This is the Bill to enact legislation to make Google and Facebook pay the news media owners for “use” of their news.
For some commentary on the earlier exposure draft, see here.
There have been some notable changes. These include:
When setting the amount of the payment, there will now be a requirement that the value the media organisation receives from having its material “used” by Facebook or Google, as the case may be, is taken into account: see proposed section 52ZZ;
The public broadcasters, the ABC and the SBS, reportedly will be able to negotiate for payment whereas previously they were excluded;
Opinion pieces, not just “news”, may qualify as material the “use” of which must be paid for, not just “news” written by journalists: s 52A
The Channel 9 newspaper reports that the retiring MD of Channel 9 is spitting chips over the inclusion in the value calculus of the benefit the news organisation receives from Facebook’s, or Google’s, “use”.
It still remains far from clear what, if any, rights of the news publishers are actually being “used” and for which payment will be required. What impact, if any, will the definition of “making content available” as including “a link to the content is provided on the service” have on the scope of the communication right conferred by copyright? Similarly, will the inclusion within that definition of “an extract of the content is provided on the service” affect the interpretation of what is, or is not, a fair dealing?
There is a little peep behind the curtain into the sausage making process here.
Meanwhile, media reports indicate the bill will be referred to a Senate committee for inquiry.
Schedule 1: the 12 month ‘grace period’ before the priority date for prior use/publication by or with the consent of the design. Publications by the Registrar of Designs (i.e. on the Register of Designs) or by an equivalent overseas person or body will not be able to claim the benefit of this ‘grace period’. On the other hand, if some third party starts using, or publishes, the design or a substantially similar design after the design owner, there will be presumption that the third party derived its design from the design owner. In other words, if the registered owner is relying on the ‘grace period’, the onus will be on the person asserting invalidity by prior use or publication in the 12 month ‘grace period’ to prove the prior art relied on was not derived from the registered owner or the owner’s predecessor in title.
Schedule 2: will introduce new s 71A to provide an exemption from infringement for persons who start using a design during the 12 month ‘grace period’ introduced by Schedule 1. The exemption will continue to operate after the design is registered. The exemption extends not only to those who actually engage in an otherwise infringing act but also to a person who: had taken definite steps (contractually or otherwise and whether or not in Australia) to do [the otherwise infringing] act…. According to the EM, ‘definite steps’ will not be satisfied by mere ‘initial steps’. The plans must be finalised and the process of acquiring or making all components must have started. Under 71A(4), the person entitled to the exemption may “dispose” of their entitlement so that the exemption passes to the disposee – presumably, it follows from the disposal of the entitlement that the disposer cannot continue to claim the benefit.
Schedule 3: removes the publication option – the nice flowchart of the options for requesting registration and the formalities check is now on p. 23 of the EM.
Schedule 4: will amend s 75 to provide a further ‘innocent infringer’ defence for acts done prior to registration of the design (when the design representations are first published). The amendment will give the Court a discretion not to award damages where the defendant satisfies the Court that, when the infringing acts were done, the defendant was not aware, and could not reasonably have been expected to be aware, that the design application had been filed.
Schedule 5: will give an exclusive licensee standing to sue for infringements. By proposed s 5A, an exclusive licensee will be defined to be as a person to whom the registered owner has granted the exclusive rights in the design. An exclusive licensee may be empowered to sub-license. A person will not be disqualified as an exclusive licensee, however, if their exclusive rights do not include the right to sub-license.
Schedule 6: will empower the Registrar to specify the formal requirements for design applications by publishing notices – these formalities will no longer by specified in the regulations and such notices will not be “legislative instruments”
Repeals “the standard of the informed user” and replaces it with the “standard of the familiar person” adopted in Multisteps.
Will give the Court a discretion whether or not to revoke a registered design on grounds of lack of entitlement unless satisfied in all the circumstances it is just and equitable to do so – this will bring the revocation power on this basis in line with s 138 of the Patents Act.
Will permit revocation on grounds of fraud, false suggestion etc. perpetrated at the examination stage.
Makes provision for ‘revived’ designs where the renewal fees are not paid until after the expiry of the initial 5 year term:
If the renewal fees are paid within 6 months after expiry of the initial term (the so-called ‘renewal grace period’), the registration will be treated as remaining in force and never to have ceased;
But if the renewal fees are paid after 6 months (on the basis of an application for an extension of time), the registration will be treated as having ceased on the expiry of the 5 year term.
The significance of these differences is that a third party should not start using the design in the 6 month ‘renewal grace period’. The protections under s 140 will be available only to persons who start using after the expiry of the ‘renewal grace period’.
