With the closing stages of the negotiations between Australia and the EU over the proposed free trade agreement almost upon us, the EU has proposed a list of 55 further wine geographical indications it wants to protect. Amongst others, the list includes “prosecco” and “vittoria”. The Department of Agriculture is holding a Public Objections Process to assess the impact of accepting these names.
There are four grounds for potential objection (and only four):
The EU GI name is used in Australia as the common name for the relevant good, including as a type or style of wine.
The EU GI name is used in Australia as the name of a grape variety, plant variety or an animal breed.
The EU GI name is identical to, or likely to cause confusion with, a trade mark that is registered in Australia or the subject of a pending application made in good faith in Australia. Confusion may be likely where a trade mark consists of, or contains, the EU GI name or something so nearly resembling it.
The EU GI name is identical to, or likely to cause confusion with, an unregistered trade mark that has acquired rights through use in good faith in Australia. Confusion may be likely where a trade mark consists of, or contains, the EU GI name or something so nearly resembling it.
You can see what the problem is with a name like “prosecco” as there are lots of Australian producers of wines under that name, all the more so when the grape variety formerly known (or thought to be known) as prosecco was renamed in 2009 by an Italian government decree as “glera”.
SBS Italian published an article (in Italian) looking at the issue.
I also wonder about “Vittoria”, especially if the EU is pressing for protection not just against use of the name itself but terms and expressions which “evoke” that. There are, afterall, lots of wines which are made in a place called “Victoria”.
Whether Australia agrees to these names or not, Australian producers using these names are effectively giving up the potential to sell in the EU (unless they go to the trouble and expense of different labelling).
The consultation process has been running since late March and closes at 12 NOON AEST Friday 21 APRIL 2023. If you want to lodge an objection (good luck!), you must make your submission via here. Be warned: this is a “hard” deadline; finalisation of the deal is that close.
If you are feeling a little bit like “deja vu”; you’re right, there was a whole round of consultations about a much more extensive range of names two years ago.
Previously on IPwars.com we looked at why the High Court held PROTOX did not infringe BOTOX. The High Court also ruled that “instant BOTOX® alternative” did not infringe and overturned the Full Court’s ruling that the phrase was misleading or deceptive contrary to the ACL.
You will recall that Allergan has registered BOTOX as a trade mark for “[p]harmaceutical preparations for the treatment of … wrinkles” in class 5. The product Allergan makes and sells under the BOTOX trade mark is an injectable pharmaceutical which must be administered by a health professional. One treatment of BOTOX preparation can last for up to several months.
Because of its “overwhelming” and “ubiquitous” reputation in BOTOX, however, Allergan has also achieved registration of BOTOX in class 3 for anti-ageing and anti-wrinkle creams.
The second FREEZEFRAME product Self Care sells is INHIBOX. The INHIBOX product is a cream which the user can apply themselves at home and which lasts for up to a few hours to reduce the visible signs of ageing.
The INHIBOX product was sold in two forms of packaging:
Old packaging – Packaging A
New packaging – Packaging B:
Both forms of packaging included the phrase “instant BOTOX® alternative”. You will also notice that the back of both forms of packaging includes a longer declaration: “The original instant and long term Botox® alternative”.
Why “instant Botox® alternative” did not infringe
Self Care’s INHIBOX product being an anti-wrinkle cream falling squarely within the scope of Allergan’s BOTOX registration in class 3, the High Court had identified at  that the trade mark owner had to prove two things to establish trade mark infringement under s 120(1):
that the impugned sign was being used as a trade mark; and
that the impugned sign was substantially identical or deceptively similar to the registered trade mark.
At , a sign is being used as a trade mark when it is being used as “a badge of origin” to indicate a connection between the goods and the user of the mark.
And whether that is the case is to be determined objectively in the context of the use without regard to the subjective intentions of the user. To repeat the High Court’s explanation at :
Whether a sign has been “use[d] as a trade mark” is assessed objectively without reference to the subjective trading intentions of the user. As the meaning of a sign, such as a word, varies with the context in which the sign is used, the objective purpose and nature of use are assessed by reference to context. That context includes the relevant trade, the way in which the words have been displayed, and how the words would present themselves to persons who read them and form a view about what they connote. A well known example where the use was not “as a trade mark” was in Irving’s Yeast-Vite Ltd v Horsenail, where the phrase “Yeast tablets a substitute for ‘Yeast-Vite’” was held to be merely descriptive and not a use of “Yeast-Vite” as a trade mark. Therefore, it did not contravene the YEAST-VITE mark. (citation omitted)
Applying that test, the High Court held that Self Care was not using “instant Botox® alternative” as a trade mark. There were a number of reasons contributing to this conclusion.
First, Self Care did not present the phrase in a consistent style.
Secondly, the phrase was presented alongside two obvious trade marks – FREEZEFRAME and INHIBOX – so that the phrase was less likely to be taken as a trade mark.
And thirdly, while FREEZEFRAME and INHIBOX were presented as trade marks, the phrase “instant Botox® alternative” was a descriptive phrase which in context was used only with that descriptive purpose and nature.
As to the first consideration, the High Court explained at :
The presentation of “instant Botox® alternative” was inconsistent in size, font and presentation on each of Packaging A, Packaging B and the website, indicating “instant Botox® alternative” was not being used as a badge of origin to distinguish Self Care’s goods from those dealt with by another trader. On Packaging A the phrase was presented vertically, marked out by four vertical lines separating each of the words. On Packaging B and on the website the phrase was presented horizontally without any lines separating the words. The arrangement of the words differed. On the packaging, each word in the phrase occupied its own line. On two website pages the phrase occupied a single line. On two other website pages the words “Instant” and “Botox®” shared a line and the word “ALTERNATIVE” appeared on the next line. The font was inconsistent. The packaging used a different font to the website pages, and one website page used a different font to the other website pages. The capitalisation was inconsistent. Three different forms were adopted: “instant Botox® alternative” on the packaging, “INSTANT BOTOX® ALTERNATIVE” on one website page and “Instant Botox® ALTERNATIVE” on three other website pages.
Then, the High Court explained at  that the likelihood “instant Botox® alternative” would be taken as a trade mark was diminished because its use was not as dominant as the use of FREEZEFRAME and INHIBOX:
…. This diminishes the likelihood that the phrase “instant Botox® alternative” could be objectively understood to indicate origin in itself. This is because its use was not as dominant as the use of the other signs, FREEZEFRAME and INHIBOX. This is most evident on the packaging. On both Packaging A and Packaging B, “instant Botox® alternative” appeared only once, on the front of the box, in much smaller font than FREEZEFRAME and INHIBOX. FREEZEFRAME and INHIBOX were also featured prominently on the left and right sides of each box. Further …. (citations omitted)
At , the High Court recognised that a sign can be both descriptive and used as a trade mark (see also ) but the phrase “instant Botox® alternative” was not in this case:
The FREEZEFRAME and INHIBOX script style and presentation is also significant. FREEZEFRAME and INHIBOX were both distinctive and stylised signs that were apt to be perceived as brands. In contrast, “instant Botox® alternative” was a descriptive phrase that had an ordinary meaning and included within it the trade mark BOTOX (identified as such with a ® symbol). It was descriptive of the product to which it was attached as an alternative product. While a sign can both be descriptive and serve as a badge of origin, the better view is that the use of the phrase, consistent with its ordinary meaning, had only a descriptive purpose and nature. As the primary judge found, the phrase amounted to “ad?speak”. (citation omitted)
As the phrase was not used as a trade mark, there was no need to consider whether it was deceptively similar to Allergan’s trade mark.
Some aspects of the High Court’s reasons
In reaching its conclusions, the High Court drew on three different uses – the two forms of packaging and the website collectively. At , the High Court said it was permissible “to address them together, identifying relevant similarities and differences in use.”
In this case at least, there appears to have been some overlap between Self Care’s use of Packaging A and Packaging B – the latter being introduced on the market in September 2016, the former still being on the market until February 2017. The website of course was contemporaneous with both.
Nonetheless, it might be thought a bit odd that generally the old form of packaging informed the understanding of the new form of packaging. And, if the question is whether or not the particular use on the packaging is use as a trade mark, one might wonder about the relevance of use elsewhere. It must also be acknowledged that the form of use was one only of the factors contributing to the conclusion.
