Trade marks

Licensing relief

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The Full Court has restored some commercial sanity to trade mark licensing in Australia and ruled that Manassen, the parent company, was an authorised user of the TRIDENT trade marks owned by Trident Foods (the subsidiary). This is an important ruling as it is a common arrangement for a corporate group’s trade marks to be held by an IP “holding company” which is often not the parent of the group.

Trident Seafoods, a large American corporation, has its trade mark:

blocked in Australia by Trident Foods’ TRIDENT registrations. It therefore tried to get Trident Foods’ registrations removed for non-use.

The trial judge found that Trident Foods had not used its trade marks in the relevant period, but exercised her Honour’s discretion against removal. Her Honour found that Trident Foods did not use its trade marks itself; they were used by Manassen, which was Trident Foods’ parent. The trial judge considered that the arrangements did not constitute the exercise of control by Trident Foods over Manassen to qualify as authorised use under section 8. Trident Seafood appealed her Honour’s decision not to order removal. The Full Court held that her Honour had erred and should have found Manassen’s used was authorised use and so the removal action failed because Trident Foods proved use of its trade marks in the relevant period. It also held that there was no error in the exercise of the discretion not to remove the registrations.

There was licensed use

At [44], the Full Court set out the trial judge’s findings that Manassen was not Trident Foods’ authorised user:

I am not satisfied that the evidence identified by Trident Foods shows that Manassen’s use of the “TRIDENT” trade mark has been “under the control of” Trident Foods within the meaning of s 8 for the following reasons:

(1) The corporate relationship between Trident Foods and Manassen does not place Trident Foods in a relationship of control over Manassen; rather, the converse is the case. The commonality of directors does not, without more, permit Trident Foods to exercise control over Manassen.

(2) Ms Swanson’s evidence is in the nature of assertion. It does not include any particular illustration of conduct by Trident Foods amounting to actual control of the use of the “TRIDENT” trade mark.

(3) The fact that Ms Swanson considered it unnecessary to give directions, whether by reason of the existence of the VQM Manual or otherwise, is not relevant to the question of whether Manassen had obligations to Trident Foods in relation to the use of the “TRIDENT” trade mark.

(4) Any control that Ms Swanson might personally exercise by virtue of her membership of the Innovations Council (which was asserted but not demonstrated) does not prove control by Trident Foods.

(5) The identification of Trident Foods as trade mark owner on products supplied by Manassen does not prove use of the trade mark under the control of Trident Foods.

(6) Assuming that the VQM Manual is owned by Trident Foods jointly with other corporate entities in the Bright Group, Trident Seafoods did not demonstrate that the VQM Manual conferred any relevant control on Trident Foods over Manassen.

(7) I am not satisfied on the evidence that there was an unwritten licence agreement in place, notwithstanding the recitals to the 3 November 2017 agreement. The affidavit evidence does not support the accuracy of the recital as to that unwritten agreement.

At [44], the Full Court noted that Lodestar required actual control over the use of the trade mark to qualify as authorised use under section 8. Whether there was actual control was a question of fact and degree. However, control could arise “where there was obedience to the trade mark owner “so instinctive and complete that instruction was not necessary”.

At [45], the Full Court considered the relevant issue was not which company controlled the other, but whether or not Trident Foods had control over the use of the trade marks by Manassen even though Trident Foods was its wholly owned subsidiary. The Full Court held that there was relevant control. The two companies were acting with “unity of purpose”. Here:

  • the two companies had common directors;
  • as directors of Trident Foods, those directors had obligations to maintain the value of its trade marks (which were valued in its books at $10 million)

    To that end Trident Foods necessarily controlled Manassen’s use of the marks by reason of the simple fact that it owned the marks and its directors, who were also Manassen’s directors, must have had one common purpose, being to maximise sales and to enhance the value of the brand.
    So it was “commercially unrealistic” in these circumstances not to infer the common directors necessarily wished to ensure the maintenance and enhancement of the value of the brand (emphasis supplied)

  • further, every packet sold by Manassen bore a notice that the trade marks were owned by Trident Foods
  • the corporate relationship, the commonality of directors and the shared processes between the two companies meant it was not surprising there were no particular instances of actual control being exercised over Manassen
  • It was inconceivable that Manassen was using the trade marks without the knowledge, consent and authority of Trident Foods

As a result, the Full Court considered it was not accurate to characterise Trident Foods as merely acquiescing in Manassen’s use of the trade marks rather than controlling that use. At [51]:

Mere acquiescence denotes passive acceptance of Manassen’s use but the corporate relationship, common directorships and arrangements between the companies required active engagement by those directors to protect Trident Foods’ valuable goodwill ($10 million in the books of Trident Foods, PJ [161(1)]). Trident Foods’ active consent and authority must constitute an unwritten licence for use of the marks.

So, Trident Foods demonstrated that it had used its trade marks (through its authorised user, Manassen) during the relevant non-use period.

The discretion not to remove under s 101(3) & (4)

If it had been necessary, the Full Court also rejected Trident Seafoods’ argument that the trial judge should not have exercised her discretion against removal. In reaching that conclusion, the trial judge had properly taken into account the length and extent of Trident Foods’ reputation in the TRIDENT trade marks and the potential for confusion if Trident Seafoods introduced its trade mark into the market place.[1] At [37]: the Full Court explained:

