Intellectual property : commentary and materials [Sixth edition.] 9780455238685, 0455238685

Citation preview

INTELLECTUAL PROPERTY Commentary and Materials

Thomson Reuters (Professional) Australia Limited 19 Harris Street Pyrmont NSW 2009 Tel: (02) 8587 7000 Fax: (02) 8587 7100 [email protected] http://www.thomsonreuters.com.au For all customer inquiries please ring 1300 304 195 (for calls within Australia only)

INTERNATIONAL AGENTS & DISTRIBUTORS

NORTH AMERICA Thomson Reuters Eagan United States of America

ASIA PACIFIC Thomson Reuters Sydney Australia

LATIN AMERICA Thomson Reuters São Paulo Brazil

EUROPE Thomson Reuters London United Kingdom

INTELLECTUAL PROPERTY: COMMENTARY AND MATERIALS DAVID PRICE MA (Sydney), LLM (NTU), PhD (Law) (CDU), BA (Chinese) (Macquarie), GDipEd (Sydney), FAIM Associate Professor in Intellectual Property Law and International Law School of Law, Charles Darwin University

COLIN BODKIN BSc (Hons), DPhil (Sussex), MBA (Macquarie), GradDipIP (UTS) Author of Patent Law in Australia

FADY AOUN BEc (Hons)/LLB (Hons); PhD (Law) (Sydney) Lecturer in Intellectual Property and Corporate Law The University of Sydney Law School, Sydney University

SIXTH EDITION

LAWBOOK CO. 2017

Published in Sydney by Thomson Reuters (Professional) Australia Limited ABN 64 058 914 668 19 Harris Street, Pyrmont, NSW First edition (McKeough, Blakeney) 1987 Second edition (McKeough) 1992 Third edition (McKeough, Bowrey, Griffith) 2002 Fourth edition (McKeough, Bowrey, Griffith) 2007 Fifth edition (Price, Bodkin, Arnold, Adjei) 2012 National Library of Australia Cataloguing-in-Publication entry Title: Intellectual property commentary and materials/ David Price, Colin Bodkin, Fady Aoun. Edition: 6th edition. ISBN: 9780455238685 (paperback) Notes: Includes index. Subjects: Intellectual property–Australia–Textbooks. Patent laws and legislation–Australia. Industrial property–Australia–Textbooks. Copyright–Australia–Textbooks. Other Creators/Contributors: Bodkin, Colin (Colin Lewis), 1947- author. Aoun, Fady J G, author. © 2017 Thomson Reuters (Professional) Australia Limited This publication is copyright. Other than for the purposes of and subject to the conditions prescribed under the Copyright Act, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Inquiries should be addressed to the publishers. All legislative material herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permits certain reproduction and publication of Commonwealth legislation. In particular, s 182A of the Act enables a complete copy to be made by or on behalf of a particular person. For reproduction or publication beyond that permitted by the Act, permission should be sought in writing. Requests should be submitted online at http:// www.ag.gov.au/cca, faxed to (02) 6250 5989 or mailed to Commonwealth Copyright Administration, Attorney-General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600. Editor: Zoe Haynes Product Developer: Lucas Frederick Publisher: Robert Wilson Printed by Ligare Pty Ltd, Riverwood, NSW This book has been printed on paper certified by the Programme for the Endorsement of Forest Certification (PEFC). PEFC is committed to sustainable forest management through third party forest certification of responsibly managed forests. For more info: http://www.pefc.org

PREFACE In the present legal and economic climate, intellectual property law in Australia is nothing if not dynamic and transformational. The mercurial expansion of the digital environment as an essential medium of communication and trade is challenging the very essence of conventional intellectual property law and practice. At the same time, the push for a global harmonisation of the intellectual property protection environment by developed countries as major exporters of intellectual property rights is significantly impacting on the form and structure of Australia’s domestic intellectual property regime. It is a fascinating time to be studying intellectual property law. This latest publication, the sixth edition of Intellectual Property: Commentary and Materials, attempts to capture at least some of this dynamic environment. It includes updated discussion of all the essential aspects of the nature of the property rights involved in copyright, patents, designs, trade marks and geographical indications, protection of business reputation, plant breeders’ rights, confidential information and passing off. It also examines subject matter outside the conventional paradigm of intellectual property protection, namely indigenous and cultural intellectual property. This edition incorporates a number of changes and enhancements from the earlier editions. It includes expanded and updated chapters on the international dimensions of intellectual property rights and their impact on the Australian domestic regime, on copyright in the digital environment and on indigenous cultural intellectual property. The sixth edition again brings together a team of experienced authors. They in turn each bring their own unique approach and dynamics to this longstanding and leading publication on intellectual property and its protection (or non-protection, as the case may be in some instances). The objective of the current team of authors has been to produce a scholarly yet practical tome which can serve a dual purpose: first as an authoritative source for the academic, researcher or research student pursuing a study of intellectual property; and secondly as a useful guide for the legal practitioner seeking a broader understanding of the law of intellectual property. The authors hope that it will also inspire in the reader an ongoing passion and fascination for intellectual property and its pervasive presence in everyday life. This edition endeavours to guide the reader towards a broader understanding of the complex nature and parameters of intellectual property and its accompanying rights. It focuses on the Australian context and materials, while noting that this context must still take cognisance of, and exist within, a global environment. In this edition, David Price is responsible for Chapters 1, 2, 3, 4, 5, 6, 7 and 15; Colin Bodkin for Chapters 8, 9, 10, 11, 14 and 16; Fady Aoun for Chapters 12 and 13; and David Price and Fady Aoun are jointly responsible for Chapter 17. Our special thanks to Thomson Reuters and especially to Lucas Frederick and Zoe Haynes. Without their contributions, guidance, and steely determination that we would adhere to essential deadlines, this edition would not have been possible.

DAVID PRICE COLIN BODKIN FADY AOUN February 2017

v

TABLE OF CONTENTS

Preface .............................................................................................................................................. v Table of Cases .................................................................................................................................. ix Table of Statutes ......................................................................................................................... xxxiii

PART 1 Introduction 1 Introduction to Intellectual Property ................................................................... 3 2 The International Context of Intellectual Property ......................................... 21

PART 2 Copyright 3 Copyright: Contextual and Conceptual Issues ................................................... 53 4 Criteria for Subsistence of Copyright ................................................................. 77 5 Copyright: Ownership, Rights and Exploitation ............................................. 153 6 Copyright Infringement, Defences and Remedies .......................................... 221 7 Copyright in the Digital Environment .............................................................. 291

PART 3 Patents 8 Context of Patent Law ........................................................................................ 345 9 Requirements of Validity .................................................................................... 367 10 Specifications – The Internal Requirements .................................................. 433 11 Infringement and Exploitation ........................................................................ 459

PART 4 Trade Marks 12 Protection of Business Reputation .................................................................. 499 13 Trade Marks ........................................................................................................ 587

PART 5 Other Intellectual Property Areas 14 Designs and Circuit Layouts ............................................................................. 743 15 Confidential Information ................................................................................. 767 vii

Intellectual Property: Commentary and Materials

16 Plant Breeder’s Rights ....................................................................................... 823

PART 6 Special Topics in Intellectual Property 17 Indigenous Cultural and Intellectual Property ............................................. 837 Index ......................................................................................................................................... 871

viii

TABLE OF CASES A A v B [2002] 3 WLR 542 ................................................................................................ 15.10, 15.80 A&M Records Inc v Napster Inc 239 F 3d 1004 (9th Circuit 2001) ..................... 7.160, 7.170, 7.230 A&M Records Inc v Napster (2000) 50 IPR 232 ........................................................................ 6.320 A Bailey and Company Limited v Clark, Son and Morland [1938] AC 557 ............................... 13.440 ACCC v Nooravi [2008] FCA 2012 .......................................................................................... 17.140 AF’s Application, Re (1913) 31 RPC 58 ..................................................................................... 9.130 AG Australia Holding Ltd v Burton (2002) 58 IPR 268 ............................................................. 15.200 AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449; 32 RPC 273 ......... 12.30, 12.50, 12.60, 12.70, 12.160, 12.210, 12.320 AIM Maintenance Ltd v Brunt (2004) 60 IPR 572 .................................................................... 15.180 AMP Inc v Utilux Pty Ltd [1972] RPC 103 ................................................................................. 14.50 ANI Corp Ltd v Celtite Australia Pty Ltd (1990) 19 IPR 306 ..................................................... 15.180 A-One Accessory Imports Pty Ltd v Off Road Imports Pty Ltd (No 2) (1996) 34 IPR 332 ............ 6.330 Abbott Laboratories v Corbridge Group Pty (2003) 57 IPR 432 ................................................. 9.870 Abbott Laboratories Ltd v Evysio Medical Devices plc [2008] EWHC 800 ................................ 10.350 Abernethey v Hutchinson (1825) 2 LJ Ch 219; 47 ER 1313 ..................................................... 15.190 Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 554 .................... 13.290 Ackroyds (London) Ltd v Islington Plastics Ltd [1962] RPC 97 ................................................. 15.300 Acme Bedstead Co Ltd v Newland Bros Ltd (1937) 58 CLR 689 ................................................ 9.560 Acohs Pty Ltd v RA Bashford Consulting Pty Ltd (1997) 144 ALR 528; 37 IPR 542 ................... 11.440 Acohs Pty Ltd v Ucorp Pty Ltd [2010] FCA 577 ......................................................................... 4.510 Acorn Computers Ltd v MCS Microcomputer Systems Pty Ltd (1984) 57 ALR 389; 4 IPR 214 .... 5.110 Ad-Lib Club Ltd v Granville [1971] 2 All ER 300 ...................................................................... 12.300 Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481 ........ 7.190 Adidas AG v Pacific Brands Footwear Pty Ltd (No 3) [2013] FCA 905 ...................................... 12.270 Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1993) 26 IPR 171 .......... 9.60, 9.570 Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 ..... 9.140, 9.350, 9.860 Advanced Hair Studio of America Pty Ltd v Registrar of Trade Marks (1988) 12 IPR 1 .............. 13.440 Advantage-Rent-A-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683; (2001) 52 IPR 24 ...................................................................................................................................... 13.500 Ainsworth Nominees Pty Ltd v Andclar Pty Ltd (1988) 12 IPR 551 ............................................ 6.120 Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411 ..................................... 9.680, 11.70 (1999) 44 IPR 593 .................................................................................................................... 9.700 Aktiebolaget Hässle v Alphapharm Pty Ltd (1999) 44 IPR 593; [1999] AIPC 91-474; [1999] FCA 628 ............................................................................................................................. 10.160 Aktiebolaget Hässle v Alphapharm Pty Ltd (2000) 51 IPR 375 ................................................... 9.700 Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 ..................................... 9.690, 9.700 Al Hyat Publishing Co Ltd v Sokarno (1996) 34 IPR 214 ......................................................... 12.180 Alice Corporation Pty Ltd v CLS Bank International 134 S Ct 2347 (2014) ................................ 9.440 Allen Manufacturing Co Pty Ltd v McCallum & Co Pty Ltd [2001] FCA 1838; 53 IPR 400 ......... 7.210 Allen v Brown Watson [1965] RPC 191 ................................................................................... 12.290 Allsop Inc v Bintang Ltd (1989) 15 IPR 686 .................................................................. 9.690, 10.240 Alsop’s Patent, In the Matter of (1907) 24 RPC 733 .................................................................. 9.840 Amalagamated Television Services Pty Ltd v Pickard [1999] ATMO 103 ................................... 13.510 Amalgamated Television Services Pty Ltd v Sylvia Margret Clissold [2000] ATMO 14 ............... 13.510 Amber Size & Chemical Co Ltd v Menzel [1913] 2 Ch 239 ............. 15.150, 15.180, 15.190, 15.240, 15.370 American Cyanamid Co v Berk Pharmaceuticals Ltd [1976] RPC 231 ........................................ 9.230 American Cyanamid Co v Upjohn Co [1970] 1 WLR 1507 ........................................................ 8.360 American Cyanamid Co (Dann’s) Patent [1971] RPC 425 ................................................ 9.60, 9.230 American Express v Thomas (1990) 19 IPR 574 ........................................................................ 15.40 American National Can v Trigon [1996] APO 23 ..................................................................... 10.280 ix

Intellectual Property: Commentary and Materials

Amstrad Consumer Electronics Plc v British Phonographic Industry Ltd [1986] FSR 159 ............ 6.270 An Application by the Pianoist for the Registration of a Trade Mark, Re (1906) 1A IPR 379 ...... 13.650 An Application for a Patent by Compagnies Reunies des Glaces et Verres Speciaux du Nord de la France, In the Matter of (1931) 48 RPC 185 .................................................................. 9.60 Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 28 IPR 383 ..................................................... 9.80 Anakin Pty Ltd v Chatswood BBQ King Pty Ltd [2008] FCA 1467 ............................................ 13.740 Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2015) 115 IPR 67 .................................... 13.740 Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 3) [2015] FCA 1436 ........................... 13.740 Aneeta Window Systems (Vic) Pty Ltd v K Shugg Industries Pty Ltd (1996) 34 IPR 95 .............. 11.440 Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 ....................... 13.520, 13.650, 13.680 Anheuser Busch Inc v Budejovivky Budvar NP [1984] FSR 413 ................................................ 12.180 Anheuser v Conservatories Custom Built Ltd [1989] RPC 455 ................................................. 12.210 Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 ........... 15.30, 15.60, 15.120, 15.140, 15.150, 15.180, 15.190, 15.200, 15.240 Ansul BV v Ajax Brandbeveiliging BV [2005] Ch 97 ................................................................. 13.760 Anton Piller KG v Manufacturing Processes Ltd (1976) 1 Ch 55 ................................................ 6.520 Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 30 IPR 337 ......... 12.110, 12.130, 12.340, 13.330 Apotex Pty Ltd v Sanofi-Aventis (2008) 78 IPR 485 ................................................................... 9.580 Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 253 CLR 284 ........................... 9.310, 9.320 Apple Computer Inc v Computer Edge Pty Ltd (1983) 50 ALR 581; ATPR 40-421 ............. 4.40, 4.380 Apple Computer Inc v Computer Edge Pty Ltd (1984) 2 IPR 1 .................................................. 4.380 Apple Computer Inc v Computer Edge Pty Ltd (1984) 53 ALR 225 .................................. 4.40, 4.380 Application by Baker & Priem (No 2), Re (1989) 15 IPR 660 ................................................... 14.110 Application by Beecham Group Ltd, Re (1984) 3 IPR 26 ............................................................. 9.80 Application by Bourjois Ltd, Re (1988) 11 IPR 625 .................................................................... 14.70 Application by Glenleith Holdings Ltd (Patent Office), Re (1989) 15 IPR 555 .......................... 13.360 Application by Lee Kum Kee (Patent Office), Re (1988) 12 IPR 212 ......................................... 13.360 Application by Sakata Rice Snacks Pty Ltd, Re (1998) 43 IPR 378 ............................................ 13.320 Application by Shell Internationale Research Maatschappij BV, Re (1985) 4 IPR 439 .................. 9.450 Application for Type Font in the Name of Microsoft Corporation, Re (2007) 71 IPR 664 ........... 14.70 Application in the name of Apple Computer Inc, Re (2007) 74 IPR 164 .................................. 14.150 Applications by Maxam Food Products Pty Ltd (Patent Office), Re (1991) 20 IPR 381 ............. 13.410 Aquaculture Corp v New Zealand Green Mussel Co Ltd (No 1) (1985) 5 IPR 353 ........ 15.50, 15.300 Aquaculture Corp v New Zealand Green Mussel Co Ltd (No 2) (1986) 10 IPR 319 ...... 15.50, 15.300 Aquaculture Corp v New Zealand Green Mussel Co (No 3) (1990) 19 IPR 527 ............ 15.50, 15.300 Argyll v Argyll [1965] 2 WLR 790 ............................................................................................ 15.190 Argyll v Argyll [1967] Ch 302 ......................................................................... 15.80, 15.170, 15.240 Aristoc Ltd v Rysta Ltd [1945] AC 68 ............................................................. 13.520, 13.600, 13.770 Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; 157 FCR 564 .................................................................................................... 12.440 Aronberg v Federal Trade Commission 132 F 2d 165 .............................................................. 12.140 Artcraft Urban Group Pty Ltd v Streetworx Pty Ltd [2016] FCAFC 29 ........................................ 9.870 Asahi Kasei Kogyo Kabushiki Kaisha v W R Grace & Co [1991] RPC 485; (1991) 22 IPR 491 .... 9.680, 10.110 Aston v Harlee Manufacturing Co (1960) 103 CLR 391 ................... 12.210, 13.100, 13.180, 13.220 Aston v Harlee Manufacturing Co (1960) 103 CLR 391 .......................................................... 13.210 AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324; 107 IPR 177 ................. 9.580, 9.730, 11.440 Athlete’s Foot Marketing Associates Inc v Cobra Sports Ltd [1980] RPC 343 ........................... 12.200 Attorney-General v Guardian Newspapers Ltd (No 2) [1990] AC 109; [1988] 3 All ER 545 ....... 6.330, 15.90 Attorney-General v Jonathon Cape Ltd [1976] QB 572 ........................................................... 15.170 Attorney-General v Trustees of National Art Gallery of New South Wales (1944) 62 WN (NSW) 212 .......................................................................................................................... 4.260 Attorney-General (Cth) v Adelaide Steamship Co (1913) 18 CLR 30 ................................ 8.20, 8.240 Attorney-General (NSW) v Brewery Employees Union (NSW) (Union Label Case) (1908) 6 CLR 469 ............................................................................................................................... 13.10 x

Table of Cases

Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 IPR 153; 10 NSWLR 86; 75 ALR 353 ........... 15.230, 15.240, 15.250, 15.280, 15.290, 15.410, 15.430, 15.440 Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 8 NSWLR 341 ........... 15.240 Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd [1988] HCA 25 ......... 6.330, 15.250 Attorney-General (UK) v Jonathan Cape Ltd [1976] QB 752 ...................................... 15.240, 15.410 Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 .................................... 15.10 Attorney General v Trustees of National Art Gallery of NSW (“Joshua Smith” Case) (1944) 62 WN (NSW) 212 .............................................................................................................. 4.270 .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 ......... 12.160, 12.230 Austal Ships Pty Ltd v Stena Rederi Aktiebolag (2006) 66 IPR 420 .................................. 9.860, 9.870 Australasian Performing Right Association v Tolbush (1985) 7 IPR 160; 62 ALR 521 ....... 6.160, 6.200 Australasian Performing Right Association Ltd v Commonwealth Bank of Australia (1992) 25 IPR 157 ................................................................................................................................ 6.160 Australasian Performing Right Association Ltd v Jain (1990) 18 IPR 663 .............. 6.160, 6.180, 6.190 Australasian Performing Right Association Ltd v Miles (1961) 3 FLR 146 ................................... 6.160 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2002) 54 IPR 161 ............. 15.10, 15.80 Australian Competition and Consumer Commission v Australian Dreamtime Creations [2009] FCA 1545; (2009) 84 IPR 326 ................................................................................. 17.120 Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309 ................... 13.630 Australian Insurance Holdings Pty Ltd v Chan [2010] FCA 781 ................................................ 15.400 Australian Performing Right Association Ltd v Canterbury-Bankstown League Club Ltd (1964) 5 FLR 415 ................................................................................................................. 6.160 Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153 .................... 13.650, 13.670 Australian Postal Corporation v Digital Post Australia Pty Ltd (No 2) [2012] FCA 862 .............. 13.650 Australian Securities and Investments Commission v National Exchange Pty Ltd (2003) 202 ALR 24 ............................................................................................................................... 12.160 Australian Video Retailers Association v Warner Home Video Pty Ltd (2001) 53 IPR 242 ............. 5.450 Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 ........ 12.310, 13.520, 13.640, 13.650 Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 .................................................................... 6.90 Automobile Club de L’Quest v Gardiakos (2005) 66 IPR 191 .................................................. 13.500 Avedis Zildjian Co (1990) 18 IPR 474 ...................................................................................... 13.360 Avel Pty Ltd v Jonathan Wells (1991) 22 IPR 305 ............................................................ 4.520, 5.430 Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 18 IPR 443; 171 CLR 88 ...... 3.70, 5.430, 6.150 Avel Pty Ltd v Wells (1992) 23 IPR 353 ........................................................................... 4.510, 4.520 Aveley/Cybervox Ltd v Celltech Ltd [1982] FSR 92 .................................................................. 15.240 Azuko Pty Ltd v Old Digger Pty Ltd (2001) 52 IPR 75 ......................................... 9.770, 9.780, 9.800

B BA’s Application, Re (1915) 32 RPC 348 ................................................................................... 9.130 BBC v Talbot [1981] FSR 228 .................................................................................................. 12.290 BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1976) 51 ALJR 254; 12 ALR 363 .... 12.100, 12.110, 12.210, 12.330 BO Morris Ltd v Gillman (1943) 60 RPC 20 ............................................................................ 15.150 BP plc v Woolworths Ltd (2004) 212 ALR 79 ........................................................................... 13.470 Baigent v Random House Group [2006] EMLR 16; [2006] EWHC 719 ............................. 6.20, 3.120 Baker v Selden (1880) 101 US 99 ............................................................................................. 3.100 Bali Brasserie Co Inc’s Registered Trade Mark, Re (1968) 118 CLR 128 ....................... 13.540, 13.640 Ballarat Products Ltd v Farmers Smallgoods Co Pty Ltd [1957] VR 104 ....................... 12.210, 12.290 Bancorp Services LLC v Sun Life Assurance Co of Canada (US) 687 F. 3d 1266 (2012) .............. 9.440 Bancroft’s Application (1906) 23 RPC 89 ................................................................................ 10.280 “Barry Artist” Trade Mark [1978] RPC 703 .............................................................................. 13.360 Baskin-Robbins Ice Cream Co v Gutman [1976] FSR 545 ........................................... 12.190, 12.210 Bauman v Fussell [1978] RPC 485 ............................................................................................... 6.20 Baume & Co Ltd v AH Moore Ltd [1958] Ch 907 ........................................... 13.70, 13.650, 13.680 Bausch & Lomb Inc v Registrar of Trade Marks (1980) 28 ALR 537 ......................................... 13.440 Bavaria NV v Bayerischer Brauerbund eV (2009) 177 FCR 300 ................................................ 13.510 xi

Intellectual Property: Commentary and Materials

Baygol Pty Ltd v Foamex Polystyrene Pty Ltd (2005) 66 IPR 1 ........................................ 11.70, 11.90 Beatty v Guggenheim Exploration Co 122 NE 378 ................................................................. 15.450 Beck v Montana Constructions Pty Ltd [1964–65] NSWR 229 ................................................... 4.320 Bedford Industries Rehabilitation Association Inc v Pinefair Pty Ltd (1998) 40 IPR 438 ............ 11.100, 11.110, 11.130 Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153 .......... 11.30, 11.130, 11.150, 11.160 Bell v Steele (No 2) [2012] FCA 62 ........................................................................................... 6.630 Beloff v Pressdram Ltd [1973] 1 All ER 241 .............................................................................. 15.420 Benchairs Ltd v Chair Centre Ltd [1974] RPC 429 ................................................................... 12.120 Benmax v Austin Motor Co Ltd [1955] AC 370 ....................................................................... 12.380 Bent’s Brewery Co Ltd v Hogan [1945] 2 All ER 570 ................................................... 15.190, 15.240 Berlei Limited’s Application (1968) 118 CLR 128 .................................................................... 13.520 Betts v Wilmott (1871) 2 Ch LR 6 ........................................................................................... 11.120 Biogen Inc v Medeva Plc [1997] RPC 1 ...................................................................... 10.110, 10.360 Blackadder v Good Roads Machinery Co Inc (1926) 38 CLR 332 ............................................ 13.180 Blackie & Sons v Lothian Book Publishing Co (1921) 29 CLR 396 ............................................... 6.20 Blackmagic Design Pty Ltd v Overliese (2010) 84 IPR 505 ......................................................... 15.40 Blakey v Latham (1889) 6 RPC 184 ........................................................................................... 9.690 Blount v Registrar of Trade Marks (1998) 83 FCR 50; 40 IPR 498 .................. 13.240, 13.260, 13.470 Blue Gentian LLC v Product Management Group Pty Ltd [2014] FCA 1331 ............................ 11.480 Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2013] FCA 1255 .......................... 13.680 Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] FCA 637 ............................ 13.680 Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2016] FCA 1129 .......................... 13.680 Boots Pure Drug Co, Re [1938] Ch 54 .................................................................................... 13.390 Boulton v Bull (1795) 1 H Bl 463; 126 ER 651 ............................................................................ 9.40 Bowden Wire Ltd v Bowden Brake Co Ltd (1914) 31 RPC 385 .................................................. 13.90 Braas GmbH v Humes Ltd (1993) 26 IPR 273 ......................................................................... 10.240 Brain v Ingledew Brown Bennison and Garrett (A Firm) [1996] FSR 341 .................................. 11.410 Brain v Ingledew Brown Bennison and Garrett (A Firm) (No 3) [1997] FSR 511 ....................... 11.410 Breen v Williams (1996) 186 CLR 71 ....................................................................................... 15.220 Breville Pty Ltd v Warehouse Group (Australia) Pty Ltd (2005) 67 IPR 576 ................................. 11.80 Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460; 57 ALR 401 .............................. 12.100, 12.310 Bright Tunes Music Corp v Harrisongs Music Ltd (1976) 420 F Supp 177 ................................. 3.130 Bristol-Myers Co v Beecham Group Ltd [1974] AC 646 ............................................................. 9.780 Bristol-Myers Co (Johnson’s) Application [1975] RPC 127 ......................................................... 9.770 Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524; 41 IPR 467 ......... 9.140, 9.150, 9.160, 9.580, 11.170, 11.180, 11.200 Bristol-Myers Squibb Company v Apotex Pty Ltd (2015) 228 FCR 1 ........................................ 11.480 Bristol-Myers and Co’s Application [1969] RPC 146 .................................................................. 9.500 Bristol Conservatories v Conservatories Custom Built [1989] RPC 455 ....................................... 12.50 Bristol Myers Squibb Co v Baker Norton Pharmaceuticals Inc [1999] RPC 253 .......................... 9.330 Bristol Myers and Co’s Application, Re (1969) RPC 146 ............................................................ 9.510 British American Glass Co Ltd v Winton Products (Blackpool) Ltd [1962] RPC 230 .................. 12.390 British Franco Electric Pty Ltd v Dowling Plastics Pty Ltd [1981] 1 NSWLR 448 ........................ 15.300 British Legion v British Legion Club (Street) Ltd (1931) 48 RPC 555 ....................................... 12.400 British Leyland Motor Corp v Armstrong Patents Co Ltd [1986] FSR 221 ................................ 14.240 British Medical Association v Marsh (1931) 48 RPC 565 .......................................................... 12.400 British Motor Syndicate v John Taylor & Sons (1900) 17 RPC 723 ........................................... 11.110 British Nylon Spinners Ltd and Imperial Chemical Industries Ltd, Ex parte; In re Imperial Chemical Industries Ltd’s Patent (1963) 109 CLR 336 ........................................................ 11.480 British Reinforced Concrete Engineering Co Ltd v Lind (1917) 34 RPC 101 ................ 11.440, 15.190 British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 ............................................. 13.470 Brooktree Corp v Advanced Micro Devices Inc (1998) 14 IPR 85 ............................................... 4.520 Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 ..................................................................... 12.100 Brown, Wills & Nicholson’s Application, Re (1923) 41 RPC 171 .............................................. 13.390 Buchanan Turf Supplies Pty Ltd v Registrar of Trade Marks [2015] FCA 756 ............................ 13.290 Bulun Bulun v R & T Textiles Pty Ltd (1998) 86 FCR 244; 41 IPR 513 ........................... 17.30, 17.110 Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 ....................... 12.440 Burberrys v J C Cording & Co Ltd (1909) 26 RPC 693 ................................................. 12.30, 12.390 Burge and Others v Swarbrick [2007] HCA 17; 72 IPR 235 ........................................................ 4.530 xii

Table of Cases

Burger King Corporation v The Registrar of Trade Marks (1973) 128 CLR 417 ........... 13.420, 13.440 Burgoyne’s Trade Mark (1889) 6 RPC 227 .............................................................................. 13.410 Burke & Margot Burke Ltd v Spicers Dress Designs [1936] Ch 400 ................................ 4.360, 6.250 Burroughs Corp (Perkin’s) Application (1974) RPC 147 ............................................................. 9.400

C C & W’s Application, Re (1914) 31 RPC 235 ............................................................................... 9.40 C Van Der Lely NV v Ruston’s Engineering Co Ltd [1993] RPC 45 ........................................... 10.150 C Van der Lely NV v Bamfords Ltd [1963] RPC 61 .......................................................... 9.500, 9.570 C and A Modes v C and A (Waterford) Ltd [1978] FSR 126 ...................................................... 12.210 CA Henschke & Co v Rosemount Estates Pty Ltd (1999) 47 IPR 63 ......................................... 12.250 CA Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42 ......................................... 12.260 CBS Records Australia Ltd v Guy Gross (1989) 15 IPR 385 ............................................. 4.220, 4.230 CBS Records Australia Ltd v Telmak (Aust) Pty Ltd (1987) 9 IPR 440 ................................. 5.80, 6.210 CBS Songs Ltd v Amstrad Consumer Electronics Plc (1988) 11 IPR 1 .............................. 6.180, 6.270 CC Wakefield & Co Ld v Purser (1934) 51 RPC 167 ................................................................ 12.410 CCOM Pty Ltd v Jiejing Pty Ltd (1993) 27 IPR 577 .................................................................. 11.300 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 .................... 9.60, 9.400, 9.430, 10.320, 10.330 CGR’s Application, Re (1924) 42 RPC 320 ................................................................................ 9.130 CRW Pty Ltd v Sneddon [1972] AR (NSW) 17 ......................................................................... 12.140 Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] RPC 429 ...................... 12.110, 12.210 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2006] FCA 363 ............... 12.260 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397 ......... 12.90, 12.230 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 2) [2006] FCA 364 .... 12.270 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) [2006] FCA 446 .... 12.270 Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] RPC 429 ................................... 12.210 Cadbury Schweppes Pty Ltd v Pub Squash Company Pty Ltd [1980] 2 NSWLR 851 ................ 12.230 Calder Vale, Re (1934) 53 RPC 117 ........................................................................................... 14.90 Campbell v MGN [2002] EWCA Civ 1373 ...................................................................... 15.10, 15.80 Campbell v MGN Ltd [2005] UKHL 61 ..................................................................................... 15.10 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 ................ 12.80, 12.160, 12.310, 12.390, 13.10, 13.470, 13.540, 13.550, 13.560 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 254 CLR 337; [2014] HCA 48 ........ 13.110, 13.290, 13.410, 13.420 Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752 .................................. 13.420 Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 31 IPR 375; (1994) 120 ALR 495 ........... 13.520 Carpmael’s Application (1928) 45 RPC 411 ................................................................................ 9.90 Castrol Australia Pty Ltd v EmTech Associates Pty Ltd (1980) 33 ALR 31 ........ 15.240, 15.410, 15.420 Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 1 IPR 265 ............... 13.120 Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 ................... 10.240, 11.50, 11.60, 11.80 Catnic Components Ltd v Hill & Smith Ltd [1987] FSR 60 ........................................................ 11.30 Cementation Co Ltd’s Application, Re (1945) 62 RPC 151 .......................................................... 9.40 Centronics Systems Pty Ltd v Nintendo Co Ltd (1992) 24 IPR 481 ............................................ 4.520 Chakrabarty, Re 571 F 2d 40; 197 USPQ 73 (1978) .................................................................. 9.210 Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330 ............ 13.690 Chancellor, Master and Scholars of the University of Oxford (t/a Oxford University Press) v Registrar of Trade Marks (1988) 15 IPR 646 ....................................................................... 13.320 Chancellor, Masters and Scholars of the University of Oxford v Registrar of Trade Marks (1990) 24 FCR 1 ................................................................................................................ 13.420 Chantrey Martin v Martin [1953] 2 QB 286 ................................................................................ 3.70 Charles Selz Ltd’s Application (1954) 71 RPC 158 ................................................................... 11.440 Children’s Television Workshop Inc v Woolworths (NSW) Ltd [1981] 1 NSWLR 273 ................ 12.370 Chiron Corporation v Organon Teknika Ltd [1994] FSR 202 .................................................... 10.110 Chocolaterie Guylian NV v Registrar of Trade Marks (2009) 180 FCR 60; [2009] FCA 891 ....... 13.450 Chris Ford Enterprises Pty Ltd v B H & JR Badenhop Pty Ltd (1985) 4 IPR 485 ......................... 14.160 Christy v Tipper [1905] 1 Ch 1; 21 RPC 755 ........................................................................... 13.390 Chubb Australia Ltd, Re (1990) 20 IPR 175 ............................................................................. 13.320 Church of the New Faith v Commissioner of Pay-roll Tax (Vict) (1983) 154 CLR 120 .............. 17.310 xiii

Intellectual Property: Commentary and Materials

Ciba-Geigy AG (Durr’s) Applications [1977] RPC 83 .................................................................. 9.370 Cincinnati Grinders (Inc) v BSA Tools Ltd (1931) 48 RPC 33 ...................................................... 9.850 Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309 ............................... 4.320 Clark v Adie (1875) LR 10 Ch App 667 ...................................................................................... 11.30 Clark v Ryan (1960) 103 CLR 486 ........................................................................................... 12.250 Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 ......................... 13.310, 13.420 Clark Equipment Co v Registrar of Trade Marks (1965) 112 CLR 537 ...................................... 13.420 Clarke v Adie (1875) LR 10 Ch App 667 .................................................................................... 11.80 Clayton v Vincent’s Products Ltd (1934) 34 SR (NSW) 214 ..................................................... 12.210 Clifford Davis Management Ltd v WEA Records Ltd [1975] 1 WLR 61 ....................................... 5.290 Clothing Manufacturers Pty Ltd v Ellis and Goldstein Ltd (1967) 116 CLR 254 ........... 13.760, 13.770 Coca-Cola Co v All Fect Distributors Ltd (1999) 96 FCR 107; [1999] FCA 1721; (1999) 47 IPR 481 .................................................................................................... 13.520, 13.590, 13.640 Coca Cola v PepsiCo In (No 2) (2014) 109 IPR 429; [2014] FCA 1287 .................................... 12.260 Coco v AN Clark (Engineers) Ltd [1968] FSR 415 ...... 15.80, 15.90, 15.100, 15.110, 15.180, 15.230, 15.260, 15.300, 15.320 Coco v AN Clark (Engineers) Ltd [1969] RPC 41 ........................................................ 15.240, 15.280 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 ........................................... 13.730 Coleman Company Inc v Igloo Products Corp (1999) 48 IPR 158 ........................................... 13.165 Collins v Northern Territory (2007) 161 FCR 549 .................................................................... 11.200 Collins Co v Brown [1857] 3 K & J 423; 69 ER 1174 ............................................................... 12.210 Colman Properties Ltd v Borden Inc [1990] 1 All ER 873 ......................................................... 12.210 Comite Interprofessionel Du Vin de Champagne v NL Burton (1981) 38 ALR 664 ..................... 12.10 Commercial Plastics v Vincent [1964] 3 WLR 820; [1964] 3 All ER 546 .................................... 15.150 Commission for the New Towns v Cooper (Great Britain) Ltd [1995] Ch 259 ......................... 11.240 Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39; 32 ALR 485; 55 ALJR 45 .......... 6.330, 6.370, 6.380, 15.170, 15.240, 15.290, 15.410 Commonwealth v Tasmania (1983) 158 CLR 1 ......................................................................... 2.120 Commonwealth Industrial Gases Ltd v MWA Holdings Pty Ltd (1970) 44 ALJR 385 ...... 10.240, 11.40 Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 ................................. 3.70 Como Investments Pty Ltd v Yenald Nominees Pty Ltd (1997) ATPR 43,617 ............................ 11.240 Computer Edge Pty Ltd v Apple Computer Inc (1986) 65 ALR 33; [1986] HCA 191; 61 CLR 171 ............................................................................................................................. 4.40, 4.380 Computer Edge Pty Ltd and Anor v Apple Computer Inc and Anor (1986) 6 IPR 1 ...................... 1.60 Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 12 IPR 487 ................ 5.430, 6.180 ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 ......... 12.10, 12.90, 12.110, 12.180, 12.210, 12.230, 12.310, 12.340, 13.530 “Concord” Trade Mark [1987] FSR 209 .................................................................................. 13.760 Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577 ............ 5.330 Consorzio del Prosciutto di Parma v Marks & Spencer plc [1991] RPC 351 ............................. 12.210 Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154; 41 IPR 593 ........... 4.360, 4.370, 4.480 Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380 ............................................. 11.170 Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 ............................. 13.650 Cooper Industries Inc v Metal Manufactures Ltd (1994) 29 IPR 106 ........................................ 10.240 Coopers Animal Health Australia Ltd v Western Stock Distributors Pty Ltd (1987) 15 FCR 382 .... 10.320 Cope Allan (Marrickville) Ltd v Farrow (1984) 3 IPR 567 ........................................................... 4.410 Copyright Agency Ltd v State of New South Wales [2007] FCAFC 80 ............................. 5.240, 5.250 Coral Index Ltd v Regent Index Ltd [1970] RPC 147 ................................................................. 15.40 Corelli v Gray (1913) 29 TLR 570 ......................................................................... 3.140, 6.40, 6.120 Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 10 IPR 53 ............ 15.200, 15.410, 15.450 Cosmetic, Toiletry and Fragrance Association Foundation v Fanni Barns Pty Ltd (2003) 57 IPR 594 .............................................................................................................................. 13.500 Cowan v Avel Pty Ltd (1998) 58 FCR 157 ................................................................................ 11.420 Crane v Price (1842) 1 Web PC 393; 4 Man & G 580; 134 ER 239 .................................. 9.40, 9.840 Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293; [1966] RPC 81 .... 15.100, 15.310, 15.320 Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd [2004] FCAFC 196 ........................................................................................................................ 13.740 xiv

Table of Cases

Croft v Day (1843) 7 Beav 84; 49 ER 994 ................................................................................. 12.20 Cuisenaire v Reed [1963] VR 719 .............................................................................................. 4.360 Cultivaust Pty Ltd v Grain Pool Pty Ltd (2005) 147 FCR 265; 67 IPR 162 .................................. 16.10 Cummins v Bond [1927] 1 Ch 167 ........................................................................... 4.40, 4.50, 5.80 Cutler v Wandsworth Stadium Ltd [1949] AC 398 .................................................................... 12.60

D D’Arcy v Myriad Genetics Inc (2015) 325 ALR 100 .............................................. 9.230, 9.240, 9.250 DC Comics v Cheqout [2013] FCA 478; (2013) 212 FCR 194 .................................... 13.570, 13.580 DSI Australia (Holdings) Pty Ltd v Garford Pty Ltd (2013) 100 IPR 19; [2013] FCA 132 ............. 9.770 Daimaru Pty Ltd v Kabushiki Kaisha Daimaru (1990) 19 IPR 129 .................................. 13.80, 13.190 Dalgety Australia Operations Ltd v FF Seeley Nominees Pty Ltd (1985) 5 IPR 97 ....................... 14.90 Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 317 ............................................... 7.10, 7.300, 7.310 Dallas Buyers Club LLC v iiNet Ltd (No 3) [2015] FCA 422 ........................................................ 7.300 Dallas Buyers Club LLC v iiNet Ltd (No 4) [2015] FCA 838 .................................... 7.10, 7.145, 7.300 Dallas Buyers Club LLC v iiNet Ltd (No 5) [2015] FCA 1437 ............................................. 7.10, 7.145 Damorgold Pty Ltd v JAI Products Pty Ltd (2014) 105 IPR 60; [2014] FCA 150 ........................ 11.220 Dan River Trade Mark [1962] RPC 157 ................................................................................... 13.310 Darcy v Allen (1602) 11 Co Rep 84 ............................................................................................. 8.10 Dart Industries Inc v Decor Corp Pty Ltd (1989) 15 IPR 403 .................................................... 14.140 Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101 ................................................ 12.110 Darwin Fibreglass Pty Ltd v Kruhse Enterprises Pty Ltd (1998) 41 IPR 649 ................................. 4.350 Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1 ....................... 4.380, 4.390 David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294 ........................... 15.450 Davidson v CBS Records (1983) AIPC 90-106 ........................................................................... 5.290 Dawson Chemical Co v Rohm & Haas Co 448 US 176 (1980) ................................................ 11.200 De Garis v Neville Jeffress Pidler (1990) 95 ALR 625 .......... 5.140, 5.150, 5.160, 5.350, 5.360, 6.330, 6.370 Deckers Outdoor Corporation Inc. v Farley (No 2) [2009] FCA 256 ........................................ 13.740 Decor Corp Pty Ltd v Dart Industries Inc (1988) 13 IPR 385 ....................................... 10.230, 10.240 Decor Corp Pty Ltd v Dart Industries Inc (1989) AIPC 90-549 ................................................... 9.850 Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326 .......................................... 15.380, 15.390 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 ................................................................ 11.240 Dennison Manufacturing Co v Monarch Marking Systems Inc (1983) 1 IPR 431 ....................... 9.450 Dent v Turpin (1861) 2 John & H 139; 70 ER 1003 ................................................................... 12.60 Derek McCulloch v Lewis A May Ltd (1947) 65 RPC 58 .......................................................... 12.360 Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 55 IPR 1 ........................... 7.50 Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112 .............. 4.80, 4.90 Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 .... 15.240, 15.270, 15.300 Devefi Pty Ltd v Mateffy Perl Nagy Pty Ltd (1993) 113 ALR 225 .................................................. 3.70 Diabolo Case [1908] 2 Ch 274 ............................................................................................... 13.420 Diageo North America Inc v Intercontinental Brands (ICB) Ltd [2011] 1 All ER 242; [2010] EWCA Civ 920 ..................................................................................................................... 12.70 Diamond v Chakrabarty 447 US 303 (1980) ............................................................................. 9.210 Diamond, Commissioner of Patents & Trade Marks v Diehr & Lutton 209 USPQ 1 (1981) ........ 9.400 Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939 ...................................................... 13.770 Dickens, Re [1935] Ch 267 .............................................................................. 3.50, 3.60, 3.70, 3.90 Digital Pulse Pty Ltd v Christopher Harris [2002] NSWSC 33 ................................................... 15.230 Dixon Investments Pty Ltd v Hall (1990) 18 IPR 481 ................................................................... 6.50 Dominion Rent A Car Ltd v Budget Rent A Car Systems (1970) Ltd [1987) 2 NZLR 395 .......... 12.210 Donaldson v Becket (1774) 1 ER 837 .......................................................................................... 3.20 Donoghue v Allied Newspapers [1938] Ch 106 ........................................... 3.100, 3.110, 4.40, 5.80 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2001] FCA 1877 ...................... 10.280 Dorling v Honnor Marine [1965] Ch 1 ...................................................................................... 6.250 Douglas v Hello! Ltd (2005) 65 IPR 449 ..................................................................... 15.210, 15.260 Douglas v Hello! Ltd (No 1) [2001] 2 All ER 289 ............................................... 15.10, 15.80, 15.210 Douglas v Hello [2007] UKHL 21 .............................................................................................. 12.90 Dow Chemical v Ishihara Sangyo Kaisha Ltd (1986) 5 IPR 415 .................................................... 9.90 Dowson & Mason Ltd v Potter [1986] 2 All ER 418 ................................................................... 15.40 xv

Intellectual Property: Commentary and Materials

Draper v Trist (1939) 56 RPC 429 ........................................................................................... 12.400 Dronpool Pty Ltd v Hunter (1984) 3 IPR 310 .............................................................................. 6.20 Duchess of Argyll v Duke of Argyll [1967] Ch 302 ................................................................... 15.100 Ducker’s Trade Mark (1928) 45 RPC 397 ................................................................................ 13.100 Dunlop v Holborn Tyre Co (1901) 18 RPC 222 ....................................................................... 11.110 Dunlop Olympic Ltd v Cricket Hosiery Inc (1990) 20 IPR 475 ...................................... 13.80, 13.190 Dunlop Pneumatic Tyre Co v David Moseley & Sons Ltd [1904] 1 Ch 616 .............................. 11.110 Dunlop Pneumatic Tyre Co Ltd v British & Colonial Motor Car Co (1901) 18 RPC 313 ........... 11.150 Dunlop Rubber Co’s Application (1942) 59 RPC 134 ................................................. 13.310, 13.390 Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd (2009) 177 FCR 239 .............................................. 9.760 Durkan v Twentieth Century Fox Film Corporation [2000] ATMO 5 ........................................ 13.510

E E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2009) 175 FCR 386 ................................. 13.760 E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144; [2010] HCA 15 ........ 13.760 E I Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd (2005) 66 IPR 462 ..... 9.540 EI Dupont de Nemours Powder Co v Masland (1917) 244 US 102 ......................................... 15.280 EMI Music Publishing Ltd v Papathanasiou [1993] EMLR 306 ................................................... 6.140 EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 47 .......... 3.150, 6.140 EOS Australia Pty Ltd v Expo Tomei Pty Ltd (1998) 42 IPR 277 ................................................ 13.740 Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 43 IPR 1; (1999) 44 IPR 535 .................... 4.320 Eastman Photographic Materials Co v Comptroller-General of Patents, Designs & Trade Marks [1898] AC 571; 15 RPC 476 .................................................................................... 13.390 Eclipse Sleep Products Incorporated v The Registrar of Trade Marks (1957) 99 CLR 300 ......... 13.440 EdSonic Pty Ltd v Cassidy [2010] FCA 1008 ................................................................... 5.160, 5.190 Edison & Swan Electric Light Co v Holland (1889) 6 RPC 243 ................................................... 10.60 Education, Director-General of v Public Service Association of New South Wales (1985) 4 IPR 552 ...................................................................................................................................... 5.240 Edward Young & Co Ltd v Grierson Oldham & Co Ltd (1924) 41 RPC 548 ............................. 13.620 Edwards Hot Water Systems v SW Hart & Co Pty Ltd (1983) 49 ALR 605 .................................. 14.70 Eisman & Co’s Application, Re (1920) 37 RPC 134 ................................................................. 13.390 Elconnex Pty Ltd v Gerard Industries Pty Ltd (1991) 32 FCR 491 ................................. 9.690, 10.240 Elders Rural Services Australia Ltd v Registrar of Plant Breeder’s Rights (2012) 199 FCR 520; 95 IPR 229 ........................................................................................................................... 16.10 Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 ............................ 12.160 Electric & Musical Industries Ltd v Lissen Ltd (1939) 56 RPC 23 .................... 10.200, 10.220, 10.240 Electric Telegraph Co, The v Brett (1851) 10 CB 838; 138 ER 331 .............................................. 9.40 Electrix Ltd’s Application, In Re [1957] RPC 369 ..................................................................... 13.530 Electrolux Ltd v Electrix Ltd (1953) 71 RPC 23 ............................................................. 13.70, 13.760 Eli Lilly & Co v Pfizer Overseas Pharmaceuticals (2005) 218 ALR 408 ...................................... 10.150 Elias v Grovesend Tinplate Co (1890) 7 RPC 455 ...................................................................... 9.130 Ellis & Co’s Trade Marks (1904) 21 RPC 617 ........................................................................... 13.500 Elton John v Richard Leon James [1991] FSR 397 ...................................................................... 5.290 Elton and Leda Chemicals Ltd’s Application, Re [1957] RPC 267 ................................................. 9.40 Eno v Dunn (1890) 1B IPR 391 ............................................................................................... 13.520 Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166 ................................................................ 13.770 Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 .............. 12.60, 12.70, 12.90, 12.100, 12.160, 12.210, 12.410 Esanda Ltd v Esanda Finance Ltd [1984] 2 NZLR 748 .............................................................. 12.210 Eutectic Corporation v Registrar of Trade Marks (1980) 32 ALR 211 ........................... 13.420, 13.440 Evans v E Hulton & Co Ltd [1924] Mac CC 51 .......................................................................... 3.110 Evans v Hutton (1924) 131 LT 534 ........................................................................................... 6.270 Express Newspapers Plc v Liverpool Daily Post & Echo Plc [1985] FSR 306 ............................... 4.170 Express Newspapers Plc v News (UK) Ltd (1990) 18 IPR 201 ...................................................... 5.80 Exxon Corp v Exxon Insurance Consultants International Ltd [1981] 2 All ER 495 ..................... 4.170 Exxon Corporation v Exxon Insurance Ltd [1982] 1 Ch 119 ...................................................... 4.170 Exxon/Fuel Oils (T 409/91) [1994] OJEPO 653 ....................................................................... 10.360 xvi

Table of Cases

F F Hoffman-La Roche & Co Aktiengesellschaft v Commissioner of Patents is reported in (1971) 123 CLR 529 .......................................................................................................... 10.320 FAI Insurance Ltd v Advance Bank Aust Ltd (1986) 7 IPR 217 .................................................... 4.320 FH Faulding & Co Limited v Imperial Chemical Industries of Australia and New Zealand Limited (1965) 112 CLR 537 .............................................................................................. 13.440 FP Innovation Pty Ltd v Registrar of Trade Marks [2013] FCA 826 ........................................... 13.740 Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617; 6 IPR 155 ........ 15.140, 15.180, 15.360, 15.370 Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd [2010] FCA 984; (2010) 88 IPR 11 ................................................................................... 4.120, 4.130, 6.430 Falcon v Famous Players Film Co [1926] 2 KB 474 .................................................................... 6.270 Falconer v Australian Broadcasting Corporation (1991) 22 IPR 205 ............................ 15.160, 15.170 Fallshaw Holdings Pty Ltd v Flexello Castors & Wheels Plc (1993) 26 IPR 565 ........................... 9.450 Fanfold Ltd’s Application (1928) 45 RPC 325 .......................................................................... 13.370 Farbenfabriken Application, Re [1894] 1 Ch 645 ..................................................................... 13.390 Farbenindustrie AG’s Patents, In re (1930) 47 RPC 289 ............................................................. 9.700 Farley (Aust) Pty Ltd v JR Alexander & Sons (Qld) Pty Ltd (1946) 75 CLR 487 ......................... 13.180 Faulding (1965) 112 CLR 537 ................................................................................................. 13.420 Federal Trade Commission v Standard Education Society 302 US 112 ..................................... 12.140 Fei Yu t/as Jewels 4 Pools v Beadcrete Pty Ltd [2014] FCAFC 117 ............................................ 11.220 Fender Guitar Case, Fender Australia v Bevk [(1989) 15 IPR 257] ............................................ 13.710 Fenty v Arcadia [2013] EWHC 2310 .......................................................................................... 12.90 Fenty v Arcadia [2015] 1 WLR 3291; [2015] EWCA Civ 3 .......................................................... 12.90 Fertilitescentrum AB and Luminis Pty Ltd (2004) 62 IPR 420; [2004] APO 19 ............................ 9.290 Festo Corp v Shoketsu Kinzoku Kogyu Kabushiki Co Ltd (2000) 234 F 3d 558 .......................... 11.70 Fine Industrial Commodities Ltd v Powling (1954) 71 RPC 253 .............................................. 11.440 Firebelt Pty Ltd v Brambles Australia Ltd (2000) 51 IPR 531; [2000] FCA 1689 ........................ 10.140 Firebelt Pty Ltd v Brambles Australia Ltd (2002) 76 ALJR 816; 188 ALR 280 .................. 9.650, 10.150 Fiscal Technology Co Ltd v Johnson (1991) 23 IPR 555 ........................................................... 15.180 Fisher & Paykel Healthcare Pty Ltd v Avion Engineering Pty Ltd (1991) 103 ALR 239 ............... 10.240 Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 6) [2010] FCA 694 ............. 5.320 Fleming’s Nurseries Pty Ltd v Hannaford [2009] FCA 884 ......................................................... 16.10 Fleming’s Nurseries Pty Ltd v Siciliano (2006) 68 IPR 545 ......................................................... 16.10 Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196 .... 12.180, 12.210, 12.290 Flexible Steel Lacing Co v Beltreco Ltd (2000) 49 IPR 331 ............................................ 9.690, 10.240 Florence Mfg Co v JC Dowd & Co 178 F 73 ........................................................................... 12.140 Flour Oxidizing Company Ltd v Carr & Co. Ltd [1908] 25 RPC 428 .......................................... 9.580 Foggin v Lacey (2003) 57 IPR 225 .......................................................................................... 14.190 Fomento Industrial SA v Mentmore Manufacturing Co Ltd (1956) RPC 87 ..................... 9.510, 9.560 Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58; (2010) 185 FCR 9 ................................................................................................................................. 13.170 Ford v Foster (1872) LR 7 Ch App 611 .................................................................................... 12.210 Forsyth v Riviere (1819) 1 Web PC 95 ......................................................................................... 9.40 Foster v Mountford and Rigby Ltd (1976) 29 FLR 233; 14 ALR 71 .................................. 15.10, 17.80 Franchi v Franchi [1967] RPC 149 ........................................................................................... 15.120 Francis Day & Hunter Ltd v Bron [1963] Ch 587 ........................... 3.130, 3.150, 6.110, 6.130, 6.140 Frank Yu Kwan Yuen v McDonald’s Corporation, McDonald’s Restaurants Ltd (2001) CH/APP No 183 ................................................................................................................... 13.50 Franklin v Giddens [1978] Qd R 72 ......................................................................................... 15.260 Fraser v Evans [1969] 1 QB 349; [1969] 1 All ER 8 .................................................................. 15.420 Fraser v Thames Television [1984] QB 44 .................................................................................. 15.70 Freeman v TJ & FL Pohlner Pty Ltd (1994-1995) 30 IPR 377 ................................................... 10.240 Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd (2005) 67 IPR 230 .......................... 11.80 Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81; 201 FCR 565 .............. 13.570, 13.580 Funk Bros Seed Co v Kalo Inoculant Co 333 US 127 (1948) ...................................................... 9.190 xvii

