The bill has finally been introduced into Parliament today.
This follows the release way back in December 2015 of an exposure draft bill.
According to the EM, the main topics covered in this version of the bill are:
” replace the current exception for persons with a disability, and others acting on their behalf, with a fair dealing exception;
” replace the current statutory licences for institutions assisting persons with a print or intellectual disability with a single exception that applies to organisations assisting persons with a disability;
” harmonise and modernise the preservation exceptions for copyright material in libraries, archives and key cultural institutions;
“? consolidate and simplify the statutory licences that allow educational institutions to use works and broadcasts;
“? allow copyright material to be incorporated into educational assessments conducted online;
“? set new standard terms of protection for published and unpublished materials and for Crown copyright in original materials; and
“? make minor amendments to update references to Ministers and preconditions for making regulations extending or restricting the operation of the Act in relation to foreign countries.”
Those of you with long memories will notice that the amendments in the exposure draft to bring the safe harbour provisions for “carriage service providers” (see s 116AC to 116AJ) into line with Australia’s obligations under the US Free Trade Agreement (way down in chapter 17 article 29(b)) is missing from that list. The rights holders’ interests were very strongly opposed to that change and, presumably, the Government is betting that President Trump’s America will not be too fussed.
In relation to the term of copyright in unpublished works – currently perpetual (until published) – the Minister explained the intended effect of the amendments:
The bill harmonises the copyright term for works (including a literary, dramatic, musical or artistic work) by creating a new standard term of 70 years from the death of the author, irrespective of whether the relevant work has or has not been made public. This means that an unpublished work will have the same term of copyright protection as a published work. Where the identity of the author remains generally unknown, or the work is made by an international organisation to which the act applies, the standard copyright term will be 70 years from when it is made. However, if this work is made public within 50 years of being created, the copyright term will be 70 years from first being made public. For sound recordings and films, a standard copyright term of 70 years from the year in which the material is made will apply. However, if the sound recording or film is made public within 50 years of being made, the copyright term will be 70 years from first being made public.
You may not be surprised to read that Perram J has found that CLIPSO is deceptively similar to CLIPSAL for electrical goods in class 9. This had the consequence that Clipso’s registration for “CLIPSO” was expunged from the Register and CLIPSO itself was found to infringe prospectively. Clipsal’s trade mark registration for the shape of its ‘dolly switch’, however, was not infringed by Clipso’s products.
A significant issue in the case was whether Clipso’s principal, a Mr Kader, was to be believed about how he came up with the mark. Perram J found he was not. Perhaps the most interesting feature of the case, however, is the market by which the issues fell to be assessed.
Some background facts
Clipsal has registered CLIPSAL as a trade mark in respect of all goods in class 9. While it and its predecessors claim to have been using the mark since the 1920s, the registration it relied on in this proceeding dates from 1989. It currently markets some 14,668 electrical products under the trade mark and, in 2011, its annual sales exceeded $500 million. Clipsal had some 77% of the market; its nearest competitors having only 11% each. Clipsal also has a shape mark registered for the shape of its dolly switch:
in respect of ‘electrical wiring accessories which incorporate a rocker switch … including dimmer switches….’
Mr Kader had been importing electrical accessories since about 2005. The CLIPSO mark came into use, however, in 2008 and Clipso achieved its registration in respect of a range of class 9 goods, principally electrical switches and the like, from October 2008.
The market by which deceptive similarity assessed
Many of Clipsal’s products, and most if not all Clipso’s, are what is known in the trade as ‘Bakelite’. These are (generally) plastic products such as switches, power points and other electrical products. A significant feature of these products is that by law they can be installed only by licensed electricians. Thus, a key plank of Clipso’s defence was the nature of its goods which, it said, were essentially bought by electrical wholesalers and electrical tradies, who were not confused by the two trade marks. CLIPSAL, it was argued, was so famous that no reasonable tradie would mistake CLIPSO for it.
Perram J began by noting trade mark authority had held that an infringer’s conduct fell to be assessed in light of its effect on ordinary purchasers of the products in suit. His Honour noted that misleading or deceptive conduct under the ACL fell to be assessed by reference to the ordinary and reasonable consumer. Acknowledging that other cases may lead to different conclusions, however, in the context of this case Perram J considered that Clipso’s conduct fell to be assessed under all heads according to its impact on the ordinary and reasonable consumer.