Strictly speaking, the exclusive rights conferred by s 10(1)(a) to (e) only. Can anyone think of a rational reason why s 10 confers on the registered owner the exclusive licence to authorise people to do the acts in s 10(1)(a) to (e), but authorising an infringement is not an infringing act under s 71? ?
The Designs Amendment (Advisory Council On Intellectual Property Response) Bill 2020 was introduced into Parliament on Wednesday, 2 December.
At the time of writing the links to the text of the Bill and the Explanatory Memorandum are inactive. You can read, however, the Minister’s Second Reading speech.
Also there has already been consultation on an exposure draft and IP Australia’s response to that public consultation. So we know broadly what is in the Bill, although there were a number of details to be worked out following IP Australia’s response.
the Bill introduces the 12 month ‘grace period’ for design owners who make their designs publicly available before they file their design applications – this was Sch. 1 in the exposure draft. As the Minister pointed out, this will align Australia’s registered design law with “many of our major trading partners” (including the EU and the USA);
the Bill will give exclusive licensees standing to bring infringement proceedings – this was Schedule 4 in the exposure draft. In the exposure draft at least and as with patents, the exclusive licensee had to be the exclusive licensee of the whole right;
the Bill will remove the “rarely used” publication option so that every application will be an application for registration – one consequence of this reform as implemented in the exposure draft was that a design application will automatically proceed to formalities examination and registration 6 months after filing if registration was not requested earlier;
there will also be a prior user defence for a person who commences using a design during the ‘grace period’ before the design application is filed – this was Schedule 2 in the exposure draft;
in addition, in cases where registration is delayed (up to 6 months from the filing date), there will be some sort of “innocent infringer” defence for a person who commences using the design in the period between filing and registration (as it is only on registration that the design representations are published);
there are also “smaller technical corrections and improvements” including revocation of a design for fraud, false representation etc. during certification.
The Minister also indicated the Bill “is just the first stage of the Government’s ongoing program of designs reform, with more improvements to come after further consultation.” According to IP Australia’s consultation page (scroll down), the following matters are still on IP Australia’s Policy Register:
Protection of partial designs – Policy ID 42 This issue apparently has “high priority”;
Protection of virtual, non-physical and active state designs – Policy ID 43 This issue apparently has “high priority”;
Clarify ambiguity in section 19 of the Designs Act – Policy ID 35 A third issue with “high priority”;
(This is in addition to the change from “informed user” to “familiar person”.)
Clarification of ‘registered’ and ‘certified’ designs – Policy ID 37 Also “high priority”;
Some of the amendments proposed in Recommendation 18 of the ACIP Designs Review (18b, 18d, 18e and 18g are not progressing at this time) – Policy ID 45
For the research reports arising from the longer term Designs Review Project, see here.
Debate on the Bill itself has been adjourned to the first sitting day of the next period of sittings – presumably, in 2021.
Lid dip: Genevieve Corish at LexisNexis
When they do appear (presumably in the next few days), they should be accessible from here and/or here. ?
SOE claimed Ms Schwartz and her company, Chuchka, were infringing copyright in the Escape bag as a work of artistic craftsmanship by importing and selling the Chuchka bags. SOE also alleged that the sale of the Chuchka bags was misleading or deceptive conduct and passing off.
Despite Ms Schwartz’ denials, Davies J found that the Chuchka bag was copied from the Escape bag and, if copyright subsisted in the Escape bag, numerous versions of the Chuckha bag would be infringements. SOE did not have a registered design and SOE was selling at least 50 or 60 Escape bags a day. So, subsistence of copyright came down to whether or not the Escape bag was a work of artistic craftsmanship.
The Escape Bag
The Escape bag is a soft, oversized tote bag. It is made from perforated neoprene fabric with handles made from sailing rope which wrap around the body and base of the bag. It also has an internal, detachable pouch made from perforated neoprene and press studs at either end for expansion.
The bags are made by hand. They feature hand punched holes where the rope goes in, a heat seal tape finish along the top line of the bag and other contact points.
The Escape bag was designed over several months of trial and error in 2013 by Ms MacGowan who, with Ms Maidment, is a co-founder and director of SOE.
Ms MacGowan gave evidence that she designed the bag to be both beautiful and practical. She chose perforated neoprene as it was aesthetically pleasing and light:
The bag did not have any lining. I did not want it to have any embellishments. I did not want anything disguising something that was not beautiful. I wanted the whole thing to be beautifully created. I hand cut all the patterns. I wanted the inside to be as beautiful as the outside. I wanted to challenge ingrained ideas that a bag had to be a certain way. My focus was, ‘This is what it is’. I did not want the bag to be like something else. Everything in the design had to be there for a reason. For instance, there was a risk that binding could ruin the curve of the bag. I ended up putting binding on the top edge because I was concerned it would fray. There were a lot of things that I felt strongly about.
