2016

Productivity Commission’s Final Report

Updated to fix some broken links

The Productivity Commissions’s final report into “Intellectual Property Arrangements” has been published.

An overview and  recommendations is here.

The full report is here.

The key points sign off with a stirring call to action – or harbinger of what’s to come:

Steely resolve will be needed to pursue better balanced IP arrangements.

The Government has announced it is undertaking further consultations with us about the Commission’s recommendations and wants to hear your views by 14 February 2017. I wonder how many bunches of roses they will receive?

 

Productivity Commission’s Final Report Read More »

Third party website blocking – down under

Third party website blocking – down under Read More »

Intellectual Property Laws Amendment Bill 2017 – exposure draft

IP Australia has published an exposure draft of an Intellectual Property Laws Amendment Bill 2017 and the proposed accompanying regulations, explanatory memorandum and statement. So that everyone at IP Australia has something to do when they come back from their summer hols, you have to get your comments in by 22 January 2017.

A large part of the changes seem to be about aligning the administrative processes under the different statutory regimes According to the EM:

The patents, trade marks, designs and plant breeder’s rights (PBR) systems have a number of different administrative processes and rules specific to each IP right. A number of these differences are unnecessary or too onerous. Some processes take too long to resolve. This needlessly increases complexity, uncertainty and cost for users of the IP system.

This Bill will align and streamline the processes for obtaining, maintaining and challenging IP rights. Using similar processes for the different IP rights will make the IP system simpler and assist businesses dealing with more than one right. A simpler IP system will decrease administration costs for the Australian Government and reduce the regulatory burden for businesses that use it. The Bill will also enable greater use of electronic systems to manage and monitor IP rights.

A laudable objective! But, there are some 23 Parts and 596 items in the exposure draft bill alone. However, lots of them are plainly necessary changes such as replacing “reject” with “refuse” in the PBR Act, but there are others which will have more impact.

Overall, the broad topics addressed are:

  • Part 1 relating to renewals and terminology
  • Part 2 relating to re-examination and re-consideration
  • Part 3 relating to extensions of time
  • Part 4 relating to written requirements
  • Part 5 relating to the filing requirements
  • Part 6 relating to Official Journals
  • Part 7 relating to amendments of applications or other documents
  • Part 8 relating to signature requirements
  • Part 9 relating to computerised decision-making
  • Part 10 relating to addresses and service of documents
  • Part 11 relating to examination of patent requests and specifications
  • Part 12 relating to requirements for patent documents
  • Part 13 relating to acceptance of trade mark applications
  • Part 14 relating to registration of designs
  • Part 15 relating to unjustified threats of infringement
  • Part 16 relating to ownership of Plant Breeder’s Rights and entries in the Register
  • Part 17 relating to trade mark oppositions
  • Part 18 relating to seizure notices
  • Part 19 relating to publishing personal information of registered patent or trade marks attorneys
  • Part 20 relating to (criminal) prosecutions
  • Part 21 relating to the Secretary’s role in the Plant Breeder’s Rights Act
  • Part 22 relating to updating references to Designs Act
  • Part 23 abolishing the Plant Breeder’s Rights Advisory Committee.

I have no hope of trying to cover all that. Some of the things that caught my eye:

Part 15 introduces substantive changes to “unjustified threats”. The provisions in the Trade Marks Act will be amended to remove the defence of bringing infringement proceedings with due diligence. This will bring the trade marks regime in line with that for patents, designs and copyright. A corresponding regime is to be introduced for PBR.

Part 15 will also introduce a right for a victim of an unjustified threat to seek additional damages. What will be a flagrantly unjustified threat should be fun to explore.[1] Curiously, this remedy is not proposed for copyright.[2]

Part 13 proposes to reduce the period for acceptance of a trade mark, but expand the grounds for deferment. Items 421, 423 and 425 of the exposure draft regulations propose to reduce the period under reg. 4.12 from 15 months to 9 months after an adverse first report. However, item 427 inserts a new ground for deferring acceptance on the basis that:

(1A) The Registrar may, at the request of the applicant in writing, defer acceptance of an application for registration of a trade mark if:

(a) the request is made within the period applicable under regulation 4.12 or that period as extended under section 224, 224B or 224C of the Act; and

(b) the Registrar reasonably believes that there are grounds for refusing the application under section 41 or 177 of the Act; and

(c) the applicant is seeking to gather documents or evidence as to why the applicant considers there are no grounds for so refusing the application.

For renewal and re-examination (Part 2), apparently, it is possible to request examination of a registered design even after it has already been examined and certified. A formal re-examination process will be introduced. A re-examination regime is also proposed for PBR. The regimes for re-examination of patents and trade marks will also be clarified.