Perram J accepted that a large part of the market for Clipsal’s products were electrical wholesalers and electrical installers. For many people having a home or office built, the issue was whether there were light switches, their positioning and number. The actual purchasing decision was left to the builder or contractor. However, Perram J found that there was a (relatively small) but not insignificant section of the general public who were interested in such matters and did take into account the trade source of the products that were being installed in their building and so specified the products they wanted their contractors to install, non-purchasing end-consumers.
A key factor in his Honour’s conclusion on this point was the extent and length of Clipsal’s marketing efforts directed to the general public, not just the trade. In addition to the usual forms of advertising, this included a software program, Cipspec, which Clipsal installed in showrooms and its consultants used to work through with customers the placement and appearance of various CLIPSAL products. At  and  of his Honour’s reasons, Perram J accepted:
However, the evidence of these witnesses (the marketing director, Mr Quinn, a store manager of an electrical wholesaler, Mr Kalimnios and the electrical wholesaler, Mr Micholos) nevertheless persuades me that the applicants’ efforts in bringing end-consumers into the process as part of its supply chain strategy are likely to have had some success. The evidence of Mr Kalimnios and Mr Micholos (referred to later in these reasons) was attacked on the basis that the firm for which they worked, P&R Electrical, was not independent of the applicants. It is not surprising that an electrical wholesaler might have a substantive commercial relationship with the market leader in electrical accessories, but I would not describe such a relationship as lacking independence. In any event, I do not think that the evidence of either man was adversely affected by this matter.
One is left in the situation then that the only evidence of the success of the strategy of seeking to increase demand at the consumer end of the market is the existence of the strategy itself. Although I am prepared to accept that some end-consumers do indeed purchase switches and sockets themselves, I do not accept that generally these are the same people who are involved in, or the targets of, Mr Quinn’s supply chain strategy. As best I can surmise, they are instead a small group of people who decide to buy Bakelite products to have an electrician install them, or possibly even a smaller group of unlawful renegades who buy Bakelite products to install themselves.
His Honour was unable to quantify how significant the involvement of such end-users in the market was, but at  considered it was not de minimis:
… one is still left with little compelling evidence that any of the end-consumers targeted by the strategy exist beyond the strategy itself and the amount spent on it. I have no particular difficulty describing the strategy as plausible. One can well see that there are likely to be some people who care very much about what the light switches and sockets installed in their homes are to be, whilst there will be others who are benignly indifferent. Amongst the first class, it requires no great mental athleticism to see that their fascinations are likely to be with the Bakelite products at the premium end of the market. Can I infer from these observations that such a class exists and in numbers which are significant? I believe that I can and I do. The widespread fascination with home renovations in some quarters is reflected in the programming that appears on popular television every week. I do not believe that Mr Quinn’s strategy of creating demand and driving it back up the supply chain is some quixotic venture which is pointless. To the contrary, I am prepared to infer that a significant portion of persons building a new house or renovating an existing dwelling do care about which Bakelite products are used.
It was not necessary that these end-users be the people who actually bought the goods in question; it was sufficient that they gave instructions for them to be purchased such as through their contractors. The size of this segment of the market was sufficient to qualify as ‘substantial’. The relevant market, therefore, was a segmented one consisting of electrical contractors, electrical wholesalers and ‘non-purchasing’ end-consumers.
One consequence of this conclusion was that Perram J considered the parts of the market consisting of electrical contractors and wholesalers was a specialised market which would require expert evidence about the conduct and purchasing habits of people in those trade channels. That was not be the case for that part of the market comprised of end-users.
For that part of the market, Perram J went on to hold that CLIPSO was deceptively similar to CLIPSAL. Perram J considered that the two words shared the same root and had very similar pronunciation – the primary stress would fall on the first syllable and the final syllable of both words would be unstressed. There was also expert evidence that some people might perceive CLIPSO as an hypocristic” for CLIPSAL.
