Australia

The Consumer Guarantees in the ACL apply to computer games downloaded from overseas’ vendors

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The ACCC – the consumer watchdog – has successfully sued Valve for misleading or deceptive conduct in relation to its Steam gaming platform. The representations were along the lines of statements made in the terms and conditions like:

“ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT REFUNDABLE IN WHOLE OR IN PART”.

The ACCC’s case was that such statements were misleading because they were inconsistent with a consumer’s rights to return defective goods and receive a refund. These rights arose (in the case of defective goods) since s 54 of the Australian Consumer Law incorporates into all supplies of goods in trade or commerce to consumers in Australia a guarantee that the goods are of acceptable quality. If they are not, s 259, amongst other things, confers a right of action for compensation where the deficiency in quality could not be remedied or was a major failure and s 263 provides an entitlement to a refund.

Valve is based in Washington State, USA. It argued its arrangements with Australians were not subject to the Australian Consumer Law. There were 3 reasons:

  1. Valve’s conduct did not occur in Australia and it did not carry on business in Australia;
  2. The Steam Subscriber Agreement was governed by the law of Washington State in the USA and so the Australian Consumer Law did not apply; and
  3. The software games were not “goods”.

Conflicts of law rules did not exclude Australian Consumer Law

In (very) broad terms, section 67 of the Australian Consumer Law says that the consumer guarantee provisions of the Australian Consumer Law continue to apply where the proper law of the contract would be Australia (but for the terms of the contract which provide otherwise) or the terms of the contract provide that the laws of some other country govern the contract.

As noted above, Valve’s contract with subscribers (i.e., someone who “buys” a game through Steam to download or play) provided that the governing law of the contract was the law of the state of Washington in the USA and its courts had exclusive jurisdiction.

The parties accepted that this clause could not be relied on in face of s 67. However, Valve argued that nonetheless the “proper law” of the contract was the law of the state of Washington and not somewhere in Australia.

Edelman J noted that at common law, the proper law of a contract was that which had the closest and most real connection with the transaction. This was determined by consideration of:

matters including (i) the places of residence or business of the parties, (ii) the place of contracting, (iii) the place of performance, and (iv) the nature and subject matter of the contract (437). Each of these is considered in turn.

Valve’s customers, at least those who gave evidence for the ACCC, were resident in NSW, Victoria and Tasmania. Valve, however, had its offices in Washington State, USA and did not have offices in Australia. Edeleman J acknowledged also that it was seeking to enter into contracts with people from all over the world and was aiming to do so on consistent terms.

His Honour next considered that the place of contracting was Washington State as that was the place where the electronic communication from the customer was received to form the contract. That is, presumably, the transaction was one where the customer made an offer to “buy” the game and the contract was formed when Valve accepted the transaction in Washington State.[1]

So, while the proper law of the contract was Washington State, USA, s 67 of the ACL applied.

Valve was carrying on business in Australia

Even though his Honour found that the proper law of the contract was Washington State in the USA, Edelman J nonetheless found that Valve both engaged in conduct in Australia and was carrying on business in Australia and so subject to the Australian Consumer Law.

You can see where this is going at [4]:

…. There are some difficult issues involved in determining whether “conduct” is in Australia, but even if Valve’s conduct was not conduct in Australia, the Australian Consumer Law would apply if Valve carried on business in Australia. Valve said that it does not carry on business in Australia despite Valve (i) having more than 2 million user accounts in Australia, (ii) generating potentially millions of dollars in revenue from Australia, (iii) owning, and using, servers in Australia, with original retail value of US $1.2 million, (iv) having relationships with businesses in Australia, and (v) paying tens of thousands of dollars monthly to Australian companies in expenses for running its business in Australia.

conduct in Australia

Despite the difficulties in determining where conduct takes place, Edelman J was able to find that Valve engaged in conduct in Australia. The conduct in question was the making of representations. The representations were made in the place(s) where they were received (otherwise, if no-one saw or heard the representation, there would be no conduct). Here, however, representations about “no refunds” were made directly to customers in Australia in “chat” sessions and when they signed up for accounts and “bought” games to download: [2]