For re-examination (Part 3)

The EM says there are three broad issues with the current regimes:

> There are three broad issues with the extension of time system. The first issue is the differences in the number and types of extensions available between the IP rights. This increases complexity and confusion as to which extension is applicable and what evidence is required for supporting the request in a given situation. The second issue is the administrative burden placed on customers and IP Australia. Short extensions rarely have a significant impact on third parties, yet require the same declarations from applicants and assessment by IP Australia as long extensions. The third issue is that the protection for third parties that used an invention or trade mark while the IP application or right was lapsed or ceased can be inadequate or burdensome to obtain.  

The EM then says the main changes are:

  • repeal the ‘despite due care’ extension for patents;
  • remove the Commissioner’s and Registrar’s discretion for all general extensions, for all rights. This will
  • simplify the process and ensure compliance with the Patent Law Treaty and Patent Cooperation Treaty;
  • require all requests for extensions to be filed within two months of the removal of the cause of the failure to comply, to ensure there are no unreasonable delays;
  • improve the compensation for third parties that use inventions when a patent lapsed or ceased to reduce the burden on third parties;
  • expand the protection against infringement for third parties that use a trade mark while it was ceased to include while a trade mark application was lapsed;
  • introduce a streamlined process for short extensions, but ensure IP Australia can review and remake a decision on an extension of time;
  • prevent applicants from obtaining consecutive ‘short’ extensions for the same action;
  • provide general extensions and corresponding third party protection for PBRs.

Part 6 plans repeal of the requirements to publish information in the Official Journals, replacing them instead with an obligation to publish some information on the website or other electronic means.

Part 7 plans changes to the processes for amendments of information entered on the Registers and in documents. Perhaps alarmingly, these include plans to allow rights owners to make some changes to the Registers themselves!

Part 9 proposes introducing the potential for computerised decision making. An example of what is intended is the situation where an application has been accepted and the opposition period has expired without an opposition being filed. In such a situation “the computer” will “decide” to grant the right (presumably after,checking the fee has been paid). This seems intriguing, but you will have to go to a proposed legislative instrument to find out what decisions can be (have been) automated.

No doubt there will be something else to meet your curiosity lurking in the details!

You can find links to the exposure draft documents here. Remember though, get your submissions by 22 January 2017.


  1. Of course, in line with the existing provisions for additional damages for infringements, it may be possible to “score” even if the threat itself is not flagrant.  ?
  2. It can’t be because copyright falls under a different department because the exposure draft amends the Copyright Act to allow for electronic notifications (“notice” is also deprecated in this new simplified regime) relating to customs seizures – see Part 18.  ?

Intellectual Property Laws Amendment Bill 2017 – exposure draft Read More »

Henley Arch v Lucky Homes – part 2

You will recall that Beach J ordered Lucky Homes and the Mistrys to pay Henley Arch $34,400 by way of compensatory damages and Lucky Homes to pay $25,000 and Mr Mistry $10,000 by way of additional damages for infringing Henley’s copyright in its Amalfi plan. An earlier post looked at the Mistry’s claim to apportion liability (refused) and their cross-claim against Lucky Homes for misleading or deceptive conduct. This post adds some comments on the damages awards.

Some background

You will recall that the Mistrys had their first house built for them by Henley according to one of Henley’s designs. When they came to build their next, “dream” home, they began negotiating with Henley to use its Amalfi design. Just before they signed up with Henley, however, they met with Lucky Homes. Within a very short space of time, the Mistrys signed up with Lucky Homes to have it build for them what was in effect an Amalfi home with “some” changes.[1] The changes did not avoid copyright infringement.

Innocent infringers

The Mistrys claimed they were ‘innocent infringers’ and invoked the protection of s 115(3) which provides:

Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

This “defence” has both a subjective element and an objective element. The Mistrys had to prove that they were not actually aware what they did was an infringement and they had no reasonable grounds for suspecting it was.

These are not easy tests to satisfy and it is very rare for them to be invoked successfully.

The Mistrys failed to satisfy the objective requirement. The pre-contract documents they signed with Henley included clauses stating that the information they were provided with was confidential and the exclusive property of Henley. Further, the pro forma plans and the plans prepared specifically for their land each included a copyright notice: “© Henley Arch P/L”. Beach J considered at [193] these clauses and notices would have put reasonable persons in the position of the Mistrys on notice that Henley claimed copyright and its permission was required to use them. That is, the Mistrys could not show they had no reasonable grounds for suspecting they would infringe copyright.

His Honour went further. At [194], Beach J considered that a reasonable person in the Mistrys’ shoes, about to spend $250,000 on a new build would not have acted on Lucky Homes’ assurances that it would change the plans sufficiently to avoid infringement “without checking with a lawyer” first. His Honour explained:

the assurances given by Mr Shafiq that only 15 to 20 changes were required ought not to have been relied on by persons who were proposing to spend nearly $250,000 based on that assurance, without checking it with a lawyer, particularly in the light of the specific acknowledgements set out in the various versions of the tender documents that they had notice of. The fact that the Mistrys did rely upon Mr Shafiq’s representations does not establish the objective limb of “no reasonable grounds”. Moreover, to say that they relied upon Mr Shafiq’s statements does not necessarily entail that they had no suspicions about whether they could use the Amalfi Avenue floorplan. In my view, whatever Mr Shafiq said, the Mistrys had reasonable grounds for suspecting that the use of that floorplan constituted an infringement. At the least, they have not discharged the onus of proving that they had no reasonable grounds for suspecting.