As noted above, Clipso argued that CLIPSAL was so well-known in the trade that there would be no confusion. Perram J rejected this on several grounds. First, in the context of s 44 resort could not be had to reputation except where the mark was so well-known as to be ubiquitous and, notwithstanding its market penetration, Perram J was not prepared to find CLIPSAL fell into that exceptional category. Secondly, as his Honour had already held, the market was not limited to those in the trade but also included ordinary (non-purchasing) consumers. Thirdly, there was in any event evidence from people in the trade (well, at least one) that, while they were not necessarily confused, they were caused to wonder whether there was some connection between the two trade marks. Consequently, CLIPSO was deceptively similar to CLIPSAL even for the segments of the market comprised of those in the trade.
These findings together with Perram J’s rejection of Mr Kader’s claims about how he chose the name CLIPSO meant that the CLIPSO registration was cancelled pursuant to s 44, s 60 and s62A.
Mr Kader had claimed that he chose the name while leafing through the list of goods in class 9 in the International Classification and noticing some references to “clips”. He also claimed that he knew very little if anything about CLIPSAL when he applied to register CLIPSO. Perram J found Mr Kader was lying about this based on a number of factors including the strength of Clipsal’s position in the market, Mr Kader’s involvement in the market for at least 3 years and, amongst other things, the fact that each day his trip to work involved passing a very large CLIPSAL hoarding.
As s 122(1)(e) provides a defence to trade mark infringement when the sign used is itself a registered trade mark and is being used in respect of the goods for which it is registered, Clipso could not in fact infringe until Perram J’s orders cancelling the registration of CLIPSO were effected on the Register. Therefore, injunctions only would be available.
However, Perram J did go on to find that Clipso’s use of CLIPSO also contravened the prohibitions on misleading or deceptive conduct under the ACL and passing off, but only insofar as the public consisted of (non-purchasing) end-consumers. As Perram J considered those actually engaged in the trade would not be misled or deceived, but only caused to wonder if there was a connection, there was no contravention in respect of those segments of the market.
Use of a shape trade mark
Perram J found that Clipso’s dolly switch very closely resembled Clipsal’s dolly switch which was depicted in its registered trade mark. Nonetheless, his Honour considered Clipso did not use its dolly switch as a trade mark. Perram J accepted that there were many shapes a dolly switch could take so that Clipso’s dolly switch was not dictated by function. Nonetheless, it was not used as a trade mark. At , his Honour explained:
Be that as it may, I still do not think that the first respondent was using the switch as a trade mark. Generally speaking, Clipso products were packaged in plastic sleeves emblazoned with the Clipso logo, and then placed in a cardboard box also emblazoned with the Clipso logo. There is no doubt that the word CLIPSO was being used as a badge of origin, which rather detracts from the idea that the switch located within the packaging could also have been operating as a badge of origin.
Perram J was not prepared to find that the shape of the dolly switch itself conveyed an association with Clipsal based on the sheer volume of sales of the product. This was so even though Clipsal’s packaging often included a statement that “The shape of this dolly switch is a trade mark of [Clipsal]”.
Perram J noted that there could be subtle differences also between passing off and the ACL, but it was sufficient to proceed in this case on the basis that the same test applied for both actions notwithstanding their different bases. ?
There were also end-consumers who actually bought the products themselves, but they were considered too small a segment to qualify as ‘substantial’. ?
Apparently, this refers to the practice, particularly prevalent amongst Australians, of modifying words colloquially to suggest familiarity such as “kiddo” for “kid”. ?
Bridling at  –  against even that scope for reputation permitted by Henscke. ?
Last year, we looked at the ACCC’s successful prosecution of Valve (provider of the online gaming platform, Steam) for breach of the consumer guarantees in the ACL. Valve’s contracts for example provided that all fees were payable in advance and not refundable. Valve’s main line of defence was that it was in the US state of Washington and so not bound by the ACL.
On 23 December 2016, the Court fined Valve $3 million for its breaches: $2.2 million for the contraventions involving the Steam Subscriber Agreement and $800,000 for the contraventions involving the Steam Refund Policy.
