Trade marks

Winnebago the damages or a reasonable royalty Down Under

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You will remember that Winnebago (USA) successfully sued the Knotts for passing off in Australia but (in large part because of Winnebago (USA)’s delay in asserting its rights) the Knotts had developed their own reputation in Australia and so could continue using WINNEBAGO here provided it was used with an appropriate disclaimer (here and here). The damages were to be assessed.

Now we know what the damages will be:

Knott Investments, the company that built and supplied the “Australian” Winnebagoes will have to pay a royalty calculated at 1% of its sales on all sales made from 6 years before the proceedings were started until the disclaimer was put in place.

The dealers who sold the vehicles will also have to pay a royalty of 1% on their sales in addition, but only from the date proceedings were actually commenced.

Winnebago (USA) claimed damages on the basis of a reasonable royalty. The respondents resisted. It was clear that Winnebago (USA) would never have granted them a licence and, equally, they would never have taken a licence from Winnebago (USA). In those circumstances, the respondents said, the court could not impose a royalty on the basis of an assumed agreement that would never have happened:

the applicant suffered no damage by way of a lost royalty (in effect, no lost “sale”) because the applicant would not have licensed the respondents to use the Winnebago marks in the first place.

Yates J rejected that defence and held that compensation was required to be paid on what has been called “the user principle”:

Under this principle, a plaintiff is entitled to recover, by way of damages, a reasonable sum from a defendant who has wrongfully used the plaintiff’s property. The plaintiff may not have suffered actual loss from the use, and the wrongdoer may not have derived actual benefit. Nevertheless, under the principle, the defendant is obliged to pay a reasonable sum for the wrongful use. The reasonable sum is sometimes described as a reasonable rent, hiring fee, endorsement fee, licence fee or royalty (amongst other expressions), depending on the property involved and the nature of the wrongful use.

Black CJ and Jacobson J in a copyright case in the Full Court had appeared to reject the application of that principle.[1] Yates J, however, considered the principle could and should be adopted in the context of passing off (and trade mark infringement) on the basis of a long line of English and Australian cases applying the principle in the context of trespass to real property, conversion, detinue and intellectual property infringements.[2] Otherwise, the respondents would escape liability for damages as a result of the very thing that made their conduct unlawful: the lack of consent by Winnebago (USA).

The respondents also argued that no damages should be payable because, as the Full Court found, they had a concurrent reputation in WINNEBAGO in Australia. Yates J rejected this too. His Honour considered that the existence of concurrent reputations – one which did not require a disclaimer and one which did – meant there was value in being able to use the reputation without any disclaimer. Yates J arrived at the royalty of 1% on the basis that Winnebago (USA) had granted a licence to an Australian licensee at that rate and, while various other considerations were entered into, that was an appropriate round number.

Three points in relation to the dealers.

Yates J rejected their first argument: that they should not be liable for anything as the supplier, Knott Investments would already have paid a royalty. However, the dealers’ sales of vehicles in passing off were separate wrongs to those of the manufacturer and so required separate compensation.

Secondly, while Winnebago (USA) did not submit evidence about what damages the dealers’ actions caused, it claimed a royalty of 4 or 5%. Yates J considered, in the absence of evidence, that a royalty of 1% would be consistent with that imposed on the supplier.

Thirdly, the dealers (and for that matter, the Knotts) would be liable for damages for passing off only where they acted with fraud: that is, with knowledge of Winnebago (USA)’s reputation in Australia and its desire to assert those rights here. In the absence of evidence avout what the dealers knew, Yates J considered that they could only be held to have acted with fraud once proceedings were initiated:

The difficulty for the applicant is that the evidence does not address the question of what the dealers knew or thought. Even if they might have been aware of the applicant’s activities in the United States or in other overseas markets, it does not follow that they also understood that the applicant had a reputation of any significance in Australia, let alone one that was capable of legal protection, or, more importantly, that, prior to the commencement of this proceeding, the applicant was claiming that it had rights in Australia in respect of the Winnebago marks and that the commercial activities of the first respondent and its dealers constituted an infringement of those rights. However, from the time of commencement of this proceeding, when the applicant’s claims were exposed, the position of the second to twelfth respondents was different. From that time, they were on notice of the applicant’s claimed rights. Their persistence in using the Winnebago marks after this notice constitutes fraud in the relevant sense.

The need to show “fraud” is another difference between the tort of passing off and the action for misleading or deceptive conduct under the Australian Consumer Law.

Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) [2015] FCA 1327

  1. Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (2007) 157 FCR 564; [2007] FCAFC 40 (Aristocrat) at [27]-[28].  ?
  2. One of those cases was Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342, in which the leading judgment was given by Allsop P, now the present Chief Judge.  ?

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When can an authorised user sue

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Following on from my earlier post about the Trade Marks Act 1995 and repackaged goods, it is worth noting that there was also a dispute about the power of an authorised user to bring proceedings under s 26(1)(b) of the Act.

Amongst other things, section s 26(1)(b) provides:

Powers of authorised user of registered trade mark

(1) Subject to any agreement between the registered owner of a registered trade mark and an authorised user of the trade mark, the authorised user may do any of the following:

….