The criticisms of the primary judge are unfounded. The primary judge did identify the relevant context and the evidentiary foundation for her conclusion about confusion. Trident Seafoods’ asserted error constitutes nothing more than a disagreement with the evidence the primary judge considered should be given weight and her characterisation of the relevant context. At PJ [161] the primary judge identified, amongst other things, that the Trident marks have a substantial reputation in Australia having regard to the brand’s “high penetration in Australian households that it is probably in most households at some point during the year”, the fact that there is “not an independent retail channel in Australia that does not carry a ‘TRIDENT’ brand product”, “‘TRIDENT’ branded products are on promotion with independent retailers every month of the year, across the range”, and “‘TRIDENT’ is the number 1 selling brand for sweet chilli sauce, dates and coconut cream”. The primary judge also referred expressly to the competing contentions of Trident Seafoods about the potential for confusion at PJ [159] to [165]. It must be taken from the primary judge’s conclusion at PJ [179], particularly PJ [179(5)] that the primary judge was not persuaded by Trident Seafoods’ submissions about the prospect of confusion. We also do not accept that, in the circumstances identified by the primary judge at [161], there was insufficient evidence for the primary judge to conclude that removal of the marks would create a prospect of confusion in the minds of consumers. The primary judge’s finding at [179(5)] that “confusion is likely to be experienced by consumers who purchase food products at supermarkets because the ‘TRIDENT’ mark is likely to be associated in the minds of those consumers with an array of food products (not necessarily assumed to be limited to, for example, tinned products or tinned products of a particular variety) emanating from a single supplier and available for purchase at supermarkets” is unassailable. The finding was not only open on the evidence but, in our view, was correct. The fact that her Honour did not consider the TRIDENT brand had any residual reputation in respect of fish is not inconsistent with and does not undermine this conclusion.

The Full Court also rejected Trident Seafoods’ arguments that the trial judge had erred in treating mussels, oysters and oyster sauce as falling within “fish” and “fish products”. Trident Seafoods based its arguments on dictionary definitions of these terms. However, a “fair reading of the Nice Classifications discloses that molluscs and crustacean were treated as within the meaning of “fish” and other dictionary definitions also included molluscs and crustaceans within the meaning of ”fish”.

Trident Seafoods Corporation v Trident Foods Pty Ltd [2019] FCAFC 100 (Reeves, Jagot and Rangiah JJ)

  1. Trident Seafoods currently markets its products in Australia under the trade mark “Bountiful”.  ?

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check your e-filing receipts carefully

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Now that IP Australia has essentially moved to electronic lodgement, a recent case shows that you need to check your e-receipts carefully. The decision may also prove useful to understanding the Registrar’s obligation to give a party an opportunity to be heard.[1]

Facts

Foxtel instructed their lawyers to file a notice of intention to oppose a trade mark filed by Unicom. Foxtel’s instructions were to file on the last day available to oppose. The notice was prepared and on the last day for filing a legal secretary submitted it through eServices. A transaction receipt was received by return.

Ten days later the in-house lawyer at Foxtel rang up the lawyers, alerting them to the fact that Unicom’s trade mark was now registered. Checking the Register revealed that no notice of intention to oppose had been received. The legal secretary:

then checked her files and the transaction receipt. As it turned out, the receipt was not for the lodgement of the notice of intention but concerned a different transaction altogether. Subsequent review of the electronic log provided by IP Australia indicates that although the process for filing the notice of intention had been commenced, the payment had not been received and lodgement had timed out before the filing was complete.

The lawyers then promptly wrote to the Registrar requesting that the registration of Unicom’s trade mark be revoked under s 84A and s 84B, providing an explanation and subsequently filed the proposed Statement of Grounds and Particulars of Opposition (if the registration were revoked).

The Registrar then wrote to Unicom’s attorneys indicating that, having regard to Foxtel’s intention to oppose and the explanation why that had not been effected, her she intended to revoke the registration, but giving Unicom an opportunity to be heard.

Unicom replied; arguing that something is not regarded as filed under the eServices system until and unless a filing receipt is issued. It also contended that the proposed revocation was outside the power conferred by s84A. After considering the submissions, the Registrar decided not to revoke the registration.

Foxtel, through its lawyers, then obtained a copy of Unicom’s submissions through s 217A and made an application for judicial review under s 5 of the ADJR Act and/or s 39B of the Judiciary Act.

Decision

Burley J has dismissed Foxtel’s application.

Foxtel’s first argument was that it had been denied procedural fairness because it was not provided with an opportunity to respond to Unicom’s submissions before the Registrar changed her mind and decided not to revoke the registration.

The Registrar denied that it owed Foxtel any duty of procedural fairness. She was under no obligation to make a decision under s 84A and, in any event, the terms of s 84A required her to give an opportunity to be heard only to the registrant and people with interests recorded under Part XI.

At [40], Burley J held the Registrar did owe Foxtel a duty of procedural fairness, but the failure to provide it with Unicom’s submissions was not a material breach of that duty.

A duty to provide procedural fairness arises whenever the exercise of a statutory power affected a person’s rights, interests or legitimate expectations unless the duty has been excluded by plain words or necessary intendment.

The public interest in the purity of the Register – that the Register should not be clogged with invalid trade marks – meant Foxtel had a sufficient interest that required it be accorded procedural fairness. At [49], Burley J explained:

…. The “interest” of Foxtel is in persuading the Registrar that, in all the circumstances that existed when the trade mark was registered, the trade mark should not have been because, but for the error in filing the notice of intention to oppose there would have been an opposition on foot at the time of registration (s 84A(1)). In my view this is a form of possible adverse affectation that is sufficient to qualify as an interest to attract the protection of the rules of procedural fairness.

That s 84A did specify some people whom had to be given an opportunity to be heard did not lead an implication that Foxtel was not owed a duty. An intention to exclude natural justice was not to be inferred from the presence in the Act of rights which “are commensurate with some [only] of the rules of natural justice”.[2] While not obliged to make a decision under s 84A, the Registrar was obliged to accord Foxtel natural justice having embarked on the exercise.

While Burley J accepted Foxtel’s argument that it was owed a duty of procedural fairness, his Honour did not accept it had been denied natural justice.

Foxtel argued that, as the Registrar indicated to Unicom she would revoke the registration if Unicom did not respond, Unicom’s submissions must have been material to the Registrar’s change of mind – deciding not to revoke. Therefore, Foxtel argued that the failure to disclose Unicom’s submissions before the Registrar decided not to revoke the registration denied it natural justice.

Burley J examined the reasons the Registrar gave for deciding not to revoke; these had been outlined only in short form in the letter advising her decision. From that letter, his Honour found that the Registrar had in fact rejected Unicom’s arguments on the construction of s 84A and accepted Foxtel’s construction. Therefore, Foxtel had not been denied natural justice on the point.