This was in a context where, while,the number of accounts developed over the 3 year period of the misconduct, Valve had some 2.2 million Australian accounts (I.e, about $1.36 per account) and had received communications about refunds from over 21,000 accounts. What is more, despite its no refunds policy wording, it had actually paid refunds to some 15,000 accounts. Another factor was Valve’s high-handed approach to its legal position in Australia; apparently deciding it had no liability as a matter of policy without reference to Australian legal advice.
Previously, we looked at Moshinsky J’s reasons for finding that Intervet was not entitled to the invention claimed in its patent application for a “soft chew” dosage. In what appears to be one of the first judicial considerations of the inventive step requirements introduced by the Patents Amendment Act 2001, Moshinsky J has also allowed Merial’s opposition on the grounds of lack of inventive step.
To recap, claim 1 of Intervet’s patent application was for:
A soft chew formulation for oral administration comprising a pharmaceutical for control of a parasite of Equidae, Canidae, Felidae, Bovidae, Ovidae Capridae, or Suidae organisms in a soft chew formulation, a flavouring component, a starch component, a sugar component, an oil component and an emulsifying agent that acts as a forming agent, wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
In addition to challenging Intervet’s entitlement to the claimed invention, Merial successfully argued that Intervet’s patent application lacked an inventive step in light of common general knowledge combined with the “Christensen” patent. The interest in the present case (unless you are in the business of developing soft chews) lies in how Moshinsky J applied the version of s 7(3) as amended by the Patents Amendment Act 2001 operates.
Section 7(2) and 7(3) in their second incarnation provided:
(2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).
(3) The information for the purposes of subsection (2) is:
(a) any single piece of prior art information; or
(b) a combination of any 2 or more pieces of prior art information;
being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant to work in the relevant art in the patent area and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.
The second version of s 7(3) should liberalise the ability of the skilled addressee to combine 2 or more pieces of prior art. It also omitted the words struck out in the quote above which the High Court in Lockwood No 2 considered imposed a significant constraint on what information could be added to common general knowledge. Of those now omitted words, the High Court in Lockwood No 2 explained at  that:
… the phrase “relevant to work in the relevant art” should not be construed as meaning relevant to any work in the relevant art, including work irrelevant to the particular problem or long-felt want or need, in respect of which the invention constitutes an advance in the art. The phrase can only be construed as being directed to prior disclosures, that is publicly available information (not part of common general knowledge) which a person skilled in the relevant art could be expected to have regarded as relevant to solving a particular problem or meeting a long-felt want or need as the patentee claims to have done. Otherwise the words of limitation in the last 40 words of s 7(3) would have no role to play. Any piece of public information in the relevant art would be included, as is the case with the much broader and quite different formulation in the cognate provisions in the United Kingdom, which do not depend on the standard of a skilled person’s opinion of the relevance of the information.
This difference in wording between the first and second iterations of s 7(3) does not appear to have been the subject of debate between the parties. Rather, the evidence appears to have proceeded on the basis that it was necessary to show that the skilled addressee could reasonably have been expected to regard the additional information as relevant to the problem of developing a “soft chew” medicament for animals. In addition, Merial pitched its attack on the basis of the modified “Cripps” question approved in Alphapharm. This does not appear to have been contested by Intervet.
On that basis the evidence showed that a skilled addressee, given that task at the priority date, would be both likely to have carried out a search of the patent literature and found the Christensen patent. Merial’s witnesses said that they would have regarded Christensen as relevant to the problem. Intervet’s witness said he would not, on the basis that it did not teach him anything he did not already know. Moshinsky J accepted the evidence of Merial’s witnesses.
Having found that Christensen could be added to common general knowledge, Moshinsky J found that the claims of Intervet’s patent application were obvious. His Honour found that claim 1 for example could be characterised as having several elements:
(a) a flavouring component;
(b) a starch component;
(c) a sugar component;
(d) an oil component;
(e) an emulsifying agent that acts as a forming agent,
wherein the moisture content of the composition is between 5.0 and 7.5 percent wt, and the soft chew formulation is formed by knockout and the soft chew formulation is not an extrudate.
The inclusion of a flavouring component was taken as a given in such an exercise. All the experts said they would include flavouring in any product developed for such a project – apparently, animals have taste too! All three experts, Merial’s and Intervet’s, agreed that an emulsifying agent would be used as a forming agent.