The High Court’s approach therefore reinforces INTA’s longstanding message that the trade mark owner should ensure it presents its trade mark consistently. Giving this consideration too much weight in isolation, however, risks creating some sort of pirate’s charter.
Ultimately, it might be thought the result is not too surprising. Afterall, phrases like this have not been considered to be trade mark use since the House of Lords’ decision in 1934 that “Yeast tablets a substitute for Yeast-Vite” did not infringe the registered trade mark YEAST-VITE.
In explaining why the Full Court wrongly found use as a trade mark, however, the High Court advanced a very different explanation why “instant Botox® alternative” was not use as a trade mark. The Full Court had impermissibly conflated the tests of use as a trade mark and deceptive similarity. At , the High Court then said:
Conflation of those elements is not uncommon. As Shanahan’s Australian Law of Trade Marks & Passing Off observes, “[t]here is a common misconception that an infringer uses a sign as a trade mark if the use indicates or is likely to indicate a connection between the infringer’s goods and the owner of the registered mark”. However, “factors relevant to whether there is a misrepresentation or likelihood of deception have no role to play in deciding the question of what constitutes ‘use as a trade mark’”. As was stated in Coca-Cola Company v All-Fect Distributors Ltd, the inquiry is not “whether the sign indicates a connection between the alleged infringer’s goods and those of the registered owner”. The correct approach is to ask whether the sign used indicates origin of goods in the user of the sign. (emphasis supplied) (citations omitted)
This may be contrasted with the reason why the House of Lords held that there had been no use as a trade mark. Lord Tomlin explained:
This is clearly a use of the word “Yeast-Vite” on the respondent’s preparation to indicate the appellant’s preparation and to distinguish the respondent’s preparation from it. It is not a use of the word as a trade mark, that is, to indicate the origin of the goods in the respondent by virtue of manufacture, selection, certification, dealing with or offering for sale.
The High Court’s endorsement of Coca-Cola v Allfect on this point cannot be the result of some change in the meaning or concept of “use as a trade mark”. In the Yeast-Vite case, Lord Tomlin said:
The phrase “the exclusive right to the use of such trade mark” carries in my opinion the implication of use of the mark for the purpose of indicating in relation to the goods upon or in connection with which the use takes place, the origin of such goods in the user of the mark by virtue of the matters indicated in the definition of “trade mark” contained in s 3.
That is the same explanation of the concept as adopted by the High Court in Gallo at  and in Self Care at  and .
It also cannot really be explained by the introduction into the Trade Marks Act of s 122A and s 123. Lord Tomlin roundly rejected a similar argument by the trade mark owner in Yeast-Vite:
nor do I think it is legitimate to treat special defences available under other sections of the latter Act as constituting a measure of the right conferred by s 39.
It appears therefore that the High Court has resolved the point left open in the Gallo case at  – whether a retailer uses the trade mark as a trade mark when using it in relation to the genuine goods of the trade mark owner.
The Full Court had found that the phrase “instant Botox® alternative” conveyed the representations that use of INHIBOX would result in a similar reduction in the appearance of wrinkles to using Botox and, secondly, that the effects would last for a period equivalent to that resulting from use of Botox.
The Full Court found that Self Care had reasonable grounds for the former representation, but not the latter – the long term efficacy representation. Therefore, Self Care’s use of the phrase was misleading or deceptive in contravention of the ACL.
On appeal, Self Care did not contend INHIBOX had a similar long term efficacy to Botox. Rather, it denied that the phrase “instant Botox® alternative” conveyed the long term efficacy representation at all.
Recap of the ACL principles
At , the High Court confirmed that determining whether there had been a breach of s 18 required a four step analysis:
Identifying the conduct said to contravene with precision;
Confirming that the conduct was “in trade or commerce”;
Considering what meaning the conduct conveyed; and
Determining whether the conduct in light of that meaning was misleading or deceptive or likely to mislead or deceive.
At , the High Court also confirmed that the third and fourth steps required characterisation as an objective matter. This required viewing the conduct as a whole and its notional effects, judged by the conduct in context, on the state of mind of the relevant person or class of persons.
The context includes the immediate context – all the words in the communication and the way they are conveyed, not just the word or phrase in isolation. The context also includes the broader context – all the relevant surrounding facts and circumstances.
Next, in cases of this kind the High Court re-affirmed at  that it is necessary to identify an ordinary and reasonable representative member of the relevant class “to objectively attribute characteristics and knowledge to that hypothetical person (or persons), and to consider the effect or likely effect of the conduct on their state of mind.” This required allowing for a range of reasonable reactions to the conduct by excluding from consideration reactions of the ignorant or very knowledgeable, those resulting from habitual caution or exceptional carelessness and the extreme or fanciful.
The misrepresentation was not made
The High Court analysed each of the three types use – Packaging A, Packaging B and the website – separately. But the reasons why “instant Botox® alternative” was not misleading or deceptive are essentially the same.
In the case of Packaging A, the High Court noted the use of the trade marks FREEZEFRAME and INHIBOX and “instant Botox® alternative” on the front of the packaging. On the side of the packaging were printed the words “Clinically proven to erase wrinkle appearance in 5 minutes”. And on the back, there was the vertical script “The world’s first Instant and Long Term Botox® Alternative” in larger, blue lettering than the panel of explanatory text. Under the heading “Freeze wrinkles instantly”, the first paragraph of that explanatory text read:
Why wait for weeks to look dramatically younger when you can wipe away the years this very minute! freezeframe’s exclusive INHIBOX complex is clinically proven to wipe away visible expression wrinkles around the eyes and on the forehead within 5 minutes, so you get an immediate wrinkle freeze and eye lift that lasts for hours. (emphasis supplied)
The remainder of the text included three more references to the effects of INHIBOX being “long term”. This included a heading “And long term!” under which the packaging stated “”freezeframe technology is scientifically proven to reduce the appearance of wrinkles by up to 63.23% in just 28 days“ and ”freezeframe’s Dual Effect technology gives you proven instant wrinkle reduction, plus the world’s best long term wrinkle relaxing”.
Under the heading “Two of the world’s most potent wrinkle erasers* in one formula”– the packaging stated “[i]magine… the power of an instant wrinkle freeze, combined with the long term benefits of the most potent, cumulative facial relaxing technology on the planet. All in one simple formula.”
Despite all these references to “long term”, the High Court held at  that both the immediate and broader contexts meant the phrase “instant Botox® alternative” would not convey to the reasonable consumer in the target market that either a single treatment or long term use of INHIBIX would last for an equivalent period to a BOTOX injection.
In the immediate context – the packaging, the words “long term” must be understood in the context of “lasts for hours” and that the treatment was “instant” and working “within 5 minutes”. As a result, “long term” was mere puffery. At , the High Court explained:
…. The fact that the effect of Inhibox was said to be instant makes it less likely that the reasonable consumer would believe that those effects would last for as long as those of Botox. Put differently, the reasonable consumer would likely believe it too good to be true that the effects of Inhibox are both instant and as long lasting as those of Botox.
The broader context included that INHIBOX was a cream applied by the user while BOTOX is a pharmaceutical injection requiring a visit to a healthcare professional. INHIBOX was much cheaper. The two products were not sold in the same locations. In these circumstances, the High Court concluded at :
Taking into account that broader context, it is difficult to conceive why the reasonable consumer in the target market would think that a topically self-applied cream obtained from the pharmacy at a relatively low cost and worn in the course of the usual activities of life (including bathing and exercise) would have the same period of efficacy after treatment as an injectable anti-wrinkle treatment that is only available to be administered by healthcare professionals at a higher cost. ….
Moreover, the reasonable consumer would not assume that the use of BOTOX in the phrase indicated a common trade connection between INHIBOX and BOTOX.
Similar reasoning led to the same conclusion in respect of Packaging A and the website even though the latter, in particular, seems to have used “long term” rather more prominently.
The errors made by the Full Court
The High Court’s reasons why the phrase “instant Botox® alternative” was not misleading or deceptive suggest a rather robust approach to assessing the impact of the conduct on the target market. In addition, its reasons provide further guidance about how the conduct should be analysed.
First, at  – , the High Court agreed the trial judge had made an appealable error by considering only the phrase and the broader context, not taking into account the immediate context as well. So, it is necessary to consider all three aspects.