…. The purchase of a game also required a consumer to click on a box that agreed to the terms of the SSA. The consumer provided Valve with his or her location as Australia at the time of purchase. Indeed, Valve priced some games differently in Australia (ts 120–121). The consumer might be told by Valve that “This item is currently unavailable in your region” (Court Book 347).

carrying on business in Australia

Accepting that “carrying on business” could have different meanings depending on the context, Edelman J accepted the approach advanced earlier by Merkel J in Bray:

… the ordinary meaning of “carrying on business” usually involves (by the words “carrying on”) a series or repetition of acts. Those acts will commonly involve “activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis” ….

That was undoubtedly the case here. See the matters referred to in paragraph 4 above.[3]

Software downloads are “goods”

Computer programs are specifically included in the definition of “goods” for the purposes of the ACL. Valve argued, however, that what it was really supplying were services including the motion picures and audio which portrayed the images and sounds which the gamer interacted with.

Edelman J agreed that the film and audio files were not a computer program for these purposes, adopting the definition of a computer program as a set of instructions from the Copyright Act.

Under the ACL, however, it is not a question whether the supply is substantially a supply of services. Rather, the question is whether or not it involves a supply of goods. If so, the way the definitions are written, it doesn’t matter whether there is also a supply of services.

Valve further contended that it did not supply goods as all the subscriber had was a licence to use the software and, citing Cowell, a bare licence is purely a contractual right; not the supply of any property. One problem with this argument was that s2 of the ACL defined supply to include lease, hire or hire-purchase; terms sufficiently wide to encompass a licence. Another problem was that the argument did not take into account that subscribers could download games to play offline. They “physically” had the goods.

Valve therefore breached the consumer warranties implied by the ACL into each arrangement.

Interesting question whether foreighn companies systematically supplying goods or services over the internet to Australia will need to be registrered as a foreign company carrying on business in Australia under s 601CD of the Corporations Act? One may wonder about the practical ramifications flowing from that.

Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 (Edelman J)

  1. OK, that is an old-fashioned characterisation of the contractual formation, but Edelman J relied more specifically on UNCITRAL Model Law on Electronic Commerce 1996 with additional article 5bis as adopted in 1998 and the electronic transaction provisions in Australian laws such as Electronic Transactions Act 1999 (Cth) s 14B.  ?
  2. Ward Group v Brodie & Stone was distinguishable, at least because in Valve, there were (2.2 million) real purchasers. Gutnick was also distinguished as directed to different issues.  ?
  3. Catalogued again at [199] – [204].  ?

The Consumer Guarantees in the ACL apply to computer games downloaded from overseas’ vendors Read More »

RPL Central also refused special leave

Leave a Comment / Patents / / / , , , , ,

The High Court has also refused RPL Central special leave to appeal.

RPL Central had applied for the grant of an innovation patent entitled ‘Method and System for Automated Collection of Evidence of Skills and Knowledge’.

Middleton J had upheld RPL’s appeal from the Commissioner’s decision to reject the application on the grounds it was not a manner of manufacture. The Full Court allowed the Commissioner’s appeal. In rejecting special leave, the High Court baldly stated:

The Full Court was plainly correct and, accordingly, none of the applicant’s proposed grounds of appeal enjoys sufficient prospects of success to warrant the grant of special leave to appeal. Pursuant to r 41.11.1 of the High Court Rules 2004 (Cth), we direct the Registrar to draw up, sign and seal an order dismissing the application with costs.

So, so far as patenting business methods goes in Australia, it looks like Research Affiliates will be the last word … for a long time.

If you have a question or wish to make a comment, feel free to post it in the comments box or send me an email.

RPL Central Pty Ltd v Commissioner of Patents [2016] HCASL 84

RPL Central also refused special leave Read More »

Now for the PLAYGO word mark

Leave a Comment / Enforcement / / / , , , , , , , , ,

Moshinsky J has now extended the declarations and injunctions in the Playgro v Playgo proceedings to include the PLAYGO word mark, but refused orders to recall infringing products and for delivery up.