Burley J was not prepared to accept Foxtel’s argument that the short form letter did not set out the real reasons for the decision, especially in circumstances where Foxtel had not sought a statement of reasons from the Registrar under ADJR Act s 13.

Burley J next rejected Foxtel’s argument that the Registrar’s decision was an improper exercise of power because it was so unreasonable that no reasonable person could have exercised the power that way.

Here, Foxtel’s conscious decision to instruct that the notice of intention to oppose be filed on the last day of the opposition period – not an uncommon practice – loomed large.

Burley J accepted that the scheme of the Act reflected an intention that the Register be pure. His Honour noted, however, that the Act and reg.s also provided for deadlines for filing documents in oppositions and, in addition, provided a further opportunity for objectors to seek rectification through s 88. His Honour also pointed out that the Explanatory Memorandum linked s 84A(6) – which explicitly states the Registrar has no duty to consider whether to revoke a registration under s 84A – to the objectives of the section:

…. Revocation of registration under section 84A is not intended to provide a way of settling competing claims to ownership of a trade mark. This can be pursued through the courts, with section 86 of the Trade Marks Act providing for the Federal Court to cancel a registered trade mark. Nor is it intended to be a mechanism for parties to file de facto oppositions after a trade mark has been registered. This provision is only intended to provide an administrative mechanism to undo a registration where it was wrongly registered.

The Registrar’s letter stated that she had considered “all of the circumstances” and so taken into account all mandatory considerations. Further, as already noted, the procedure was not intended to provide a mechanism “for parties to file de facto oppositions after a trade mark has been registered” and Foxtel could still seek rectification under s 88. In these circumstances, Burley J held the Registrar’s decision was not so unreasonable that no reasonable person would have exercised the power that way.

Rather than take up the invitation to seek rectification under s 88, Foxtel has appealed (NSD795/2019).

Foxtel Management Pty Limited v Registrar of Trade Marks [2019] FCA 605 (Burley J)

  1. Reg. 21.15 applies where the Act or the reg.s “provide for a person to be heard”.  ?
  2. Citing Annetts v McCann [1990] HCA 57; 170 CLR 596 at [2].  ?

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Repeal of s 51(3)

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

The bill repealing (amongst other things) s 51(3) of the Competition and Consumer Act did get passed and has received royal assent.

The repeal takes effect on 13 September 2019.

So, if you thought you were relying on s 51(3)’s protection, you have a bit less than 6 months to get your house in order.

Your licences and assignments of IP rights probably will not get you into trouble for the most part unless you have market power. But that is not exactly a hard and fast rule so you should discuss your arrangements with your lawyers ASAP.

As discussed in this post, one area of potentially significant concern is where the IP holder has its own retail outlets and also licenses other retail outlets – e.g. not uncommon for franchisors who have their own outlets and franchisees. There is a concern that may give rise to criminal cartel conduct.

If you want to know about the prohibitions on cartel conduct, Ian Wylie has published a paper “Cartel conduct or Permissible Joint Venture?“

On Tuesday, the ACCC also announced it hopes to publish draft guidelines by “mid-2019” and finalise them before 13 September. Amongst other things, these proposed guidelines will outline:

how the ACCC proposes to investigate and enforce Part IV in relation to conduct involving intellectual property rights. They will also provide hypothetical examples to illustrate conduct that the ACCC considers is likely or unlikely to contravene Part IV.

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Trade Mark 2,000,000

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IP Australia has published details of Trade Mark No. 2,000,000:

Trade Mark No. 2000000

I am not sure whether the sequence has been unbroken right from Trade Mark No. 1. Even so, the meter has ticked over and it is definitely a milestone of sorts.

It does seem a little strange, in these days of tobacco plain packaging laws, that someone is pursuing a trade mark registration for a new brand, but it does also extend to smoker’s articles and e-cigs.

By way of interest, Trade Mark No. 1,000,000 was filed by Anchor Foods on 23 April 2004.

That is, it took almost 100 years to get to the 1,000,000 mark; but it took only 15 years for the next million.

I wonder whether “Northern Lights” will achieve the same degree of notoriety as the equally colourful “Golden Lights“.

Lid dip: Dave Stewart

ps. Trade Mark No 1 is still there and, all right, it was only filed on 2 July 1906 so strictly speaking it took just under 98 years to clock up 1 million.

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Hells Angels v Redbubble

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

Redbubble’s online market place has survived the Hells Angels’ copyright infringement claims, but did infringe their registered trade marks. The reasoning, however, leaves questions hanging over Redbubble’s business model.

Redbubble provides an online market place. Artists can upload their artwork and potential buyers can browse the site to purchase the artwork or merchandise such as t-shirts and coffee cups emblazoned with the artwork. If a purchase is made for, say, a t-shirt with a particular artwork printed on it, Redbubble’s system arranges for the order to be placed with a fulfiller and ultimately shipped in packaging which bears a Redbubble trade mark.

The claims in this case related to uploaded images of a Hell’s Angels membership card featuring a helmeted death’s head in profile:

and registered trade marks featuring versions of the death’s head: Trade Marks Nos 526530,723291, 723463, 1257992 and 1257993.

At 552 paragraphs long, this post is going to be a high level overview only.

Copyright

A key feature in the case is that Hells Angels Motorcycle Corporation (Australia) Pty Ltd is not the owner of the copyright or the registered trade marks. It contended it was the exclusive licensee in Australia of those rights; the exclusive licences having been granted by Hells Angels Motorcycle Corporation, a US corporation.

The Hells Angels lost the claim of copyright infringement. They did so, however, because they could not prove Hells Angels USA was the owner of the copyright. As a result, Hells Angels Motorcycle Corporation (Australia) Pty Ltd could not be the exclusive licensee.

Reaching this conclusion required Greenwood J to explore, amongst other things, the notion of publication and whether the supply of membership cards was supply of copies of the work to the public. And the non-applicability of the US “work for hire” doctrine in ownership disputes under Australian law.

Redbubble is still in trouble.

First, if the applicants had been able to prove title to the copyright, Redbubble would have infringed.