S 115(2) damages

Damages under s 115(2) are in the alternative to an account of (the infringer’s) profits. S 115(2) damages are compensatory; they are to put the copyright owner back in the position it would have been in if there had been no infringement (so far as a monetary award can do that).

Beach J considered that the “lost profits” method was the appropriate measure in this case. That is, the profit Henley lost on the Amalfi house it would have built if the Mistrys had gone ahead was the appropriate measure.

As the “lost profit” here was the loss of a chance or opportunity, Beach J noted that there were two steps to the inquiry. First, a determination whether there had in fact been a lost opportunity. Then, secondly, the value of that opportunity. His Honour explained at [213]:

where one is utilising the lost profits method based upon the loss of a chance or opportunity, there are two questions to consider. The first question is whether there has been such a lost opportunity. This is determined on the balance of probabilities. The second question is what is the value of that lost opportunity. That is to be decided on the possibilities or probabilities of the case (Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ and at 365 to 368 per Brennan J). But some estimation or even educated guesswork under either question may be required and is justifiable.

The Mistrys of course said they never would have contracted with Henley. They had become too frustrated with delays and the price for the house with the facade they really wanted was too high ($10,000 higher than the more basic option).

Beach J rejected this claim. His Honour pointed out that, until they met with Lucky Homes, the Mistrys had been anxiously pressing Henley to finalise the contract documentation, even demanding it move up the settlement date. His Honour also rejected the Mistrys’ complaints about the delays in process as “implausible”. Amongst other things, Henley couldn’t finalise the buidling contract until the certificate of title to the land had issued to the Mistrys and that had occurred only a week or two before the Mistrys were introduced to Lucky Homes. This was to be the Mistrys’ “dream home”. They were anxious to get its construction underway. If Lucky Homes hadn’t turned up, Beach J did not think it realistic that the Mistrys would have abandoned the process with Henley and start all over again.

However, Beach J also rejected Henley’s argument that it was practically certain the Mistrys would have bought the house from Henley. Instead, at [221], his Honour considered the profit Henley would have made needed to be discounted by 20% “to reflect some aspect of uncertainty as to whether the Mistrys would have proceeded with Henley Arch absent the infringing conduct.”

On the question of quantum, Beach J considered that EBIT (earnings before interest and tax) was the appropriate measure.

When it comes to calculating profits, there is usually a ding dong battle over how much should be excluded from the gross profits to allow for overheads. Beach J side-stepped that fight here. In a context where Henley was building about 1,000 homes a year, it was unlikely that there would have been any increase in its overheads building the home for the Mistrys, a single house.

Henley’s evidence was that the total profit after allowing for variable (direct) costs it would have made was $48,231.83 (ex GST). There were some evidential disputes about this, but his Honour considered it was reasonable. At [235], Beach J declared it should be reduced by 10% to allow for contingencies and to reflect the uncertainty in the estimates advanced, and rounded that calculation down to $43,000.

That had to be further discounted by 20% to reflect his Honour’s finding that there was only an 80% chance the Mistrys would indeed have bought the house from Henley. Thus the award of $34,400.

Additional damages

Unlike damages under s 115(2), damages under s 115(4) may include a punitive element – to punish the wrongdoer and to deter others.

Henley contended that $250,000 would reflect the culpability of Lucky Homes and $75,000 that of Mr Mistry. Beach J considered these amounts wholly disproportionate. Accepting the degree of culpability involved and, amongst other things, taking into account the (un)likelihood of repetition of the conduct and the parties’ respective abilities to pay, his Honour ordered that Lucky Homes pay $25,000 by way of additional damages and Mr Mistry $10,000.

You will remember that, on the Mistrys’ cross-claim, Beach J ordered that Lucky Homes only had to be accountable for 50% of the additional damages awarded against Mr Mistry. This was because Mr Mistry’s participation in Lucky Homes’ creation of a copy of Henley’s pro forma plan without Henley’s copyright notice and his unsatisfactory approach to giving evidence meant Mr Mistry should bear some proportion of the sanction himself.

Beach J did not consider Mrs Mistry’s involvement in the infringing conduct warranted any award of additional damages.

Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217


  1. The infringing conduct came to light because the Mistrys sued Henley in VCAT to recover their deposit!  ?

Henley Arch v Lucky Homes – part 2 Read More »

Broadcast does not include internet streaming

The (NSW) Court of Appeal has rejected WIN’s argument that its exclusive licence to broadcast Nine Network’s content extended to “live streaming” over the internet.