Intellectual Property: Commentary and Materials

G G v Day [1982] 1 NSWLR 24 .................................................................................................. 15.170 GEC’s Application, Re (1942) 60 RPC 1 .............................................................................. 9.40, 9.50 Gadd & Mason v Manchester Corp (1892) 9 RPC 516 ............................................................. 9.500 Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 145 ALR 21 ........................................ 4.420 Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 37 IPR 462 .............................. 4.420, 4.430 Gardenia Overseas Pty Ltd v The Garden Co Ltd (1994) 29 IPR 485 .......................... 13.520, 13.640 Gartside v Outram (1856) 26 LJ Ch 113 .................................................................... 15.410, 15.420 Genentech I/Polypeptide expression (T 292/85) [1989] OJ EPO 275 ....................................... 10.110 General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1972] RPC 457; (1971) 1A IPR 121 ..................................................................................................... 9.570, 9.580, 9.670, 9.680 Generic Health Pty Ltd v Otsuka Pharmaceutical Co Ltd (2013) 296 ALR 50; 100 IPR 240 ....... 11.210 George Cording Ltd’s Application, Re (1916) 33 RPC 83 ........................................................ 13.390 George Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64; [1975] RPC 31 .............. 4.360 Gerard Industries Pty ltd v Auswide Import Export Pty Ltd (1998) 40 IPR 119 ......................... 14.140 Gillette Safety Razor Company v Anglo-American Trading Company Ltd (1913) 30 RPC 465 .................................................................................................................................... 11.260 Gilman Engineering Ltd v Ho Shek On (1986) 8 IPR 313 ........................................................ 15.180 Glastonbury case [1938] AC 557; (1938) 55 RPC 253 ............................................................. 13.310 Glaverbel SA v British Coal Corp [1994] RPC 443 .................................................................... 10.240 GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No. 2) Limited v Apotex Pty Ltd [2016] FCA 608 ........................................................................................................... 10.220 Global Brand Marketing Inc v YD Pty Ltd [2008] FCA 605; (2008) 76 IPR 161 ........................ 13.460 Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 ..................................... 12.100 Globelegance BV v Sarkissian [1974] RPC 603 ........................................................................ 12.210 Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd [2005] FCA 1521; 67 IPR 497 ........................................................................................................................... 4.530, 5.270 Gollel Holdings v Kenneth Maurer (1987) 9 IPR 109 ................................................................. 12.90 Gould v Vaggelas (1985) 157 CLR 215 ................................................................................... 11.240 Grain Pool of WA v Commonwealth of Australia [2000] HCA 14; 202 CLR 479; 170 ALR 111; 46 IPR 51 ...................................................................... 1.80, 1.90, 2.120, 16.10, 16.180, 16.190 Grant v Commissioner of Patents [2006] FCAFC 120 ................................................................ 9.410 Great Western Corp Pty Ltd v Grove Hill Pty Ltd [2001] FCA 423 ............................................ 11.220 Green v Broadcasting Corp of New Zealand (1983) 2 IPR 191; (1989) 16 IPR 1 ............... 4.190, 6.40 Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417; (1990) 95 ALR 275 .... 4.300, 4.310, 5.110, 5.270, 6.50 Greenfield Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417 ................................................ 4.330 Griffin v Isaacs (1938) 12 ALJ 169; 12 AOJP 739 ............................................................. 9.450, 9.560 Griffiths v United States of America [2005] FCAFC 34 ............................................................... 6.620 Grove Hill Pty Ltd v Great Western Corp Pty Ltd (2002) 55 IPR 257; [2002] AIPC 91-810; [2002] FCAFC 183 ............................................................................ 9.590, 9.790, 9.800, 11.220 Gruzman Pty Ltd v Percy Marks Pty Ltd and Anor (1989) 16 IPR 87 .......................................... 5.340

H H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 .................. 9.570, 9.600, 9.860, 10.250 H Lundbeck A/S v Generics (UK) Ltd [2009] RPC 13 ............................................................... 10.360 HIT Factory Inc v HIT Factory Inc (1986) 12 CPR (3d) 287 ...................................................... 12.210 Hack’s Application, Re (1940) 58 RPC 91 ................................................................................ 13.490 Hadley v Kemp [1999] EMLR 589 .................................................................................... 5.70, 5.110 Haines v Copyright Agency Ltd (1982) 42 ALR 549 ................................................................... 5.370 Half Court Tennis Pty Ltd v Seymour (1980) 53 FLR 240 .................................................. 4.350, 6.40 Hall v Lewis (2004) 64 IPR 61 ................................................................................................. 14.110 Hallelujah Trade Mark [1976] RPC 605 ................................................................................... 13.500 Hanave Pty Ltd v LFOT Pty Ltd (1999) FCA 357 ...................................................................... 11.240 Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCA 406 ............................. 12.230 Hansen Beverage Company v Bickfords (Australia) Pty Ltd (2008) 171 FCR 579; [2008] FCAFC 181 ........................................................................................................................ 12.230 Harrods Ltd v R Harrod Ltd (1923) 41 RPC 74 .......................................................................... 12.60 xviii

Table of Cases

Hartnell v Sharp Corp of Australia Pty Ltd (1975) 5 ALR 493 ................................................... 13.790 Harwood v Great Northern Railway (1863) 11 HLC 654 ........................................................... 9.450 Hawkes & Son (London) Ltd v Paramount Films Service Ltd [1934] 1 Ch 593 ........... 6.50, 6.60, 6.70 Health World Ltd v Shin-Sun Australia Ltd (2010) 240 CLR 590 ............................................... 13.740 Hearne v Street (2008) 235 CLR 125 ...................................................................................... 15.350 Hecla Foundry Co v Walker, Hunter & Co (1889) 14 App Cas 550 ............................................ 14.40 Helitune Ltd v Stewart Hughes Ltd [1991] FSR 171 ................................................................. 11.300 Helmore v Smith (1887) 35 Ch D 449 .................................................................................... 15.190 Henderson v Radio Corp Pty Ltd [1960] SR (NSW) 576 ............................................. 12.380, 12.400 Henderson v Radio Corpn Pty Ltd [1969] RPC 218 ................................................................. 12.390 Henjo investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546; 79 ALR 83 ......................................................................................................................... 11.240, 12.100 Henriksen v Tallon Limited [1965] RPC 434 .............................................................................. 10.70 Herbert Morris Ltd v Saxelby [1916 1 AC 688 ............................................................ 15.190, 15.370 Hexagon Pty Ltd v Australian Broadcasting Commission (1975) 7 ALR 233 ................................. 6.40 Hick’s Trade Mark, Re (1897) 22 VLR 636 ............................................................................... 13.180 Hickton’s Patent Syndicate v Patents & Machine Improvements Co Ltd (1909) 26 RPC 339 ..... 9.190 Hill v Evans (1862) 4 De GF and J 288 ...................................................................................... 9.570 Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169; [1946] 1 All ER 350 .......... 15.190 Hogan v Koala Dundee Pty Ltd (1988) 12 IPR 508 ..................................................... 12.320, 12.370 Hogan v Pacific Dunlop Ltd (1988) 12 IPR 225 .............................................................. 12.10, 12.90 Home Box Office Inc v Channel 5 Home Box Office Ltd [1982] FSR 449 ................................. 12.210 Hornblower v Boulton (1799) 8 TR 95; 101 ER 1258 .................................................................. 9.40 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 ..................................................................... 12.90, 12.100, 12.160, 12.310 Howard (1946) 72 CLR 175 .................................................................................................... 13.420 Howard Auto Cultivators Ltd v Webb Industries Pty Ltd (1946) 72 CLR 175 ............................ 13.390 Hubbard v Vosper [1972] 2 QB 84; [1972] 1 All ER 1023 ............................................. 6.330, 15.420 Hudson’s Trade Marks, Re (1886) 32 Ch D 311 ...................................................................... 13.180 Humpherson v Syer (1887) 4 RPC 407 ..................................................................................... 9.500 Hutchence v South Sea Bubble Co Pty Ltd (1986) 64 ALR 330 ................................................ 14.250

I ICI Chemicals & Polymers Ltd v Lubrizol Corp Inc (1999) 45 IPR 577 ....................................... 9.500 ICI Chemicals & Polymers Ltd v The Lubrizol Corporation Inc (2000) 106 FCR 214 .................. 9.580 IF Asia Pacific v Galbally (2003) 59 IPR 43 .................................................................. 15.120, 15.140 IG Farbenindustrie AG’s Patent (1930) 47 RPC 289 ................................................................... 9.600 ITW AFC Pty Ltd v Loi and Tran Pty Ltd [2008] FCA 552 ............................................................ 11.90 IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14 ................................................... 4.60 Icon Plastics Pty Ltd [2007] ADO 2 ......................................................................................... 14.150 Imperial Chemical Industries Ltd (Clark’s) Application [1969] RPC 574 ................................... 10.320 Imperial Group Ltd v Philip Morris & Co Ltd [1982] FSR 72 .............................. 13.60, 13.70, 13.760 Improver Corporation v Remington Consumer Products Ltd [1990] FSR 181 ................. 11.60, 11.80 Independent Management Resources Pty Ltd v Brown (1986) 9 IPR 1 ...................................... 15.40 Initial Services Ltd v Putterill [1968] 1 QB 396; [1967] 3 All ER 145 ............................ 15.420, 15.440 Inland Revenue Comrs v Muller & Co’s Margarine Ltd [1901] AC 217 ......................... 12.60, 12.390 Innovative Agriculture Products v Cranshaw (1996) 35 IPR 643 ................................................ 9.800 Insta Image Pty Ltd v KD Kanopy Australasia Pty Ltd [2008] FCAFC 139 ................................... 9.560 Interfirm Comparison Pty Ltd v Law Society of NSW [1975] 2 NSWLR 104 ................ 15.120, 15.170 Interlego AG v Croner Trading Pty Ltd [1992] FCA 624; [1993] AIPC 90-956; (1992) 111 ALR 577; 25 IPR 65; 39 FCR 348 .................................................................. 14.70, 4.320, 12.250 Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 ................................................................ 10.240 International Business Machines Corp v Commissioner of Patents (1991) 33 FCR 218 .............. 9.400 International Business Machines Corp’s Application (1980) FSR 564 ......................................... 9.400 Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 .................................................................................................................... 5.430, 6.250 Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd (2010) 85 IPR 525; [2010] FCA 108 .................................................................................................................. 9.860, 11.170 Irvine v Talksport [2002] 2 All ER 414 ......................................................................... 12.370, 12.390 xix

Intellectual Property: Commentary and Materials

Irvine Talksport Ltd [2003] 2 All ER 881; [2003] EWCA Civ 423 ............................................... 12.390 Irving’s Yeast-Vite Ltd v Horsenail (1934) 150 LT 402 .............................................................. 13.390

J JB Stone & Co Ltd v Steelace Manufacturing Co Ltd (1929) 46 RPC 406 ................................ 13.620 JB Williams Co v H Bronnley & Co Ltd (1909) 26 RPC 765 ...................................................... 12.120 JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 ............................................... 11.410 JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2006) 154 FCR 348 ............................................ 9.660 JT International SA v Commonwealth [2012] HCA 43; 250 CLR 1 .................................. 2.220, 13.10 Jafferjee v Scarlett (1937) 57 CLR 115 ........................................................................ 12.140, 13.520 James A Jobling & Co Ltd v James McEwan & Co Pty Ltd [1933] VLR 168 ............................... 13.420 Jamieson v American Dairy Queen Corp (1989) 18 IPR 101 .................................................... 13.190 Jellinek’s Application, Re (1946) 63 RPC 59 ................................................................ 13.165, 13.490 John Bulun Bulun v R & T Textiles Pty Ltd (1998) 41 IPR 513 ......................................... 5.220, 5.230 John Haig & Co. Ltd. v. Forth Blending Co. Ltd .(1953) 70 R.P.C. 259 ...................................... 12.40 Johnson v Agnew [1980] AC 367 ............................................................................................ 15.450 Johnson & Johnson v Kalnin (1993) 26 IPR 435 ...................................................................... 13.520 Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 ......... 12.110, 13.640, 13.650 Johnson’s Patent, Re (1937) 55 RPC 4 ...................................................................................... 9.130 Joos v Commissioner of Patents (1972) 126 CLR 611 ................................................................ 9.430 Joseph Bancroft & Sons Co v Registrar of Trade Marks (1957) 99 CLR 453 ............................. 13.510 Joy Music Ltd v Sunday Pictorial Newspapers (1920) Ltd [1960] 2 QB 60 ................................... 6.20 Julie Breen v Cholmondeley W Williams (1996) 186 CLR 71 ........................................................ 3.70 Jupiters Ltd v Neurizon Pty Ltd (2005) 222 ALR 155; 65 IPR 86 ................................................. 9.560

K KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd (2007) 71 IPR 615 ............. 9.660, 11.60, 11.80, 11.90 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2002) 55 IPR 497 .......................... 7.100 Kabushiki Kaisha Sony Computer Entertainment v Stevens (2003) 57 IPR 161 .......................... 7.100 Kalamazoo (Aust) Pty Ltd v Compact Business Systems P/L (1985) 84 FLR 101 .............. 4.170, 4.180 Kalamazoo (Aust) Pty Ltd v Compact Business Systems Pty Ltd (1985) 5 IPR 5 ............................ 4.60 Kauzal v Lee (1936) 58 CLR 670 ............................................................................................. 10.220 Keech v Sandford (1726) 2 Eq Ca Ab 741; 22 ER 629 ............................................................. 15.190 Keith Henry & Co Pty Ltd v Walker (1958) 100 CLR 342 ......................................................... 15.190 Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449; (2010) 268 ALR 613; (2010) 87 IPR 1; [2010] AIPC 92-384 ......................................................................... 14.140 Kendall Co, The v Mulsyn Paint and Chemicals (1963) 109 CLR 300 ......................... 13.210, 13.520 Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) 56 IPR 30 ......................... 13.440 Kenrick v Lawrence (1890) 25 QBD 99 ................................................................... 5.80, 4.320, 6.20 Kestos v Kempat (1935) 53 RPC 139 ............................................................................. 14.40, 14.70 Kettles and Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1935) 35 SR (NSW) 108 ....... 12.210 Kiku Trade Mark [1978] FSR 246 ............................................................................................ 13.420 Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 .......... 10.80, 10.90, 11.70 Kimberly-Clark Worldwide, Inc v Goulimis [2008] FCA 1415 ................................................... 13.500 King v Milpurrurra (1996) 66 FCR 474 ..................................................................................... 7.210 King Features Syndicate Inc v O & M Kleeman Ltd [1941] AC 417 ................... 6.120, 6.250, 14.250 Kirchner & Co v Gruban [1909] 1 Ch 413; [1908-10] All ER Rep 242 ..................................... 15.190 Kirin-Amgen v Hoechst Marion Roussel Ltd [2005] RPC 9; (2004) 64 IPR 444 ................ 11.70, 11.80 Klissers Bakeries v Harvest Bakeries (1986) 5 IPR 533 .................................................................. 6.50 Knight v Beyond Properties Pty Ltd (2007) 242 ALR 586 ......................................................... 12.230 Knott Investments Pty Ltd v Winnebago Industries, Inc [2013] FCAFC 59 .................. 12.430, 12.440 Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117 ..... 12.430, 12.440 Kodak Ltd’s Trade Mark, Re (1903) 20 RPC 337 ...................................................................... 13.390 Komesaroff v Mickle (1986) 7 IPR 295 ...................................................................................... 4.360 xx

Table of Cases

Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257 .... 14.10, 14.140, 14.310 Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 ....................................................... 11.240 Krisarts SA v Briarfines Ltd [1977] FSR 577 .................................................................................. 6.20 Kuntstreetwear Pty Ltd’s Trade Mark Application (2007) 73 IPR 438 ....................................... 13.500

L LB (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 ............................................................ 14.250 LED Builders v Eagle Homes (1999) 44 IPR 24 .......................................................................... 4.320 LED Builders v Masterton Homes (NSW) Pty Ltd (1994) 30 IPR 447 ............................................ 6.40 LED Technologies Pty Ltd v Elecspess Pty Ltd [2008] FCA 1941; (2008) 80 IPR 85; [2009] AIPC 92-330 ...................................................................................................................... 14.140 L’Oreal’s Application [1970] RPC 565 ....................................................................................... 9.370 Labelmakers Group Pty Ltd v LL Force Pty Ltd (No 2) [2012] FCA 512 ....................... 15.180, 15.230 Lac Minerals Ltd v International Corona Resources Ltd (1989) 16 IPR 27 ................................ 15.250 Ladbroke v William Hill [1964] 1 WLR 273 ....................................................................... 4.170, 6.50 Lamb v Evans [1893] 1 Ch 218 ............................................................................................... 15.180 Lane Fox v Kensington & Knightsbridge Electric Lighting Co [1892] 3 Ch 424; (1892) 9 RPC 413 ........................................................................................................ 9.180, 9.190, 9.840 Lantech Inc v First Green Park Pty Ltd (1995) 31 IPR 327 ........................................................ 10.240 Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Ltd [2010] FCA 29 ............. 3.130, 3.150, 6.140 Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Ltd (No 2) (2010) 87 IPR 357 ....... 6.600, 6.610 Leather Cloth Co v American Leather Cloth Co (1865) 11 HL Cas 523; 11 ER 1435 .................. 12.20 Lee and Commissioner of Patents, Re [2011] AATA 818 ........................................................... 11.450 Leicestershire County Council v Michael Faraday & Partners Ltd [1941] 2 KB 205 ...................... 3.70 Lenard’s Application (1954) 71 RPC 190 .................................................................................. 9.200 Leng v Andrews [1909] 1 Ch 763 ........................................................................................... 15.190 Leonardis v Sartas No 1 Pty Ltd (1996) 35 IPR 23; 67 FCR 126 .................................. 10.240; 10.320 Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27 .................................................... 10.160 Levi Strauss v Kimbyr Investments Ltd (1994) 28 IPR 149 ....................................................... 12.110 Liardet v Johnson Hil V 1778 ...................................................................................................... 8.10 Liebig’s Extract of Meat Co’s Trade Mark, Re (1902) 22 NZLR 165 ......................................... 13.390 Lincoln Industries Ltd v Wham-O Manufacturing Co (1984) 3 IPR 115 .......................... 4.300, 4.330 Lindner v Murdoch’s Garage (1950) 83 CLR 628; [1950] ALR 927 .......................................... 15.400 Lion Laboratories Ltd v Evans [1984] 2 All ER 417 ................................................................... 15.410 Littlewoods Organisation Ltd v Harris [1978] 1 All ER 1026 ..................................................... 15.370 Liverpool Electric Cable Co case (1928) 46 RPC 99 ................................................................. 13.310 Livron case (1937) 54 RPC 327 ............................................................................................... 13.310 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274; 62 IPR 461 ............................................................................................................ 10.20, 10.290, 10.330 Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 235 CLR 173 ...... 9.650, 9.730; 9.760 Lomas v Winton Shire Council (2002) FCAFC 413 .................................................................. 13.220 Lomas v Winton Shire Council (2003) AIPC 91-839 ................................................................ 13.520 London Armoury Co Ltd v Ever Ready Co (Great Britain) Ltd [1941] 1 KB 742 .......................... 12.60 Longworth v Emerton (1954) 82 CLR 539 ..................................................................... 9.590; 9.800 Lord Ashburton v Pape [1913] 2 Ch 469 ................................................................... 15.170, 15.180 Lorenzo & Sons v Roland Corporation (1992) 23 IPR 376 ........................................................... 3.70 Lotus Development Corp v Vacolan Pty Ltd (1989) 16 IPR 143 ................................................. 5.430 Louth v Diprose ((1992) 175 CLR 621) ....................................................................................... 3.70 Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 ................................................................. 12.160 Lubrizol Corp v Esso Petroleum Ltd [1998] RPC 727 ............................................................... 11.300 Lumley Life Ltd v IOOF of Victoria Friendly Society (1989) 16 IPR 316 .................................... 12.230 Ly v The Queen [2014] FCAFC 175 ......................................................................................... 13.730 Lyngstad v Anabas Products Ltd [1977] FSR 62 ....................................................................... 12.370 Lyon v Goddard (1893) 10 RPC 121; 11 RPC 354 ..................................................................... 9.840 xxi

Intellectual Property: Commentary and Materials

M MGM Studios, Inc v Grokster, Ltd 545 US 913 (2005) .............................................................. 7.230 MID Sydney Pty Ltd v Australian Tourism Co Limited (1998) 90 FCR 236 ................................ 13.520 Macrae Knitting Mills Ltd v Lowes Ltd (1936) 55 CLR 725 ...................................................... 12.120 Maeder v Busch (1938) 59 CLR 684 ........................................................................................... 9.40 Maglificio Calizificio Torinese SpA’s App (1982) 52 AOJP 1764 ................................................ 13.500 Magnolia Metal Co v Tandem Smelting Ltd (1900) 17 RPC 477 ............................................... 12.10 Magnolia Metal Co’s Trade Mark [1897] 2 Ch 371 ................................................................. 13.340 Majestic Selections Pty Ltd v Bushland Flora [2016] APBRO 1 ................................................... 16.40 Malone v Metropolitan Police Commissioner [1979] 1 All ER 256; [1979] 1 WLR 700 ............. 15.420 Mangrovite Belting Ltd v J C Ludowici & Son Ltd (1938) 61 CLR 149 ..................................... 13.420 Marco Polo Foods Pty Ltd v Benino Fine Foods (Aust) Pty Ltd (2005) 67 IPR 179 .................... 13.500 Marconi v British Radio Telegraph & Telephone Co Ltd (1911) 28 RPC 181 .............................. 11.30 Mareva Naviera SA of Panama v International Bulk Carriers SA [1980] 1 All ER 213 ................... 6.540 Mark Foy’s Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 ............ 13.420, 13.430, 13.600, 13.640 Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61 ..... 12.80, 12.90, 12.290, 12.310, 12.420 Mars GB Ltd v Cadbury Ltd [1987] RPC 387 ........................................................................... 13.520 Martin v Scribal Pty Ltd (1954) 92 CLR 17 .............................................................................. 10.240 Martin & Biro Swan Ltd v H Millwood Ltd [1956] RPC 125 ..................................................... 10.240 Martin Engineering Co v Nicaro Holdings Pty Ltd (1991) AIPC 90-799 ..................................... 9.850 Martin Engineering Co v Trison Holdings Pty Ltd (1989) 14 IPR 330 ............................ 9.860, 10.240 Maxim’s Ltd v Dye [1978] 2 All ER 55 ..................................................................................... 12.190 Maxwell v Hogg (1867) LR 2 Ch App 307 .............................................................................. 12.290 Maxwell v Murphy (1957) 96 CLR 261 ..................................................................................... 7.190 Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd (2008) 166 FCR 312 ........... 13.740 McCormick & Company Inc v McCormick [2000] FCA 1335 ..................................... 13.510, 13.530 McCorquodale v Masterson [2004] FCA 1247 ........................................................................ 13.510 McCulloch v Lewis A May (Produce Distributors) Ltd [1947] 2 All ER 845; 65 RPC 58 ............ 12.380, 12.390 McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 ....... 12.160, 13.50 Measures Bros Ltd v Measures [1910] 1 Ch 336 ........................................................ 15.190, 15.240 Mecklermedia Corp v DC Congress GmbH [1998] Ch 40 ....................................................... 13.630 MedImmune Ltd v Novartis Pharmaceuticals UK Ltd [2013] RPC 27 ....................................... 10.350 Melbourne v Terry Fluid Controls Pty Ltd (1994) 28 IPR 302 ................................................... 10.240 Mense v Milenkovic [1973] VR 784 ........................................................................................ 15.120 Merchandising Corporation of America v Harpbond [1983] FSR 32 ......... 4.250, 4.280, 4.290, 12.90 Merck & Co Inc v Arrow Pharmaceuticals Ltd (2006) 154 FCR 31; 68 IPR 511 ............... 9.170, 9.510 Mercy’s Application (1955) AOJP 938 ..................................................................................... 13.500 Merryweather & Sons v Moore [1892] 2 Ch 518; [1891-94] All ER Rep 563 ........................... 15.190 Meth v Norbert Steinhardt & Son Ltd (1963) 107 CLR 187 .................................................... 11.420 Metric Resources Corp v Leasemetrix Ltd [1979] FSR 571 ....................................................... 12.210 Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228; 1A IPR 181 .... 9.350, 9.570, 9.580 Michael Sharwood & Partners Pty Ltd v Fuddruckers Inc (1989) 15 IPR 188 ............... 13.80, 13.190, 13.400 Microcell case (1959) 102 CLR 232 .......................................................................................... 9.130 Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231 ........................................ 7.210 Mid Sydney Pty Ltd v Australian Tourism Co Ltd (1998) 90 FCR 236 ....................................... 13.440 Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 ..................................................................... 17.310 Millar v Taylor (1769) 98 ER 201 ................................................................................................. 3.20 Milpurrurru v Indofurn (1994) 54 FCR 240; 30 IPR 209 .......... 6.70, 6.80, 6.90, 6.550, 6.560, 17.30, 17.100 Mineral Resources, Minister for v Newcastle Newspapers Pty Ltd (1997) 40 IPR 403 .............. 15.250, 15.290, 15.410 Mining Equipment “Minquip” Pty Ltd v Alfagamma Australia Pty Ltd (2005) 64 IPR 237 ........ 14.110 Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253 ..... 9.350, 9.680, 9.700, 11.30 Mitchell v Brown (1880) 6 VLR 168 ................................................................................. 5.80, 5.110 Mobil Oil Australia Ltd v Guina Development [1996] 2 VR 34; (1995) 33 IPR 82 ..................... 15.350 xxii

Table of Cases

Modena Trading Pty Ltd v Cantarella Bros Pty Ltd [2013] FCAFC 110; 215 FCR 16 .... 13.410, 13.740 Mogul Steamship Co v McGregor Gow & Co [1892] AC 25 ....................................................... 8.20 Monckton v Pathe Freres Pathephone Ltd [1914] 1 KB 395 ...................................................... 6.270 Montana Wines Ltd v Villa Maria Wines Ltd (1984) 2 IPR 203 .................................................. 13.620 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 ...... 3.70, 13.210, 13.220, 15.10, 15.230, 15.240, 15.280 Moorgate Tobacco Company Ltd v Philip Morris Ltd (1980) 145 CLR 457 .............................. 12.210 Moorhouse v Angus & Robertson (No 1) Pty Ltd (1980) FSR 231 ............................................... 3.70 Morgan v Seaward (1837) 2 M & W 544 .................................................................................. 9.780 Morgan & Co v Windover & Co (1890) 7 RPC 131 .................................................................. 9.450 Morison v Moat (1851) 68 ER 492 .......................................................................................... 15.190 Moser v Marsden (1893) 10 RPC 350 ....................................................................................... 9.130 Multisteps Pty Ltd v Source and Sell Pty Ltd (2013) 214 FCR 323 ............................................. 9.760 Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 ................................................ 12.110 Murray v King (1984) 55 ALR 559 ............................................................................................ 5.110 Musitor BV v Tansing (1994) 29 IPR 203 ................................................................................. 13.640 Mustad (O) & Son v Dosen [1964] 1 WLR 109; [1963] 3 All ER 416 ........................................ 15.150 My Kinda Bones [1984] FSR 289 ............................................................................................. 12.210 My Kinda Town Ltd v Soll (1983) RPC 15 ............................................................................... 12.110 Mölnlycke AB v Procter & Gamble Ltd [1992] FSR 549 ........................................................... 10.110

N NP Generations Pty Ltd v Feneley (2001) 52 IPR 563 ................................................................ 15.40 NSI Dental Pty Ltd v University of Melbourne (2006) 69 IPR 542 .............................................. 9.680 NV Philips Gloeilampenfabricken v Mirabella International Pty Ltd (1995) 183 CLR 655; 32 IPR 449 ................................................................................................................................ 9.140 NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 26 IPR 513; 44 FCR 239 .............................................................................................. 9.60, 9.150, 9.870, 10.240 NV Philips’ Gloeilampenfabrieken Application (1954) 71 RPC 192 ............................................ 9.200 NZ Olympic and Commonwealth Games Association v Telecom NZ (1996) 35 IPR 55 ............. 12.10 National Biscuit Co’s Application, Re [1902] 1 Ch 783; 19 RPC 281 ........................................ 13.390 National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420 .............................................................................................................................. 12.230 National Phonograph Co of Australia v Menck [1911] AC 336 ................................................ 11.120 National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 ........................................... 9.30, 9.40, 9.50, 9.60, 9.130, 9.180, 9.190, 9.430, 9.440, 9.450 National Surgical Pty Ltd v McPhee [2010] FCA 992; 87 IPR 602 ...... 15.40, 15.330, 15.340, 15.380, 15.400 Native Guano Co v Sewage Manure Co (1889) 8 RPC 125 ....................................................... 12.60 Nature’s Blend Pty Ltd v Nestle Australia Ltd [2010] FCA 198 ................................................. 13.330 Nature’s Blend Pty Ltd (ACN 126 406 488) v Nestle Australia Ltd (2010) 272 ALR 487 ........... 13.680 Neilson v Minister of Public Works (NSW) (1914) 18 CLR 423 .................................................. 9.180 Nesbit Evans Group Australia Pty Ltd v Impro Ltd (1997) 39 IPR 56 ............................. 9.870, 10.240 Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 ............................ 13.530 Network Ten Pty Ltd v TCN Channel Nine [2004] HCA 14; (2004) 59 IPR 1 ......... 1.70, 4.440, 4.450, 6.30, 6.220, 7.20, 7.30, 7.40 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2005] HCA Trans 842 ................................. 6.240 New England Biolabs, Inc v H Hoffmann-La Roche AG (2005) 63 IPR 524; [2004] FCA 1651 .... 10.160 New England Country Homes Pty Ltd v Moore (1998) 45 IPR 186 ........................................... 4.320 New South Wales Dairy Corporation v Murray-Goulburn Co-operative Co Ltd (1989) 86 ALR 549 .................................................................................................................................... 13.760 New South Wales Dairy Corporation v Murray Goulburn Co-Operative Company Ltd (1990) 171 CLR 363 ......................................................................................................... 13.530, 13.550 New York University v Nissin Molecular Biology Institute Inc (1994) 29 IPR 173 ...................... 11.130 New Zealand Post Ltd v Leng [1999] 3 NZLR 219 .................................................................. 13.630 Newall & Elliot, Re (1858) 4 CB (NS) 269; 140 ER 1087 ........................................................... 9.590 Newbery v James (1817) 35 ER 1011 ........................................................................................ 15.50 Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 16 IPR 545; 91 ALR 513 ........ 9.500, 9.570, 10.240, 11.60, 11.70 xxiii

Intellectual Property: Commentary and Materials

Nichols v Universal Pictures Corporation 45 F (2d) 119 (1930) ................................................. 6.110 Nigel Louez Graphic Design Pty Ltd, Application by (1989) 15 IPR 570 .................................... 14.70 Nine Network Australia Pty Ltd v Australian Broadcasting Corporation (1999) 48 IPR 333 ........ 4.210, 6.420 Nintendo Co Ltd v Centronics Systems Pty Ltd (1991) 23 IPR 119 ............................................ 4.520 Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 28 IPR 431 ............................................ 4.520 No-Fume Ltd v Frank Pitchford & Co Ltd (1935) 52 RPC 231 ........................................ 10.70, 10.80 Nodoz Trade Mark, Re [1962] RPC 1 ......................................................................... 13.760, 13.770 Noel Leeming Television Ltd v Noel’s Appliance Centre Ltd (1985) 5 IPR 249 ........................... 12.90 Nomad v Heyring [1992] APO 15 ........................................................................................... 10.280 Nora Beloff v Pressdram Ltd [1973] 1 All ER 273 ....................................................................... 5.160 Norbert Steinhardt & Son Limited v Meth (1961) 105 CLR 440 ............................................. 13.630 Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 .......................... 15.400 Northern Territory v Collins (2008) 235 CLR 619 ....................................................... 11.180, 11.200 Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133 ....................... 15.240 NutraSweet Australia Pty Ltd v Ajinomoto Co Inc (2005) 67 IPR 381 ......................................... 9.680

O O’Brien v Komesaroff (1982) 41 ALR 255 ....................................................................... 4.170, 5.110 Occupational and Medical Innovations Ltd v Retractable Technologies Inc (2007) 73 IPR 312 .................................................................................................................................... 11.410 Oceanroutes (Australia) Pty Ltd v M C Lamond (1984) AIPC 90-134 ......................................... 5.160 Old Digger Pty Ltd v Azuko Pty Ltd (2000) 51 IPR 43 ............................................................... 9.870 Olin Chemical Pty Ltd v Pace Chemical & Swimming Pool Equipment Pty Ltd (unreported, Supreme Court, NSW, Needham J, 22 December 1978) .................................................... 12.210 Olin Corp v Super Cartridge Co Pty Ltd (1977) 51 ALJR 525; 14 ALR 149; 180 CLR 236 ........ 10.330, 11.30, 11.70 Olin Corporation v Super Cartridge Co Pty Ltd (1975) 49 ALJR 135 ........................................ 10.330 Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157 ..................... 9.700 Organon Laboratories Ltd’s Application [1970] RPC 574 ........................................................... 9.370 Orkin Exterminating Co Inc v Pestco Co of Canada Ltd (1985) 19 DLR (4th) 90 ..................... 12.210 Otto v Linford (1882) 46 LT 35 ................................................................................................. 9.180 Oxford University Press v Registrar of Trade Marks (1990) 24 FCR 1 ....................................... 13.440 Ozi-Soft Pty Ltd v Wong (1988) 10 IPR 520 ................................................................... 5.430, 5.440 Ozi-Soft Pty Ltd v Wong (1988) 12 IPR 487 .............................................................................. 5.430

P PAKI Logistics GmbH v OHIM (General Court of the European Union) .................................... 13.500 Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553; 14 IPR 398 .............. 11.240, 12.80, 12.310, 12.320 Pacific Film Laboratories Pty Ltd v Commissioner of Taxation [1970] HCA 36; (1970) 121 CLR 154 ......................................................................................... 3.50, 3.60, 3.70, 3.90, 15.420 Pacific Publications Pty Ltd v IPC Media Pty Ltd (2003) 57 IPR 28 ........................................... 13.520 Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 ..................................................... 9.350 Palser v Grinling [1948] AC 291 ................................................................................................ 13.70 Parish v World Series Cricket Pty Ltd (1977) 16 ALR 172 ......................................................... 12.140 Parison Fabrics Ltd’s Application (1949) 66 RPC 217 .............................................................. 13.360 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; 42 ALR 1 ............ 1.100, 1.110, 1.120, 12.50, 12.80, 12.100, 12.110, 12.120, 12.130, 12.140, 12.160, 14.310 Parker Knoll Ltd v Knoll International Ltd [1962] RPC 265 ....................................................... 12.210 Parker and Son (Reading) Ltd v Parker [1965] RPC 323 .......................................................... 12.210 Parkington & Co Ltd’s Application, In Re (1946) 63 RPC 171 ................................................. 13.530 Patent Gesellschaft AG v Saudi Livestock Transport & Trading Co (1996) 33 IPR 426 .............. 10.240 Patent Gesellschaft AG v Saudi Livestock Transport and Trading Co (1996) 33 IPR 426 ............. 9.820 Patents, Commissioner of v Emperor Sports Pty Ltd (2006) 149 FCR 386 ................................. 9.660 Patents, Commissioner of v Lee (1913) 16 CLR 138 .................................................................. 9.390 Patents, Commissioner of v Microcell Ltd (1959) 102 CLR 232 ...................................... 9.120, 9.130 Patents, Commissioner of v RPL Central Pty Ltd [2015] FCAFC 177 ............................... 9.420, 9.440 xxiv

Table of Cases

Paul’s Retail Pty Ltd v Lonsdale Australia Ltd [2012] FCAFC 130 ................................. 13.690, 13.720 Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd (2012) 202 FCR 286; [2012] FCAFC 51 .............. 13.720 Payton & Co Ltd. v Snelling, Lampard & Co Ltd (1899) 17 RPC 48 .......................................... 12.40 Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 33 IPR 161 ...................................... 12.115 Performing Right Society v Harlequin Record Shops [1979] FSR 233 ......................................... 6.160 Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 ............................. 7.270 Perry v Truefitt (1842) 6 Beav 66; 49 ER 749 ................................................................. 12.10, 12.60 Pessers and Moody v Haydon & Co (1909) 26 RPC 58 .................................................... 9.90, 9.100 Peter Hanlon’s Application [2011] ATMO 45 ........................................................................... 13.500 Pfizer v Ministry of Health [1965] AC 512; [1965] RPC 261 ........................... 11.130, 11.120, 11.150 Pfizer Inc v Commissioner of Patents [2004] NZCA 104; (2004) 60 IPR 624 ................................ 9.80 Pfizer Overseas Pharmaceuticals v Eli Lilly & Co (2005) 68 IPR 1 ..................... 9.680, 10.150, 10.160 Pharmacia Corp v Merck & Co Inc [2002] RPC 775 .................................................................. 9.700 Philippart v William Whiteley Ltd [1908] 2 Ch 274 .................................................................. 13.390 Philips Electronics BV v Remington Consumer Products [1998] RPC 283 ................................... 13.20 Philmac Pty Ltd v Registrar of Trade Marks (2002) 126 FCR 525 ............................................. 13.470 Phipps v Boardman [1967] 2 AC 46 ............................................................................................ 3.70 Phonographic Performance Company of Australia Ltd [2010] ACopyT 1 ................................... 5.390 Photocure ASA v Queen’s University at Kingston (2005) 216 ALR 41; 64 IPR 314; [2005] FCA 344 ................................................................................................... 9.680, 10.160, 11.70, 11.80 Pianotist Company Ltd’s Application (1906) 23 RPC 774 ........................................................ 13.520 Pinefair Pty Ltd v Bedford Industries Rehabilitation Assoc Inc (1998) 87 FCR 458 ....... 11.130, 11.150 Pink v J A Sharwood & Co Ltd (1913) 30 RPC 725 .................................................................. 12.310 Pioneer Hi-Bred Corn Co v Highline Chicks Pty Ltd [1979] RPC 410 ....................................... 13.640 Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670; [1977] HCA 56 ...... 13.760 Pirrie v York Street Flax Spinning Co Ltd (1894) 11 RPC 429 ..................................................... 9.130 Plix Products Ltd v Frank M Winstone (Merchants Ltd) (1984) 3 IPR ......................................... 3.100 Polaroid Corp v Hannaford & Burton Ltd [1974] 1 NZLR 368 ................................................. 12.250 Pollard v Photographic Co (1888) 40 Ch D 348 ..................................................................... 15.170 Polo/Lauren Co LP v Ziliani Holdings Pty Ltd (2008) 80 IPR 531 ............................................... 4.530 Polwood Pty Ltd v Foxworth Pty Ltd (2008) 165 FCR 527; 75 IPR 1 ........................................ 11.450 Populin v HB Nominees Pty Ltd (1982) 41 ALR 471; 59 FLR 37 ......................... 10.240, 11.30, 11.80 Postum, In re [1906] Board of Trade ....................................................................................... 13.500 Powell v Glow Zone Products Pty Ltd (1996) 36 IPR 343 ........................................................ 13.640 Pracdes Pty Ltd v Stanilite Electronics Pty Ltd (1995) 35 IPR 259 ............................................... 9.870 Prebble v Reeves [1910] VR 88 ............................................................................................... 15.190 Prestige Group (Australia) Pty Limited v Dart Industries Inc . (1990) 26 FCR 197 ........................ 9.60 Primary Health Care Ltd v Commissioner of Taxation [2010] FCA 419 ......... 3.80, 3.90, 5.110, 5.120 Primary Health Care Ltd v Commonwealth [2016] FCA 313 ......................... 13.290, 13.300, 13.510 Prince Albert v Strange (1849) 1 N & T 1 ............................................................................... 15.170 Prince Albert v Strange (1849) 2 De G & Sm 652; 64 ER 293 .......... 15.100, 15.190, 15.240, 15.290 Prince Albert v Strange (1849) 47 ER 1302 ............................................................................... 15.10 Prince PLC v Prince Sports Group Inc (1997) 39 IPR 225 ......................................................... 11.410 Print Investments Pty Ltd v Art-vue Printing Pty Ltd (1983) 1 IPR 149 ........... 15.120, 15.180, 15.260 Printers & Finishers Ltd v Holloway [1964] 3 All ER 731; [1965] RPC 239 ..... 15.120, 15.150, 15.180, 15.190, 15.260 Prior v Lansdowne Press Pty Ltd [1977] VR 65; (1975) 12 ALR 685 ....................... 5.90, 5.100, 6.470 Pro-Football, Inc v Blackhorse 112 F Supp 3d 439 .................................................................. 13.500 Product Management Group Pty Ltd v Blue Gentian LLC [2015] FCAFC 179 ............................ 9.760 Pugh v Riley Cycle Co Ltd [1912] 1 Ch 613 .............................................................................. 14.40

Q Quigley & Co Inc’s Application (1973) 43 AOJP 3375; [1977] FSR 373 ..................................... 9.390

R R v Wheeler (1819) 2 B & Ald 345; 106 ER 392 .......................................................................... 9.40 R & C Products Pty Limited v S C Johnson & Sons Pty Limited (1993) 42 FCR 188 ................... 12.80 xxv

Intellectual Property: Commentary and Materials

R Johnston & Co v Archibald Orr Ewing & Co (1882) 7 App Cas 219 ..................................... 12.440 RA Bailey & Co Ltd v Boccaccio Pty Ltd (1986) 6 IPR 279 ......................................................... 5.430 RCA Corp v John Fairfax & Sons Ltd (1981) 52 FLR 71 ............................................................ 11.170 RD Werner v Bailey Aluminium Products Pty Ltd (1989) 85 ALR 679 ......................................... 9.690 RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1989) 13 IPR 513; 25 FCR 565 ........ 9.60, 9.150, 11.270 REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559 .................................................................. 13.650 RJ Lea Ltd [1913] 1 Ch 446; (1913) 30 RPC 216 ..................................................................... 13.310 Radiation Ltd v Galliers & Klaerr Pty Ltd (1938) 60 CLR 36 ....................................................... 11.30 Radio Corporation Pty Ltd v Disney (1937) 57 CLR 448 .......................................................... 13.520 Ramsay v Master Locksmiths Association of Australasia Ltd (2004) 64 IPR 94 ............................ 14.70 Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 44 IPR 481 ....... 11.220, 11.240 Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC (2008) 77 IPR 449 ......................... 9.860, 9.870 Ranbaxy Australia Pty Ltd v Warner-Lambert Company LLC (No 2) (2006) 71 IPR 46 ................ 9.680 Rank Film Production Ltd v Dodds (1983) 2 IPR 113 ................................................................. 6.160 Ranks Hovis McDougall’s Application (1976) 46 AOJP 3915 ........................................... 9.210, 9.230 Rantzen’s Application, Re (1946) 64 RPC 63 ............................................................................... 9.40 Re International Business Machines Corporation v Commissioner of Patents [1991] FCA 625 .... 9.410 Re Press-Form Pty Ltd and Kelrit Investments Pty Ltd v Henderson’s Ltd [1993] FCA 46 .......... 14.305 Re Taco Bell Pty Limited v Taco Company of Australia Inc (1981) 60 FLR 60 ............................ 12.180 Rebeschini v Miles Laboratories (Aust) Ltd (1982) 1 IPR 159 ..................................................... 5.110 Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84 ......................................................... 13.490 Reckitt & Colman Ltd v Borden Inc & Ors [1990] RPC 341; [1990] 1 All ER 873; [1990] 1 WLR 491; (1990) 17 IPR 1 ........................................................................... 12.40, 12.50, 12.210 Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228 ........................ 12.115 Reddaway v Banham [1896] 65 LJ QB 381; [1896] AC 199 ......... 12.20, 12.30, 12.40, 12.60, 12.440 Rediffusion Simulation Ltd v Link-Miles Ltd [1993] FSR 369 .................................................... 10.150 Redrock Holdings Pty Ltd & Hotline Communications Ltd v Adam Hinkley (2001) 50 IPR 565 ................................................................................................................ 5.160, 5.200, 5.210 Registered Trade Mark “Yanx”, Re; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 ............................................................................................. 12.140, 13.180, 13.210, 13.510 Registered Trade Marks of John Batt & Co, Re [1898] 2 Ch 432; [1899] AC 428 ..................... 13.180 Registrar for Trade Marks v Woolworths (1999) 45 IPR 411; 93 FCR 365 ...... 13.240, 13.510, 13.520, 13.650 Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 ................................... 13.310, 13.440 Registrar of Trade Marks, The v Muller (1980) 144 CLR 37 ..................................................... 13.440 Rehm Pty Ltd v Webster’s Security Systems (International) Pty Ltd (1988) 81 ALR 79; 11 IPR 289 ................................................................................................. 9.870, 10.320, 10.330, 11.70 Reid & Sigrist Ltd v Moss & Mechanism Ltd (1932) 49 RPC 461 ................................ 15.190, 15.370 Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205; 25 IPR 119 ....... 9.320, 9.850, 9.860, 10.150, 11.180, 11.200 Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 ............................ 9.420, 9.440 Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588; (2008) 173 FCR 450; (2008) 79 IPR 214; [2008] AIPC 92-319 ................................................................ 14.140, 14.150 Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589; (2008) 79 IPR 236 ..... 14.140 Reynolds v Herbert Smith (1902) 20 RPC 123 .......................................................................... 9.180 Riviera Leisurewear Pty Ltd v J Hepworth & Son Plc (1987) 9 IPR 305 ..................................... 13.190 Roadshow Films Pty Ltd v Telstra Corporation Ltd [2016] FCA 1503 .............................. 7.330, 7.340 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23; (2011) 89 IPR 1 ..... 7.10, 7.250, 7.260, 7.270, 7.280 Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16 ............................................... 7.10, 7.280, 7.290 Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 83 IPR 430 ....................................... 7.250, 7.260 Robb v Green [1895] 2 QB 315; [1895-99] All ER Rep 1053 ............. 15.40, 15.180, 15.190, 15.240, 15.370 Robin Ray v Classic FM plc [1998] FSR 622 ............................................................................. 11.440 Roger Bullivant v Ellis [1978] FSR 172 ....................................................................................... 15.40 Rolls Royce Ltd’s Application [1963] RPC 251 ............................................................................. 9.80 “Roman Holiday” Trade Mark [1964] RPC 129 ....................................................................... 13.510 Ronneby Road Pty Ltd v ESCO Corporation [2016] FCA 588 ..................................................... 9.870 xxvi

Table of Cases

Root Quality Pty Ltd v Root Control Technologies Pty Ltd [2000] FCA 980; (2000) 177 ALR 231; 49 IPR 225 .................................................................................. 7.210, 9.680, 11.70, 11.80 Rosedale Associated Manufacturers Ltd v Carlton Tyre Saving Co Ltd [1960] RPC 59 .............. 10.240 Royal Children’s Hospital, The v Robert Alexander [2011] APO 94 ............................................. 5.190

S S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 ......... 12.100, 12.130, 12.310 SAP Australia Pty Ltd v Sapient Australia Pty Ltd [1999] FCA 1821 ........................................... 13.220 Sabre v Amadeus Global Travel [2004] APO 21 ....................................................................... 10.280 Saccharin Corp v Anglo-Continental Chemical Works Ltd (1900) 17 RPC 307 ........... 11.130, 11.140, 11.150, 11.160 Saccharin Corp Ltd v Chemicals & Drugs Co Ltd (1900) 17 RPC 28 ......................................... 9.390 Sachtler GMBH & Co KG v RE Miller Pty Ltd (2005) 65 IPR 605 .......................... 11.60, 11.70, 11.80 Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) 4 IPR 120 .............. 4.530, 14.90, 14.110 Salter’s Application, Re (1923) 40 RPC 402 ............................................................................. 13.390 Saltman Engineering Co v Campbell Engineering Co (1948) 65 RPC 203; [1963] 3 All ER 413 ....................................................................... 15.60, 15.90, 15.150, 15.180, 15.240, 15.310 Samuel Reitzman v Grahame-Chapman & Derusuit Ltd (1950) 68 RPC 25 ................................. 9.40 Samuelson v Producers Distributing Co Ltd (1932) 48 RPC 580 ............................................. 12.400 Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd [2016] FCA 236 .................................................................................................................. 9.870, 11.220 Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994-1995) 30 IPR 479 ......................... 10.240 Saville Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147 ...................................... 12.160, 13.600 Scandinavian Tobacco Group Eersel BC v Trojan Trading Company Pty Ltd [2016] FCAFC 91 ...................................................................................................................................... 13.720 Schering Biotech Corp’s Application [1993] RPC 249 ............................................................. 10.340 Schering Chemicals Ltd v Falkman Ltd [1981] 2 WLR 848 ...................................................... 15.440 Schott Musik International GMBH v Colossal Records (1996) 36 IPR 267 .................................. 4.220 Schroeder Music Publishing Co Ltd v Macauley [1974] 1 WLR 1308 ......................................... 5.290 Seafolly Pty Ltd v Fewstone Pty Ltd (2014) 106 IPR 85 .............................................................. 4.530 Seager v Copydex Ltd [1967] 1 WLR 923; [1967] RPC 349 ............... 15.60, 15.260, 15.270, 15.280, 15.300, 15.320, 15.310 Searle (GD) v Commissioner of Patents (1987) 8 IPR 376 ......................................................... 9.870 See Universal Music & Ors v Australian Competition and Consumer Commission [2003] FCAFC 193 .......................................................................................................................... 5.450 Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1996) 35 IPR 161 .............................. 4.510, 4.520 Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1998) 39 IPR 577 ......................................... 5.320 Seven Network (Operations) Ltd v TCN Channel Nine Pty Ltd [2005] FCAFC 144; (2005) ALR 569 ........................................................................................................... 5.80, 5.160, 5.310 Seven Up Co v OT Ltd (1947) 75 CLR 203 ................................................... 13.180, 13.190, 13.210 Shanton Apparel Ltd v Thornton Hall Manufacturing Ltd (1989) 17 IPR 311 ............................. 6.250 Sharwood v Fuddruckers Inc (1989) 15 IPR 188 ..................................................................... 13.440 Sheldon & Hammond Pty Ltd v Metrokane Inc (2004) 135 FCR 34 .......................................... 4.540 Shell Co of Australia v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 ...... 13.210, 13.620, 13.640, 13.650 Shell Co of Australia Ltd v Rohm & Haas Co (1949) 78 CLR 601 ................... 13.180, 13.200, 13.220 Shell Refining Co’s Patent, Re [1960] RPC 35 ............................................................................ 9.600 Sheraton Corporation of America v Sheraton Motels Ltd [1964] RPC 202 .................. 12.100, 12.210 Sibley v Grosvenor (1916) 21 CLR 469 ................................................................................... 11.240 Siddons Pty Ltd v Stanley Works Pty Ltd (1991) 29 FCR 14 ..................................................... 12.160 Sir Titus Salt Co’s case [1894] 3 Ch 166 .................................................................................. 13.340 Sirdar Rubber Co Ltd v Wallington Weston (1907) 24 RPC 539 ............................................... 11.110 Sizzler Restaurants International Inc v Sabra International Pty Ltd (1990) 20 IPR 331 ............... 13.80, 13.190 Smith Kline & French Laboratories Ltd v Attorney-General (NZ) (1991) 22 IPR 143 ................ 11.130 Smith Kline & French Laboratories Ltd v Attorney-General [1989] 1 NZLR 385 ....................... 15.280 Smith Kline & French Laboratories Ltd v Attorney-General (New Zealand) [1991] 2 NZLR 560 .................................................................................................................................... 11.150 Smith Kline & French Laboratories Ltd, Re [1989] 2 WLR 397 ................................................. 15.280 xxvii

Intellectual Property: Commentary and Materials

Smith Kline and French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 17 IPR 545; (1990) 22 FCR 73 ............. 3.70, 15.110, 15.280, 15.410, 15.430, 15.450 Smith Kline and French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1991) 20 IPR 643 ................................................................. 15.270, 15.280 Smith Kline and French Laboratories (Australia) Limited v Registrar of Trade Marks (1967) 116 CLR 628 ...................................................................................................................... 13.440 Snoid v Handley (1981) 38 ALR 383 ....................................................................................... 12.160 Soares v Australian Postal Corporation [2016] ATMO 10 ......................................................... 13.170 Solar Thompson Engineering Co Ltd v Barton [1977] RPC 537 ............................................... 11.110 Solio Case [1898] AC 571 ....................................................................................................... 13.420 Sony Corporation of America v Universal City Studios Inc 464 US 417 (1984) .......................... 7.170 Sony Kabushiki Kaisha, Re (1987) 9 IPR 466 ........................................................................... 13.400 South Wales Dairy Corporation v Murray Goulburn Co-Operative Company Ltd (1990) 171 CLR 363 ............................................................................................................................. 13.540 Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 ............. 13.165, 13.490, 13.520, 13.530, 13.650 Southorn v Reynolds (1865) 12 LT 75 ....................................................................................... 12.60 Spalding’s Case (1915) 84 LJ Ch 449 ........................................................................................ 12.60 Speed Seal Products Ltd v Paddington [1986] 1 All ER 91 ............................................ 15.60, 15.300 Sporoptic Pouilloux SA v Arnet Optic Illusions Inc (1995) 32 IPR 430 ...................................... 13.520 Sports Café Ltd v Registrar of Trade Marks (1999) 42 IPR 552 ................................................. 13.520 Stack v Brisbane City Council (1995) 32 IPR 69 ...................................................................... 11.370 Stack v Brisbane City Council (1999) 47 IPR 525 ...................................................................... 10.70 Standard Cameras Ltd’s Application (1952) 69 RPC 125 ......................................................... 13.380 Stannard v Reay [1967] FSR 140 ............................................................................................. 12.290 Stanway Oyster Cylinders Pty Ltd v Marks (1996) 35 IPR 71; (1996) 66 FCR 577 ......... 9.510, 10.240 Star Industrial Co Ltd v Yap Kwee Kor (tlas New Star Industrial Co) [1976] 2 FSR 256 ............ 12.210, 12.310 Star Micronics Pty Ltd v Five Star Computers Pty Ltd (t/as Computerfair) (1990) 18 IPR 225 .................................................................................................................................... 12.410 Starbucks (HK) Ltd v British Sky Broadcasting Group plc (No 2) [2015] 3 All ER 469; [2015] UKSC 31; [2015] 1 WLR 2628 ............................................................................................ 12.180 State Street Bank & Trust Co v Signature Financial Group 149 F 3d 1368 (1998) ..................... 9.430 State for Immigration and Ethnic Affairs, Minister of v Teoh (1995) 183 CLR 273 ...................... 2.120 Stauffer Chemical Company’s Application, Re (1977) RPC 33 ................................................. 10.320 Stephenson, Jordan & Harrison Ltd v McDonald [1952] 69 RPC 10 ............................. 5.160, 15.260 Sterling Engineering Co Ltd v Patchet [1955] AC 534 ............................................................. 11.440 Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58; (2005) 65 IPR 513 ..................................................................................... 3.30, 6.280, 7.10, 7.90, 7.110, 7.140 Stevenson Jordan & Harrison v McDonald & Evans [1952] 1 TLR 101 ..................................... 15.180 Stork Restaurant Inc v Sahati 166 F 2d 348 ............................................................................. 12.210 Stovin-Bradford v Volpoint Properties Ltd [1971] Ch 1007 ........................................................ 5.110 Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (2014) 110 IPR 82 ............................ 9.760, 9.870 Sun World International Inc v Registrar, Plant Breeder’s Rights (1997) 39 IPR 161 ..................... 16.10 Sun World International Inc v Registrar, Plant Breeder’s Rights [1998] FCA 1260 ....................... 16.10 Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd (1961) 180 CLR 98 ............................ 9.510 Suyen Corporation v Americana International Ltd [2010] FCA 638; (2010) 187 FCR 169 ........ 13.170 Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd (2002) 53 IPR 359 .............. 11.420 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 ........... 7.210, 12.115

T TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (2001) 50 IPR 335 ................. 6.370, 6.390, 6.400 TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) (2005) 65 IPR 571 ...... 6.220, 6.230, 6.240 Taco Bell Pty Ltd v Taco Co of Australia Ltd (1981) 60 FLR 60 ................................................. 12.200 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 2 TPR 48; 42 ALR 177 ......... 12.90, 12.100, 12.160, 12.200, 12.210 Talbot v General Television [1980] VR 224 ................................................................................ 15.70 Tam, In Re 808 F 3d 1321 ...................................................................................................... 13.500 Tastee Freez’s Application [1960] RPC 255 .............................................................................. 13.440 xxviii

Table of Cases

Tate v Thomas [1921] 1 Ch 503 ............................................................................. 4.190, 5.80, 6.40 Tavenor Rutledge Ltd v Trexapalm Ltd [1977] RPC 275 .......................................................... 12.370 Taverner Rutledge Ltd v Specters Ltd [1959] RPC 355 ............................................................ 13.640 Taxation, Commissioner of v Seven Network Ltd [2016] FCAFC 70 .......................................... 7.320 Taxation, Federal Commissioner of v Seven Network Ltd [2016] FCAFC 70 .............................. 7.320 Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 .......................... 12.210 Telstra Corporation Ltd v Australasian Performing Right Association (1997) 38 IPR 294 .... 6.1606.170 Telstra Corporation Ltd v Desktop Marketing Systems Pty Ltd (2002) 51 IPR 257 ....................... 7.50 Telstra Corporation Ltd v Phone Directories Co Pty Ltd (2010) 85 IPR 571 .................................. 7.50 Telstra Corporation Ltd v Phone Directories Co Pty Ltd [2010] FCAFC 149; (2010) 90 IPR 1 .... 4.100, 4.110, 7.20 Telstra Corporation Ltd v Phone Directories Co Pty Ltd [2014] FCA 568 ................................. 12.270 Telstra Corporation Ltd v Phone Directories Co Pty Ltd (2015) 237 FCR 388; [2015] FCAFC 156 .................................................................................................................................... 13.290 Telstra Corporation Ltd v Royal & Sun Alliance Insurance Australia Ltd (2003) 57 IPR 453 ........ 12.80, 12.90 Tenodi v Blue Mountains City Council [2011] NSWLEC 1183 .................................................. 17.160 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 .................................. 12.160, 12.230 Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1960] RPC 128 .................... 15.150, 15.310, 15.320 Terrapin Ltd v Builders Supply Co (Hayes) Ltd [1967] RPC 375 ............................................... 15.300 Terry Yumbulul v Reserve Bank of Australia [1991] FCA 332; (1991) 21 IPR 481 ........................ 17.90 Thai World Import & Export Co Ltd v Shuey Shing Ply Ltd (1989) 17 IPR 289 ......................... 12.310 The Australian Wine Importers Ltd, Re (1889) 41 Ch D 278 .................................................... 13.490 Thomas v Brown and Anor (Aboriginal Flag Case) (1997) 37 IPR 207; [1997] 215 FCA ............. 3.100 Thomas Marshall (Exports) v Guinle [1979] Ch 227 ................................................... 15.120, 15.130 Thomas Marshall (Exports) Ltd v Guinle [1978] 3 All ER 193 ..................................................... 15.40 Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 ................................... 11.220 Thomson v B Seppelt & Sons Ltd (1925) 37 CLR 305 ................................... 13.310, 13.420, 13.440 Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 ............................................................ 9.650 Titan Group Pty Ltd v Steriline Manufacturing Pty Ltd (1990) 19 IPR 353 ............................... 15.300 Toddler Kindy Gymbaroo Pty Ltd v Gymboree Pty Ltd [2000] FCA 618 ................................... 13.530 Tolkien Estate Ltd v Saltalamacchia [2016] FCA 944 .................................................................... 6.90 Tolmark Homes v Paul (1999) 46 IPR 321 ................................................................................. 4.320 Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Ltd (2003) 59 IPR 318; [2003] FCA 901 ............................................................................................................................. 13.520 Townsend Controls Pty Ltd v Gilead (1989) 16 IPR 469 ............................................... 9.870, 11.420 Trade Mark “Holly Hobbie”, Re (1984) 1 IPR 486 .......................................................... 13.80, 13.90 Trade Mark “Orlwoola”, Re (1909) 26 RPC 850 ...................................................................... 13.510 Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83 ................................................. 11.490 Transport Tyre Sales Pty Ltd v Montana Tyres Rims & Tubes Pty Ltd (1999) 43 IPR 481 ........... 13.710 Tropical Export Nursery v Shade Span Industry [1994] APO 62 ............................................... 10.280 Tullybelton [1979] AC 731 ..................................................................................................... 12.210 Turkovic v Triple Three Leisure Ltd (1993) 27 IPR 430 ............................................................... 13.80 Turner v General Motors (Australia) Pty Ltd [1929] HCA 22; 42 CLR 352 ................... 12.210, 12.440 Turner v Winter (1787) 1 Web PC 82; 99 ER 1274 .................................................................... 9.840 Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 66 FCR 451 ........................................................................................................................... 12.80, 12.90 Tye-Sil Corp Ltd v Diversified Products Corp (1991) 20 IPR 574 .............................................. 10.240

U U And I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 32 IPR 494 .......... 11.420 US v Bottone 365 F 2d 389 (2nd Circuit 1966) ....................................................................... 15.220 US Surgical Corp v Hospital Products International Pty Ltd [1982] 2 NSWLR 761 ....... 12.110, 15.300 Unilin Beheer v Berry Floor [2004] EWCA (Civ) 1021; [2005] FSR 6 ......................................... 10.350 United Wire Ltd v Screen Repair Services (Scotland) Ltd [2000] 4 All ER 353 ........................... 11.110 Universal Music Australia Pty Ltd v Cooper (2005) 65 IPR 409 ................... 7.10, 7.150, 7.180, 7.190 Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 65 IPR 289 ..... 7.10, 7.150, 7.200, 7.210, 7.220, 7.230, 7.240 University of British Colombia v Conor Medsystems Inc (2006) 155 FCR 391; 70 IPR 248 ....... 11.460 xxix

Intellectual Property: Commentary and Materials

University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 ....... 4.60, 4.70, 4.170 University of New South Wales v Moorhouse (1975) 133 CLR 1; (1975) 6 ALR 193 ...... 6.180, 6.260, 6.270, 11.170 University of Sydney v University of Wollongong (2016) 118 IPR 592; [2016] ATMO 17 ........ 13.290, 13.350 University of Western Australia v Gray (2008) 246 ALR 603; 76 IPR 222 .................................. 11.450 University of Western Australia v Gray (2009) 179 FCR 346; 82 IPR 206 .................................. 11.450 University of Western Australia v Gray [2009] FCAFC 116 .................................. 5.160, 5.170, 15.220 Urban Ventures Pty Ltd v Solitaire Homes Pty Ltd (2010) 90 IPR 289 ........................................ 6.580

V Vacuum Cleaner Parts Dyson Ltd v Quiltex (UK) Ltd (2005) 65 IPR 188 .................................. 14.230 Valensi v British Radio Corporation [1973] RPC 337 .................................................................. 10.70 Van Duzer’s case (1887) 34 Ch D 623 .................................................................................... 13.340 Vax Appliances Ltd v Hoover plc [1991] FSR 307 .................................................................... 10.320 Vehicle Monitoring Systems Pty Ltd v Sarb Management Group Pty Ltd (No 2) (2013) 101 IPR 496 ................................................................................................................................ 9.760 Venables and Anor v News Group Newspapers Ltd and Ors [2001] 1 All ER 908 ............ 15.10, 15.80 Verrocchi v Direct Chemist Outlet Pty Ltd [2015] FCA 234 ...................................................... 13.290 Vickers, Sons Ltd v Siddell (1890) 15 AC 496 ............................................................................ 9.690 Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 ............. 1.10, 4.60, 4.170, 15.170 Vidal Dyes Syndicate Ltd v Levenstein Ltd (1912) 29 RPC 245 ................................................ 10.140 Virginia-Carolina Chemical Corp’s Application, Re [1958] RPC 35 ............................................... 9.40 Vokes v Heather (1945) 62 RPC 135 ....................................................................................... 15.190 Vokes Ltd v Heather (1945) 62 RPC 135 ................................................................................. 15.370

W W v Egdell [1990] 2 WLR 471 ................................................................................................. 15.450 W D & H O Wills (Australia) Ltd v Rothmans Ltd (1956) 94 CLR 182; [1956] HCA 15 ............. 13.760 W R Grace & Co v Asahi Kasei Kogyo Kabushiki Kaisha (1993) 25 IPR 481 ................................ 9.680 WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274 ...................................... 7.270 WEA Records Pty Ltd v Stereo FM Pty Ltd (1983) 1 IPR 6 ............................................................ 5.80 WM Wrigley Jr Co v Cadbury Schweppes Pty Ltd (2006) 66 IPR 298 .............................. 9.860, 9.870 Wainwright v Home Office [2003] 4 All ER 969 ......................................................................... 15.10 Wake and Commissioner of Patents, Re [2014] AATA 43 .......................................................... 11.450 Walker v Alemite Corp (1933) 49 CLR 643 ............................ 10.240, 11.30, 11.110, 11.200, 11.220 Walter v Lane [1900] AC 539 ............................................................................................. 4.40, 5.80 Ward Group Pty Ltd v Brodie & Stone Plc (2005) 143 FCR 479 ..................... 12.220, 12.410, 13.630 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 ................................................ 12.110 Warman International v Envirotech Australia Pty Ltd (1986) 6 IPR 578 ............ 14.240, 14.250, 15.60 Warner (George) Laboratories Pty Ltd v Chemspray Pty Ltd (1967) 41 ALJR 75 ......................... 9.500 Washex Machinery Corporation v Roy Burton & Co Pty Ltd (1974) 49 ALJR 12 ............. 9.700, 9.850, 9.860 Waterford Glass Group Ltd, Re (1987) 9 IPR 339 .................................................................... 13.320 Waterlow Publishers Ltd v Rose (1990) 17 IPR 493 .................................................................... 6.110 Weir Pumps Ltd & CML Pumps Ltd v Central Electricity Generating Board (1983) 2 IPR 129 ..... 14.70 Weitmann v Katies Ltd (1977) 29 FLR 336 .............................................................................. 12.160 Weitmann v Katies Ltd [1977] ATPR 40,041 ............................................................................ 12.130 Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 ................................ 9.350, 10.240, 10.330 Welch Perrin Pty Ltd v Worrel (1961) 106 CLR 588 ................................................................... 11.30 Welch Perrin and Co Pty Ltd v Worrell (1961) 106 CLR 588 ...................................................... 9.860 Welcome Real-Time SA v Catuity Inc (2001) 113 FCR 110; 51 IPR 327; [2001] FCA 445 ........... 9.420, 9.430, 11.290, 11.300, 11.310 Weld-Blundell v Stephens [1919] 1 KB 520 ............................................................................. 15.420 Weld-Blundell v Stephens [1920] AC 956 ................................................................................ 15.420 Wellcome Foundation (1981) 148 CLR 262 .............................................................................. 9.700 xxx

Table of Cases

Wellcome Foundation Limited, The v VR Laboratories (Aust) Proprietary Ltd (1981) 148 CLR 262 ...................................................................................................................................... 9.730 Wellcome Foundation Ltd v Commissioner of Patents (1980) 145 CLR 520; 1A IPR 261 ........... 9.360, 9.370 Wellness Pty Ltd v Pro Bio Living Waters Pty Ltd and Others (2004) 61 IPR 242 ...................... 13.680 Wessex Dairies Ltd v Smith [1935] 2 KB 80; [1935] All ER Rep 75 .............................. 15.190, 15.370 Western Australia v Ward (2000) 99 FCR 316 ............................................................................ 17.50 Western Australia v Ward (2002) 213 CLR 1; [2002] HCA 28 ................................................... 17.310 Wheatley v Bell [1982] 2 NSWLR 544 ..................................................................................... 15.260 Wilderman v FW Berk [1924] Ch 116 ...................................................................................... 11.160 William L Dawson v Hinshaw Music Inc (1990) 18 IPR 256 ....................................................... 6.140 Willow Lea Pastoral Co Pty Ltd, Re (1990) 20 IPR 180 ............................................................. 13.320 Wilson v Anderson (2002) 213 CLR 401 .................................................................................... 7.110 Wilson v Broadcasting Corp of New Zealand (1988) 12 IPR 173 ............................................... 15.70 Wilson v Weiss Art Pty Ltd (1995) 31 IPR 423 ................................................................. 5.260, 5.280 Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (1996) 34 IPR 367 .................... 9.870 Windsurfing International Inc v Petit [1984] 2 NSWLR 196; (1984) 73 FLR 224; 3 IPR 449 ...... 11.220 Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 ................................................... 13.770 Wineworths Group Ltd v Comite Interprofessionel Du Vin De Champagne (1991) 23 IPR 435 ...................................................................................................................................... 12.10 Wingate Marketing Pty Ltd v Levi Strauss Pty Ltd (1994) 16 ATPR 41-303; (1994) 49 FCR 89 .... 13.520, 13.640, 13.700, 13.760 Winner v Ammar Holdings Pty Ltd (1993) 25 IPR 273 ............................................................... 9.690 Wolanski’s Registered Design, Re (1953) 88 CLR 278 ............................... 14.10, 14.30, 14.40, 14.70 Wolf Mountain Coal Ltd Partnership v Netherlands Pacific Mining Co Inc (1988) 31 BCLR (2d) 16 .............................................................................................................................. 15.450 Wolverine World Wide, Inc v Khodar Ali Ahmed [2008] ATMO 93 ............................................ 13.500 Wombles Ltd v Womble Skips [1977] RPC 99 .......................................................................... 12.370 Woo-Suk Hwang’s Application [2004] AIPC 92-031 ................................................................... 9.110 Woodbridge Foam Corporation v AFCO Automotive Foam Components Pty Ltd (2002) 58 IPR 56 ................................................................................................................................ 11.260 Woodhouse UK Plc v Architectural Lighting Systems [2006] RPC 1 .......................................... 14.150 Woodward v Hutchins [1977] 1 WLR 760; [1977] 2 All ER 751 ............................................... 15.420 Woollen Mills; Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 ...... 13.520 Woolly Bull Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166 .............................................. 13.760 Woolworths Ltd v BP plc (2006) 150 FCR 134 ........................................................................ 13.470 Woolworths Ltd v BP plc [2006] FCAFC 132 ........................................................................... 13.470 Woolworths Ltd v Olson (2004) 63 IPR 258 .............................................................................. 15.40 World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 ......................................................... 12.140 Worsley & Co v Cooper [1939] 1 All ER 290 ........................................................................... 15.240 Worthington Pumping Engine Co v Moore (1902) 20 RPC 41 ................................................ 11.440 Wright v Gasweld Pty Ltd (1990) 20 IPR 481 .......................................................................... 15.180

Y Yalding Manufacturing Co’s Application, Re (1916) 33 RPC 285 ............................................. Yanx case (1951) 82 CLR 199 ................................................................................................. Yates Circuit Foil Co v Electrofoils Ltd [1976] FSR 345 ............................................................. Yorkshire Copper Works case (1954) 71 RPC 150 ....................................................................

13.390 13.180 15.140 13.310

Z Zeccola v Universal City Studios Inc (Jaws Case) (1982) 67 FLR 225; (1982) 46 ALR 189 .......... 3.100, 4.190, 4.200, 4.420, 6.40, 6.110 Zippo Manufacturing Company v Zippo Dot Com Inc 952 F Supp 1119 ................................ 13.630

xxxi

TABLE OF STATUTES s 51(xviii): 1.80, 2.120, 8.100 s 51(xxix): 2.120 s 51(xxxi): 2.220 s 51(v): 2.120 s 51(viii): 13.10 s 53: 13.600 s 116: 17.310

COMMONWEALTH Acts Interpretation Act 1901: 9.460 s 2B: 9.480, 9.500 s 13: 13.260 Acts Interpretation Amendment Act 2011: 13.260

Competition and Consumer Act 2010: 1.100, 5.290, 5.450, 11.500, 12.10, 13.10, 15.10 s 2: 2.120 Pt IV: 11.490, 11.500 Sch 2: 5.290, 11.230, 12.90, 13.650, 13.790

Australian Consumer Law: 5.290, 12.10, 13.10, 13.680 s 18: 2.120, 11.230, 12.10, 12.90, 12.150, 12.170, 12.420, 15.60 s 29: 12.420, 13.790 Sch 2: 15.10

Copyright Act 1905: 2.120 s 4: 4.190

Australian Grape and Wine Authority Act 2013: 12.10, 13.320 s 40C: 12.10 s 40F: 12.10 Pt VIB: 13.320

Copyright Act 1911: 3.110 Copyright Act 1912: 2.120, 3.60, 4.10 s 7: 3.60 s 8: 3.60

Australian Grape and Wine Authority Regulations 1981 Sch 1: 12.10 Sch 2: 12.10 Australian Wine and Brandy Corporation Amendment Act 2010: 2.120 US Free Trade Agreement Implementation Act 2004: 2.120, 2.140, 4.10, 5.40, 5.10, 6.320, 7.60, 7.120, 7.190, 8.130, 9.820 s 116AF: 7.190 s 116AG(1): 7.190 s 116AH: 7.190 s 248(1): 5.10 s 248CA(1): 5.10 s 248CA(3): 5.10 Sch 8, item 5: 8.360 Broadcasting Services Act 1992: 4.30, 6.220 Business Names Registration Act 2011: 13.10 s 28: 13.10 Circuit Layouts Act 1989: 2.120, 4.510, 4.520, 14.160, 14.230, 14.320, 14.420 s 5: 14.330, 14.340, 14.360 s 8: 14.380 s 11: 14.390 s 17: 14.350 Circuit Layouts Regulations 1990 reg 3: 14.340 Commonwealth of Australia Constitution Act: 1.80, 13.600 s 50: 13.600

Copyright Act 1968: 2.120, 2.220, 3.10, 3.40, 3.50, 3.160, 3.180, 3.200, 4.10, 4.20, 4.30, 4.40, 4.60, 4.110, 4.140, 4.170, 4.190, 4.220, 4.240, 4.250, 4.380, 4.410, 4.490, 4.510, 4.520, 4.530, 5.10, 5.20, 5.30, 5.40, 5.80, 5.130, 5.140, 5.240, 5.250, 5.320, 5.370, 5.430, 5.460, 6.260, 6.340, 6.390, 6.450, 6.460, 6.465, 6.620, 7.20, 7.60, 7.70, 7.80, 7.120, 7.140, 7.145, 7.300, 7.320, 7.330, 14.70, 14.230, 14.250, 14.270, 14.310, 14.420, 15.30, 15.340, 17.20, 17.30, 17.40, 17.50, 17.80, 17.110, 17.160 s 8: 3.20, 17.110 s 8A(1): 5.240 s 10: 3.120, 4.470, 4.510, 7.80, 14.230 s 10(1): 3.70, 4.170, 4.190, 4.240, 4.300, 4.320, 4.330, 4.340, 4.350, 4.380, 4.410, 4.420, 4.440, 5.80, 5.90, 5.320, 6.330, 7.80, 7.100, 7.110, 7.140, 7.320 s 10(1)(a): 4.240 s 10(1)(b): 4.240 s 10(3)(c): 6.210 s 10(3)(n): 5.240 s 13: 3.70 s 13(2): 6.10 s 14: 6.70, 7.40 s 14(1): 6.50 s 17: 17.50 s 18: 17.50 s 21: 17.50 s 21(3): 14.230 s 22: 5.80 s 22(1): 4.40

xxxiii

Intellectual Property: Commentary and Materials

Copyright Act 1968 — cont s 22(2): 4.170 s 22(3): 4.40, 4.410 ss 22(3) to (6): 4.40 s 22(4): 5.50 s 22(6): 7.290 s 22(7)(f): 17.40 s 24: 7.320 s 25(4): 7.40 s 27: 6.160 ss 27(1) to (3): 17.210 s 28: 6.160 s 29(1)(e): 4.460 s 31: 3.70, 5.10, 6.150, 7.110 s 31(1): 3.10, 6.120, 6.150 s 31(1)(a): 5.10 s 31(1)(a)(i): 3.70 s 31(1)(a)(vi): 4.380, 4.470 s 31(1)(a)(iii): 6.160 s 31(1)(b): 5.10 s 32: 4.30, 4.120, 4.380 s 32(1): 4.30, 4.60 s 32(2): 4.30 s 32(3): 4.30 s 33(2): 4.500 s 33(3): 4.500 s 33(5): 4.500 s 34(1): 4.500 s 35(2): 5.80 s 35(4): 5.160 s 35(4)(c): 5.140 s 35(4)(d): 5.140 s 35(5): 3.70, 5.130 s 35(6): 3.70, 5.110, 5.160, 5.190, 5.240 s 35(7): 5.130 s 36: 3.70, 6.100 s 36(1): 6.10, 6.20, 6.100 s 36(1A): 6.20, 6.260 ss 36 to 39A: 6.10 s 37: 5.430, 6.10, 6.100, 6.150, 6.180, 6.250 s 37(1): 5.450 ss 37 to 39: 6.20 s 38: 6.10, 6.100, 6.150, 6.250 s 39: 6.20, 6.160 s 39(1): 6.10 s 39A: 6.260 s 39B: 6.320, 7.190 s 40: 5.370, 6.350 s 40(2): 6.330, 6.350 ss 40(3) to (7): 6.360 s 40(5): 6.350 ss 40 to 43: 6.340 s 41: 6.370, 17.50 s 41A: 6.390 ss 41 to 42: 6.330 s 42: 17.50 s 42(1)(b): 6.70 s 42(2): 6.70 s 43: 6.440, 17.50 s 43(1): 3.70 xxxiv

s 43B: 4.40 s 43C: 6.450, 6.460 s 44A: 6.250 s 46: 6.460 s 47A: 6.460 s 47D: 6.460 s 47E: 6.460 s 47F: 6.460 s 47J: 6.450 s 47AA: 6.460 ss 47AB to 47H: 4.380 ss 54 to 64: 5.300 s 65: 6.460 s 66: 4.350, 6.460 s 67: 6.460 s 70: 6.460 s 72: 5.290, 6.460 s 73: 6.460 s 74: 4.530, 14.280 s 74(1): 4.530 ss 74 to 77: 14.270, 14.310 ss 74 to 77A: 4.530 s 75: 4.530, 14.290, 14.310 s 76: 14.290 s 77: 4.530, 6.250, 14.250, 14.300, 14.305, 14.310 s 77(3): 14.310 s 77(4): 4.530 s 80: 4.490 s 84: 17.40 s 85: 4.40, 4.410, 5.10 ss 85 to 88: 4.40, 5.10, 7.110 ss 85 to 89: 5.10 s 86: 4.190, 4.420, 5.10 s 86(c): 7.290 s 87: 4.440, 5.10, 7.40 s 87(a): 7.30, 7.40 s 87(c): 7.30, 7.40 s 88: 4.460, 5.10 ss 89(1) to (3): 4.30 s 90: 4.30, 4.420 s 91: 4.30, 4.440, 6.220, 7.40 s 92: 4.30, 4.460 s 93: 4.500 s 94(1): 4.500 s 94(2): 4.500 s 95: 4.500 s 96: 4.500 s 97(1): 5.80 s 97(2): 5.130 s 97(3): 5.130 ss 97 to 100: 5.80 s 98(1): 5.80 s 98(2): 5.130 s 98(3): 5.130 s 99: 5.80 s 100: 5.80 ss 100A to 104B: 6.10 s 101: 7.40, 7.210, 7.220, 7.250, 7.300, 11.170

Table of Statutes

s 132AC: 6.620 ss 132AC(1): 6.620 s 132AC(3): 6.620 s 132AD: 6.620 ss 132AD to 132AJ: 6.620 s 132AE: 6.620 s 132AF: 6.620 s 132AG: 6.620 s 132AH: 6.620 s 132AI: 6.620 s 132AJ: 6.620 s 132AK: 6.620 s 132AK(2): 6.620 s 132AL: 6.620 s 132AM: 6.620 s 132AN: 6.620 s 132AO: 6.620 s 132AQ: 6.620 ss 132AQ to 132AT: 6.280, 6.620 s 132AR: 6.620 s 132AS: 6.620 ss 132APA to 132APE: 6.620 s 132APC: 6.620 s 132APD: 6.620 s 132APE: 6.620 s 135P: 5.400 s 135ZZB: 5.400 s 176: 4.30 s 176(2): 5.240 ss 176 to 179: 5.240 ss 176 to 183F: 5.240 s 178: 4.30 s 180(1): 4.500 s 180(1)(a): 5.240 s 180(1)(b): 4.490 s 180(2): 4.500 s 180(3): 4.490, 4.500 ss 180 to 181: 5.240 s 181: 4.490, 4.500 s 183(5): 5.250 s 183A(2): 5.250 s 187: 4.30, 4.500 s 188: 4.30 s 188(1): 4.500 s 188(3): 4.500 s 189: 5.40, 5.50 s 190: 5.20 s 193: 5.20 s 195AN: 5.30 s 195AN(3): 5.20 ss 195AO to 195AXL: 6.10 s 195AR: 5.20 s 195AS: 5.20 s 195AW: 5.20 ss 195AW to 195AWA: 5.260 s 195ABD: 5.40 s 195AHB(1): 5.40 s 195AHC(1): 5.40 s 195ANA: 5.30 s 196: 3.50, 5.270

Copyright Act 1968 — cont s 101(1): 6.10, 6.20, 6.100, 7.200, 7.260, 7.270 s 101(1A): 7.190, 7.210, 7.270, 7.280, 7.290, 7.330 s 101(1A)(a): 7.190, 7.290 s 101(1A)(b): 7.290 s 101(1A)(c): 7.190, 7.290 ss 101 to 102: 6.20 ss 101 to 103: 6.210 s 102: 6.10, 6.250 s 103: 6.10, 6.100, 6.250, 7.180 s 103A: 6.370 ss 103A to 103C: 6.340 s 103C: 6.350 s 103C(2): 6.350 s 103AA: 6.390 s 104: 6.440 s 104A: 6.460 ss 104 to 104AL: 6.340 s 105: 6.460 s 106: 6.460 s 107: 6.460 s 108: 6.460 s 109: 6.460 s 109A: 6.450 s 110AA: 6.450 s 111: 6.270, 6.450, 7.140 s 112E: 6.320, 7.190, 7.250, 7.270, 7.290, 7.300 s 115: 5.320, 6.470 s 115(2): 6.480, 6.500, 6.550, 6.580, 6.590, 17.100 s 115(3): 6.480 s 115(4): 5.100, 6.550, 6.580, 11.430 s 115A: 6.470, 7.145, 7.330 s 116: 5.320, 6.480, 6.550 s 116A: 7.80, 7.100, 7.140 s 116A(1): 7.110 s 116A(3): 7.110 s 116A(4): 7.110 s 116A(8): 7.110 ss 116A to 116D: 6.10, 6.280, 7.80 s 116B: 7.80 s 116C: 7.80 s 116D: 7.80 ss 116AA to 116AI: 6.320 ss 116AA to 116AJ: 7.120 ss 116AG to 116AI: 7.260 ss 116AK to 116D: 7.140 ss 117 to 125: 5.300, 5.320 s 119: 6.470 s 119(a): 5.320 s 120(1): 6.470 s 120(2): 6.470 s 132: 7.110 s 132(5B): 7.110 s 132(6A): 7.110 ss 132 to 133A: 7.80 ss 132AC: 6.620 xxxv

Intellectual Property: Commentary and Materials

Copyright Act 1968 — cont s 196(1): 5.270 s 196(2): 5.260, 5.270, 11.460 s 196(2)(b): 5.260 s 196(2)(c): 5.260 s 196(3): 5.270 s 196(4): 5.300 s 197: 5.270 s 197(3): 5.300 s 198: 3.50 s 200AB: 6.460 s 202: 6.630 s 202(1): 6.630 s 202A: 6.630 s 210(1): 4.10 s 248A: 4.30 s 248A(1): 17.40 s 248A(1)(f): 5.40 ss 248G to 248J: 6.10 s 248CA(1): 4.500 s 248CA(3): 4.500 Pt V: 6.620 Pt V, Div 2A: 7.80, 7.110, 7.140 Pt V, Div 2AA: 6.320, 7.120, 7.190 Pt V Div 5: 6.620 Pt IV: 4.140, 4.160, 4.220, 4.400, 5.130, 5.260, 6.210, 6.240, 6.340, 6.460, 7.40 Pt IV, Div 2: 7.40 Pt IX: 5.20, 5.40, 5.50 Pt VI: 5.370 Pt III: 4.140, 4.150, 6.210, 6.340 Pt III, Div 5: 6.260 Pt XIA: 4.190 Copyright Amendment Act 1980: 2.120, 6.260 Copyright Amendment Act 1984: 4.380 Copyright Amendment Act 1989: 2.120, 5.370 Copyright Amendment Act 2006: 2.120, 4.10, 6.390, 6.450, 7.60, 7.140 Copyright Amendment Act (No 1) 1998: 2.120 Copyright Amendment Act (No 2) 1998: 2.120 Copyright Amendment (Computer Programs) Act 1999: 2.120, 4.10, 6.460 Copyright Amendment (Digital Agenda) Act 2000: 2.120, 4.10, 4.440, 6.10, 6.260, 6.280, 6.460, 7.40, 7.60, 7.70, 7.80, 7.100, 7.140 s 3: 7.70, 7.190 Copyright Amendment (Film Directors’ Rights) Act 2005: 2.120, 4.10 Copyright Amendment (Moral Rights) Act 2000: 2.120, 4.10, 5.10, 5.20 ss 193 to195AB: 5.20 s 195AC to AH: 5.20

s 195AI to AW: 5.20 Copyright Amendment (Online Infringement) Act 2015: 2.120, 4.10, 7.60, 7.145, 7.300, 7.330 Copyright Amendment (Parallel Importation) Act 2003: 4.10, 5.450 Copyright Amendment (Re-enactment) Act 1993: 2.120 Copyright (International Protection) Regulations 1969: 4.30 Copyright Legislation Amendment Act 2004: 2.120, 4.10 Copyright Regulations 1969: 4.530 reg 17: 4.530, 14.305 Copyright (World Trade Organization Amendments) Act 1994: 2.120 Corporations Act 2001 s 182: 15.340 s 183: 15.340, 15.390 Crimes Act 1914 s 4AA: 6.620 Criminal Code Ch 9A: 6.620 Design Act 2003: 14.70 Design Regulations 2004 reg 2.01: 14.110 reg 4.06(d): 17.50 Designs Act 1906: 1.110, 2.120, 12.120, 14.10, 14.40, 14.50, 14.90, 14.110, 14.290 s 4: 14.40 s 17: 14.40 s 17(1): 12.120 s 18: 14.70 s 20: 14.120 s 26(2): 14.40 s 28(a): 14.40 Designs Act 2003: 2.120, 2.220, 4.510, 4.530, 14.10, 14.70, 14.160, 14.200, 14.210, 14.230, 14.260, 14.270, 14.290, 14.310, 14.420, 17.40, 17.50 s 5: 14.20, 14.70, 14.200 s 6: 14.20 s 7: 14.50, 14.60 s 10: 14.180 s 13: 14.10, 14.160 s 15(1): 14.80 s 15(2): 14.100, 14.110 s 15(2)(c): 14.110 s 16(1): 14.80 s 16(2): 14.80 s 17: 14.110 s 18: 14.310 xxxvi

Table of Statutes

Major Sporting Events (Indicia and Images) Protection Act 2014: 12.10

Designs Act 2003 — cont s 19: 14.90, 14.120, 14.130, 14.190 s 19(4): 14.140 ss 20 to 61: 14.160 s 29: 14.160 s 43: 14.160, 14.420 s 43(1): 17.50 s 43(1)(a): 17.50 s 46: 14.70, 14.230 s 47: 14.70 s 60: 14.160 s 71: 14.170, 14.180 s 71(4): 14.190 s 72(1): 14.200 s 73(2): 14.210 s 75(1): 14.210 s 75(2): 14.210 s 75(3): 14.210 s 83: 14.210 s 83A: 14.210 s 84: 14.210

Olympic Insignia Protection Act 1987: 14.160 Patent Law Treaty 2000: 8.220 Patent Regulations 1991 Pt 2: 8.190 Sch 5: 8.190 Patents Act 1903: 2.120, 8.100, 8.110, 9.40, 9.150 Patents Act 1907 s 93: 9.40 Patents Act 1949 s 101: 9.40

Designs (Consequential Amendments) Act 2003: 14.270 Designs Regulations 2004: 14.220

Patents Act 1969: 8.120

Environment Protection and Biodiversity Protection Act 1999: 17.200

Patents Act 1977 s 5: 10.350 s 5(2)(a): 10.350

Evidence Act 1995 s 79: 12.250 s 135: 12.270 Federal Trade Commission Act 1914: 12.140 Freedom of Information Act 1982 s 43: 15.200 s 45: 15.200 Income Tax Assessment Act 1936: 15.350 Income Tax Assessment Act 1997 s 373-10(1): 5.120 Intellectual Property Laws Amendment Act 1998: 8.340 Intellectual Property Laws Amendment Act 2006: 2.120, 4.10, 11.290, 11.310, 11.350, 11.430, 11.500 Intellectual Property Laws Amendment Act 2015: 2.120, 4.10 Intellectual Property Laws Amendment (Raising the Bar) Act 2012: 2.120, 4.10, 8.40, 8.130, 8.240, 8.270, 9.640, 9.820, 10.10, 10.40, 10.160, 10.300, 10.340, 11.330, 11.350, 13.240, 13.260 s 9: 9.800 s 40: 10.90 s 102: 10.160

Patents Act 1952: 2.120, 8.120, 9.40, 9.490, 9.500, 9.510, 9.530, 9.700, 11.490 s 6: 9.60 s 40: 10.150 s 40(1)(a): 10.150 ss 40(3) to (7): 10.130 s 100(d): 9.150 s 100(e): 9.150 s 112: 11.490

Patents Act 1990: 2.120, 2.220, 8.10, 8.40, 8.130, 8.150, 8.160, 8.170, 8.190, 8.200, 8.230, 9.40, 9.90, 9.220, 9.380, 9.530, 9.590, 9.640, 10.160, 10.340, 11.10, 11.170, 11.230, 11.290, 11.330, 11.350, 11.470, 14.10, 16.10, 16.220, 17.40, 17.190 s (1A)(a): 8.10 s 1: 9.470 s 40(2(a): 10.40 s 5(2)(a): 10.110 s 6: 8.250, 10.130 s 7: 9.650 s 7(1): 9.460, 9.470, 9.500 s 7(1)(a): 9.510 s 7(1)(b): 9.500, 9.520 s 7(2): 9.610, 9.620, 9.640, 9.650, 9.670, 9.690, 9.710, 9.720, 9.730, 9.740 s 7(3): 9.610, 9.620, 9.640, 9.650, 9.710, 9.730, 9.750 s 7(4): 9.630, 9.750 s 7(5): 9.750 s 7A: 9.820, 9.830 s 7A(3): 9.820 s 9: 9.780, 9.800, 9.810 s 9(a): 9.800 s 9(b): 9.800 s 13: 8.320, 11.10, 11.170, 11.200 s 13(1): 11.170

xxxvii

Intellectual Property: Commentary and Materials

Patents Act 1990 — cont s 14(1): 11.460 s 14(2): 11.460 s 15: 8.210, 11.440 s 16(1): 11.440 s 16(2): 11.440 s 17: 8.210, 11.440 s 18: 9.60, 9.140, 9.170 s 18(1): 8.200, 9.20, 9.30, 9.60, 9.120, 17.60 s 18(1)(a): 8.10, 9.320, 9.380, 9.400, 9.430 s 18(1)(b)(i): 9.450, 9.460 s 18(1)(b)(ii): 9.150, 9.450, 9.730 s 18(1)(c): 9.320 s 18(1)(d): 9.770 s 18(1A): 8.200, 9.20, 9.30 s 18(1A)(b)(i): 9.460 s 18(1A)(c): 9.320, 9.760 s 18(2): 9.20, 9.110, 9.210, 9.280, 9.290 s 18(3): 9.20, 9.210 s 18(4): 9.20 s 18(c): 9.820 s 20: 8.360 s 22A: 11.440 s 23: 9.590 s 24: 9.460 s 24(1): 9.590 s 24(1)(a): 9.590 s 24(1)(b): 9.590 s 25: 8.350 s 25(2): 10.80 s 27: 8.330 s 29: 8.240, 11.440 s 29(1): 8.210, 8.220 s 29(2): 8.220 s 29A: 8.230 s 29A(1): 8.230 s 29B: 8.230 s 29B(5): 8.200 s 30: 8.220 s 31: 8.210 s 32: 8.210, 11.440 s 33: 8.210 ss 33 to 36: 11.440 s 34: 8.210 s 35: 8.210 s 36: 8.210 s 40: 8.240, 8.270, 9.230, 9.540, 9.850, 10.10, 10.40, 10.50, 10.100, 10.230, 10.280, 10.290 s 40(1): 10.30, 10.40 s 40(2): 8.310, 8.360, 10.30, 10.120, 10.140, 10.180, 11.260 s 40(2)(a): 8.250, 10.40, 10.80, 10.100, 10.110, 10.130, 10.140, 10.150, 10.300, 10.340, 10.360 s 40(2)(b): 10.170, 10.190 s 40(2)(c): 10.170, 10.190 s 40(3): 8.310, 8.360, 10.170, 10.180, 10.190, 10.210, 10.220, 10.230, xxxviii

10.270, 10.280, 10.300, 10.310, 10.320, 10.330, 10.340, 11.260, 15.30 s 40(4): 10.170 s 40(5): 15.30 s 41: 8.250, 9.230, 10.130 s 42: 8.250, 9.230, 10.130 s 42(2A): 8.200 s 43: 8.200, 9.540 s 43(2): 8.200 s 44(2): 8.260 s 45: 8.260 s 45(1)(b): 9.490, 9.630 s 49: 8.260 s 50: 8.260, 9.30 s 50(1)(a): 9.90, 9.100, 9.110, 9.300 s 50(1)(b): 9.380 s 54: 8.290 s 54(3): 8.290 s 55: 8.290 s 56: 8.290 s 57: 11.10 s 57(1): 8.290 s 57(3): 8.290 s 59: 8.310 s 59(a): 11.440 s 59(b): 9.30, 9.490, 9.630 s 60: 8.310 s 61: 8.320 s 62: 8.290, 8.320 s 62(2): 8.290 s 65: 8.340 s 67: 8.340 s 68: 8.340 s 70: 8.340, 9.320 ss 70 to 79A: 8.340, 11.350 s 72(1)(c): 10.110 s 78(a): 11.350 s 78(b): 11.350 s 80: 8.350 s 81: 8.350 s 81(2): 8.350 s 81(3): 8.350 s 81(4): 8.350 s 83(1): 8.350 s 85: 8.350 s 97: 9.490, 9.630 s 98(b): 9.490, 9.630 s 100(1): 9.850 s 100(1)(g): 9.510 s 101A: 8.300, 9.490 s 101B: 8.300, 9.750 s 101B(2)(b): 9.30, 9.490 ss 101B(2)(d) to (g): 9.30 s 101B(2)(e): 9.380 s 101G: 9.490 s 101G(3)(b): 9.490 s 101M: 8.310, 9.750 s 101M(c): 9.490 s 102: 8.370 s 102(1): 8.370

Table of Statutes

Patents Act 1990 — cont s 102(2): 8.370 s 102(2A): 8.370 s 102(2B): 8.370 s 102(3): 8.370 s 104: 8.370 s 105: 8.370 s 106: 8.370 s 107: 8.370 s 116: 10.240 s 117: 9.290, 11.180, 11.190, 11.200, 11.220 s 117(1): 11.200 s 117(2): 11.200 s 117(2)(a): 11.200 s 117(2)(b): 11.200, 11.210 s 117(2)(c): 11.200 s 118: 11.380 ss 118 to 119C: 11.10 s 119: 11.290, 11.300, 11.310 s 119(1): 11.280, 11.300, 11.310 s 119(1)(b): 11.300 s 119(2): 11.280 s 119(3): 9.590, 11.310 s 119(4): 11.310 s 119A: 9.320 s 119A(1)(a): 11.350 s 119A(1)(b): 11.350 s 119A(2): 11.350 s 119B: 11.350 s 119C: 11.320, 11.330 s 120: 8.300 s 120(1): 11.10 s 120(1A): 11.10 s 120(2): 11.10 s 120(3): 11.10 s 120(4): 11.10 s 121: 8.360, 11.10 s 121A: 11.250 s 122: 11.430 s 123: 11.10, 11.260 s 123(1): 11.390 s 123(2): 11.390 s 123(3): 11.390 s 128: 11.400, 11.410 s 129: 11.400 s 129A: 11.400 s 130: 11.400 s 130(7): 10.350 s 131: 11.400 s 132: 11.400 s 133: 9.320, 11.490 s 133(1): 11.500 s 133(2): 11.500 s 134: 8.360 s 135: 11.500 s 137: 8.360 s 138: 8.300, 8.360, 9.380, 9.750 s 138(3): 11.10 s 138(3)(a): 11.440 s 138(3)(b): 9.30, 9.490, 9.630, 9.820

s 141: 8.220 s 142: 8.260 s 142(2)(e): 8.260 s 143: 11.360 s 144: 11.490 s 144(1): 11.490 s 144(1A): 11.490 s 144(4): 11.490 s 152: 8.290 s 152(1): 8.320 s 163: 11.370 s 165: 11.370 s 173: 8.290 s 173(3): 8.320 ss 187 to 189: 11.470 s 196: 11.460, 11.470 s 200(3): 8.190 s 223(1): 11.360 s 223(2): 11.360 s 223(2A): 11.360 s 223(7): 11.360 s 223(9): 11.360 s 223(10): 11.360 Ch 7: 9.450 Ch 12: 11.500 Ch 15: 8.290 Sch 1: 8.10, 8.170, 8.200, 8.210, 8.280, 9.30, 9.120, 9.460, 9.470, 9.610, 9.620, 9.740, 11.10, 11.140, 11.200, 11.210, 11.410, 11.480 Patents Amendment Act 1978: 8.120 Patents Amendment Act 1979: 8.120 Patents Amendment Act 2001: 2.120, 8.130, 9.490, 9.640 Patents Amendment (Innovation Patents) Act 2000: 2.120, 8.130, 8.180, 9.750 s 198: 8.190 s 200: 8.190 ss 201 to 204: 8.190 Patents Regulations 1991: 8.130, 8.160 reg 4.2(3: 8.290 reg 1.4: 8.200 reg 1.5: 10.130 reg 2.2D: 9.590 regs 2.2 to 2.2C: 9.590 reg 3.1: 8.220 reg 3.1A: 8.210 reg 3.2B: 8.280 reg 3.5: 8.220 reg 3.5A: 8.220 reg 3.12: 9.540 reg 3.15: 8.260 reg 3.16: 8.260 reg 3.16(2): 8.260 reg 4.2: 8.290 reg 4.3: 8.290 reg 5.4: 8.310

xxxix

Intellectual Property: Commentary and Materials

s 43(1)(a): 16.190 s 43(1)(b): 16.190 s 43(1)(e): 16.190 ss 43(1) to (6): 16.60 s 43(2): 16.190 s 43(5): 16.190 s 43(6): 16.190 s 43(8): 16.70 s 44: 16.120, 16.130 s 44(1): 16.140 s 44(2): 16.150 s 45: 16.160 s 53: 16.160 s 54(2)(a): 16.190 s 55: 16.160 s 56: 16.200 s 56(3): 16.200 s 57(1): 16.200 s 57(2): 16.200 s 58: 16.10 s 61: 16.80 s 72: 16.70

Patents Regulations 1991 — cont regs 5.4 to 5.9: 8.310 reg 5.6: 8.310 reg 5.8: 8.310 reg 6.2: 8.320 reg 10.2A: 8.370 reg 10.2B: 8.370 reg 10.2C: 8.370 reg 10.3: 8.370 reg 10.5(2): 8.370 reg 13.4: 8.260 reg 19.1: 11.460 reg 22.21: 11.360 Ch 5: 8.310 Ch 10: 8.370 Pt 2: 10.130 Div 2: 8.200 Sch 3: 8.220 Patents (World Trade Organization Amendments) Act 1994: 8.130 Patents, Designs & Trade Marks Act 1883 s 46: 9.40

Plant Breeder’s Rights Amendment Act 2002: 2.120

Plant Breeder’s Rights Act 1994: 2.120, 9.220, 15.30, 16.10, 16.40, 16.70, 16.80, 16.180, 16.200, 16.220 s 3: 16.20, 16.30, 16.40, 16.220 s 3(1): 16.190 s 4: 16.20 s 5: 16.30 s 5(1): 16.190 s 6: 16.220 s 11: 16.20, 16.160, 16.170 s 12: 16.20 s 13: 16.20 s 14: 16.20 s 15: 16.20 s 16: 16.170 s 17: 16.170 s 18: 16.170 s 19(1): 16.20 s 22: 16.70 s 24: 16.70 s 24(1): 16.190 s 24(3): 16.70 s 24(4): 16.70 s 25: 16.190 s 26: 16.70, 16.80, 16.100, 16.120 s 26(2): 16.80, 16.90, 16.190 s 30: 16.100 s 34: 16.100, 16.120 s 34(1): 16.100 s 34(2): 16.100 s 34(4): 16.100, 16.110 s 35: 16.120 s 37: 16.120 s 39: 16.120 s 43: 16.40, 16.50, 16.70 s 43(1): 16.190

Plant Variety Rights Act 1987: 2.120, 16.10 Privacy Act 1988: 15.210 Prohibition of Human Cloning Act 2002: 9.110, 9.300 s 20: 9.110 Public Interest Disclosure Act 2013: 15.350 Racial Discrimination Act 1975 s 18C: 13.500 Registered Designs Act 1949: 14.250 Resale Royalty Right for Visual Artists Act 2009: 2.120, 5.410, 5.460, 17.40 ss 6 to 11: 5.470 s 11: 5.460 Div 5: 5.410, 5.420 Research Involving Human Embryos Act 2002: 9.300 Restrictive Trade Practices Act 1956: 15.420 Sydney 2000 Games (Indicia and Images) Protection Act 1996: 12.10 Taxation Administration Act 1953 Pt IVC: 3.90, 5.120 Telecommunications Act 1997 s 87: 6.320 Therapeutic Goods Act 1989: 9.320 Tobacco Plain Packaging Act 2011: 2.120, 2.210, 2.220, 13.10 xl

Table of Statutes

Pt IX: 13.550

Trade Mark Regulations 1995 reg 4.15: 13.10 reg 8.2: 13.740 Sch 2: 13.10

Trade Marks Act 1995: 2.120, 2.220, 12.10, 12.220, 13.10, 13.20, 13.190, 13.240, 13.260, 13.320, 13.330, 13.440, 13.480, 13.640, 13.670, 13.720, 17.40, 17.50, 17.280 s 44(3(b): 13.770 s 6: 13.20, 13.120, 13.270, 13.280, 13.620, 13.750 s 6(1): 13.130 s 7: 13.60 s 7(1): 13.60 s 7(3): 13.270, 13.280 s 7(4): 13.760 s 8: 13.60, 13.70, 13.270, 13.280 s 8(3): 13.60 s 8(4): 13.60 s 8(5): 13.60 s 9(1): 13.380 s 10: 13.480, 13.520, 13.590, 13.640 s 14: 13.165 s 17: 13.20, 13.130, 13.330, 13.590, 13.640, 13.760 s 18: 13.10 s 18(1): 13.680 s 19: 13.120 s 20: 13.590 s 21: 13.10 s 22: 13.70 s 23: 13.760 s 24: 13.400, 13.480, 13.740 s 25: 13.740 s 25(1): 13.310 s 26: 13.70, 13.310 s 26(1): 13.70, 13.310 s 26(1)(a): 13.70 s 26(2): 13.310 s 27: 13.180, 13.240 s 27(1): 13.170 s 28: 13.170 s 29: 13.250 s 31: 13.240 s 32: 13.70, 13.180 s 33: 13.240, 13.260, 13.440 s 33(4): 13.240 s 34: 13.240 s 35: 13.240 s 38: 13.740 s 39: 13.240, 13.480, 13.600 s 39(2): 13.10 s 40: 13.240, 13.480 s 41: 13.110, 13.140, 13.240, 13.260, 13.290, 13.300, 13.350, 13.400, 13.440, 13.480 s 41(1): 13.260, 13.280 s 41(2): 13.260, 13.470 s 41(3): 13.260, 13.270, 13.300, 13.470 s 41(4): 13.260, 13.270, 13.290 s 41(5): 13.260, 13.270, 13.300, 13.470

Trade Marks Act 1905: 2.120, 13.140 s 16: 13.110 s 16(1)(c): 13.390 s 16(1)(d): 13.430 s 16(2): 13.420 s 20: 13.110 s 21: 13.110 s 25: 13.490 s 28: 13.550 s 114: 13.500 Pt VII: 13.10 Trade Marks Act 1938: 13.70 Trade Marks Act 1948: 13.550 Trade Marks Act 1955: 13.120, 13.130, 13.140, 13.210, 13.310, 13.320, 13.360, 13.390, 13.540, 13.640, 13.710 s 4: 13.530 s 6(1): 13.210 s 6(3): 13.520 s 9(1)(a): 13.380 s 9(1)(e): 13.380 s 14: 13.140 s 22(1)(b): 13.550 s 23: 13.760 s 24: 13.110, 13.550 s 24(1)(c): 13.550 s 24(d): 13.110 ss 24 to 39: 13.550 s 25: 13.550 s 26(2)(a): 13.420 s 28: 13.480, 13.500, 13.520, 13.530, 13.540, 13.550, 13.560, 17.270 s 28(a): 13.540, 13.550, 13.560 s 28(b): 13.560 s 28(c): 13.560 s 28(d): 13.560 s 33: 13.480 s 34: 13.530, 13.550 s 34(1): 13.530 s 40(1): 13.210 s 41: 13.420 s 58(1): 13.640 s 61: 13.540 s 62(1): 13.640 s 62A: 13.80 ss 73 to 81: 13.550 s 74(4): 13.80 s 82: 13.550 s 88(1)(a): 13.420 Pt 4: 13.530 Pt 4, Div 2: 13.530 Pt 5: 13.530 Pt IV: 13.550 Pt X: 13.550 xli

Intellectual Property: Commentary and Materials

ss 85 to 88: 13.740 ss 85 to 89: 13.740 s 86: 13.740 ss 86 to 88: 13.740 s 87: 13.740 s 87(c): 13.740 s 88: 13.740 s 88(1): 13.740 s 88(2): 13.740 s 88(2)(a): 13.500, 13.560, 13.740 s 88(2)(b): 13.740 s 88(2)(c): 13.540, 13.740 s 88(2)(e): 13.740 s 88A: 13.740 s 89: 13.540, 13.560, 13.740 s 89(1): 13.530, 13.740 s 89(2)(a): 13.740 s 89(2)(b): 13.740 s 92: 13.740, 13.750 s 92(1): 13.750 s 92(3): 13.750 s 92(4): 13.750 s 92(4)(b): 13.760 s 92(4)(b)(ii): 13.760 ss 92 to 105: 13.750 s 94(1)(b)(ii): 13.770 s 100(1)(c): 13.760 s 100(2): 13.770 s 100(3)(a): 13.760 s 100(3)(c): 13.770 s 101(1): 13.750 s 101(2): 13.770 s 101(3): 13.750 s 102: 13.750, 13.770 s 106(1): 13.200 s 114: 13.490 s 120: 13.440, 13.480, 13.590, 13.640 s 120(1): 13.590, 13.650, 13.670 s 120(2): 13.590, 13.640, 13.670 s 120(3): 13.590, 13.640, 13.670 s 120(3)(b): 13.640 s 120(3)(c): 13.640 s 120(4): 13.590 s 122: 13.610 s 122(1): 13.650, 13.680 s 122(1)(a): 13.670, 13.680 s 122(1)(a)(i): 13.650, 13.680 s 122(1)(b): 13.670 s 122(1)(b)(i): 13.650 s 122(1)(c): 13.670 s 122(1)(d): 13.670 s 122(1)(e): 13.670 s 122(1)(f): 13.670 s 122(1)(g): 13.670 s 122(1)(fa): 13.670 s 122(2): 13.670 ss 122 to 124: 13.670 s 123: 13.670, 13.690, 13.710, 13.720 s 123(1): 13.710 s 124: 13.510, 13.670

Trade Marks Act 1995 — cont s 41(6): 13.260, 13.290, 13.300, 13.350, 13.470 s 41(b): 13.550 s 42: 13.10, 13.240, 13.300, 13.350, 13.480, 13.500 s 42(a): 13.500, 17.50 s 42(b): 13.500, 13.570 s 43: 13.240, 13.300, 13.350, 13.480, 13.490, 13.510, 13.580 s 44: 13.165, 13.240, 13.480, 13.490, 13.510, 13.520, 13.530, 13.550, 13.570 s 44(1): 13.510, 13.530 s 44(1)(a)(i): 13.520 s 44(2): 13.510 s 44(3): 13.510, 13.530 s 44(4): 13.510 s 50: 13.600 s 52: 13.240 s 52A: 13.240 s 53: 13.600 s 54A(2): 13.240 s 56: 13.530 ss 56 to 8: 13.260 s 57: 13.240, 13.500, 13.530 s 58: 13.170, 13.220, 13.240, 13.570, 13.740 s 58(3): 13.550 s 58A: 13.240, 13.510 ss 58 to 62: 13.530 s 59: 13.170, 13.240, 13.570, 13.750 s 60: 13.240, 13.350, 13.480, 13.490, 13.510, 13.520, 13.530, 13.570, 13.580 s 60(a): 13.530 s 60(b): 13.530 s 61: 13.240, 13.320, 13.480 s 62: 13.240 s 62A: 13.100, 13.140, 13.170, 13.190, 13.240, 13.480, 13.570, 13.580 s 64: 13.340 s 65: 13.470 s 72: 13.180, 13.200, 13.240 s 75: 13.240 s 75(2): 13.240 s 77: 13.240 s 78: 13.740 s 79: 13.240 s 81: 13.740 s 82: 13.740 s 83: 13.740 s 84: 13.740 s 84A: 13.740 s 84A(2): 13.740 s 84A(3): 13.740 s 84A(4): 13.740 s 84B: 13.740 s 84D: 13.740 s 85: 13.740 xlii