Contrary to Hells Angels’ arguments, Redbubble was not liable for infringement by uploading the images. That was done by the artists in question. In the examples in question, the acts involved uploading images to websites outside Australia. For example, Example 1 was uploaded by an individual in Virginia in the USA. So the uploaders themselves were not liable as their actions did not involve any act done in Australia. At [428] – [429], Greenwood J ruled that, even though the images were made available online to the public in Australia, the artists (uploaders) did not infringe because they did no act in Australia.

…. the act of the artist in uploading the image to the website and thus making the work available online to the public must be an act “done” (that is, an exercise of the exclusive right), “in Australia” and therefore, none of the artists in the examples in suit can be regarded as a “primary infringer” in the territorial sense contemplated by s 36(1) because the relevant act was not done “in Australia”.

His Honour found, however, that Redbubble would be liable for communicating the images to the public in Australia as it was the person who was responsible for determining the content of the communication for the purposes of s 22(6) when a potential customer in Australia viewed the image on the website. Redbubble’s business model was crucial here. At [435], his Honour explained:

The business model as described by Mr Hosking and its working operation as described by Mr Kovalev makes it plain that Redbubble is not in the nature of an ISP linking a user to remote websites. It is not an intermediary providing a transmission service between particular participants. It owns, operates, manages and controls the website and conducts a transactional enterprise in which it facilitates the uploading of images, the interrogation of those images in Australia, relevantly, by users, with a view to enabling sales to consumers of articles bearing the relevant images. It has a detailed business model in which it derives revenue from each transaction and controls every step of the transactional engagement between an artist and a buyer. It confirms the sale. It facilitates payment. It organises a fulfiller to apply the work to the relevant goods. It facilitates delivery of the goods to the buyer. It generates email responses which not only confirm the order but track every step of the transaction. It affixes its own trade marks to the goods. It says that it does not directly do that but there is no doubt that an essential part of its business model is ensuring that fulfillers affix the Redbubble trade marks to the goods. The labels bearing the trade marks are on the goods as delivered to each buyer. Although I will address the trade mark case shortly, the reference to Redbubble’s trade marks, in this context, is simply to note another feature of the extent of Redbubble’s engagement in and association with each transaction. It is Redbubble’s business. But for the Redbubble website, the transactions would not occur. The artworks would not be available online to consumers in Australia to consider and appraise with a view to purchasing a product bearing the artwork. The entire focus of the business model is to enable works to be made available online so that consumers can pick and choose amongst the works so as to have them applied to goods. It would be difficult to imagine a more directly engaged participant than one deploying the business model adopted by Redbubble. Although Redbubble describes itself as the “agent” of the artist (presumably as principal), the relationship is not, in truth, a relationship of agent and principal. Redbubble acts as an “independent contractor” to “facilitate the transaction” as the Redbubble User Agreement and Appendix A to the Services Agreement makes plain: [245] and [246] of these reasons. The artist, in truth, is not the “seller” in the classic sense in which that term might be understood because Redbubble is the supplier as the facilitator of all of the essential elements of the transaction with the consumer in an analogous way to that discussed in:  International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company [1958] HCA 16;  (1958) 100 CLR 644 at 653; Heidelberg Graphics Equipment Ltd v Andrew Knox & Associates Pty Ltd (1994) ATPR 41326 at 42, 31011, notwithstanding that the nature of the technology is different to the forms of distribution arrangement in those cases.


His Honour would, if necessary, have also found Redbubble liable for authorising the conduct if it had been infringing.

Trade Marks

Secondly, Greenwood J found Redbubble liable for infringement of the Hells Angels’ registered trade marks on works such as t-shirt designs featuring the death’s head logo.

The crux of this finding came back to Redbubble’s business model. Greenwood J accepted that the artist who uploaded the image was using the trade mark as a trade mark. Unlike the copyright test, there was no requirement that the artist be in Australia. However, so was Redbubble.

At [460] – [461], his Honour explained:

As to Redbubble, that company is “in the business” of facilitating the supply of products bearing the uploaded image of Ms Troen (in this example) or, put another way, Redbubble is in the business of facilitating the supply of clothing bearing, put simply, the registered trade marks of HAMC US (in this example). Redbubble is not the “seller” of artwork. However, it is the supplier, in the sense that it is responsible for all of the transactional supplyside elements of a transaction for the supply of goods bearing the applied works. (emphasis supplied)


Redbubble has created a business model designed to enable users, in Australia (and, for that matter users in all jurisdictions in which the website is accessible), to find images through the website comprised of, in this example, Ms Troen’s image made up of the identified trade marks of HAMC US. Redbubble enables images containing the relevant trade marks to be presented to buyers of particular goods (nominated by the artists from the website categories of those goods to which the work can be applied) expressly for the purpose of facilitating the supply of goods (clothing, in this example) to which the marks are applied. It does so by and through the functions and protocols of the website engaged by Mr Hansen (and other potential viewers of the image), in Australia.

His Honour elaborated on why Redbubble’s conduct attracted liability at [462] – [469]. While this and two other examples infringed, his Honour found that, on the particular facts, Example 2 was not infringing use.

Greenwood J’s reasons also include an extended consideration of whether Hells Angels Australia was an authorised user; ultimately concluding it was.

Greenwood J, however, rejected Hells Angels’ claims that use of “Hells Angels” as search terms, or key words, within the Redbubble site was infringing. At [542] explaining:

542. …. However, I am not satisfied that this use, in itself, is use of the word marks as a trade mark, at this point in the functionality of the website. I take that view because I am not satisfied that using the term as a search term to find a relevant image is use of the term as a “badge of origin” of Redbubble. It is, undoubtedly, a use which is designed, quite deliberately, to lead a consumer by the “search nose” to images, marks, devices, livery and badging somehow or other connected with the Hells Angels Motorcycle Club.

….

544. … use of the word marks … as a search term is a search step along the way to use of the image and thus the registered trade marks, as trade marks but use of the word marks at the point of searching is not, in itself, in my view, use as a trade mark. (original emphasis)

It appears that, at the stage of entering the search term, it is not being used to identify things offered under the aegis of the Hells Angels, but just to locate things about the Hells Angels in some way.

