, in contrast to the logo in Polo/Lauren itself, the reproduction of the Senorita artwork sewn on to the relevant garment may not retain a separate existence, as probably, it could not survive removal and is not conceptually distinct from the garment. Accordingly, if the Full Court’s observations in  represent the correct and comprehensive test, the Senorita artwork could be embodied within the meaning of s 74(1). As stated above, however, the comment at  does not comprehensively reflect the reasoning of the Full Court’s judgment.
I am not sure, with respect, why the Senorita design was any the less capable of independent existence than the Polo logo. I think the design could not have an independent existence because it was created by attaching the stitching to the shirring framestrings and there was presumably no drawing.
Dodds-Streeton J identified a further problem. It seems difficult, with respect, to reconcile the Full Court’s interpretation of s 74 with the clear legislative intent to capture woven tapestries, bas relief and “textured” carpets within the concept of corresponding design by the inclusion in s 74(2) of:
“embodied in , ” in relation to a product, includes woven into, impressed on or worked into the product.
According to Dodds-Streeton J:
480 Following the insertion of the words “woven into”, “impressed on” or “worked into” in s 74(2), it seems clear that features of shape or configuration of an artwork can be embodied in an article which is itself a piece of embroidery, a carpet, bas?relief or similar, by being woven or worked in. This was the qualification to the maintenance of the tradition [sic] position to which the Full Court referred at . The amendment to s 74(2) did not, however, apply to the circumstances of Polo/Lauren itself as the relevant product was a garment rather than a carpet, bas?relief or embroidery (although the design was applied or attached by means of embroidery or “weaving in”).
481 In the light of the Full Court’s emphasis that the position was otherwise unchanged, it would seem that it rejected Rares J’s analysis not simply or principally because the logo remained conceptually distinct from the garment, but because the garment was not made in the shape or configuration of the artistic work, irrespective of whether it was three dimensional.
It’s not clear why garments should be treated any differently to tapestries, carpets etc. I suppose a carpet could for example be woven in the shape of a (stylised) polo player or teddy bear or some other novelty shape thought to be appealing to someone out there in the wide world, but a tapesty? One might have thought (if one didn’t have the Full Court’sobiter dicta hanging over one) the legislature intended to catch all such woven, stitched or otherwise ‘applied’ artistic works from its intention to ensure that carpets, tapestries and the like be “clearly” brought in.
This is not to say that the alternative, literal approach to interpreting s 74 is not without its challenges. Dodds-Streeton J went on in dicta to consider that the Full Court really also disagreed with Rares J’s view that the embroidered stitching was sufficiently three-dimensional to qualify as features of shape or configuration.In any event:
486 … the surface of the garment onto which the smocking is sewn is not flat because the fabric is shirred. Any protrusion of the smocking from the surface is minimal and probably significantly less than that in Polo/Lauren itself, which on a fair reading of its judgment, the Full Court nevertheless thought insufficient.
So, there may well be questions of degree in how much three dimensional appearance is required before something qualifies as shape or configuration. That is, however, a problem which long challenged designs law.
Putting to one side, of course, all the fun and games of what may be a work of artistic craftsmanship for the purposes of s 77(1)(a) or the difference between “shape or configuration” and “pattern or ornamentation”. ?
At its peak, Lipitor was prescribed to over one million Australians with annual sales exceeding AU$700 million.
Pfizer had a patent over the active ingredient, atorvastatin, but it expired in May 2012.
Early in 2012 (before the patent expired), the ACCC alleges that Pfizer offered to supply Lipitor to pharmacies at “significant discounts and the payment of rebates previously accrued” so long as they agreed to buy from Pfizer a minimum volume of up to 12 months’ generic atorvastatin after the patent expired.
The ACCC alleges this constituted a misuse of market power contrary to s 46 and exclusive dealing contrary to s 47 of the Competition and Consumer Act because:
(1) the offers were made before the patent expired and so at a time when other generic suppliers could not make offers; and
(2) “Pfizer engaged in this conduct for the purpose of deterring or preventing competitors in the market for atorvastatin from engaging in competitive conduct, as well as for the purpose of substantially lessening competition”.