Secondly, the Full Court had also erred. There are a number of strands to this. One key error was misidentification of the ordinary and reasonable consumer. A second was the false premise that consumers would think the phrase “instant Botox® alternative” conveyed an association between INHIBOX and the trade source of BOTOX.
On the second point at , the High Court pointed out that the trial judge had found “instant Botox® alternative” would not convey an association between INHIBOX and BOTOX and there had been no appeal from that finding.
On the first point, the Full Court had found that some members of the relevant class would know that the effects of BOTOX lasted four months. The High Court criticised the factual basis for the conclusions about how long BOTOX lasted and whether consumers knew that.
More generally, however, the High Court said the Full Court had been wrong to assess the effects of the phrase on the target market on the basis that some reasonable consumers would have been misled. At , the High Court explained:
…. Further, the Full Court’s statement that the target market “would have included” reasonable consumers who had that knowledge demonstrated a misunderstanding of the relevant test. The ordinary and reasonable consumer is a hypothetical construct to whom the court attributes characteristics and knowledge in order to characterise the impugned conduct. The class in fact will always have reasonable consumers with varying levels of knowledge; the question was whether the knowledge should be attributed to the hypothetical reasonable consumer in this case.
Then, as already discussed above, the High Court proceeded to analyse how the phrase “instant Botox® alternative” would be perceived and understood by the ordinary reasonable consumer in all the circumstances.
Picking up the definition of What is a trade mark in s 17 as explained in Campomar and E & J Gallo at : “the requirement that a trade mark ”distinguish“ goods encompasses the orthodox understanding that one function of a trade mark is to indicate the origin of ”goods to which the mark is applied“. Distinguishing goods of a registered owner from the goods of others and indicating a connection in the course of trade between the goods and the registered owner are essential characteristics of a trade mark. There is nothing in the relevant Explanatory Memorandum to suggest that s 17 was to effect any change in the orthodox understanding of the function or essential characteristics of a trade mark.” (citations omitted) ?
A unanimous High Court has upheld Self Care’s appeal and ruled that PROTOX and “instant Botox® alternative” do not infringe Allergan’s BOTOX registered trade mark. Nor was “instant Botox® alternative” false, misleading or deceptive conduct contrary to the ACL.
The High Court’s ruling that the reputation of the registered trade mark has no part to play in infringement under section 120(1) has finally settled that issue. More interestingly, in explaining why PROTOX did not infringe BOTOX their Honours also may also have changed how infringement is assessed. Thirdly, the High Court’s explanation why “instant BOTOX® alternative” did not infringe confirms that the plain English 1995 Act fundamentally changed the nature of trade mark use.
Allergan owns various registered trade marks in Australia for BOTOX including in class 5 for “pharmaceutical preparations for the treatment of … wrinkles” and in class 3 for “anti?ageing creams” and “anti?wrinkle cream”.
Allergan’s BOTOX product is an injectable pharmaceutical product containing botulinum toxin, type A which is administered by healthcare professionals and which can last for several months. That is, a class 5 product type. It does not sell an anti-ageing or anti-wrinkle cream. Its class 3 registration, however, is a defensive registration under section 185. As the High Court pointed out at , it was the reputation Allergan had derived from its extensive use of BOTOX for the goods in class 5 that was the basis for the defensive registration in class 3.
Self Care markets anti-wrinkle creams under the trade mark FREEZEFRAME. Its FREEZEFRAME products come in at least 2 lines – PROTOX and INHIBOX. These creams could be self-administered and could reduce the appearance of ageing for up to a few hours. The image below shows the PROTOX packaging the subject of the litigation:
The INHIBOX labels are similar, but bearing INHIBOX AND the slogan “instant BOTOX® alternative”.
Some differences between trade mark infringement and passing off / ACL
To consider what the High Court did when finding PROTOX did not infringe BOTOX, I want to recall four or five main differences between actions for “traditional” trade mark infringement and passing off or misleading or deceptive conduct contrary to the ACL.
For “traditional” trade mark infringement (that is, infringement under section 120(1)), the trade mark owner just has to prove that the trade mark was registered – there is no need to prove reputation; just the fact of registration;
For “traditional” trade mark infringement at least, it was necessary to show that the accused conduct was conduct in relation to the goods or services for which the trade mark was registered whereas passing off and the ACL were not so limited;
Trade mark infringement can occur where a reasonable member of the public is caused to wonder whether or not there is some connection between the accused conduct while passing off and the ACL require a likelihood of deception or being misled;
At least for trade mark infringement, the accused use must be use as a trade mark; that is, as a “badge of origin” to identify trade source; and
“Traditional” trade mark infringement required a comparison of the mark as registered to the particular sign alleged to infringe alone. The Court has ignored the use of other marks or indicia that may distinguish the relevant goods. In contrast, the comparison for false or misleading conduct or in passing off involves the accused use in context of all the circumstances.
This last point is well illustrated by the June Perfect case. There, Saville Perfumery had “June” registered in fancy script for toiletry articles including shampoo and lipsticks. June Perfect brought out its own range of lipsticks and shampoo under the name “June”. The packaging made it clear that the goods were the products of June Perfect.
The House of Lords held there was a clear case of trade mark infringement as the comparison was between the mark as registered and the sign used by June Perfect. On the question of passing off, however, the House of Lords accepted that June Perfect might be able to use its name in such a way that the trade source of the goods was clearly distinguished from Saville Perfumery. While there was an injunction to restrain June Perfect from infringing the trade mark, the passing off injunction restrained only the use of “June” without clearly distinguishing the trade source of the articles from Saville Perfumery.
There has been some relaxation over time to propositions 1 and 2.
First, section 120(2) extends the trade mark owner’s rights to cover not just the goods or services specified in the registration but also to things of the same description or closely related. Unlike the case with infringement under s 120(1), however, it is a defence to this extended form of infringement if the alleged infringer can show that the way they use their sign is not likely to deceive or cause confusion. Thus, the proviso to s 120(2) states:
However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.
Thus, Burley J quoted with approval Yates J’s dictum:
So too it is recognised that, for the purposes of considering infringement under s 120(1), it is beside the point that the alleged infringer has added other material to the impugned trade mark, even if those steps were taken to avoid the likelihood of deception: Saville Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147 at 161 (Sir Greene MR) and at 174 (Viscount Maugham); Lever Brothers, Port Sunlight Limited v Sunniwite Products Ltd (1949) 66 RPC 84 at 89; Mark Foy’s Ltd v Davies Coop and Co Ltd (1956) 95 CLR 190 at 205; Polaroid Corporation v Sole N Pty Ltd  1 NSWLR 491 at 495; New South Wales Dairy Corporation v Murray Goulburn Co-Operative Company Limited (1989) 86 ALR 549 at 589; Polo Textile Industries Pty Ltd v Domestic Textile Corporation Pty Ltd (1993) 42 FCR 227 at 231–232. Considerations of this kind, if raised by an alleged infringer, are relevant when considering infringement under s 120(2) and may be relevant when considering infringement under s 120(3). However, the general position under s 120(1) is that infringement cannot be avoided by, for example, the use of additional matter if the mark itself is taken and used. Once again, if the test is not applied in this fashion a trade mark owner may be deprived of the monopoly conferred by registration. (emphasis supplied by Burley J)
As the High Court recognised in the Self Care case, the 1995 Act introduced a further broadening of what could be infringement in s 120(3). If a trade mark owner could show that its trade mark was well-known in Australia, it could claim infringement by use of a sign on wholly unrelated goods or services where the use would be likely to indicate a connection to the trade mark owner and the trade mark owner’s interests were likely to be prejudicially affected.
With that background, we can turn to the High Court’s reasons.
Self Care and some principles
The appeal is concerned only with infringement under s 120(1). The extended versions of infringement for similar or closely related products (s 120(2)) and “famous” or “well-known” trade marks (s 120(3)) were not in issue in this case.
The High Court at  pointed out that infringement under s 120(1) requires 2 distinct questions to be addressed:
Did the alleged infringer use the sign “as a trade mark” – that is, as a “badge of origin” to indicate trade source?
If so, was the sign deceptively similar to the registered trade mark?
These are, as the High Court emphasised, two different issues and the High Court approached them separately.