(b) the authorised user may (subject to subsection (2)) bring an action for infringement of the trade mark:

   (i) at any time, with the consent of the registered owner; or

  (ii) during the prescribed period, if the registered owner refuses to bring such an action on a particular occasion during the prescribed period; or

  (iii) after the end of the prescribed period, if the registered owner has failed to bring such an action during the prescribed period;

Scandinavian Tobacco Group Eersel, as the owner of the registered trade marks, had brought the proceeding, but it was joined as an applicant by its local distributor as an authorised user. Trojan argued that the authorised user had no standing to sue in this case. This was not an argument about whether the local distributor was an authorised user. Rather, it was whether or not the formal requirements of s 26(1)(b) had been met.

Allsop CJ confirmed that s 26(1)(b) allowed an authorised user to bring proceedings for trade mark infringement concurrently with the trade mark owner. It was not necessary for the authorised user to call on the registered owner to bring proceedings and then wait 60 days for the owner to fail to take any action.

The power of an authorised user under the Act to bring proceedings is subject to any agreement with the registered owner to the contrary. In that connection Cl 8 of the relevant distribution agreement is in fairly typical terms:

Nothing in this Agreement shall be interpreted or otherwise construed as giving the Distributor any rights to any of the Supplier Trade Marks. The Distributor shall inform the Supplier of any Infringements of the Supplier Trade Marks of which the Distributor becomes aware. Prosecutions for infringements shall be at the Supplier’s discretion and cost, but the Distributor shall offer all reasonable assistance. Any damages received shall be credited to the Supplier.

Allsop CJ considered this did not exclude the authorised user’s powers under s 26(1)(b) but, if it did, his Honour would have inferred the registered owner had given consent in the circumstances of this case: both the registered owner and the authorised user had issued the proceedings as joint applicants.

The question of the local distributor’s standing as an authorised user to bring proceedings is not necessarily an arid debate in cases where the right owner is also an applicant. It might have affected how much damages could be recovered for any infringement by Trojan.

There are of course a number of ways damages could be calculated (assuming damages and not an account of profits were pursued). One way of calculating such damages is the amount of profits that would have been made on sales lost as a result of the infringing activity. If s 123 had not provided Trojan with a defence and the applicants had pursued damages for lost sales, the quantum as measured by any profits lost by reason of the (hypothetical) infringement would probably include the local distributor’s “lost” profits only if it was an authorised user and entitled to join in the proceeding. If STG, as the owner of the registered trade marks, was the only applicant, its damages would probably have been limited only to the profits it lost on sales to its distributor and probably would not include profits on sales “lost” by the distributor.[1]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086[2]

  1. The qualification “probably” is necessary in light of the Full Court’s decision in a copyright case: Insight SRC IP Holdings Pty Ltd v Australian Council for Educational Research Ltd [2013] FCAFC 62  ?
  2. STG’s appeal from the principal decision was heard by the Full Court on 25 November.  ?

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Parallel imports – repackaging Down Under

1 Comment / Trade marks / / / , , , , , ,

Scandinavian Tobacco Group Eersel (STG) is the world’s largest manufacturer of cigars and pipe tobacco. Three of its brands include CAFE CREME, LA PAZ and HENRY WINTERMANS; each of which is registered in Australia as a trade mark for tobacco products.

Trojan bought up stocks of genuine STG cigars in Europe in their original packaging. STG had placed the relevant trade marks on the cigars or their packaging.

The Tobacco Plain Packaging Act, however, precludes the sale of such cigars in Australia in their packaging. Trojan took the cigars out of the packaging which STG sold them in and put them in the drab, khaki packaging with gruesome pictures and health warnings as required under the TPPA. It also placed on the new packaging the relevant trade mark in the plain font and type size in the limited places that the TPPA allows.

STG sued for infringement unsuccessfully. Trojan did use the trade marks as trade marks within the meaning of s 120, but the defence provided by s 123(1) applied.

Allsop CJ held that use of the trade mark by an importer on genuine goods was use of the trade mark “as a trade mark” and so would infringe if done without consent or other defence. While appearing to express some doubts, his Honour considered that 4 Full Courts[1] required him to find that the 1995 Act changed the law so that Champagne Heidsieck[2] was no longer good law. Accordingly, subject to the s 123 defence, Trojan would have infringed.

Section 123(1) provides:

In spite of [section 120][s120], a person who uses a registered trade mark in relation to goods that are similar to goods in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied to, or in relation to, the goods by, or with the consent of, the registered owner of the trade mark.

This seems like a pretty straightforward application of s 123(1). STG argued, however, that the application of the trade mark which Trojan had to show STG’s consent was the application to the plain packaging by Trojan, not the application of the trade mark to the original packaging by STG.

