leave to appeal

Aristocrat lives to fight another day

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O’Bryan J has granted Aristocrat leave to appeal Burley J’s decision ruling that the remitted claims were not patentable subject matter.

Recap

O’Bryan J sets out a convenient summary of how the case came to be before him and IPwars has had a few goes including here and here but in case the meaning of “manner of manufacture” for the purposes of the Patents Act 1990 is not tattooed over you heart, a brief recap:

  1. The Commissioner rejected Aristocrat’s innovation patents over an electronic gaming machine (EGM) with a new software-implemented feature game and trigger.
  2. Burley J allowed Aristocrat’s appeal, pointing out it was accepted on all sides that the claims would have been patentable if implemented in the traditional mechanical way rather than software implementation.
  3. The Full Federal Court allowed the Commissioner’s appeal restoring the rejection of the claims. Although agreed in the result, the reasoning was divided. Middleton and Perram JJ held at [26] that it was first necessary to decide if the claimed invention was for a computer or computer-implemented. If so, it was then necessary for the claim to result in an advance in computer technology. In the result (and subject to any appeal to the High Court), after setting aside Burley J’s orders, the Full Federal Court ordered: The proceedings are remitted to the primary judge for determination of any residual issues in light of the Full Court’s reasons including any issues which concern the position of claims other than claim 1 of Innovation Patent No. 2016101967 (referred to at [8] of the reasons of the primary judge dated 5 June 2020) and the costs of the hearings before the primary judge.
  4. The High Court memorably failed to reach a decision, with three judges dismissing the appeal while the other three judges would have allowed Aristocrat’s appeal (a seventh judge was unable to sit). Consequently, under Judiciary Act 1903 s 23(2)(a), the decision of the Full Federal Court was affirmed.
  5. On remitter, Burley J considered he was bound by the Full Federal Court’s decision and ruled that the dependent claims of Aristocrat’s patents were also invalid.

Leave to appeal

As Burley J was hearing and determining an appeal from a decision of the Commissioner, Aristocrat needed leave to appeal to the Full Court under s 158(2).

Often where leave is being sought by the patentee or applicant for the patent rather than an opponent, one might expect leave would be granted as otherwise the patent is dead. As O’Bryan J explained at [50]:

The guidance that emerges from the above cases may be summarised as follows. Section 158(2) evinces a legislative policy against the bringing of appeals against a judgment or order of a single judge of the Federal Court in the exercise of its jurisdiction to hear and determine appeals from decisions or directions of the Commissioner except where the court, acting judicially, finds reason to grant leave. The discretionary power to grant leave is not constrained by express legislative criteria and the Court should not lay down rigid rules that would restrict the exercise of the discretion given the diversity of cases to which s 158(2) will potentially apply. In determining whether to grant leave, it is relevant to consider: whether the decision is attended with sufficient doubt to warrant it being reconsidered on appeal; whether the issues proposed to be raised by the appeal are of general application; and the consequences of a refusal to grant leave – particularly whether the refusal will finally determine the matter. None of those considerations is determinative in and of itself and the considerations are interrelated. The cases make clear that the degree of doubt with respect to the decision that would warrant a grant of leave is affected by the consequences of a refusal to grant leave. In a pre-grant opposition proceeding, where there have been two hearings with the opposition dismissed, and where the opponent of the patent will still be able to institute revocation proceedings, leave to appeal will often be granted only where the opponent has demonstrated a clear prima facie case of error in the decision appealed from. In contrast, where an opponent has been successful such that the decision will be final with respect to the grant of the patent, leave to appeal would ordinarily be granted where the grounds are arguable.

O’Bryan J appears to have had some reservation in granting leave this time around. His Honour described the application as “finely balanced”.

The two main areas that seem to have been particularly troubling were that, as the Commissioner characterised it, the parties had agreed that Burley J’s determination of claim 1 in the first hearing would guide the determination of the other claims. Secondly, the innovation patents in question had expired and Aristocrat still had applications for standard patents covering the same subject matter pending.