Use as a trade mark
The High Court confirmed that whether a sign is being used as a trade mark is to be determined objectively, without reference to the subjective intentions of the user. At , their Honours explained:
Whether a sign has been “use[d] as a trade mark” is assessed objectively without reference to the subjective trading intentions of the user. As the meaning of a sign, such as a word, varies with the context in which the sign is used, the objective purpose and nature of use are assessed by reference to context. That context includes the relevant trade, the way in which the words have been displayed, and how the words would present themselves to persons who read them and form a view about what they connote. A well known example where the use was not “as a trade mark” was in Irving’s Yeast-Vite Ltd v Horsenail, where the phrase “Yeast tablets a substitute for ‘Yeast-Vite’” was held to be merely descriptive and not a use of “Yeast-Vite” as a trade mark. Therefore, it did not contravene the YEAST-VITE mark. [citations omitted]
At , their Honours affirmed the longstanding principle that the existence of a descriptive element or purpose was not determinative if there were several purposes for the use of the sign. So long as one purpose is to distinguish the trade source, that will be sufficient.
Further, their Honours acknowledged that the presence of ‘a clear dominant “brand”’ can be relevant to assessing the balance of the label or packaging, but that did not mean that another sign on the labelling was not also functioning as a trade mark.
For the last proposition, the High Court cited Allsop J’s decision in the Budweiser case at . In that case, Anheuser-Busch, the owner of trade mark registrations for BUDWEISER successfully sued the Czech company for infringement by the latter’s use of BUDWEISER on labels such as:
At , Allsop J explained:
It is not to the point, with respect, to say that because another part of the label (the white section with ‘Bud?jovický Budvar’) is the obvious and important ‘brand’, that another part of the label cannot act to distinguish the goods. The ‘branding function’, if that expression is merely used as a synonym for the contents of ss 7 and 17 of the TM Act, can be carried out in different places on packaging, with different degrees of strength and subtlety. Of course, the existence on a label of a clear dominant ‘brand’ is of relevance to the assessment of what would be taken to be the effect of the balance of the label.
Turning to the PROTOX label, there cannot really be any dispute that PROTOX is used as a trade mark. The question then is whether it is deceptively similar to BOTOX.
The test for deceptive similarity
The High Court discussed the principles for determining whether a trade mark is deceptively similar to another at  – .
Noting that section 10 defines a deceptively similar mark to be one that so nearly resembles the registered trade mark that it is likely to deceive or cause confusion, at  the High Court stated the resemblance of the two marks must be the cause of the likely deception or confusion. And this involved an assessment of the two marks as a whole taking into account both their look and sound.
At , their Honours endorsed the much quoted explanation of the principles given by Dixon and McTiernan JJ in Australian Woollen Mills at 58 CLR 658:
“But, in the end, it becomes a question of fact for the court to decide whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained.
In deciding this question, the marks ought not, of course, to be compared side by side. An attempt should be made to estimate the effect or impression produced on the mind of potential customers by the mark or device for which the protection of an injunction is sought. The impression or recollection which is carried away and retained is necessarily the basis of any mistaken belief that the challenged mark or device is the same. The effect of spoken description must be considered. If a mark is in fact or from its nature likely to be the source of some name or verbal description by which buyers will express their desire to have the goods, then similarities both of sound and of meaning may play an important part.
At , their Honours emphasised the artificial nature of the inquiry. Stating at :
…. The notional buyer is assumed to have seen the registered mark used in relation to the full range of goods to which the registration extends. The correct approach is to compare the impression (allowing for imperfect recollection) that the notional buyer would have of the registered mark (as notionally used on all of the goods covered by the registration), with the impression that the notional buyer would have of the alleged infringer’s mark (as actually used). …. (original emphasis) (citations omitted)
Returning to this issue, at  their Honours emphasised that “the court is not looking to the totality of the conduct of the defendant in the same way as in a passing off suit”. The High Court continued:
…. In addition to the degree of similarity between the marks, the assessment takes account of the effect of that similarity considered in relation to the alleged infringer’s actual use of the mark, as well as the circumstances of the goods, the character of the likely customers, and the market covered by the monopoly attached to the registered trade mark. (citations omitted)
Cases approved by the High Court in Self Care have acknowledged that questions of some subtlety can arise assessing the context of a use to determine if the sign is being used as a trade mark and assessing whether the infringing sign is deceptively similar.
All of the cases endorsed by the High Court in these propositions, however, make the same point: the comparison is between the registered trade mark and the mark being used by the alleged infringer without regard to the totality of the conduct by the infringer such as the presence of other trade marks or disclaimers.
One example of the role of impression in this mark to mark comparison, expressly cited by the High Court at , is the Chifley Tower case. There, MID Sydney’s registration of CHIFLEY TOWER for building management services was not infringed by Touraust’s proposed use of CHIFLEY for the names of the hotels it managed – such as “Chifley on the Wharf” or “The Chifley”.
One reason was that the services were not the same or of the same description.
Importantly for present purposes, the Full Court also found the marks were not deceptively similar because the public was familiar with many different uses of “Chifley” – apart from MID Sydney’s. This included the name of the Prime Minister, a restaurant and numerous geographical places. With that general background knowledge, therefore, the distinctive power of MID Sydney’s trade mark lay in the combined term, not in the common element CHIFLEY alone.
While this should not be surprising to trade mark lawyers, therefore, where it becomes interesting lies in what the High Court did when finding PROTOX did not infringe BOTOX.
Before turning to that issue, however, the High Court squarely addressed the role of reputation in infringement proceedings under section 120(1).
The role of reputation
Noting that the role of reputation has been contentious for a number of years, the High Court ruled at  that reputation is not relevant to infringement under section 120(1).
A number of considerations led the High Court to this conclusion. The first point at  was that it is registration which confers the rights in the trade mark on the owner and defines the scope of the registration. If considerations other than the registration could be taken into account “the level of protection afforded to that right would vary and be inherently uncertain.”
Another point was that the legislation specified various matters to be entered on the Register and available for public inspection. Reputation was not one of those matters and at  taking into account the reputation which had accrued to a trade mark would be contrary to the objective of the registered trade mark system:
which is to provide “a bright line that delineates the property rights” of a registered owner, for the benefit of the owner and the public, and runs the risk of collapsing the long standing distinction between infringement and passing off. (citations omitted)
Further, the Trade Marks Act expressly identified a role for reputation in four places:
section 60 providing a ground of opposition on the basis of the reputation in the opponent’s trade mark;
the provision for registration as a ‘defensive’ trade mark provided by section 185;
the provision by section 24 for “genericide” when a trade mark has become known as the generic description of the goods or services.
Why PROTOX did not infringe BOTOX
At , the High Court summarised the trial judge’s finding that PROTOX was not deceptively similar to BOTOX. His Honour accepted that the two marks looked and sounded very similar but less so in idea or meaning. Further, the trial judge had held that the reputation of BOTOX was so strong that it was not likely to be recalled imperfectly. Even if there was imperfect recollection, no-one was likely to be deceived. His Honour was reinforced in this conclusion by the close proximity of PROTOX to FREEZEFRAME and the lack of evidence of actual confusion.
At , the High Court noted the Full Court held the trial judge had erred by failing to consider whether the use of PROTOX might cause people to wonder if there was some connection to the owner of the BOTOX mark. In finding deceptive similarity, however, the Full Court had made two errors.
First, it had relied on Allergan’s reputation in BOTOX for pharmaceutical preparations to conclude that the public might wonder whether PROTOX was some form of brand extension. Secondly, in doing so, their Honour’s had relied on the way Allergan actually used BOTOX rather than taking into account its notional use for anti-wrinkle creams in class 3.
Considering the effect of the use of PROTOX on potential customers of anti-wrinkle creams in class 3, the High Court accepted at  that “pro” and “bo” looked and sounded similar and the common element “otox” was both distinctive and identical. But consumers would not have confused PROTOX or BOTOX:
…. The words are sufficiently different that the notional buyer, allowing for an imperfect recollection of BOTOX, would not confuse the marks or the products they denote. The visual and aural similarities were just one part of the inquiry. (emphasis supplied)
Despite the surprise many trade mark practitioners have felt about the trial judge’s similar conclusion, up to this point the High Court’s reasoning can be seen as consistent with the extensive array of case law endorsed by the High Court which distinguishes trade mark infringement from passing off. After all, as the High Court emphasised from Australian Woollen Mills, the ultimate conclusion onabout deceptive similarity is a question of fact.