Allsop CJ short circuited that argument. His Honour got STG to agree that a retailer could rely on s 123(1) to avoid infringement if it printed the trade mark on a purchase receipt. One would hope that proposition was not controversial. At [82], his Honour developed the ramifications:

During argument, I posited to Mr Heerey, counsel for STG, an example: a tie with
trade mark Z woven into the tie, in a pink box with trade mark Z embossed on the box. Both trade marks have been applied by the registered owner. The shop owner advertises his stock of Z ties with a sign outside bearing trade mark Z and invoices customers with a document bearing the same mark. Mr Heerey accepted that there would be no infringement in the use of the advertising and invoices even though such use would be use as a trade mark because of the operation of s 123: Facton Ltd v Toast Sales Group Pty Ltd [2012] FCA 612; 205 FCR 378 at 398–404 [112]-[145]. (It is to be noted, and Trojan emphasised this point in its submissions, that Middleton J in Facton said at [132] that “a natural reading of the words used in s 123 suggest that the only time at which the issue of consent is to be assessed is the time of the application of the trade mark to goods.”) I then posited a change to the facts. The
shop owner preferred selling the tie in a blue box (fitting in with a blue theme to his shop) upon which he faithfully and accurately placed the trade mark Z. The tie was taken out of the pink box (which was discarded) and put in the blue box for display and sale. STG submitted that the step of placing the Z trade mark on the blue box would not be protected by s 123, but accepted that the sign and invoices remained protected. That was so, it was submitted, because of an implied consent by the registered owner of the trade mark to the advertising and invoices in the light of the trade mark on the tie. Yet, should the difference be governed by the existence of weaving on the tie? Has not the trade mark already been applied in relation to the good (the tie) by embossing on the pink box?

Allsop CJ considered that the plain, natural meaning of the statutory language led to the answer “Yes” and was to be preferred.

In this case, there was no question about the quality of the goods once Trojan had repackaged them. Section 123(1) arguably does not concern itself with such matters. Nonetheless, the approach under the Australian Act contrasts starkly with the convoluted regime applicable in the EU which even requires the parallel importing repackager to give the trade mark owner advance notice of its nefarious plans.[3]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086

  1. The famous four: Transport Tyre Sales Pty Ltd v Montana Tyres Rims & Tubes Pty Ltd [1999] FCA 329; 93 FCR 421 at 440 [94]; [Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd [2012] FCAFC 51; 202 FCR 286 at 295 [66]; Paul’s Retail Pty Ltd v Lonsdale Australia Limited [2012] FCAFC 130; 294 ALR 72 at 82 [65] and E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2009] FCAFC 27; 175 FCR 386 at 403–404 [57]- [58]. The two Paul’s Retail cases, of course, did not involve genuine goods and the High Court in Gallo refrained from deciding this point while overtuning the Full Federal Court’s decision.  ?
  2. Champagne Heidsieck et cie Monopole Society Anonyme v Buxton [1930] 1 Ch 330.  ?
  3. See for example Case C–143/00 Boehringer Ingelheim KG v Swingward Ltd and Dowelhurst Ltd [2002] ECR–1 at [61] – [68].  ?

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Harper Review: Government Response

Leave a Comment / Copyright, IP generally, Trade marks / / / , , , , , , , ,

Yesterday (November 24), the Government published its response to the Competition (Harper) Review.

According to the response, “Harper” made 5556 recommendations; the Government has accepted 39 of them in full, 5 in part and the remainder are still under advisement.

In the intellectual property field, the item receiving most press (here and here) is the Government’s acceptance of the recommendation to remove all remaining restrictions on parallel importing books. At the moment,[1] the importation of a genuine book published first in Australia or within 30 days of first publication overseas may be blocked provided the copyright owner complies with the convoluted regime to supply copies in response to an order. This guarantees availability, but still leaves the copyright owner free to set the price it charges the person placing the order.

Harper recommended:

Restrictions on parallel imports should be removed unless it can be shown that:

• the benefits of the restrictions to the community as a whole outweigh the costs; and

• the objectives of the restrictions can only be achieved by restricting competition.

Consistent with the recommendations of recent Productivity Commission reviews, parallel import restrictions on books and second?hand cars should be removed, subject to transitional arrangements as recommended by the Productivity Commission.

Remaining provisions of the Copyright Act 1968 that restrict parallel imports, and the parallel importation defence under the Trade Marks Act 1995, should be reviewed by an independent body, such as the Productivity Commission.

What the Government plans:

The Government supports the removal of parallel import restrictions on books. The Government will progress this recommendation following the Productivity Commission’s inquiry into Australia’s intellectual property arrangements (see Recommendations 6 above) and consultations with the sector on transitional arrangements.

The terms of reference for the inquiry provide that the Productivity Commission is to have regard to the findings and recommendations of the Harper Review in the context of the Government’s response, including recommendations related to parallel import restrictions in the Copyright Act 1968 and the parallel importation defence under the Trade Marks Act 1995.[2]

Harper’s recommendation 6 was a reference to the Productivity Commission to undertake a 12 month long “overarching review of intellectual property” focusing on

competition policy issues in intellectual property arising from new developments in technology and markets; and the principles underpinning the inclusion of intellectual property provisions in international trade agreements.