Ultimately, his Honour found in favour of granting leave in the “unusual circumstances” of this case.

The factor that appears to have tipped his Honour in favour of granting leave was not just that the High Court had divided 3:3 in its previous decision. O’Bryan J was sceptical that this was just Aristocrat trying to have a “second go”. Rather, the additional factor is how s 23 of the Judiciary Act should apply in circumstances where all six judges of the High Court appear to have rejected the majority view in the Full Federal Court.

At [65], O’Bryan J explained:

Having taken all of the foregoing factors into account, I have determined on balance that leave to appeal should be granted. Ultimately, two factors weigh marginally in favour of the grant of leave: that the effect of the primary judgment is to determine finally that the innovation patents in suit will not be granted, and that the grounds of appeal sought to be raised by Aristocrat are arguable (raising novel questions about the operations of s 23(2)(a) in the unusual circumstances of this case). If Aristocrat is able to persuade an appellate court that the primary judge’s application of s 23(2)(a) of the Judiciary Act in this case was erroneous, Aristocrat should be entitled to have the residual claims adjudicated in accordance with the legal principles that the appellate court determines are applicable.

What happens next

Having been granted leave to appeal, Aristocrat has foreshadowed an application under Judiciary Act s 40 requesting the High Court to hear and determine the appeal without the need for a further hearing in the Full Federal Court. This is of course a very unusual step. In this case, however, the foundational question can really be answered only by the High Court: how does s 23(2)(a) operate when the decision under appeal is affirmed but all the High Court judges sitting on the appeal appear to have rejected the reasoning of the “affirmed” decision?

Who know, we might even get something approaching a settled test for “manner of manufacture” (again).

Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2024] FCA 987

Aristocrat lives to fight another day Read More »

Motherland, Mothersky and Mother

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The Full Court has allowed Energy Beverages’ (EB) appeal opposing Canteralla’s registration of MOTHER as a trade mark for coffee and related products. However, the Full Court rejected EB’s appeal against the removal of its MOTHERLAND trade mark for non-use. In the process, the Full Court provided helpful clarification of the role of Trade Marks Act s44(3)(b) “other circumstances”.

Some background

Cantarella applied to register MOTHERSKY in class 30 in respect of coffee, coffee beans and chocolate, coffee beverages and chocolate beverages and in class 41 in respect of coffee roasting and coffee grinding (TMA 1819816).

EB – the producer and distributor of the MOTHER energy drink – opposed, relying on its prior registered trade marks for MOTHERLAND (TM 1345404), MOTHER LOADED ICED COFFEE (TM 1408011) and MOTHER (TM 1230388) all registered, amongst other things, for non-alcoholic beverages.

Cantarella countered by seeking the removal of the MOTHERLAND and MOTHER LOADED ICED COFFEE marks for non-use under s 92 and deleting coffee beverages and chocolate beverages from its specification of goods.

The delegate ordered removal of MOTHERLAND (here) and MOTHER LOADED ICED COFFEE (here) from the Register for non-use. The delegate also dismissed EB’s opposition to the registration of MOTHERSKY. On appeal, the primary Judge upheld the delegates’ decisions.

EB sought leave to appeal the decisions in respect of MOTHERLAND and allowing the registration of MOTHERSKY. The Full Court refused leave to appeal the MOTHERLAND decision but allowed leave and upheld the appeal against registration of MOTHERSKY.[1]

MOTHERLAND

At [61], the Full Court quoted the well settled principles for trade mark use from Nature’s Blend:

(1) Use as a trade mark is use of the mark as a “badge of origin”, a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else: Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 at 19; E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 265 ALR 645 at [43] (Lion Nathan).

(2) A mark may contain descriptive elements but still be a “badge of origin”: Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347–8; 101 ALR 700 at 723; 21 IPR 1 at 24 (Johnson & Johnson); Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 135 ALR 192; 33 IPR 161; Aldi Stores Ltd Partnership v Frito-Lay Trading GmbH (2001) 190 ALR 185; 54 IPR 344; [2001] FCA 1874 at [60] (Aldi Stores).