Table of Statutes

Trade Marks Act 1995 — cont s 126: 13.730, 13.740 s 126(2): 13.730 s 127: 13.730 s 128: 13.670 s 129: 13.730 s 137(4): 13.640 s 148(1): 13.730 s 162: 13.780 s 164: 13.780 s 166: 13.780 s 173: 13.790 s 175: 13.790 ss 175 to 181: 13.790 s 185: 13.800 s 190: 13.750 s 192(1): 13.750 s 192(3): 13.750 s 207: 13.140 s 234: 13.560 s 234(2): 13.540 s 234(d): 13.540 Pt 9: 13.750 Pt 13: 13.730 Pt 14: 13.730 Pt 15: 13.780 Pt 16: 13.790 Pt 17: 13.800 Pt 17A: 13.810 Pt 19: 13.140 Trade Marks Amendment Act 2006: 2.120, 13.80, 13.510 Trade Marks Amendment (Madrid Protocol) Act 2000: 2.120 Trade Marks Amendment (Tobacco Plain Packaging) Act 2011: 2.120 Trade Marks Regulations 1995 reg 3.1: 13.150 reg 4.15: 13.240 reg 5.7: 13.240 reg 5.8: 13.240 reg 5.13: 13.240 reg 5.14: 13.240 reg 5.15: 13.240 Sch 1: 13.150 Sch 2: 13.240 Trade Practices Act 1974: 1.100, 5.290, 6.600, 12.10, 13.10, 13.330, 15.420 s 45: 5.450 s 46: 5.290, 5.450 s 46A: 5.290 s 47: 5.450 s 48: 5.290 s 51(3): 5.290 s 52: 1.100, 2.120, 11.230, 11.240, 12.10, 12.80, 12.90, 12.100, 12.110, 12.115, 12.120, 12.130, 12.140, 12.150,

12.160, 12.200, 12.230, 12.310, 12.420, 15.60, 15.420, 17.120, 17.140, 17.160 s 52(1): 1.100, 12.140 s 53: 12.310, 12.420, 15.420 s 53(3b): 17.120 s 53(c): 12.80, 12.310 s 53(d): 12.80, 12.310 s 53(eb): 17.120 s 80: 12.120 s 82: 11.240, 12.100, 12.110 s 87: 12.110 s 155: 15.420 Pt V: 12.160, 17.110 Pt IV: 5.290 US Free Trade Agreement Implementation Act 2004: 2.120, 2.140, 4.10, 5.40, 5.10, 6.320, 7.60, 7.120, 7.190, 8.130, 9.820 s 116AF: 7.190 s 116AG(1): 7.190 s 116AH: 7.190 s 248(1): 5.10 s 248CA(1): 5.10 s 248CA(3): 5.10 Sch 8, item 5: 8.360 Wine and Brandy Corporation Amendment Act 1993: 12.10

NEW SOUTH WALES Consumer Protection Act 1969: 12.140 Patents Act 1852-95: 8.100 Trade Marks Act 1865: 12.10

NORTHERN TERRITORY Biological Resources Act 2006: 17.210 Public Interest Disclosure Act 2008: 15.350

QUEENSLAND Patents, Designs and Trade Marks Act 1884 s 72: 13.500 Trade Marks Act 1864: 12.10

SOUTH AUSTRALIA Trade Marks Act 1863: 12.10 Whistleblowers Protection Act 1993: 15.350

TASMANIA Merchandise Marks Act 1864: 12.10

VICTORIA Copyright Act 1869 s 51: 17.50 xliii

Intellectual Property: Commentary and Materials

Patents Act 1890: 8.100

Literary Copyright Act 1842: 4.490

Trade Marks Registration Act 1876 s 2: 13.110 s 8: 13.500

Lord Cairns’ Act: 12.400

Whistleblowers Protection Act 2001: 15.350

Merchandise Marks Acts 1887-1953: 12.60

Merchandise Marks Act 1862: 12.10

Ornamental Designs Act 1842: 14.10

WESTERN AUSTRALIA

Patents Act 1949: 2.120, 8.120 s 4(3)(b): 10.150 s 32(1)(h): 10.150

Aboriginal Heritage Act 1972: 15.10 Designs and Trade Marks Act 1884 s 30: 13.500

Patents Act 1977: 9.320, 10.340 s 2(2): 9.650 s 14: 10.110 s 14(3): 10.100 s 64: 11.300

NEW ZEALAND Trade Marks Act 2002: 17.270 s 3(c): 13.500, 17.270 s 17(1)(b): 17.270 s 17(1)(c): 13.500, 17.270 s 97A: 13.720 s 178: 17.270

Patents Law Amendment Act 1852 (15 & 16 Vict c 65): 8.90 Patents and Designs Act 1907 s 25(2)(h): 10.80 Patents and Designs Act 1932: 8.360 s 3: 10.80

UNITED STATES Digital Millennium Copyright Act: 7.160

Patents, Designs & Trade Marks Act 1883 (46 & 47 Vict c 57): 8.90, 8.100, 12.10, 14.10

Innovative Design Protection Act s 3523: 14.10

Registered Designs Act 1949: 14.250 s 77: 14.250

Innovative Design Protection and Piracy Prevention Act s 3728: 14.10

Sale of Goods Act 1893: 3.60 Statute of Anne 1710: 3.20, 4.490, 7.20

Lanham Act 1946: 13.500

Statute of Monopolies 1623: 8.10, 8.20, 8.30, 9.30, 9.40, 9.50, 9.70, 9.90, 9.130, 9.180, 9.430, 9.510, 9.840 s 6: 8.10, 8.170, 9.40, 9.430, 9.450

Lanham Act 1948 s 2(a): 13.500 National Stolen Property Act: 15.220

Trade Mark Registration Act 1875: 12.10

Plant Patent Act 1932: 16.10

Trade Marks Act 1875: 12.30

Plant Variety Protection Act 1970: 16.10

Trade Marks Act 1905: 13.600 s 9(5): 13.420

Sonny Bono Copyright Term Extension Act 1998: 4.490

Trade Marks Act 1938: 13.70 s 8(a): 13.680 s 9(3): 13.420 s 26: 13.760

Uniform Trade Secrets Act: 15.200

UNITED KINGDOM Copyright Act 1842: 3.20

Trade Marks Registration Act 1875 s 6: 13.500 s 10: 13.110

Copyright Act 1911: 2.120, 3.20, 4.10, 5.80 Copyright of Designs Act 1839 (2 & 3 Vict c 17): 14.10

Utility Designs Act 1843: 14.10

Designing & Printing of Linens (etc) Act 1787 (27 Geo 3, c 38): 14.10

TREATIES AND CONVENTIONS

Designs Registration Act 1839: 14.10

1883 Paris Convention for the Protection of Industrial Property: 13.10

Human Rights Act 1998: 15.10 s 12: 15.210

Agreement Establishing the World Trade Organisation xliv

Table of Statutes

Pt VII, Arts 68 to 73: 2.70

Agreement Establishing the World Trade Organisation — cont Art II.2: 2.30 Annex 1C: 2.30

Anti-Counterfeiting Trade Agreement: 1.120 Australia–US Free Trade Agreement: 2.120, 4.40, 4.490, 7.120, 7.140, 8.80 Art 17.1: 2.150 Art 17.4.7: 7.120, 7.140 Art 17.4.8: 7.120 Art 17.11: 7.130 Art 17.11.29: 7.120 Art 17.11.29(xii): 7.120 Ch 17: 2.140, 7.130

Agreement between The Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments: 2.230 Agreement on Trade-Related Aspects of Intellectual Property Rights: 1.30, 1.40, 2.10, 2.20, 4.10, 4.30, 8.80, 8.130, 12.10, 13.10, 15.10, 16.10 s 5: 17.170 Arts 1 to 4: 2.80 Art 2.1: 2.240 Art 3: Art 3.1: 2.240 Arts 3 to 5: 2.40 Art 4: Art 7: 1.40, 2.40, 2.80 Art 8: 2.40, 2.80 Arts 9 to 14: 1.30, 2.50 Art 15: 13.20 Art 15.4: 2.240 Arts 15 to 21: 1.30, 2.50 Art 16.1: 2.240 Art 16.3: 2.240 Art 18.13: 2.170 Art 18.16: 2.170 Arts 18 to 37: 2.170 Art 20: 2.240 Art 22.2(b): 2.240 Arts 22 to 24: 1.30, 2.50 Art 24.3: 2.240 Arts 25 to 26: 1.30, 2.50 Art 27: 9.10, 9.20 Art 27.3(b): 17.170 Arts 27 to 34: 1.30, 2.50 Arts 35 to 38: 1.30, 2.50 Arts 37 to 54: 2.170 Art 39: 1.30, 15.10 Art 39(1): 15.10 Art 39.3: 2.50 Art 39(3): 15.10 Arts 39 to 40: 2.50 Art 40: 1.30 Art 41: 7.130 Arts 57 to 70: 2.170 Art 64: 2.70 Art 71.1: 17.170 Pt I: 2.40 Pts I to IV: Pt V, Art 63: 2.70 Pt II: 2.50, Pt IV: Pt IV, Art 62: 2.70 Pt VI, Arts 65 to 67: 2.70 Pt III: 2.60, Pt III, Arts 41 to 61: 2.60

Berne Convention for the Protection of Literary and Artistic Works (1886): 1.15, 1.30, 2.10, 2.150, 3.20, 4.30, 4.490, 5.20, 5.260 Art 2: 1.15, 1.20 Art 6: Art 6(1): 5.260 Art 6bis: 2.50, 5.20 Art 14ter: 5.460 Brussels Act (1948) of the Berne Convention: 4.10 Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977): 2.150, 8.250, 10.130 Convention Establishing the World Intellectual Property Organization: 1.30, 2.90 Art 2(viii): 1.30 Art 5: 2.90 Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite: 2.150 Convention for the Protection of Industrial Property: 13.810 Convention on Biological Diversity: 2.10, 17.180 Art 8(j): 1.120, 2.10, 17.180 European Convention on Human Rights: 15.10 Arts 8 to 10: 15.210 European Patent Convention: 9.320 Art 84: 10.340 Art 87(1): 10.350 Framework Convention on Tobacco Control: 2.210 Art 11: 2.210 Art 13: 2.210 General Agreement on Tariffs and Trade 1994: 1.30, 2.20, 2.240 Art III:4: 2.240 Hague Agreement Concerning the International Deposit of Industrial Designs: 14.220 xlv

Intellectual Property: Commentary and Materials

Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks: 2.150

Hague Agreement Concerning the International Registration of Industrial Designs: 2.150 International Convention for the Protection of New Varieties of Plants: 2.50, 2.90, 2.150, 16.10, 16.210 s 4: 16.210 Art 6: 16.40

Rome Convention for the Protection of Performers, Producers and Broadcasting Organizations (1928): 1.30 Singapore–Australia Free Trade Agreement: 14.220

International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations: , 2.10 Art 1(b): Art 5, para 3: Art 6, para 2:

Statute of Uses 1535: 15.100 Strasbourg Agreement Concerning International Patent Classification 1971: 8.150 Technical Barriers to Trade: 2.240 Art 2.1: 2.240 Art 2.2: 2.240

International Covenant on Economic, Social and Cultural Rights (1966): 2.10 International Union for the Protection of New Varieties of Plants: 2.50, 2.90

Trade Marks Amendment (Tobacco Plain Packaging) Act 2011: 2.120

Marrakesh Agreement Establishing the World Trade Organization: 2.20, 9.10 Annex 1C: 2.20, 2.80

Trademark Law Treaty: 2.150 Trans-Pacific Partnership Agreement: 8.80, 8.140

Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks: 13.120, 13.810

Treaty on Intellectual Property in Respect of Integrated Circuits (1989): 2.30 United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules 2010: 2.230

Paris Convention for the Protection of Industrial Property: , 1.30, 2.150, 8.200, 8.230, 11.380, 14.10, 14.220 Art 1: 1.30 Arts 1 to 12: Art 19:

United Nations Declaration on the Rights of Indigenous Peoples: 17.10 Art 11: 17.10 Art 31: 17.10 Vienna Convention on the Law of Treaties: 2.20

Paris Convention for the Protection of Industrial Property (1883): 2.10, 8.90 Art 10: 15.10

WIPO Copyright Treaty: 2.10, 2.90, 2.150, 3.160, 7.70

Patent Cooperation Treaty: 2.90, 2.150, 8.230

WIPO Performances and Phonograms Treaty: 2.10, 2.90, 2.150, 3.160, 5.40

Patent Law Treaty: 2.90, 2.150

xlvi

INTRODUCTION

PART1

CHAPTER 1 Introduction to Intellectual Property [1.10] [1.15]

WHAT IS INTELLECTUAL PROPERTY? ....................................................................... 3 International conventions and agreements ............................................................ 4 [1.20]

[1.40]

Berne Convention for the Protection of Literary and Artistic Works ............................................................................ 4

WHY DO WE HAVE IP RIGHTS AND LAWS? ............................................................. 7 [1.50] [1.70]

Integrating Intellectual Property Rights and Development Policy ................................................................... 9 Network Ten v TCN Channel Nine ............................................ 11

[1.80]

SCOPE OF IP PROTECTION IN AUSTRALIA ........................................................... 12

[1.100]

An alternative route for IP protection .................................................................... 15

[1.90] [1.110]

Grain Pool of WA v Commonwealth of Australia ......................... 12 Parkdale Custom Built Furniture v Puxu ..................................... 15

[1.120]

FUTURE OF IP RIGHTS ............................................................................................. 17

[1.130]

SCOPE OF THIS BOOK ............................................................................................ 19

WHAT IS INTELLECTUAL PROPERTY? [1.10] An overly simplistic answer that belies the complexity of the subject matter and the parameters of what might or might not be included, might well be that intellectual property (IP) is the expression or manifestation of the creative juices of man’s intellect – the product of the “sweat of the brow”. The answer is somewhat akin to stating that Jane Austen’s Pride and Prejudice is about two things: namely “pride” and “prejudice” – correct but hardly helpful. IP is not a single, cohesive entity, however, but a generalisation that encompasses “special heads of protected interests” (as pointed out by Dixon J in Victoria Park Racing and Recreational Grounds v Taylor (1937) 58 CLR 479). IP encompasses a vast and diverse range of subject matter that is constantly growing and expanding, as societal and technological developments increase the ways and means of effective communication and interaction, and business and trade expand the exploitative commercial opportunities of the range and types of subject matter. On occasion, societal and technological advances, notably in the digital environment, test the capacity of current IP regimes to keep pace with those advances. Hence IP, or rather the special heads that are encompassed within the term, is thus subject to constant scrutiny and thus dynamic and constantly evolving. Nevertheless, our description of IP contains three crucial characteristics: namely, the intangible in the creativity; the tangible in the expression/manifestation; and the property characteristic. Hand-in-hand with the term “intellectual property” are the rights ascribed to it. And IP rights could be described as the rights derived from the laws – mainly statutory, but also common law – governing those abovementioned “special heads of protected interests”. These rights are essentially exclusive, monopolistic rights in the sense that they exclude or prevent [1.10]

3

Intellectual Property: Commentary and Materials

others from using or exploiting the subject matter of the right without the authorisation of the creator (or owner of the right), usually for a specified period of time. The rights of attribution and creator integrity – otherwise known as moral rights – are a fairly recent addition to the exploitative regime and thus still somewhat subordinate to the protected interests. The above brief outline still does not really answer our initial question of what IP actually is.

International conventions and agreements [1.15] IP is commonly understood in terms of generalisations that are described by inclusive lists, rather than defined by precise and practical terms. Hence, an understanding, to any reasonable degree, of breadth and specificity requires reference to both international descriptors, such as the multilateral conventions and IP chapters of bilateral and regional trade agreements, and domestic statute and case law. It is relatively easy to name specific items that would be included in any list of forms of IP protection, but somewhat more difficult to formulate a general and universal concept around which they can all be grouped. The average layman is likely to be able to name and have a general understanding of the “Big Three” of IP – namely, copyright, patents and trade marks – but may have more of a challenge in identifying and explaining the other “special heads”. In the first instance, therefore, a working description of what is generally accepted as being within the ambit of IP is perhaps best achieved by reference to universally agreed or authoritative (albeit non-exclusive) lists. The term “intellectual property rights” originally applied to the rights that protected literary and artistic creations. In its modern formulation, the term embraces what is called industrial or commercial property, as well as literary and artistic property. These two separate and disparate streams established their international foundations in the late 19th century, but still retain their respective identities and legal standing today. In operational terms, they have coalesced into the broader collective of IP benchmarks enshrined in the international agreements of major global fora for the protection of IP rights, namely the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO). The scope of literary and artistic works can be seen in the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention), the first, and principal, international Convention dealing with their protection, concluded in 1886. Article 2 provides as follows, in [1.20].

Berne Convention for the Protection of Literary and Artistic Works [1.20] Berne Convention for the Protection of Literary and Artistic Works Article 2 Article 2 Protected Works (1)

4

The expression “literary and artistic works” shall include every production in the literary, scientific and artistic domain, whatever may be the mode or form of its expression, such as books, pamphlets and other writings; lectures, addresses, sermons and other works of the same nature; dramatic or dramatico-musical works; choreographic works and entertainments in dumb show; musical compositions with or without words; cinematographic works to which are assimilated works expressed by a process analogous to cinematography; works of drawing,

[1.15]

Introduction to Intellectual Property

CHAPTER 1

Berne Convention for the Protection of Literary and Artistic Works cont. painting, architecture, sculpture, engraving and lithography; photographic works to which are assimilated works expressed by a process analogous to photography; works of applied art; illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science. … (3)

Translations, adaptations, arrangements of music and other alterations of a literary or artistic work shall be protected as original works without prejudice to the copyright in the original work.

(4)

It shall be a matter for legislation in the countries of the Union to determine the protection to be granted to official texts of a legislative, administrative and legal nature, and to official translations of such texts.

(5)

Collections of literary or artistic works such as encyclopedias and anthologies which, by reason of the selection and arrangement of their contents, constitute intellectual creations shall be protected as such, without prejudice to the copyright in each of the works forming part of such collections. …

(7)

Subject to the provisions of Article 7(4) of this Convention, it shall be a matter for legislation in the countries of the Union to determine the extent of the application of their laws to works of applied art and industrial designs and models, as well as the conditions under which such works, designs and models shall be protected. Works protected in the country of origin solely as designs and models shall be entitled in another country of the Union only to such special protection as is granted in that country to designs and models; however, if no such special protection is granted in that country, such works shall be protected as artistic works.

(8)

The protection of this Convention shall not apply to news of the day or to miscellaneous facts having the character of mere items of press information.

[1.30] The Paris Convention for the Protection of Industrial Property (Paris Convention),

concluded in 1883, is the counterpart of the Berne Convention in the area of industrial property and the other foundation stone of the international IP system. It applies to industrial property in the broadest sense: inventions, trade marks, industrial designs, utility models (a form of patent under the laws of some countries), trade names and geographical indications (indications of source and appellations of origin). Article 1 of the Paris Convention describes the scope of the industrial property it covers: (2) The protection of industrial property has as its object patents, utility models, industrial designs, trademarks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition. (3) Industrial property shall be understood in the broadest sense and shall apply not only to industry and commerce proper, but likewise to agricultural and extractive industries and to all manufactured or natural products, for example, wines, grain, tobacco leaf, fruit, cattle, minerals, mineral waters, beer, flowers, and flour. (4) Patents shall include the various kinds of industrial patents recognized by the laws of the countries of the Union, such as patents of importation, patents of improvement, patents and certificates of addition, etc. [1.30]

5

Intellectual Property: Commentary and Materials

The Convention Establishing the World Intellectual Property Organization (WIPO Convention), concluded in 1967, defines the collective scope of IP. The WIPO Convention declares that WIPO’s objectives are the promotion of the protection of IP throughout the world and the administration of a number of Conventions and agreements concerning IP. The term “intellectual property” is described, as distinct from defined, in Article 2(viii) as including the rights relating to: • literary, artistic and scientific works, • performances of performing artists, phonograms, and broadcasts, • inventions in all fields of human endeavor, • scientific discoveries, • industrial designs, • trademarks, service marks, and commercial names and designations, • protection against unfair competition, and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.

The final sentence in the WIPO definition leaves the door open for the development and emergence of new forms of agreed IP rights, or variations on common established rights – the imperative for such flexibility being strikingly demonstrated with the rapid and dramatic emergence of the digital environment into our everyday lives and the move of IP into that new medium. IP rights are a major tool of world trade. Since 1995 and the establishment of the WTO as the successor to the post-war General Agreement on Tariffs and Trade (GATT), 1 and the adoption of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the parameters of IP law has largely been shaped by global trade imperatives, in which the driving concern has moved on from a focus on the acknowledgement of IP creation to the expansion, exploitative protection and enforcement of IP rights. Intellectual property has been formalised as a major commodity in the world trade basket, and the enforcement of IP rights has become a powerful weapon in that trade. TRIPS has become the most significant multilateral agreement over the full range of IP rights. As one agreement in the system of agreements that make up the WTO, TRIPS links IP rights to the General Agreement on Tariffs and Trade (GATT) or WTO rights and obligations. IP issues on the agenda for WTO’s peak body, the biennial Ministerial Meetings, intertwine IP and public health, compulsory licensing of patented drugs, generic pharmaceuticals and agrochemicals, geographical indications in general and the “higher level of protection” for wines and spirits, patents and plants, biodiversity and traditional knowledge, and dispute settlement mechanisms. (See Chapter 2 for further discussion on TRIPS and the international context of IP rights.) Hence, with the exception of the provision for moral rights found in the Berne Convention, it is not surprising that the definition of IP rights in TRIPS does not vary greatly in substance from the subject matter identified in the Berne and Paris Conventions. The TRIPS definition includes: 1

6

The General Agreement on Tariffs and Trade (GATT) was an international treaty that came into force on 1 January 1948. Its objective was to aid global economic recovery following World War II by reducing the barriers to international trade through reduction of tariffs, quotas and subsidies. GATT remained a key element of international trade agreements until it was replaced by the creation of the World Trade Organization on 1 January 1995. Negotiations to replace GATT with the WTO commenced in 1986 (the “Uruguay Round”), with IP rights figuring prominently in those negotiations. [1.30]

Introduction to Intellectual Property

CHAPTER 1

• copyright and related rights (TRIPS Articles 9 – 14); • trade marks (including service marks) (Articles 15 – 21); • geographical indications (or appellations) of origin (Articles 22 – 24); • industrial designs (Articles 25 – 26); • patents (including plant varieties rights) (Articles 27 – 34); • layout-designs (topographies) of integrated circuits (Articles 35 – 38); and • undisclosed information (including trade secrets) (Article 39). TRIPS allows for the protection of new plant varieties to be either subsumed within the patents regime or to be the subject of sui generis legislation. It also addresses the issue of control of anti-competitive practices in contractual licences, by allowing WTO members to legislate to control abuses of IP rights that have an adverse effect on competition in a market (Article 40). TRIPS was built upon the main WIPO treaties that existed and had become generally entrenched as exemplars of IP understanding and example at the time it was formulated – that is, the Berne Convention, the Paris Convention, and the Rome Convention for the Protection of Performers, Producers and Broadcasting Organizations (1928) (Rome Convention) – and extended them. It is a minimum standards treaty and members may provide more, but not less, generous protection. The global trade environment has experienced phenomenal growth since the creation of the WTO and the introduction of TRIPS. A complex network of regional and bilateral trade agreements has developed outside the multilateral fora of the WTO and WIPO and the balance that such organisations can provide between the sometime conflicting demands of developed countries and the needs of developing and least-developed countries. The issue of protection of IP rights continues to be a core element in such regional and bilateral trade agreements on a global scale. What changes in this context is not so much what is protected as IP since this has already been largely settled through the Berne, Paris and Rome Conventions, TRIPS and the establishment of WIPO. Instead, the extension occurs through the dimension of the protection and the nature and standards of the enforcement pressures.

WHY DO WE HAVE IP RIGHTS AND LAWS? [1.40] IP rights, in principle at least are meant to strike a balance between the interests of the original creator, the interests of the creator’s competitor(s), the interests of the investor, and the interests of the public at large. The debate in all specific instances about whether such balance should be tilted more or less in favour of the individual creator always contains various types of arguments, such as the:

• moral argument – a moral conception of IP focuses on the legitimacy of a person being rewarded for their creativity or the “sweat of [their] brow”, and, equally, on the illegitimacy of a person “reaping what [he or she] has not sown”, or getting a “free ride” through improper use or exploitation of another person’s effort; • societal argument – society requires creativity and its expression by its members for society’s own development and advancement, and for the improvement and enhancement of the quality of life of all its members. Society has an economic interest in new ideas, inventions, innovations; [1.40]

7

Intellectual Property: Commentary and Materials

• economic argument – an economic view does not focus on the morality or otherwise of improperly using another person’s work. Rather, it asserts that if the person who creates these ideas gets no benefit from them, economic growth will be hindered: this will provide a strong disincentive to innovation or new ideas. Proponents of high standards of IP rights argue strongly that these rights are necessary to stimulate economic growth that, in turn, contributes to poverty reduction. They argue that by stimulating invention and new technologies, agricultural or industrial production increases, domestic and foreign investment is promoted, technology transfer is facilitated, and public health benefits by the availability of, and access to, medicines on a global scale to combat disease. The principles and systems for high standards of protection can and should apply equally to developed, developing and least developed countries. Opponents of this view argue the opposite position with equal vigour. They claim that IP rights do little to stimulate invention in developing countries, because the necessary human and technical capacity is generally absent. IP rights are ineffective at stimulating research to benefit poor countries because their people will not be able to afford the products even if they are developed. IP rights limit the option of technological learning through imitation. They allow foreign firms to drive out domestic competition by obtaining patent protection, and to service the market through imports, rather than domestic manufacture. Moreover, they increase the costs of essential medicines and agricultural inputs, which badly affects poor countries and their people, particularly farmers. 2 WIPO proffers the following grounds as to the desirability and necessity for a robust system of protection for IP rights: What are intellectual property rights? Intellectual property rights are like any other property right. They allow creators, or owners, of patents, trademarks or copyrighted works to benefit from their own work or investment in a creation. These rights are outlined in Article 27 of the Universal Declaration of Human Rights, which provides for the right to benefit from the protection of moral and material interests resulting from authorship of scientific, literary or artistic productions. Why promote and protect intellectual property? There are several compelling reasons. First, the progress and well-being of humanity rest on its capacity to create and invent new works in the areas of technology and culture. Second, the legal protection of new creations encourages the commitment of additional resources for further innovation. Third, the promotion and protection of intellectual property spurs economic growth, creates new jobs and industries, and enhances the quality and enjoyment of life. An efficient and equitable intellectual property system can help all countries to realize intellectual property’s potential as a catalyst for economic development and social and cultural well-being. The intellectual property system helps strike a balance between the interests of innovators and the public interest, providing an environment in which creativity and invention can flourish, for the benefit of all. 3

There arises the challenge of identifying, reaching and maintaining the appropriate balance between these divergent and, at times, clashing views on IP, and the promotion and protection of its associated rights. This necessary balancing act is explained in the mission and objectives of TRIPS. The general goals of TRIPS, as detailed in the Preamble, include: • reduction of distortions and impediments to international trade; 2 3

8

Commission on Intellectual Property Rights (UK), Integrating Intellectual Property Rights and Development Policy (2002), p 1. “What is Intellectual Property”, World Intellectual Property Organisation, WIPO Publication No. 450(E), p 3, at http://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf [1.40]

Introduction to Intellectual Property

CHAPTER 1

• promotion of effective protection for IP rights, while ensuring that measures to protect these rights do not become barriers to legitimate trade; • recognition of the underlying public policy objectives of national systems for the protection of IP, including developmental and technological objectives, and, in particular, the special needs of least-developed countries in trying to create a sound and viable technological base. The objectives detailed in Article 7 of TRIPS are that protection and enforcement of IP rights should contribute to the promotion of technological innovation, and the transfer and dissemination of technology to the mutual advantage of producers and users of technological knowledge in a manner that is conducive to social and economic welfare and a balance of rights and obligations.

Integrating Intellectual Property Rights and Development Policy [1.50] Commission on Intellectual Property Rights (UK), Integrating Intellectual Property Rights and Development Policy (2002), pp v, 6–8 Perhaps there is something about the era we live in that has encouraged blind adherence to dogma. This has affected many walks of life. It certainly has affected the whole area of intellectual property rights. On the one side, the developed world side, there exists a powerful lobby of those who believe that all IPRs [(IP rights)] are good for business, benefit the public at large and act as catalysts for technical progress. They believe and argue that, if IPRs are good, more IPRs must be better. On the other side, the developing world side, there exists a vociferous lobby of those who believe that IPRs are likely to cripple the development of local industry and technology, will harm the local population and benefit none but the developed world. They believe and argue that, if IPRs are bad, the fewer the better. The process of implementing TRIPS has not resulted in a shrinking of the gap that divides these two sides. Rather it has helped to reinforce the views already held. Those in favour of more IPRs and the creation of a “level playing field” hail TRIPS as a useful tool with which to achieve their objectives. On the other hand those who believe that IPRs are bad for developing countries believe that the economic playing field was uneven before TRIPS and that its introduction has reinforced the inequality. So firmly and sincerely held are these views that at times it has appeared that neither side has been prepared to listen to the other. Persuasion is out, compulsion is in. Whether IPRs are a good or bad thing, the developed world has come to an accommodation with them over a long period. Even if their disadvantages sometimes outweigh their advantages, by and large the developed world has the national economic strength and established legal mechanisms to overcome the problems so caused. Insofar as their benefits outweigh their disadvantages, the developed world has the wealth and infrastructure to take advantage of the opportunities provided. It is likely that neither of these holds true for developing and least developed countries. … The Nature of Intellectual Property Rights Some see IP rights principally as economic or commercial rights, and others as akin to political or human rights. The TRIPS agreement treats them in the former sense, while recognising the need to strike a balance between the rights of inventors and creators to protection, and the rights of users of technology (Article 7 of TRIPS). The Universal Declaration of Human Rights has a broader definition recognising “the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author”, balanced by “the right … to share in scientific advancement and its benefits”. The crucial issue is to reconcile the public interest in accessing new knowledge and the products of new knowledge, with the public interest in stimulating invention and creation which produces the new knowledge and products on which material and cultural progress may depend. [1.50]

9

Intellectual Property: Commentary and Materials

Integrating Intellectual Property Rights and Development Policy cont. The difficulty is that the IP system seeks to achieve this reconciliation by conferring a private right, and private material benefits. Thus the (human) right to the protection of “moral and material interests” of “authors” is inextricably bound up with the right to the private material benefits which result from such protection. And the private benefit to the creator or inventor is derived at the expense of the consumer. Particularly where the consumer is poor, this may conflict with basic human rights, for example, the right to life. And the IP system, as manifested in TRIPS, does not allow – except in rather narrow ways – discrimination between goods essential to life or education, and other goods such as films or fast food. We therefore consider that an IP right is best viewed as one of the means by which nations and societies can help to promote the fulfilment of human economic and social rights. In particular, there are no circumstances in which the most fundamental human rights should be subordinated to the requirements of IP protection. IP rights are granted by states for limited times (at least in the case of patents and copyrights) whereas human rights are inalienable and universal. For the most part IP rights are nowadays generally treated as economic and commercial rights, as is the case in TRIPS, and are more often held by companies rather than individual inventors. But describing them as “rights” should not be allowed to conceal the very real dilemmas raised by their application in developing countries, where the extra costs they impose may be at the expense of the essential prerequisites of life for poor people. Regardless of the term used for them, we prefer to regard IPRs as instruments of public policy which confer economic privileges on individuals or institutions solely for the purposes of contributing to the greater public good. The privilege is therefore a means to an end, not an end in itself. Thus in terms of assessing the value of IP protection, it may be compared to taxation. Hardly anybody claims that the more taxation there is, the better. However, there is a tendency among some to treat more IP protection as self-evidently a good thing. More taxation might be desirable if it delivers public services that society values more than the direct and indirect cost of taxation. But less can also be beneficial, for instance if excessive taxation is harming economic growth. We think there are very analogous questions for intellectual property. How much of it is a good thing? How should it be structured? How does the optimal structure vary with sectors and levels of development? Moreover, even if we get the level and structure of protection right, to balance the incentive to invention and creation against the costs to society, we also have to worry about the distribution of gains. [Footnotes omitted.]

[1.60] Arguably, except for the moral rights recognition provision within copyright, protection is directly linked with commercial exploitation. Without the commercial value of the item being protected, IP protection becomes meaningless. In the matter of Computer Edge Pty Ltd and Anor v Apple Computer Inc and Anor (1986) 6 IPR 1, before the High Court of Australia, Deane J opined (at 32): Those matters and considerations include the determination of the appropriate boundary between patent law with its requirement of novelty and its fixed and more limited period of protection, and copyright law, with its limited requirement of originality and its much greater period of protection. They also include the resolution of the competing legitimate claims of different interests – the claim of an author, a designer or an inventor to the protection of his work and the claims of the public to the unrestricted use of information, technology and other material. The assessment and balancing of those matters and considerations and the question 10 [1.60]

Introduction to Intellectual Property

CHAPTER 1

whether some, and if so what, extension of copyright protection to a new field to which existing legislative provisions are inapplicable is warranted are matters for the Parliament and not for the courts.

While Computer Edge revolved around patent infringements, his Honour’s remarks apply generally with equal force to other areas of IP and their protection. But such is the dimension of possible commercial gain or loss at stake, that unauthorised use of an IP right belonging to another is clothed in emotive language designed to cast the perpetrator in the most negative and unseemly light. Hence even infringers (let alone offenders) are designated “pirates” and their infringing acts are “acts of piracy”. Unauthorised copies or alternative or generic versions of protected goods are described as “counterfeit” or “pirated” goods. The notion of “piracy”, in the classical sense, can evoke images of acts of extreme and ultimate cruelty – rape, murder, pillage, arson, victims forced to “walk the plank”, and so forth. But the term “piracy” has been adopted by the IP rights industry generally to describe infringements of any degree – whether civil or criminal – of IP rights. With the use of such emotive imagery, there is a danger that the sound social, moral and legal basis for the enforcement of the protection of IP rights becomes overwhelmed by commercial strategy and spin-doctoring. There is also a risk that using the same emotive language to describe both fake goods which may represent a loss of commercial revenue and fake goods which constitute a real and serious threat to personal life and limb and/or public health generally – such as pharmaceuticals coloured with toxic road-marking paint or brake linings made from compressed grass cuttings – diminishes the overall IP rights enforcement imperative and commitment.

Network Ten v TCN Channel Nine [1.70] Network Ten Pty Ltd v TCN Channel Nine [2004] HCA 14 High Court of Australia MCHUGH ACJ, GUMMOW AND HAYNE JJ: … 14. Counsel for Nine invoked a well-known statement made in University of London Press Ltd v University Tutorial Press Ltd. This was a case of infringement of copyright in an original literary work and Peterson J applied “the rough practical test that what is worth copying is prima facie worth protecting”. But later authorities correctly emphasise that, whilst copying is an essential element in infringement to provide a causal connection between the plaintiff’s intellectual property and the alleged infringement, it does not follow that any copying will infringe. The point was stressed by Laddie J when he said: Furthermore many copyright cases involve defendants who have blatantly stolen the result of the plaintiff’s labours. This has led courts, sometimes with almost evangelical fervour, to apply the commandment “thou shalt not steal”. If that has necessitated pushing the boundaries of copyright protection further out, then that has been done. This has resulted in a body of case law on copyright which, in some of its further reaches, would come as a surprise to the draughtsmen of the legislation to which it is supposed to give effect. Professor Waddams, speaking of the use of terms such as “piracy”, “robbery” and “theft” to stigmatise the conduct of alleged infringers of intellectual property rights, describes “the choice of rhetoric” as “significant, showing the persuasive power of proprietary concepts”. He also remarks:

[1.70]

11

Intellectual Property: Commentary and Materials

Network Ten v TCN Channel Nine cont. Against the merits of enlarging the property rights of one person or class of persons must always be set the loss of freedom of action that such enlargement inevitably causes to others. [Footnotes omitted.]

SCOPE OF IP PROTECTION IN AUSTRALIA [1.80] The term “intellectual property” was not especially current in common law jurisdictions at the time of Federation in Australia. The Federal power to enact IP laws was enshrined in the Constitution in rather specific terms, with s 51(xviii) granting Parliament, subject to the Constitution, power to make laws for the peace, order, and good government of the Commonwealth with respect to “[c]opyrights, patents of inventions and designs, and trade marks”. This degree of specificity has led to a consideration of the constitutional limits of the provision. In Grain Pool of WA v Commonwealth of Australia [2000] HCA 14 at [41], the High Court supported a generous interpretative approach to s 51(xviii) of the Constitution, supporting “fresh rights in the nature of copyright, patents of inventions and designs and trade marks” (emphasis added). Given the High Court’s support for “fresh rights” and the importance of treaty-making to contemporary IP law reform, constitutional challenges are likely to remain uncommon.

Grain Pool of WA v Commonwealth of Australia [1.90] Grain Pool of WA v Commonwealth of Australia [2000] HCA 14 High Court of Australia GLEESON CJ, GAUDRON, MCHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ: … 16. The general principles which are to be applied to determine whether a law is with respect to a head of legislative power such as s 51(xviii) are well settled. They include the following. First, the constitutional text is to be construed “with all the generality which the words used admit”. Here the words used are “patents of inventions”. This, by 1900, was “a recognised category of legislation (as taxation, bankruptcy)”, and when the validity of such legislation is in question the task is to consider whether it “answers the description, and to disregard purpose or object”. Second, the character of the law in question must be determined by reference to the rights, powers, liabilities, duties and privileges which it creates. Third, the practical as well as the legal operation of the law must be examined to determine if there is a sufficient connection between the law and the head of power.1 Fourth, as Mason and Deane JJ explained in Re F; Ex parte F: In a case where a law fairly answers the description of being a law with respect to two subject matters, one of which is and the other of which is not a subject matter appearing in s 51, it will be valid notwithstanding that there is no independent connection between the two subject matters. Finally, if a sufficient connection with the head of power does exist, the justice and wisdom of the law, and the degree to which the means it adopts are necessary or desirable, are matters of legislative choice. 17. In a passage in the joint judgment of the court in Nintendo Co Ltd v Centronics Systems Pty Ltd upholding the validity of the Circuit Layouts Act 1989 (Cth) (the Circuit Layouts Act), the court attended to the first of these matters, the construction of the terms of s 51(xviii) with the generality admitted by the words used. Their Honours said: 12 [1.80]

Introduction to Intellectual Property

CHAPTER 1

Grain Pool of WA v Commonwealth of Australia cont. The grant of Commonwealth legislative power which sustains the [Circuit Layouts Act] is that contained in s 51(xviii) of the Constitution with respect to “Copyrights, patents of inventions and designs, and trade marks”. It is of the essence of that grant of legislative power that it authorises the making of laws which create, confer, and provide for the enforcement of, intellectual property rights in original compositions, inventions, designs, trade marks and other products of intellectual effort. In the present case, the plaintiff contends that the final phrase in this passage should not be read so as to treat as sufficient to attract this head of power any product of intellectual effort. Those supporting validity contend that the legislation here is valid without such a wide reading of the power. That which constitutes the invention for the Varieties Act is “the origination” of the “new plant variety” (s 5(a)) and for the Breeder’s Rights Act it is “the breeding” of the plant variety (s 10(b)). It will be necessary to return to these submissions. 18. What is of immediate significance for present purposes is the reference in Nintendo by their Honours to R v Brislan; Ex parte Williams and Jones v Commonwealth (No 2). Those authorities dealt with the inherent scope for expansion of the application of the power with respect to postal, telegraphic, telephonic “and other like services” in s 51(v) of the Constitution. This serves to emphasise a point of significance in the present case. Later developments in scientific methods for the provision of telegraphic and telephonic services were contemplated by s 51(v). Likewise, it would be expected that what might answer the description of an invention for the purpose of s 51(xviii) would change to reflect developments in technology. 19. Consistently with the general principles which we have identified above, an appropriate approach to the interpretation of s 51(xviii) is that appearing in what was then the dissenting judgment of Higgins J in Attorney-General (NSW) v Brewery Employees Union of NSW (the Union Label case). Higgins J observed that trade marks were “artificial products of society”. Further, while “we are to ascertain the meaning of ‘trade marks’ as in 1900”, trade marks usage in 1900 “gives us the central type; it does not give us the circumference of the power” with respect to trade marks provided for by s 51(xviii). The centre of the thing named – trade marks – was to be taken with the meaning as in 1900 to find the circumference of the power. However, it would be “a mistake to treat the centre as the radius”. 20. Higgins J continued: Power to make laws as to any class of rights involves a power to alter those rights, to define those rights, to limit those rights, to extend those rights, and to extend the class of those who may enjoy those rights. In the same clause of s 51, power is given to make laws with respect to “copyrights” (rights of multiplying copies of books, etc); with respect to “patents” (rights to make or sell inventions); and with respect to “trade marks” (rights to use marks for the purposes of trade). The power to make laws “with respect to” these rights, involves a power to declare what shall be the subject of such rights. In the second place, although we are to interpret the words of the Constitution on the same principles of interpretation as we apply to any ordinary law, these very principles of interpretation compel us to take into account the nature and scope of the Act that we are interpreting – to remember that it is a Constitution, a mechanism under which laws are to be made, and not a mere Act which declares what the law is to be (original emphasis). … 22. The judgment of the court in Nintendo and those of Higgins J and Gibbs CJ, delivered across the lifespan of the court, exemplify the first of the general principles of constitutional interpretation to

[1.90]

13

Intellectual Property: Commentary and Materials

Grain Pool of WA v Commonwealth of Australia cont. which reference has been made. They reflect what the foundation members of the court had intended by their adoption in Baxter v DCT (NSW) of a passage of the judgment of Story J delivering the opinion of the court in Martin v Hunter’s Lessee. In that well-known statement with respect to the interpretation of the United States Constitution, Story J had stressed that the legislative powers of the Congress were expressed “in general terms”, so as “to provide [not] merely for the exigencies of a few years, but … to endure through a long lapse of ages, the events of which were locked up in the inscrutable purposes of Providence”. 23. These words do not suggest, and what follows in these reasons does not give effect to, any notion that the boundaries of the power conferred by s 51(xviii) are to be ascertained solely by identifying what in 1900 would have been treated as a copyright, patent, design or trade mark. No doubt some submissions by the plaintiff would fail even upon the application of so limited a criterion. However, other submissions, as will appear, fail because they give insufficient allowance for the dynamism which, even in 1900, was inherent in any understanding of the terms used in s 51(xviii). KIRBY J: … 130. There is one further consideration which suggests that the reference to the categories of legal rights contained in s 51(xviii) should be given a specially broad interpretation, released from the conceptions of 1900. If, as this court has held, the feature which links the rights provided in s 51(xviii) is the “enforcement of, intellectual property rights in original compositions, inventions, designs, trade marks and other products of intellectual effort”, there are special reasons why no narrow approach to the power, found by worrying about the conceptions common in 1900 or otherwise, should be imposed on this particular paragraph. 131. A universal feature of the twentieth century has been the dynamic progress and momentum of science and technology. The principal inventions of the century, which include flight, applied nuclear fission, informatics and biogenetics were all undiscovered, and for the most part unconceived, in 1900. Yet the Constitution certainly envisaged that the Commonwealth was entering an age of special technological inventiveness. So much can be seen in the specific provision of the post and telecommunications power in such wide terms. 132. Given the objects of the head of power, which include the facilitation and protection of intellectual inventiveness within Australia, it would be specially destructive of the achievement of those objects if the grant of power were to be attached – even as a primary reference point – to the particular notions which, up to 1900, “copyrights, patents of inventions and designs and trade marks” had been protected by the law. I do not believe that such an approach is necessary. It is certainly not desirable. The provision of copyright protection of genetically modified organisms had certainly never been contemplated before 1900. This is for the very good reason that the science and technology of genetic modification was unknown at that time. It is unnecessary now to decide whether copyright law does or could extend to genetically modified organisms. It is sufficient to note that the issue is one of lively intellectual debate. 133. To the full extent that the language of the Constitution warrants and that other important values which it upholds permit, meaning should be given to a provision such as s 51(xviii) in a way that allows the section to respond to the very great variety of inventiveness that may be considered by the Federal Parliament to necessitate protection for the “products of intellectual effort”. The future directions of such inventiveness are unknowable and likely to outstrip even our present vivid imaginations. Whether in particular contexts special and even new forms of such protection are

14 [1.90]

Introduction to Intellectual Property

CHAPTER 1

Grain Pool of WA v Commonwealth of Australia cont. desirable is a matter for argument and dispute. But power being present, the proper place for that debate ordinarily to occur is in the parliament and in the Australian community which helps to shape the parliament’s decisions. [Footnotes omitted.]

An alternative route for IP protection [1.100] Another route that has been utilised in the search for the protection of IP rights

outside the traditional heads of protection, has been by way of actions to enjoin breaches of the Trade Practices Act 1974 (Cth) s 52(1) and its superseding legislation, Competition and Consumer Act 2010 (Cth). That provision proscribed conduct engaged in by persons in trade or commerce “that is misleading or deceptive or … likely to mislead or deceive”. Such actions were encouraged by the identification of an additional jurisdiction in the Federal Court of Australia to hear general law actions based on a common substratum of fact with those actions that could be brought under the Trade Practices Act 1974 (Cth) and by the subsequent cross-vesting of jurisdiction in IP matters between the State Supreme Courts and the Federal Court. However, the scope of s 52 to supplement the traditional IP causes of action was circumscribed at an early stage by the High Court in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, following (see further discussion of Parkdale at [12.120] and [12.140]).

Parkdale Custom Built Furniture v Puxu [1.110] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 High Court of Australia [Puxu Pty Ltd (Puxu), since June 1978, manufactured and sold under the name “Post and Rail” furniture of a distinctive appearance and design known as the “Contour” range. The furniture had been designed and sold by Puxu’s predecessors in business since late 1976 or early 1977. It was advertised quite widely and had an established reputation, but the design had not been registered under the Designs Act 1906 (Cth), as amended. From June 1978, Parkdale Custom Built Furniture Pty Ltd (Parkdale) manufactured and sold under the general names “Parkdale Custom Built Furniture” and “Custom Built Furniture” furniture known as the “Rawhide” range. The furniture made by Parkdale closely resembled that made by Puxu.] MASON J: [205] The relationship of s 52(1) with established statutory regimes dealing with related topics gives rise to an important question. Can it be inferred from the detailed treatment of limited monopolies of intellectual and industrial property in specific statutes that s 52(1) should be read down if it otherwise could facilitate the creation of new monopolies not subject to the limitations imposed by those statutes? In my view there are sound reasons for not construing s 52 in that way. Clearly there is here no question of infringement of a trade mark. As a general proposition the Trade Marks Act 1955 (Cth) is concerned with deception or confusion to the public as to the source of goods, whilst the Trade Practices Act is concerned with deception of the public as consumers of goods or services. Likewise, the operation of s 52 is not restricted by the common law principles relating to passing off. If, as I consider, the section provides the public with wider protection from deception than the common law, it does not follow that there is a conflict between the section and the common law. The statute provides an additional remedy. [1.110]

15

Intellectual Property: Commentary and Materials

Parkdale Custom Built Furniture v Puxu cont. To obtain a monopoly in a particular design under the Designs Act it is not sufficient merely to have a period of undisturbed [206] use. The necessary registration is only possible for a “new or original design, which has not been published in Australia before the lodging of an application for its registration” (s 17(1)). A certificate of registration remains in force for a limited period (s 26). Importantly a registered design is open to public inspection (s 27) so that others can assess whether they could be infringing the copyright in a registered design. Thus the statute seeks a balance between limited monopoly rights for traders with a novel design on the one hand and the stimulus of competition aided by access to information on the other hand. Similarly the Patents Act 1952 (Cth) seeks to balance competing interests in connection with the grant of letters patent for a particular invention. Essentially, in return for the disclosure of his invention a patentee receives a limited monopoly at the expiration of which the invention is available to the public at large. The case made by the respondent as a competing trader here is that it is entitled to an injunction to restrain the appellant from producing and selling goods which very closely resemble the respondent’s product. Its claim in substance is that s 52 gives it the rights which it would have had if it had a registered design for the furniture. On the other hand the appellant’s case is that to forbid a manufacturer to manufacture a product because it too closely resembles a competitor’s earlier product without subjected the resulting monopoly for the earlier product to the limitations imposed by the Designs Act, would be to create a monopoly in a design in circumstances in which that Act does not confer a monopoly. This, the appellant urges, is a result which would scarcely have been intended. Mr Staff QC for the respondent submits that the Patents Act and the Designs Act are directed to a field of obligations and rights quite different from s 52. In one sense this is so. It is the object of the two statutes to create private property rights. They confer exclusive or monopoly rights in patents and designs respectively and prescribe the conditions according to which these rights come into existence. With s 52 it is different. Its primary purpose is not to create private property rights but to regulate the conduct of traders by prohibiting them from engaging in conduct which misleads or deceives consumers. Enforcement of this statutory prohibition may enable trader A to prevent trader B from manufacturing or marketing goods which closely resemble those of trader A because the marketing of them will mislead or deceive the public, but this result, if it occurs, will be incidental to the enforcement of the prohibition – it is an unavoidable consequence of protecting the [207] public from misleading or deceptive conduct. When s 52 is viewed in this light, there is no very strong reason for saying that the generality of its language should be restricted on the ground that it runs counter to the policy and purposes of the Patents Act and the Designs Act. It would be otherwise if the policy and purpose of the two statutes were to prohibit all monopoly rights in patents and designs except those for which they provide. If the two statutes were anti-monopoly statutes then we might be justified in saying that the general words of s 52 should be read subject to the particular words of the Patents Act and the Designs Act – generalia specialibus non derogant. But it is not possible to say of them that they are anti-monopoly statutes – their object is to create exclusive rights. … BRENNAN J: [224] If s 52 of the Trade Practices Act authorised or required the granting of such an injunction, it would run counter to the intention of Parliament implied in the statutes which create or provide for the creation of monopolies. Those statutes define the conditions governing the creation of monopolies and thus chart the limits of the contemporary reservations from the freedom to manufacture and sell which the Statute of Monopolies assured. The notion that patent laws imply an intention to leave free the field of activity not covered by the grant of monopoly rights underlay the judgments of the Supreme Court of the United States in Sears, Roebuck & Co v Stiffel Co 376 US 225; 11 16

[1.110]

Introduction to Intellectual Property

CHAPTER 1

Parkdale Custom Built Furniture v Puxu cont. Law Ed 2d 661 (1964) and in Compco Corp v Day-Brite Lighting Inc 376 US 234; 11 Law Ed 2d 669 (1964). The Court of Appeals for the Seventh Circuit in Sears, Roebuck had held that a likelihood of confusion as to the source of products was sufficient, without passing off, to attract an Illinois law proscribing unfair competition and to warrant the granting of injunctive relief. The Supreme Court, assuming that the State law had the operation thus attributed to it, denied the competence of a State legislature to encroach upon federal patent laws. These cases were explained in Goldstein v California 412 US 546 at 569-570; 37 Law Ed 2d 163 at 181 (1973): In regard to mechanical configurations, Congress had balanced the need to encourage innovation and originally of invention against the need to insure competition in the sale of identical or substantially identical products. The standards established for granting federal patent protection to machines thus indicated not only which articles in this particular category Congress wished to protect, but which configurations it wished to remain free. The application of state law in these cases to prevent the copying of articles which did not meet the requirements for federal protection disturbed the careful balance which Congress had drawn and thereby necessarily gave way under the Supremacy Clause of the Constitution. It would be surprising if Trade Practices Act were to alter the “careful balance” of the Patents Act and the Designs Act by a side-wind and, after four centuries, open the way to the creation of prescriptive monopolies for the manufacture of goods. In my view, it does not have that effect.

FUTURE OF IP RIGHTS [1.120] The “careful balance” referred to by Brennan J in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, above, is that which exists between the interests of IP owners, on the one hand, and the interests of users, or potential users, of material embodying the rights, on the other, which may include downstream innovators. The creation of IP involves intellectual effort, while its exploitation can entail substantial resource outlays. Producers need an incentive to make that effort and incur the costs of production, by receiving an appropriate return, usually through a period of exclusive rights to exploit the IP. There are many challenges to IP and the appropriate scope of protection is to be considered in the light of these challenges, which have recently included issues of competition policy, privacy, health, biodiversity and public policy. The custodians of traditional knowledge and those working on genetic resources are making new claims for enfranchisement. Marketers are increasingly requiring protection for well-known trade marks, geographic indications and domain names in circumstances where existing trade mark or copyright laws would not recognise proprietary rights. There are serious and subversive threats to the established order as the law continues to address the issues surrounding material on the internet. Here, open source, peer-to-peer file sharing systems and creative commons licensing assist in returning to users what encryption, private contractual arrangements and legislative reform may attempt to take away. Despite the perception by some critics that IP is at a “crisis point”, the belief that IP law is “outdated and obsolete” is challenged by those who see the law as able to draw on a long history of attempts

[1.120]

17

Intellectual Property: Commentary and Materials

to grant property status to intangibles. 4 This work challenges the notion that these laws have ever had clear, uncontested foundations or clear definitions of what ought to be protected, and to what extent. The focus of international discussions on digital technologies and the growth of computer networks (the “Digital Agenda”), which resulted in the WIPO “internet treaties”, illustrates the adaptation of IP law at both the national and international level. The distribution of information by means of digital technology is revolutionising the conditions of international trade and bringing into sharp focus the requirements of IP protection in a world with no physical boundaries. National differences in copyright protection are tolerable where physical objects embody the IP. But a film (or other material) loaded onto the internet will, in the absence of a technical barrier, be available instantly and in full all over the world. In the information technology industry, “incentive theories” that lead to restricted access to computer code by “downstream” developers are commonly challenged. The computing industry took off in the 1970s and 1980s with weak, if any, IP protection, but this did not lead to any shortage of innovation – rather, it was a very vibrant time for development. Thus, many argue that patents and copyright protection may hinder, rather than sponsor, these particular kinds of innovations. Justifying IP rights is a complicated and difficult business, and recourse to general theories without address to the specifics of particular categories, their individual histories and mixes of policy objectives is quite problematic. The politics of IP lawmaking is more contested now than at any other stage of the development of IP rights. This points to the fact that the “right” IP rights are perceived to have a much greater impact on the future growth of the economy and on balances of trade. Consideration of the “balance between owners and users” presupposes a world in which all creators, owners and users are equal in terms of capacity to create, disseminate and access the desired product or service comprising the IP. In fact, apart from differences between individuals and corporations, another consideration is “Australia’s ability to compete in world markets”, 5 where the value of our imports of copyright material far outweighs the value of exports. IP is not just about “incentives” and simple calculations of trade balances. Increasingly, there has been international focus on treaties that deal with justice, equity and development issues. For example Article 8(j) of the Convention on Biological Diversity establishes that: each contracting party will … subject to its national legislation, respect preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of benefits arising from the utilisation of such knowledge, benefits and practices.

This can be the foundation for a capacity to impact on patents that seek to capitalise on traditional knowledge without engagement with traditional owners. In 2004, developing countries led by Brazil and Argentina launched an initiative to establish a Development Agenda in WIPO. The proposal notes: Technological innovation, science and creative activity in general are rightly recognised as important sources of material progress and welfare. However, despite the important scientific 4 5

B Sherman and L Bently, The Making of Modern Intellectual Property Law: The British Experience, 1760–1911 (Cambridge University Press, 1999), pp 1–5. A Mason, “Reading the Future” (1996) 9 AIPLB 13.