If the ACCC is right, it wants penalties, declarations and costs. Under the Act, the pecuniary penalties could be up to the greater of $10 million, 3 times the benefit gained from the contravention or 10% of annual turnover.
More generally, as the ACCC’s chairman flagged:
This case also raises an important public interest issue regarding the conduct of a patent holder nearing the expiry of that patent and what constitutes permissible competitive conduct.
Now, patentees’ efforts, while their patent is in force, to tie customers into taking the product after the patent has expired, were so controversial that, just over one hundred years ago, Parliaments introduced legislation to permit licensees to terminate patent licences once the patent expired.
Beyond that, s 46 also prohibits any corporation from taking advantage of a substantial degree of power in a market for the purpose of:
(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;
(b) preventing the entry of a person into that or any other market; or
(c) deterring or preventing a person from engaging in competitive conduct in that or any other market.
So, to contravene s 46, the ACCC will have to establish two conditions:
(1) Pfizer had a substantial degree of power in a market; and
(2) it took advantage of that power for an anti-competitive purpose.
The first issue turns on what is the market: the market for Lipitor or some wider market such as a market for the treatment of high cholesterol? This question highlights the reference in the ACCC’s press release to the succes of Lipitor “at its peak”. I don’t know much about the market for treatment of high cholesterol but, by the time Pfizer did this allegedly dastardly deed, there were presumably some alternatives to prescribing Lipitor.
In an earlier proceeding involving copyright, the Full Court of the Federal Court held that a record company which had less than 20% of the market did not have a substantial degree of power in the market. So, unless the ACCC can tie the market narrowly to the market for Lipitor, it may well face considerable difficulties.
Those difficulties may mean that the s 47 allegation has greater significance as, in that earlier case, the Full Federal Court still found the record companies contravened s 47 even though they did not have market power. Although their conduct could not have the effect of substantially lessening competition (because they did not have sufficient market power), their purpose was anti-competitive.
Plainly, Pfizer was trying to sign up the pharmacies to this deal so that they would not buy at least the minimum amount from these generic suppliers who were apparently waiting in the wings, but is that anti-competitive? Maybe it depends on how large the minimum requirement is in relation to the pharmacy’s expected needs for the period. But, it was only for 12 months!
Normally, one would expect the pharmacies could readily calculate whether they were better off taking the deal or continuing to pay the “list” price for Lipitor and then taking advantage of spot prices in the market after the patent expired. If the alleged contravention, however, was that Pfizer refused to supply Lipitor at all while the patent was in force unless the pharmacies agreed to buy “generic” Lipitor after the patent’s expiry, that might have put the pharmacies in a very difficult position of being unable to fill prescriptions.
A further potential complication is that s 47 does not apply to conditions in a licence (or assignment) of a patent to the extent the conditions related to the patented invention or articles made by the use of the patented invention. No-one really knows what that means. Could a pharmacy that agrees to buy Lipitor from Pfizer be a licensee? Certainly, in keeping the drug for sale and selling it, the pharmacy would be exploiting the patent (while it was still in force), but has an implied licence to do those acts. Could agreement to buy “generic” Lipitor after the patent has expired relate to the invention?
At this stage, the parties have filed their respective pleadings, discovery is taking place to be followed by affidavits and a return to Court for further directions in September.
Federal Court Proceeding No. NSD 146/2014, filed on 13 February 2014. ?
As this case demonstrated, however, it has limited effect. ?
And it may often be the case that different drugs have different side effects or have particular advantages over other treatments so it is not quite the same as comparing, say, Pink Lady apples with Fuji apples or …. ?
Last October, Tracey J found that Shine Forever had infringed Bugatti’s registered trade mark (for BUGATTI) by selling clothing and accessories under the trade mark BUGATCHI and BUGATCHI UOMO. Now Tracey J has ordered that Shine Forever pay Bugatti $551,159.39 plus costs on an indemnity basis.