Those of you who have emulated Burke and Wills and wandered out of the CBD of your state’s capital city may have discovered that free-to-air television is (a little bit) different. There are regional broadcasters who arrange at least some local news and advertising, but also carry a lot of the programming of the “big” broadcasters.

WIN Corporation is one such regional broadcaster. For many years, it had a “programming supply agreement” through which it took much of the Nine Network’s programming. Thereby bringing the joys of A Current Affair and the Block to those lucky enough to live in a place where WIN was a broadcaster.

The relevant clause (clause 2.1) said:

“Nine grants WIN the exclusive licence to broadcast on and in the licence areas covered by the WIN Stations the program schedule broadcast by Nine on each of the channels known as ‘Nine’, ‘NineHD’, ‘9Go’, ‘9Gem’, ‘Extra’ and ‘9Life’ (the ‘Nine Channels’), to be picked up by WIN at Nine’s NPC.”

The Court and the parties all agred that “exclusive” in this context meant that Nine could not license anyone else to broadcast its content in WIN’s territory. Nor could it “broadcast” its content in WIN’S territory itself.[1]

WIN’s case was that this clause also meant Nine could not allow people in WIN’s territory to access the content through Nine’s website too. (You may already be perceiving some practical difficulties with WIN’s argument, if right.)

The evidence showed that the scope of the grant had been the subject of some negotiation, with Nine contending for a narrow definition and WIN arguing for a broader definition. The trial judge had found this evidence of pre-contactual negotiations did not assist the interpretation exercise. Apart from anything else, it was inconclusive and incomplete.[2]

Barrett AJA pointed out that a playwright could grant an exclusive licence to perform his or her play at a particular time or place, but that did not prevent the playwright from granting someone else a licence to show the play as a film or to perform the play some other place or time. This was important because it meant (you will be surprised to read) that the scope of exclusivity depended on the terms of the grant. His Honour explained at [34]:

The important point is that a person who has a collection of rights and grants an exclusive licence in respect of only some of those rights does not, through the exclusivity undertaking, promise the grantee not to exercise (or allow others to exercise) the remainder of the rights that is not the subject of the grant. The exclusivity undertaking restricts the grantor only as regards the rights granted. Preclusion of the grantor in relation to the whole or any part of the remainder of the grantor’s rights could come only from some contractual stipulation over and above that which is implied by the exclusive quality of the grant.

Applying this, his Honour considered that WIN’s licence to broadcast was limited to the kinds of broadcasting it was licensed to engage in under the Broadcasting Services Act and only within the territories it held a commercial broadcasting licence for. So this meant its exclusivity related only to free-to-air broadcasting in its territory. In the judgment under appeal, Hammerschlag J had explained at [82]:

Where clause 2.1 refers to broadcasting on and in the licence areas covered by the WIN Stations this is, and can only be, a reference to free-to-air. The licence areas are the geographical delimitations imposed on WIN by its licences under the BSA. These licences cover only free-to-air. Unsurprisingly, it is common cause that the WIN Stations have only ever broadcasted free-to-air and under such licences. They are traditional television stations. They do not deliver by internet. Internet delivery is not geographically based in the same way as is free-to-air.

Barrett AJA also rejected WIN’s argument that exclusivity over internet streaming followed from the implied term not to do anything that would deprive the other party of the benefit of the contract. WIN argued it was necessary for the exclusivity to extend to internet streaming as the promise of exclusivity meant it was to be free from competition.

Judging from the number of people watching TV on the train, tram and buses these days, you might think WIN had something of a point.

Barrett AJA, however, considered the benefit for which WIN had contracted was exclusivity from competition in free-to-air broadcasting. Nine was not under a duty to maximise WIN’s return under the contract, but to ensure that WIN had exclusive rights to broadcast Nine’s programming by free-to-air transmissions. His Honour said at [73]:

In the present case, the PSA, according to its correct construction, required Nine to desist from engaging in free-to-air transmission of Nine programs in the WIN licence areas and from enabling persons other than WIN to undertake free-to-air transmission of those programs in those areas. The “benefit” of the contract, from WIN’s perspective, was the right to transmit the Nine programs free-to-air in the WIN areas without free-to-air competition by Nine or anyone to whom Nine had given transmission rights. Extension of the negative stipulation binding on Nine so as to forbid live-streaming would entail a restriction on Nine and a corresponding “benefit” to WIN over and above those created by the contract and, in that way, enlarge rather than support and underwrite WIN’s contracted benefit. The value of the benefit of the contract to WIN was, as in the Queensland case, dependent on many contingencies, some of which were in Nine’s control. But Nine was not obliged to maximise WIN’s return from the contract.

At one level, the result is not too surprising. “We” have been generally aware at least from the Optus Now here and here controversies several years back that the major sporting organisations were generating very substantial revenues from internet streaming in addition to the broadcast (pay and/or free-to-air) rights. If you are drafting an exclusive licence relating to the right to communicate to the public, therefore, you will need to pay careful attention to what exactly is intended to be included: the whole right to communicate to the public, broadcasting (in some one or many of its multifarious forms), internet streaming etc.

WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297 (McColl JA, Sackville and Barrett AJJA)


  1. Barrett AJA conveniently collected the well-established propositions at footnote 15: “15. As a matter of general principle, an “exclusive” licence confers relevant rights upon the licensee to the exclusion of the whole world, including the licensor: Carr v Benson (1868) 3 Ch. App. 524 at 532; Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1; [1946] HCA 48 at 5 (Latham CJ) and 15 (McTiernan J applying Heap v Hartley (1889) 42 Ch. D. 461). A “sole” licence resembles an “exclusive” licence but does not operate to exclude the grantor: see, for example, Black & Decker Inc v GMCA Pty Ltd (No 2) [2008] FCA 504; (2008) 76 IPR 99 at [131] (Heerey J).”  ?
  2. WIN Corporation Pty Ltd -v- Nine Network Australia Pty Limited [2016] NSWSC 523 at [71] – [80].  ?

Broadcast does not include internet streaming Read More »

Selected links from the last week (or so)

Here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

Copyright

Designs

Not categorised

I hope you find something interesting. If you did or have a question, leave a comment or send me an email

Selected links from the last week (or so) Read More »

Apportionment of liability for IP infringement

Beach J has ordered that Lucky Homes (the builder) and Mr Mistry (the owner) pay Henley Arch $34,400 by way of compensatory damages and, respectively, $25,000 and $10,000 additional damages. There was no apportionment of liability under the Wrongs Act. Instead, Beach J also ordered that the builder pay to Mr Mistry however much he pays of the compensatory damages and half of the additional damages he pays.

Time and space mean that this post will look at the apportionment issue. Issues arising from the damages findings may get covered in a later post.

Some facts

In 2010/2011, the Mistrys had Henley Arch build them a home. In 2013, they started negotiating with Henley Arch for it to build another home, their dream home, based on another Henley plan, the Amalfi. They requested, and Henley arranged for, a number of modifications to the basic plan. Their preferred facade would have cost $10,000 more than the “basic” facade.

In October 2013, just before they were to sign the final contracts with Henley, they were introduced to Lucky Homes. Lucky Homes was prepared to build the home with their preferred facade and “some” changes for pretty much the same price as the “basic” facade that Henley would build. The Mistrys got Lucky Homes to build the house for them instead.

Apportionment

Perhaps the point of most general application to all IP statutes is Beach J’s ruling that the state law provisions allowing liability to be apportioned between wrongdoers under s 24AI of the Wrongs Act 1958 (Vic) had no application to copyright infringement.

As is often the case in these types of cases, the builder – Lucky Homes – says the owners – the Mistrys – told me they owned the copyright and, of course, the Mistrys claim Lucky Homes the builder said he would make sufficient changes that there would not be any copyright issue.

While not impressed with the witnesses for either camp, Beach J accepted the Mistrys’ version of events this time.

The Mistrys had provided Lucky Homes with a copy of Henley’s pro forma plan for the Amalfi rather than the customised version Henley had modified to meet their particular requirements. The pro forma plan had Henley’s copyright notice clearly marked on it. Mr Shafiq, for Lucky Homes, had annotated the pro forma plan with the various changes the Mistrys wished to make, such as converting a powder room to a prayer room. According to the Mistrys, Mr Shafiq told them he would make 15 or 20 changes so that the redesign would not infringe Henley’s copyright. Mr Shafiq had also tried to persuade the drafting service Lucky Homes used to lie about which drawings had been used as the starting point for the building plans.

Following the findings of infringement and how much damages would be, the first question was whether there was power to apportion liability.

The Copyright Act, like the other Commonwealth intellectual property statutes – the Patents Act 1990, the Trade Marks Act 1995, the Designs Act 2003, the Plant Breeders Rights Act 1994, does not include provisions to apportion liability.[1] So, the Mistrys invoked the Victorian Wrongs Act.

Section 24AF provides that an apportionable claim is:[2]

(a) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care; and

(b) a claim for damages for a contravention of section 18 of the Australian Consumer Law (Victoria).

Beach J said neither of these requirements were satisfied. In particular, at [266] a claim for copyright infringement is not a claim for failure to take reasonable care.[3] And at [267], the Mistry’s attempt to invoke s 87CD of the Competition and Consumer Act 2010 was “misconceived”. Moreover, his Honour at [267] considered that the Copyright Act provides a complete scheme for a copyright owner to recover damages from both the primary infringer and an authoriser. Therefore, it “overrode” the provisions of the (State enacted) Wrongs Act.[4] Accordingly, apportionment was not possible. However, the respondents could (and did) cross-claim against each other.[5]

The cross-claims

Lucky Homes cross-claimed against the Mistrys on the basis that the building contract included a warranty and indemnity that the Mistrys owned the copyright in the plans they provided.

That didn’t get up in view of the copyright notice on the pro forma plans and the Judge’s acceptance of the Mistrys’ case that Lucky Homes through Mr Shafiq had claimed it could change the plans sufficiently to avoid infringement.