The water content range, 5 to 7.5% wt, was the range Merial’s experts would aim for in a “soft chew” product. Intervet’s witness gave evidence that the moisture content he would have aimed for was between 18 to 21%, but that was discounted because he had been asked how he would have developed a “semi-moist formulation” rather than a “soft chew” formulation as claimed.
The Christensen patent supplied features (b), (c) and (d). Christensen described formulation by extrusion rather than knock-out. However, all experts agreed that, at the priority date, a knock-out process was known to be preferable to extrusion.
Taking all these matters together as a whole, Moshinsky J was clearly satisfied that the claimed invention was obvious at the priority date. On the other hand, some of the dependent claims would not have been obvious.
For example, claim 2 was for:
The soft chew formulation according to claim 1 characterized in that the emulsifier is a polyethylene glycol (PEG).
PEG was known at the priority date, but not for use in a moulding process for an oral formulation. PEG was not disclosed in Christensen. One of Merial’s experts, Dr Pougnas, gave evidence that he would have considered using it for the emulsifier. The other expert did not mention it and, while Intervet’s expert knew of PEG, he had not had cause to consider it for use in pet foods.
Moshinsky J was not satisfied that the skilled addressee would have been directly led as a matter of course to use PEG in the expectation that it might well produce a useful alternative or better formulation. At , his Honour explained:
… I am not satisfied that the skilled person or notional research team at 13 August 2002 would directly be led as a matter of course to try PEG in the expectation that it might well produce a useful alternative to or better formulation than the prior art. Dr Pougnas’s evidence did not contain, to my mind, a satisfactory explanation as to why he would have considered PEG in addressing the notional development task. It would be different if, for example, there had been evidence that the common general knowledge included that PEG imparted softness and evidence that, for that reason, the skilled person or notional research team would have tried PEG in the expectation that it might well produce a useful alternative or better formulation. That would provide a logic for trying PEG. However, in the absence of such a rationale, I am not persuaded that the skilled person or notional research team would be directly led as a matter of course to try PEG in the expectation that it might well produce a useful alternative or better formulation. ….
His Honour also expressed doubts as Dr Pougnas might be “too inventive”, having at least 13 patents to his name. He also admitted to being involved in some experimental work at the priority date, the details of which he was not at liberty to disclose. The research project did not form part of the common general knowledge. Moshinsky J was concerned, however, that that experience might explain why Dr Pougnas was willing to consider using PEG.
Moshinsky J’s decision does show the importance when assessing obviousness of ensuring the expert one advances is appropriately skilled and tasked. As it was sought to add only one piece of prior art to common general knowledge, the Christensen patent, it does not explore how much the second (2001 Act) version of s 7(3) liberalised the willingness of the Courts to combine prior art which did not form part of the common general knowledge. It was not necessary for Moshinsky J to explore the significance of the omission from the second version of s 7(3) of the words which the High Court focused on in Lockwood (No 2). The parties and hence his Honour appear to have proceeded on the basis that the skilled addressee must regard the prior art as relevant to the problem, or long felt want, that the patentee was seeking to address through the invention.
A Following up last week’s quick note, a closer look at Nicholas J’s decision in Roadshow Films v Telstra ordering the ISPs to block access to a number of offshore websites on the basis that they were primarily sites which infringe, or facilitate the infringement of, copyright (which unhelpfully didn’t publish last year on schedule). Oh well, hopefully better late than never!
There were two separate actions: one brought by Roadshow Films and the second brought by Foxtel. Both proceedings sought orders against essentially three groups of ISPs: Telstra, Optus and TPG. Roadshow also sought orders against M2. Roadshow was seeking orders under s115A compelling the ISPs to block their subscribers’ access to a number of SolarMovie sites (which in the end resolved back solarmovie.ph). Foxtel was seeking the injunctions to block access to various Pirate Bay, Torrenz, TorrentHound and IsoHunt websites.
The ISPs did not contest the injunctions, but there were disputes about some of the terms.