This is the second ruling at first instance where Redbubble has been found to infringe.

While Redbubble’s business model does leave it exposed along the lines indicated above. It is worth noting that Greenwood J awarded only nominal damages of $5,000 in respect of two of the three infringements. His Honour did not allow even nominal damages in respect of the third infringement, Example 4, as it was online for a short period, viewed only 11 times and no sales resulted.

Greenwood J expressly rejected any claim for exemplary damages. His Honour does not go into reasons. Perhaps, Redbubble’s business model did protect it. The evidence was clear, for example, that Redbubble had a policy relating to infringement claims and implemented it promptly.

Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited  [2019] FCA 355

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Cartel conduct and IP licences and assignments

1 Comment / Antitrust, Copyright, Designs, Franchising, Patents, PBR, Trade marks, Trade Practices / / / , , , , , , , , , , , ,

Will your assignments and licences of intellectual property, such as in a typical franchise agreement, expose your client to liability for cartel conduct or will you be ready to apply for an authorisation?

One of the bills pending before Parliament contains the long pursued (by the ACCC) repeal of s 51(3) of the Competition and Consumer Act 2010.

Section 51(3) exempts from most of the prohibitions in Pt IV of the Competition and Consumer Act terms and conditions in assignments and licences of intellectual property which most of us take for granted.

The rationale for repeal is that most transactions involving IP do not have anti-competitive effects or purposes and, if they do, they should not be exempt from the competition laws.

Rodney De Boos, a consultant at DCC with many years’ experience in licensing and commercialisation of IP, however, points out that this explanation was developed before the provisions banning cartel conduct were introduced into the Act. And, he contends, typical arrangements in IP agreements which allocate, for example, territories or customers will constitute cartel conduct and so need authorisation if the parties are not to be in breach of the cartel provisions.

As Rodney explains, a cartel provision are certain types of specified provisions between competitors.

Now, it may well be that an assignor and assignee, or a licensor and licensee, will not be competitors. There are many types of arrangements, however, where the Competition and Consumer Act will deem them to be competitors. An obvious example is the case of a franchisor who has retail outlets (either itself or through a related body corporate) as well as retail franchisees. Other arrangements involving IP could also be similarly problematical.

You can read Rodney’s concerns in more detail here.

The bill repealing s 51(3) has already passed the House of Representatives and is due to be debated by the Senate in the sittings coming up.

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Prosecco, GIs and the possible EU FTA

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

The last few weeks have seen increasing rumblings within Australia about some of the consequences if a possible Free Trade Agreement with the EU goes through.

One of the main features the EU is seeking is expanded protection for the thousands of “GIs”, or geographical indications, recognised in the EU.

The potential impact of the EU FTA requiring Australian producers to stop calling their non-Italian products ‘prosecco’, a GI in the EU, has been generating some media excitement: see:

Professor Mark Davison and colleagues have a paper forthcoming in the AIPJ exploring the validity of the claims to protection [SSRN paper here]

We have been here before – when the EU-Australia Wine Agreement knocked out use of names like ‘champagne’ in return for greater access to the EU for Australian sparkling and other wines.

When the second version of that agreement replaced the 1994 version, the National Interest Assessment pointed out:

8. In 2006-07, Australia exported 421 million litres of wine to the EC with a value of $1.3 billion, and imported 10.2 million litres with a value of $168 million. Key regulatory and intellectual property issues related to trade in wine between Australia and the EC are currently regulated by the 1994 Agreement. 

9. The Agreement offers a number of advantages to Australian wine-growers, which will help consolidate their access to the EC market at a time when the domestic industry still faces concerns about an over-supply. The new Agreement also resolves several outstanding issues not covered by the 1994 Agreement, and thus will help maintain a mutually beneficial trade relationship with the EC.

10. In particular, the Agreement obliges the EC to permit the import and marketing of Australian wines produced using 16 additional wine-making techniques. It also sets out a simpler process for recognition of further techniques, with an option for disputes to be resolved by a binding arbitration. Under the 1994 Agreement, by contrast, the process for authorisation of new wine-making practices has no binding dispute settlement procedure, and no new practices have been authorised under the 1994 Agreement. This has been particularly problematic for Australian wines produced with an important wine-making technique involving the use of cation exchange resins to stabilise the wine. This technique was provisionally authorised for 12 months under the 1994 Agreement, and this authorisation has since had to be periodically extended for 12-month periods.

11. The Agreement also obliges the EC not to impose any new wine labelling requirements that are more restrictive than those which apply when the proposed Agreement comes into force. This means that industry will not face the difficulties and additional costs that might arise if the EC was permitted to introduce more onerous wine labelling requirements.

12. Finally, the Agreement obliges the EC to recognise and protect new Australian wine Geographical Indications. A Geographical Indication is a label or sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due to that place of origin.

How it will play out this time, who knows? As usual, the Australian government is keeping its position largely secret from us. The EU, however, is quite open about what it is seeking (Compare DFAT here and here and here to EU proposed text here see esp. article X.22 and from X.31 and generally).

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Shades of green – 2

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Last week’s post looked at the substantive reasons for the rejection of Frucor’s attempt to register a shade of green as a trade mark for energy drinks. There were also a couple of points about grounds of opposition and amendment of applications on appeal worth noting.

image002.jpg

You will remember that Frucor’s application included a green swatch, copied from its New Zealand trade mark application, which was for a different colour than the colour identified by the written description under reg. 4.3(7), Pantone 367c.

What’s a ground of rejection (for opposition purposes)

In addition to the grounds of opposition provided by sections 58 to 62A, as you will know s 57 provides that an application may be opposed on any of the grounds on which the application could have been rejected during examination.

Coca-Cola argued that the inconsistency between the graphic representation of the mark and the written description was itself a ground of rejection.

The basis for this argument was that s 33 required the Registrar to reject an application where the application had not been made in accordance with the Act. It argued the Registrar should have rejected the application because the inconsistency meant that Frucor’s application had not been made in accordance with the Regulations as required by s 27(2)(a).