The previous decision concerned the use of the PLAYGO device. This device appeared prominently on the top and the four sides of the product packaging. In small print (6 point or 8 point) on the bottom of the packaging, the following legend was printed:

Screen Shot 2016-05-11 at 12.28.21 PM

Moshinsky J has now ruled that PLAYGO in the first line of that “notice” also infringed, but not the other occurrences of PLAYGO in the company names.

The respondents argued that the PLAYGO device placed prominently on the top and sides of the packaging was clearly the trade mark and would be understood by the consumers to be the trade mark. This “notice” was just a legend referring to that device. Consumers would never even see it, unless they picked the package up and looked at its underside. His Honour said at [17]:

In the present case, the word, ‘PLAYGO’ was immediately followed by the letters, ‘TM’ in superscript and the words “is a trademark of”. These are strong indicators that the word, ‘PLAYGO’ is being used as a trade mark, that is, as a ‘badge of origin’ to distinguish the respondents’ playthings from playthings made by others. While the nature and purpose of the use of the word must be considered in the context of the packaging as a whole, which includes the Playgo Device Mark on the front and sides of the box, the fact that the Playgo Device Mark is used as a trade mark does not diminish the fact, in this case, that the word, ‘PLAYGO’ in the small print is also being used as a trade mark. This case may be contrasted with cases where a word which is arguably descriptive is used in small print on the packaging and it is concluded that, in the context of the packaging as a whole, including the use of a prominent brand elsewhere on the packet, the word is not being used as a trade mark: compare, for example, Nature’s Blend Pty Ltd v Nestle Australia Ltd (2010) 86 IPR 1 at [22], [37]-[40] per Sundberg J; Nature’s Blend Pty Ltd v Nestlé Australia Ltd (2010) 87 IPR 464 at [42], [48] per Stone, Gordon and McKerracher JJ. In the present case, the word, ‘PLAYGO’ is not descriptive and the presence of the superscript letters, ‘TM’ and the words “is a trademark of” indicate use as a trade mark.

Even if the word PLAYGO in the first line of the “notice” could be seen as a legend, it would be sufficient that one of the impressions a consumer could take away from the use was that it was used as a trade mark and that was the case here.

Bearing in mind that Playgo was outside Australia (in China) and supplied its products there to retailers who imported them into Australia for sale, the injunctions Moshinsky J ordered were against supplying for sale in Australia playthings under or by reference to the PLAYGO device or in packaging bearing both the PLAYGO device and the word PLAYGO in small print on the packaging (other than as part of a company name).

The words “under or by reference to” were preferred to “use as a trade mark” as, while the latter expression is the term used in the Act, it was liable to debate and uncertainty about its scope. The use of PLAYGO in the company names was not enjoined as it was not trade mark use. In addition, his Honour was not prepared to enjoin wider uses of PLAYGO where the trial had concerned only the limited use in small print on the bottom of the packaging.

Moshinsky J refused to order Playgo to recall all unsold goods. Playgo had stopped supplying goods with the trade mark in November 2014. His Honour considered it unlikely that stocks would still be held by retailers. Even if there were, there was no evidence that Playgo had any right to require the retailers to return the products. (That of course does not mean that retailers who sell would not infringe.)

The order for delivery up was also refused. This was because any goods in Playgo’s possession or control were in China – where it was located and operated – and could be sold to places other than Australia where there might not be an infringement.

Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited (No 2) [2016] FCA 478

Now for the PLAYGO word mark Read More »

Primary Health Care is not registrable as a trade mark

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You will probably not be surprised to discover that PRIMARY HEALTH CARE is not registrable as a trade mark. You may, however, be surprised that the successful challenger was the Commonwealth of Australia.

Primary Health Care Limited (PHC) applied to register PRIMARY HEALTH CARE and

Primary Health Care logo
Primary Health Care logo

in class 35 for:[1]

Medical centre business management; medical centre business administration; service provider to medical professionals, namely provider of: administrative support services, billing and invoicing services, reception and telephone answering services, patient booking services, patient file management services including management of access to patient files, typing services, account-keeping and book-keeping services, preparation of business reports, systemisation of information into computer databases, professional business consultancy, computerised file management, business and information management services, ordering services, processing of purchase orders.