Conversely, those findings meant that the Mistrys’ cross-claim for misleading or deceptive conductive succeeded. Therefore, Beach J ruled that Lucky Homes should pay the Mistrys all of the moneys they paid to Henley on the compensatory damages.

Beach J also ordered Lucky Homes to pay Mr Mistry half the additional damages he pays. Mr Mistry was entitled only to damages for loss (i.e., here the additional damages he was ordered to pay to Henley) to the extent the loss was causally connected to Lucky Homes’ misleading or deceptive conduct. His Honour considered that much of Mr Mistry’s conduct that warranted the award of additional damages against Mr Mistry was not causally connected to Lucky Homes’ misleading or deceptive conduct. So, on a “rough and ready assessment … given the modest amounts involved” his Honour arrived at 50%.

Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217


  1. Unlike s 236 of the Australian Consumer Law through s 87CD of the Competition and Consumer Act 2010.  ?
  2. Disregarding irrelevant exceptions.  ?
  3. Don’t rush off to add negligence claims to your pleadings now. Although not referred to by Beach J (as it wasn’t in issue), s 24AF(3) says that the fact that a claim is an apportionable claim under s 24AF(1) does not limit liability under any other law. That appears to mean that liability for infringement would stand even if the negligence claim could be apportioned.  ?
  4. Presumably on the basis of s 109.  ?
  5. A practical consequence of this is that the copyright owner can get its money from either or both sets of respondents. That is, vis a vis Henley, both Lucky Homes and the Mistrys are on the hook for all the compensatory damages awarded. If only one has the money to pay the award, Henley could be paid the full amount by that party and the “paying” party would be left to try to recover a proportion from the impecunious respondent.  ?

Apportionment of liability for IP infringement Read More »

Are you carrying on business in Australia by registering a trade mark here

If you need authority for the proposition that registering a trade mark, or enforcing the rights under the registration, does not necessarily mean you are carrying on business in Australia, Besanko J may help you out.

The ACCC sued Nexans SA and others alleging they were engaged in price fixing cartel.

Nexans SA is the global parent of the Nexans group. It had registered NEXANS in Australia as a trade mark. It had also licensed the trade mark to Nexans Australia, which was a member of the group, but not a direct subsidiary.

Besanko J rather sensibly stated at [282]:

…. I do not think the fact that the ultimate holding company of a large worldwide Group, insures all of the directors and officers of the companies comprising the Group means that the ultimate holding company is carrying on business within all the jurisdictions where companies in the Group are operating or is even a reasonably strong indication of that fact. The registration of trade marks in Australia by an overseas company could be an indication that the company is carrying on business in Australia, but, of course, it is only the beginning of the inquiry. The fact is that here there is a licence to Nexans Australia which (depending on the precise circumstances) may be considered to be an authorised user of the registered trade marks under s 8 of the Trade Marks Act. Nor do I think the fact that Nexans SA took action in this Court to protect its rights as owner of the registered trade marks indicates that it was carrying on business within Australia.

His Honour then explored other factors which in the end did lead to Nexans SA being held to carry on business in Australia. Ultimately, however, Besanko J did not consider it had engaged in the cartel behaviour, but another company, Prysmian, had.

Australian Competition and Consumer Commission v Prysmian Cavi E Sistemi S.R.L. (No 12) [2016] FCA 82

Are you carrying on business in Australia by registering a trade mark here Read More »

Logan J has ruled that documents prepared by a firm of trade mark attorneys in connection with a domain name arbitration are not covered by trade marks attorney privilege. The limits on the scope of “trade marks attorney privilege” is the main takeaway – in particular, Logan J considered that a draft statutory declaration prepared in connection with a UDRP complaint did not fall within the scope of the privilege. There is a warning about how a claim of privilege is made too.

Logan J has ruled that documents prepared by a firm of trade mark attorneys in connection with a domain name arbitration are not covered by trade marks attorney privilege. The limits on the scope of “trade marks attorney privilege” is the main takeaway – in particular, Logan J considered that a draft statutory declaration prepared in connection with a UDRP complaint did not fall within the scope of the privilege. There is a warning about how a claim of privilege is made too.

Titan is suing a Mr Cross and a Dr Harmon alleging that a website they, or one of them, operated – Beware of Titan Garages – infringed its trade mark rights and copyright.

Titan alleges that Mr Cross is a fictitious person.[1]

Titan had previously brought a complaint against Mr Cross under the UDRP unsuccessfully. Mr Cross was represented in that dispute by a firm of patent and trade mark attorneys (the attorneys) and not their associated law firm.

Titan issued a subpoena to the attorneys for production of documents which disclosed information about the identity of Mr Cross. The subpoena allowed redaction of information in the documents protected by client legal privilege (apart from name and contact details). The attorneys produced documents in answer to the privilege in redacted form. After inspection, Titan sought to access the documents in unredacted form. The attorneys objected, citing s 229.