Yates J rejected this argument at [136]ff. The grounds of rejection contemplated by s 57 were, relevantly, those provided by s 39 – s 44. (They even appear under a heading “Grounds for rejecting an application”.)

The power to amend

Frucor had not sought to amend its application to substitute a swatch of the correct colour before the Registrar during the examination process. It did apply to amend, however, during the appeal to the Federal Court.

Yates J, citing the approach taken by Heerey J under the Patents Act in Genetics Institute,[1] held that the Court had power to consider the amendment application under s 197 even though there had not been an application to amend before the Registrar. At [195], his Honour explained:[2]

…. I do not see how an appeal to this Court from a decision of the Registrar in opposition to registration proceedings under the Trade Marks Act differs materially from an appeal to this Court from a decision of the Commissioner in opposition to grant proceedings under the Patents Act. Whilst I acknowledge that, in the present case, an application under s 63 of the Trade Marks Act was not before the Registrar, the registrability of the mark the subject of the application was in contest. In the proceedings below, the Registrar had the power to permit the application to be amended subject to the constraints placed upon the exercise of that power by the Act. Given the nature of the “appeal” to this Court, the Court’s power to quell the controversy as to the registrability of the mark—the subject matter of the appeal—cannot be more limited than the Registrar’s power. Further, it cannot matter that the Registrar was not asked to exercise the power of amendment, just as it cannot matter that an opponent might seek to raise additional or new grounds of opposition, or that the parties might seek to adduce different evidence to the evidence that was before the Registrar or raise new or different arguments. The opposition proceeds afresh before the Court on the subject matter that was before the Registrar and is adjudicated upon accordingly.

This practical approach is, with respect, to be welcomed in the interests of efficiency and, if followed, would obviate the need to introduce into the Trade Marks Act a counterpart to s 105(1A) of the Patents Act which, in turn, arose because Courts applying NEB had ruled a Court hearing an appeal from an opposition before the Commissioner had no power to deal with an amendment application.

Even though the power existed, Yates J at [206] denied Frucor’s application to amend. The substitution of “a markedly different green-coloured swatch” for the existing swatch would substantially affect the identity of the trade mark and so was prohibited by s 65(2).

Frucor also made a very late application to the Court to amend the application on the basis of s 65A.

The very late stage of the application and the lack of any utility (as the application would fail the distinctiveness requirement in any event) were fatal.

In contrast to his Honour’s practical approach to allowing consideration of an amendment under s 65 through s 197, however, Yates J considered allowing a party to bring an application under s 65A for the first time in the Court would subvert the statutory process for the consideration of such amendments by the Registrar prescribed by s 65A. Section 65A contemplated publication of the amendment application in the Official Journal and opposition proceedings before the Registrar.

In further contrast to Yates J’s views about s 65A, it may be noted that Courts dealing with amendment applications under s 105(1A) have directed the amendment applicant to publish the application in the Official Journal so that the Commissioner and any potential opponents may intervene.[3] The difference is of course that the Patents Act through s105(1A) expressly tells the Court to deal with the request to amend because of the inefficiencies and delays which had resulted.

As previously noted, it does not appear that Frucor has appealed.

Frucor Beverages Limited v The Coca-Cola Company [2018] FCA 993

  1. Which Yates J noted was apparently endorsed by the Full Court in New England Biolabs at [50].  ?
  2. See also at [200] – [201] and [204].  ?
  3. A recent example is Electronic Tax-Free Shopping Ltd v Fexco Merchant Services (No 3) [2017] FCA 569 at [2] – [3].  ?

Shades of green – 2 Read More »

Shades of green

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Frucor’s attempt to register the colour green as the predominant colour applied to its “V” energy drinks has failed. The colour being applied for was not properly defined and, consequently, had not been used as a trade mark. Yet again, consumer survey results did not help.

image002.jpg

Frucor’s application included a green swatch, copied from its New Zealand trade mark application and, in accordance with reg. 4.3(7) a written description:

The mark consists of the colour green (Pantone 376c), as shown in the representation attached to the application, applied as the predominant colour to the goods, their packaging or labels.

The fundamental problem was that the green colour of the swatch was not Pantone 376c.

What’s the trade mark

Frucor argued that the written description should be given priority over the coloured swatch as a matter of construction of the trade mark application.

Its argument was that any trader looking at the Register would realise the colour swatch was inherently unreliable due to the potential for corruption through scanning, printing etc. Consequently, anyone looking at the Register would recognise that Pantone 376c was the subject colour.

Yates J considered this analysis was informed by Frucor’s subjective intention. The matter needed to be determined objectively. Reg. 4.3 required the application to set out a representation of the mark and, in that context, r. 4.3(7) required a description of the mark “as represented”. It was the representation which was primary. At [122], his Honour concluded:

…. A person inspecting the Register is entitled to act on the assumption that the trade mark applicant’s own depiction of colour in the representation accompanying the application is accurate.

Once the person inspecting the Register appreciated there was an inconsistency between the graphic representation and the description, there was no way to resolve the disconformity.

“V” green had not acquired distinctiveness

As the application was for a single colour mark, this meant that Frucor could not possibly demonstrate its trade mark had acquired distinctiveness under s 41(6)(a), the old (or pre-Raising the Bar version).[1] At [145], his Honour explained:

As the Full Court explained in Woolworths/BP at [79], it is important to appreciate that it is the use of the mark applied for, as a trade mark, that determines what can be registered. In that connection, the Full Court emphasised that the mark that is the subject of the application for registration must conform to the mark that was, for the purposes of s 41(6), used before the filing date. Because, in the present case, the mark is defined ambiguously—its features are uncertain and cannot be determined objectively—it is not possible for Frucor to establish the factual condition of s 41(6)(a) by reference to its own particular use of “V” Green. It follows that, for that reason alone, registration should be refused in the present case.

Yates J would have rejected the application even if one assumed there was no ambiguity and the colour claimed was Pantone 376c.