18 [1.120]

Introduction to Intellectual Property

CHAPTER 1

and technological advances and promises of the 20th and early 21st centuries, in many areas a significant “knowledge gap” as well as a “digital divide” continue to separate the wealthy nations from the poor … Intellectual property protection cannot be seen as an end in itself, nor can the harmonisation of intellectual property laws leading to higher protection standards in all countries, irrespective of their levels of development. 6

The proposal was accepted by WIPO’s General Assembly, and provided for new rounds of meetings seeking ways of addressing these issues and to reconcile IP protection with development agendas – a debate which is still continuing twelve years after its introduction. Domestically, the Australian IP context is undergoing a period of critical scrutiny and review that could possibly impact on its character in the future. Two impending regional agreements, namely the Anti-Counterfeiting Trade Agreement (ACTA) and the Trans-Pacific Trade Partnership (TPPA) both include substantial IP provisions, amongst other matters, leading to higher standards of protection and enforcement that will require incorporation into domestic laws. However, such is the rate of dynamic development in the IP “industry” both globally and regionally, it is quite conceivable that both agreements and the consequent flow-on into the domestic IP legislative regime, could be superseded before they come into force. ACTA, which was concluded by the 31 negotiating parties (including Australia) in October 2011, requires at least six ratifications to come into force, but at late 2016 has just one. The TPPA, which was signed by the 12 negotiating parties in February 2016 and incorporates a number of ACTA copyright provisions, is currently subject to intense United States domestic opposition which could also jeopardise its future. It is certainly an interesting time to be studying IP laws, where the nature of the rights and concept of balance, and the complexity of interests that might feature in such discussions, continues to broaden.

SCOPE OF THIS BOOK [1.130] This book combines a commentary on the generally accepted key elements of IP,

supported and illustrated by extracts of carefully selected and explanatory materials. It endeavours to assist the reader, whether academic and researcher, legal practitioner, law student, or interested reader, to grasp a broader understanding of the nature and the parameters of IP and its accompanying rights, as outlined above. It focuses on the Australian context and materials, while noting that this context must still take cognisance of, and exist within, a global environment. The book endeavours to maintain a targeted and manageable menu of expert commentary and source material. It attempts to strike a balance between length, number and diversity of extracted statutory and judicial sources. However, the book may still require further close reference to relevant legislation and case law. Hopefully, the material selected will arouse the reader’s interest to research further the issues explored here and the broader contexts of the material selected for inclusion. This book is divided into sections, which can be studied in any order. While each section is largely self-contained, it will soon become clear to the reader that there is a significant degree of interaction and overlap between these areas – such as between copyright and designs, trade marks and geographical indications, and again copyright and patents. Principles and 6

Proposal by Argentina and Brazil for the Establishment of a Development Agenda for WIPO, WIPO General Assembly Document WO/GA/31/11. [1.130]

19

Intellectual Property: Commentary and Materials

requirements in respect of enforcement and the provision of both civil and criminal procedures can apply across all areas of IP. It is no accident that the book commences with the international context of IP rights and protection regimes, since, in the current climate, national regimes are becomingly increasingly driven and shaped by the obligations enshrined in international and bilateral conventions, treaties and agreements and imposed upon those who accede to them. This section is followed by specific areas, which examine in turn: • copyright; • patents; • trade marks; • designs; • confidential information and trade secrets. • plant breeder’s rights; The concluding chapter of the book examines an area of IP that is hardly included within the conventional ambit of an IP protection system largely derived from the Eurocentric protectionist exploitative paradigm – namely, cultural heritage and traditional knowledge, or Indigenous cultural intellectual property (being the term more generally used in the Australian IP context).

20 [1.130]

CHAPTER 2 The International Context of Intellectual Property [2.10] [2.20] [2.30]

INTRODUCTION ...................................................................................................... 21 World Trade Organization and TRIPS ..................................................................... 23 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) ...................................................................................................................... 24 [2.40] Preamble and Part I .............................................................................. 25 [2.50] Part II ...................................................................................................... 26 [2.60] Part III Enforcement .............................................................................. 28 [2.70] Parts IV–VII ............................................................................................. 29 [2.80]

[2.90] [2.100]

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) ............................................................ 30 World Intellectual Property Organization (WIPO) ................................................ 32 Bilateral and regional trade agreements with IP provisions ................................ 34

[2.120]

AUSTRALIAN DOMESTIC CONTEXT ON IP .......................................................... 36

[2.130] [2.140]

AUSTRALIA’S REGIONAL IP-STRONG AGREEMENTS ............................................ 38 Australia–United States Free Trade Agreement ..................................................... 38 [2.150]

[2.160] [2.170] [2.180] [2.190] [2.200] [2.210]

Australia–United States of America Free Trade Agreement .............................................................................. The recent Korean, Japanese and Chinese Trade Agreements ............................ The Trans-Pacific Partnership Agreement (TPPA) .................................................. The Regional Comprehensive Economic Partnership .......................................... The Australian Productivity Commission inquiry into IP ...................................... Australian Government Productivity Commission ...............................................

39 40 40 43 44 45

[2.200] Main Key Points ..................................................................................... 45 The Australian tobacco plain packaging saga ....................................................... 46 [2.220] 1. The HCA judgment ........................................................................... 46 [2.230] 2. Claim under the Australia Hong-Kong BIT of 1993 ...................... 47 [2.240] 3. The Complaints before the WTO’s Dispute Settlement Body ...... 48 [2.250] 4. The Global interest ........................................................................... 49

INTRODUCTION [2.10] In the international context, intellectual property (IP) is essentially a trade issue, and its protection and exploitation by those states, corporations and individuals who enjoy or control rights over it, is a major weapon of world trade. Recognition, protection and enforcement of IP rights are firmly fixed in the multilateral and bilateral trade agendas of the major developed nations, with their dealings with each other and with developing and least-developed countries. Hence, IP protection and regulation regimes exist in a complex framework of international bodies, multilateral conventions and foreign relations. These multilateral conventions are generally minimum standards agreements; countries are not prevented from adhering to higher standards unilaterally or with other countries. [2.10]

21

Intellectual Property: Commentary and Materials

However, under the most-favoured-nation and national treatment provisions that exist in these treaties and conventions, the benefits or standards they set themselves or agree to with other individual countries must also be granted to all other signatories to those treaties and conventions. The major players in the multilateral forum for IP protection are the World Trade Organization (WTO) and the World Intellectual Property Organization (WIPO). The major international agreements specifically addressing IP protection include: • Berne Convention for the Protection of Literary and Artistic Works (1886) (Berne Convention); • Paris Convention for the Protection of Industrial Property (1883) (Paris Convention); • International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome Convention) (1960); • WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (1995); • WIPO Copyright Treaty (WCT) (1996); • WIPO Performances and Phonograms Treaty (WPPT) (1996). But there are other players that are involved in the development of IP protection or that influence its development and future direction, including other UN agencies – United Nations Educational, Scientific and Cultural Organization (UNESCO), United Nations Development Programme (UNDP), United Nations Conference on Trade and Development (UNCTAD), International Centre for Trade and Sustainable Development (ICTSD), World Health Organization (WHO), and global financial institutions, such as the World Bank and the International Monetary Fund (IMF). Similarly, there are a significant number of major international conventions and treaties that address other global issues or issues to which IP has relevance, and which therefore encompass elements of IP. Two examples of theses related treaties are the Convention on Biological Diversity (1992) and the International Covenant on Economic, Social and Cultural Rights (1966). The Convention on Biological Diversity 1992, for example, has as its main objective the development of international and national strategies for the conservation and sustainable use of biological diversity. Its three primary goals are: • conservation of biological diversity (or biodiversity); • sustainable use of its components; and • fair and equitable sharing of benefits arising from genetic resources. Article 8(j) of the Convention on Biological Diversity 1992 provides that each contracting party shall: Subject to its national legislation, respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices …

In other words, it creates a moral imperative (if not an enforceable obligation) upon countries and corporations to consult with local communities and share equitably with them the financial rewards arising from their exploitation of local bio-resources and knowledge. The 22 [2.10]

The International Context of Intellectual Property

CHAPTER 2

application of the principles of Article 8(j) and the Convention overall relates particularly, but not exclusively, to the patents area of IP. Australia became party to the Convention on 18 June 1993. But standards in these multilateral conventions are increasingly being overtaken by a complex network of bilateral and regional investment treaties and free trade agreements (FTAs).

World Trade Organization and TRIPS [2.20] The leading international body responsible for IP protection in the global context is the World Trade Organization (WTO). As a formal international body and the successor to GATT IV (the General Agreement on Tariffs and Trade IV), the WTO was created in 1995 by the Marrakesh Agreement Establishing the World Trade Organization, after more than a decade of negotiation by signatories to GATT IV. The Agreement was concluded on 15 April 1994, and the WTO came into effect on 1 January 1995. The WTO currently has 164 members (as at July 2016), including most of the world’s developed nations. Afghanistan (29 July 2016), the Seychelles (26 April 2015), and Yemen (26 June 2014) are the most recent members. Included amongst the members is the European Union. Another 23 states have observer status, most seeking membership. Andorra, Azerbaijan, Bahamas, Belarus, Bhutan, Bosnia and Herzegovina, Comoros, Equatorial Guinea, Ethiopia, Holy See (Vatican), Iran, Iraq, Lebanese Republic, Libya, Sao Tomé and Principe, Serbia, Sudan, Syrian Arab Republic, and Uzbekistan have all applied to join. The process of accession to the WTO requires an applicant state to demonstrate that they have established a domestic regime to the WTO standards in a number of key trade areas, including IP protection. The Marrakesh Agreement and its subordinate agreements, being international conventions and treaties, impose conditions upon its signatory parties in accordance with the requirements of the Vienna Convention on the Law of Treaties (VCLT). A key part of the creation of the WTO included the agreed settlement and introduction of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS):

• In formal terms, TRIPS constitutes Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization. • WTO accession or membership binds member states to adhere to TRIPS and its protection provisions in their national legislation. • TRIPS was the minimum-standards benchmark for IP protection standards in 1995, but it has since been overtaken by both WIPO treaties, as well as a complex network of bilateral and regional trade agreements, which invariably include chapters on enhancing IP rights protection. • Although a WTO agreement, TRIPS is administered by WIPO. In recent years, the standing of the WTO in the global arena has become somewhat eroded with its failure to reach consensus on a number of major trade issues, notably the reduction of trade barriers, agricultural tariffs, and public health and access to patented medicines. Commitment by WTO members to negotiate on these areas (which became known as the Doha Development Agenda) was reached at the WTO Fourth Ministerial Meeting in Doha, Qatar, in 2001. However, little progress has been made since 2001, and negotiations have largely stalled since 2008. [2.20]

23

Intellectual Property: Commentary and Materials

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) [2.30] TRIPS constitutes Annex 1C of the Agreement Establishing the World Trade Organisation 1994 (the Marrakesh Agreement). It is an extensive agreement comprising 73 articles over seven major Parts. The Agreement covers eight major areas of intellectual property rights, namely:

• Copyright; • Trademarks; • Geographical indications; • Patents; • Industrial designs; • Layout designs of integrated circuits; • Protection of Undisclosed Information; • Control of Anti-Competitive Practices in Contractual Licences. TRIPS was concluded on 15 April 1994 and entered into force on 1 January 1995. In accordance with the requirements of Article II.2 of the Marrakesh Agreement, TRIPS is binding on all members of the WTO. TRIPS was created not with the view of establishing an entirely new regulation, but with the intention of supplementing and developing some sense of cohesion with the then existing major international conventions on IP protection, namely the Berne, Paris and Rome Conventions, and the Treaty on Intellectual Property in Respect of Integrated Circuits (1989) (Washington Treaty). TRIPS is based upon, and supplements, these conventions by providing additional obligations and a higher level of protection. The supplemented provisions become compulsory, even for WTO member countries that have not ratified the above conventions (except for the Rome Convention, which only continues to be binding on states that have joined it), by virtue of their WTO membership. However, nothing in TRIPS may derogate from any existing obligations that members may have to each other under the Paris, Berne, or Rome Conventions or the Washington Treaty. In terms of its coverage, TRIPS is still the most comprehensive multilateral agreement on IP rights, encompassing most types of rights, with the particular exceptions of plant breeders’ rights, utility models and traditional knowledge. The general goals of TRIPS, as enunciated in its Preamble, include the reduction of distortions and impediments to international trade, the promotion of effective and adequate protection of IP rights, and ensuring that measures and procedures to enforce IP rights do not themselves become barriers to legitimate trade. Although the Preamble recognises that IP rights are private rights, the underlying public policy objectives of national systems for the protection of IP, including developmental and technological objectives, are also recognised. The Preamble also acknowledges that least-developed countries require maximum flexibility in the domestic implementation of their laws and regulations in order to enable them to create a sound and viable technological base. It has been suggested that TRIPS was successfully advocated by the governments of the industrialised world in order to obtain worldwide protection for the innovations and 24 [2.30]

The International Context of Intellectual Property

CHAPTER 2

technologies generated by their corporations. 1 Industrialised countries forced developing countries to negotiate an agreement on TRIPS with the clear objective of universalising the standards of IP protection that they had incorporated in their own domestic legislation once they had obtained a high level of technological and industrial capacity. A number of factors that converged during the 1980s and 1990s explain the priority given by some countries, notably the United States, to a far-reaching enhancement of the IP system worldwide, namely the: • growing importance of technology as a factor in international competition; • elimination or reduction of trade barriers in developing countries, which increased both the opportunity for direct exports from those countries and their attractiveness to multinational companies to gain access to those markets without the obligation for local investment or technology transfer; • erosion of US supremacy in manufacturing and technology by Japan and, subsequently, Asian “tiger-economies”, this being attributable to too-open policies in respect of technology transfer and innovation imitation. 2 The perception that this declining American competitiveness was largely due to losses from foreign piracy and counterfeiting was effectively promoted by US industry lobbies – particularly the pharmaceutical, software and recording industries – which convinced the US Government of the need to link trade and protection of IP rights to preserve US technology supremacy and the consequent economic advantage. Thus, TRIPS was not merely conceived as an instrument to combat counterfeiting and piracy, but also a component of a policy of “technological protectionism” by establishing international rules to counter a declining competitive position in world markets. 3 The adoption of TRIPS represented a major victory for industrialised countries and for their most active industry lobbies. It mirrored the standards of intellectual property rights protection that were suitable for industrialised countries at their then prevailing level of development. It thus has several serious and adverse implications for developing countries, as many of its protectionist provisions could place higher obstacles in the path of these countries in their endeavour to achieve technological progress. Preamble and Part I [2.40] The general goals of TRIPS, as enunciated in its Preamble, include the reduction of distortions and impediments to international trade, the promotion of effective and adequate protection of intellectual property rights, and ensuring that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade. Although the Preamble recognises that intellectual property rights are private rights, the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives, are also recognised. 1 2 3

C Correa, Intellectual Property Rights, the WTO and Developing Countries: The TRIPS Agreement and Policy Options (Zen Books, London, 2002), p 3. C Correa, Intellectual Property Rights, the WTO and Developing Countries: The TRIPS Agreement and Policy Options (Zen Books, London, 2002), pp 3-4. C Correa, Intellectual Property Rights, the WTO and Developing Countries: The TRIPS Agreement and Policy Options (Zen Books, London, 2002), pp 4-5. [2.40]

25

Intellectual Property: Commentary and Materials

The Preamble also acknowledges that least-developed countries require maximum flexibility in the domestic implementation of their laws and regulations in order to enable them to create a sound and viable technological base. The Agreement’s public policy objectives are further enunciated in Part I by a declaration on the fundamental objective of TRIPS, and on the equally fundamental principles by which members should be guided formulating their laws relating to the Agreement. Article 7 Objectives provide that the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of both producers and users. Article 8 Principles recognise that members have the right to adopt measures necessary for the protection of public health and other public interest reasons in sectors of vital importance to their socio-economic and technological development. Such measures must still be consistent with TRIPS’ provisions. Part I also set out further general provisions and basic principles governing the protection of intellectual property rights. They establish minimum standards to be applied by all WTO members, these same standards also being the maximum standards that members are obliged to adopt. However members are not prevented from adopting greater protection than that required by TRIPS, provided that such protection does not contravene the TRIPS provisions. Members are also free to determine the appropriate method of implementing the TRIPS provisions within their own legal systems and practices. Articles 3 – 5 stipulate the fundamental obligations on national and most-favoured-nation (MFN) treatment of foreign nationals, which are common to all categories of intellectual property covered by the Agreement. These obligations cover not only the substantive standards of protection but also matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in the Agreement. National treatment provision forbids discrimination between a member’s own nationals and the nationals of other members, and requires the member to accord treatment no less favourable than that accorded to its own nationals. The MFN treatment obligation forbids discrimination between the nationals of other members by requiring that any advantage a member grants to the nationals of another member must be extended immediately and unconditionally to the nationals of all other members, even if such treatment is more favourable than that which the member gives to its own nationals. Part II [2.50] TRIPS Part II addresses each intellectual property right in succession, and sets out the

minimum standards of protection to be provided by each member. Each of the main elements of protection is defined, namely the scope of the subject-matter to be protected, the rights to be conferred and permissible exceptions to those rights, any particular special provisions (such as the reversal of burden of proof in respect of process patents), and the minimum duration of protection. TRIPS sets these standards by requiring compliance with the substantive obligations of the major pre-existing conventions, and by adding a number of additional obligations on matters where the pre-existing conventions are silent or where they are seen by their proponents as being inadequate. 26 [2.50]

The International Context of Intellectual Property

CHAPTER 2

Copyright (Articles 9 – 14). Parties are required to comply with the substantive provisions of the Berne Convention (Paris 1971 version), although they are not obliged to protect moral rights as stipulated in Article 6bis of that Convention. Protection is extended to expressions, but not to ideas, procedures, methods of operation or mathematical concepts as such. Computer programs, whether in source or object code, are protected as literary works, as are databases and other similar data compilations, whether in a machine-readable or other form, provided that they constitute intellectual creations because of the selection or arrangement of their contents. Rental rights for computer programs, and cinematographic works in certain circumstances, are established. Performers may prevent the unauthorised fixation, reproduction and broadcast of their live performance, although the right covers only aural and not audiovisual fixations. Producers of phonograms are entitled to exclusive reproduction and exclusive rental rights, while broadcasting organisations have the right to prohibit unauthorised fixation, reproduction, and re-broadcasting. Literary works are protected for the life of the author plus 50 years; performances and recordings are protected for 50 years; while broadcasts are protected for 20 years. Trade marks and service marks (Articles 15 – 21). The The fundamental principle of trademark protection is that any sign, or any combination of signs, capable of distinguishing the goods and services of one undertaking from others, must be eligible for registration as a trademark, provided that it is visually perceptible. Such signs may take the form of particular words, including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination thereof. Marks that have become well-known in a particular country shall enjoy additional protection. In addition, the Agreement lays down a number of obligations with regard to the use of trade marks and service marks, their term of protection (at least seven years with unlimited renewal), and their licensing or assignment. For example, requirements that foreign marks be used in conjunction with local marks would, as a general rule, be prohibited. Geographical indications (Articles 22 – 24). The geographical indications provisions represent a delicate balance between conflicting European interests seeking high levels of protection, particularly for wines and spirits, and North American interests which are more interested in limiting protection than extending it. All parties must provide means to prevent the use of any indication which misleads the consumer as to the origin of goods, and any use constituting an act of unfair competition. A higher level of protection is provided for geographical indications for wines and spirits, which are protected even where there is no danger of the public being misled as to the true origin. Exceptions are allowed for names that have already become generic terms. Provision is made for further negotiations to establish a multilateral system of notification and registration of geographical indications for wines. Industrial designs (Articles 25 – 26). TRIPS devotes just two articles to protection of industrial designs, less than the attention given to the additional protection for geographical indications attached to wines and spirits. Designs are protected for a period of 10 years. Owners of protected designs are able to prevent the manufacture, sale or importation of articles bearing or embodying a design that is a copy of the protected design. Patents (Articles 27 – 34). Members are required to make patents available for any invention, whether for a product or process, in all fields of technology without discrimination, provided that the invention is new, involves an inventive step, and is capable of industrial application. It also requires that patents be available and patent rights be enjoyable without [2.50]

27

Intellectual Property: Commentary and Materials

discrimination as to the place of invention, or whether products are imported or locally produced. Three exceptions are permitted to this basic rule on patentability, namely: • inventions contrary to ordre public or morality, including inventions dangerous to human, animal or plant life or health or seriously prejudicial to the environment; • diagnostic, therapeutic and surgical methods for the treatment of humans or animals; • plants and animals other than micro-organisms and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. The term of protection available shall extend for a period of 20 years from the date of filing of the patent application. Detailed conditions are set for compulsory licensing or governmental use of patents without the authorisation of the patent owner. Rights conferred in respect of patents for processes must extend to the products directly obtained by the process; under certain conditions, reversal of burden of proof may apply in respect of patented processes Plant varieties must be protectable either by patents or by a sui generis system, such as the provision of breeders’ rights by the International Union for the Protection of New Varieties of Plants (1961) (UPOV) established by the International Convention for the Protection of New Varieties of Plants (1961). Layout designs of integrated circuits (Articles 35 – 38). Members are required to provide protection on the basis of the Washington Treaty 1989. Protection must be available for a minimum period of 10 years. Trade secrets and know-how (Articles 39 – 40). Undisclosed information and trade secrets are deemed to be protectable under the rules of unfair competition. The protection does not confer any exclusive right, but provides the right (and the obligation) to prevent practices contrary to honest commercial practices with respect to both the disclosure and acquisition of undisclosed information. Persons and legal entities must be able to prevent information lawfully within their control from being acquired by, or disclosed to, others without their consent in a manner contrary to honest commercial practices, provided that such information: • is secret in that it is not generally known, either as a whole or in its various parts, to persons who would normally deal with that kind of information; • has commercial value because of its secret state; and • has been subject to reasonable steps by its owner to keep it secret. Article 39.3 makes a particular requirement to provide protection against unfair commercial use of undisclosed test or other data submitted as a condition for gaining market approval for new pharmaceutical or agricultural chemical products or for products which utilise new chemical entities. In respect of anti-competitive practices in contractual licences, consultations between governments must occur where there is reason to believe that licensing practices or conditions pertaining to IP rights constitute an abuse of these rights and have an adverse effect on competition. Remedies against such abuses must be consistent with the other provisions of the Agreement. Part III Enforcement [2.60] TRIPS Part III (Articles 41 - 61) sets out the obligations of member states to provide

procedures and remedies under domestic law to ensure that IP rights can be effectively enforced, by foreign right holders as well as by their own nationals. Procedures should permit effective action against infringement of IP rights but should be fair and equitable, not 28 [2.60]

The International Context of Intellectual Property

CHAPTER 2

unnecessarily complicated or costly, and should not entail unreasonable time limits or unwarranted delays. They should include access to provisional measures, and allow for judicial review of final administrative decisions. There is no obligation to put in place a judicial system distinct from general law enforcement, or to give priority to the enforcement of IP rights in the allocation of resources or staff. The special requirements relating to members’ border measures constitute a significant proportion of the TRIPS enforcement obligations. They establish a scheme for suspension of the release into circulation of suspected counterfeit trademark or pirated copyright goods, either on application by a right holder or by ex officio action by border authorities. A footnote to Part III defines the term “counterfeit trademark goods” as “any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation”. The term “pirated copyright goods” is defined as “any goods which are copies made without consent of the rights holder in the country of production and which are made directly or indirectly from any article where the making of that copy would have constituted an infringement of a copyright or a related right under the law of the country of importation”. Finally, while IP infringements are generally civil matters members must provide for criminal procedures and penalties at least in cases of wilful trade mark counterfeiting or copyright piracy on a commercial scale. Remedies should include imprisonment and fines sufficient to act as a deterrent. Parts IV–VII [2.70] TRIPS Part IV (Article 62) addresses the acquisition and maintenance of IP rights and related inter partes procedures. Part V (Articles 63 and 64) provides for dispute settlement to take place under the integrated GATT dispute-settlement procedures as revised in the Uruguay Round. Part VI (Articles 65 – 67) deal with implementation. It envisages a one-year transition period for developed countries to bring their legislation and practices into conformity. Developing countries and countries in the process of transformation from a centrally planned economy into that of a market economy have a five-year transition period, and leastdeveloped countries have 11 years. Part VII (Articles 68 – 73) provides for the establishment of a Council for Trade-Related Aspects of Intellectual Property Rights to monitor the operation of the Agreement and countries’compliance with it. Subject to certain exceptions, the general rule is that the obligations in the Agreement apply to existing IP rights as well as to new ones.

[2.70]

29

Intellectual Property: Commentary and Materials

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) [2.80] Marrakesh Agreement Establishing the World Trade Organization, Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Articles 1 – 4, 7, 8 General Provisions and Basic Principles Article 1 Nature and Scope of Obligations 1.

Members shall give effect to the provisions of this Agreement. Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement. Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice.

2.

For the purposes of this Agreement, the term “intellectual property” refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part II.

3.

Members shall accord the treatment provided for in this Agreement to the nationals of other Members. In respect of the relevant intellectual property right, the nationals of other Members shall be understood as those natural or legal persons that would meet the criteria for eligibility for protection provided for in the Paris Convention (1967), the Berne Convention (1971), the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits, were all Members of the WTO members of those conventions. 4 Any Member availing itself of the possibilities provided in paragraph 3 of Article 5 or paragraph 2 of Article 6 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for Trade-Related Aspects of Intellectual Property Rights (the “Council for TRIPS”).

Article 2 Intellectual Property Conventions 1.

In respect of Parts II, III and IV of this Agreement, Members shall comply with Articles 1 through 12, and Article 19, of the Paris Convention (1967).

2.

Nothing in Parts I to IV of this Agreement shall derogate from existing obligations that Members may have to each other under the Paris Convention, the Berne Convention, the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits.

Article 3 National Treatment (a)

4

5

30

Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection 5 of intellectual property, subject to the exceptions already provided in, respectively, the Paris Convention (1967), the In this Agreement, “Paris Convention” refers to the Paris Convention for the Protection of Industrial Property; “Paris Convention (1967)” refers to the Stockholm Act of this Convention of 14 July 1967. “Berne Convention” refers to the Berne Convention for the Protection of Literary and Artistic Works; “Berne Convention (1971)” refers to the Paris Act of this Convention of 24 July 1971. “Rome Convention” refers to the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, adopted at Rome on 26 October 1961. “Treaty on Intellectual Property in Respect of Integrated Circuits” (IPIC Treaty) refers to the Treaty on Intellectual Property in Respect of Integrated Circuits, adopted at Washington on 26 May 1989. “WTO Agreement” refers to the Agreement Establishing the World Trade Organization. For the purposes of Articles 3 and 4, “protection” shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in this Agreement. [2.80]

The International Context of Intellectual Property

CHAPTER 2

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) cont. Berne Convention (1971), the Rome Convention or the Treaty on Intellectual Property in Respect of Integrated Circuits. In respect of performers, producers of phonograms and broadcasting organizations, this obligation only applies in respect of the rights provided under this Agreement. Any Member availing itself of the possibilities provided in Article 6 of the Berne Convention (1971) or paragraph 1(b) of Article 16 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for TRIPS. (b)

Members may avail themselves of the exceptions permitted under paragraph 1 in relation to judicial and administrative procedures, including the designation of an address for service or the appointment of an agent within the jurisdiction of a Member, only where such exceptions are necessary to secure compliance with laws and regulations which are not inconsistent with the provisions of this Agreement and where such practices are not applied in a manner which would constitute a disguised restriction on trade.

Article 4 Most-Favoured-Nation Treatment With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members. Exempted from this obligation are any advantage, favour, privilege or immunity accorded by a Member: 1.

deriving from international agreements on judicial assistance or law enforcement of a general nature and not particularly confined to the protection of intellectual property;

2.

granted in accordance with the provisions of the Berne Convention (1971) or the Rome Convention authorizing that the treatment accorded be a function not of national treatment but of the treatment accorded in another country;

3.

in respect of the rights of performers, producers of phonograms and broadcasting organizations not provided under this Agreement;

4.

deriving from international agreements related to the protection of intellectual property which entered into force prior to the entry into force of the WTO Agreement, provided that such agreements are notified to the Council for TRIPS and do not constitute an arbitrary or unjustifiable discrimination against nationals of other Members.

… Article 7 Objectives The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. Article 8 Principles

• Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.

[2.80]

31

Intellectual Property: Commentary and Materials

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) cont.

• Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.

World Intellectual Property Organization (WIPO) [2.90] The predecessor of the World Intellectual Property Organization (WIPO) was established originally in 1896 when the administering bodies of the Paris Convention and the Berne Convention joined together. WIPO in its present guise came into being following the entry into force of the Convention Establishing the World Intellectual Property Organization 1967 (WIPO Convention). WIPO has been a specialised self-funding agency of the United Nations since 1974. It currently (July 2016) has 189 member states (most of whom are also members of the WTO). WIPO describes itself as the global forum for intellectual property services, policy, information and cooperation. The WIPO Convention, Article 5, provides that membership is open to any state that is a member of the Paris Union for the Protection of Industrial Property, or of the Berne Union for the Protection of Literary and Artistic Works:

(ii)

or is a member of the United Nations, or of any of the United Nations’ Specialized Agencies, or of the International Atomic Energy Agency, or is a party to the Statute of the International Court of Justice;

(iii)

or is invited by the WIPO General Assembly to become a Member State of the Organization. WIPO administers TRIPS on behalf of the WTO, but also negotiates and brings into effect multilateral IP protection and management treaties in its own right. WIPO has largely created and now administers the following multilateral agreements, which can be broadly classified into three main groups according to their functions: IP protection treaties, classification treaties and global protection treaties.

TABLE 2.1 Treaties Administered by WIPO WIPO treaties Beijing (audiovisual performances Berne (literary works) Brussels (satellite signals) Geneva (phonograms) Madrid (indications of source) 32 [2.90]

Year into force Member states IP Protection Treaties Not yet in force 15

Australian accession -

1883 (1971)

183

1928

1974

37

1990

1971

79

1974

1891

36

-

The International Context of Intellectual Property

WIPO treaties Marrakesh VIP (visually impaired) Nairobi (Olympic symbol) Paris (industrial property) Patent Law Treaty (PLT) Rome (performers, producers, broadcasters) Singapore (trade marks) Trademark Law Treaty (TLT) Washington World Copyright Treaty (WCT) World Performances and Phonograms Treaty (WPPT) Locarno (designs) (9th ed) Nice (marks classification) (10th ed) Strasbourg (patent classes) Vienna (marks elements) Budapest (microorganisms) Hague (industrial designs) Lisbon (appellations of origin) Madrid Agreement (marks) Madrid Protocol (marks) Patent Cooperation Treaty (PCT)

CHAPTER 2

Year into force 2016

Member states 25

Australian accession 2015

1981

52

–

1883 (1979)

194

1925

2005

39

2009

1961

92

1992

2006

45

2009

1994

54

1998

not yet in force 2002

3 94

– 2007

2002

94

2007

Classification Treaties 1968 54

–

1957 (2012)

84

1961

1971

62

1975

1973

32

–

Global Protection Treaties 1977 80

1987

1925 (1999)

66

–

1958

28

–

1891 (1979)

55

–

1989

98

2001

1970

151

1980

[2.90]

33

Intellectual Property: Commentary and Materials

WIPO treaties International Convention for the Protection of New Plants (UPOV) (plant varieties)*

Year into force 1961 (1991)

Member states 74

Australian accession 1989

(as at 01/01/2017) *The International Union for the Protection of New Varieties of Plants (UPOV), established by the International Convention for the Protection of New Varieties of Plants, is an independent intergovernmental organisation having legal personality. Pursuant to an agreement concluded between WIPO and UPOV, the Director-General of WIPO is the Secretary-General of UPOV and WIPO provides administrative and financial services to UPOV. The WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT) deserve particular attention. These are commonly known as the “internet treaties”, since they are aimed at protecting copyright and neighbouring rights in the digital environment. The WCT and WPPT were approved by WIPO members in 1996. However, it took another six years until either treaty received the requisite minimum 30 accessions to enable them to come into force. The primary objective of both the WCT and WPPT is to establish and raise the level of international protection for copyright and related rights that were established before the development and widespread use of personal computers and the internet. The WCT supplements the Berne Convention and introduces new and far-reaching norms to protect the rights of authors of literary and artistic works within the digital environment. Similarly, the WPPT builds upon the Rome Convention, and serves to safeguard the interests of producers of phonograms and performers whose performances are fixed in phonograms. In particular, both treaties raise the minimum standards of global IP protection with respect to internet-based delivery of copyrighted works. Both treaties require signatories to provide a framework of basic rights to enable creators of protectable work to commercially exploit their creations and to control the way they are used and by others. Most importantly, the treaties ensure that the owners of those rights will continue to be protected when their works are disseminated through new technologies and communications systems such as the internet. The treaties thus clarify that existing rights continue to apply in the digital environment, and create new online rights. Australia became a member of WIPO in 1972, and a member of the WTO upon its establishment in 1995. Australia thereby acceded to TRIPS at the same time as it became a member of the WTO.

Bilateral and regional trade agreements with IP provisions [2.100] While TRIPS has set the minimum international standards for IP protection, the

nature of these standards and universal adherence to them has still created difficulties and challenges for developing countries, and least developed countries. It has also generated a considerable degree of frustration and dissatisfaction for a number of the major industrialised nations. In some respects, TRIPS has become somewhat superseded by the emergence of the new round of IP lawmaking in the post-TRIPS world. WTO has stumbled at its recent 34 [2.100]

The International Context of Intellectual Property

CHAPTER 2

ministerial meetings on efforts to liberalise global trade, and to also inject a greater degree of equity and access into TRIPS. Failure to conclude the Doha Rounds after 13 years of rounds of largely fruitless negotiations, calls into question WTO’s continuing existence as the lead forum for the global trade agenda. At the same time, WIPO has been confronted with its own self-examination debate over proposals and counter-proposals which have the potential to significantly change its position and role in the global IP arena. The new “international standard” of IP protection in practical terms is fast becoming that which is defined by the terms enshrined in the latest bilateral or regional trade agreement which the United States and the EU in particular may have concluded. The “highest international standards” have become very much a dynamic formula in a bilateral context rather than the multilateral forums. Bilateral and regional trade and investment agreements, particularly free trade agreements (FTAs), have become the most common medium for developed countries to impose enhanced IP protection standards, or “TRIPS-plus” provisions as they have become popularly known outside the forums of the WTO and WIPO. The definition of “investment” in these agreements invariably includes intellectual property rights. These agreements typically contain extensive IP protection provisions, either under the broad “investment” definition or within specific IP provisions, which the major developed countries utilise to establish standards which exceed those enshrined in TRIPS. In so doing, they tend to remove or reduce the flexibilities provided by or permitted in TRIPS, or to even establish protection in new areas of IP rights that go beyond the parameters of TRIPS. The process of utilising trade and investment agreements to impose TRIPS-plus IP protection has been described as a process that constitutes “raising the bar” or a “global ratcheting” of IP protection benchmarks. 6 This process, which is seeing certain national intellectual property norms globalise upwards to those higher standards at a remarkable rate, is dependent upon the following key elements: • forum shifting – in which the standard-setting agenda is moved from fora in which difficulties are encountered in imposing TRIPS-plus standards (such as the WTO) to fora in which success is more likely to be achieved (such as bilateral and regional agreements); • co-ordinated bilateral and multilateral intellectual property protection strategies; and • entrenchment in bilateral and regional agreements of the principle of ever-increasing minimum protection standards. 7 The two major protagonists in this process of global enhancement and harmonisation through integration are the United States and the European Union. [2.110] Bilateral and regional trade and investment agreements are promoted by their

advocates as being stepping stones towards full integration of their participants into a global free market economy, by ensuring that governments implement the liberalisation, privatisation and deregulation measures of the globalisation agenda. These advocates argue that the introduction of free trade and the removal of regulations on investment that bilateral agreements generate will lead to economic growth, the reduction of poverty, increased living standards and employment opportunities. 6 7

P Drahos, “BITs and BIPs – Bilateralism in Intellectual Property” (2001) 4 Journal of World Intellectual Property 791 at 798–99. P Drahos, “BITs and BIPs – Bilateralism in Intellectual Property” (2001) 4 Journal of World Intellectual Property 791 at 798. [2.110]

35

Intellectual Property: Commentary and Materials

The critics of bilateral agreements, on the other hand, argue that the agreements merely allow transnational corporations more freedom to exploit workers and to shape the national and global economies of the junior partners to suit the corporations’ interests. Some commentators have argued at length that the self-interest mechanisms that are particular to the US-sponsored bilateral agreements – such as the conditions relating to the protection of IP rights, their enforcement, and the control or check mechanisms for managing the agreements – are tantamount to an intrusion into domestic lawmaking. Bilateral agreements have been critically painted as part of an insidious fast-expanding and bewildering web, popping up like hydra’s heads throughout the world, and constructing in patchwork fashion what the developed nations have not been able to impose through such international forums as the WTO, or through multilateral negotiations. 8 Bilateral agreements are also seen as insidious because they are invariably conducted in an unequal contest in closed sessions between unequal partners – mainly a developed country in contest with a developing, or least developed, country. As two commentators on bilateralism so colourfully, yet accurately, describe the outcome of such a scenario, “[b]ilateralism is like cooking an elephant and rabbit stew: however you mix the ingredients, it ends up tasting like elephant stew”. 9 It is estimated that there are currently almost 3,000 bilateral investment treaties in force globally.

AUSTRALIAN DOMESTIC CONTEXT ON IP [2.120] Since Federation, primary responsibility for IP laws has been vested in the

Commonwealth Parliament. Section 51(xviii) of the Australian Constitution gives the Commonwealth a concurrent power “to make laws for the peace, order, and good government of the Commonwealth with respect to (xvii) copyright, patents of inventions and designs, and trade marks”. This specificity has led to a consideration of the constitutional limits of the provision. The constitutionality of “Union” trade marks, performer’s rights, plant variety rights and plant breeder’s rights has been debated. This power has been significantly supplemented by the external affairs power s 51(xxix). The High Court interpretation of this power in, for example, Commonwealth v Tasmania (1983) 158 CLR 1 (Tasmanian Dams Case) and Minister of State for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 (Teoh Case) has been that it validates Commonwealth legislation enacted in accordance with international treaties to which Australia is a signatory. Thus, for example, the Commonwealth moral rights legislation is valid under the external affairs power even though moral rights are not specifically mentioned in s 51(xviii). In Grain Pool of WA v Commonwealth (2000) 202 CLR 479, the High Court supported a generous interpretative approach to s 51(xviii), supporting “fresh rights in the nature of copyright, patents of inventions and designs and trade marks” (emphasis added). The Court acknowledged the need to “make allowance for the dynamism which, even in 1900, was inherent in any understanding of the terms used in s 51(xviii)” (at 493). Potential to enact some IP legislation by relying upon the postal and telegraphic power (s 51(v)) and the external 8 9

36

A Choudry, Bilateral Trade and Investment Deals a Serious Challenge to Global Justice Movements, GRAIN (December 2003), available at http://www.grain.org/rights/tripsplus.cfm?id=2 (cited 2 June 2011). P Drahos and J Braithwaite, Information Feudalism: Who Owns the Knowledge Economy? (Earthscan, London, 2002), p 194. [2.120]

The International Context of Intellectual Property

CHAPTER 2

affairs power (s 51(xxix)) was also acknowledged. Given the High Court’s support for “fresh rights” and the importance of treaty-making to contemporary IP law reform, constitutional challenges are likely to remain uncommon. In Australia, the various types of IP are protected by the following domestic laws: • Copyright Act 1968 (Cth), which replaced the earlier Copyright Act 1905 (Cth), and Copyright Act 1912 (Cth) (which was a simple translation of the Copyright Act 1911 (UK)). The Act has been extensively amended and expanded since its initial enactment, including by the following legislation: – Copyright Amendment Act 1980 (Cth); – Copyright Amendment Act 1989 (Cth); – Copyright Amendment (Re-enactment) Act 1993 (Cth) (performers’ rights); – Copyright (World Trade Organization Amendments) Act 1994 (Cth); – Copyright Amendment Act (No 1) 1998 (Cth); – Copyright Amendment Act (No 2) 1998 (Cth) (sound recordings); – Copyright Amendment (Computer Programs) Act 1999 (Cth); – Copyright Amendment (Digital Agenda) Act 2000 (Cth); – Copyright Amendment (Moral Rights) Act 2000 (Cth); – Copyright Legislation Amendment Act 2004 (Cth); – US Free Trade Agreement Implementation Act 2004 (Cth); – Copyright Amendment (Film Directors’ Rights) Act 2005 (Cth); – Copyright Amendment Act 2006 (Cth); – Copyright Amendment (Online Infringement) Act 2015 (Cth). • Patents Act 1990 (Cth), which replaced the original Patents Act 1903 (Cth), and the Patents Act 1952 (Cth) (again, largely based on the Patents Act 1949 (UK)); – Patents Amendment Act 2001 (Cth); – Patents Amendment (Innovation Patents) Act 2000 (Cth). • Trade Marks Act 1995 (Cth), which replaced the Trade Marks Act 1905 (Cth) (which was significantly expanded in 1948 and again in 1978); – Trade Marks Amendment (Madrid Protocol) Act 2000 (Cth); – Trade Marks Amendment Act 2006 (Cth); – Trade Marks Amendment (Tobacco Plain Packaging) Act 2011 (Cth)). • Circuit Layouts Act 1989 (Cth); • Plant Breeder’s Rights Act 1994 (Cth) (formerly the Plant Varieties Act 1987 (Cth)); – Plant Breeder’s Rights Amendment Act 2002 (Cth); • Designs Act 2003 (Cth), which replaced the Designs Act 1906 (Cth)). However, the statutory protection regime for IP rights extends beyond the above sui generis IP laws. For example, the Australian Consumer Law, s 18 (being part of Sch 2 of the Competition and Consumer Act 2010 (Cth) and replacing the Trade Practices Act 1974 (Cth), s 52), prohibits conduct by corporations in trade or commerce that is misleading or deceptive or is likely to mislead or deceive. The US Free Trade Implementation Act 2004 (Cth) [2.120]

37

Intellectual Property: Commentary and Materials

introduced a number of changes to the above Acts, particularly in the area of copyright, as part of the implementation of the Australia–US Free Trade Agreement (AUSFTA). Other legislation that applies across the board to IP rights generally, or which impacts directly on the above primary IP acts or key provisions thereof, include the following: • Intellectual Property Laws Amendment Act 2006 (Cth); • Australian Wine and Brandy Corporation Amendment Act 2010 (Cth); • Resale Royalty Right for Visual Artists Act 2011 (Cth); • Tobacco Plain Packaging Act 2011 (Cth) (and the associated Trade Marks Amendment (Tobacco Plain Packaging) Act 2011); • Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth); • Intellectual Property Laws Amendment Act 2015 (Cth).

AUSTRALIA’S REGIONAL IP-STRONG AGREEMENTS [2.130] According to the Department of Foreign Affairs and Trade (DFAT), Australia has 10

FTAs currently in force – with New Zealand, Singapore, Thailand, United States, Chile, the Association of South East Asian Nations (ASEAN) (with New Zealand), Malaysia, Korea, Japan and China. The countries covered by these FTAs account for 67 per cent of Australia’s total trade. Australia has also recently signed (in February 2016) the Trans Pacific Partnership Agreement (TPPA). The Government is currently going through the necessary domestic political and legislative processes required to ratify the Agreement and to bring it into force in Australia.

Australia–United States Free Trade Agreement [2.140] Formal negotiations on Australia’s proposed FTA with the United States (AUSFTA) commenced in November 2002. Five rounds of negotiation were conducted between March 2003 and February 2004. The finalised agreement was agreed at Washington on 8 February 2004, and tabled in the Australian Parliament on 8 March 2004. The implementing legislation, the US Free Trade Implementation Act 2004 (Cth), was passed by Parliament in August 2004, and entered into force on 1 January 2005. The Agreement consists of 23 chapters, several annexes and a range of side letters (exchanges of letters). The IP provisions are incorporated in Chapter 17 of the Agreement, which is one of its most substantial chapters. Key points in the chapter include:

• stronger protection for copyright owners, including: – agreement to implement the WIPO “Internet Treaties” (WCT and WPPT) by entry into force of the Agreement, being the latest global IP standards on the treatment of digital copyright material; – an expeditious process for allowing copyright owners to engage with internet service providers (ISPs) and subscribers to deal with allegedly infringing copyright material on the internet; – tighter controls on circumventing technological protection of copyright material, and a mechanism for examining and, as necessary, introducing public interest exceptions in relation to technological protection measures; 38 [2.130]

The International Context of Intellectual Property

CHAPTER 2

– other measures in relation to circumvention tools; – agreement on standards of copyright protection; – increased term of protection for copyright material from life of creator plus 50 years to life of creator plus 70 years; • enhanced IP enforcement, including: – increased criminal and civil protection against the unlawful decoding of encrypted program carrying satellite TV signals; – agreed criminal standards for copyright infringement, and on remedies and penalties; – reinforcement of Australia’s existing framework for industrial property protection. In addition, the Agreement includes agreement to work to reduce differences in law and practices, in the area of patents, trademarks and designs, and to promote bilateral and regional cooperation with respect to enforcement of border measures. It also provides for the introduction of transparent procedures into the marketing approval process for pharmaceuticals products coming off patents.

Australia–United States of America Free Trade Agreement [2.150] Australia–United States of America Free Trade Agreement, Article 17.1: General Provisions • Each Party shall, at a minimum, give effect to this Chapter. A Party may provide more extensive protection for, and enforcement of, intellectual property rights under its law than this Chapter requires, provided that the additional protection and enforcement is not inconsistent with this Agreement. International Agreements 2.

Each Party affirms that it has ratified or acceded to the following agreements: • the Patent Cooperation Treaty (1970); • the Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite (1974); • the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989); • the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1980); • the International Convention for the Protection of New Varieties of Plants (1991); • the Trademark Law Treaty (1994); • the Paris Convention for the Protection of Industrial Property (1967) …; and • the Berne Convention for the Protection of Literary and Artistic Works (1971) ….

3.

Further to Article 1.1.2 (General), the Parties affirm their rights and obligations with respect to each other under the TRIPS Agreement.

4.

Each Party shall ratify or accede to the WIPO Copyright Treaty (1996) and the WIPO Performances and Phonograms Treaty (1996) by the date of entry into force of this Agreement, subject to the fulfilment of their necessary internal requirements.

5.

Each Party shall make its best efforts to comply with the provisions of the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs (1999), and the Patent Law Treaty (2000), subject to the enactment of laws necessary to apply those provisions in its territory. [2.150]

39

Intellectual Property: Commentary and Materials

Australia–United States of America Free Trade Agreement cont. National Treatment 6.

In respect of all categories of intellectual property covered in this Chapter, each Party shall accord to nationals of the other Party treatment no less favourable than it accords to its own nationals with regard to the protection and enjoyment of such intellectual property rights and any benefits derived from such rights. With respect to secondary uses of phonograms by means of analogue communications and free over-the-air radio broadcasting, however, a Party may limit the rights of the performers and producers of the other Party to the rights its persons are accorded in the territory of the other Party. (emphasis added)

[Note] … protection includes matters affecting the availability, acquisition, scope, maintenance, and enforcement of IP rights, as well as those matters affecting the use of IP rights specifically covered by this Chapter. … protection also includes the prohibition on circumvention of effective technological measures specified in Article 17.4.7 and management information specified in Article 17.4.8.

The recent Korean, Japanese and Chinese Trade Agreements [2.160] During 2014 and 2015, Australia entered into ground-breaking bilateral trade

agreements with South Korea (entered into force 12 December 2014) (KAFTA), Japan (entered into force 15 January 2015) (JAEPA), and China (entered into force 15 December 2015) (CHAFTA), all of which include rather brief chapters on IP rights and their administration, particularly when contrasted with the AUSFTA IP chapter. The KAFTA IP Chapter (21 pages, 13 articles) is arguably the more comprehensive of these three recent agreements. It reinforces the parties’ commitments made under TRIPS. Attention is given early to national treatment and to specific commitments on patents, trademarks, copyright and related rights, geographical indications and enforcement. Some attention is given to civil, administrative and judicial procedures and remedies, as well as border measures. Perhaps not surprisingly, copyright in the digital environment, including technological protection measures rights management, and the internet receives the lion’s share of attention. The JAEPA IP Chapter (nine pages, 16 articles) also reinforces and builds on the parties’ existing rights and obligations under TRIPS. Rather than advocating increased protections standards, it focusses on the promotion of transparency and administration of those regimes. In relation to copyright, it provides for protection against unauthorised circumvention technological protection measures and also addresses the protection of undisclosed information. The chapter includes brief requirements related to border measures, and states that criminal penalties must be sufficient to provide a deterrent to future infringements. The CHAFTA IP Chapter 11 pages, 24 articles) is essentially a restatement of the parties’ existing international obligations. It includes provisions on various issues including national treatment, enforcement, border measures, geographical indications and cooperation.

The Trans-Pacific Partnership Agreement (TPPA) [2.170] The Trans-Pacific Partnership Agreement (TPPA) is a comprehensive multilateral free

trade agreement involving 12 Pacific Rim countries, namely, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Negotiations commenced in 2008 and were completed on 5 October 2015. The Agreement was signed by the negotiating parties on 4 February 2016 in Auckland, New Zealand. 40 [2.160]

The International Context of Intellectual Property

CHAPTER 2

According to its promoters, the TPPA will increase economic liberalisation and integration in the Asia-Pacific region, particularly as membership expands. Accordingly, it encompasses the broad spectrum of trade and investment areas, including trade in goods, rules of origin, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, trade in services, intellectual property, government procurement and competition policy. Its declared goals are to strengthen and broaden the mutually-beneficial linkages between member economies; enhance regional and global competitiveness; support the creation of jobs and new economic opportunities; promote economic growth and development; support innovation and help to alleviate poverty; and ensure the greatest benefits for the member peoples. 10 The Agreement constitutes a voluminous and complex treaty, comprising 30 chapters, 2700 pages (6000 pages including Schedules and side letters). The TPPA is contentious because of some of its provisions and because of the secretive nature of the negotiations. The IP Chapter (Chapter 18) also proved to be both complex and controversial. While other negotiating parties have proffered proposals, much of the debate and contentious argument over the Chapter focussed upon the leaked US negotiating positions, although some of the more extreme claims of those positions did not last through to the final agreed text. Nevertheless the Chapter is still extensive, detailed and complex, comprising 75 pages, 83 clauses; 161 footnotes; 6 annexes, and side letters. The stated objectives of the IP Chapter is that protection and enforcement of IP rights should contribute to technological innovation promotion and the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. Hence measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, are permitted, but only if such measures are still consistent with the provisions of this Chapter. Similarly, parties may take measures to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology, but only if they are still consistent with the provisions of this Chapter. The Chapter is a minimum standards template. It restates commitment to TRIPs, the Berne and Paris Conventions and a range of WIPO treaties. It emphasises cooperation between the parties in domestic and international IP policy, IP administration and registration systems, and policies involving the use of IP for research, innovation and economic growth (art 18.13). In the area of trademarks (arts 18 – 37), the chapter strengthens registration rights and limits cancellation and revocation grounds, and broadens the scope of protection for registered marks, well-known marks, certification marks, collective marks and electronic marks. Geographical indications receive particular attention, making them secondary and subject to trademarks, and thus operating their status as enshrined in TRIPS. Hence the grounds for cancellation and revocation, particularly when in conflict with trademarks, are liberalised. In the area of patents (arts 37 – 54), the range of patentable inventions are expanded to include inventions claimed as at least one of the following: new uses of a known product, new 10

See Australian Government Department of Foreign Affairs and Trade, “Trans-Pacific Partnership Agreement: Latest News”, 17 May 2016, at http://www.dfat.gov.au/trade/agreements/tpp/pages/trans-pacificpartnership-agreement-tpp.aspx. [2.170]

41

Intellectual Property: Commentary and Materials

methods of using a known product, or new processes of using a known product. Parties are required to adjust the term of the patent to compensate for unreasonable delays in issuing patents – up to five years from date of filing or three years from examination – although the term “unreasonable” is and liability for delays are not explained. Greater restrictions are placed on agricultural and pharmaceutical-based inventions under patent application in respect of the access and use by third parties of submitted undisclosed test or other data concerning the safety and efficacy of the a new pharmaceutical product (or use). In the case of pharmaceutical products containing biologics – complex molecules such as proteins isolated from plants, animals and micro-organisms – a Party shall either provide effective market protection for a period of at least five years or eight years from the date of first marketing approval to provide effective market protection. In respect of copyright and neighbouring rights (arts 57 – 70), the Chapter focusses on the rights of the copyright holder, with little attention given correspondingly to the user, notwithstanding the noble objectives and principles asserted in the Chapter’s introductory articles. The rights of reproduction, communication to the public, distribution by authors, performers and producers of phonograms receive quite some attention and detail, although the terms of protection remain unchanged for the Australian context. Technological Protection Measures and Rights Management Information systems are also the subject of scrutiny, with the scope being widened and sanctions for their circumvention, removal or other interference being strengthened. Finally, the Chapter establishes safe harbour provisions for internet service providers to cooperate with copyright owners to deter the unauthorised storage and transmission of copyrighted materials. In contrast, traditional knowledge and cultural heritage systems, on the other hand, receive scant attention. In just one brief article with the parties merely recognising the relevance of IP systems to traditional knowledge associated with genetic resources when that traditional knowledge is related to IP systems, and agreeing to endeavour to cooperate with each other to enhance the understanding of issues connected with traditional knowledge associated with genetic resources, and genetic resources (art 18.16). The TPPA overall, as well as the IP Chapter, requires parties to introduce strong enforcement systems including civil procedures, provisional measures, border (customs) measures and criminal procedures and penalties for commercial scale trade mark counterfeiting and copyright or related rights piracy. The systems lower and broaden the threshold for criminal liability. The test for wilfulness, for example, in respect of copyright or related rights piracy, “on a commercial scale” includes (a) acts carried out for commercial advantage or financial gain; and (b) significant acts, not carried out for commercial advantage or financial gain, that have a substantial prejudicial impact on the interests of the copyright or related rights holder in relation to the marketplace. According to the Department of Foreign Affairs and Trade and to other commentators, 11 the IP Chapter requirements do not necessarily impose a major burden in the Australian context necessitating wholesale changes to our IP laws, and the impact may be relatively small. 11

See Australian Government Department of Foreign Affairs and Trade, “Trans-Pacific Partnership Agreement. Chapter Summary: Intellectual Property”, at http://www.dfat.gov.au/trade/agreements/tpp/summaries/ Documents/intellectual-property.PDF. See also P Ormonde Fitzpatrick, “Trans-Pacific Partnership (TPP) Agreement – Intellectual Property provisions”, at https://www.pof.com.au/trans-pacific-partnership-tppagreement-intellectual-property-provisions; Herbert Smith Freehills, “TPP impact: Intellectual property”, at http://www.herbertsmithfreehills.com/insights/issues/trans-pacific-partnership/intellectualproperty/tabs/ip-australia.