Ms MacGowan said she did not want to use leather or webbing for the handles as she considered they did not fit with the design aesthetic. She spent many months with her sewing machine working out how to fix the rope to the bag so it retained its round profile and was not merely glued. Ms MacGowan explained:
It really complemented the neoprene beautifully. And also it was very important that I had to find rope that matched back with the fabric beautifully because it was really about creating an impression of the whole than the individual parts. So that was also very, very important.
Ms MacGowan’s evidence explained design issues she had to confront and resolve including:
how to sew the rope on to the bag rather than glue it;
how to stop the fabric from ripping at pressure points where the rope joined the bag;
stopping the raw cut neoprene edges at the top of the bag from fraying;
reinforcing the pressure points under the press studs and rope entry points;
using a glue lined heat shrink black tubing to fix the rope to the bottom of the bag;
attaching the rope to the four bottom corners which would otherwise be exposed to the risk of damage;
providing a pocket for valuables;
finishing the inside seams to look like the rest of the bag.
Burge v Swarbrick
At , Davies J and counsel for the parties managed to divine nine guiding principles from the High Court’s decision in Burge v Swarbrick to determine whether the Escape bag qualifed as a work of artistic craftsmanship:
(a) the phrase “a work of artistic craftsmanship” is a composite phrase to be construed as a whole: Burge at 357 56, 360 . It is not permissible to inquire separately into whether a work is: (a) artistic; and (b) the manifestation of craftsmanship;
(b) in order to qualify as a work of artistic craftsmanship under the Copyright Act, the work must have a “real or substantial artistic element”: Burge at 356 52;
(c) “artistic craftsmanship” does not mean “artistic handicraft”: Burge at 358 59;
(d) a prototype may be a work of artistic craftsmanship “even though it was to serve the purpose of reproduction and then be discarded”: Burge at 359 60;
(e) the requirements for “craftsmanship” and “artistic” are not incompatible with machine production: Burge at 358–9 59–60;
(f) whilst there is a distinction between fine arts and useful or applied arts, when dealing with artistic craftsmanship there is no antithesis between utility and beauty or between function and art: Burge at 359 61;
(g) a work of craftsmanship, even though it cannot be confined to handicraft, “at least presupposes special training, skill and knowledge for its production… ‘Craftsmanship’… implies a manifestation of pride and sound workmanship – a rejection of the shoddy, the meretricious, the facile”: Burge at 359 61, citing George Hensher Ltd v Restawile Upholstery (Lancs) Ltd  AC 64 (Hensher) at 91 per Lord Simon;
(h) although the matter is to be determined objectively, evidence from the creator of the work of his or her aspirations or intentions when designing and constructing the work is admissible, but it is neither determinative nor necessary: Burge at 360 –65. In determining whether the creator intended to, and did, create a work possessing the requisite aesthetic quality and requisite degree of craftsmanship, the Court should weigh the creator’s evidence together with any expert evidence: Burge at 360 64 and 65; and
(i) in considering whether a work is one of “artistic craftsmanship”, the beauty or aesthetic appeal of the work is not determinative. The Court must also weigh in the balance the extent to which functional considerations have dictated the artistic expression in the form of the work: Burge at 364 83–84.
Having set out the High Court’s statement of principle at 83, Davies J emphasised at  the High Court’s factual conclusion at  in application of that principle:
Taken as a whole and considered objectively, the evidence, at best, shows that matters of visual and aesthetic appeal were but one of a range of considerations in the design of the Plug. Matters of visual and aesthetic appeal necessarily were subordinated to achievement of the purely functional aspects required for a successfully marketed “sports boat” and thus for the commercial objective in view.
The Escape bag was not a work of artistic craftsmanship
Ms MacGowan’s evidence at  was that “the overall appearance of the bag as an object was fundamentally the most important thing.” She explained that “simplicity, beauty and originality” were her guiding principles:
“something free of embellishments, that was so pure in its form, structure and makeup that it embodied beauty in simplicity.”
SOE’s expert, a Ms Beale, agreed; considering the Escape bag “unique”. In cross-examination, however, she accepted that the uniqueness arose from the “decision decision” to use perforated neoprene and sailing rope “rather than in any contribution to the creation of those underlying materials.”