However, the last sentence from  quoted above picks up what their Honours had said in . In considering the visual and aural impact of PROTOX, it was permissible to have regard to both the packaging and the website from which PROTOX was promoted:
it was necessary to consider the marks visually and aurally and in the context of the relevant surrounding circumstances. Considering both the packaging and the website for Protox accords with assessing the “actual use” of the PROTOX mark as required by the test for deceptive similarity. ….
The High Court then explained at  that the packaging and the website together dispelled the risk of implied confusion:
…. The notional buyer sees the PROTOX mark used on a similar product – a serum which is advertised on its packaging and website to “prolong the look of Botox®”. While the reputation of BOTOX cannot be considered, the relevant context includes the circumstances of the actual use of PROTOX by Self Care. “[P]rolong the look of Botox®” may suggest that Protox is a complementary product. However, as was observed by the primary judge, “it will be the common experience of consumers that one trader’s product can be used to enhance another trader’s product without there being any suggestion of affiliation”. In this case, the back of the packaging stated in small font that “Botox is a registered trademark of Allergan Inc” and, although the assumption is that Botox is an anti?wrinkle cream, the website stated that “PROTOX has no association with any anti-wrinkle injection brand”. (emphasis supplied)
It is very difficult, with respect, to see how these conclusions sit with the High Court’s earlier endorsement of the authorities that additional matter such as the presence of disclaimers does not avoid infringement.
Perhaps, given the copious citation of case law endorsing the “traditional” position that it is a mark to mark comparison only, the role of the packaging and the website will ultimately be characterised as reinforcing the finding of deceptive similarity rather than determining it. Indeed, at , their Honours concluded there was no real, tangible danger of deception or confusion:
…. As explained, the marks are sufficiently distinctive such that there is no real danger that the notional buyer would confuse the marks or products. The similarities between the marks, considered in the circumstances, are not such that the notional buyer nevertheless is likely to wonder whether the products come from the same trade source. That conclusion is reinforced by the fact that the PROTOX mark was “almost always used in proximity to the FREEZEFRAME mark” and that there was “no evidence of actual confusion”.
instant Botox® alternative
As noted at the outset, the High Court also found that Self Care’s use of “instant Botox® alternative” did not infringe Allegan’s trade mark. Nor was it misleading or deceptive conduct in contravention of the ACL. Given the length of this post, however, consideration of those issues will have to await another day.
Edit: on 3 April to clarify that it is the ultimate conclusion about deceptive similarity that is the question of fact. Thanks, Craig Smith SC.
That is, Allergan has used BOTOX so extensively, its use by someone else in relation to class 3 goods such as anti-ageing creams will falsely indicate a connection with Allergan. Where the reputation in the trade mark is so extensive to achieve a defensive registration, it does not matter whether the trade mark owner actually uses the trade mark for the goods or services covered by the defensive registration. ?
At , the “overwhelming” and “ubiquitous reputation of BOTOX”. ?
Saville Perfumery Ld. v. June Perfect Ld. (1941) 58 RPC 147. ?
As Lord Tomlin explained at 176, “It seems to me, and the form of the second injunction supports the view, that these Appellants may be able by proper precautions to sell the three articles in connection with their name of June Perfect Ld., while clearly distinguishing those goods from the Respondents’ goods. If that can be done there is no probability that the ultimate purchaser will be deceived.”. See also e.g.Puma Se v Caterpillar Inc  FCAFC 153; 168 IPR 404 (Nicholas, Rofe and McElwaine JJ) at  (Nicholas, Rofe and McElwaine JJ); In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd  FCA 193; 377 ALR 116; 150 IPR 73 at  and  (Katzmann J) (affirmed on appeal) and many others. ?
If you know of a court case where s 120(3) has been successfully asserted, please let me know. ?
Curiously, s 120 does not in terms require the trade mark owner to prove that alleged infringer did not have the owner’s consent to use the trade mark. An alleged infringer who claims to be licensed or set up consent must do so by way of [section 123][s123] in the case of services or, in the case of goods, the wonders of [section 122A][s122a]. (I tried to untangle the latter provision in Warwick A Rothnie, ‘Unparalleled importing and trademarks in Australia,’ (2020) 21(3) Business Law International 229.) ?
See e.g.Optical 88 at  and Budweiser at . Generally, one might have thought the emphasis in actual use in an infringement context lay in contrast to the situation at the examination and opposition stages where it is necessary to consider all fair and reasonable notional use that may be made by the applicant within the scope of the applied for registration. ?
Stewart J has dismissed Brick Lane’s ACL and passing off complaints against the get-up of Torquay Beverage Co’s Better Beer.
On 21 July 2021, Brick Lane issued a press release announcing the launch of its new Sidewinder Hazy Pale ale, a no to low alcohol beer. The range had been in development, behind the scenes, since September or November 2020. Sales of the product to the public began around 2 August 2021 including in outlets such as Dan Murphy’s.
The domain name had been registered and and Instagram account created on 9 July 2021. From then, the Instagram account, at least, featured an image of the Sidewinder product. Before 21 July 2021, however, there were only 9 followers (and they were likely from Brick Lane or otherwise associated with its development).
On 26 July 2021, Mighty Craft announced to the ASX that it had partnered with Torquay Beverage Co and The Inspired Unemployed to form Better Beer Co and the launch of the new zero carb beer Better Beer. The announcement was picked up and widely reported in industry publications; one of which, Beer & Brewer had a “reach” of 13,000 people and another, Drinks Trade, some 27,000 people. It was not until late October 2021, however, that product actually made it on to retail shelves.
There was no suggestion that the respondents had some how copied Brick Lane’s get-up.
On 3 December 2021, Brick Lane launched the second product in its Sidewinder range – an XPA Deluxe.
In April 2021, Better Beer ginger ale was launched.
As is conventional, Brick Lane argued the get-up of the respondents’ product was liable to misrepresent to the public that the product was Sidewinder or manufactured by or in some way endorsed, approved or sponsored by the manufacturer of Sidewinder.
The respective get-ups alleged:
an off-white 355 ml can
an off-white 355 ml can (save for the bottled product)
an off-white cardboard cluster and case (where sold by cluster or case)
off-white cardboard cluster and case (where sold by cluster or case)
a curving flared striped design (on the can, cluster and case) in blue and shades of yellow and orange with the dominant flared part of the stripes being vertically aligned
a curving non-flared striped design (on the can, bottle, cluster and case) in blue and shades of orange and yellow with the stripes oriented horizontally; and
the use of horizontal black lettering for the Sidewinder name and horizontal off-white lettering against a black background for the name of the particular product on the can and case (the lettering, or background to the lettering, being silver on the cluster packaging); and
the use of dark blue lettering for the product name, the lettering being rotated vertically; and
the use of a sans serif typeface in upper case for the “Sidewinder” lettering.
the use of a serif typeface in title case for the “Better Beer” lettering.
What went wrong
There were two main problems.
First, when the respondents started their conduct – the launch of their product a mere 5 days after the launch of the Sidewinder product, Sidewinder itself did not have any appreciable reputation with the public. At , Stewart J explained:
The first reason why Brick Lane’s claim in respect of the Sidewinder Hazy Pale product must fail is that at the relevant time, being 26 July 2021, there was no appreciable knowledge amongst members of the relevant class of the Sidewinder get-up. That is to say, the hypothetical member of the class of consumers purchasing beer is not likely to have any familiarity with the Sidewinder get-up with the result that on seeing the Better Beer get-up they would not be likely to confuse it with the Sidewinder get-up. As it was explained by Burley J in Homart FCA at , “it takes a strong case” to establish a reputation that the get-up relied on is associated by consumers with the relevant product. Put differently, even assuming a strong similarity in the respective get-ups, the hypothetical consumer is not likely to be misled or deceived into thinking that the two products are associated if they do not readily associate the applicant’s product’s get-up with the applicant or its product.
The position was different with the Better Beer ginger beer, launched later in April 2022. By then, however, both the Sidewinder and original Better Beer products had been widely promoted and distributed throughout the market so that the public must be taken to have learned to distinguish between them.