What PHC did was it bought or built a building for use as a medical practice. It set up the rooms and facilities and provided the staff such as receptionists, book keepers etc. Then it contracted with medical practitioners (mostly GPs) to work from the medical centre, using the staff and facilities PHC made available to provide their services. PHC argued that it used its trade marks only in providing those services to the medical practitioners and the trade marks were not used by it in providing medical services to the medical practitioners’ patients. Thus, it said, it was not using the trade marks for medical services, only for business management and administration services – services for which the expression PRIMARY HEALTH CARE was not an apt description. At [53]:

The applicant’s case is that the Services are all to be provided to health care professionals and are not to include clinical or medical care by those professionals to patients.

This argument was predicated on PHC’s clinics/centres not being called or promoted to the public as PRIMARY HEALTH CARE centres.[2]

Jagot J rejected PHC’s contention. Her Honour accepted that PHC’s marketing was directed to health care professionals rather than the public. Her Honour also accepted that the health care professionals provided the health care services to the patient and jealously guarded their clinical independence in deciding what clinical care to provide to the patient. So PHC was not actually providing medical or health care services to the patients per se. However, it was unrealistic to treat the services PHC provided as being services provided only to the health care professionals. They were also provided to the public. Jagot J explained what her Honour had in mind by reference to the medical centre’s receiptionist – who was employed by PHC. For example at [55] – [59]:

…. the person paying for the services, the medical professional, is not the only person who receives the services or, at the least, is not the only person concerned with the services. The Services include reception and telephone answering services, patient booking services, patient file management services, information management services, billing and invoicing services, computerised file management, and ordering services, all said to be “to medical professionals”. (emphasis supplied)

Assume then a member of the public who wishes to see a GP who is contracted to and has a practice located in one of the applicant’s medical centres (leaving aside, for the moment, the issue about Idameneo and how the marks have in fact been used). The patient calls the centre and speaks to a receptionist. On the applicant’s case, in answering the call, the receptionist is providing a service only to the GP the patient might wish to see and not to the patient. This is untenable. The GP who ultimately sees the patient pays for the service but the service cannot be said to be a service to the GP only. It is also a service to the patient, the cost of which is borne by the GP, at least insofar as the GP does not seek to recoup those costs in the consultation fee. ….

As a consequence, Jagot J found:

[64] As such, the focus of the applicant’s case is off target and at odds with the evidence. The consequences of this disconnect run through every aspect of the case. First, the Services cannot be considered as if they exist in isolation because that is not how the Services are provided. Second, no matter how often the applicant repeats it, I am unable to accept that the Services are directed only to GPs and health professionals; the public and other participants in the health care sector are provided with some of the Services and are potentially concerned with all of the Services. ….

[65] … the reality is that, at least insofar as the Services are concerned, the applicant is providing services to medical professionals within its centres, to patients of those centres, and to all other participants in health care who interact with any medical professional in one of its centres. The fact that the applicant (or Idameneo) receives payment for the provision of the Services directly from the medical professional does not mean that the Services are provided only to the medical professional. Nor does the fact that medical professionals understand that they alone provide clinical or medical services to patients mean that the Services are not provided to patients. The reasoning involved seems to involve a false syllogism: (i) only medical professionals provide clinical services to patients, (ii) the Services are not clinical services, (iii) therefore, the Services are necessarily not services to patients. Propositions (i) and (ii) may be accepted, but they do not lead to proposition (iii).

Therefore, when deciding what the ordinary signification of the words PRIMARY HEALTH CARE was, the relevant public was not just the health care professionals to whom the services were promoted but all other participants in the health care system including patients and potential patients.