The Government response notes that in August it had already made this reference to the Productivity Commission.[3] The response on this point is curiously even-handed. The Productivty Commission:

is to have regard to Australia’s international arrangements, including obligations accepted under bilateral, multilateral and regional trade agreements to which Australia is a party. The global economy and technology are changing and there have been increases in the scope and duration of intellectual property protection. Excessive intellectual property protection can result in higher costs for Australian businesses and consumers and inhibit innovation. However, weak intellectual property protection can lead to under?investment in research and development (R&D) which also stifles innovation. A comprehensive evaluation of Australia’s intellectual property framework is needed to ensure that the appropriate balance exists between incentives for innovation and investment and the interests of both individuals and businesses, including small businesses, in accessing ideas and products. (emphasis supplied)

However, an independent inquiry into the processes for negotiating intellectual property provisions in treaties is not necessary: there are already robust processes in place and publishing an independent cost benefit analysis before the negotiations have concluded might tip our hand in the negotiations.

Section 51(3) gained a slight reprieve. Harper’s recommendation 7 was that it be repealed (and a new power for the ACCC to create block exemptions be introduced). Despite Prof. Harper’s injunctions that this is old news and we should just, er, do it, the Government thinks it should wait and see what the Productivity Commission says. Anyone betting the Productivity Commission won’t recommend …?

The Government also supports conferring a power to grant block exemptions on the ACCC:

A block exemption removes the need to make individual applications for exemption. The exemption is granted if the competition regulator considers that certain conditions are satisfied: either that the category of conduct is unlikely to damage competition; or that the conduct is likely to generate a net public benefit.

A block exemption power that supplements the existing authorisation and notification frameworks will be helpful in establishing ‘safe harbours’ for business. Block exemptions will reduce compliance costs and provide further certainty about the application of the CCA. They are an efficient way to deal with certain types of business conduct that are unlikely to raise competition concerns, either because of the parties engaged in the conduct or the nature of the conduct itself.

So, in the interests of promoting competition, we are going to introduce a European-style power for the regulator to design the marketplace.

  1. Copyright Act s 44A.  ?
  2. The Government also said it would not proceed with the recommendation about second hand cars, in the interests of consumer protection and community safety.  ?
  3. Indeed, you should already be putting the finishing touches on your submissions in response to the Issue Paper since they are due on Monday!  ?

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The word yellow is descriptive of online directories

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Telstra has lost its appeal in the “Yellow” case.

The Full Court upheld the trial judge’s conclusion that the word “yellow” lacked any capacity to distinguish print or online directories under (the old version of) s 41. However, the Full Court accepted that the word “yellow” had become sufficiently distinctive of Telstra by reason of use and promotion after the date of the application that it would have been registrable if it had had some inherent capacity to distinguish.

Following the High Court’s ruling in “Oro/Cinque Stelle“, the Full Court agreed with the trial judge that the word “yellow” signifies the colour yellow and the evidence showed that the colour yellow signified print and online directories. Consequently, the word itself was descriptive. At [117], in considering the ordinary signification of the word, the Full Court said:

We would say at the outset that it was appropriate for Telstra to proceed on the basis that capacity to distinguish could not be decided by reference to inherent adaption alone even if the Court accepted all of its arguments. The word yellow describes a colour and, even without evidence, it would be appropriate to infer that at least some other traders might wish to use that colour. Furthermore, there was at the very least evidence in this case of not infrequent use of the colour yellow in connection with print and online directories.

The Full Court then considered that the evidence of use by other traders in print and online directories confirmed that consumers did in fact consider the word “yellow” descriptive of such directories. Like the trial judge, the Full Court took into account the usage of traders overseas as well as within Australia, although it may have been to support the good faith of the local traders’ use.

Survey and acquired distinctiveness – s 41(5)

If the word “yellow” had had some capacity to distinguish print and online directories, the Full Court would have allowed Telstra’s appeal that it had become sufficiently distinctive under s 41(5) by use after application. A 2008 survey (not the 2007 survey relied on by the primary judge) showed that after several years of use including millions of dollars of expenditure on advertising, at least 12% of the survey respondents identified (associated?) the word “yellow” with Telstra’s directory unprompted. A further 4%, making 16% in total, had similar unprompted association.

The Full Court distinguished British Sugar and held that would be sufficient. (The report does not disclose the terms of the question that elicited those responses.) Arguably, makes a nice contrast to the Oro/Cinque Stelle case.

What about .com.au

In dismissing a second, cross-appeal in which yellowbook.com.au was found to be deceptively similar to Telstra’s Yellow Pages trade mark, the Full Court treated the domain name “accoutrement” .com.au as largely insignificant for the purposes of the deceptive similarity analysis.

The interesting point here is that the Full Court considered this may not always be the case. It was appropriate to disregard the element here in the context where the services were online directories and consumers were shown largely to disregard such elements.

The question of onus

The Full Court also seems to have resolved the ongoing disputes about the onus of proof. The Full Court held that the opponent has the onus of proving that a proposed trade mark has no inherent capacity to distinguish. It further held that that onus was on the balance of probabilities, not the practically certain standard which some courts at first instance have applied.