The second main reason Brick Lane failed was the strikingly different names prominently plastered over the products and their packaging. At , Stewart J explained:
Turning now to the differences and similarities between the relevant products’ get-up, the first observation is that each product bears a distinctive brand name – Sidewinder and Better Beer. Not surprisingly, Mr Hall’s evidence was that the Sidewinder brand name is distinctive, unique and powerful. There is no reason to disagree with that assessment notwithstanding that not everyone encountering the name may associate it with 70s jet boats – they may think of air-to-air missiles or snakes or something else equally distinctive and memorable. Equally, Better Beer is a distinctive brand name. Brick Lane submitted that because it is descriptive it is weak, but I do not accept that. It is alliterative and catchy. Moreover, Sidewinder and Better Beer are rendered in quite different styles of typeface – sans serif and serif respectively. They look and feel very different. They do not have visual or phonetic similarities such as were material to the reasoning in Homart FCA at 195(b).
As in Parkdale v Puxu, this difference was compelling in distinguishing the products.
His Honour accepted that there were distinct similarities between the relevant get-ups and did not put much store in the different orientation of the coloured stripes or banding – vertical vs horizontal.
On the other hand, Stewart J did not think the size of the cans – 355ml instead of 375ml – had any significant role to play. Of the 894 different beers on offer at Dan Murphy’s, at least 50 used the 355ml can format so it could not be described as unusual.
Overall, Stewart J concluded at :
Taking all of the above matters into consideration, I am not satisfied that the hypothetical reasonable consumer of beer would at the relevant date have had any particular familiarity with Brick Lane’s Sidewinder get-up, but even if they did, they would not have been likely to be misled by the similarity of the respondents’ Better Beer get-up to the Sidewinder get-up into thinking that the products were in some way associated. As explained, that arises in particular from the distinctive names used for the different products as well as the differences between the get-ups and the features of the relevant market.
A couple of noteworthy points
As his Honour noted, the question whether there has been a contravention of the ACL in these types of cases is determined when the respondent started the relevant conduct.
Brick Lane argued that the relevant date was when Better Beer was actually on the shelves available for retail purchase – that is, late in October 2021 – by which time Sidewinder was well established in the market.
Stewart J rejected that argument at  –  finding that the relevant date was when the respondents’ launched (i.e., announced the launch of) their product. As his Honour pointed out, the promotion of a product could give rise to misleading associations regardless of whether the product was actually available for purchase. In the cases which focused on the date sales started, there was no suggestion that there had been advertising or promotion beforehand. On the other hand, in In-n-Out Burgers, the contravening conduct started (at  and ) when the respondent launched its Facebook page, not later when it opened its store. Correspondingly, the date Cadbury Schweppes started marketing its product in the Pub Squash case was accepted by the Privy Council as the relevant date in passing off.
Secondly, Stewart J sought to explain the role of reputation in an ACL case. Where conduct is directed to a class rather than specific individuals, case law has now established it is not necessary to establish that a substantial or not insubstantial number of that class are likely to be misled or deceived. It is only necessary to show that the ordinary or reasonable member of the class is likely to be mislead or deceived.
Stewart J considered that in this type of case it was nonetheless necessary to show some association in the mind of the public between the get-up and the applicant. After quoting the Full Court in Cadbury Schweppes v Darrell Lea at , his Honour explained at :
… although it might be said that a particular reputation is not necessary, it is nevertheless necessary that there is some association in the mind of the relevant sector of the public between the applicant’s product and its get-up such that confusion might arise from the use of the same or a similar get-up in relation to the respondent’s product. Without the pre-existence of such an association, it could not be said that the use by the respondent of the same or a similar get-up suggests a misleading or deceptive association. The inquiry does not proceed on the assumption that the hypothetical consumer member of the relevant class is familiar with the applicant’s product; that is required to be established.
In this case, the respondents had argued that its product was in a different market segment to Sidewinder – the low carb segment vs the low alcohol segment, but Stewart J found the relevant public was the beer market generally. There was no evidence that the different “segments” operated as distinct (sub-)markets. For example, there was no evidence that beer products were arranged on retail shelves in any fashion by market segments.
Brick Lane sought to rely on a Trade Mark examiner’s rejection of Torquay’s trade mark application in the face of Brick Lane’s prior application. Stewart J pointed out at  that the competing applications did not feature their respective brand names. His Honour also doubted the examiner’s opinion was admissible evidence in a Court in light of Evidence Act s 76.
Finally, for those of you that recall Lord McNaghten’s famous aphorism “thirsty folk want beer, not explanations”, this case was distinguishable. In Lord Mcnaghten’s case, there had been one brewery in the town of Stone making and selling its Stone Ales for hundreds of years when the competitor opened up as Stone Brewery selling Stone Ales. When Sidewinder and Better Beer launched into the market, however, the consumer was confronted with a plethora of brands and products.
The Attorney-General has released a Copyright Enforcement Review: Issues Paper.
The Issues Paper begins with a welcome recognition that copyright plays an important role in “Australia’s creative ecosystem and broader economy”:
Copyright infringement may harm Australia’s creative ecosystem and broader economy by reducing or diverting income that creators of, and investors in, original material rely on for their financial sustainability. Copyright owners need to be able to take reasonable steps to protect and enforce their rights as part of a well-functioning copyright system. To this end, the current system includes a range of enforcement mechanisms (including industry-driven and statute-based mechanisms) to address unauthorised uses of copyright material. At the same time, it is important that consumers, service providers and other businesses are clear about when they can use copyright materials and in what circumstances.
Having noted the interests of both the creators and investors and consumers and others, the Issues Paper then declares the Government’s commitment to ensuring that copyright protects Australian artists through a fit-for-purpose enforcement regime:
The Government is committed to copyright laws that protect Australian artists and enable them to earn a living from their creative works. The Australian copyright enforcement regime must remain fit-for-purpose.
Accordingly, the Issues Paper states that the purpose of the review is to investigate whether the enforcement regime is working effectively or there are matters requiring attention:
The Australian Government is undertaking this review to:
• understand current and emerging enforcement priorities and challenges
• gather views from all parts of the copyright system – including owners, users, institutions and service providers – on whether Australia’s copyright enforcement regime remains relevant, effective and proportionate, and
• seek feedback on whether there is any need to supplement or strengthen existing enforcement mechanisms, and if so, how this could be done without imposing unreasonable administrative or economic burdens.
It appears that the background to the review is the increasing prevalence of online copyright distribution and consumption. Thus, the Issue Paper refers to the findings of a 2021 Consumer Survey on Online Copyright Infringement which revealed that 71% of survey respondents had “consumed” copyright material online in the 3 months to April 2021.
Further, the Issues Paper refers to industry data company, MUSO’s statistics for access to online piracy sites from 2017 to 2021 which appear to disclose “no strong upward or downward trend in copyright infringement overall” but, while declines in piracy of TV, films and music since 2017 have been observed, there have been increases in pirating of publishing materials.
The Issues Paper also reports that there is still a significant amount of IP-infringing material in the form of counterfeit goods – defined as goods infringing trade marks or copyright – citing the seizure by Customs of 145,000 counterfeit goods worth more than AUD 66 million in the last 12 months.
Against this background, the Issues Paper asks 3 questions directed to identifying the nature and scale of copyright infringement challenges in Australia:
What challenges have you been facing in relation to copyright infringement in recent years? Are you seeing any changes or trends (including any forms or methods of infringement that are emerging or particularly concerning, or conversely, are becoming less prevalent or concerning)?
Can you provide any data on the scale of current copyright infringement, or the estimated economic impact of such copyright infringement on you, your organisation or your industry more broadly?
Are there any particular drivers of copyright infringement that you see as noteworthy or significant? Have these drivers changed in recent years?
Next, the Issues Paper asks 4 questions directed to ascertaining the extent to which people are using “industry-driven mechanisms”, the costs and weaknesses of such mechanisms and the scope for developing such mechanisms. Such mechanisms include “cease and desist letters” and tools like YouTube’s content ID and Facebook’s Rights Manager schemes.
Turning to “statute-based mechanisms”, the Issues Paper reports that the website blocking scheme introduced in 2015 has resulted in more than 30 cases with more than 1600 sites blocked and some 330 extensions of the “whack-a-mole” variety.