(3) The appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of the brand: Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 422; [1963] ALR 634 at 636; 1B IPR 523 at 532 (Shell Co).

(4) The purpose and nature of the impugned use is the relevant inquiry in answering the question whether the use complained of is use “as a trade mark”: Johnson & Johnson at FCR 347; ALR 723; IPR 24 per Gummow J; Shell Co at CLR 422; ALR 636; IPR 532.

(5) Consideration of the totality of the packaging, including the way in which the words are displayed in relation to the goods and the existence of a label of a clear and dominant brand, are relevant in determining the purpose and nature (or “context”) of the impugned words: Johnson & Johnson at FCR 347; ALR 723; IPR 24; Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182; [2002] FCA 390 (Anheuser-Busch).

(6) In determining the nature and purpose of the impugned words, the court must ask what a person looking at the label would see and take from it: Anheuser-Busch at [186] and the authorities there cited.

The problem for EB was that its product is the energy drink MOTHER and its uses of MOTHERLAND focused on it being a fictional fantasyland tailored to “MOTHER-drinking” consumers.

An example of its use, taken from one of two commercials using MOTHERLAND, is:

Another example of use – the description in the “About Us” page of EB’s YouTube channel was “Welcome to MOTHERland”.

The Full Court considered that EB used only MOTHER as a trade mark in respect of energy drinks; MOTHERLAND was just used as the name of the fictional theme park and no more. Accepting that there could be more than one trade mark used in relation to a product, in context MOTHERLAND was not being used as a trade mark to indicate the trade source of the drink. At [67] – [68]:

The depiction of MOTHERLAND in the commercial with the prominent MOTHER in the well-known gothic script representation in contradistinction to LAND, appended in plain red font, emphasises the use of the distinctive gothic script MOTHER mark as the only mark possessing the character of a brand. MOTHERLAND was the name of the fictional theme park, and no more.

The presence of the dominant gothic script MOTHER mark each time MOTHERLAND appears in the commercial, including as the central part of the mark itself, is part of the context relevant to the assessment of the role of MOTHERLAND: Anheuser at [191]. The focus on the well-known gothic script MOTHER, including as part of MOTHERLAND, supports the conclusion that the gothic script MOTHER is the only mark being used to distinguish the MOTHER energy drinks in the commercial from the energy drinks of others.

There was a further problem with reliance on the commercials. The commercials had been run on television well before the non-use period. The commercials had also remained publicly available during the non-use period as they had been uploaded to EB’s YouTube and Facebook pages. There was no evidence, however, that anyone in Australia had accessed the commercials on either site. At [76], the Full Court explained:

Under existing authority, which has not been challenged in the present application, the mere uploading of trade mark content on a website outside Australia is not sufficient to constitute use of the trade mark in Australia …

citing Ward Group Pty Ltd v Brodie & Stone plc [2005] FCA 471; 143 FCR 479; Sports Warehouse Inc v Fry Consulting Pty Ltd [2010] FCA 664; 186 FCR 519; Christian v Societe Des Produits Nestle SA (No 2) [2015] FCAFC 153; 327 ALR 630.

Consequently, EB failed to demonstrate that the primary judge’s order to remove MOTHERLAND for non-use in respect of non-alcoholic beverages etc. was attended by sufficient doubt to warrant leave being granted to appeal.

MOTHERSKY

Despite the deletion of coffee beverages from Cantarella’s specification of goods, both parties conducted the proceedings on the basis that “coffee” included coffee beverages, not just the product of the coffee plant or coffee beans.

In contrast to the MOTHERLAND proceeding, the Full Court found that the primary judge made two material errors. First, his Honour had examined whether coffee beverages were similar goods to energy drinks and the powders and syrups for bottling energy drinks and concluded that the respective products had fundamentally different taste and flavour and were presented for sale and consumed in different circumstances.

This was in error. Section 44(1) calls for comparison of Cantarella’s “coffee” across the full scope of its normal and fair meaning to the full scope of EB’s specification. The correct comparison therefore was between “coffee” and “non-alcoholic beverages”.