Yates J accepted that Frucor’s use of “V” green was substantial, consistent and conspicuous. At [163], his Honour had “no doubt that … those familiar with Frucor’s “V” energy drinks would have associated “V” Green as the colour of Frucor’s core energy drink product.” (emphasis supplied)

Yates J held, however, that this extensive use and recognition was not use as a trade mark.[2] First, at [164] the “consistent presence” and “dominating display” of the “V” logo was what consumers would recognise as performing the function of the badge of origin for the goods.

Accepting that there could be more than one trade mark for a product, the second consideration was the role colour played in the soft drink market including energy drinks, soft drinks, sports drinks, fruit juices and bottled water.

Packaging and labels in this field are often brightly coloured. Soft drink producers used colour to denote a range of things: sometimes product flavour, more generally some “varietal characteristic”. Frucor itself had different varieties of “V” which were presented in different liveries (scroll down): red for berry flavoured, silver for sugarfree, black and also a yellow in addition to “V” green which was reserved for the “hero” of the range. So at [166]:

…. Although Frucor’s use of “V” Green was pervasive and no doubt fundamental to its whole marketing strategy, it was, nonetheless, reminiscent of its core product. In this way, Frucor’s use of “V” Green was essentially descriptive, not distinctive in the trade mark sense. It denoted the core product in the “V” energy drink range. I am not persuaded that, somehow, consumers would understand that colour in relation to the core product was being used differently to colour in relation to other varieties within the “V” energy drink range, or any differently from how colour was and is used descriptively across the range of non-alcoholic beverages sold through trade channels such as supermarkets and convenience stores.

So at [167], even though more than one trade mark could be used on any given product, the “V” green colour did not function as a trade mark.

What the market survey didn’t prove

Frucor’s evidence from a market research consultant based on two surveys did not help. His evidence showed, for example, that some 77% of the survey respondents identified Pantone 376c with a brand of energy drink and and 85% of those identified the drink as Frucor’s “V” energy drink. As a result, the expert concluded that Pantone 376c was part of Frucor’s “brand identity”, having properties that went well beyond decorative or functional attributes so that it distinguished Frucor’s products from other traders’.

The main problem was that evidence the public associated, or even identified, a particular colour with a “brand” by itself is not enough to establish that the colour is functioning as a trade mark. At [171], his Honour explained:

… evidence of an association (or, I would add, identification) of a sign, including a colour, with a particular product does not mean, without more, that the sign is functioning or has functioned as a trade mark in relation to that product. One needs to have an understanding of how the sign was used, in the proper context and setting, before that conclusion can be drawn. Moreover, the conclusion is not purely a factual one.

The last sentence in that extract points out that whether something is used as a trade mark is a legal conclusion.

If you are going to advance someone to give evidence that a colour has been used as a trade mark – as Frucor’s market survey expert purported to do, you will also need to demonstrate that the witness properly understands the legal concept. More practically, if you are trying to convert your colour into a trade mark, you need to educate your public that it is being used as your trade mark. At it’s most rudimentary level (and bearing in mind the range of other issues), can you tell your customers to “look for” you product by reference to its colour?[3]

Market survey blues

Approaching the matter in this way enabled Yates J to avoid having to deal with the numerous criticisms about the survey methodology raised by Coca-Cola. A couple of points, however, do emerge.

At [168], Yates J was sceptical that the sample used in the surveys was representative. Frucor’s expert had not bailed up survey respondents randomly in the street or at the shopping centre. Rather, as is quite common in marketing, they were drawn from a panel of people who had signed up to participate in surveys.

That criticism is all the more compelling given the second point. Yates J was not at all comfortable accepting Coca-Cola’s criticisms of Frucor’s survey methodology in the absence of support from Coca-Cola’s own expert evidence.

It does not appear that Frucor has appealed.

Frucor Beverages Limited v The Coca-Cola Company [2018] FCA 993

  1. Presumably, the same reasoning would apply under s41(3) in the “new” version.  ?
  2. At [148], Yates J recalled that this required “an understanding, from an objective viewpoint, of the purpose and nature of the use, considered in the context of the relevant trade” citing Woolworths/BP at [77].  ?
  3. See for example the evidence in Philmac about its khaki and then terracotta plastic pipe fittings leading to the conclusion at [40]. For more recent US practice see here.  ?

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Trident Seafoods 2

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A previous post examined Gleeson J’s conclusion that Trident Foods had not used its TRIDENT trade marks for a continuous period of three years because it had not actually controlled the use by its parent, Manassen. As noted there, however, Gleeson J exercised her discretion under s 101(3) not to order removal.

You will recall that Trident Foods has had TRIDENT registered:

(1) for fish and fish products in class 29 since 1973, TM No. 266,625; and

(2) since 1983, for meat, fish, poultry and various extracts, preservatives and pickles, TM No. 400,953,

and Trident Seafoods is trying to get those trade marks removed for non-use because they are blocking its attempt to register its own trade marks for “Trident Seafoods”. Gleeson J found that Trident Foods had not used its trade marks either itself or through an authorised user in the relevant 3 years between 2011 and 2014, but exercised her discretion against removal.

Discretion against removal

At [179], a number of matters played into her Honour’s decision not to order removal.

One factor was that Trident Foods had not abandoned its trade mark but, when the removal action had been filed, had organised Manassen to make some limited sales of fish products and (eventually) had entered into a formal (and presumably effective) licence agreement with Manassen.

Another factor was the risk of confusion if Trident Seafoods started marketing its products in Australia by reference to a trade mark which included “Trident”. While there had been limited use by Manassen in relation to fish and fish related products, there had nonetheless been some limited use both before and after the non-use period and that use had been with the knowledge and acquiescence of Trident Foods. Moreover, there was longstanding use in respect of a wide range of food products which changed over time.

Interestingly, Gleeson J would not have exercised the discretion if Manassen’s use had been in respect of products other than fish and fish products only. Such use could be taken into account in favour of the exercise of the discretion because there had been some use in respect of fish and fish products and, apparently more importantly at [178], because Trident Foods and Manassen still intended that Manassen continue to use the trade mark as an authorised user.

The fact that the limited sales of fish and fish products after the non-use period were specifically motivated in response to the bringing of the non-use application was not ‘colourable’. At [175], Gleeson J noted that the sales were not unprofitable or otherwise contrived, but appeared to reflect a genuine estimate of the extent to which the products could be profitably sold in Australia.