Section 229 provides that a communication, or a record or document, made for the dominant purpose of a registered trade marks attorney providing “intellectual property advice” is privileged in the same way and to the same extent as if made by a lawyer.

The attorneys recognised that the privilege was Mr Cross’ privilege; not theirs. They had made efforts to obtain his instructions, but these were not forthcoming. Mr Cross did not appear at the hearing before Logan J either. As it was Mr Cross’ privilege to waive or not, the attorneys properly maintained the objection.

Why the claim of privilege was refused

In support of the claim, the trade mark attorneys provided an affidavit by the solicitors acting for them in connection with the subpoena. It stated that the deponent was informed the documents:

(1) were part of the trade mark attorney firm’s confidential files; and

(2) contained confidential communications with the attorneys for the purpose of them giving advice in connection with the UDRP complaint.

Logan J considered that the evidence did not rise above “mere assertion” and, in the circumstances of this case, was insufficient to discharge the onus on the person claiming the privilege to prove the privilege applied. His Honour had earlier explained at [9] that:

“the essential issue on a claim for privilege is the purpose for which the document or communication in question was made”: Hancock v Rinehart at [32]. It necessarily follows that the best, though not the only sufficient, source of evidence is the direct evidence of the person whose purpose is in question: Hancock v Rinehart at [32]. Procedural fairness questions in relation to other affected parties intrude in relation to any endeavour to prove the requisite purpose just by an inspection by the Court of the document which is the subject of the asserted privilege. That means that a court ought to be cautious about acting upon an invitation so to do, especially if that invitation is not attended by separate evidence describing the document and the circumstances of its creation….

Logan J did acknowledge that there might be other situations where the circumstances could lead to a different result. His Honour’s approach, however, highlights the risks that can be run by what might be thought to have been a fairly typical form of claim to privilege.

No doubt the attorneys were hampered in preparing the response by Mr Cross’ failure to provide instructions. One might also speculate whether his failure to provide instructions or to appear in circumstances where Titan alleged he was fictitious influenced his Honour’s approach. Titan did not take the point that the affidavit was “on information and belief”, but that is often problematic.[2] Logan J was not invited to inspect the documents and did not consider it appropriate to do so of his own motion. Presumably the point of claiming the privilege would be lost if his Honour had inspected the documents.

The scope of trade mark attorney privilege

Logan J noted that s 229 provides a privilege only in respect of communications and documents made for the dominant purpose of providing “intellectual property advice”.

Relevantly, that was defined as advice in relation to “trade marks” or (one might add) “any related matters”.

His Honour pointed out at [11] – [12] that the privilege was conferred only in respect of the advisory aspect of client legal privilege and did not extend to the litigation aspects.[3] While s 19(2) of the Code of Conduct for Patent and Trade Marks Attorneys 2013 incorporates a duty of confidentiality into the attorneys’ retainer. The terms and scope of that obligation were not co-extensive with the privilege. Consequently at [14]:

As s 229 is presently drawn, it is certainly possible to conceive of anomalous outcomes concerning the existence or otherwise of s 229 privilege with respect to such an arbitral proceeding. For example, it is not controversial that advice as to whether the rights associated with a registered trade mark confer rights in respect of an Internet domain name fall within the definition of “intellectual property advice” in s 229(3). And so, too, would advice as to whether the contents of a statutory declaration for use in an arbitral proceeding were sufficient to demonstrate that those rights did or did not extend to an Internet domain name seem to fall within the ambit of s 229 privilege – either by virtue of paragraph (b) or (e) of the s 229(3) definition. But the mere drafting of that statutory declaration by a registered trade mark attorney would not attract s 229 privilege. Likewise, advice as to what submission ought to be made to demonstrate that the asserted trade mark right did or did not extend to cover a domain name would seem to fall within the scope of the privilege, whereas the mere drafting of such a submission for use in an arbitral proceeding would not. However this may be, the present claim must be determined solely by reference to the scope of the privilege as presently enunciated by Parliament. (emphasis supplied)

If with respect his Honour’s approach is right, there would appear to be potentially quite drastic consequences for the normal practice of attorney firms, and for that matter patent attorneys,[4] in drafting statutory declarations and preparing submissions in contested hearings before the Office such as opposition proceedings.

Of course, given the view Logan J took about the adequacy of the claim to privilege, his Honour’s view on the scope of the privilege is “only” obiter dicta.

And, it must be said, the circumstances were rather unusual given Mr Cross’ failure to provide instructions or defend his claim.

Further, his Honour was not considering the potential application of the privilege to proceedings in the Office. And it might be possible to argue that such proceedings are not what is normally within the scope of litigation privilege rather than “advisory” privilege. Both privilege provisions for trade mark attorneys and patent attorneys draw a clear line between “intellectual property advice” and “court proceedings”. But “arbitrations” under the UDRP are not court cases either, officially being styled administrative proceedings without prejudice to the parties’ rights to litigate in court.