For the public so defined, Jagot J then went on to find that the expression PRIMARY HEALTH CARE was directly descriptive and so not inherently adapted to distinguish at all under the old form of s 41(3) or capable of distinguishing under s 41(5) or in fact distinctive under s 41(6).[3]

At first blush her Honour’s ruling that the Services were being provided to the public (other than the medical practitioners) might seem questionable because, so far as I can make out from the judgment, no member of the public (apart from the medical practitioners of course) actually sees the sign PRIMARY HEALTH CARE being used as a trade mark. For example, patients were not given bills or receipts or prescriptions with PRIMARY HEALTH CARE emblazoned on them. Nor does it seem that the receptionist (or other ancillary staff) wore uniforms with the sign on them. If keywords are not used as a trade mark because they are “invisible”, one might think that the unseen expression PRIMARY HEALTH CARE was also not being used as a trade mark for the services provided to the public. As the Commonwealth pointed out, however, PRIMARY HEALTH CARE could be used on, for example, the uniforms if the trade mark were registered. So, taking into account fair notional use renders the “invisiblity” argument untenable.[4]

Perhaps the crucial consideration is that the services being provided by the receptionist and the other “ancillary” staff are just so closely bound up with the health care services being provided by the medical practitioner to be part of those services or taking their character from the primary services being offered at the clinic. This indeed appears to be what her Honour had in mind. So for example, her Honour said at [119]:

there is an unreal distinction at the heart of the applicant’s case between the provision of the Services and the provision of clinical or medical care. The distinction is unreal because the Services are part of the overall service a patient receives when attending a medical centre and, to some extent, are also part of the medical or clinical care a patient receives. It is part of medical care that a GP be able to access clinical records for a patient. It is part of medical care to ensure new records are accessible in the future. It is part of medical care for a patient’s referral to be properly recorded, stored and managed. It is part of medical care for the centre to have available necessary medical supplies. ….

and at [121]:

in the real world context in Australia (at least) the Services are inextricably bound up with the provision of medical and clinical services by general practitioners and allied healthcare professionals, including through medical centres and medical practices – they are ‘part and parcel’ of the practice of general medicine and allied healthcare in the community, of primary health care.

That way of looking at things, with respect, seems in accord with the reasons why the Full Court in the Chifley Tower case rejected the argument that an hotel was engaged in providing property management services.

Jagot J went on to find that an additional ground for refusing registration was that the trade marks were deceptive or confusing. They were deceptive or confusing because, although they were so closely bound up with the provision of medical services, the specification of services did not include medical services. On the other hand, use of the trade marks would be congtrary to law in contravention of s 18 of the Australian Consumer Law because use of the mark misrepresented that PHC provided medical services and further that PHC was responsible for the medical services provided by the medical practitioners at the centres.

Primary Health Care Limited v Commonwealth of Australia [2016] FCA 313 (Jagot J)

  1. The “Services”. In the course of the proceeding the specification of services went through a number of revisions. This is just the starting one, but it indicates the nature of what PHC wanted registration for.  ?
  2. There was a factual dispute whether PHC used PRIMARY HEALTH CARE as the name of 3 or 7 of its medical centres, but this seems to have been regarded as essentially de minimis.  ?
  3. Putting a simple box around the words didn’t improve matters.  ?
  4. This led PHC in one of its revised specifications of services to seek to “disclaim” such use under s33(2) and s 55(1)(b).  ?

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Playgro v Playgo

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PLAYGRO v PLAYGO

Well, you’ll never guess what? It turns out that:

playgo

is deceptively similar to:

playgro

No April Fool’s. Now, maybe some of you (like me) are thinking, “Wait a minute, there must be ‘gazillions’ of trade marks for toys with PLAY in them. That’s true, but the second syllables of the verbal elements are just too close, both visually and aurally. As Moshinsky J explained:

In my view, the fact that there are other trade marks for goods in class 28 containing ‘PLAY’ as part of the word, does not assist in resolving the matter. Accepting that it is a crowded market for toys, games and playthings where the word ‘PLAY’ is used as an element of the trade mark, and therefore more attention than usual may be paid to the second syllable, there is nevertheless a closer degree of similarity between the trade marks in issue here and the marks referred to in paragraph [94] above. In the present case, the second syllable of each mark (‘GRO’ and ‘GO’ respectively) is visually and phonetically very similar, while in the other cases (for example, PLAYSKOOL and PLAYBOY) the second syllable is quite different.