Telstra Corporation Limited v Phone Directories Company Australia Pty Ltd [2015] FCAFC 156 (Besanko, Jagot and Edelman JJ)

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Productivity Commission reviews IP

Leave a Comment / Copyright, Designs, IP generally, Patents, Trade marks / / / , , ,

The Productivity Commission has released an issues paper for its inquiry into Intellectual Property Arrangements.

What it was asked to do

In his reference the then Treasurer directed the Productivity Commission to investigate:

The Australian Government wishes to ensure that the intellectual property system provides appropriate incentives for innovation, investment and the production of creative works while ensuring it does not unreasonably impede further innovation, competition, investment and access to goods and services. In undertaking the inquiry the Commission should:
1. examine the effect of the scope and duration of protection afforded by Australia’s intellectual property system on:
(a) research and innovation, including freedom to build on existing innovation;
(b) access to and cost of goods and services; and
(c) competition, trade and investment.
2. recommend changes to the current system that would improve the overall wellbeing of Australian society, which take account of Australia’s international trade obligations, including changes that would:
(a) encourage creativity, investment and new innovation by individuals, businesses and through collaboration while not unduly restricting access to technologies and creative works;
(b) allow access to an increased range of quality and value goods and services;
(c) provide greater certainty to individuals and businesses as to whether they are likely to infringe the intellectual property rights of others; and
(d) reduce the compliance and administrative costs associated with intellectual property rules.

Big job!

As a consequence, there are a “gazillion” questions set out in the Issues Paper. Here’s just a few:

Do IP rights encourage genuinely innovative and creative output that would not have otherwise occurred? If not, how could they be designed to do so? Do IP rights avoid rewarding innovation that would have occurred anyway? What evidence and criteria should be used to determine this? Are IP arrangements in other jurisdictions more effective in generating additional creative output?

To what extent does the IP system actively disseminate innovation and creative output? Does it do so sufficiently and what evidence is there of this? How could the diffusion ofknowledge-based assets be improved, without adversely impacting the incentive to create?

What, if any, evidence is there that parties are acting strategically to limit dissemination?

Do IP rights provide rewards that are proportional to the effort to generate IP? What evidence is there to show this? How should effort be measured? Is proportionality a desirable feature of an IP system? Are there particular elements of the current IP system that give rise to any disproportionality?

What are the relative costs and return to society for public, private and not-for-profit creators of IP? Does the public provision of IP act as a complement or substitute to other IP being generated? Are there any government programs or policies that prevent, raise or lower the costs of generating IP?

What are the merits and drawbacks of using other methods to secure a return on innovation (such as trade secrets/confidentiality agreements) relative to government afforded IP rights? What considerations do businesses/creators of IP make in order to select between options? How does Australia’s use of methods besides IP rights to protect IP compare to other jurisdictions? Why might such differences arise?

The Commission seeks submissions about how the parameters of the IP system came to be set, and on the basis of what evidence and analysis.

How were decisions to extend IP rights in the past (e.g. copyright) assessed? Is an evidence-based approach systematically used to assess changes to the IP system? How transparent have decisions to change the IP system been, including when it comes to legislation and international agreements? Is a stronger evidence base and greater transparency in the public interest, and if so, how should this be accomplished?

Don’t worry. Things get more specific from here. Some of the questions about patents will give you the flavour:

What evidence is there that patents have facilitated innovations that would not have otherwise occurred, or have imposed costs on the community, including by impeding follow-on innovation?

Are there aspects of Australia’s patent system that act as a barrier to innovation and growth? If so, how could these barriers be addressed?

Do patents provide rewards that are proportional to the effort to generate IP? What evidence is there to show this? How should effort be measured? How does the balance of costs and benefits from patent protection compare across sectors and innovations?

What scope is there to better leverage the economic benefits of patents, by taking steps to improve the diffusion of patent information?

Is the patent system sufficiently flexible to accommodate changes in technology and business practices?

Do the criteria for patentability in the Patents Act 1990 (Cwlth) help the patent system to meet its objectives? Would introducing economic criteria for patentability and/or gradually reducing the duration of patent protection substantially improve the efficiency and effectiveness of the patent system?
….

There are numerouse questions in similar vein for the other IP rights and “data”.

Don’t get me wrong. These are all facinating questions. You, or professors and teams of doctoral candidates, could spend lifetimes trying to answer them.[1]

But here’s a thing. Are we really going to withdraw from the World Trade Organisation (with its obligations under the TRIPS Agreement)? Are we really going to pull out of the Australia – USA Free Trade Agreement? Or, given what the Prime Minister is reported to have said, does anyone seriously think we are not going to implement the TPP?

Hmmm. Maybe, at least as far as patents go, we could tell them that [28] of the majority’s ruling in Myriad has solved all the problems.[2] On the other hand, may be you are thinking this might be a good place to try and “fix” Myriad. In that case, you might like to read “Box 3 Beyond the theory” right up the front of the Issues Paper:

While discussions about IP rights are often theoretical, policy decisions about the balance between creators and consumers matter in real ways. Striking the wrong balance can impact the price and availability of books, music, cars, phones or even clothes.