42 [2.170]

The International Context of Intellectual Property

CHAPTER 2

They would maintain that Australia’s IP laws are already in or near general compliance because of the range and nature of enhancements undertaken as a consequence of AUSFTA obligations a decade or so earlier. However, the future of the TPPA is not certain. The Agreement requires ratification by original signatories who together account for 85 percent of combined gross domestic product (GDP) of all signatories before it can come into force. This means that it must be ratified by both the United States and Japan. While Japanese ratification may not be a problem, the United States is experiencing strong opposition from President Trump, Republicans and Democrats in both chambers of Congress and from the American electorate across the broad spectrum of political persuasion, to the extent that the United states may not ratify unless there are further changes to bring the Agreement as a whole and the IP provisions more into line with some of the unsuccessful US negotiating positions. Immediately following his inauguration on 20 January 2017, President Trump declared that the United States was withdrawing from the TPPA.

The Regional Comprehensive Economic Partnership [2.180] Even if the TPPA does not eventuate, Australia has another major regional trade

agreement with IP provisions in its sights. The Regional Comprehensive Economic Partnership (RCEP) is an ASEAN-centred proposal for a regional free trade area, which includes the 10 ASEAN member states and those countries with existing FTAs with ASEAN, namely, Australia, China, India, Japan, Republic of Korea and New Zealand. The 16 RCEP participating countries account for almost half of the world’s population, almost 30 per cent of global GDP, making it only marginally smaller than the TPPA. Of greater significance is the fact that, in many respects, it stands in direct competition to the TPPA. China, as the major promoter of the RCEP is not part of the TPPA negotiating membership, while the RCEP negotiating group does not include the United States. RCEP members are striving to finalise their treaty by early 2017 – many months before the TPPA can come into force. This would be a remarkable achievement in terms of international trade agreement creation, since the negotiations were only launched in November 2012. The RCEP and the TPPA cover common ground in terms of being major comprehensive trade treaties both covering trade in goods, investment, intellectual property and regional cooperation, as well as their negotiating participants. According to leaked versions of the negotiating documents (since, as is customary for trade deals, negotiations are held in secret), it appears that the RCEP will set lower regulatory standards and less mandatory harmonisation amongst members than the TPPA; it also appears to be making greater allowances for developing economies amongst its participating countries. While much of the language of the RCEP’s IP chapter appears similar to the TRIPS Agreement or the TPPA, there are some significant differences – such as a section on genetic resources, traditional knowledge and folklore substantially longer than the TPPA’s brief reference. It has been suggested by one expert commentator that, in the interests of striking agreement as soon as reasonably feasible, the RCEP IP chapter will promote lower protection standards that the TPPA, but still more expansive protection than the TRIPS Agreement or what is currently available in many Asian countries. 12 12

See P K Yu, “The RCEP and Intellectual Property Norm-Setting in the Asia-Pacific”, Intellectual Property Rights And Mega-Regional Trade Agreements (Global Perspectives and Challenges for the Intellectual Property [2.180]

43

Intellectual Property: Commentary and Materials

The Australian Productivity Commission inquiry into IP [2.190] In August 2015, Treasurer Joe Hockey requested the Australian Productivity

Commission to undertake an inquiry into Australia’s intellectual property arrangements, including their effect on investment, competition, trade, innovation and consumer welfare. The Government sought to ensure that the appropriate balance exists between incentives for innovation and investment and the interests of both individuals and businesses, including small businesses, in accessing ideas and products. 13 In undertaking the inquiry, the Commission has been asked to examine the effect of the scope and duration of protection afforded by Australia’s IP system on research and innovation, access to and cost of goods and services, and competition, trade and investment. Its brief includes recommending changes to the current system that would improve the overall wellbeing of Australian society, which take account of Australia’s international trade obligations. In undertaking the inquiry and proposing changes, the Commission is to have regard to, amongst others: 1.

Australia’s international arrangements, including obligations accepted under bilateral, multilateral and regional trade agreements to which Australia is a party.

2.

The IP arrangements of Australia’s top IP trading partners and the experiences of these and other advanced economies in reforming their IP systems.

3.

The relative contribution of imported and domestically produced IP to the Australian economy, for example to Australia’s terms of trade and other economic impacts of IP protection, including on inward investment.

4.

Ensuring the intellectual property system will be efficient, effective and robust through time, in light of economic and technological changes.

5.

How proposed changes fit with, or may require changes to, other existing regulation or forms of assistance (such as research subsidies) currently providing incentives for the development of intellectual property.

6.

The findings and recommendations of the Harper Competition Policy Review, the Advisory Council on Intellectual Property’s Review of the Innovation Patent System, the Senate Economics References Committee’s inquiry into Australia’s innovation system the Australian Law Reform Commission’s Copyright and the Digital Economy report. The Commission submitted the Report to Government on 23 September 2016, which subsequently publicly released it on 21 December 2016. The Report is currently undergoing a further consultation process during early 2017. The Report strongly criticises the current Australian IP system. It asserts that Australia’s IP system has swung too far in favour of vocal rights holders and influential IP exporting nations, and that action must be taken to rebalance Australia’s IP arrangements. Australia overwhelmingly imports more IP than it exports, and this gap is widening. Most of the profits from excessive IP rights flow offshore. Many of Australia’s IP arrangements are locked-in by trade agreements, frustrating much needed change.

13

System, CEIPI-ICTSD Publication Series No 4) 2016, at SSRN: http://www.ssrn.com/abstract=2810579 Australian Government Productivity Commission, “Intellectual Property Arrangements: Terms of Reference”, at http://www.pc.gov.au/inquiries/current/intellectual-property/terms-of-reference.

44 [2.190]

The International Context of Intellectual Property

CHAPTER 2

Australia’s patent system is poorly targeted – some patented inventions border on trivial and protection can last too long. For pharmaceuticals alone, excessive protection costs the Australian Government, taxpayers and consumers over a quarter of a billion dollars each year. While copyright protection lasts too long. To correct these imbalances, Australia needs a new, principles-based, fair use exception, to protect user rights without undermining the incentive to create.

Australian Government Productivity Commission Main Key Points [2.200] http://www.pc.gov.au/inquiries/current/intellectual-property/draft#glance

• Intellectual property (IP) arrangements need to balance the interests of rights holders with users. IP arrangements should: – encourage investment in IP that would not otherwise occur; – provide the minimum incentives necessary to encourage that investment; – resist impeding follow-on innovation, competition and access to goods and services. • Improvements are needed so Australia’s copyright and patent arrangements function effectively and efficiently. • Australia’s patent system grants protection too easily, allowing a proliferation of lowquality patents, frustrating the efforts of follow-on innovators, stymieing competition and raising costs to the community. To raise the quality of patents, the Australian Government should: – increase the degree of invention required to receive a patent, abolish the innovation patent, redesign extensions of term for pharmaceutical patents, limit business method and software patents, and use patent fees more effectively. • Australia’s copyright system has progressively expanded and protects works longer than necessary to encourage creative endeavour, with consumers bearing the cost. – A new system of user rights, including the introduction of a broad, principles-based fair use exception, is needed to help address this imbalance. – Better use of digital data and more accessible content are the key to reducing online copyright infringement, rather than increasing enforcement efforts or penalties. • While Australia’s enforcement system works relatively well for large rights holders, reforms can improve outcomes for small- and medium-sized enterprises. – Recent self-initiated reforms of the Federal Court, with an emphasis on lower costs and informal alternatives, should improve enforcement outcomes and replicate many of the benefits a dedicated IP court would offer. – Changes to the Federal Circuit Court are one option for improving dispute resolution options for small- and medium-sized enterprises. • Commercial transactions involving IP rights should be subject to competition law. The current exemption under the Competition and Consumer Act is based on outdated views and should be repealed. • Improving IP governance arrangements would help promote a coherent and integrated approach to IP policy development and implementation. [2.200]

45

Intellectual Property: Commentary and Materials

• Multilateral and bilateral trade agreements are the primary determinant of Australia’s IP; arrangements. These agreements substantially constrain domestic IP policy flexibility. – An overly generous system of IP rights is particularly costly for Australia – a significant net importer of IP, with a growing trade deficit in IP-intensive goods and services. – The Australian Government should focus its international IP engagement on encouraging more balanced policy arrangements for patents and copyright, and reducing transaction and administrative costs for parties seeking IP rights in multiple jurisdictions. – Improving the evidence base and analysis that informs international engagement (especially trade agreements with IP provisions) would help the Australian Government avoid entering agreements that run counter to Australia’s interest.

The Australian tobacco plain packaging saga [2.210] The saga of the global disputation over the introduction of Australia’s tobacco plain packaging legislation in 2012 demonstrates the manner in which international trade interests and domestic IP can interact and sometimes generate domestic and international conflict between opposing interests. It further demonstrates that the two can never been seen as entirely operating in isolation. While international trade agreement may not always drive domestic IP policy, it will more often than not influence it. Throughout 2010 and 2011 the then Australian Government conducted a public health campaign incorporating formal public consultation processes and targeted consultation with stakeholders, as part of its legislative initiative to progressively restricting the promotion and sale of tobacco and tobacco products. The campaign culminated in the enactment of the Tobacco Plain Packaging Act 2011 (Cth) (the TPP Act), and related legislation, on 21 November 2011. The Government asserted at the time that the legislation is part of a comprehensive suite of reforms as a public health initiative that it is implementing to reduce smoking and its perceived harmful effects. The legislation was also one means by which the Government gives effect to Australia’s obligations under the World Health Organization Framework Convention on Tobacco Control (FCTC) [2005] ATS 7. Article 11 of the FCTC requires Parties to implement effective measures to ensure that tobacco packaging does not promote a tobacco product by any means that are false, misleading, deceptive or likely to create an erroneous impression about its characteristics or health effects. Article 13 requires Parties to implement comprehensive bans on tobacco advertising, promotion and sponsorship. Guidelines adopted by the Conference of the Parties to the FCTC for arts 11 and 13 recommend that Parties consider introducing plain packaging. The TPP Act requires that all tobacco packaging be in a particular shade of drab dark brown, as the optimal colour for achieving the objectives of the plain packaging legislation. It also imposes restrictions on the dimensions and make-up of tobacco packaging, preventing unique or “novelty” cigarette packets. However, brand names and variant names can continue to appear on tobacco packaging in specified locations, and in a standard colour, position, font style and size, enabling tobacco companies to continue to distinguish their products.

1. The HCA judgment [2.220] Four international tobacco companies brought an action against the Commonwealth

contending that the TPP Act and the consequent virtual prohibition on the use of their 46 [2.210]

The International Context of Intellectual Property

CHAPTER 2

trademarks and other “get-up” on cigarette packaging, extinguished their rights in respect of their trademarks, copyright and other forms of intellectual property. This extinguishment was, in effect, an acquisition by the Commonwealth of their intellectual property rights. They argued that since such acquisition was undertaken on other than “just terms”, it was unconstitutional under s 51(xxxi) of the Australian Constitution (remember that iconic Australian movie The Castle?). They also maintained that the same prohibition was contrary to the rights granted to holders of registered trademarks under the Australian Trade Marks Act 1995 (Cth), the Patents Act 1990 (Cth), the Designs Act 2003 (Cth) and the Copyright Act 1968 (Cth). They further claimed that the TPP Act violated certain provisions of the WTO’s Agreement on Trade-Related Aspects on Intellectual Property Rights TRIPs Agreement and thus Australia’s obligations as a WTO member. On 5 October 2012, the Australian High Court handed down its decision in the matter of JT International SA v Commonwealth [2012] HCA 43, addressing the question as to whether or not the provisions of Tobacco Plain Packaging Act 2011 (Cth) would result in an acquisition of intellectual property within the meaning of s 51(xxxi) of the Australian Constitution, thereby invalidating the Act. The High Court relevantly found that no such acquisition had occurred because the Australian Government did not stand to accrue a proprietary benefit or interest as a result of restrictions on the packaging of tobacco products. Critically, Philip Morris’s earlier contentions that “it was sufficient that there has been obtained no more than some identifiable benefit or advantage”, which, while not of a proprietary character, is at least a benefit or advantage “relating to the ownership or use of property” was not accepted by the High Court. The High Court case was just one of a number of skirmishes in the war between the tobacco companies and the Australian Government of over plain packaging for cigarettes and tobacco products. 2. Claim under the Australia Hong-Kong BIT of 1993 [2.230] Philip Morris Asia (PMA), a Hong Kong company which owns 100 per cent of the

shares in Philip Morris Australia, initiated investor-state dispute resolution proceedings with the Permanent Court of Arbitration (PCA) through a notice of arbitration under a 1993 Bilateral Investment Treaty (BIT) between Australia and Hong Kong (Agreement between The Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments). PMA claimed that the plain packaging legislation was a substantial deprivation of the intellectual property and goodwill vested in its Australian subsidiary – similar argument to that propounded before the High Court. It argued that the deprivation constituted an expropriation of its investments and breached the terms of the Treaty in respect of the treatment of investments in Australia. PMA’s written notification of claim alleged that it was entitled to compensation “in an amount to be quantified but of the order of billions of Australian dollars”. The Australian Government’s formal response of December 2011 emphasised that PMA did not have any formal interest in the Australian company until February 2011, some 10 months after the Australian government had made its policy position clear and public. Hence the Government’s argument was that PMA acquired assets knowing that, according to it, the value of those assets was about to be reduced by “billions of Australian dollars”. In addition, the Australian Government had received submissions from Philip Morris about the proposed legislation well before February 2011, so that PMA could not claim that it was [2.230]

47

Intellectual Property: Commentary and Materials

not aware of the impending action by the Government. The Government argued that PMA acquired assets in Australia knowing that it could be adversely affected by the forthcoming legislation, its motive being to enable it to launch a claim under the BIT. The arbitration was conducted by the PCA under the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules 2010. The tribunal was constituted on 15 May 2012, and issued its decision in December 2015, in which it stated that that it lacked jurisdiction to hear the arbitration. Reasons for the decision were issued in May 2016, and included the following: the initiation of this arbitration constitutes an abuse of rights, as the corporate restructuring by which the Claimant acquired the Australian subsidiaries occurred at a time when there was a reasonable prospect that the dispute would materialise and as it was carried out for the principal, if not sole, purpose of gaining Treaty protection. Accordingly, the claims raised in this arbitration are inadmissible and the Tribunal is precluded from exercising jurisdiction over this dispute.

3. The “Complaints” before the WTO’s Dispute Settlement Body [2.240] During 2012 Ukraine, Honduras, Dominican Republic and Cuba separately lodged

formal requests for consultations with Australia over its plain packaging legislation under the World Trade Organization (WTO) dispute resolution procedures. The consultations, which are confidential, are a precursor to a formal request to the WTO Dispute Settlement Body (DSB) to establish a dispute settlement panel. These WTO members are arguing that the tobacco plain packaging measures violate Australia’s obligations under the WTO’s TRIPS, its Agreement on Technical Barriers to Trade (TBT), and the General Agreement on Tariffs and Trade 1994 (GATT 1994). 14 They maintain that the legislation and related measures are unnecessary obstacles to trade, and nullify or impair the benefits accruing to them under these Agreements. Curiously, Ukraine had just signed into law a prohibition on all forms of advertising, sponsorship and promotion by the tobacco industry, and is reportedly considering introducing similar plain packaging legislation. 15 On 20 September 2013, Indonesia also requested consultations with Australia concerning certain Australian laws and regulations that impose restrictions on trademarks, geographical indications, and other plain packaging requirements on tobacco products and packaging. Indonesia claims that the measures appear inconsistent with Australia’s obligations under: • arts 2.1, 3.1, 15.4, 16.1, 16.3, 20, 22.2(b) and 24.3 of TRIPS; • arts 2.1 and 2.2 of the TBT; and • art III:4 of the GATT 1994. On 26 March 2014, the DSB established a panel at the request of Indonesia, thereby moving the dispute beyond the informal consultation stage. On 10 October 2014, the Chair of the panel informed the DSB that the panel did not expect to issue its final report to the parties before the first half of 2016. On 29 June 2016, the Chair informed the DSB that due to the complexity of the dispute, the panel did not expect to issue its final report to the parties before the end of 2016. 14

15

48

Australia – Certain Measures concerning Trademarks and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, WTO Doc WT/DS434/1, G/L/985 (15 March 2012) (Request for Consultations by Ukraine). See “Yanukovych signs law to ban tobacco advertising”, Tobacco Campaign, 14 March 2012, http:// www.tobaccocampaign.com/yanukovych-law-ban-tobacco-advertising, at 15 June 2012. [2.240]

The International Context of Intellectual Property

CHAPTER 2

The Indonesian request for consultations became the fourth and latest complaint essentially identical grounds in a series of WTO complaints over Australia’s tobacco plain packaging legislation, after Ukraine (13 March 2012, DS434), Honduras (4 April 2012 DS435) Dominican Republic (18 July 2012, DS441), and Cuba (3 May 2013, DS458). Ukraine, Honduras, the Dominican Republic and Cuba individually and collectively conduct only nominal trade with Australia, but all apparently have a well-established and burgeoning tobacco production and/or manufacturing industry. Interestingly, Ukraine had just signed into law a prohibition on all forms of advertising, sponsorship and promotion by the tobacco industry, and was reportedly considering introducing similar plain packaging legislation at the time it lodged its complaint. On 28 May 2015, Ukraine withdrew its complaint; British Tobacco acknowledged that it was providing financial assistance to the Ukraine to meet its legal costs in mounting its case against Australia. Australia’s total trade figures (imports and exports) as at the end 2015 for these four countries are as follows – Ukraine ($172m), Honduras ($52.5M), Dominican Republic ($45.5m), Cuba ($13m, of which $5m is for tobacco products). Indonesia, on the other hand, is Australia’s 11th largest trading partner. 4. The Global interest [2.250] While the issue before the High Court was essentially the constitutional validity of the

legislation, the WTO and the UNCITRAL arenas are concentrating on the perspective of international trade and investment rules and treaty obligations. However, the one issue is at the core of all three disputations is the right of the multinational corporation to maximise its investment in tobacco product with minimal government interference versus the sovereign authority of the state to legislate in the national interest. However, because the basis and grounds of each complaint are not identical – one being legislation, one being treaty and the third being trade – it cannot be ruled out that a global body such as the WTO may rule against the Australian position. This creates potential for further ongoing disputation in both domestic and international fora over the extent and circumstances in which international treaty obligations take precedence over domestic law (both generally and in respect of this ongoing plain packaging war). Since Australia is the first country to introduce plain packaging for tobacco products, the litigation proceedings and outcomes have been keenly watched and scrutinised by other Governments which are considering implementing similar legislation. The European Union and several Governments, including those of the UK, France, Canada, Belgium, Ireland, Iceland, India and Malaysia have been considering introducing legislation to introduce plain packaging legislation for tobacco products. The UK Government launched consultations on plans to introduce similar legislation a few years ago, prompting PMI to threaten to sue it for billions of pounds of it does proceed. Nevertheless tobacco plain packaging laws come into force in the UK in May 2017, and earlier in France in January 2017. Even Indonesia, currently leading the charge against Australia in the WTO has recently introduced legislation requiring health warnings and graphic warnings on tobacco product packaging. As at the time of this writing, the panel appointed by the WTO’s Dispute Settlement Board to hear the Indonesian and other Members’ complaints has yet to issue its findings.

[2.250]

49

COPYRIGHT

PART2

CHAPTER 3 Copyright: Contextual and Conceptual Issues [3.10] [3.10]

[3.40] [3.40] [3.50]

WHAT IS COPYRIGHT? ............................................................................................ Copyright and Creativity ........................................................................................ [3.20] Brief historical context .......................................................................... [3.30] The knowledge economy .....................................................................

[3.130] [3.160]

54 57

NATURE OF THE IP RIGHT ....................................................................................... 59 Some fundamental copyright concepts ................................................................ 59 Tangible versus intangible ...................................................................................... 60 [3.60] [3.70] [3.90]

[3.100]

53 53

Pacific Film Laboratories v Commissioner of Taxation ................. Julie Breen v Williams ............................................................... Primary Health Care v Commissioner of Taxation ...................... Idea versus expression ............................................................................................. [3.110] Donoghue v Allied Newspapers ................................................ Independent creation versus derivation ................................................................ [3.140] Corelli v Gray ..........................................................................

60 62 64 65 66 68 69

SIMPLIFICATION OF THE COPYRIGHT ACT 1968 ................................................ 70 [3.170] [3.190] [3.210]

Simplification of the Copyright Act 1968 ................................... 71 Simplification of the Copyright Act 1968 ................................... 73 Australian Government Productivity Commission: Intellectual Property Arrangements: Report ............................... 75

WHAT IS COPYRIGHT? Copyright and Creativity [3.10] Copyright and related rights protection is an essential component in fostering human creativity and innovation. Giving authors, artists and creators incentives in the form of recognition and fair economic reward increases their activity and output and can also enhance the results. By ensuring the existence and enforceability of rights, individuals and companies can more easily invest in the creation, development and global dissemination of their works. This, in turn, helps to increase access to and enhance the enjoyment of culture, knowledge and entertainment the world over, and also stimulates economic and social development. 1 It is often claimed or assumed that intellectual property laws are necessary to encourage individual creativity and inventiveness and that society would be worse off without such law. … [In] the field of copyrights and patents at least, such claims rest on myth and paradox rather than proof, and should be viewed sceptically. 2

Copyright is commonly classified as “intellectual” rather than “industrial” property, thus drawing a distinction between creations of the “sweat of the brow” and those areas of IP loosely considered to have industrial (in the broadest sense) use or application – namely 1 2

“What is Intellectual Property/”, World Intellectual Property Organisation, WIPO Publication No. 450(E), p 3, at http://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf. D Vaver, “Intellectual Property Today: Of Myths and Paradoxes” [1990] Canadian Bar Review 98. [3.10]

53

Intellectual Property: Commentary and Materials

patents, trade marks, industrial designs, and so forth. This characterisation might suggest that copyright is more concerned with sponsoring and protecting intellectual or creative endeavours, and less interested in ways of protecting investments in commodity production, than other areas of IP law. However, copyright is both a form of intellectual property and industrial property, and exploitation comes to the fore and thus explains in part Vaver’s cynicism above. Explanations of the origins of copyright law most commonly strive to show how and why creativity has come off “second best” in the law, with economic interests receiving a much more dedicated treatment by the legislature and courts. Vaver’s scepticism about the function of copyright law is shared by many others. To answer the above question of “what is copyright”, one needs to turn to statute. According to the Copyright Act 1968 (Cth), “copyright” is an exclusive right to do certain things in respect of original created works, such as literary and artistic works, recordings, audiovisual works, performances and so forth. Section 31(1), for example states: For the purposes of the Act, unless to the contrary intention appears, copyright in relation to a work, is the exclusive right: (a) In the case of a literary, dramatic or musical work to do all or any of the following acts: (i) to reproduce the work in a material form; (ii) to publish the work; (iii) to perform the work in public; (iv) to communicate the work to the public; (vi) to make an adaptation of the work; (vii) to do, in relation to a work that is an adaptation of the first-mentioned work, any of the acts specified in relation to the first-mentioned work in subparagraphs (i) to (iv), inclusive; and …

The Act makes the same, or very similar, declaration in respect of the other areas of created works that come within its scope. Note that s 31(1) does not make any reference to either the creator or the owner (being two different things) of the work in question. Brief historical context [3.20] This conundrum of settling the appropriate balance between the due recognition

exploitative and the creative rights goes back to the early formalised origins of copyright protection. Formalised protection could be deemed to have commenced with the English formation of the Stationers Company of London, a printers’ guild monopoly beginning in 1557. The Stationers Company was designed to enlist the aid of printers and booksellers in supervising royal censorship. The Stationers Company kept a register of books and their effective owners; an entry in the register asserted ownership of the book, and carried with it the exclusive right to print and publish it. There was no concept at this stage of authors’ rights: the right belonged to the printer, not the author. A prolonged campaign of lobbying of Parliament by the Stationers Company to shore up their monopolies eventually led to the passage in 1709 of the Statute of Anne (8 Anne c 19), The statute was entitled “An Act for the Encouragement of Learning, by vesting the Copies of printed Books in the Authors or Purchasers of such copies, during the Times therein mentioned”. It provided the author of a published book with the right to prevent unauthorised copying for up to 28 years – and, significantly, this right could be assigned to a publisher. This was the first mention of the interests of authors in their works. 54 [3.20]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

The Statute of Anne (8 Anne c 19) in 1709 is often cited as the origin of UK and thus Australian copyright law. 17 The Statute was not concerned with any romantic notion of recognition of authors’ rights and their creations. The social purpose of the law was to promote broader public access to books by creating limited economic rights in literary texts. In reality it recognised the longstanding economic interests of some publishers, most ably represented by the guild organisation the Stationers’ Company, as much as the author’s rights to own the text. That the primary legal interest protected the economic interests of certain printers can be seen from a 1709 petition in support of the legislation: The poor distressed printers and bookbinders in London and Westminster; setting forth, that having served seven years apprenticeship, hoped to have gotten a comfortable livelihood by their trades, who are in number at least 5000; but by the liberty taken of some few persons printing books, to which they have no right to the copies, is such a discouragement to the bookselling trade, that no person can proceed to print any book without considerable loss, and consequently the petitioners cannot be employed; by which means the petitioners are reduced to very great poverty and want: And praying that their deplorable case may be effectively redressed. 3

In effect, the Statute recognised the exclusive right to print texts for a set term of years, arising through the action of registering a “copy” of the text. Historically speaking, the Copy Register that marked the “copy right” was maintained by the Stationers’ Company. The legislation internally regulated the book trade and prevented cheaper versions of texts flooding the London market from printers in Northern England and Scotland. Though the long title of the Act implied that the first copy of the text was originally obtained from authors, the legislation said nothing explicitly about author–publisher legal relations and especially the origin of the author’s right to own the text, purchased by the publisher. Presumably, the author transferred to the publisher more than the rights to the manuscript as a chattel. They also sold a form of intangible property right, the exclusive right to reproduce those thoughts as expressed in the text. However, this was never clearly defined in early statute or case law. The issue of whether the Statute of Anne (8 Anne c 19), in creating a new statutory regime, acknowledged an existing common law right and then reaffirmed or expunged that right was examined in the leading 18th century cases of Millar v Taylor (1769) 98 ER 201 and Donaldson v Becket (1774) 1 ER 837. Both cases arose over a dispute concerning publication of a book of poetry, The Seasons, by James Thomson, who died in 1748. Bookseller Andrew Millar acquired the publishing rights in 1729. Robert Taylor from Scotland subsequently published Thomson’s poetry after the term of the exclusive rights granted under the Statute of Anne (8 Anne c 19) expired. In Millar v Taylor, the Court of the King’s Bench, led by Lord Mansfield found by a majority that common law rights were not extinguished by the Statute. Under Mansfield’s ruling, the publishers had a perpetual common law right to publish a work for which they had acquired the rights. When the statutory rights granted by the Statute expired, the publisher was still left with common law rights to the work. The issue was ultimately resolved in the landmark case of Donaldson v Becket, which essentially overturned Millar v Taylor. Beckett acquired Millar’s publishing rights and successfully obtained an injunction against Scottish bookseller Donaldson also publishing Thomson’s Four Seasons. The matter was heard by the House of Lords by way of appeal against the injunction. The House of Lords considered the question of the origins of copyright 3

Reported in “Information for John Robertson, Defender against J Mackenzie …”, in The Literary Property Debate, n 16, at D35. [3.20]

55

Intellectual Property: Commentary and Materials

law, and specifically the argument that the author was a proprietor – a claim justified by John Locke’s theory of labour and romantic theory. It was argued that: Authors have ever had a property in their Works, founded upon the same fundamental maxims by which Property was originally settled, and hath since been maintained. The Invention of Printing did not destroy this Property of Authors, nor alter it in any Respect, but by rendering it more easy to be invaded. Every man was entitled to the fruits of his labor, they argued, and therefore it was self-evident that authors had an absolute property in their own works. This property was transferred to the bookseller when the copyright was purchased and thereafter it continued perpetually just like any other property right. 4

By a majority on the voices, the House of Lords failed to find any authoritative legal precedent that endorsed this purported theory of right and declared that, there being no common law literary property right, the power to define (and limit) copyright rested exclusively with Parliament. Statutory rights could not be strengthened in the interest of authors and publishers, by way of legal reference to rights that might be claimed as existing according to “natural law”. Copyright was not concerned with the author’s moral claims to own texts, and it was not a perpetual right. Lord Camden, arguably the most vocal of the Lords against the claimed perpetual rights, asserted that: I find nothing in the whole that favours of Law, except the term itself, Literary Property. They have borrowed one single word from the Common Law. … Most certainly every Man who thinks, has a right to his thoughts, while they continue to be his; but here the question again returns; when does he part with them? When do they become public juris? While they are in his brain no one indeed can purloin them; but what if he speaks, and lets them fly out in private or public discourse? Will he claim the breath, the air, the words in which his thoughts are cloathed? Where does this fanciful property begin, or end, or continue? 5

He rejected the claim that the common law had ever recognised such a right. It was noted that there was no record of it preceding the arrival of the Caxton printing press in England in 1476, thus it was not a legal right conferred by time immemorial. He then proceeded to discuss if it should recognise such a right, concluding that: Knowledge has no value or use for the solitary owner; to be enjoyed it must be communicated. … Some authors are as careless for profit as others are rapacious of it; and what a situation would the public be in with regard to literature if there were no means of compelling a second impression of a useful work. … All our learning will be locked up in the hands of the Tonsons and Lintons of the age, who will set what price upon it their avarice chuses to demand, till the public becomes as much their slaves, as their own hackney compilers are. 6

In failing to endorse any specific philosophical theory of copyright, Donaldson v Beckett decided that copyright is a creature of positive law. Contemporary statutory recognition of this resonates in the Copyright Act 1968 (Cth) s 8, which states that “Copyright does not exist otherwise than by virtue of this Act …”. Donaldson v Beckett also demonstrates that there is no necessary connection between authors and texts. Such a relationship was only constructed 4

5 6

Cited in M Rose, “The Author as Proprietor: Donaldson v Becket and the Genealogy of Modern Authorship” (1988) 23 Representations 51. It was republished in B Sherman and A Strowel (eds), Of Authors and Origins: Essays on Copyright Law (Clarendon Press, Oxford, 1994), pp 23-55. Cited in S Parks (ed), The Literary Property Debate: Seven Tracts, 1747-1773 (Garland Publishing, New York, 1974) at F32. Cited in S Parks (ed), The Literary Property Debate: Seven Tracts, 1747-1773 (Garland Publishing, New York, 1974) at F32.

56 [3.20]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

in the 18th and 19th centuries. Rose argues that the view of “the author as proprietor” has been so widely circulated since then, that it is often assumed to be a universal, timeless truth. The Romantic movement of the late 18th and 19th centuries may have been a particularly influential philosophical and social movement, but it seems to have a lesser impact on the law. As a matter of history, Romanticism can be read as a movement in opposition to the mechanical, commodity-oriented production of the developing marketplace. Artistic and literary vision is explained in terms of a “natural” opposition to the “mechanical” world. In themes, 18th and 19th century romantic writers often expressed dismay at the natural, social and artistic consequences of industrialisation, and a desire to produce “original” works. Under Romantic notions, the author “owns” the text refers to ownership in both a moral and an economic sense. It is the original author’s effort that gives rise to the meaning of the work and the right to profit from it as they see fit. Throughout the 17th and 19th centuries, professional authors, such as Ben Jonson (1573–1637), Robert Southey (1774–1843), William Wordsworth (1770–1850) and Charles Dickens (1807–1892), were politically active, advocating for reform of their legal rights. Clearly, not all of these writers ascribed to romantic theories of rights, but all shared grievances about publishers and others unfairly profiting from their works. That there was little consensus about the nature of the rights authors deserved only complicated their legal cause over time. Authors lacked the level of organisation and political skill to put their interests firmly on the political agenda. Ultimately, case law determined that Anglo copyright had no space for “moral rights” comparative with those that developed elsewhere. During the 19th century, numerous pieces of legislation related to intellectual property were enacted in a rather uncoordinated fashion, leading to much criticism of the incompleteness and obscurity of copyright law. A copyright law was enacted in 1814 that extended the duration of protection for literary works to 28 years from date of first publication or life of author, whichever was the greater. The Copyright Act 1842 (UK) extended this duration to 42 years or the life of the author, again whichever was the greater. The United Kingdom was represented at two diplomatic conferences at Berne in 1884 and 1885, the conferences leading to the creation of the Berne Convention for the Protection of Literary and Artistic Works (1886) (Berne Convention). The UK became a signatory to the Berne Convention, and ratified it with effect from 5 December 1887. Ratification of the original Berne agreement and a number of subsequent amendments soon thereafter required the UK to make sweeping changes to its copyright protection framework. The Copyright Act 1911 (UK) repealed all previous Acts, abolished common law copyright in both published and unpublished works, and recognised the existence of copyright in published and unpublished literary, dramatic, artistic and musical works, as well as in sound recordings. The knowledge economy [3.30] Similar questioning of the social and economic impact of copyright laws arises in debates about the wisdom and politics associated with the strengthening of IP rights globally. While this is an international concern raised in lawmaking bodies such as WIPO, overwhelmingly it is American academic work, most notably by Lawrence Lessig, 7 that has 7

Free Culture: How Big Media Uses Technology and the Law to Lock Down Creativity (Penguin Press, 2004); The Future of Ideas: The Fate of the Commons in a Connected World (Random House, 2001); Code, and Other Laws of Cyberspace (Basic Books, 1999). [3.30]

57

Intellectual Property: Commentary and Materials

publicised these concerns. Australian perspectives on these developments are found in Information Feudalism: Who Owns the Knowledge Economy? by Peter Drahos and John Braithwaite. 8 These are publications that reach out far beyond traditional legal audiences, seeking to educate the broader public about the power of multinational media, entertainment and technology corporations and their industry consortiums, such as the Recording Industry Association of America, the Motion Picture Association of America and the Business Software Alliance. It is argued that the TRIPS Agreement, new digital agenda copyright laws, copyright term extensions and free trade agreements have advanced particular economic interests and upset the traditional public balances of IP laws. A healthy public domain, where information circulates for free, is considered essential to a healthy democracy, innovation and education system. Lessig argues that copyright struggles with creativity more than ever, as strong protections imperil creative activity and detrimentally restrict consumer rights and access to works. New “public” licences such as creative commons, open source, free software, and free for education licences, are promoted to counter perceived erosions of the public domain. In 2003, one million web pages were published under creative commons licences. It is estimated that in early 2016, there were 1 billion works in circulation under creative commons licences. 9 The exponential explosion in the exploitation of communication in the digital environment – an environment that is in common usage across all generations – continually and increasingly tests the capacity of copyright and other IP owners and their agents to protect their rights. Statute and regulation, administration and control is continually placed in “catch up” mode. But the challenge is not simply protection; it also becomes one of protection to facilitate exploitation that, at times, has travelled well beyond the realm of the original creator. It is no accident that economic rights, hand in hand with exploitation, have been and remain paramount in copyright legislation, while moral rights and formal acknowledgement of the creative spirit are, in essence, a secondary consideration – and a recent one at that. As Kirby J opined in Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58 at [169]: “Copyright”, it has been rightly declared, “is one of the great balancing acts of the law. Many balls are in play and many interests are in conflict”. To the traditional problems of resolving such conflicts must be added, in the present age, the difficulties of applying the conventional model of copyright law to subject matters for which that model is not wholly appropriate; adjusting it to the “implications of the online environment”; and adapting it to international pressures that may reflect economic and legal interests that do not fit comfortably into the local constitutional and legal environment. “The dance proceeds”, as Professor Ricketson has observed; but the multiplicity of participants and interests now involved in its rhythms inevitably affect the contemporary judicial task of resolving contested questions of interpretation of the Copyright Act.

8

9

Published by Earthscan, UK, 2002. Also K Bowrey, “Can we Afford to Think about Copyright in a Global Marketplace?” in F Macmillan (ed), New Directions in Copyright Law, Volume 1 (Edward Elgar, Cheltenham, UK, 2005), pp 51-69. See http://www.creativecommons.org.

58 [3.30]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

NATURE OF THE IP RIGHT Some fundamental copyright concepts [3.40] In light of this overview of the historical context about copyright, it is important to consider some fundamental copyright concepts about copyright, namely, the:

• nature of copyright as an “incorporeal right”; • notion that there is no “property in ideas” or “property right in information”; • distinction between copyright as an “economic right” and copyright as a “moral right”; • precise meaning of moral rights, as recently introduced; • legal meaning of “author” and distinction between author or maker and owner; and • limitation on the current statutory regime in providing equitable protection of the creative production of all members of Australian society. No rights at all arise until the ideas are expressed in a tangible medium, and this, combined with the concept of copyright as property that can be divided and transferred from one individual or group to another by a commercial transaction, makes the Copyright Act 1968 (Cth) inept at protecting certain material, even if it is of prime cultural significance. An important example is indigenous cultural IP (ICIP). In 1981, a report of the Working Party on the Protection of Aboriginal Folklore was produced by the Federal Government, in co-operation with the Australia Council and the Australian Copyright Council. The report highlighted a number of reasons why the Copyright Act 1968 (Cth) fails to protect Aboriginal folklore, one being the conception of property rights arising in material which, although sacred and traditional, is not amenable to being traded in the marketplace. The Working Party recommended the introduction of an Aboriginal Folklore Act aimed at the preservation of the cultural heritage, which would include appropriate economic rights but not the usual requirements for the subsistence of copyright necessarily being present. In 2001, the Federal Government set up an inquiry into contemporary visual arts and craft. In 2003, the subsequent Myer Report included wide-ranging recommendations concerned with strengthening visual arts and craft in Australia, including several concerning taxation, superannuation, copyright protection, resale royalties and other proposals for administrative and legislative change. In 2007, a Senate standing committee report on Australia’s indigenous visual arts and craft sector, Indigenous Art – Securing the Future, recommended that, as a matter of priority, the government introduce revised legislation on indigenous communal moral rights. 10 Despite these initiatives, no significant statutory steps have been completed to effectively address the issue of protection of indigenous cultural IP. The first three of the above fundamental concepts translate into the following: • Rights of property in an object in which a copyright work or subject-matter is embodied are distinct from rights of copyright in that same object (tangible versus intangible). • Copyright protects only the form in which the ideas and information are expressed, and not the idea itself (idea versus expression). • Copyright confers a right to protection against copying or unfair derivation, as opposed to a right against an independent (even if almost identical) creation (derivation versus independent creation). 10

Standing Committee on Environment, Communications, Information Technology and the Arts, Indigenous Art – Securing the Future (Commonwealth of Australia, June 2007), Recommendation 24, p xii. [3.40]

59

Intellectual Property: Commentary and Materials

These three concepts, exemplified in case law, are covered below.

Tangible versus intangible [3.50] Intellectual property is a form of intangible personal property. There are no formal registration requirements for obtaining copyright protection. Provided the requirements set down in the Copyright Act 1968 (Cth) concerning originality, material form and territorial qualification are met, copyright exists in a work or other material. In Pacific Film Laboratories v Federal Commissioner of Taxation (1970) 121 CLR 154, reproduced in part below, Barwick CJ stated that “there is authority for the proposition that the property in a chattel may be in one person and the copyright in another: In re Dickens; Dickens v Hawksley [1935] Ch 267. In the second place, an authority to reproduce a copyright work given by the owner of the copyright allows the authorized person to produce the copy as his own property and indeed unless the authority it provides otherwise, is free to dispose of the reproduction ….” (at 164). The Copyright Act 1968 (Cth) s 196 provides that copyright is personal property and is transmissible by assignment, by will and by devolution by operation of the law. Section 198 continues that where a person is entitled to an unpublished manuscript under a will, the bequest is presumed, unless the contrary intention appears, to include the copyright in that work. This might (depending on the exact terms of the will) have met the difficulty experienced in In re Dickens; Dickens v Hawksley [1935] Ch 267.

Pacific Film Laboratories v Commissioner of Taxation [3.60] Pacific Film Laboratories Pty Ltd v Commissioner of Taxation (1970) 121 CLR 154 High Court of Australia [The plaintiff, a photograph-processing company, objected to paying sales tax on prints processed by it and paid for by customers, arguing that there was no sale of goods as the customers owned the negatives and the plaintiff had no general property in them. The court distinguished between the copyright in the negatives (owned by the customer) and property in the prints (owned by the plaintiff).] BARWICK CJ: [162] … But it is objected that there could not in any case be a sale of a print or duplicate either to the photographer or to any other person because of the provisions of the Copyright Act 1912. It has been assumed in argument that the person ordering the print was the owner of the copyright in the negative or transparency. This may or may not be so, but I am prepared to assume it as fact. Because the negative or transparency was the subject of copyright it is said that the appellant as the producer of the print or duplicate as a reproduction of the negative or transparency could not have any general property in the print which he could transfer by sale to any person including the owner of the copyright. It is submitted that it would have no more than a lien for the amount agreed to be paid for the production of the print [163] or duplicate. The fact that he owned the sensitised paper or the film on which the print or duplicate was made to appear and such of the chemicals as remained on the paper or film at the end of the process of making the print or duplicate did not give him any general property in the print or duplicate as reproductions of the copyright work, the negative or transparency as the case may be. … [C]opyright shall be deemed to be infringed by any person who without the consent of the owner of the copyright does anything, the sole right to do which is by the Act conferred on the owner of the copyright. By s 7, all infringing copies of any work in which copyright exists shall be deemed to be the property of the owner of the copyright who accordingly may take proceedings for the recovery of possession thereof or in respect of the conversion thereof. But s 8 provides that where proceedings 60

[3.50]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

Pacific Film Laboratories v Commissioner of Taxation cont. are taken in respect of the infringement of the copyright in any work and the defendant establishes that he was not aware nor had reasonable ground for suspecting that copyright existed in the work the plaintiff shall not be entitled to any remedy other than an injunction. There are, in my opinion, several clear answers to this submission. In the first place, there is authority for the proposition that the property in a chattel may be in one person and the copyright in another: Re Dickens; Dickens v Hawksley [1935] Ch 267. In the second place, an authority to reproduce a copyright work given by the owner of the copyright allows the authorised person to produce the copy as his own property and indeed unless the authority to reproduce it provides otherwise, he is free to dispose of the reproduction. In the third place, whilst of course the Copyright Act enables the copyright owner to recover possession of infringing copies of the copyright work or damages [164] for the conversion of such infringing copies there were in this case no infringing copies, the owner of the copyright on the supposition made, authorised the making of the copy and its delivery to himself. It seems to me that even if the agreement between the owner of the copyright and the appellant had been no more than an agreement for the rendering of services the print produced by the appellant could not have been claimed by the owner of the copyright as his own nor could he have recovered it in detinue before it had been delivered to him but if as I think the agreement was an agreement for the sale of the print or duplicate by the appellant to the owner of the copyright it seems to me necessarily to follow that not only was there no property in the owner of the copyright in the print viewed as a chattel at any time before the delivery of the print to the owner of the copyright but that it was intended that property in the print or duplicate should pass on delivery of the print or duplicate. In my opinion, the appellant had general property in the print or duplicate when produced with the authority of the copyright owner: it was not an infringing copy of the negative or transparency as the case may be though possibly it might have become so if sold to some person other than the owner of the copyright: this was so because of the limited nature of the authority to reproduce given by the owner of the copyright. But the rights given by s 7 to recover infringing copies, though subject to s 8, only arise when the copy is the infringing copy: that is to say, it is the sale which attracts the operation of the section in the case supposed. But that conclusion denies that the authorised reproducer had no general property in the print or duplicate. As I have said, the appellant, in my opinion, had the general property in the print or duplicate which it manufactured out of its own materials and none the less so because the copyright in the negative or transparency was in some other person, or as has been supposed in the member of the public ordering the print or duplicate. WINDEYER J: … [165] Of course a man cannot buy something that is already his. And the Sale of Goods Acts in force in Australia, all copied from the Sale of Goods Act 1893 (UK), it being itself a codification of the common law, treat a sale as a transaction effecting a transfer of “the general property in the goods”. It was argued that, because the owner of a photographic negative has copyright in it as an artistic work, someone else who makes prints from it for him cannot have the general property in them as goods that he can sell to him. There is I think here a fallacy. [166] It lies in the failure to distinguish between the copyright as incorporeal property and property in the material thing which is the subject of the copyright. … [168] … Academic purists in the use of jurisprudential language now say it is a mistake to speak of an incorporeal right. A right, they say, is essentially incorporeal: property is either corporeal or incorporeal. That may be so. Nevertheless the expression, an incorporeal right, can be defended as simply a transferred epithet which is a not uncommon figure of speech. But defence is not necessary for it would be a pedantic presumption to discard an expression that has long been used in connection with copyright by great lawyers, including Lord Mansfield in the 18th century and Lord Maugham in this. … [169] Copyright under the Act is thus properly called an incorporeal right. … It cannot be said that the owner of a copyright cannot buy a chattel made by his licence. It is not an infringing copy. It [3.60]

61

Intellectual Property: Commentary and Materials

Pacific Film Laboratories v Commissioner of Taxation cont. is a lawful copy. In this case the contract was for the sale to the owner of the copyright of future goods, namely copies of prints that he by implication licensed to be made for that very purpose. They could only be lawfully sold to him or by his authority because his licence to the copyist to make them [170] was only so that they might be sold to him. His incorporeal right to prevent infringement of his copyright could not prevent his right to have chattels he had agreed to buy delivered to him or absolve him from an obligation to pay for them on delivery as goods sold and delivered. I agree in the order that the Chief Justice proposes.

Julie Breen v Williams [3.70] Julie Breen v Cholmondeley W Williams (1996) 186 CLR 71 High Court of Australia [The appellant, who had been a patient of the respondent medical practitioner, claimed a legal right to reasonable access to the records kept by the respondent with respect to the appellant and a right to inspect and/or copy those records. The right was submitted to be based variously on contract, property and fiduciary duty.] BRENNAN CJ: Property [80] … The appellant concedes that the property in the records as chattels is in the respondent. The concession is rightly made. Documents prepared by a professional person to assist the professional to perform his or her professional duties are not the property of the lay client; they remain the property of the professional (Leicestershire County Council v Michael Faraday & Partners Ltd [1941] 2 KB 205 at 216; Chantrey Martin v Martin [1953] 2 QB 286). In the light of that principle, it is not easy to see what relevance the law of property has to the supposed right of the appellant to access to the respondent’s records. If (as it was put during argument) the respondent is said to have no proprietary right that would entitle him to refuse access, the question whether the appellant has a right to be given access still remains. On that approach, the supposed right (if any) must find some basis other than property. But even on that approach, the argument is flawed. Absent some right to require, or the exercise of some power to compel, production of a document for inspection, its owner is entitled by virtue of the rights of ownership to refuse to produce it. As for copying, where the professional person is the owner of the copyright, [81] he or she has the sole right to copy or to permit the copying of the document (Copyright Act 1968 (Cth), ss 13, 31, 36; Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 58). If the approach is that a right to access and to copy arises because the information contained in the records is proprietary in nature, the approach mistakes the sense in which information is described as property. The sense in which information is so described is stated by Lord Upjohn in Phipps v Boardman ([1967] 2 AC 46 at 127-128) in these terms: In general, information is not property at all. It is normally open to all who have eyes to read and ears to hear. The true test is to determine in what circumstances the information has been acquired. If it has been acquired in such circumstances that it would be a breach of confidence to disclose it to another then courts of equity will restrain the recipient from communicating it to another. In such cases such confidential information is often and for many years has been described as the property of the donor, the books of authority are full of such references; knowledge of secret processes, “know-how”, confidential information as to the prospects of a company or of someone’s intention or the expected results of some horse race based on stable or other confidential information. But in the end the real truth is that it is not property in any normal sense but equity will restrain its transmission to another if in breach of some confidential relationship. 62 [3.70]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

Julie Breen v Williams cont. As information is not property except in the sense stated by Lord Upjohn, the remedies which equity grants to protect against the disclosure of certain kinds of information do not have their source in notions of property. Deane J pointed this out in Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 438; see also Smith Kline & French v Secretary, Department of Community Services & Health (1990) 95 ALR 87 at 135-136 per Gummow J): Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in proprietary right. It lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained. Equity might restrain the respondent from disclosing without authority any information about the appellant and her medical condition that is contained in the respondent’s records and, in that sense, it might be arguable that that information is the property of the appellant. Even if such a description were correct – and it is not necessary to consider that question – the description would provide no foundation for the existence of a right to access and to copy enforceable in equity. The mere possession by the respondent of his [82] records relating to the appellant breaches no obligation of conscience and thus it attracts no equitable remedy that might clothe the information with some relevant proprietary character. There is no obligation in conscience requiring the respondent to open his records to inspection and copying by the appellant. Whichever approach is taken to the relevance of the law of property, it fails to provide any basis for the appellant’s claim. GUMMOW J: [126] … Property rights The appellant also sought to draw support for the right she asserts from a complex of equitable institutions and doctrines dealing with fiduciary duty, confidential information, undue influence, and with unconscientious transactions of the nature considered in such authorities as Louth v Diprose ((1992) 175 CLR 621). To some extent these submissions reflect an imperfect understanding of some basic matters of the law of personal property. Other submissions concern classification as “property” of the information contained in the records in question. As the submissions for the appellant appear to reflect some confusion of thought, it is appropriate, before proceeding further, to draw several basic distinctions. First, as I understand the submissions, the appellant did not contend before us, and she had not contended before the Court of Appeal ((1994) 35 NSWLR 522 at 561), that she owned the relevant records “as such”. That concession (as the Court of Appeal agreed (1994) 35 NSWLR 522 at 538, 559-561) was correctly made. The documents in question, including any photographs, are chattels, ownership and the right to exclusive possession of which appear to be enjoyed by the respondent. Access to those records would be an incident of those rights. They would be protected against invasion by the law of tort, in particular by actions for detinue and conversion. [127] Thus, in Moorhouse v Angus & Robertson (No 1) Pty Ltd ((1980) FSR 231 at 239-240), McLelland J held that a cause of action in detinue had been established by an author against his publishers by reason of their failure to comply with his demand for the return of his original manuscript. … Secondly, the appellant’s submissions gave insufficient allowance to the operation in this field of copyright law, a matter of federal statute. The composition by the medical practitioner of the material shown on the records may have involved the authorship by him of what, whilst not of literary quality, were nevertheless literary works for the purposes of copyright law. This would vest in him various exclusive proprietary rights, including that to reproduce the work in a material form (Copyright Act 1968 (Cth), s 31(1)(a)(i)). In Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation ((1970) 121 CLR 154 at 165-170), Windeyer J referred to the fundamental distinction between copyright as incorporeal property and property in the material thing which is the subject of the copyright, the [3.70]

63

Intellectual Property: Commentary and Materials

Julie Breen v Williams cont. essence of the former being the power to prevent the making of a reproduction in material form. His Honour referred to authorities, including Re Dickens ((1935) Ch 267). This illustrates the distinction. On the proper construction of his will, Charles Dickens bequeathed the manuscript of an unpublished work to his sister-in-law and his residuary estate, including the copyright in the unpublished work, to his children. Ownership of the manuscript would not, of itself, carry with it the right to publish it and to reproduce it. It is unlikely that the medical practitioner would have made the literary works in pursuance of the terms of his employment by the patient under what was classified as a contract of service, so that the patient was the owner of the copyright (s 35(6)). Ownership of the copyright in any photographs, as artistic works (see the definition of “artistic work” in s 10(1) of the Copyright Act 1968 (Cth)) would, pursuant to s 35(5) of the Copyright Act 1968 (Cth), vest in the patient only if within the meaning of that provision the patient had made for valuable [128] consideration an agreement for the taking of the photographs and they were taken in pursuance of that agreement. The copyright of the respondent would not be infringed by anything done for the purposes of a judicial proceeding (s 43(1)). Nor would it be an infringement to act pursuant to a licence or permission (which might be express or implied) (Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 at 103-106, 119-120; Lorenzo & Sons v Roland Corporation (1992) 23 IPR 376 at 380-383; Devefi Pty Ltd v Mateffy Perl Nagy Pty Ltd (1993) 113 ALR 225 at 237-242). However, the circumstances of the present case, as disclosed in the evidence, do not provide support for the existence of any copyright licence or consent given to the appellant either expressly or by implication. Nor does it appear that such a licence is implied in the contract between medical practitioner and patient as a matter of law in the sense I have described earlier in these reasons. … The appeal should be dismissed with costs.

[3.80] The distinction between copyright and the medium in which it is expressed was

examined again recently in Primary Health Care Ltd v Commissioner of Taxation [2010] FCA 419 in the context of a transfer of title in a business operating a string of health clinics. The issue before the Federal Court arose not only in respect of the nature of the assets subject to transfer but also of the degree of independent intellectual effort required to create copyright in a medical record (see also further discussion on this case in [5.50]).

Primary Health Care v Commissioner of Taxation [3.90] Primary Health Care Ltd v Commissioner of Taxation [2010] FCA 419 Federal Court of Australia [This case involved six separate applications appealing under Taxation Administration Act 1953 (Cth) Pt IVC in respect of objection decisions made by the respondent, the Commissioner of Taxation. Primary Health Care Ltd (PHC) was a public company and the sole beneficial owner of all issued units in a unit trust, of which Idameneo Pty Ltd was the trustee, operating a group of medical clinics. The issues in these applications arose out of PHC’s purchase of certain medical and dental practices and concern whether the company was entitled to claim income tax deductions arising from its acquisition of copyright interests as part of its purchase of the practices.] STONE J: Transfer of Copyright Interests to PHC [142] I have found only very limited subsistence of copyright in the patient records of the sample practices. Nevertheless, in case I am wrong, I shall consider PHC’s claim that Idameneo obtained an 64

[3.80]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

Primary Health Care v Commissioner of Taxation cont. interest in the copyright in the patient records of each of the 12 sample practices on the assumption that there was copyright, at least in part, in the patient records of each of the sample practices. The question requires an examination of the title of the vendor in any such copyright and raises the question whether an interest in it passed under the agreement for the sale of each practice. It necessarily involves a construction of the sale agreements into which the various vendors entered with PHC. [143] Any discussion of the transfer of an interest in copyright must take place with full cognisance of the nature of copyright as a proprietary interest and the distinction between that interest and a proprietary interest in the medium in which the copyright subsists. Thus it is legally possible for property in the patient records of the sample practices to be held by PHC and any copyright in those records to be held by other persons; Pacific Film Laboratories Pty Limited v The Commissioner of Taxation of the Commonwealth of Australia [1970] HCA 36; (1970) 121 CLR 154 at 163 per Barwick CJ and 165-170 per Windeyer J. In Breen v Williams at 127, Gummow J drew attention to this distinction between ownership of copyright and ownership of “the material thing which is the subject of the copyright” and referred to Pacific Film Laboratories and also to Re Dickens [1935] Ch 267, which, Gummow J observed, illustrated the distinction between the manuscript of an unpublished work (bequeathed to Charles Dickens’ sister-in-law) and the copyright in the work which was included in the residuary estate left to the author’s children. [144] In Re Dickens the manuscript in question was of a story Charles Dickens had written for his children but had never published. The Court of Appeal held that, not having been published, the manuscript was included in the “private papers” which, on the proper construction of the author’s will, he had left his to his sister-in-law.