The different shaped backgrounds and colours and arrangement of the verbal element(s) were not signficant matters.

A couple of other points.

Playgo is based in Hong Kong. It sold and supplied its products to Myer, Woolworths and Big W there (presumably FOB or some similar arrangement). It argued therefore that it did not use its trade mark in the course of trade in Australia as property in the goods passed on delivery in Hong Kong.

Moshinsky J rejected this argument. When Playgo sold its product to Myer and the others, it knew they were intending to import them into Australia for sale at retail. Moshinsky J considered this was just a straightforward application of Gallo and Estex. Until the goods passed into the hands of the ultimate consumers, they were still in the course of trade and the PLAYGO trade mark operated to denote Playgo as the trade source.

Perhaps surprisingly given this conclusion, however, his Honour considered that Playgo was not liable as a joint tortfeasor with Myer, Woolworths or Big W for the infringements committed by their use. Selling the goods to them, with knowledge of what they intended to do with them (i.e., import them into Australia for retail sale) did not have sufficient commonality of purpose to amount to a common design, to “acting in concert together”; it was merely facilitation:

Nevertheless, in my view, the facts do not establish that Playgo Enterprises and Myer engaged in a ‘common design’ to offer for sale and sell toys bearing the Playgo Device Mark. The relationship between Playgo Enterprises and Myer was merely that of vendor and purchaser. The Supply Agreement appears to be a standard agreement for the sale and purchase of goods; there are no special features which involve Playgo Enterprises in the process of offering for sale and sale of the goods to customers. The facts do not indicate that Playgo Enterprises played any role in the offering for sale or sale of the goods to customers. It is true that Playgo Enterprises sold goods bearing the Playgo Device Mark to Myer, and knew that they were to be offered for sale and sold to customers in Australia. Nevertheless, in my view, that is insufficient to amount to a ‘common design’ because Playgo Enterprises did not engage in any acts in furtherance of the alleged common design. At most, Playgo Enterprises facilitated the infringement by selling the goods to Myer; but mere facilitation is not enough to establish joint tortfeasorship.

Although it is not referred to in the judgment, presumably the other limb of joint tortfeasorship – directing, procuring or inducing the infringement – would also fail in the absence of some positive act (other than selling to the importer for importation in Australia and sale)?[1] If so, that illustrates that the common law principles are much less help to the right holder than the statutory prohibitions in copyright law and patent law against authorising infringement[2] and, even more so, s 117 of the Patents Act 1990.

Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited [2016] FCA 280

  1. See e.g. Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd [1999] FCA 898; 44 IPR 481 at [41], [52].  ?
  2. In Cooper v Universal Music, for example, the provision of links on a website which browsers could use to download infringing content did constitute infringement where the website was designed to enable anyone, including the primary infringers, to place the links on the website.  ?

Playgro v Playgo Read More »

Servier best method & amendment

Leave a Comment / Patents / / / , , , , , , ,

Servier has lost what may be its last round[1] in the arginine perindopril litigation against Apotex. Servier began the litigation back in 2007. Ultimately, it lost with its patent being found invalid on the ground that Servier had failed to disclose the best method of performing the invention. After that ruling, Servier applied to amend its patent to include the best method. Its application failed on discretionary grounds. Now, we have the Full Court’s decision dismissing Servier’s appeal from that refusal.

Best method

Servier’s first argument was that, following the High Court’s Kimberley-Clark decision, all s 40(2)(a) required was a disclosure sufficient to enable a skilled person to produce something within each claim without new invention or additions or prolonged study of matters presenting initial difficulty. Servier argued that there was no separate and independent requirement to disclose the “best method”.

After an extensive review of the case law, the Full Court rejected that argument, ruling that disclosure of the best method was indeed a separate requirement. In this case, Servier had failed to comply with that requirement.

Claim 1 of the patent was for the arginine salt of perindopril. There had been an earlier patent for perindopril and sodium and maleate salt forms had been identified. According to the Specification, the arginine salt form had particular stability advantages in conditions of heat and humidity which resulted in longer shelf life and permitted the use of less expensive forms of packaging. The achievement of these advantages, however, could be affected by the method of production. The Specification described the claimed arginine perindopril only as being produced by “a classical method of salification”.