Given the way the case had been conducted, the Full Court had little difficulty concluding that coffee beverages were “non-alcoholic beverages” within the scope of EB’s registration.

The fact that coffee as a beverage was classified in class 30 and not class 32 was a matter of administrative convenience and, at [132], irrelevant given Cantarella contended “coffee” covered “coffee beverages”.

Further, contrary to the primary judge’s approach, Cantarella’s claim for “coffee beverages” was not limited to “pure” coffee but extended across a range of beverages. Cantarella argued that coffee beverage did not include coffee flavoured milk. The Full Court accepted at [129] that there may be “a penumbra of uncertainty” about when a coffee flavoured beverage is not “coffee”. Treating “coffee” as meaning “coffee beverage”, however, at [128]:

there is nothing in the specification, so construed, which would limit the meaning of “coffee” to any particular coffee beverage or to any particular kind or type of coffee beverage. For example, there is nothing to limit “coffee” to black coffee as opposed to white coffee or coffee made with milk. There is nothing to limit “coffee” to coffee that does not include some additive such as, for example, a flavoured syrup. Further, there is nothing to limit “coffee” to a hot beverage or a freshly-brewed beverage as opposed to a cold or iced beverage. Further still, there is nothing to limit “coffee” to coffee produced by a particular process or prepared in a particular way, or to coffee packaged and promoted in a particular way. There are many permutations of what constitutes “coffee” as a beverage. Thus, coffee beverages cover a range of goods.

Further still, there was a sufficient body of evidence demonstrating that, at the priority date of the MOTHERSKY application, drinks such as pre-packaged iced coffee were regarded in the trade as non-alcoholic beverages and, further, of overlap between the trade channels through which coffee beverages and energy drinks were marketed and sold.

Secondly, the Full Court considered the primary judge materially erred when undertaking the deceptive similarity comparison.

The Full Court recognised that the comparison the test of deceptive similarity called for involved matters of judgment and degree about which opinions could reasonably differ. In the absence of legal error, mere difference of opinion was not enough. In undertaking the comparison, however, the primary judge’s assessment was heavily coloured by his Honour’s conclusion that “coffee beverages” and the goods covered by EB’s MOTHER registration were not the same or even of the same description.

Further, the primary judge erred by comparing only the specific way Cantarella actually used its trade mark with the specific way EB used its mark rather than comparing how notionally the competing marks could fairly be used across their full scope.

Undertaking the comparison themselves, the Full Court concluded that MOTHERSKY was deceptively similar to MOTHER.

First, at [167], while “mother” is a commonly used English word, it is not in any way descriptive of “non-alcoholic beverages” and was inherently distinctive of such goods. This was of considerable importance in the assessment. (emphasis supplied)

Secondly, at [168], “mother” was wholly incorporated in MOTHERSKY and did not lose its identify merely by the addition of “sky”.

Thirdly, at [169] to [170], “sky” did not have a well-understood meaning when added to “mother”. It might for example be understood according to its ordinary signification. Or it might be treated as some sort of playful variant or as creating a diminutive of “mother”. The Full Court considered that “mother” remained the dominanting element and, consequently, the likelihood of confusion arose.

As a result, s 44(1) operated to preclude registration of MOTHERSKY in the face of EB’s MOTHER registration for non-alcoholic beverages.

Other circumstances

It is well established that the registrability of a trade mark application falls to be determined at the date of the application.

Cantarella’s tactic of applying to clear the way for its MOTHERSKY application by removing EB’s blocking registrations for non-use is also long-standing although, of course, as at the date of the MOTHERSKY application, EB’s registrations were still in the way – removal for non-use being prospective, not retrospective.

At [176] – [178], however, the Full Court endorsed the Registrar’s practice (albeit by way of obiter dicta) of allowing an application to proceed to registration if the blocking citation was removed for non-use as “other circumstances” for the purposes of s44(3)(b). There would be “something perverse” in testing the registrability of the application against a mark which will be removed from the Register.