Other matters – what goods were specified

In the course of her Honour’s reasons, Gleeson J was required to give careful consideration to the meaning of “fish and fish products” in the specification of goods in the respective trade marks. This required consideration of the signification of the terms in the editions of the Nice Classification in force at the priority date of the trade marks as well as the normal meaning of the terms.

Trident Seafoods argued that the terms were limited to creatures with scales, gills and fins. However, Gleeson J accepted at [55] – [56] the terms were wide enough to cover crustaceans such as crabs and prawns and molluscs such as oysters as well as foods prepared from those products.

Trident Foods argued further that the use of TRIDENT for products which include fish as an ingredient would constitute use in respect of fish and fish products relying on, for example, sales of prawn flavoured tom yum soup. Gleeson J rejected this argument in its broadest form and, instead, considered a qualitative assessment on a product by product basis was required:

  1. … the application of a trade mark to a particular food product is a use of the trade mark in relation to those goods only, and generally not to the ingredients from which the goods are made.

Noting that a a trade mark in respect of flour would not cover bread or vice versa, her Honour explained at [66]:[1]

whether a product is a “fish product” will depend on the ingredients of the product or, perhaps, whether the product is identified by its name as a fish product. Generally speaking, the greater the fish content in a product, the more likely it will be to answer the description “fish product”. In my view, a fish sauce product or flavouring made from fish could be a fish product … particularly where the main ingredient is fish or seafood. ….

Noting also that there may be debate about whether a sauce of flavouring of animal origin fell within class 29 or class 30, Gleeson J considered that TRIDENT brand Tom Yum soup, labelled “Tom Yum Goong Flavour Thai Noodle Soup” with a marking “contains Crustacea and fish”, was not a fish product. The contents listed noodles, a flavour sachet, an oil sachet and a chilli sachet and the oil sachet was described as containing, relevantly, fish sauce and dried shrimp.

Honest concurrent user

The final round of issues related to Trident Foods’ fallback application to register TRIDENT for “its” products. After Trident Seafoods brought its non-use application against Trident Foods’ registrations, Trident Foods filed a further application in 2014 to register TRIDENT for its products including fish and fish products. Trident Foods’ application was blocked of course by Trident Seafoods’ earlier, pending applications (which you will remember were in turn blocked by Trident Foods’ registrations that Trident Seafoods was trying to remove for non-use).

The first point is that Gleeson J ruled at [202] that Trident Foods could not rely on “honest concurrent use” to overcome the citation of Trident Seafoods’ applications as Trident Seafoods had not used its trade mark in Australia. The plain, literal words of s 44(3)(a) required “honest concurrent use of the 2 trade marks (emphasis supplied). As there had been no use in Australia of its trade mark by Trident Seafoods, s 44(3)(a) did not apply.

Seems like yet another triumph of the “plain English” drafting of the 1995 Act.

(not) closely related goods

Next, at [207] – [211], Gleeson J ruled that Trident Foods could not take advantage of the prior continuous user provisions in s 44(3)(a).

The long period of non-use from 2007 to 2014 meant that there was no use at all in respect of “the goods” or “similar goods”. However, Trident Foods argued it could rely on use in respect of closely related goods on the basis of the reference in s 44(4)(a)(ii) to continuous use for “the similar services or closely related goods”. Gleeson J held this avenue was unavailable to Trident Foods because s 44(4)(a)(ii) applied only to trade mark applications for services. Where the application was blocked because of its specification of goods, only s 44(4)(a)(i) applied and so the use had to be in respect of the specified goods or similar goods. At [207]:

In this case, s 44(1) applies because the relevant application is an application for the registration of a trade mark in respect of goods. Section 44(2), concerning registration of a trade mark in respect of services, has no application. “[T]he similar goods or closely related services” referred to in s 44(4)(a)(i) are the “similar goods or closely related services” in respect of which registration of a trade mark is sought, referred to in s 44(1)(a)(ii). Section 44(4)(a)(ii) has no relevant operation, because it refers to the “similar services or closely related goods” in s 44(2)(a).

In any event, the use was by Manassen and, as discussed in the previous post, that use was not authorised use and so could not be relied on.

The discretion for “other circumstances” under s 44(3)(b)

Finally, Trident Foods argued at [213] that, even if “honest concurrent use” was not available,

(1) the existence of its earlier registrations for TRIDENT (which were not going to be removed);

(2) the fact that Trident Seafoods blocking applications were pending applications only and were blocked by Trident Foods’ own registrations; and

(3) essentially the discretionary considerations which led her Honour not to order removal of the trade mark registrations for non-use,

were “other circumstances” on which her Honour could exercise the discretion under s 44(3)(b).

At [216], Gleeson J accepted that the inchoate nature of Trident Seafoods’ applications and their inability to proceed in the face of Trident Foods’ earlier registrations was a relevant “other circumstance” enlivening s 44(3)(b).

At [217], however, it was not appropriate to exercise the discretion to allow registration because there was no use, or intention to use, the trade mark at the priority date of the application by Trident Foods or an authorised user:

in the absence of a licence agreement, Trident Foods was not using the “TRIDENT” trade mark as at the priority date and had not authorised any such use. Rather, the mark was being used by Manassen, albeit with the acquiescence of Trident Foods. The use or intended use of the trade mark, or the authorisation or intended authorisation of such use is a precondition to the right to apply for registration by s 27 of the Act. In my view, it would not be appropriate to exercise the discretion under s 44(3)(b) whether [sic] that precondition had not been satisfied.

Moreover, s 59 would apply as a ground of opposition to defeat Trident Foods’ application. You will remember that Trident Foods filed this application in 2014, but its licence agreement with Manassen was put in place only in 2017. When Trident Foods applied to register the trade mark, therefore, it did not have an intention to use the trade mark either itself or through an authorised user.

Trident Seafoods has appealed: NSD1951/2018.

Trident Seafoods Corporation v Trident Foods Pty Limited [2018] FCA 1490

  1. See also [68].  ?

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