The experts agreed this description of how to prepare the salt was “pregnant with ambiguity” and following from this evidence the trial judge had found this description was “wholly inadequate” and did not:

allow the skilled addressee to follow a routine process of deduction from that description because it leaves open too many variables.

Servier itself had used two different methods before the filing date – the 1986 method and the 1991 method – and another method – the 2002 study – after the priority date. The evidence showed that the method of salification used and variables such as the solvent used and whether and when to stir significantly affected the properties of the resulting salt, including its stability.

Accordingly, the Full Court upheld the trial judge’s conclusion that Servier had not disclosed the best method known to it of performing the invention.

Amendment

Servier had applied after the trial to amend the Specification to add the best method.

The Full Court affirmed the Pfizer Full Court’s ruling that the best method requirement required disclosure of the best method of performing the invention known to the applicant at the filing date. However, it was possible to remedy a failure to disclose the best method by amendment of the Specification made after the filing date.

The Full Court agreed with the trial judge that the amendment power under s 105 could be invoked even after trial and judgment finding all claims invalid. While there was a proprietal interest in being allowed to amend, it was still necessary for the patentee to satisfy the Court that discretionary grounds did not warrant exclusion.

In this case, however, discretionary grounds warranted refusal. Back in 2004, the examiner had issued a report as a result of which Servier’s patent attorney had advised Servier to include a description of the method of manufacture of arginine perindopril, even if it was well known. The inhouse instructor replied “we will see later”.

Although there was no suggestion of bad faith on the part of the inhouse instructor, the Full Court upheld the trial judge’s conclusion that the inhouse instructor’s decision to ignore the advice of her Australian patent attorney was not reasonable.

The Full Court considered that there was no error of principle in the trial judge’s rejection of the length of the delay as otherwise warranting rejection of the application. However, they would appear themselves have felt the trial judge had been overly generous.

Finally, the Full Court allowed Apotex’ appeal from the trial judge’s order that Apotex pay 66% of Servier’s costs. Rather, Servier should pay 40% of Aptex’ costs of the revocation proceeding and 75% of Aptex’ costs of the amendment proceedings.

Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27 (Bennett, Besanko and Beach JJ)

  1. Barring (potentially) a special leave application.  ?

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What an Anton Piller order should look like

Leave a Comment / Confidential Information, Enforcement / / / , , , , , , ,

Bearing in mind the potential for the privilege against self-incrimination to be invoked, Bromberg J’s orders in Bluescope v Somanchi are a good illustration of what an Anton Piller order (search and seizure ex parte) should look like (but often do not).

BlueScope Steel Limited v Somanchi [2016] FCA 4

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Dallas Buyers Club No 5

Leave a Comment / Copyright / / / , , , , ,

Perram J has rejected Dallas Buyers Club’s latest attempt to get permission to send those letters of demand out.

Last time out, Perram J said DBC could get the names and addresses of the 4726 “downloaders”[1] only if it gave undertakings to use the information for the purposes of resolving its infringement allegations. limited the demands for compensation to the retail price of a download and some part of the unrecovered costs of detection and put up a bond of $600,000.

This time round, DBC wanted to claim monetary compensation on a different basis, including additional damages under s 115(4) and restrict the bond to $60,000 as it was only seeking release of details of about 10% of the “downloaders”. It also did not offer up the undertakings.

Perram J told them, no sale; they had their shot at what they wanted in the previous hearing(s). His Honour gave them until 11 February 2016 to comply with his previous orders or he would dismiss the application.

Dallas Buyers Club LLC v iiNet Limited (No. 5) [2015] FCA 1437

  1. By which I really mean the account holders whose accounts the ISPs’ records showed were using the IP addresses at the time of the alleged infringements.  ?

Dallas Buyers Club No 5 Read More »

Winnebago the damages or a reasonable royalty Down Under

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

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

Now we know what the damages will be:

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

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

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

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

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

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

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

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

Three points in relation to the dealers.