It is understood that an application for special leave to appeal to the High Court has been filed.

Energy Beverages LLC v Cantarella Bros Pty Ltd [2023] FCAFC 44 (Yates, Stewart and Rofe JJ)

  1. Leave to appeal being required under s 195(2) and so EB needed to persuade the Full Court that “(a) whether, in all the circumstances, the decision below is attended with sufficient doubt to warrant it being considered by a Full Court; and (b) whether substantial injustice would result if leave were refused, supposing the decision to be wrong.” citing Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 – 399 and Primary Health Care Ltd v Commonwealth [2017] FCAFC 174; 260 FCR 359 at [206].  ?

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Q1?

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Mr Spagnuolo has been granted “special” leave to appeal to the Full Court from Reeves J’s dismissal of his opposition to Mantra registering Q1 for a range of accommodation, travel and holiday services.

Some background

Q1 is another one of those “iconic” high rise apartment buildings on the Gold Coast. Its 78 levels boast 526 residential apartments, a retail shopping plaza and a resort / conference complex.

In addition to operating the resort/conference part of the building under Q1 RESORT & SPA, Mantra also has arrangements for renting out 193 of the privately owned apartments.

Mr Spagnuolo owns two of the apartments himself and has arrangements to rent out a number of others’ apartments. He operates his rental business under the name Q1 Holidays Gold Coast and also holds the domain name q1holidaysgoldcoast.com.au.

Mantra’s predecessor applied to register 3 trade marks, Nos 1228706, 1228707 and 1228708 for a range of services in classes 36, 39, 35 and 43. (Not sure why they were in three different applications. has there been a change of practice about these things?)

The Registrar’s delegate had upheld Mr Spagnuolo’s opposition, but Reeves J overturned that decision on appeal.

Why?

While a party may appeal to the Court from the Registrar’s decision in an opposition proceedings as a matter of right, there is no automatic right of appeal from the Court’s decision at first instance. Leave is required: s 195(2).  It is fairly unusual for unsuccessful opponents to the registration of a trade mark to get leave to appeal to the Full Court.

One key factor in why Logan J granted leave was the legal point Mr Spagnuolo wants to run: he argues that Q1 is not inherently adapted to distinguish Mantra’s services as other people wanting to rent out their properties in the Q1 building will legitimately want to use Q1 too. That is, Mr Spagnuolo wishes to contend that Q1 is not inherently adapted to distinguish under s 41 because the Q1 building is not owned by one person. As a result of the disparate ownership of the properties comprising the Q1 building, therefore, Q1 may be the name of “a locality”.

According to Logan J and the parties, this question has not been the subject of judicial decision.

Another consideration was that there were conflicting decisions in the Office and at first instance, with the Registrar’s delegate allowing the opposition and Reeves J rejecting it.

After some rumblings about the potential for litigants with deep pockets to oppress those “not as well financially provided”, Logan J also pointed out that the parties had filed extensive evidence in the court proceedings, the benefit of which would be lost if Mr Spagnuolo was not permitted to appeal and was left to start revocation proceedings anew.

Finally, Logan J granted Mr Spagnuolo an extension of time in which to file his application for leave to appeal. Under the “old” Rules, an applicant for leave had 21 days to file the application. Under the new rules (in force since August 2011), however, applications for leave must be filed within 14 days. That wasn’t an obstacle in this case as Mr Spagnuolo’s advisers filed only 1 week late so there wasn’t really any special prejudice Mantra could point to.

Finally, Logan J granted a stay on Reeves J’s direction that the trade marks proceed to registration:

… Mantra IP has only briefly enjoyed the benefits of the judgment. Before then, its applications stood rejected. It was not greatly pressed, on its behalf, that there was any particular commercial harm that it would suffer beyond the obvious one of its position being unclear until there was a final judgment. It seems to me there would be much potential for mischief in the marketplace in the event that there were not a stay.

Spagnuolo v Mantra IP Pty Ltd [2012] FCA 1038

Q1? Read More »

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