According to the 2021 Online Copyright Infringement Survey, 11% of respondents had encountered blocked websites in the previous 3 months. Of those, 59% gave up trying to access the material and 18% sought lawful access instead. On the other hand, “almost 1 in 5” had used alternative tools to navigate around the block.
Accordingly, the Issues Paper asks:
8 How effective and efficient is the current website blocking scheme as a way of combating copyright infringement and steering online consumers towards legitimate sources of content? For example, is the application process working well for parties, and are injunctions operating well, once granted?
9 Could the way the website blocking scheme operates be improved in any way (for example to address the use of new and emerging technologies to navigate around or through website blocks), including through changes to how the current scheme is practically implemented, or potential amendments to legislation?
(a) What impact would any such changes have on you or your organisation?
(b) Are there any potential broader or unintended consequences (for example, on other aspects of internet traffic management) that should be taken into account when considering changes that may be suggested through this consultation process?
The Issues Paper notes that the “safe harbour scheme”, which introduced a notice and take down scheme modelled on the DMCA, applies only to “carriage service providers” and key cultural institutions such as libraries, archives and organisations assisting people with a disability but does not extend generally to digital platforms.
The Issues Paper then asks:
10 How effectively and efficiently are the authorisation liability provisions and/or safe harbour scheme (and associated notice and take-down process) currently operating as mechanisms for addressing copyright infringement? For example:
(a) How clear are the circumstances in which a party may be considered to have authorised another person’s copyright infringement, given the courts’ interpretation of the authorisation liability to date?
(b) How effective and efficient is the safe harbour scheme (and associated statutory notice and take-down process) in striking the right balance between combatting copyright infringement and protecting the legitimate interests of service providers?
11 Are there ways in which these provisions could be amended to improve their effectiveness or efficiency?
(a) How would such changes affect you or your sector?
(b) Are there any potential broader or unintended consequences that should be taken into account when considering changes that may be suggested through this consultation process?
In its last section, the Issues Paper reports than 150 copyright matters “were brought before the courts” between 2019 and 2021. Of these 60% were brought in the Federal Court and 40% in the court formerly known as the Federal Circuit Court. The Issues Paper also refers to what it describes as the Federal Court’s “expedited claims process” and developments overseas such as the Copyright Claims Board in the United States for disputes up to USD 30,000 and the Intellectual Property Enterprise Court in the UK for claims up to GBP 10,000.
This leads to three final questions:
12 What factors influence your decisions on what action(s), if any, to take through the legal system and/or law enforcement in relation to suspected or alleged copyright infringement?
(a) For example, have you found mechanisms such as mediation, alternative dispute resolution and other non-court remedies to be preferable as ways to resolve disputes?
13 Are the various avenues available through the legal system and law enforcement to address copyright infringement suitable and effective? For example:
(a) Have you sought to engage with the courts or law enforcement in relation to suspected or alleged copyright infringements? If so, please provide (if possible) any data or examples in relation to your experiences.
(c) Are the current civil and criminal remedies under the Copyright Act appropriate?
(d) What barriers (if any) do you face in engaging with the legal system? Could any models introduced in other international jurisdictions to streamline consideration of copyright matters be potentially relevant in an Australian context?
(e) Were you previously aware of the ABF’s Notice of Objection border enforcement application process?
14 Are there any ways in which the current system could be improved? How would such changes affect you or your sector?
In a very welcome move, we have been granted an extended period to make our submissions: they should be submitted by 7 March 2023.
The NSW Court of Appeal has upheld the decision to award damages for a defective computer system as the cost of replacement and also included a component for an employee’s time spent working on solutions for the problems.
SEMF is an engineering and project management consultancy.
In 2013, it engaged Renown to supply and install an upgraded project management and accounting system. The upgraded system was to be based on Microsoft Dynamics SL 2011.
When installed, between 2014 and 2016, the system was defective. The defects related mainly to the module which was supposed to enable SEMF’s employees to generate real-time reports through a web-based browser. SEMF’s employees spent considerable time and effort and incurred significant costs in trying to remedy the defects before Renown conceded it wasn’t possible to fix the problems.
By the time of the trial in 2021, the Microsoft Dynamics SL 2011 software had itself been superseded by the Microsoft Dynamics SL 2015 and then the Microsoft Dynamics SL 2018 package. SEMF had therefore arranged for the installation of a new system based on the 2018 package.
The trial judgment
At first instance, the trial Judge, Ball J found Renown had breached the contract to supply and install the system. His Honour gave judgment for $662,344 comprised of:
$631,894 for the costs of installing a new system based on Dynamics SL 2018, less $52,218 for maintenance fees payable to Microsoft from 2016;
$84,744 paid to Mr McLean, an employee who was found to have been engaged specifically to work on solutions to the problems with the Renown System and the implementation of the Business Portal. However, damages were not allowed for the time of other SEMF employees performing tasks which would not have been necessary had the Renown System not been defective, by reason that the extent of the diversion was not established, a substantial portion of the time claimed was in respect of administrative staff and there was no evidence that SEMF had had to employ additional administrative staff, and the disruption to the business was not so great as to justify an award of damages based on employee costs;
$27,184 for additional licences, $13,935 paid to Plumbline, $7,320 paid to Ms Nicholls, and $800 paid to Pinnacle Analytics. These items either were not, or are no longer, in dispute;
less, a set-off in favour of Renown for $51,315 in respect of unpaid invoices.
On appeal, Renown contended Ball J was wrong to assess damages at the date of the trial rather than the breach. It argued further that the damages should be the difference between the value of the system as delivered and the value of the system it had contracted to supply and that no allowance for the employee should be included.
As we all no doubt recall, the measure of damages for breach of contract is:
The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.
Brereton JA (with whom Meagher and Mitchelmore JJA agreed) considered that contracts of this kind for the supply and installation of software systems were analogous to building construction contracts. While the general rule is that damages for breach of contract are assessed at the date of the breach, that is not always the case in such cases as the loss actually suffered can be affected by the date the defects are discovered.
Accordingly, Brereton JA considered SEMF was entitled to its reasonable costs of rectification when those costs were incurred. At , his Honour explained:
the principle emerges that the proper measure of damages in a case such as the present is the reasonable costs of rectification, which will be the costs when they were actually incurred (if they have been incurred by the date of trial), so long as they are not unreasonable; or (if they have not been incurred already), the reasonable costs as proved as at the trial, unless it is established that by not conducting rectification works earlier the plaintiff has unreasonably failed to mitigate its loss.
Further, SEMF had allowed Renown an extended period of time to rectify the defects which came to an end when Renown itself concluded it could not fix the defects. Hence, there was no suggestion that SEMF had unreasonably failed to mitigate its loss.
Replacement or fixing the defective module
Renown further contended that the costs of rectification should be limited to fixing the defects in the specific, faulty module.
In a conclusion that will surprise no one who has ever tried to unscramble these things, however, the expert evidence was that identifying the defects and appropriate remedies would be extremely time-consuming and expensive and might never be possible. Accordingly, the expert evidence demonstrated that replacing the whole system with the new 2018 system would be the more efficient and costs effective solution.
A discount because the 2018 system was better than the 2011 system
The next question was whether some discount should be made because SEMF got a better, more modern system – the 2018 version – than what it had contracted for – the 2011 version.
The trial judge accepted there were situations where some allowance for “betterment” should be made. However, they did not apply here. SEMF had not consciously chosen an asset more valuable than the one being replaced. His Honour also considered that, save in one respect, there was no evidence of any benefit to be accounted for.
The exception to this conclusion was in respect of maintenance fees. Before the system was upgraded to the 2018 system, SEMF had not been paying maintenance fees to Microsoft, some 18% of the contract value each year.
In the Court of Appeal, Brereton JA accepted that the 2018 system did bring enhancements and improvements to the user experience over the 2011 system. However, SEMF would have been entitled to upgrade upon payment of the applicable maintenance fees.
There was a disagreement between the experts on whether an upgrade from the 2011 system to the 2018 system would have simply worked or would have required additional work. If such work was required, SEMF had been saved it and its damages might have been reduced on the “avoided loss principle”.
Under that principle, however, Renown bore the onus of proving what work would have been required and so the amount of costs saved. There was no evidence of what work would have been involved let alone its costs so, at , this argument failed.