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

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

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

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

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

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

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

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Commonwealth can sue on the undertaking as to damages

1 Comment / Enforcement, Patents / / / , , , , , , , , , , , ,

The Full Court (Dowsett, Kenny and Nicholas JJ) has upheld the Commonwealth’s power to sue for damages on the undertaking as to damages given by Sanofi and Wyeth when obtaining interlocutory injunctions against generic suppliers.

Sanofi sued Apotex (then called GenRX) for patent infringement when the latter sought to registration in the Therapeutic Goods Register of drug containing clopidogrel. Sanofi obtained an interlocutory injunction preventing the listing and sale of Apotex’ product, on terms of the “usual undertaking as to damages”. Thus, as a condition of obtaining the interlocutory relief, Sanofi undertook to the court:

(a) to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; and

(b) to pay the compensation referred to in (a) to the person there referred to. (emphasis supplied)

After the trial judge found Sanofi’s patent valid and infringed, the Full Court on appeal held that the patent was invalid. Ultimately, the High Court refused special leave.[1]

The Commonwealth, which was not a party to either the Sanofi or Wyeth proceedings is now claiming compensation from Sanofi and Wyeth under the “undertaking as to damages”. In broad terms, it says it suffered losses because the price it paid under the Pharmaceutical Benefits Scheme was higher than it would have been if the generic parties had not been prevented from listing and selling their products by the interlocutory injunctions.

Sanofi and Wyeth argued that sections 26B, 26C, 26D of the Therapeutic Goods Act[2] precluded the Commonwealth from claiming under the usual undertaking as to damages. The Full Court held, however, that these provisions were ancillary or additional to the Court’s powers under the undertaking. They did not provide an exhaustive code which excluded the operation of the undertaking.

Dowsett J delivered a concurring judgment, suggesting at [20] that some restriction on the scope of the usual undertaking should have been sought and then questioning, if such a restriction had been sought, whether it would have been appropriate to grant the interlocutory injunction:

…. As the Commonwealth was not a party to the proceedings in which the undertakings were given, they were presumably not extracted at its request. I infer that the Court extracted the undertakings. It is not suggested that it lacked the power to do so in order to protect the interests of identified or unidentified third parties. In submitting that the Commonwealth may not recover other than pursuant to s 26C, the Sanofi and Wyeth parties effectively seek to resile from their undertakings. It may be simply too late for them to do so. Any limitations upon the undertakings ought to have been sought at the time at which they were given. The Court would then have had to consider whether such limited undertakings were sufficient to justify the grant of the interlocutory injunctions. The Commonwealth has not put its case in that way. However, in any event, I see no basis for limiting the Commonwealth’s right to seek to enforce the undertakings to the extent that it benefits under them.

If only the regime under sections 26B, 26C, 26D had been available, it looks like Sanofi’s and Wyeth’s exposure would have been limited to situations where they had given false or misleading certificates or did not have “reasonable prospects of success”.[3]

Commonwealth of Australia v Sanofi (formerly Sanofi-Aventis) [2015] FCAFC 172

  1. Similarly, in the Wyeth proceedings an interlocutory injunction was granted on the usual undertaking as to damages, but the patent was ultimately found to be invalid.  ?
  2. These provisions were introduced as part of the package implementing the Australia – United States Free Trade Agreement relating particularly to the 5 year data exclusivity for pharmaceutical test data.  ?
  3. Defined in s 26C(4) as “(4) For the purpose of paragraph (3)(b), proceedings have reasonable prospects of success if: (a) the second person had reasonable grounds in all the circumstances known to the second person, or which ought reasonably to have been known to the second person (in addition to the fact of grant of the patent), for believing that he or she would be entitled to be granted final relief by the court against the person referred to in paragraph (1)(a) for infringement by that person of the patent; and (b) the second person had reasonable grounds in all the circumstances known to the second person, or which ought reasonably to have been known to the second person (in addition to the fact of grant of the patent), for believing that each of the claims, in respect of which infringement is alleged, is valid; and
    (c) the proceedings are not otherwise vexatious or unreasonably pursued.”  ?

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