Idea versus expression [3.100] Copyright protection does not extend to an idea, a fact or other item of information.

Rather, it extends to the manner or form in which that idea or information is expressed: a dichotomy which is said to be “probably the most difficult concept in the law of copyright” and “often honoured more in the breach than in the observance”: Plix Products Ltd v Frank M Winstone (Merchants Ltd) (1984) 3 IPR at 418. In the United States case Baker v Selden (1880) 101 US 99 (US Supreme Court), it was observed that “where the truths of a science or the methods of an art are the common property of the whole world, any author has the right to express the one, or explain and use the other, in his own way”. The court also stated that: … there is a clear distinction between the book, as such, and the art which it is intended to illustrate. The mere statement of the proposition is so evident that it requires hardly any argument to support it. The same distinction may be predicted of every other art as well as that of book-keeping. A treatise on the composition and use of machines, be they old or new; on the construction and use of ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines to produce the effect of perspective, would be the subject of copyright; but no one would contend that the copyright of the treatise would give the exclusive right to the art or manufacture described therein. The copyright of the book, if not pirated from other works, would be valid without regard to the novelty or want of novelty of its subject-matter.

[3.100]

65

Intellectual Property: Commentary and Materials

See also Zeccola v Universal City Studios (Jaws Case) (1982) 46 ALR 189; for a more recent decision, see Thomas v Brown and Anor (Aboriginal Flag Case) (1997) 37 IPR 207; [1997] 215 FCA. In Donoghue v Allied Newspapers Ltd [1938] Ch 106, the court drew a distinction between ideas gleaned from interviews by a journalist and the subsequent newspaper stories based on those ideas. The court held that the journalist who wrote the published stories was the author and owner of any material in which copyright subsisted, with the plaintiff merely having only supplied the ideas.

Donoghue v Allied Newspapers [3.110] Donoghue v Allied Newspapers [1938] Ch 106 High Court of Justice, Chancery Division (United Kingdom) [Several articles were published in the News of the World newspaper based on interviews between the plaintiff and a journalist. The articles had titles such as Enthralling Stories of the King of Sports and Donoghue’s Racing Secrets and were based on the experiences of the plaintiff, a well-known character of the turf.] FARWELL J: [109] The first question that I have to determine is whether the plaintiff is or is not either the sole or the joint owner of the copyright in the original articles which appeared in the News of the World. If the plaintiff has no copyright, either as sole owner or as joint owner, in these articles, this action necessarily fails, and it will be unnecessary for me to consider the further question which I shall have to consider if that is not the position namely, as to the effect of the agreement on 4 April 1931, and whether that agreement amounts to an equitable assignment of the plaintiff’s copyright to the News of the World. It is necessary, in considering whether the plaintiff is the owner or part owner of the copyright in this work, to see in what it is thatcopyright exists under the Copyright Act 1911. This at any rate is clear beyond all question, that there is no copyright in an idea, or in ideas. A person may have a brilliant idea for a story, or for a picture, or for a play, and one which appears to him to be original; but if he communicates that idea to an author or an artist or a playwright, the production which is the result of the communication of the idea to the author or the artist or the playwright is the copyright of the person who has clothed the idea in form, whether by means of a picture, a play, or a book, and the owner of the idea has no rights in that product. On the other hand, and I think this is equally plain, if an author employs a shorthand writer to take down a story which the author is composing, word for word, in shorthand, and the shorthand writer then transcribes it, and the author has it published, the author is the owner of the copyright and not the shorthand writer. A mere amanuensis does not, by taking [110] down word for word the language of the author, become in any sense the owner of the copyright. That is the property of the author. The explanation of that is this, that that in which copyright exists is the particular form of language by which the information which is to be conveyed is conveyed. If the idea, however, original, is nothing more than an idea, and is not put into any form of words, or any form of expression such as a picture, then there is no such thing as copyright at all. It is not until it is (if I may put it in that way) reduced into writing or into some tangible form that there is any copyright, and the copyright exists in the particular form of language in which, or in the case of a picture the particular form of the picture by which, the information or the idea is conveyed to those who are intended to read it or to look at it. [On the point of “material form”] … In the present case, the ideas of all these stories, apart altogether from what one may call merely the embellishments which were undoubtedly supplied wholly by Mr Felstead the ideas of all these stories, and in fact the stories themselves, were supplied by the plaintiff; but in my judgment, upon the evidence it is plain that the particular form of language by 66 [3.110]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

Donoghue v Allied Newspapers cont. which those stories were conveyed was the language of Mr Felstead and not of the plaintiff. Although many of the stories were told in the form of dialogue, and to some extent Mr Felstead no doubt tried to reproduce the story as it was told to him by the plaintiff, nevertheless the particular form of language in which those adventures or stories were conveyed to the public was the language of Mr Felstead and not the language of the plaintiff. One case has been cited to me which is, I think, very near to the present one, and if I were to decide in favour of the plaintiff on this first point I think that I should be disregarding the decision of Tomlin J in Evans v E Hulton & Co Ltd [1924] Mac CC 51. The facts of that case are not quite on all fours with the present one; but the principle upon which that judgment rests is the same as that which I have to apply in this case. [111] In that case the person who supplied the information was a foreigner, and no doubt he did not convey the information in a form which would have been suitable for an article in a newspaper, and to that extent it may be that the person who wrote it down and supplied the article had more to do than Mr Felstead in the present case; but the principle applicable is the same. What Tomlin J said was this (at 56): One thing is reasonably plain, I think, that probably Mr Zeitun would not himself claim that he was capable of producing in the English tongue a literary work which would find a market. He certainly agreed that he has never attempted to do so, and I should doubt his capacity to do so. The fact that he is the subject matter of the production in the sense that it is an incident from his life, for which he provided the material, does not seem to me to make him in any sense the joint author with Mr Evans of the manuscript which was in fact written, and, upon the facts which I have stated, I find that he did not take any part in producing the express matter which is the original literary work, the subject matter of copyright. What I understand the learned judge to mean by the “express matter” is that which I have endeavoured to define as the particular form of language in which the information is conveyed, and although it may be that in the present case the plaintiff could give more help to Mr Felstead than Mr Zeitun could give in the case of Evans v E Hulton & Co Ltd (at 51), to the author of the manuscript, nevertheless, although the plaintiff supplied all the substance of the articles, it was conveyed in language which was the language or Mr Felstead, and for which the plaintiff himself was not responsible. Appeal dismissed.

[3.120] In an even more recent case and highly publicised UK case, the court examined the

dichotomy between ideas and established and alleged “historical facts”, and expressions of those ideas in a literary form: see Baigent v The Random House Group Ltd (Da Vinci Code Case) [2006] EWHC 719. In the Da Vinci Code Case, the plaintiffs, authors Michael Baigent and Richard Leigh, claimed that Dan Brown’s novel The Da Vinci Code (DVC), published by Random House, infringed their copyright in their book The Holy Blood and the Holy Grail (HBHG), written in 1982. They claimed that Brown had copied some 15 core ideas or historical assertions that formed the “architecture” of their book and hence its “central theme”. The subject matter of both books focused upon assertions that Christ had survived the crucifixion, married and had children by Mary Magdalene, and that their descendants and bloodline continued to the present day. It was conceded that there was no infringement based on textual comparison; rather the infringement was “non-textual”. Smith J rejected the plaintiffs’ argument, commenting that: [3.120]

67

Intellectual Property: Commentary and Materials

24 Plainly there can be no copyright in an idea which is merely in the head, which has not been expressed in copyrightable form, as a literary, dramatic, musical or artistic work, but the distinction between ideas and expression cannot mean anything so trivial as that. On the other hand, every element in the expression of an artistic work (unless it got there by accident or compulsion) is the expression of an idea on the part of the author. It represents her choice to paint stripes rather than polka dots, flowers rather than tadpoles, use one colour and brush technique rather than another, and so on. The expression of these ideas is protected, both as a cumulative whole and also to the extent to which they form a “substantial part” of the work.

He found that there were no central themes in the plaintiffs’ work, the alleged “central theme” merely being an expression of a number of general ideas, assertions or facts that were not entitled to copyright protection. It did not constitute the “architecture” of The Holy Blood and the Holy Grail (HBHG) and, because of this, the plaintiffs’ claim was without merit. In fact, Smith J suggested: It it seems to me (and this is what the defendant submit) [sic] is that the Central Theme is not a genuine Central Theme of HBHG and I do no [sic] accept that the claimants genuinely believe it is as such. In my view it is an artificial contrivance designed to create an illusion of a Central Theme for the purposes of alleging infringement of a substantial part of HBHG.

Smith J continued to comment rather cynically on what he considered to be the primary motives in bringing the action against Random House: 4 By virtue of various mergers and acquisitions Random publishes both HBHG and DVC. Further a film production of DVC is apparently in the offing starring Tom Hanks with a scheduled release in May 2006. It is a testament to cynicism in our times that there have been suggestions that this action is nothing more than a collaborative exercise designed to maximise publicity for both books. It is true that the book sales of both books have soared during the course of the trial (in the case of HBHG it is said to be a tenfold increase). 5 I am not in a position to comment on whether this cynical view is correct but I would say that if it was such a collaborative exercise Mr Baigent and Mr Brown both went through an extensive ordeal in cross-examination which they are likely to remember for some time.

The idea versus expression dichotomy is given statutory substance by the requirement, as laid down in the Copyright Act 1968 (Cth), s 10, that generally (but not exclusively) a work must be in “material form” or “made” to enjoy copyright protection. The issue of “material form” is discussed in greater length in [4.40].

Independent creation versus derivation [3.130] Copyright confers a right against direct derivation. To establish that an infringement

exists, it is necessary to establish that there has been “copying” or derivation from the original work, even if that copying may have been on a subconscious or unconscious level: see Bright Tunes Music Corp v Harrisongs Music Ltd (1976) 420 F Supp 177 (US District Court, New York). However, there is no protection against the coincidental, independent creation of the same work or subject matter by another author or creator. Where two very similar or identical works are produced wholly independently of each other, the author of the first-published work has no right to restrain the publication of the second: see Francis Day & Hunter Ltd v Bron [1963] Ch 587 (UK Court of Appeal); but also see Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Ltd [2010] FCA 29. A photographer of a scene or particular subject matter, for example, has no right of claim against a subsequent photograph of exactly the same scene or subject. 68 [3.130]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

Corelli v Gray [3.140] Corelli v Gray (1913) 29 TLR 570 High Court of Justice (United Kingdom) [The plaintiff alleged that the respondent’s play “The People’s King” infringed the plaintiff’s copyright in the plaintiff’s book Temporal Power.] SARJANT J: [571] Before comparing the relative probability of these two rival cases I should like to make two observations, both of which tend in favour of the defendant. In the first place, it is fairly clear, and I assume in favour of the defendant, that under the new Act, as under the former law, no absolute monopoly is given to authors analogous to that conferred on inventors of patents that is to say, if it could be shown as a matter of fact that two precisely similar works were in fact produced wholly independently of one another, I do not think that the author of the work that was published first would be entitled to restrain the publication by the other author of that author’s independent and original work. The right appears to be merely a negative right to prevent the appropriation of the labours of an author by another. The second observation is this, that the onus of establishing appropriation, of course, rests upon the plaintiff. With these two observations, I will now deal with the case in the order in which it was presented to me namely, first, by examining the extent of the similarities or coincidences between the two works; and next by investigating the story put forward by the defendant.

[3.150] In Francis Day & Hunter Ltd v Bron [1963] Ch 587 (UK Court of Appeal), the court considered an appeal from a judgment in the primary court dismissing an application for copyright infringement. The respondent denied infringement by deliberate copying or conscious knowledge or unconscious copying of the original work. The plaintiffs, the owners of the copyright in a musical work “In a Little Spanish Town”, first published in 1926, complained that their copyright had been infringed by the publication in 1959 by the defendants of a musical work “Why”, composed by de Angelis, which, they alleged, reproduced a substantial part of the plaintiffs’ work. It was alleged that the first eight bars of the chorus of “In a Little Spanish Town” had been reproduced consciously or unconsciously in the first eight bars of “Why”. The court held that that:

• “reproduction need not be identical reproduction since infringement of copyright in music was not a question of note for note comparison but depended upon whether the alleged infringing work was substantially the same as the original work” (at 611); • “proof of similarity between the alleged infringing work and the original, coupled with proof of access to the original, did not raise any irrebuttable presumption of copying, but at most raised a prima facie case for the defendant to answer” (at 612); • “reproduction by subconscious copying was a possibility which, if it occurred, might amount to an infringement, but that to establish liability on this ground it must be shown that the composer of the offending work was in fact familiar with the original work, and that there was some causal connection between the alleged infringing work and the original work” (at 614); • “[i]t was therefore a simple question of fact whether the degree of objective similarity proved was sufficient to warrant the inference that there was a causal connection between the two works. Here it was impossible to say that the judge had reached a wrong conclusion on this question of fact, and therefore the appeal should be dismissed” (at 614). [3.150]

69

Intellectual Property: Commentary and Materials

But in a recent Australian case along similar lines, it was demonstrated that derivation can be established in a modicum of less than the eight bars in contention in Francis Day & Hunter v Bron. In 2009, Larrikin Music, holders of the copyright in an iconic Australian short musical piece of some four bars entitled “Kookaburra sits in the old Gum Tree” (“Kookaburra”), initiated action against the rock group Men at Work for infringing their rights in “Kookaburra”. In Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Ltd [2010] FCA 29, Larrikin claimed that two of those bars were reproduced in the 1981 recording of another iconic Australian composition, the song “Down Under” performed and recorded by Men at Work. The two bars make up part of the flute riff that was added to “Down Under” after it was first composed. The flute riff in “Down Under” did not consist solely of the two bars of “Kookaburra”. Where it first appeared in the 1981 recording, immediately after the percussion introduction, the flute riff contained only the second bar of “Kookaburra”. However, the flute riff was then heard at two later points in “Down Under”. At those points, the flute riff includes the first and second bars of “Kookaburra”. Justice Jacobson followed the approach taken in the English case of Francis Day & Hunter Ltd v Bron in determining objective similarity in contending musical works by “a note for note comparison but … by the eye as well as the ear”. His Honour concluded, based on his own aural and visual comparisons of melody, key, tempo, harmony and structure, as well as expert evidence, that there was a sufficient degree of objective similarity between the bars of “Kookaburra” and “Down Under” to amount to reproduction. On appeal, the Full Federal Court dismissed two appeals by EMI, and upheld the judgment of the primary court: see EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 47. The “independent creation versus derivation” conundrum raises further fundamental issues, namely in respect of the degree of originality (the diminution or absence of which may still not necessarily constitute infringement) and existence or otherwise of a certain degree of literary, artistic or creative effort as a precondition for copyright protection. These issues will also be discussed at further length at [4.60] – [4.80].

SIMPLIFICATION OF THE COPYRIGHT ACT 1968 [3.160] The Copyright Act 1968 (Cth) has grown significantly in terms of breadth and

complexity since its first introduction, to the extent that there have been ongoing calls for its rationalisation and simplification. The Act currently consists of 12 parts (some with sub-parts), numerous divisions (some with sub-divisions), over 249 sections (many with sub-sections). The hard-copy version available from the Federal Register of Legislation, in its latest iteration (July 2016) comprises 768 pages. In 1983, the Federal Attorney-General established the Copyright Law Review Committee (CLRC) as a specialist advisory body to report to government on specific copyright law matters referred to it from time to time. In 1995, the then Minister for Justice directed the committee to review the Act. One of its tasks, having regard to Australia’s international obligations as a member of the relevant international conventions for the protection of copyright, was to inquire into and report on “how to simplify the Copyright Act 1968 to make it able to be understood by people needing to understand their rights and obligations under the 70 [3.160]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

Act, with particular attention to simplification of the various provisions and schemes that provide exceptions to the exclusive rights comprising copyright”. The CLRC was also asked to examine how the government’s proposed ongoing Digital Agenda reforms might be given effect, including the new broadly based, technology-neutral right of communication to the public, as well as examining Australia’s obligations under the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT).

Simplification of the Copyright Act 1968 [3.170] Copyright Law Review Committee, Simplification of the Copyright Act 1968, Part 2–Categorisation of Subject Matter (September 1998), Chapter 5, [5.04]–[5.13] (references omitted) Problems with the current Act 5.04 The main features that characterise the current legislation’s approach to categorisation of protected subject matter and exclusive rights are the use of a relatively large number of categories of subject matter and rights, wherein those categories are defined in a relatively narrow and often technologically specific way. There are a number of consequences of this approach which, in the view of the majority of the Committee, are problematic. These consequences are an element of unnecessary legislative complexity, some instances of unjustifiable differential treatment of similar subject matter, and an undesirable degree of technological specificity of protected subject matter and exclusive rights. Each of these consequences are described in more detail, and illustrated by examples, below. 5.05 One consequence of the current legislation’s approach to categorisation is that it is long and complex. This arises from the treatment of works and subject matter other than works in different parts of the Act. As a result, there is a degree of duplication within those two parts of provisions relating to the same issues – including, in particular, in relation to the exceptions and limitations to the exclusive rights granted. The majority of the Committee agrees with the general view contained in the submissions it received that there is a fundamental difference between the types of subject matter that fall within Parts III and IV of the Act. However, the majority of the Committee does not believe that it is necessary to recognise this difference through the current unwieldy structural distinction, and is of the view that the difference can continue to be maintained in a more efficient and simplified form. 5.06 Another consequence is that there is a difference in the protection granted to different categories of subject matter within the same part of the Act, even where the different categories of subject matter satisfy the same requirements for subsistence of protection. In certain instances at least, this difference in treatment seems, to the majority of the Committee, to be unjustified. An example is the lesser protection given to artistic works compared with other works in Part III of the Act. In contrast to other works, artistic works do not receive the exclusive right of adaptation. The majority of the Committee believes that this result has the appearance, and may have the practical effect, of artists being discriminated against in comparison to other creators. 5.07 To the majority of the Committee, however, the most problematic consequence of the current legislation’s approach to categorisation is its technological specificity. This arises from the relatively narrow definitions used for both protected subject matters and exclusive rights, from the distinction drawn in those definitions between tangible and intangible embodiments, and from the requirement for Part III subject matter to be identified with a human “author”. Technological developments have produced new means of creating copyright subject matter, and new means of exploiting that subject matter. The majority of the Committee is of the view that those new means are being utilised now, and are likely to be utilised with increasing frequency in the future, to produce subject matter of a type, and to exploit subject matter in a way, that does not easily or at all come within the existing categories. The majority of the Committee is concerned that without a significant change in approach to [3.170]

71

Intellectual Property: Commentary and Materials

Simplification of the Copyright Act 1968 cont. categorisation of subject matter and rights, there will be increasing uncertainty in the application of the Act in the digital environment, and an increasing pressure on the legislature to make ad hoc amendments to deal with these uncertainties. Both of these outcomes are undesirable. 5.08 One example of a new type of subject matter arising from technological developments, for which there is already uncertainty about the Act’s application and calls for ad hoc legislative amendment, is the so-called “multimedia entity”. As discussed in more detail in Section 2 of this report, it is unclear whether a multimedia entity as such, as distinct from its component parts, is protected at all under the Act. The majority of the Committee is of the view, however, that a sufficiently creative multimedia entity should receive protection in its own right. It is also of the view that any other new media material, including material that has not yet been identified as such, should also receive protection if it is sufficiently creative. In short, the majority of the Committee is concerned that the current Act discriminates against creative material on the basis of its physical (or non-physical) form, and hence fails to protect material that, as a matter of policy, is deserving of protection. 5.09 An example of a new act of exploitation of protected subject matter arising from technological developments, for which likewise there is uncertainty about the Act’s application and calls for its amendment, is dissemination to the public by computer network. Uncertainty about the application of the current legislation lay behind the Copyright Convergence Group’s 1994 recommendation for a new, broadly defined right of transmission to the public, to replace the technology-specific rights of broadcast by wireless telegraphy and transmission to subscribers to a diffusion service. By 1996, developments in communications technology, and in particular the Internet, resulted in the adoption in both the WCT and the WPPT of an even broader new right – the right of communication to the public by wire or wireless means, which is defined to include making available to the public by interactive means. While the Committee supports the Government’s Digital Agenda decision to implement this new right in the current legislation, the majority of the Committee is concerned that these changes do not go far enough. In particular, the majority of the Committee considers problematic the fact that the provisions of the Act relating to exclusive rights will still distinguish between activities on the basis of whether they are carried out on a tangible or intangible embodiment of protected material. For example, it may be argued that the right of publication is confined to the first dissemination of a work to the public by distribution of physical copies of it. Yet a majority of the Committee believes that the publication right should embrace first dissemination of a work to the public by any means, including by distribution of intangible embodiments of the work. 5.10 The Act’s distinction between tangible and intangible embodiments of copyright material is potentially problematic in another way. Currently the legislation requires a work to be in a tangible embodiment to qualify for protection under Part III. As a result, material that has only an intangible embodiment, such as an extempore speech, is not protected even though arguably as deserving of protection as a speech that is written down prior to recitation. Also of concern to the majority of the Committee is the extent to which the current legislation accommodates the increasing, indeed almost ubiquitous, use of computers in the creation of copyright subject matter. The Act currently requires the identification of a human as the “author” of a Part III work. While a majority of the Committee recognises there is an ongoing need for copyright legislation to connect a work with a human, it is concerned that the current requirement of “authorship” may preclude the grant of protection to material that is deserving of protection, simply because the extent to which a computer was utilised in its creation exceeds a particular (currently uncertain) level. 5.11 The majority of the Committee notes that there has been some discussion relating to the “overlapping” of the current exclusive rights when applied to the digital environment. In particular, the majority of the Committee notes that at the Sydney consultations it was stated by some interests that the overlapping of rights should be avoided, as it would unjustifiably allow for the creation of a number of separate licences and the collection of separate royalties for what was primarily the 72 [3.170]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

Simplification of the Copyright Act 1968 cont. performance of the one activity. In this regard, the majority of the Committee also notes the comments made in the US report Intellectual Property and the National Information Infrastructure (1995). The US report stated: The exclusive rights, which comprise the so-called bundle of rights that is copyright, are cumulative and may overlap in some cases … the fact that more than one right may be involved in infringing activity does not, and should not, mean that only the one right should apply. Each of the exclusive rights is distinct and separately alienable and different parties may be responsible for infringements or licensing of different rights – and different rights may be owned by different people. 5.12 On this issue the majority of the Committee agrees with what was stated in the US report. Although the majority of the Committee recognises that rights appear to be “overlapping” to an increasing extent as a result of digital technology, it does not believe that this fact alone will result in the overprotection of copyright material. In the majority of the Committee’s view each right represents a specific and separately remunerable activity. The fact that the performance of an activity may involve the exercise of more than one right is justified. The majority of the Committee notes that the overlapping of rights is not peculiar to the digital environment – for example, the act of publication of a literary work in hard copy form traditionally involves the exercise of both the right of reproduction and the right of publication. 5.13 In summary, a majority of the Committee is of the view that the current legislation’s technologically specific approach to categorisation of protected subject matter and of exclusive rights is suboptimal in a number of key respects. It considers that the Act should be recast, in a manner that simplifies it and enables it better to deal with the challenges, both foreseen and as yet unforeseen, raised by the digital environment.

[3.180] The CLRC, by a majority, made a number of recommendations in respect of

simplification, which had significant implications for the nature of copyright protection and the nature of the Copyright Act 1968 (Cth). These recommendations included those outlined in the following extract.

Simplification of the Copyright Act 1968 [3.190] Copyright Law Review Committee, Simplification of the Copyright Act 1968, Part 2 – Categorisation of Subject Matter (September 1998), Chapter 5, [5.02]–[5.03] (references omitted) 5.02 The majority of the Committee recommends that the Australian copyright legislation be structured so as to implement the following principles in relation to protected subject matter: • there be two categories of protected subject matter, to which different levels of protection apply; • both categories encompass all embodiments of material within the literary and artistic domain, wherein that concept reflects its usage in the Berne Convention but is given a flexible interpretation so as to embrace both traditional and non-traditional expressions of textual, aural and visual material; • the factor for determining the category into which protected material falls, and hence the level of protection it is afforded, be the efforts of the person who undertakes its creation or production; • material will be protected at the higher level only if it is the result of significant intellectual effort by the person who undertakes its creation, while material will be protected at the lower level only if it is the result of the application of time, effort and resources by the person who undertakes its production; [3.190]

73

Intellectual Property: Commentary and Materials

Simplification of the Copyright Act 1968 cont. • there be no requirement that subject matter be in any particular, or indeed any, form of tangible embodiment for it to be protected under either category; • where public policy so requires, express provision be made to exclude specified material from either or both of the two categories of protected subject matter. 5.03 The majority of the Committee recommends that the Australian copyright legislation be structured so as to implement the following principles in relation to exclusive rights: • there be two exclusive economic rights, the right of reproduction and the right of dissemination to the public, and two exclusive moral rights, the right of attribution and the right of integrity; • the two economic rights apply to both categories of protected subject matter; • the two economic rights apply to activities that are conducted in relation to material that is in tangible form, and material that is in intangible form; • as far as practicable, for both categories of economic rights there be a harmonisation of the application of the activities that comprise the right to all the material within each category of protected subject matter; • the two moral rights apply only to the category of protected subject matter that is the result of significant intellectual effort by the person who undertakes its creation; • where public policy so requires, express provision be made to exclude specified activities from either or both of the two categories of economic and moral rights, whether that exclusion be general or in relation to specific material; • the economic and moral rights in material protected at the higher level subsist until 50 years after the death of the person who undertakes the material’s creation, or 50 years from the first dissemination of the material to the public, whichever is the greater; • the economic rights in material protected at the lower level subsist for a period of 50 years from the first dissemination of the material to the public, unless a shorter period is specified, either generally or in relation to specific material, as a matter of public policy; • the first owner of the economic and moral rights in material protected at the higher level be the person who undertakes its creation, subject to express provision maintaining the exceptions that apply under the current legislation; • the first owner of the economic rights in material protected at the lower level be the person by whom the arrangements necessary for its production are undertaken, subject to express provision maintaining the exceptions that apply under the current legislation.

[3.200] Since the CLRC report in 1998, many more provisions have been added to “update”

the Copyright Act 1968 (Cth), which mainly deal with aspects of the digital environment. There has been no “simplification”. On the contrary, there have since been significant additions encompassing new provisions for the introduction of: • moral rights; • the digital agenda; • film directors’ and performer’s rights; • other obligations under the Australia–United States Free Trade Agreement (AUSFTA); and • changes arising from the recent IP amending legislation. Further changes are to come arising from Australia’s recent round of concluded trade and investment treaties with China, South Korea and Japan. Further changes may quite possibly 74 [3.200]

Copyright: Contextual and Conceptual Issues

CHAPTER 3

arise out of further agreements awaiting ratification such, as the TPPA, and agreements under negotiation, such as those with Indonesia, India and the (Arabian) Gulf Cooperation Council. Finding and understanding the myriad of legal rights and obligations the Act now confers on owners, users and the public remains very difficult. The organisation of the Act is widely acknowledged in practice, and especially in academia, as sub-optimal. One explanation for the lack of action to remedy the complexity is “law reform fatigue”. There are too many smaller initiatives that have needed a more urgent response. Hence, new provisions are drafted or old ones redefined within the existing structure, and the problem continues unabated. Beyond a question of time, energy and resources, the bigger problem is that any restructuring of the legislation opens up jurisprudential debates about the fundamental purposes and objects of copyright law. From an historical perspective these have always been poorly expressed. For example, fundamental legal ideas such as the idea–expression dichotomy and the public domain, and popular notions in public legal education like “piracy”, have no clear or direct legislative reference. In addition, any larger reorganisation of the Act potentially interferes with established expectations of particular vested interests. There is little consensus and much disagreement about the politics of copyright, locally and globally, at this time. This political environment leads to ongoing piecemeal reform and a continuing deferral of legislative address to the structural complexity and incoherence of the Act. More recently, the Commonwealth Government has commissioned yet another examination on the Australia’s IP rights regime, including copyright. As earlier discussed in Chapter 2 [2.190], the Productivity Commission has recently (September 2016) delivered its Report on Australia’s IP system. Its key points in respect of copyright follow, and will now doubt generate considerable debate and discussion, both domestically and overseas, in light of its sometimes radical suggestions for change.

Australian Government Productivity Commission: Intellectual Property Arrangements: Report (September 2016), Chapter 4, Copyright Term and Scope, Key Points, page 103 [3.210] • Copyright protects the material expression of literary, dramatic, artistic and musical works, as well as books, photographs, sound recordings, films and broadcasts. In addition to being instrumental in rewarding creative and artistic endeavour, many creators value the recognition that the copyright system provides. • But an effective and efficient copyright system needs to balance the cost of creating new works (including the incentives necessary for that creation) against the community benefit from the use of creative works. Australia’s arrangements fail to strike this balance. • Australia’s copyright arrangements have expanded over time and new rights have been granted to rights holders. In some instances, expansion has been justified, as for much online material. • In other cases, copyright extension has swung too far in favour of rights holders, often with no transparent evidence-based analysis. Retrospective extension of term from 50 to 70 years after death is a prime case. • Australia’s copyright arrangements lack balance and have been slow to adapt to technological change, imposing costs on the broader community. [3.210]

75

Intellectual Property: Commentary and Materials

Australian Government Productivity Commission: Intellectual Property Arrangements: Report cont. – Overly broad and long copyright protection means Australians pay more or have difficulty accessing copyright material. – Excessively long copyright protection increases the likelihood works will become commercially unavailable or orphaned (where rights holders can no longer be identified). Copyright works that have already been produced, but cannot be accessed and used by consumers, benefit no one. • Technological change and accelerating digital disruption underscore the need for an adaptable copyright system. Research suggests today’s “representative consumer” infringes the copyright of non–commercial and commercial works over 80 times each day. • While the options for reform are limited by Australia’s international intellectual property agreements, there is scope to redress the imbalance. – The proposal of the Australian Government in late 2015 to abolish perpetual copyright protection for unpublished works should be implemented without delay. – The Australian Government should work with like-minded international partners to achieve greater balance in the way copyright operates internationally. • Targeted reforms should be implemented to improve access to copyright material, including through changes to copyright exceptions and transparent statutory licensing arrangements (covered in the following chapters).

76 [3.210]

CHAPTER 4 Criteria for Subsistence of Copyright [4.10] [4.10] [4.20] [4.30] [4.40]

INTRODUCTION ...................................................................................................... Background .............................................................................................................. Criteria for copyright protection ............................................................................ Qualified person ...................................................................................................... Material form ...........................................................................................................

[4.60]

Originality and merit ...............................................................................................

[4.80]

Minimum level of originality ..................................................................................

[4.50] [4.70] [4.90] [4.110] [4.130]

Cummins v Bond ..................................................................... University of London Press v University Tutorial Press ................. Desktop Marketing Systems v Telstra ........................................ Telstra v Phone Directories Company ........................................ Fairfax Media Publications v Reed International Books ...............

78 78 79 79 80 81 84 84 86 86 91 94

[4.140] [4.150] [4.160]

CATEGORIES OF PROTECTED WORKS AND SUBJECT MATTER ........................... 97 Part III Works ............................................................................................................ 97 Part IV subject matter .............................................................................................. 98

[4.170] [4.170]

CATEGORY OF WORKS – PART III WORKS ............................................................. 98 Literary works ........................................................................................................... 98

[4.190]

Dramatic works ...................................................................................................... 102

[4.180] [4.200]

[4.210]

Kalamazoo v Compact Business Systems .................................. 99 Zeccola v Universal City Studios ............................................. 103

Is a public spectacle a dramatic work? ............................................. 106 [4.210]

Nine Network v Australian Broadcasting Corp ......................... 106

[4.220]

Musical works ......................................................................................................... 108

[4.240]

Artistic works .......................................................................................................... 109 [4.250] Painting ................................................................................................ 110

[4.230]

[4.270] [4.290]

[4.300]

Attorney General v Trustees of National Art Gallery of NSW .................................................................................... 110 Merchandising Corp of America v Harpbond ........................... 111

Sculpture .............................................................................................. 113 [4.310]

[4.320] [4.330] [4.340] [4.350] [4.360]

CBS Records Australia v Guy Gross ......................................... 109

Greenfield Products v Rover-Scott Bonnar ................................ 113

Drawing ............................................................................................... Engraving ............................................................................................. Photograph .......................................................................................... Building ................................................................................................ Works of artistic craftsmanship ..........................................................

115 116 116 116

117 Coogi Australia v Hysport International ................................... 117 Computer programs as literary works ................................................................. 122 [4.390] Data Access v Powerflex Services ............................................ 123 [4.370]

[4.380] [4.400] [4.410] [4.420]

PART IV COPYRIGHT: SUBJECT MATTER OTHER THAN WORKS ........................ 131 Sound recordings .................................................................................................. 132 Cinematographic films .......................................................................................... 132 [4.430]

Galaxy Electronics v Sega Enterprises ...................................... 133 77

Intellectual Property: Commentary and Materials

[4.440]

Sound and television broadcasts .......................................................................... 134 [4.450] The Panel High Court decision .......................................................... 134

[4.460] [4.470]

Published editions of works .................................................................................. 142 Adaptation of works .............................................................................................. 142 [4.480] Adaptation of a computer program .................................................. 143

[4.450]

[4.480]

[4.490] [4.510] [4.530]

Network Ten v TCN Channel Nine .......................................... 134

Coogi Australia v Hysport International ................................... 143

DURATION OF COPYRIGHT .................................................................................. Overlap between copyright and circuit layouts legislation ............................... [4.520] Circuit layout litigation in Australia ................................................... Overlap between copyright and designs legislation .......................................... [4.540]

145 147

148 149 Sheldon & Hammond v Metrokane ........................................ 150

INTRODUCTION Background [4.10] Australia’s first post-independence copyright statute was the Copyright Act 1912 (Cth). This Act simply adopted the Copyright Act 1911 (UK), providing that it should be in force throughout Australia. Following the introduction in the UK of a new copyright act in 1956, the Australian Government in 1958 appointed a committee under Sir John Spicer to advise which of the amendments in the new UK law should be incorporated into Australian copyright law and what other alterations or additions, if any, should be made to the law. The Spicer Committee was also charged with examining what changes were needed to enable ratification of the Brussels Act (1948) of the Berne Convention (INT). This resulted in the Copyright Act 1968 (Cth), which is the foundation for copyright law in Australia. Copyright is a creation of statute and there is no concept of common law rights in copyright. The Copyright Act 1968 (Cth) came into effect on 1 May 1969. There are some significant differences between the two Acts, particularly in relation to the range of persons entitled to copyright protection (much broader under the earlier Act, which, being an adoption of the UK Act, had extended copyright protection not only within Australia but also to the “King’s Dominions”) and the subject matter protected (narrower under the earlier Act, which did not include, for example, television programs). As a general rule, works or subject matter protected under the 1912 Act immediately prior to the Act coming into force continue to receive protection (Copyright Act 1968 (Cth) s 210(1)). Note that it is possible that copyright may still exist in works which were first made or published even prior to the 1912 Act. Following its enactment almost 50 years ago, the current Copyright Act 1968 has been modified and added to comprehensively over the intervening years. Since the introduction in 1995 of the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (1995) (see Chapter 2), which contains significant copyright obligations and which Australia has ratified, the Copyright Act 1968 (Cth) has been subject to frequent amending legislation, including the following over the last 15 years:

• Copyright Amendment (Computer Programs) Act 1999 (Cth); • Copyright Amendment (Digital Agenda)Act 2000 (Cth); • Copyright Amendment (Moral Rights) Act 2000 (Cth); • Copyright Legislation Amendment Act 2004 (Cth); 78 [4.10]

Criteria for Subsistence of Copyright

CHAPTER 4

• Copyright Amendment (Parallel Importation) Act 2003 (Cth); • US Free Trade Implementation Act 2004 (Cth); • Copyright Amendment (Film Directors’ Rights) Act 2005 (Cth); • Copyright Amendment Act 2006 (Cth); • Intellectual Property Laws Amendment Act 2006 (Cth); • Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth); • Intellectual Property Laws Amendment Act 2015 (Cth); • Copyright Amendment (Online Infringement) Act 2015 (Cth).

Criteria for copyright protection [4.20] The conceptual distinction between tangible and intangible property rights, ideas and expressions, and independent creation as opposed to derivation, was discussed in Chapter 3. These concepts are articulated in a number of statutory provisions that determine when copyright subsists and to whom it belongs. Even though there is no registration process or other formal requirements to obtaining copyright protection, the Copyright Act 1968 (Cth) still requires the fulfilment of certain criteria for eligibility for copyright protection to subsist. In general terms (but with some limited exceptions), the Act makes provision for the protection of certain types of subject matter that are:

• original; • created or “made”; • by a “qualified person” (as defined by the Act) or published in Australia. Provided these criteria are met, the owner of the copyright gains certain exclusive rights which endure for a specified period of time.

“Qualified person” [4.30] The “qualified person” criterion effectively limits the operation of the Copyright Act 1968 (Cth) to an Australian jurisdiction. It can apply to both a person and the copyright work or other subject matter. In the latter case, it becomes a territorial criterion. In either case, protection requires an Australian connection. In general terms, s 32 of the Act provides that a “qualified person” is an Australian, an Australian protected person, or a person resident in Australia, while the territorial criterion can require works or other subject matter to have been published or made in Australia. Hence the following requirements apply to the various categories of copyright:

• unpublished works – the author was a qualified person at the time the work was made (Copyright Act 1968 (Cth) s 32(1)); • published works – the author was a qualified person when the work was first published, or the work was first published in Australia (s 32(2)); • buildings – the building is located in Australia (s 32(3)); • published and unpublished sound recordings – the maker of the recording was a qualified person when the recording was first made or the recording was made in Australia (s 89(1) – (3)); [4.30]

79

Intellectual Property: Commentary and Materials

• published and unpublished cinematographic films – the maker was a qualified person at the time the film was made, or the film was made or first published in Australia (s 90); • television and sound broadcasts – the broadcast was made from a place in Australia under the authority of the Broadcasting Services Act 1992 (Cth) (Copyright Act 1968 (Cth) s 91); • published editions of works – the publisher was a qualified person when the edition was first published or the first publication took place in Australia (s 92); • performance – the performer is a qualified person or the performance is given in Australia (s 248A). Note that works created overseas are protected in Australia as if they were created in Australia, providing the country in which they are created is signatory to one of the relevant international treaties. In particular, note the Copyright (International Protection) Regulations 1969 (Cth), made in accordance with Australia’s international treaty obligations pursuant to TRIPS and the Berne Convention. Australian works may receive reciprocal copyright protection overseas, provided the overseas country is signatory to the treaty. By the same token, Australia is obliged to extend at least the same level of protection to the other country as it does to its own citizens. There is provision for the making of original works at the direction of the Crown (Commonwealth or State) in which case copyright arises without the author needing to be a qualified person (Copyright Act 1968 (Cth) s 176). Similar principles apply in regard to cinematograph films and sound recordings (s 178), and with respect to original works (s 187) or other subject matter (s 188), made or published by, or at the direction of, certain international organisations.

“Material form” [4.40] The requirement for a copyright work or other subject matter to be created or

otherwise “made” is a corollary of the “idea versus expression” dichotomy discussed in Chapter 3 at [3.130]–[3.150]. However, it merits further examination here. Under the Copyright Act 1968 (Cth), a literary, dramatic, musical or artistic work (Part III works) and other subject matter (Part IV subject matter) must exist in “material form” in order for copyright to subsist in it. In regard to literary, dramatic, musical or artistic works, the material form occurs when the work is “first reduced to writing or to some other material form” (s 22(1)); see Donoghue v Allied Newspapers [1938] Ch 106 (see also [3.110]). Other subject matter is not quite subject to the “material form” requirement, but still needs to be “made”. In the case of sound recordings, the recording is deemed to be “made” when it was first “fixed” – that is, when the first record embodying the sound recording was produced (Copyright Act 1968 (Cth) s 22(3)). Similarly, a cinematographic film is deemed to be made when the first copy of the film is produced. The situation in respect of broadcasts is slightly different: by implication, the broadcast is deemed to be made when it is delivered. A speech, as such, cannot be protected unless it is delivered from a written text; see Walter v Lane [1900] AC 539. A sound recording made from the speech may, however, be protected as a sound recording under s 85. Copyright in sound and television broadcasts can also exist under ss 85 – 88, regardless of the requirement of “material form”: see s 22(3) – (6). Digitisation has created new problems in applying the material form requirement. The objection that copyright should not be used to protect something incapable of being seen or heard was fatal to the plaintiff’s claim to establish copyright in a computer program in Apple 80 [4.40]

Criteria for Subsistence of Copyright

CHAPTER 4

Computer Inc v Computer Edge Pty Ltd (1983) ATPR 40-421. The High Court subsequently upheld this decision of Beaumont J in Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171. Sheppard J in the Federal Court (on appeal from Beaumont J (Apple Computer Inc v Computer Edge Pty Ltd (1984) 53 ALR 225)) was also of the opinion that, in the context of the existing Copyright Act 1968 (Cth), a literary work or an adaptation thereof needed to be capable of being seen or heard. Computer programs are a type of “literary work” under copyright law, and are now excused from the requirement of being perceptible by human senses. Under the Australia–US Free Trade Agreement, there is a new definition of material form, which: … in relation to a work or an adaptation of a work, includes any form (whether visible or not) of storage of the work or adaptation, or a substantial part of the work or adaptation, (whether or not the work or adaptation, or a substantial part of the work or adaptation, can be reproduced).

This provision applies to all reproductions, in any manner or form, permanent or temporary. Material may be regarded as having been “reproduced” if it is held in a form of storage (such as RAM), even though it may not be possible to reproduce it from that form of storage. However, under Copyright Act 1968 (Cth) s 43B there is no infringement of copyright if the reproduction is “incidentally made as part of a technical process” in using a non-infringing copy of a work. Even with traditional works, the dichotomy between an idea and its expression is not always easy to formulate. In Cummins v Bond [1927] 1 Ch 167, the judge commented: [I]t would almost seem as though the individual who has been dead and buried for some 1900-odd years and the plaintiff (the medium) ought to be regarded as the joint authors and users of the copyright, but inasmuch as I do not feel myself competent to make any declaration in his favour, and recognising as I do that I have no jurisdiction extending to the sphere in which he moves, I think I ought to confine myself when inquiring who is the author to individuals who were alive when the work first came into existence and to conditions which the legislature in 1911 may reasonably be presumed to have contemplated.

Cummins v Bond [4.50] Cummins v Bond [1927] 1 Ch 167 High Court of Justice, Chancery Division (United Kingdom) [The plaintiff engaged in psychic research, acting as a spiritualist and medium at séances during which she practised automatic writing while in a trance state. The defendant was an architect who was interested in recent discoveries at the Abbey of Glastonbury, and automatic writings related to them. Séances with the defendant in attendance resulted in The Chronicle of Cleophas (the Chronicle), which the plaintiff wrote in her automatic writing. The nature of the writing was archaic, of the 16th and 17th centuries. Cleophas is mentioned twice in the New Testament as one of the followers of Christ. A dispute arose as to the ownership of copyright in the Chronicle, the defendant claiming that the writings were addressed to him and inspired by his presence, or that they were not susceptible to copyright protection at all, being communicated in substance and form by a psychic agent.] EVE J: [172] The issue in this action is reduced to the simple question who, if anyone, is the owner of the copyright of this work. Prima facie it is the author, and so far as this world is concerned there can be no doubt who is the author here, for it has been abundantly proved that the plaintiff is the writer of every word to be found in this bundle of original script. But the plaintiff and her witness and the defendant are all of opinion and I do not doubt that the opinion is an honest one that the true [4.50]

81

Intellectual Property: Commentary and Materials

Cummins v Bond cont. originator of all that is to be found in these documents is some being no longer inhabiting this world, and who has been out of it for a length of time sufficient to justify the hope that he has no reasons for wishing to return to it. According to the case put forward by those entertaining the opinion I have referred to the individual in question is particularly desirous of assisting in further discoveries relating to the ancient Abbey of Glastonbury, and he chooses the Brompton Road as the locality in which, and the plaintiff as the medium through whom, his views as to further works to be undertaken on the site of the Abbey shall be communicated to the persons engaged in the work of excavation. He is sufficiently considerate not to do so in language so antiquated as not to be understood by the excavators and others engaged in the interesting operations, but in order not to appear of too modern an epoch he selects a medium capable of translating his messages into language appropriate to a period some 16 or 17 centuries after his death. I am not impugning the honesty of persons who believe, and of the parties to this action who say that they believe, that this long departed being is the true source from which the [173] contents of these documents emanate; but I think I have stated enough with regard to the antiquity of the source and the language in which the communications are written to indicate that they could not have reached us in this form without the active co-operation of some agent competent to translate them from the language in which they were communicated to her into something more intelligible to persons of the present day. The plaintiff claims to be this agent and to possess, and the defendant admits that she does possess, some qualification enabling her, when in a more or less unconscious condition, to reproduce in language understandable by those who have the time and inclination to read it, information supplied to her from the source referred to in language with which the plaintiff has no acquaintance when fully awake. From this it would almost seem as though the individual who has been dead and buried for some 1900 odd years and the plaintiff ought to be regarded as the joint authors and owners of the copyright, but inasmuch as I do not feel myself competent to make any declaration in his favour, and recognising as I do that I have no jurisdiction extending to the sphere in which he moves, I think I ought to confine myself when inquiring who is the author to individuals who were alive when the work first came into existence and to conditions which the legislature in 1911 may reasonably be presumed to have contemplated. So doing it would seem to be clear that the authorship rests with this lady, to whose gift of extremely rapid writing coupled with a peculiar ability to reproduce in archaic English matter communicated to her in some unknown tongue we owe the production of these documents. But the defendant disputes the plaintiff’s right to be considered the sole author, alleging that he was an element and a necessary element in the production, and claiming, if the authorship is to be confined to persons resident in this world, that he is entitled to the rights incident to authorship jointly with the plaintiff. In the course of the trial, after reading the correspondence, [174] and hearing the evidence of Miss Gibbes, I expressed an unfavourable opinion of the defendant’s conduct in certain respects. For one thing he had at a very early stage of his acquaintance with that lady commenced to borrow money from her, and when at a later date he was called upon to repay the sums so borrowed he set up a wholly insupportable story that the moneys had been paid to him as a gift; and for another, when he was submitting a complicated agreement for the approval of the two ladies and inducing them to believe that he desired them to take legal advice thereon, he was at the same time urging a mutual friend to obtain their approval and execution of the same without taking any such advice. Since I expressed that unfavourable opinion I have seen and heard the defendant in the box, and although his conduct in the matters I have referred to cannot but be regarded as involving grave errors of judgment, I do not think he was actuated by the sordid motives which his conduct was certainly calculated to suggest. He is an individual upon whose memory little reliance can be placed, he is of an imaginative temperament and regards the alleged supernatural incidents connected with this work 82 [4.50]

Criteria for Subsistence of Copyright

CHAPTER 4

Cummins v Bond cont. with a reverence that is almost fanatical, and he has, I think, in more than one incident shown that he is occasionally subject to hallucinations. His claim to be considered a joint author is suggestive of an hallucination, for it is based upon the assertion that by his presence at the séances where the writing took place he in some way transmitted from his brain to the unconscious brain of the medium the classical and historical references which are to be found in these documents. He frankly admits that he does not appreciate how it was done, or to what extent he did it; but he has evidently brought himself to believe that he did contribute materially to the composition of the work and that his contribution was made by means of some silent transfer from his brain to that of the unconscious medium of phrases and allusions with which he was familiar but of which she knew nothing. But inasmuch as the medium is credited with a power to translate language of which she knew nothing into archaic English, [175] of which she was almost equally ignorant, and at a phenomenal pace, it does not appear necessary to fall back on the defendant’s presence in order to explain the classical and historical references which he maintains must have emanated from his brain. They may well have originated in the brain of the medium herself. In these circumstances I am quite unable to hold that the defendant has made out any case entitling him to be treated as a joint author. I think he is labouring under a complete delusion in thinking that he in any way contributed to the production of these documents. Alternatively failing to establish any claim on his own behalf he submits that there is no copyright in the work at all, that it has come from a far off locality which I cannot specify, and that the plaintiff is the mere conduit pipe by which it has been conveyed to this world. I do not think that it is a fair appreciation of the plaintiff’s activities, they obviously involved a great deal more than mere repetition; but, apart altogether from these considerations, the conclusion which the defendant invites me to come to in this submission involves the expression of an opinion I am not prepared to make, that the authorship and copyright rest with some one already domiciled on the other side of the inevitable river. That is a matter I must leave for solution by others more competent to decide it than I am. I can only look upon the matter as a terrestrial one, of the earth earthy, and I propose to deal with it on that footing. In my opinion the plaintiff has made out her case, and the copyright rests with her. Upon the same footing it has been further contended on behalf of the defendant that an agreement was come to between him and the plaintiff under which he is beneficially interested in the copyright, or alternatively that the conduct of the plaintiff has been such as to estop her from denying that he has such an interest. In order to determine these questions the evidence and correspondence require some examination. [His Lordship proceeded to go through these in detail and concluded:] It is quite clear that no agreement was ever concluded, and I am quite unable to hold that the [176] plaintiff ever abandoned the position she took up in the latter part of the year 1925 or ever so conducted herself as to preclude her from insisting on the claims put forward in this action. Accordingly I hold she is entitled to the declaration for which she asks, that is to say, a declaration that she is the owner of the copyright in this work it must be identified in some way delivery up of such parts of the original manuscript as have not already been handed to her, and the defendant must pay the costs of the action. The counterclaim by which the defendant seeks a declaration that he is entitled to the copyright is dismissed with costs. Order for the plaintiff.

[4.50]

83

Intellectual Property: Commentary and Materials

“Originality” and merit [4.60] Although the Copyright Act 1968 (Cth) does not require critical acclaim or even

creative merit to attach to a literary, dramatic, musical or artistic work before protection will be afforded, s 32(1) requires that such a work be “original”. To some extent, the concept of what constitutes a “work” within the Act and the concept of originality are intertwined. It is difficult to discuss what amounts to a work without discussing originality, since without a sufficient degree of originality a work will not come into existence. There are general principles of originality that would seem to apply to all classes of works. And with the issue of originality and work comes the contentious notion, implied at least, of whether some quality of human endeavour or application should also apply. In Kalamazoo (Aust) Pty Ltd v Compact Business Systems Pty Ltd (1985) 5 IPR 5, Thomas J noted (at 232), that there was general but not universal judicial acceptance that “a literary work” is one that gives “information, instruction or pleasure in the form of literary enjoyment”, rather than literary merit. However, there was an acceptance of a degree of originality comprising labour, skill, judgment or ingenuity involved in the expression of the idea. However, the question is not the novelty or the worth of the thought that a person injects into their work, but whether the expression is original. As Dixon J said in Victoria Park Racing & Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 511: “… [t]he work need show no literary or other skill or judgment. But it must originate with the author and be more than a copy of other material”. The form of expression of the work must be the result of particular mental effort or exertion by the author or authors and cannot be essentially dictated by the nature of the information. As French CJ, Crennan and Kiefel JJ said in IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14, in explaining the idea–expression dichotomy: • “[C]opyright is given in respect of ‘the particular form of expression in which an author conveys ideas or information to the world’” (at [26]). • “Copyright does not protect facts or information”. To do so “would impede the reading public’s access to and use of facts and information. It protects the particular form of expression of the information”: the words, figures and symbols in which the pieces of information are expressed and the selection and arrangement of that information (at [28]). • “Copyright is not given to reward work distinct from the production of a particular form of expression” (at [28]). In University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601, the court considered whether a set of exam papers could be deemed to be literary works and therefore be subject to copyright. Crucial to the consideration was whether the papers enjoyed originality.

University of London Press v University Tutorial Press [4.70] University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 High Court of Justice, Chancery Division (United Kingdom) PETERSON J [after stating the facts]: [608] The first question that is raised is, Are these examination papers subject to copyright? Section 1(1) of the Copyright Act 1911 provides for copyright in “every original literary dramatic musical and artistic work”, subject to certain conditions which for this purpose are immaterial, and the question is, therefore, whether these examination papers are, within the meaning of this Act, original literary works. Although a literary work is not defined in the Act, s 35 84 [4.60]

Criteria for Subsistence of Copyright

CHAPTER 4

University of London Press v University Tutorial Press cont. states what the phrase includes; the definition is not a completely comprehensive one, but the section is intended to show what, amongst other things, is included in the description “literary work”, and the words are “‘Literary work’ includes maps, charts, plans, tables and compilations”. It may be difficult to define “literary work” as used in this Act, but it seems to be plain that it is not confined to “literary work” in the sense in which that phrase is applied, for instance, to Meredith’s novels and the writings of Robert Louis Stevenson. In speaking of such writings as literary works, one thinks of the quality, the style, and the literary finish which they exhibit. Under the Act of 1842, which protected “books”, many things which had no pretentions to literary style acquired copyright; for example, a list of registered bills of sale, a list of foxhounds and hunting days, and trade catalogues; and I see no ground for coming to the conclusion that the present Act was intended to curtail the rights of authors. In my view the words “literary work” cover work which is expressed in print or writing, irrespective of the question whether the quality or style is high. The word “literary” seems to be used in a sense somewhat similar to the use of the word “literature” in political or electioneering literature and refers to written or printed matter. Papers set by examiners are, in my opinion, “literary work” within the meaning of the present Act. Assuming that they are “literary work”, the question then is whether they are original. The word “original” does not in this connection mean that the work must be the expression of original or inventive thought. Copyright Acts are not concerned with the originality of ideas, but with the expression of thought, and, in the case of “literary work”, with the expression of thought in print or writing. The originality which is required relates to the expression of the thought. But the Act does not require that the expression [609] must be in an original or novel form, but that the work must not be copied from another work that it should originate from the author. In the present case it was not suggested that any of the papers were copied. Professor Lodge and Mr Jackson proved that they had thought out the questions which they set, and that they made notes or memoranda for future questions and drew on those notes for the purposes of the questions which they set. The papers which they prepared originated from themselves, and were, within the meaning of the Act, original. It was said, however, that they drew upon the stock of knowledge common to mathematicians, and that the time spent in producing the questions was small. These cannot be tests for determining whether copyright exists. If an author, for purposes of copyright, must not draw on the stock of knowledge which is common to himself and others who are students of the same branch of learning, only those historians who discovered fresh historical facts could acquire copyright for their works. If time expended is to be the test, the rapidity of an author like Lord Byron in producing a short poem might be an impediment in the way of acquiring copyright, and, the completer his mastery of the his subject, the smaller would be the prospect of the author’s success in maintaining his claim to copyright. Some of the questions, it was urged, are questions in book work, that is to say, questions set for the purpose of seeing whether the student has read and understood the books prescribed by the syllabus. But the questions set are not copied from the book; they are questions prepared by the examiner for the purpose of testing the student’s acquaintance with the book, and in any case it was admitted that the papers involved selection, judgment, and experience. This objection has not, in my opinion, any substance; if it had, it would only apply to some of the questions in the elementary papers, and would have little, if any, bearing on the paper on advanced mathematics. Then it was said that the questions in the elementary papers were of a common type; but this only means that somewhat similar questions have been asked by other examiners. I suppose that most elementary books on mathematics may be said to be of a common type, but that fact would not give impunity to a predatory infringer. The book and the papers alike originate from the author and are not copied by him from another book

[4.70]

85

Intellectual Property: Commentary and Materials

University of London Press v University Tutorial Press cont. or other papers. The objections with which I [610] have dealt do not appear to me to have any substance, and, after all, there remains the rough practical test that what is worth copying is prima facie worth protecting. In my judgment, then, the papers set by Professor Lodge and Mr Jackson are “original literary work” and proper subject for copyright under the Act of 1911.