Ms Schwarz’ expert, Mr Smith, considered the use of perforated neoprene and sailing rope to be “strong design features”, but neither of them in itself was “new”. Mr Smith considered that combining 2 or more features that had been in common use over many years “[was] an evolution in styling rather than a completely new design”.
While Davies J reported that the experts agreed the Escape bag was a quality product, at  her Honour reported the experts agreeing that:
the Escape Bag is constructed using a standard construction method of “stitched together and then turned out” and other elements conform to what is generally expected of this style of bag – significant skill, training or knowledge was not required beyond what was expected in the design or manufacturing process”.
Davies J accepted that Ms MacGowan aspired to produce something of beauty, but that was not determinative as, following Burge, whether something was a work of artistic craftsmanship had to be determined objectively. At , her Honour declared that assessment required looking at the bag as a whole and “not by disintegrating the design choices made by Ms MacGowan within the functional limitations of the bag she created.” (emphasis supplied) While Ms MacGowan set out to design a stylish bag, at  her Honour found that “the function and utility of the bag as a carry all bag governed the overall design of the bag.”
Davies J considered on the evidence that significant design features resulted from and served functional considerations.
In the result, Davies J considered that, in designing the Escape bag, Ms MacGowan was not an “artist-craftsperson”: she had no special training, skill and knowledge relating to the design of handbags. The central aesthetic choices were the decisions to use perforated neoprene and sailing rope. Those two choices alone were not sufficient to constitute the resulting bag as a work of artistic craftsmanship.
At  – , her Honour explained:
 I also accept the submission for the respondents that Ms MacGowan did not approach the design and manufacture of the Escape Bag as an artist-craftsperson. She had no special training, skill and knowledge relating to the design and manufacture of handbags and many of the issues she encountered were purely functional in nature – for example, preventing the raw edges of neoprene from fraying, reinforcing the point where the rope handle enters the bag, and how to sew the sailing rope onto the bag while retaining the roundness of the rope.
 Further, I do not regard the selection and use of perforated neoprene as the fabric for the Escape Bag or its use in combination with sailing rope as involving an act of artistic craftsmanship. Both materials were readily available commercial materials capable of being used to manufacture a carry all bag without some particular training, skill or knowledge. At its highest, the use of those materials to make an everyday bag was an evolution in styling. Whilst Ms Beale was of the view the combination of those materials made the Escape Bag “unique” she accepted in cross-examination that the uniqueness to which she referred related to “design decision” to use those materials, rather than in any contribution to the creation of those materials.
At one level, the decision can be seen as raising a high bar for designs applying the “form follows function” theory of design rather the embellishment of embellishment’s sake. That seems to follow, however, from Burge. The suggestion that “revolution” rather than “evolution” is required might also be thought concerning.
While Davies J emphasised at  the functional nature of issues to be resolved, one might question the ways they could be resolved and the aesthetic choices that might be involved.
There may also be troubling aspects of the level of skill required to be demonstrated. The experts agreed that the level of skill exhibited by Ms MacGowan was not “beyond what was expected in the design or manufacturing process”. Are then works of artistic craftsmanship limited only to those exhibiting rare levels of skill? It is important to remember that the point of protecting works of artistic craftsmanship is to encourage real artistic effort by silversmiths, potters, woodworkers, hand-embroiderers and many others whose work does not qualify as a sculpture, engraving, drawing, painting or any of the other categories named in paragraphs (a) and (b) of the definition of artistic work.
In that respect, it does not appear that Ms MacGowan could be characterised as an “artist-craftsperson”. Davies J appears to have considered that the innovation lay in the choice of materials – perforated neoprene and sailing rope – in an otherwise fairly standard bag design. In that case, the result should be uncontroversial especially as the objective was always large scale production.
Nonetheless, the decision highlights yet again the problematic decision to include what was intended to be an expansive, and expanding, category of subject matter as an exception to a defence.
On the “passing off” related allegations, Davies J (mercifully) found SOE did not a reputation in the features of the bag alone reputation. Her Honour also considered, where the competing bags sold for around, respectively, $300 and $100, the branding of the products brought into play the well-known principle from Parkdale v Puxu:
Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another… the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public.
See Copyright Act 1968 s 77 and see paragraph (c) in the definition of artistic work in s 10(1). Copyright was claimed in the first, finished bag Ms MacGowan made or, alternatively, the first 8 bags supplied to the first customer. At , the first finished bag differed from the 8 bags supplied to the customer in that it did not include heat shrinkable tubing, the internal pouch was differently designed and there was no branding. ?
See paragraph 260 of the Gregory Committee report quoted by the High Court in Burge at para. 49 ?