It may be arguable that, given the traditional role of patent attorneys and trade marks attorneys in preparing such documents before the Office (at least), it can be argued that they fall within the scope of the “any related matters” part of the definition of “intellectual property advice”. That may be seen as straining the concept of “advice” too far in the dichotomy Logan J acted under.

On a positive note, Logan J accepted that documents prepared by persons who were not registered trade marks attorneys could benefit from the privilege if prepared under the supervision of a registered trade marks attorney.

Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 1241


  1. at [4].  ?
  2. For example, Ansell Healthcare Products LLC v Reckitt Benckiser (Australia) Pty Ltd (No 2)
    [2016] FCA 765 at [32] – [35].  ?
  3. Contrast s 118 and s 119 of the Evidence Act 1995.  ?
  4. Patents Act 1990 s 200  ?

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Two points about exclusive licences of patents in Australia

The Full Court has upheld Rares J’s decision that Novartis was an exclusive licensee with standing to sue for patent infringement. However, its sub-licensee was not.[1]

Under the Patents Act 1990, only the patentee and an exclusive licensee have standing to sue for infringement: s 120. For this purpose, the licensee must be the exclusive licensee of all the rights to exploit the patent.[2]

In its initial licence, Orion had reserved to itself the right to manufacture the relevant drugs; granting Novartis the exclusive rights to import, use, offer to sell and sell the drugs. Orion also had rights to introduce its own generic product if a generic producer entered the market.

Following the Full Court’s ruling in BMS v Apotex (Aripiprazole), those terms meant that Novatis was not an “exclusive licensee” as (at the least) the grant did not include also the exclusive right to make the drugs.

Following Aripiprazole, however, Orion and Novartis amended the terms of the licence. Under the terms of the new licence, Orion simply granted Novartis the exclusive licence to exploit the patent in Australia “to the exclusion of all other persons”. In clause 2, however, Novartis undertook to buy all its requirements for the licensed products from Orion. There was also a side agreement that Novartis’ exclusive licence terminated if its rights under another, umbrella agreement[3] terminated.

As Actavis did not contend that the new arrangements were a sham, the Full Court affirmed Rares J’s conclusion that the new arrangements superseded the previous arrangements in which Orion had reserved rights of manufacture. Further, the agreement to buy all its requirements for the patented products did not undercut that exclusivity.

There were textual arguments to support that conclusion, such as recognition that Novartis could apply to IP Australia to register its status as exclusive licensee. Perhaps, the key point is that an exclusive licensee could, if it so wished, contract with some other person for that person to make the products for it. The fact that the “other person” was the patentee did not undermine that proposition.

We are persuaded that the primary judge’s analysis of the relationship between clause 1 and clause 2 is correct. Although it is true to say that the two clauses are connected, we think that the primary judge was correct to conclude that they represent separate promises in the sense that clause 1 creates the plenary rights of an exclusive licensee and clause 2 reflects the agreement between the parties as to how Novartis will exercise its rights. We do not think that clause 2 acts as some exclusion clause or limitation clause in the way in which the appellants contend, such as to cut down the legal effect of the rights granted by clause 1.

The sub-licensee

Novartis itself had granted an exclusive sub-licence of its rights under the exclusive licence to Novartis Australia.

The Full Court rejected the argument (and Novartis itself did not try to defend it) that there had been an assignment of its rights to Novartis Australia.

The Full Court ruled that s 120 is mandatory and not permissive only. That is, only a patentee or an exclusive licensee had standing to sue for infringement. As Novartis Australia was only a sub-licensee, therefore, it had no standing to sue for infringement.

As a sub-licensee, however, Novartis Australia had sufficient interest to have standing as a proper party to the cross-claim for invalidity under s 139.

It is difficult to imagine that in this case this delicate footwork will have much reflection in who pays whose costs. One point where it could have a real impact, however, could be on what damages, if any, were payable. It might well not be possible to claim damages for sales lost by Novartis Australia, if it did in fact lose any sales, as Novartis Australia did not have standing to sue for infringement.[4]

Actavis Pty Ltd v Orion Corporation [2016] FCAFC 121 (Allsop CJ, Nicholas and Yates JJ)


  1. There are 193 paragraphs before the discussion of this issue, dealing with questions of validity and infringement (which seem to turn mainly on points of construction).  ?
  2. From the Dictionary: “exclusive licensee ” means a licensee under a licence granted by the patentee and conferring on the licensee, or on the licensee and persons authorised by the licensee, the right to exploit the patented invention throughout the patent area to the exclusion of the patentee and all other persons.  ?
  3. A so-called Rest of the World Agreement, setting out arrangements between the parties except for the USA and the European Union.  ?
  4. In Insight SRC v ACER, however, a Full Court held that a copyright owner could recover damages for sales lost non-exclusive licensees who did not have standing to sue for infringement.  ?

Two points about exclusive licences of patents in Australia Read More »