Apart from the magnitude of the amount, the decision illustrates the onus the court places on an infringer, once found to infringe, and the latitude afforded a trade mark owner confronted by a recalcitrant infringer.
To assist Bugatti in choosing between these two options, Shine Forever was ordered to provide an affidavit deposing to how many goods it had sold bearing the infringing trade mark, the price(s) they were sold for, the costs incurred in acquiring and selling the goods and the estimated profit it made.
Shine Forever was dilatory in complying with this order and there were serious doubts about the genuineness of its compliance. For example, it was claimed in Shine Forever’s “election” affidavit that the total sales were $198,407.39 worth of goods “through the BUGATCHI UOMO branded store” while total outgoings were $157,680 so that, after adjustments, there had in effect been no profit. However, in the course of the liability proceedings, Shine Forever had filed a profit and loss statement for the first 8 months of the infringing period showing total sales of $370,440.10. This profit and loss statement had been audited and certified by Shine Forever’s external accountants.
Shine Forever did not seek to explain the disparity between these two sets of figures. In fact, it failed to turn up to the hearing for the account at all.
Bugatti pointed out that the audited figures for only 8 months of the 24 month period of infringement far exceeded the amount admitted for the whole period in the “election” affidavit. The audited figures showed sales of $46,000 per month. If it were assumed that Shine Forever continued to make sales of $46,000 per month for the whole infringing period, total sales would have been $1,129,440.10. Bugatti then applied a series of assumptions and discounts, including using the costs estimated in the “election” affidavit (not the certified profit and loss statement) to arrive at the figure $551,159.39.
Tracey J recognised that Bugatti’s approach was far from ideal, but was prepared to adopt it as the best available course given the limited and imperfect information available – information which only Shine Forever could supply and which it had manifestly failed to do:
20 This process of calculation is far from ideal. It is beset by many difficulties. These include the need to make assumptions because business records which should have been produced by Shine Forever, pursuant to Court order, were not provided. Of particular concern is that …. This concern is alleviated, to some extent, by the applicant’s willingness to make a number of allowances in Shine Forever’s favour in other aspects of the calculations. ….
21 The evidence before the Court does not enable me to determine, with precision, the actual profit which Shine Forever derived from its infringement of the applicant’s marks. It is to be borne in mind that the difficulties to which I have adverted have, in large measure, been created by the failure of Shine Forever to comply with the Court’s orders and its failure to appear and make submissions on the amount to be awarded as an account of profits. The applicant should not be prejudiced by these failures.
22 The applicant has proposed a plausible method of calculating sales revenue during the relevant period by assuming that the average monthly sales figure in the first eight months of the period continued for the next 16 and a half months. In the absence of audited figures for the latter period this approach is not unreasonable and may be regarded as the best available option. Once the sales revenue figure was established, Shine Forever bore the burden of persuading the Court, by evidence, what costs should properly be deducted in order to determine the profit which it made from selling clothing and accessories bearing the infringing marks. This, Shine Forever has manifestly failed to do. ….
His Honour then awarded Bugatti its costs on an indemnity basis because of Shine Forever’s dismal failure to comply with its obligations to the Court.
The two are alternatives: damages compensate the trade mark owner for the loss it has suffered as a result of the infringement; an account of profits strips the infringer of the profits it has made by reason of the infringement. ?
Yesterday, the US Supreme Court heard oral argument on the question of the patentability of Alice Corporation’s software system for a method of payment, in denying the validity of which 10 judges of the Federal Circuit famously came up with 7 different opinions.
Several patents and claims are in issue, all relating to a computerized trading platform used for conducting financial transactions in which a third party settles obligations between a first and a second party so as to eliminate “counterparty” or “settlement” risk.
The question presented:
Whether claims to computer-implemented inventions-including claims to systems and machines, processes, and items of manufacture-are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?
As petitioner, the patentee (Alice Corp) will argue first. Respondent’s time will be split between CLS Bank and the US Government who has filed an amicus brief highlighting a misguided argument that “the abstract idea exception is patent law’s sole mechanism for excluding claims directed to manipulation of non-technological concepts and relationships.”