Nicholas J therefore ordered that each of the ISPs take reasonable steps to disable access to “the Target Online Location”. By way of example, the Target Online Location in the Roadshow matter was defined as the online location or online locations known as “SolarMovie” that are or were accessible:
(A) at the following URLs:
(III) http://www.solarmovie.eu; and
(together, the Target URLs);
(B) at the following IP Addresses:
(III) 188.8.131.52; and
(together, the Target IP Addresses);
(C) at the following Domain Names:
(III) solarmovie.eu; and
Order 3 then provided that the ISP would be deemed to have taken reasonable steps if it took any one or more of the following steps:
(a) DNS Blocking in respect of the Target Domain Names;
(b) IP Address blocking or re-routing in respect of the Target IP Addresses;
(c) URL blocking in respect of the Target URLs and the Target Domain Names; or
(d) any alternative technical means for disabling access to a Target Online Location as agreed in writing between the applicants and a respondent.
It seems from his Honour’s reasons that the ISPs expect to use DNS Blocking.
After the hearing in June, the particular Solarmovie sites went offline. Nicholas J was satisfied, however, that s 115A still permitted him to make orders blocking access. In contrast, his Honour did not consider there was sufficient evidence to block access to some of the Pirate Bay URLs associated with “CloudFlare”, but which had always been inactive. Nichols J accepted that these websites gave rise to “suspicion”, but it was not strong enough to warrant ordering an injunction.
Nicholas J further ordered that the ISPs must redirect communications attempting to view the “blocked” websites to a landing page. The ISP could choose to set up its own landing page but, if it did not wish to incur those costs, it was required to notify the relevant applicant. Once notified, the relevant applicant had to set up a landing page stating that access to the website had been disabled because the Court has found that it infringes, or facilitates the infringement of, copyright.
Given the ease with which a website can be shifted to a new address, Roadshow and Foxtel sought orders that they add to the list of blocked addresses by letter to the ISPs.
Unlike the English courts, Nicholas J considered that an extension of the orders to other websites should require the involvement of the Court. Accordingly, his Honour ordered that applications to extend the orders to new iterations should be made to the Court on affidavit with proposed short minutes of order to extend the injunctions. This imposes some constraint on the use of such injunctions by enabling the ISPs to object.
Nicholas J ordered that the scheme set in place should run for an initial period of 3 years. Six months before that expiry, however, the applicants can provide affidavit evidence to set out their case for an extension. The ISPs then have an opportunity to object or, if no objection is forthcoming, the Court may order an extension.
Roadshow and Foxtel did not seek costs. The respondents did.
Nicholas J considered that the costs of the ISPs incurred in setting up the technical requirements for the scheme to operate were simply costs of doing business and so to be borne by them. They were costs that would have to be incurred independently of these particular actions.
However, his Honour ordered that each ISP could charge $50 for each domain name included in the orders. His Honour considered that, as each ISP proposed to use DNS Blocking, a uniform figure should be used. $50 was a bit lower than some ISPs wanted and a bit higher than others.
Nicholas J also ordered that the applicants pay the ISPs costs of the proceeding relating to the method for extending the regime to new iterations of a website and compliance costs.
Nicholas J defined DNS Blocking as “a system by which any user of a respondent’s service who attempts to use a DNS resolver that is operated by or on behalf of that respondent to access a Target Online Location is prevented from receiving a DNS response other than a redirection as referred to in order 5.” Apparently, at , “ISPs can block access to specific online locations entered into the address bar of the Internet browser, by configuring their DNSS to either return no IP Address so that an error message is displayed to users or so that users are directed to a predetermined IP Address that differs from that designated by the specific online location’s IP Address.” ?
At , his Honour explained that IP Address Blocking involves the ISP not routing outbound traffic to the specified address. This apparently can be problematic as it can also block access to other websites stored on the server with the specified address. Hello ASIC, anyone? ?
At , Nicholas J described URL Blocking as comparing the destination address specified in a “packet” of data being routed across the internet to a list of addresses to be blocked and, if there is a match, blocking transmission. ?
This amount is an interesting contrast to the figures quoted by the Court of Appeal in the Cartier case in England at  which ranged from (in GBP) three figures to six figures each year. See also  –  of Cartier. ?