The balance is particularly contentious in pharmaceuticals. Cases exist where patents have allowed pharmaceutical companies to charge what some consider to be unconscionably high prices for life-saving medicines. New compounds and biologic drugs, and their safety and efficacy, are no doubt expensive to develop and test and consumers are often willing to pay almost anything to access them (or the community as a whole through pharmaceutical subsidy schemes). Practices such as patent ‘evergreening’, seeking extended test data exclusivity for biologics, or paying competing firms not to produce generic medicines makes the balance of IP rights all the more contentious. (my emphasis)

Yes, once it has been “discovered”, the price of a new drug or treatment will be higher than if there was no patent. That is the point of the patent (or any other IP right): to allow the holder the opportunity to charge higher than marginal cost. How do you work out whether the price for that expensive drug is “unconscionably high”?

  1. As it happens, you have until 30 November 2015 to get your thoughts in.  ?
  2. Apart of course from those “innovation” patents.  ?

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Little Brown Balls Bounced Again

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Jessup J has ruled that MALTITOS may be registered for confectionary in the face of MALTESERS.

Mars had successfully opposed Delfi’s application before the Office on the grounds of its prior registration for MALTESERS and its reputation in Australia.

On the s 44 point, both marks consisted of three syllables and had the word “malt” in common as the first syllable, but the different appearance and sound of the remaining two syllables were sufficiently strong that ordinary purchasers would not be caused to wonder if there was a common trade source. Both parties accepted (apparently on the basis of Delfi’s overseas use) that MALTITOS would be pronounced “toes”. Jessup J was favoured with the expert evidence of a linguist, Ass Prof Cox, including that:

the consonant between the final two syllables is ‘t’, phonetically described as a voiceless alveolar stop sound /t/, whereas for ‘Maltesers’ it is ‘s’ pronounced as /z/, a voiced alveolar fricative sound. The difference between the two sounds /t/ and /z/ is a difference of manner of articulation (stop vs fricative) and also of voicing (voiceless vs voiced). /t/ is a voiceless speech sound whereas /z/ is voiced. These differences are highly functional in English and separate words like ‘seat’ vs ‘seize’, ‘shoot’ vs ‘shoes’.

Jessup J conceded he was not in a position “to engage with her in her field of technical expertise”, but her evidence confirmed his impression as a layperson. In his Honour’s view:

if the notional consumer under contemplation was someone whose eye fell upon the applicant’s mark, in isolation, displayed on a package sitting on a rack or shelf, I am quite unpersuaded that it would, because of the limited similarities between that mark and the respondent’s mark, enter his or her mind that the product in question derived, or might have derived, from the same source as products sold under the latter.

The Bali Bra case [1] notwithstanding, Jessup J did not consider that he was concerned with the potential for sales assistants to mishear the product request across a noisy counter.

Delfi tried to argue that s 60 could be invoked only by unregistered marks, but Jessup J, after some consideration, was not prepared to buy that. Rather, the reputation (if proved) provided the basis for the comparison:

the only respect in which s 60 requires an exercise different from that arising under so much of s 44 as relates to deceptive similarity is that the reputation in Australia of the “other” mark must be the reason why the use of the mark proposed to be registered is likely to deceive or cause confusion. What this means in practice is that the notional consumer of average intelligence thinking of making a purchase by reference to goods in association with which the latter mark is used, or intended to be used, is no longer someone who has had no more than some exposure to the “other” mark: he or she is someone who is assumed to have that level of awareness of that mark as is consistent with the content and extent of the reputation of it.

His Honour accepted that MALTESERS had a widespread, solid reputation. As in the Malt Balls case, however, that in the end told against deception:

with a stronger awareness of the respondent’s mark, I consider that such a consumer would be immediately struck by the differences between the two marks, as discussed above. He or she may observe the limited similarities between the marks and, because the subject of the presumptive interest would be confectionery, may assume that the products were of the same nature as those sold under the respondent’s mark, but, giving the matter a moment’s reflection, would readily conclude that those products were not Maltesers. As I say, the strong reputation of the respondent’s mark would, if anything, make that conclusion a more likely one.

Delfi Chocolate Manufacturing S.A. v Mars Australia Pty Ltd [2015] FCA 1065

  1. The Bali Bra case is not referred to in the judgment but, consistently with Jessup J’s view, Mason J did appear to be concerned with the prospect that the consumer would have misheard what the sales person said over the phone: “No doubt orders are sometimes placed by telephone. And in considering the likely reaction of a customer it is important to take into account, not the person whose knowledge of the two marks and the goods sold under them enables her to distinguish between them, but the person who lacks that knowledge.”  ?

Little Brown Balls Bounced Again Read More »

Productivity Commission to review all IP laws

Leave a Comment / Antitrust, Copyright, Designs, IP generally, Patents, PBR, Trade, Trade marks / / / , , , , , , , , , , ,

The Harper Review[1] recommended that the Government should direct the Productivity Commission to undertake an overarching review Australia’s IP laws.

The Treasurer and the Minister for Small Business have now announced that review.