The employee costs
Ball J had allowed for the costs of Mr McLean’s work to be included in the damages, but not other employees. The Court of Appeal upheld these findings.
Mr McLean was a casual employee, engaged for a specific purpose. While Mr McLean was initially engaged to work on a different project, from October 2015 he was engaged full-time to work solely on the implementation and attempted rectification of the system installed by Renown. At : Brereton JA explained:
As a casual employee whose work was solely related to the Renown System, he fell in a different category from the other employees in respect of whom “diversion of time” was claimed but not allowed.
Coming up to the end of the year, there are events on reforming patent litigation practice and domain name disputes in review.
Patent litigation practice
Calling it “A very IPRIA Christmas”, IP Australia and IPRIA are hosting on 7 Decemberat 5:30 pm an end of year celebration exploring “a wish list of practice reforms for making patent litigation in Australia (including appeals from the Office) more expeditious and cost effective.”
The event will be chaired by Justice Rofe and features Clare Cunliffe and David Shavin KC from the Bar and Lisa Taliadoros from the solicitors’ side of the profession.
Registration is free and attendance can be in person or online – although to assist catering they do ask that you register by the end of Monday 5 December if you are planning to attend at the Law School in Carlton in person.
If domain name disputes are more your thing, the Hon. Neil Brown KC is also presenting an “Annual round-up on Domain Name Arbitration”. Topics Neil intends to cover include:
how the domain name process works
latest trends emerging from the decisions of arbitrators
what evidence do you need and how to collect the best evidence
the procedures to lodge a claim and how to defend one
traps for new players.
While Neil and I haven’t always seen eye to eye in particular cases, Neil has lots of experience both in the UDRP and a number of other regional and country-specific dispute resolution processes.
Neil is giving his talk online via Zoom at 10:00 am (Melbourne time; i.e. UTC +11) also on 7 December 2022.
According to his brochure, there is no need to register; just log-in. I am afraid I cannot reproduce the link so you are probably best just to email him directly.
Last Friday, the clock finally ran out on Dr Thaler’s attempt to register a patent in Australia on the basis that the artificial intelligence, DABUS, was the inventor: the High Court refused special leave to appeal from the Full Federal Court’s ruling that an inventor must be a human being.
Perhaps surprisingly, the High Court did not reject the application for special leave on the grounds that an inventor for the purposes of the Patents Act must be a human being. Rather, it dismissed the application on the grounds that it is not an appropriate vehicle for the determination of the issue.
You will recall that s 15(1) of the Patents Act 1990 defines who is entitled to be granted a patent:
Subject to this Act, a patent for an invention may only be granted to a person who:
(a) is the inventor; or
(b) would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
(c) derives title to the invention from the inventor or a person mentioned in paragraph (b); or
(d) is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c).
The Commissioner had rejected Dr Thaler’s application at the formalities stage on the basis that an inventor must be a human being. Therefore, Dr Thaler’s application failed at the formalities stage under reg. 3.2C(2)(ii) because the application identified DABUS as the inventor and DABUS was an artificial intelligence only.
It was an agreed fact before the Courts that DABUS was the “inventor”:
MR SHAVIN: …. [Dr Thaler] programmed the computer but he said that the way in which the computer was programmed is it acted independently in its selection of subject matter and in its generation of the invention. So, he says that he truly was not the inventor, but DABUS, the artificial intelligence, he says was the proper inventor.
Two or perhaps three matters seemed to be exercising the panel determining the special leave application.
First, there were questions directed to whether or not the case was simply one of either DABUS qualified as an inventor or there was no inventor at all for the purposes of the Act. One problem with that was that, as it was an agreed fact between the Commissioner and Dr Thaler there was no contradictor to the proposition. Notwithstanding the agreement between the parties, the panel appeared to consider that Dr Thaler himself might have been the inventor:
EDELMAN J: Mr Shavin, your submission would have a great deal of force if it were possible to exclude, immediately, without any possibility of argument, the possibility that the applicant was not the inventor, because then, once that possibility is excluded, one is left with either a presumption of the section that every invention must have an inventor – on your submission – that is wrong. Or, alternatively, an approach an inventor does not need to be a natural person, which meets some of the difficulties that the Full Court has identified. But the difficulty for this Court is that without having any submissions about the starting point, which is whether a natural person here could be the inventor, we are groping in the dark.
The idea being suggested here appears to be similar to questions of authorship in copyright law where there may be questions of degree such that the computer program is merely a tool like, say, Microsoft Word which an author uses to record his or her words compared to the computerised system used to generate telephone directories in the Phone Directories case where, the system having been designed and implemented, the Court found there was no human intervention.
Secondly, if the Act did set up the dichotomy and an inventor had to be a human being, concerns were expressed that would mean there was a “gap” in the legislation – there could be “inventions” that could not be protected because there was no inventor. Thus:
EDELMAN J: If that factual and legal position is correct, and Dr Thaler is not the inventor, then there is a significant hole in the operation of section 15 because it means that you can have an invention but no inventor.
Thirdly, the panel was plainly aware that the status of DABUS as an inventor was an issue being litigated around the world and, in particular, the UK Supreme Court has listed for hearing on 27 February 2023 the legality of the procedural approach taken to reject Dr Thaler’s application.
Where does that leave matters?
Plainly, some sort of question mark hangs over the Full Federal Court’s approach.
So far, the Commissioner has not announced any change to practice about disallowing applications which identify an artificial intelligence as an inventor.
There may be a question whether someone who does not have Dr Thaler’s agenda will nominate an artificial intelligence as an inventor. The panel refusing the special leave application appeared to envisage that the person who owned, or controlled or programmed the computer might legally be able to claim inventorship. For example:
EDELMAN J: There is an easy way the question could have been raised, which could have been if the applicant had listed himself as the inventor and the Commissioner and had rejected that on the basis that he was not the inventor but the artificial intelligence was the inventor, which would then have given rise to the prospect that nobody, for the purposes of section 15, was the inventor.
There are, however, with respect any number of difficulties with this.
For example, as Mr Shavin KC pointed out, that might require the applicant to identify someone as the inventor which the applicant did not believe to be true.
Secondly, with the benefit of the special leave panel’s (non-binding) observations, does one nominate the owner, the controller or the programmer or some combination of all three as the inventor? If one nominated the wrong person, that might provide a ground for revoking any subsequent patent on the grounds of lack of entitlement or more likely fraud, false suggestion or misrepresentation.
Thirdly, how would anyone ever know? In most (if not all) cases, the Commissioner is not going to be in a position to dispute the nomination of a person as an inventor. It might possibly come up in the context of an opposition or infringement / revocation proceedings but that would likely depend on something like the time-honoured tradition of a disgruntled ex-employee blowing the whistle.
If nothing else, if such things are to be protected as patents, it seems what we really need is some form of international agreement one whether they should be patentable and, if so, rules or guidelines for determining who is entitled to be the applicant. There has of course been no rush of international adoption of the extension of copyright to computer generated works. That problem, however, is becoming increasingly important as schoolkids (and millions of others) are happily playing with online AIs to generate their own art works, poems and other materials.
Late last year, Prof. David Brennan published Copyright Law, Federation Press.
Those of you who have heard David speak or read any of his wide ranging publications will no doubt appreciate that this is a book worth adding to your arsenal library.
If you are not one of that fortunate number, perhaps you will be further encouraged by the words of one Hon William Gummow AC:
Since its enactment more than 50 years ago, the 1968 Act has moved significantly from the classic structure of copyright laws. This is the product of judicial decisions and much legislative activity. The busy practitioner often will be presented on short notice with copyright disputes and needs an authoritative text to be ready at hand. In those law schools where the subject is taught to undergraduates the students need access to a stimulating study of the statute and case law.
This book answers their needs. The author has an engaging literary style which leads the readers through the conceptual thickets of copyright law. The publisher also is to be congratulated for the preparation which has gone into the production of the book and its printing in Australia.
One slight quibble, it might be thought a slight disservice to the efforts of the late Prof. Lahore to mark his 1977 monograph as the last comprehensive text specifically serving the Australian market given his much expanded Copyright Law looseleaf service published in 1988 and, of course, the continuing mammoth Copyrightand Designs, first published in 1996. (Of course, I would say that!). Nonetheless, that quibble aside, if you are following copyright law in Australia, you should be finding this book.