According to the Harper Review:

an appropriate balance must be struck between encouraging widespread adoption of new productivity-enhancing techniques, processes and systems on the one hand, and fostering ideas and innovation on the other. Excessive IP protection can not only discourage adoption of new technologies but also stifle innovation.

Given the influence of Australia’s IP rights on facilitating (or inhibiting) innovation, competition and trade, the Panel believes the IP system should be designed to operate in the best interests of Australians.

The Panel therefore considers that Australia’s IP rights regime is a priority area for review. (emphasis supplied)

In reaching that view, the Harper Review flagged concern about entering into new treaties with extended IP protections.

The terms of reference state:

In undertaking the inquiry the Commission should:

  1. examine the effect of the scope and duration of protection afforded by Australia’s intellectual property system on:

    a. research and innovation, including freedom to build on existing innovation;

    b. access to and cost of goods and services; and competition, trade and investment.

  2. recommend changes to the current system that would improve the overall wellbeing of Australian society, which take account of Australia’s international trade obligations, including changes that would:

    a. encourage creativity, investment and new innovation by individuals, businesses and through collaboration while not unduly restricting access to technologies and creative works;

    b. allow access to an increased range of quality and value goods and services;

    c. provide greater certainty to individuals and businesses as to whether they are likely to infringe the intellectual property rights of others; and

    d. reduce the compliance and administrative costs associated with intellectual property rules.

Then follows a catalogue of 9 matters for the Commission to have regard to. These include the Government’s desire to retain appropriate incentives for innovation, the economy-wide and distributional consequences of recommendation and the Harper Review’s recommendations in relation to parallel imports.[2]

The Commission must report within 12 months.

  1. The Competition Policy Review, recommendation 6.  ?
  2. Rec. 13 and section 10.6 of the Competition Policy Review: i.e., repeal any remaining restrictions unless the benefits outweigh the costs and the objectives of the restrictions can only be achieved by restricting competition. Cue diatribe about “restricting competition” especially given the oft mouthed formula that IP rights rarely (if ever) restrict competition.  ?

Productivity Commission to review all IP laws Read More »

Sir Walter …

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

Raleigh or Scott or … buffalo grass.

Yates J has upheld the Registrar’s refusal to register SIR WALTER for buffalo grass in class 31 on the grounds it lacked any capacity to distinguish and was not in fact distinctive.[1]

Buchanan Turf has a PBR for a variety of soft leaf buffalo grass called Sir Walter – PBR Certificate No. 1082. The variety is actually registered as “Sir Walter”. The PBR is due to expire on 27 March 2018. After that date, of course, anyone will be free to propagate and sell the Sir Walter variety. I wonder what they will call it?

For reasons best known to themselves, Buchanan Turf sought to amend the class 31 specification during the examination process to read:

Buffalo grass of the ‘Sir Walter’ variety (as lodged with the Registrar of Plant Breeder’s Rights (ref: certificate no. 1028), being part of the genus Stenotaphrum and a member of the species Secundatum.

Are you still wondering what the putative propagaters after March 2018 will be wanting to call their variety of lawn seed?

Applying the usual tests, Yates J found that Sir Walter had no inherent capacity to distinguish:

Here, the appellant developed a new thing—a new variety of buffalo grass having particular characteristics—which it called Sir Walter. Sir Walter is the given and proper name for the new variety. It has no other name. In this way, the name Sir Walter must be taken to be part of the common stock of language that denotes this particular variety of grass.

His Honour distinguished the Zima case on the basis that “Zima” was not the name of a variety of tomato.

Buchanan Turf argued its name had acquired distinctiveness – there had been over $16 million in sales since 1996 and some 68 licensed growers. There was also evidence of extensive television, radio and other media advertising; often featuring the terms Sir Walter in combination with a knight device,[2] almost invariably presenting the expression in quotes. One example of use without the device by way of illustration:

“Sir Walter” Premium lawn turf

Sir Walter Premium Lawn Turf is a superior quality soft buffalo grass giving unmatched performance for Australian conditions. Here you can find out all there is to know about this ideal, low maintenance lawn called ‘Sir Walter’. ….

His Honour considered that these types of use, even in specially marked out form, just identified the type of grass that was being used. In doing so, Yates J pointed out that just because the public had come to associate a term with a particular trader did not mean in functioned as a trade mark, relying on Jacob LJ’s dictum in the British Sugar case[3] and BP v Woolworths.

Where the name was used with the knight device, it was not sufficient to show that the combined device as a whole was distinctive, or had acquired distinctiveness. It was necessary to show that SIR WALTER alone had done so as the knight device was not part of the trade mark applied for. As with the standalone uses, in context the name just referred to the type of grass, not its trade source.

Yates J noted that there was no direct evidence from customers about what the name signified to them. This seems to be a recurrent theme in judicial comment. I wonder, however, what that evidence would need to disclose before the conclusion that any such customers just associated the name with Buchanan Turf could be overcome especially in circumstances where (a) it was the name of the variety and (b), until March 2018, there can be only one trade source?[4]

The PBR Act provides:[5]

A name … in respect of a plant variety must not:

…

(e) be or include a trade mark that is registered, or whose registration is being sought, under the Trade Marks Act 1995 , in respect of live plants, plant cells and plant tissues.

Yates J thought this provision evidenced a policy that rights to use a plant variety name after the PBR had expired should not be impeded by a trade mark registration which, of course, May last a lot longer than a PBR. However, there was no express prohibition in the Trade Marks Act, as there is with the names of patented things, against registering the name of a PBR as a trade mark.

Buchanan Turf Supplies Pty Ltd v Registrar of Trade Marks [2015] FCA 756

  1. Trade Marks Act 1995 s 41(6) (i.e., the old form).  ?
  2. One representation of the combination mark is shown in the Schedule. The knight device is itself a registered trade mark, No 882781.  ?
  3. TREAT: the relevant extract is set out at paragraph 34.  ?
  4. For one case where consumer type evidence was successfully led, see Philmac v Registrar of Trade Marks.  ?
  5. Plant Breeders Act 1994 s 27(5)  ?

Sir Walter … Read More »

Interlocutory Injunction to transfer domain name

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

Nicholas J has granted Thomas International an interlocutory injunction ordering Humantech to transfer the domain names, thomasinternational.com.au and thomas.co.za, to Thomas International. Thomas International had to give the usual undertakings and, as a foreign corporation, provide security for costs.

Thomas International is an English company which provides psychological testing and psychometric assessments, and competency and skills-based assessments, particularly using computerised services accessed over the internet through thomasinternational.net. It also makes its materials and services available through distributors. It appointed Humantech, a company associated with a Mr Schutte, as its master distributor/licensee for South Africa and Australia with power to exercise its rights through distributors. Humantech was permitted to use the “Thomas” trade marks, to incorporate a company in Australia under the name Thomas International (Australia) and to register the domain names. There were also obligations when the arrangements ceased or were terminated to cease use of the trade marks and change the corporate name of Thomas International (Australia) to a name which did not include Thomas.

In due course, the Schutte interests also incorporated another entity, ACT, which offered similar services to Thomas International’s assessment and training services. Thomas International alleges that, after some successful years’ trading, revenues from Thomas International (Australia) starting dropping off and the Schutte interests were diverting customers to ACT which, without permission, was using materials based on Thomas International’s materials.

Thomas International sued Humantech, Thomas International (Australia), ACT and Mr Schutte. There was a meeting between the parties and their lawyers shortly after. Thomas International said it would not discuss a new licensing arrangement until an undertaking dealing with the existing issues was provided. As a result, Humantech and the Schutte interests provided an undertaking to cease use of Thomas International’s trade marks, intellectual property and to transfer the domain names over. Thomas International also agreed to negotiate about a new licensing arrangement in good faith.

The next day Thomas International made its licence proposal to the Schutte interests. They considered it was financially unworkable and left the meeting. Later that day, they then put Humantech (and subsequently the other corporate entities) into administration and disabled the website. Shortly thereafter, Thomas International applied for interlocutory injunctions.

As noted, Nicholas J granted the interlocutory injunctions including an order that the domain names be transferred to Thomas International. The terms of the Undertaking meant it had a prima facie case to force the Schutte interests to stop using the Thomas name and trade mark and for the transfer of the domain names.

The Schutte interests’ main attempt to rebut that was their argument that the Undertaking was invalid or unenforceable. That was said to result because, it was alleged, that Thomas International extracted the Undertaking in return for its promise to negotiate a new licence arrangement in good faith. The Schutte interests contended that the terms of the licence they were offered were so unreasonable as to show that Thomas International did not negotiate, and had no intention of negotiating, in good faith. This issue was not developed in detail at this stage, but Nicholas J pointed out that, on the current state of the law in Australia, an obligation to negotiate in good faith did not require a party to subordinate its own interests to that of the other party.

On the balance of convenience, Nicholas J accepted Thomas International’s argument that:

the present state of affairs may cause TIL significant reputational damage as a result of customers who have purchased units entitling them to make use of facilities provided by TIL at the Thomas Hub being prevented from gaining access to it through the TIA website. I accept this submission. I also consider that any such damage may be irreparable and that damages will most likely not provide an adequate remedy. The financial statements of TIA for the financial year ending 30 June 2014 show that the company has net assets of just under $145,000.

On the other hand, the Schutte interests’ main argument was the disruption to their business, and that of their customers, if they could not continue to use the domain names, the main access point for provision of services both to Thomas International (Australia)’s customers and those ACT. As Nicholas J pointed out, however, the Schutte parties had already disabled access to the websites so they had already caused that problem themselves.

It would appear that Thomas International first learned something about ACT’s activities, the subject of the complaint, in May 2014 (i.e., a year earlier). However, Thomas International was able to lead evidence showing all the work it did, and the difficulties it encounted, in trying to ascertain what ACT was doing until proceedings were issued. In this context, the termination by Humantech of the main employee with responsibilities for running the Thomas part of its business may will have been highly significant.

Permission to proceed against the companies although administrators were appointed was granted as the interests of the administrators were adequately protected by the undertaking as to damages and provision for securities.

Thomas International Limited v Humantech Pty Ltd [2015] FCA 541

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