Minimum level of originality [4.80] The issue of minimum levels of originality and human mental effort has been examined on numerous occasions in respect of compilations in various formats – for example, in respect of racing form guides, ballot papers or telephone directories. The format of telephone directories was subject to scrutiny in 2002 and again in 2010, with very different outcomes. In Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112 on appeal before the Federal Court, the court considered whether the factual compilations – comprising the directories – met the threshold requirement of originality in Australian copyright law, and whether the headings books developed by the respondent attracted copyright protection

Desktop Marketing Systems v Telstra [4.90] Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112 Federal Court of Australia (Full Court) [Desktop Marketing Systems was appealing against a decision of the primary court that it had infringed Telstra Corporation’s copyright in the White Pages Directories, the Yellow Pages Directories (Directories) and the Headings Book. Desktop copied the data contained in the directory sections of the White Pages Directories and the Yellow Pages Directories, and separately stored those two bodies of data in databases. Desktop copied headings from the Yellow Pages Directories, using them as descriptions of the lines of business of subscribers whose details it took from those Directories. Accordingly, Telstra’s case in respect of the Headings Books is one of indirect infringement. Desktop did not copy any of the information pages, graphics, enhancements or advertisements. This case also concerned the element of “originality” in respect of compilations of factual information.] LINDGREN J: Conclusion on subsistence of copyright – The White Pages Directories and Yellow Pages Directories 160 While it is possible to distinguish particular cases on their facts, in my opinion the course of authority in England and Australia examined above supports the following propositions of relevance to the subsistence of copyright in compilations of factual information: 1.

The concept of originality is correlative with that of authorship (Sands & McDougall).

2.

Authorship (likewise originality) does not require novelty, inventiveness or creativity, whether of thought or expression, or any form of literary merit (cf Walter v Lane; University of London Press; Sands & McDougall; Victoria Park; Ladbroke).

3.

Not all works, even literary works, are of the same kind and one must identify and keep in mind the particular kind of work within the Act in which copyright is claimed to exist–in the present case, a particular form of literary work, namely, a “compilation” (cf Walter v Lane; Sands & McDougall). (The Act’s definition of “literary work” as including a “compilation” has made

86 [4.80]

Criteria for Subsistence of Copyright

CHAPTER 4

Desktop Marketing Systems v Telstra cont. extended discussion of the meaning of “literary work” unnecessary, but it is noteworthy that the noun “work” has been defined to mean, in the word’s relevant general sense, “A thing, structure or result produced by the operation, action, or labour of … a person or other agent” (OED) and as “a product of exertion, labour, or activity” (of which an artistic, literary or musical work is given as an example) (Macquarie).) 4.

It appears to be a necessary feature of a factual compilation that it supply “intelligible information” (cf Real Estate Institute discussed at [93], Canterbury Park discussed at [101]-[102]; and cf Exxon). Accordingly, a totally random collection and listing of unrelated pieces of factual information would not be a compilation within the Act. (Apparently the position would be different if the compilation included a statement that it was a random selection, since that very statement would give the whole a significance it would otherwise lack.) A telephone directory satisfies the apparent requirement that a compilation convey a significance of its own which is independent of that of its component items considered individually and in isolation from one another. A telephone directory purports to be an alphabetical listing of particulars of all listable telephone subscribers within a given geographical area, and therefore to perform the function of providing access to the telephone number of every subscriber. It impliedly proclaims: “These are the names, addresses and telephone numbers of all listable subscribers within the stated geographical region, and if a name does not appear in its alphabetical position, there is no listable subscriber by that name”.

5.

One must apply the test of originality to the literary work, including a compilation, in which copyright is claimed to exist, as a whole, rather than dissecting it and applying the test to the individual parts (cf Cambridge University Press; Ladbroke; Warwick Film; A-One).

6.

The test of originality is whether the work was not copied, but originated from the putative author (cf Dicks v Yates; University of London Press; Mander v O’Brien; Victoria Park; Purefoy; Ladbroke; Ogden; Computer Edge; Kalamazoo; Erica Vale; Skybase; Harpur v Lambourne; Data Access).

7.

This test is not an “all or nothing” one but raises a question of fact and degree as to the extent of the putative author’s contribution to the making of the particular literary work in question, in the present case, a compilation (cf Macmillan v Cooper; Cramp; Ladbroke; Computer Edge; Interlego; Flanagan). (In Sampson v Brokensha and Shaw Ltd (1935) 37 WALR 90 (“Sampson”) it was decided that a person who merely bound into a book all the forms prescribed by a set of regulations did not have copyright in the compilation.)

8.

For this purpose, no particular kind of antecedent work contributed by the putative author is, a priori, to be left out of account, except, perhaps, antecedent work which was undertaken for a purpose or purposes which did not include the making of the literary work at all (cf Football League; Ladbroke; Mirror Newspapers; Autospin).

9.

It is not the law that where there is only one way of expressing and arranging a whole-of-universe factual compilation, the compilation cannot attract copyright protection (cf Matthewson v Stockdale; Longman v Winchester; Kelly v Morris; Ibcos).

10.

Decisively for the present case, there is no principle that the labour and expense of collecting, verifying, recording and assembling (albeit routinely) data to be compiled are irrelevant to, or are incapable of themselves establishing, origination, and therefore originality; on the contrary, the authorities strongly suggest that labour of that kind may do so (cf Matthewson v Stockdale; Longman v Winchester; Kelly v Morris; Scott v Stanford; Morris v Ashbee; Cox v Land and Water Journal Company; Morris v Wright; Hogg v Scott; Ager; Collis; Weatherby; ACP v Morgan; Autospin; and the recent Indian case, Burlington’s Home Shopping Ltd v Chibber (1995) Patent & Trademark Cases 278 (noted in Pravin Anand, “Burlington’s Home Shopping Ltd v Chibber” [4.90]

87

Intellectual Property: Commentary and Materials

Desktop Marketing Systems v Telstra cont. (1995) 6 Ent L Rev 159, in which the Delhi High Court, not following Feist, held that a computer database of mail order customers (names, addresses, telephone and fax numbers) was protected as a compilation within the definition of literary work). 161 To recognise copyright in compilations of factual data which do not involve selection or scope for variance in expression or arrangement may be seen, as a practical matter, to be an acceptance of the proposition that copyright can subsist in facts. No doubt policy reasons can be suggested for withholding, as for according, copyright protection in such cases. There are those who point to the advantages of permitting others to build on the first compiler’s work, without first having to repeat that work independently. Others point out that to deny the first compiler copyright protection is to discourage research by would-be first compilers. The Act does not provide for the compulsory licensing of copyright for reasonable remuneration in aid of the commercial objectives of a would-be licensee. Accordingly, the situation in cases such as the present under Australian law is an “all or nothing” one. … 163 The task of carefully identifying and listing all the units constituting a defined universe is usefully and commonly, undertaken. Moreover, alphabetical order is a common form of arrangement according to which such lists are made up. There are two special benefits offered by the compiler in such cases. The first is the assurance that the universe has been thoroughly explored, and that all members of it have been captured. “Whole-of-universe certification” gives value to the list. A compilation which can only profess to have captured “nearly all” the members of a defined universe is not as valuable as one that can claim to have captured all of them. But whole-of-universe certification is a benefit only if the second special benefit to which I referred is also present: an intelligible arrangement of the data compiled. Who would want a telephone directory containing particulars of all subscribers listed randomly and therefore inaccessibly? 164 The making of accessible whole-of-universe compilations is arguably to be encouraged by the giving of copyright protection on account of the industrious collection, verification, recording and assembly necessarily undertaken for the purpose. But ultimately the weighing of the competing policy considerations is a matter for the legislature. 165 For reasons given above, and as a result of proposition (10) in [160], the First Issue should be resolved in favour of Telstra. SACKVILLE J: [comments on “originality”] Subsistence of Copyright – Some preliminary points 335 The principal issue in this case concerns the “innovation threshold” which must be satisfied if a compilation of the names, addresses and telephone numbers of subscribers to a telephone service is to be accorded copyright protection: see S Ricketson, The Law of Intellectual Property (2001), at [7.35], citing a comment by Professor James Lahore. The resolution of this issue and the related question of infringement ultimately depends on the proper construction of the Copyright Act since, as noted earlier, copyright in Australia cannot subsist otherwise than by virtue of the Act: s 8. It is, however, difficult to approach the task of construction without reference to the older authorities which predate the passage of the first comprehensive copyright legislation, namely the Copyright Act 1911 (UK) (the “1911 Act”) declared to operate in Australia, subject to minor modifications, by the Copyright Act 1912 (Cth) (the “1912 Act”). Indeed, the written and oral submissions on the appeal referred to numerous authorities decided both before and after 1911. 336 The earlier authorities may be important, especially if they have been followed or approved in more recent cases based on modern legislation. Telstra relied, for example, on the decisions of the House of Lords in Walter v Lane [1900] AC 539, upholding copyright in reporters’ published records of speeches given by Lord Rosebery, and that of North J in Collis v Cater Stoffell & Fortt Ltd (1898) 78 LT 88 [4.90]

Criteria for Subsistence of Copyright

CHAPTER 4

Desktop Marketing Systems v Telstra cont. 613, upholding copyright in a catalogue of medicines and other articles sold by a chemist. In Sands v McDougall Pty Ltd v Robinson [1917] HCA 14; (1917) 23 CLR 49 Isaacs J (with whom Gavan Duffy and Rich JJ agreed) not only rejected the argument that the expression “original work” in s 1(1) of the 1911 Act implied inventive ingenuity, but stated that the principles stated by the House of Lords in Walter v Lane continued to apply to the new statutory regime (at 55). Similarly, the Court of Appeal in Purefoy Engineering Co Ltd v Sykes Boxall & Co Ltd (1955) 72 RPC 89, at 95, a decision post-dating the 1911 Act, remarked that Collis v Cater had never been doubted (see also Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, at 278, per Lord Reid; at 287-288, per Lord Hodson; at 292, per Lord Pearce). 337 Even so, some caution is necessary when reading the earlier authorities. There are significant differences between the nineteenth century law of copyright and the more modern law. At the time the much-cited case of Kelly v Morris (1866) 1 LR Eq 697 was decided (upholding copyright in the “Post Office London Directory”), the legislation in the United Kingdom made no explicit provision for a literary work to include a compilation. A provision to that effect was first introduced by s 35 of the 1911 Act. The reasoning in other cases depends, at least in part, on provisions that have no exact counterpart in modern legislation. In Chilton v Progress Printing and Publishing Company [1895] 2 Ch 29, for example, the Court of Appeal held that there was no copyright in a list of the plaintiff’s selection of horses tipped to win at races to be held in the ensuing week. Lord Halsbury pointed out that the object of the Literary Copyright Act 1842 (UK), as stated in the preamble, was “to afford greater encouragement to the production of literary works of lasting benefit to the world”. That object was, in his Lordship’s view (at 32), not served by regarding the plaintiff’s opinion as to likely winners as a “literary composition such as intended to be protected by the Copyright Act”. The Copyright Act currently in force in Australia makes specific provision for copyright in compilations, but has no preamble or statement of objects corresponding to the provisions relied on by Lord Halsbury. 338 It is also important to bear in mind that copyright protection extends to many different kinds of work. Each particular category of copyright presents its own issues as to the subsistence and infringement of copyright. It ought not to be assumed that the concepts applicable to one form of copyright work necessarily apply, without modification, to others. In Autospin (Oil Seals) Ltd v Beehive Spinning [1995] RPC 683, the issue was whether the defendants, by manufacturing seals, had infringed the copyright in the plaintiff’s drawings of seals and in a compilation of measurements included in the plaintiff’s charts. Laddie J cautioned (at 700-701) against the assumption that the question of “substantial reproduction” must be decided without regard to the nature of the copyright work allegedly infringed: When the court has to decide whether a particular act constitutes a substantial reproduction of a copyright work in my view it must have regard to the nature of the copyright work in issue. What amounts to a substantial reproduction of a particular type of artistic work may well not be a reproduction of a particular type of literary work. Indeed it should be remembered that the categories of copyright work created by copyright legislation are, in some cases, very broad and include materials which have little in common. Maps, charts and plans were protected as literary works under the 1911 Act but as artistic works under the 1956 and 1988 Acts. Therefore under the former Act they were treated as brethren to plays and novels while under the latter they are treated as being in the same category as paintings … When considering what amounts to infringement of the copyright in, say, a compilation, there is no compelling reason why the courts should pretend that the works covered by literary and artistic copyright form a coherent whole. It should be borne in mind that it is not enough to say that the defendant has “used” the plaintiff’s work. He must have reproduced it. In my view the court should ask the question “is it accurate to say that the alleged infringer’s article is, from a common sense point of view, a reproduction of this particular type of literary work?” [4.90]

89

Intellectual Property: Commentary and Materials

Desktop Marketing Systems v Telstra cont. … 339 As the present case demonstrates, policy tensions permeate the law of copyright, especially in the area of factual compilations. In Skybase Nominees Pty Ltd v Fortuity Pty Ltd (1996) 36 IPR 529, Hill J (with whom French J agreed) identified (at 531) the tension in policy between the monopoly rights which are conferred upon the owner of copyright in a literary, dramatic or artistic work on the one hand, and the freedom to express ideas or discuss facts on the other. While there will be an infringement of the copyright of an owner in a literary, dramatic, musical or artistic work where there is a reproduction of that work or a substantial part of it, the fact that another work deals with the same ideas or discusses matters of fact also raised in the work in respect of which copyright is said to subsist will not, of itself, constitute an infringement. Were it otherwise, the copyright laws would be an impediment to free speech, rather than an encouragement of original expression. It is this tension between “incentive and dissemination” (Denicola, supra, at 519) that underlies the difficulties raised by the present case. It also underlies the difficulty of distinguishing between expressions of ideas (which are the subject matter of copyright) and the ideas themselves (which, generally speaking, are not). … … Infringement 437 Desktop in substance relied on two arguments on the question of infringement. The first was that the primary Judge had failed to keep in mind the principle that in determining whether a substantial part of copyright work has been taken it is necessary to consider the originality of the part allegedly taken: Data Access v Powerflex, at 32-33. The second was that the primary judge had failed to pay proper regard to the requirement that the notion of reproduction for the purposes of copyright law requires not only a causal connection between the copyright work and the allegedly infringing work, but a sufficient degree of objective similarity between the two works: S W Hart & Co Pty Ltd v Edwards Hot Water Systems [1985] HCA 59; (1985) 159 CLR 466, at 472, per Gibbs CJ. 438 The answer to the first argument has already been given. The listing information incorporated in Telstra’s directories satisfies the requirement of originality because of the labour and expense involved in the compilation. The originality of the compilation for copyright purposes does not lie in the prosaic method of presentation of the data, that is the listing in alphabetical order of the names and details of each subscriber. 439 Desktop accepts that information electronically stored on its CD-roms includes virtually all the listing data compiled by Telstra and published in its directories. The primary Judge found that around 95 per cent of the headings used by Desktop at the relevant times were identical to those used by Telstra and which had been derived from its headings books. Desktop clearly enough took the great bulk of headings compiled in the headings books (via the Yellow pages directories). Once it is accepted that the originality in Telstra’s compilations lies in the labour and expense involved in compiling the information, the primary Judge was right to conclude that Desktop had taken a substantial part of each of Telstra’s copyright works. It is not to the point that Desktop may not have adopted Telstra’s mode of presentation of the data. 440 So far as the second argument is concerned, I agree in substance with what has been said by Lindgren J. The approach outlined by his Honour is consistent with the authorities to which I have referred: see especially [117], [118]. See also Copinger and Skone James on Copyright (14th ed 1999), par 7-57; Independent Television Productions Ltd v Time Out Ltd [1964] FSR 64, at 72-74, per Whitford J; British Columbia Jockey Club v Standen (1985) 22 DLR (4th) 467 (BC CA). 90

[4.90]

Criteria for Subsistence of Copyright

CHAPTER 4

Desktop Marketing Systems v Telstra cont. 441 Even if it were necessary to demonstrate some degree of visual similarity between Telstra’s directories and headings books, on the one hand, and Desktop’s CD-rom products, on the other, I think that Telstra has discharged the burden, at least in relation to the residential CD-roms and Marketing Pro. 442 In relation to a literary work, including a compilation, “material form” includes “any form (whether visible or not) of storage from which the work … or a substantial part of the work … can be reproduced”. The definition is principally intended to overcome the difficulty under the earlier law that a database stored in electronic form may not have had the required objective similarity to a copyright work in a written form even though the database had been compiled from the copyright work: cf Computer Edge Pty Ltd v Apple Computer Inc [1986] HCA 19; (1986) 161 CLR 171, at 186, per Gibbs CJ; Pacific Gaming Pty Ltd v Aristocrat Leisure Industries Pty Ltd [2002] AIPC 92-759, at 37,090-37,091 [105]-[108], per curiam. … Conclusion 447 The appeal should be dismissed. There is no need to address Telstra’s notice of contention. Desktop should pay Telstra’s costs.

[4.100] In December 2010, Telstra was again before the Full Federal Court to appeal against a

judgment in the primary court that copyright did not subsist in its Yellow Pages and White Pages directories: Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149. The court rejected Telstra’s appeal. Crucial in the judgments at first instance and on appeal was the fact that creation of the material form of the directories was carried out by a computer program overseen by persons who had no substantive input into that form. The questions that arose, therefore, were, firstly, could the independent intellectual effort or sufficient effort of a literary nature be directed at the creation of the material form of the work (the directories) or just some anterior activity (the collection of information presented in the directories)? And, secondly, if the intellectual effort must be directed at the creation of the material form of the directories, was there sufficient human effort involved to mean that the directories were reduced to a material form by an author or authors? The court held that this was not the case since the directories were brought into the form in which they were published by computerised and automated processes. In this particular case, if copyright had existed, it would have subsisted in the computer programming/software driving the compilation, rather than the compilation itself.

Telstra v Phone Directories Company [4.110] Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149 Federal Court of Australia (Full Court) [In the primary court, the trial judge determined, as an issue separate from the other issues in the case, that copyright did not subsist under the Copyright Act 1968 (Cth) in the White Pages Directory (WPD) and the Yellow Pages Directory (YPD) published by Telstra Corporation Ltd and Senses Pty Ltd (the appellants). Telstra claimed that each WPD and YPD was an original literary work. In particular, each directory was said to be a compilation consisting of the expression of the information in individual listings in their particular form and arrangement as well as in the overall arrangement of the [4.110]

91

Intellectual Property: Commentary and Materials

Telstra v Phone Directories Company cont. individual listings, and, additionally in the case of the YPD, in the cross-referencing of the information under subject matter headings. Telstra appealed the judgment.] KEANE CJ: [5] The trial judge approached the determination of the question by reference to the decision of the High Court of Australia in IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458; 254 ALR 386; 80 IPR 451; [2009] HCA 14 (IceTV). Her Honour held at Telstra Corporation Ltd v Phone Directories Co Pty Ltd (2010) 264 ALR 617; 85 IPR 571; [2010] FCA 44 at [5]: For the reasons that follow, copyright does not subsist in any Work. None is an original literary work. By way of summary: 1. among the many contributors to each Work, the Applicants have not and cannot identify who provided the necessary authorial contribution to each Work. The Applicants concede there are numerous non-identified persons who “contributed” to each Work (including third party sources); 2. even if the human or humans who “contributed” to each Work were capable of being identified (and they are not), much of the contribution to each Work: 2.1 was not “independent intellectual effort” (IceTV [2009] HCA 14; 254 ALR 386 at [33]) and further or alternatively, “sufficient effort of a literary nature” (IceTV [2009] HCA 14; 254 ALR 386 at [99]) for those who made a contribution to be considered an author of the Work within the meaning of the Copyright Act; 2.2 further or alternatively, was anterior to the Work first taking its “material form” (IceTV [2009] HCA 14; 254 ALR 386 at [102]); 2.3 was not the result of human authorship but was computer generated; 3. the Works cannot be considered as “original works” because the creation of each Work did not involve “independent intellectual effort” (IceTV [2009] HCA 14; 254 ALR 386 at [33]) and/or the exercise of “sufficient effort of a literary nature”: IceTV [2009] HCA 14; 254 ALR 386 at [99]; see also IceTV [2009] HCA 14; 254 ALR 386 at [187]-[188]. 6. In this Court, the principal argument of the appellants is that, because each directory is a literary work published in Australia, the only question to be answered is whether it is an original literary work; this question can be answered, they say, without identifying any particular author much less all the authors. That is said to be because copyright in a work first published in Australia can subsist by virtue of s 32(2)(c) of the Act if the work is original in the sense of not being a copy. The appellants contend that it can be inferred that intellectual effort of some kind was applied by some individual or individuals in the production of each directory so that it can be said to be an original literary work. They argue that, neither the decision in IceTV, nor the reasons given by the High Court in that case, compels, or points to, a different conclusion in this case. 7. The principal contention of the respondents is that the directories were compiled, not by the individuals engaged to facilitate the process, but by a computerised process of storing, selecting, ordering and arranging the data to produce the directories in the form in which they were published. 8. In my respectful opinion, the principal contention of the respondents should be accepted, and the decision of the trial judge should be upheld for that reason. In order to explain the reasons for my opinion, I propose to set out the relevant provisions of the Act, then set out the facts as found by the learned trial judge, and then proceed to discuss the arguments agitated by the parties on the appeal to this Court. …

92

[4.110]

Criteria for Subsistence of Copyright

CHAPTER 4

Telstra v Phone Directories Company cont. Desktop Marketing 83. The appellants place particular reliance upon the decision in Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112; (2002) 119 FCR 491. In that case the Full Court of the Federal Court held that telephone directories were “original” works in which copyright subsisted because “Telstra had undertaken substantial labour and incurred substantial expense” ((2002) [2002] FCAFC 112; 119 FCR 491 at 599) in compiling and presenting the details of telephone subscribers in a particular region. It was held that there had been an infringement of this copyright by reason of the appropriation of “the benefit of Telstra’s substantial labour and expense” ((2002) [2002] FCAFC 112; 119 FCR 491 at 535-536, 600). 84. In Desktop Marketing at [2002] FCAFC 112; (2002) 119 FCR 491 at [25]-[159], Lindgren J reviewed the English and Australian cases on the subsistence of copyright in compilations. It is important to appreciate that these cases were concerned principally with the issue of the sufficiency of intellectual effort necessary to the subsistence of copyright in a work. None of these cases were concerned with the impact of automation on the process of compilation. Desktop Marketing itself was not concerned with the impact of automation on the process of compilation. The only issue considered in Desktop Marketing in relation to the subsistence of copyright concerned the sufficiency of intellectual effort in compilation necessary for the subsistence of copyright. In the resolution of this issue, the protection of the skill and labour involved in compiling a work was regarded as the decisive consideration. The reasons of the High Court in IceTV for the determination of the present case indicate authoritatively that too much emphasis on protecting another’s skill and labour is apt to skew the enquiry as to the subsistence of copyright away from the centrality of authorship. 85. In Desktop Marketing the subsistence of copyright in the telephone directories was in issue only in relation to the sufficiency of intellectual effort necessary to characterise a work as original. The implications of automation for the subsistence of copyright did not arise for consideration. For that reason it cannot be treated as decisive of the question for determination in this case. There is reason to regard the assumptions on which the court proceeded in Desktop Marketing with scepticism. In IceTV Gummow, Hayne and Heydon JJ said of the decision in Desktop Marketing, at [134]: However, a reason to treat the decision in Desktop Marketing with particular care appears from the reasons of the trial judge. Finkelstein J had observed: There are literally hundreds of appropriately trained or qualified employees who make some contribution towards the production of a telephone directory. When the nature of the work they do is described, there arise three relevant questions to the subsistence of copyright: (a) Must a copyright work have an author? (b) Does a telephone directory have an author? (c) Is every employee who contributes to the final product a joint author of the directory? These are difficult questions for which there are no ready answers. Finkelstein J went on to explain that the parties had sought to elucidate none of those issues in the litigation, with the consequence that, as here, the relevant author or authors of the work in suit remained unidentified. 86. On behalf of the appellants, it is argued that this case can be decided in favour of the respondents only if all the cases which have upheld claims to copyright in compilations (which are collected in Desktop Marketing) can be said to have been wrongly decided. But that is not so. None of those cases, nor Desktop Marketing itself, involved automated compilation as opposed to compilation

[4.110]

93

Intellectual Property: Commentary and Materials

Telstra v Phone Directories Company cont. by individuals. The decision of this Court in Desktop Marketing (and the older cases to which it referred) did not advert at all to the effect of an automated process in the making of the compilation in respect of which copyright was said to subsist.

Note

[4.115]

In late January 2011, Telstra filed an application for special leave to appeal to the High Court from the decision of the Full Federal Court. Its application was refused in September 2011. [4.120] In Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd

[2010] FCA 984 (see [6.430]) before the Federal Court, Bennett J considered whether newspaper headlines could be held to be “literary works” and, thereby, whether copyright would subsist in them. Crucial to this consideration was whether there was any degree of artistic effort as well as originality in the creation of the headlines. The case was brought by Fairfax Media Publications, the publisher of the Australian Financial Review (AFR), against Reed International Books Australia, alleging that Reed had infringed Fairfax’s copyright by taking the AFR headlines as part of its media monitoring service. According to his Honour, the main issue relating to the subsistence of copyright was whether each of the contended works were “original literary works” within the meaning of Copyright Act 1968 (Cth) s 32.

Fairfax Media Publications v Reed International Books [4.130] Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd [2010] FCA 984 Federal Court of Australia BENNETT J: … 9. In assessing the centrality of an author and authorship to the overall scheme of the Act, it is worth remembering that the theoretical underpinning of copyright legislation includes striking a balance of competing interests and competing policy considerations (IceTV at [24] per French CJ, Crennan and Kiefel JJ). Relevantly, it is concerned with rewarding authors of original literary works with commercial benefits having regard to the fact that literary works in turn benefit the reading public (at [24]). The “social contract” is that an author can obtain a monopoly, limited in term, in return for making a work available to the reading public (at [25]). 10. As the Abstracts publish a portion of the headlines of each AFR edition, unchanged, the subsistence of copyright in the headlines was a primary issue. Apart from contending that there is no copyright in headlines, Reed submits that Fairfax has failed to establish originality for the purposes of the Act by failing to prove: • Original skill and labour for the headlines to be works at all; • Originality by proof of authorship of the headline or of the joint authorship of the Article/Headline Combination; and • Originality of what is alleged to be the substantial part taken from the work. … Are headlines literary works in which copyright can subsist? … 32. The precise question of whether copyright subsists in newspaper headlines has not been decided by any Court in Australia. The Scottish case of Shetland Times Ltd v Wills [1997] FSR 604; 94 [4.115]

Criteria for Subsistence of Copyright

CHAPTER 4

Fairfax Media Publications v Reed International Books cont. (1996) 27 IPR 71 concerned an application for an interlocutory injunction. Despite a concession that a headline could be a literary work and an observation that the headlines in question were “designedly put together” for the purpose of imparting information, Lord Hamilton expressed the reservation that, “while literary merit is not a necessary element of a literary work, there may be a question whether headlines, which are essentially brief indicators of the subject matter of the items to which they relate, are protected by copyright” (27 IPR 71 at 74-75). His Lordship did not reach a final conclusion on the question. … 36. Reed contends that headlines are analogous to a title of a book or other work and relies on the fact that titles, slogans and other short phrases have been consistently refused separate protection under Australian and English copyright law. In IceTV, French CJ, Crennan and Kiefel JJ acknowledged that generally speaking, no copyright could be claimed in a programme title alone (IceTV at [27] referring to Garnett K, Davies G, Harbottle G, Copinger and Skone James on Copyright (15th ed, Sweet & Maxwell, 2005) at [3–16] and Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465 at 469 per Lord Reid). Reed concedes that there has been not been complete uniformity in reasoning in previous cases and texts and submits that the correct view is the de minimis principle: that titles and the like are simply too insubstantial and too short to qualify for copyright protection as literary works. Reed relies on the following comments of the Privy Council in Francis Day & Hunter Ltd v Twentieth Century Fox Corp Ltd (1940) AC 112 at 123: As a rule, a title does not involve literary composition, and is not sufficiently substantial to justify a claim to protection. That statement does not mean that in particular cases a title may not be on so extensive a scale, and of so important a character, as to be a proper subject of protection against being copied. As Jessel MR said in Dick v Yates … there may be copyright in a title “as, for instance, in a whole page of title of something of that kind requiring invention”. … 40. In my view, the headline of each article functions as the title of the article. Indeed, “headline” is defined in the New Shorter Oxford English Dictionary (5th ed, Oxford University Press, 2002) to mean, relevantly, “The line at the top of a page containing the title etc; a title or subtitle in large type in a newspaper etc” and, in the Macquarie Dictionary (3rd ed, The Macquarie Library, 1998) to mean, relevantly, “a display line over an article etc, as in a newspaper; the line at the top of the page, containing the title, pagination etc”. 41. It may be a clever title. That is not sufficient (cf “Opportunity Knocks” for a game show; “The Man who Broke the Bank at Monte Carlo” for a song; “Splendid Misery” for a novel). It may be an indication of the content of the article and that is not sufficient (cf “The Lawyer’s Diary” for a diary). (See generally Copinger at [3–16] and Laddie et al at [3.62].) It may be a grouping of words that convey, in themselves, the subject matter such that the expression was inseparable from the idea conveyed (“Help-Help-Driver-in-danger-Call-Police-Ph.000” in State of Victoria v Pacific Technologies (Australia) Pty Ltd (No 2) [2009] FCA 737; (2009) 177 FCR 61). In each case it was determined that the contended work did not justify claims of copyright protection, although the reasoning was not identical. In Lamb v Evans [1893] 1 Ch 218, the “headings” in which copyright was held to subsist were more than mere headlines. They included three translations and catch-words. At 232, Kay LJ said: There is sufficient literary labour involved in the production of these headings to make them properly the subject of copyright. That decision does not necessitate a finding of copyright in newspaper headlines generally. 42. The headlines in the AFR range from the more prosaic: “Investors warned on super changes” and “Builders report fall in house sales” to ones that employ what might be thought of as a more interesting and clever use of words, such as “Blackout probe sheds little light” and “Returns after tax [4.130]

95

Intellectual Property: Commentary and Materials

Fairfax Media Publications v Reed International Books cont. will be simply super”. While the use of devices such as puns and double entendres may be clever, evoke admiration and attract attention, the reasons for the denial of copyright protection to “works” that are simply too slight have long been invoked and have formed the basis for much judicial precedent. In some cases the headline represents no more than the fact or idea conveyed. 43. In Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] Ch 119, protection for an invented word (“Exxon”) was denied on the basis that, while the word was original and was created after considerable research and labour, it was not a “literary” work because it was not intended to afford information and instruction or pleasure in the form of literary enjoyment (referring to the definition of “literary work” in Hollinrake). A headline may come within the well-used criteria for a literary work as set out in Hollinrake but those criteria do not afford an exhaustive definition. They may well be necessary but they are not sufficient. Such criteria may well describe a literary work but the mere fact that a word or sequence of words provides information or pleasure is not necessarily sufficient to constitute a literary work for the purposes of the Act. 44. Headlines generally are, like titles, simply too insubstantial and too short to qualify for copyright protection as literary works. The function of the headline is as a title to the article as well as a brief statement of its subject, in a compressed form comparable in length to a book title or the like. It is, generally, too trivial to be a literary work, much as a logo was held to be too trivial to be an artistic work (Cortis Exhaust Systems Pty Ltd v Kitten Software Pty Ltd (2001) ATPR 41-837 at [33] per Tamberlin J), even if skill and labour has been expended on creation (Exxon). 45. Copyright can only subsist in a “work”. Originality does not require novelty, inventiveness or creativity, whether of thought or expression, or any form of literary merit. Any words written by an author, original in that sense and not copied, could be said to satisfy the “literary” part of a literary work for which copyright is claimed. Those words could well convey information and instruction (such as “go outside, the sun is shining”) or pleasure (such as “you look beautiful”). However, not every piece of printing or writing which conveys information will be subject to copyright (IceTV at [45]). To obtain copyright protection under the Act, there must be a literary work. I appreciate that this has been the subject of much judicial consideration but I find it helpful to resort to dictionary definitions of “work”. The Macquarie Dictionary relevantly defines “work” as “that on which exertion or labour is expended; the product of exertion, labour, or activity: a work of art, literary or musical works”. There may well be writings of original words or phrases that simply do not reach the level of constituting a “work”, regardless of literary merit. This is not just because they are short, as a deal of skill and effort can go into producing, for example, a line of exquisite poetry. It is because, on its face and in the absence of evidence justifying its description as a literary “work”, the writing does not, qualitatively or quantitatively, justify that description. A headline is, generally, no more than a combination of common English words (Dicks v Yates at 88 per Jessel MR). It is “does not involve literary composition, and is not sufficiently substantial to justify a claim to protection” (Francis Day at 122-123); it does not, in the words of Jacobson J in Sullivan at [112], have “the requisite degree of judgment, effort and skill to make it an original literary work in which copyright may subsist” for the purposes of the Act. 46. It may be that evidence directed to a particular headline, or a title of so extensive and of such a significant character, could be sufficient to warrant a finding of copyright protection (Francis Day at 123; see also Milwell v Olympic Amusements Pty Ltd (1999) [1999] FCA 63; 85 FCR 436 at [29]) but that is not the case here. Fairfax claims copyright in each and every one of the ten selected headlines. It claims copyright in the headlines as a class of work, based on evidence of a general practice that headlines are determined by staff and settled at meetings of staff to provide a title to a story which also fits into the format of the page of the AFR. That is insufficient to overcome the reasoning for the established practice of denying copyright protection to titles which is the apt characterisation for headlines as a class. 96 [4.130]

Criteria for Subsistence of Copyright

CHAPTER 4

Fairfax Media Publications v Reed International Books cont. 47. The majority of the headlines in the sample editions are short factual statements of the subject of the article. The addition of a pun does not, of itself, in the absence of evidence, convert such statements into literary works. As to the evidence adduced with respect to the Telstra Headline and the Health Headline, I accept Reed’s submission that the evidence is not sufficient to “carry” the rest of the headlines. Further, Mr Bailey’s evidence differentiates the work involved in the headlines of the front page from that for other headlines and demonstrates that the work involved in the Telstra Headline was primarily to ensure that the story was accurate, with the changing headline flowing from a changing appreciation of the facts. It is not the “ideas” of the author that is protected by copyright but their fixed expression (IceTV at [160]). 48. The headline and by-line is, as Reed says, meta-information about the work, not part of the work, the work being the article. The need to identify a work by its name is a reason for the exclusion of titles from copyright protection in the public interest. A proper citation of a newspaper article requires not only reference to the name of the newspaper but also reproduction of the headline. This was a matter of common ground between the witnesses. If titles were subject to copyright protection, conventional bibliographic references to an article would infringe. Such considerations may well be a reason for the fact that headlines and “short phrases” are excluded from copyright in the United States (Alberto Culver v Andrea Dumon [1972] USCA7 202; 466 F2d 705 (7th Cir 1972); Salinger v Random House Inc [1987] USCA2 415; 811 F2d 90 (2d Cir 1987) at 98; CMM Cable Rep Inc v Ocean Coast Props Inc [1996] USCA1 473; 97 F3d 1504 (1st Cir 1996) at 1520 n 21). 49. At IceTV at [161], Gummow, Hayne and Heydon JJ criticised the Full Court in Nine Network Australia Pty Ltd v IceTV (2008) 168 FCR 14 of tipping the balance too far against the interest of viewers in digital free to air television in the dissemination by means of new technology of programme listings in favour of the interest in the protection of Nine against perceived competition by IceTV. Their Honours noted at [163] a submission that no litigation alleging breach of confidence would have succeeded to protect Nine after the information reached the public domain and that the copyright litigation was an attempt to control the further dissemination of the information. This was discussed in the context of broadcasting information but it does raise a matter of possibly more general application. In my view, to afford published headlines, as a class, copyright protection as literary works would tip the balance too far against the interest of the public in the freedom to refer or be referred to articles by their headlines. 50. This does not exclude the possibility of establishing a basis for copyright protection of an individual headline but Fairfax has failed to prove that the ten selected headlines amount to literary works in which copyright can subsist.

CATEGORIES OF PROTECTED WORKS AND SUBJECT MATTER [4.140] The Copyright Act 1968 (Cth) distinguishes between two broad categories of

protectable subject matter, namely: • “Original Literary, Dramatic, Musical and Artistic Works” subsisting under Part III of the Act; and • “Subject Matter other than Works” subsisting under Part IV.

Part III Works [4.150] Copyright Act 1968 (Cth) Part III Works include the following: [4.150]

97

Intellectual Property: Commentary and Materials

• literary works (eg, books, film scripts, and even private correspondence) (both published and unpublished); • dramatic and musical works (eg, plays and music compositions recorded in the form of musical notation); • artistic works and works of applied art (eg, paintings, ceramics and carvings); • maps and technical drawings; • photographic works; • computer programs and databases; • an original artistic work that is a building or which is attached to or forms part of such a building.

Part IV subject matter [4.160] Copyright Act 1968 (Cth) Part IV subject matter includes the following:

• live performances; • sound recordings; • cinematographic films; • television and sound broadcasts; • published editions of works.

CATEGORY OF WORKS – PART III WORKS Literary works [4.170] Literary works are not really defined, or rather interpreted, in any comprehensive

way in the Copyright Act 1968 (Cth) s 10(1), but the section does state that they include: (a) a table, or compilation, expressed in words, figures or symbols; and (b) a computer program or compilation of computer programs.

This clearly protects computer programs and tables, but says nothing about what, in a more traditional context, might be considered “literary”. Business documents, catalogues, advertisements, lists, newspaper reports and so forth have been considered to be “literary works”: almost any kind of writing can qualify, but not single words or titles that are considered in themselves too trivial or inherently unoriginal to have copyright protection. All manner of items have been regarded as literary works for copyright purposes, ranging from the original subject matter of copyright books, to computer-selected numbers arranged in grid form (on a card published by a daily newspaper which enabled their readers to play a form of bingo: see Express Newspapers Plc v Liverpool Daily Post & Echo Plc [1985] FSR 306). Advertisements have not always been, but are now generally regarded as, subject to copyright protection: see O’Brien v Komesaroff (1982) 41 ALR 255. The effect of the adjective “literary” in defining the types of original material in which copyright subsists would appear to be relevant possibly to the form in which the work appears, and the function it should perform. The effect of this would seem to be that “literary” does not mean the work has to display any learning, but must simply amount to the exercise of sufficient effort, to effect a certain type 98 [4.160]

Criteria for Subsistence of Copyright

CHAPTER 4

of result. This result is the conveying of information, or perhaps instruction and pleasure in the form of literary enjoyment: Exxon Corp v Exxon Insurance Consultants International Ltd [1981] 2 All ER 495. In that case, the invented word “Exxon” was not regarded as a literary work because (at 503 per Graham J): It is a word which although invented and therefore original, has no meaning and suggests nothing in itself. To give it substance and meaning, it must be accompanied by other words or used in a particular context or juxtaposition. … It is not in itself a title or distinguishing name and, as I have said, only takes on meaning or significance when actually used with other words. …

The function of a literary work is to afford pleasure or instruction. Note that in Exxon Corporation v Exxon Insurance Ltd [1982] 1 Ch 119 at 143, Stephenson LJ said that “a literary work would be something which was intended to afford either information and instruction, or pleasure in the form of literary enjoyment, whatever those last six words add to the word pleasure”. Titles and single words from, for example, a poem or book are part of a “literary work” when embodied in the larger work, but questions of their protection by copyright when taken alone will revolve around whether such use amounts to taking a substantial part of the whole work so as to amount to an infringement: Exxon Corp v Exxon Insurance Consultants International Ltd [1981] 2 All ER 495 at 504. See also University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601. In Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 at 498, Latham CJ said (and Dixon J agreed): The law of copyright does not operate to give any person an exclusive right to state or to describe particular facts. A person cannot by first announcing that a man fell off a bus or that a particular horse won a race, prevent other people from stating those facts.

In Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 277, the court stated: [I]f sufficient skill and judgment have been exercised in devising the arrangements of the whole work, that can be an important or even decisive element in deciding whether the work as a whole is protected by copyright.

It should be noted that the Copyright Act 1968 (Cth) provides that a literary work can subsist in a non-written form (s 22(2)). For example, sounds embodied in an article or thing may constitute the material form of a literary work (inter alia). Therefore, a film or sound recording may have a “literary work” copyright as well as copyright protection as subject matter other than a work. The case of Kalamazoo (Aust) Pty Ltd v Compact Business Systems P/L (1985) 84 FLR 101, pushed the bounds of testing whether compilations as forms for business systems were the product of a sufficient degree of individual skill and care to be deemed a literary work and thus enjoy copyright protection.

Kalamazoo v Compact Business Systems [4.180] Kalamazoo (Aust) Pty Ltd v Compact Business Systems P/L (1985) 84 FLR 101 Supreme Court of Queensland THOMAS J: [102] The plaintiff company (Kalamazoo) claims that the defendant company (Compact Business Systems Pty Ltd) and its directors (Mr Crossley and Mr Spollen) have infringed the [4.180]

99

Intellectual Property: Commentary and Materials

Kalamazoo v Compact Business Systems cont. plaintiff’s copyright in a number of business record systems. References to “the defendant” should be taken to refer to the defendant company unless otherwise indicated. Six systems remain in issue, namely those described as: (a)

medical instant billing system;

(b)

vertical payroll ten entry system;

(c)

vertical payroll eighteen entry system;

(d)

solicitors account system;

(e)

real estate property [103] management and accounting system;

(f)

combined purchases and cash payments system.

Although they have been described as “systems”, the use of that term may be apt to mislead, especially as it is well known that there is no copyright in a system, method or idea. What is intended to be described by the plaintiff in each instance is a compilation of various blank accounting forms for intended use by customers in association with an apparatus known as a pegboard. The plaintiff’s forms were designed and published in combination with one another, and it is central to the plaintiff’s case that they be viewed as a totality or single work. The plaintiff’s counsel submits that copyright exists in the compilation of the various forms. Although conscious of the problems in use of the word “system”, I shall use it in the sense relied on by the plaintiff, that is to say as referring to the group of documents upon which the plaintiff in each instance relies. … Pegboard systems The pegboard holds the particular documents in certain positions in relation to one another by means of punched holes. The system, which is described as a “one-write” system, depends upon carbon or idem copies being made on the lower documents as an entry is written on the top document. General accounting systems of such kind have been in extensive use for many years, and there is evidence of application being made in the US for patent rights (no doubt in relation to the physical clamp-like apparatus and not in relation to the contents of the forms) as early as 1916. To take the first-mentioned “medical instant billing system” as an example, there are three basic forms designed to be used within a single pegboard folder. Although given longer titles, the documents are respectively (from bottom to top) a journal page, a ledger page, and a receipt. When the patient pays for his service the appropriate part of the receipt is written out, and the headings and columns are so ordered that the same words and figures fill out the appropriate details in the underlying ledger and journal. The receipts are prepared in marginally overlapping bundles, so that as each one is torn off (and handed to the patient) the next one will be in the appropriate position one line further down in relation to the underlying documents. Thus the process is repeated until the underlying documents are sufficiently filled out, whereupon they are transferred to the appropriate loose-leaf journal or ledger. … [104] … Issues The primary issue in the case is whether Kalamazoo is entitled to the copyright of the relevant systems. Kalamazoo claims that certain of its servants have spent considerable skill and care in the devising and drawing of the forms that comprise the systems, that they were the original works of such servants, and that as the employer of such persons it is entitled to such copyright as exists in such works. The defendants contended, inter alia, that the forms are insignificant variants of traditional accounting and bookkeeping forms, and that neither individually nor collectively are they original literary works under the Copyright Act 1968. … [120] … Originality 100 [4.180]

Criteria for Subsistence of Copyright

CHAPTER 4

Kalamazoo v Compact Business Systems cont. The next vital question is whether such works were “original” literary works. … [124] … If, as the defendants’ counsel invited me to do, I looked piecemeal at various parts of the documents, it would be possible to say that such parts were either reproductions, paraphrases or minor variations of documents already in general use. Taken alone, the size of the page, the number of columns, the width of the column, the spacing of holes for the punch, the heading of a column, a direction or instruction, the use of the “one-write” system, and the provision of boxes which force the taking of the balance, are trivial variants of commonplace ideas and forms, or applications of a method to which copyright is not available. However, whilst I refuse to find that the authors showed great skill, I did find that their preparation required a degree of concentration, care, analysis, comparison, and a certain facility in using and adapting the altered forms to a composite “one-write” system. In each case, some awareness of contemporary developments and the marketability of such forms played a part in their creation. Looking at each system as expressed, there is sufficient originality of expression, shape and content to comprise an original literary work. Whilst the importance and ingenuity of much of the data on the forms was overstressed in evidence, I am satisfied that, as a whole, the documents are entitled to protection of copyright and that each one forms an integral part of a particular system. Thus, on this piecemeal approach, there is nothing left justifying the protection of copyright. The present case is perhaps a good example of demarcation problems that afflict the law of intellectual property. The present “works” are partly diagrammatic, partly literary, and partly an apparatus designed for the use of customers. It presents problems in identifying work suitable for protection by copyright law as distinct from patent or design. But, in the end, I think that Hollinrake’s Case must be distinguished. The documents have their own character, their own form of expression, and in a sense tell their own story to the user. Therefore, even though it is true that they form part of a tool or device, I do not think that this aspect of their character needs to be severed or disregarded when evaluating their literary and original qualities. I acknowledge that it is central to my finding in favour of the existence of copyright that the documents be looked at compositely, and that the plaintiff’s case gains (rather than loses) weight from the fact that they were prepared and intended for a utilitarian function. If these components should be viewed separately, then my conclusion is wrong because item by item there is negligible originality in the works. Support for the need to look at the work as a whole may be found in Ladbroke Football) Ltd v William Hill (Football) Ltd. I conclude that each system comprised an original work. [THOMAS J later discussed the concept of “literary work”.] Literary work It is as well to repeat that the term “system” should be taken to refer to the respective groups of compatible documents upon which the plaintiff in each instance relies. The copyright asserted in the statement of claim is that of an original literary work, under s 32(2) of the Copyright Act 1968. … [118] … The relevant definition for present purposes is simply that “literary work” includes a written table or compilation. That in no way limits the ordinary meaning of the term, or the wide connotation given to it in decided cases. It will be noted that it expressly includes a compilation. Plaintiff’s counsel submits that each particular group of forms is a compilation of such forms, pointing out that they are specifically designed for use in conjunction with one another, and that in each instance they are part of a cohesive system. They are a compilation just as much as if they were put together in the one book, which in a sense they are. [119] … Mr Cooper QC, for the defendants, submitted that a “literary work” requires, as a minimum, that information, instruction or pleasure in the form of literary enjoyment be conveyed. Reliance was placed upon Exxon Corp v Exxon Insurance Ltd [1981] 3 All ER 241; [1982] Ch 119 at 142-144. Courts have refrained from spelling out any particular degree of skill perceivable from the [4.180]

101

Intellectual Property: Commentary and Materials

Kalamazoo v Compact Business Systems cont. words of the publication, and it is clear that literary merit is irrelevant. The formulation in the Exxon case was not treated as definitive or exhaustive by the members of the Full Court of the Federal Court in Apple Computer Inc v Computer Edge Pty Ltd (1984) 53 ALR 225 at 234-235, 258-259. The approach taken in Mirror Newspapers Ltd v Queensland Newspapers Pty Ltd [1982] Qd R 305 at 307 and Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465; [1964] 1 WLR 273 at 285, seems to be inconsistent with the proposition derived from the Exxon case. In his valuable work The Law of Intellectual Property, Mr Ricketson considers the denial of copyright on such a ground to be an aspect of “insubstantiality”, a problem which commonly arises in relation to titles of works, slogans, phrases and, sometimes, advertisements (paras 5.61-5.63). This is, I think, the true basis of the rejection of copyright for some works that obviously fail to provide information, instruction or pleasure. The submission points out that the forms are in themselves meaningless, and that they acquire utility and meaning only by additions made by the user after sale. Whilst accepting the force of that submission, it is also apparent that there is intellectual input in the forms inasmuch as they are designed and presented in a way which will produce meaningful results for the user. A similar submission, that a newspaper bingo game lacked meaning and utility in isolation was rejected in Mirror Newspapers Ltd v Queensland Newspapers Pty Ltd (at 308). The submission alternatively described the forms as being concerned with well-known subject matter which, at best, could be set out in a limited way and in a limited number of combinations. The submission described the works as “obvious or commonplace”, and suggested that copyright was being sought in the subject or method rather than in the expression. Reliance was placed upon Kenrick & Co v Lawrence & Co (1890) 25 QBD 99 at 103. That case concerned a voting form on which the publisher printed the representation of a hand holding a pencil in the act of completing a cross within a square. Wills J said, at 104: The copyright must be confined to that which is special to the individual drawing over and above the idea in other words, the copyright is of the extremely limited character which I have endeavoured to describe. A square can only be drawn as a square, a cross can only be drawn as a cross, and for such purposes as the plaintiffs’ drawing was intended to fulfil, there are scarcely more ways than one of drawing a pencil or the hand that holds it. If the particular arrangement of square, cross, hand, or pencil be relied upon it is nothing more than a claim of copyright for the subject, which in my opinion cannot possibly be supported. The submission would be acceptable if the component parts of the forms were considered in isolation. But the present case is, in my view, distinguishable. The forms and the systems, if viewed as a whole, are not so commonplace that they cannot be presented in more that one way. Indeed, the evidence in the case indicates that such forms can be and have been presented in [120] different ways, and no doubt will continue to be presented in different ways from time to time, according to the needs of business and professional communities from time to time. I therefore conclude that each of the systems was a literary work.

Dramatic works [4.190] Again dramatic works are not comprehensively defined in the Copyright Act 1968

(Cth), although s 10(1) states that a “dramatic work” includes: (a) a choreographic show or other dumb show; and (b) a scenario or script for a cinematograph film; but does not include a cinematograph film as distinct from the scenario or script for a cinematograph film. 102 [4.190]

Criteria for Subsistence of Copyright

CHAPTER 4

The Copyright Act 1905 (Cth) s 4 defined a dramatic work as “any tragedy, comedy, play, drama, farce, burlesque, libretto of an opera, entertainment or other work of like nature, whether set to music or other scenic or dramatic composition”. Many dramatic works may also be literary works: see Zeccola v Universal City Studios Inc (Jaws Case) (1982) 67 FLR 225 (at [4.200] below). One of the difficulties here is distinguishing between the idea and the expression thereof. The question is to what extent the dramatic incidents or the plot of a play, for example, may be protected: see Tate v Thomas [1921] 1 Ch 503. The copyright in a film script (as a work) should be distinguished from the copyright in the film itself, which may embody a work and also cinematograph film copyright (Copyright Act 1968 (Cth) s 86). Note that the dramatic or musical work must be reduced to a “material form” in order to be protected (see previous discussion on “material form” at [4.40]). Hence it is not the performance, but the script or score that receives copyright protection. Performances of dramatic and other works are protected independently of any underlying work being performed. Since 1989, the Copyright Act 1968 (Cth) Part XIA has protected live performances from unauthorised recording and this protection now extends to prohibiting communication and “public performance” of a performance or recording without authorisation. See Zeccola v Universal City Studios Inc (Jaws Case), below, and Green v Broadcasting Corporation of New Zealand (1988) 16 IPR 1, in which the difference between a literary work and a dramatic was considered.

Zeccola v Universal City Studios [4.200] Zeccola v Universal City Studios Inc (Jaws Case) (1982) 67 FLR 225 Federal Court of Australia LOCKHART J: The judgment I am about to deliver is the joint judgment of [226] Fitzgerald J and myself. This is an appeal from a judgment of the Supreme Court of Victoria delivered on 4 August 1982 which granted interlocutory injunctions restraining the appellants until the final hearing of the action or further order from infringing the respondent’s copyright in a novel, screenplay and film each entitled Jaws and from infringing the respondent’s registered trade mark in the word Jaws. A problem in these proceedings is that the parties tended to blur the distinction between final and interlocutory proceedings and the problem was exacerbated by the different copyrights asserted by the respondent as the basis of its claim. Many questions have been raised, some of which were dealt with by the learned primary judge, which may be of importance at the trial but do not fall for present decision and indeed are best left open at this juncture for later determination. It is well-established that where the judgment appealed from involves the exercise of discretion by the trial judge this court will not interfere unless an error of the kind mentioned in various cases, including House v The King (1936) 55 CLR 499, is shown to have been made. … We will not trouble to recite all the findings of fact and law made by the primary judge in an extensive judgment. It is sufficient if we refer to them in summary form as follows. The novel Jaws was written by Peter Benchley, a US citizen. It was first published in 1974 in the US. The Jaws screenplay was completed in the same year. The film Jaws was made in the US in 1975 and was first shown to the public there in July of that year. Since then it has been exhibited in most countries of the world, including Italy, where it was called [Lo] Squalo which, translated into English means “The Shark”. [227] [4.200]

103

Intellectual Property: Commentary and Materials

Zeccola v Universal City Studios cont. The film Jaws has been a huge success and has made a lot of money for the respondent. Apart from exhibitions in motion picture theatres it has been shown under contract on television in the US and many other countries. Most of those contracts are still on foot. The sale of video cassettes and disks has also been widespread and is still proceeding. In 1977 the respondent arranged for the making of a sequel to Jaws which was called Jaws II. Jaws II concerns much the same subject matter and character as Jaws. Jaws II was first exhibited to the public in June 1978 and has also been a great success. Both films have been prominently featured as Universal films and some $20 million has been expended in promoting the films throughout the world. Another film Jaws 3-D is presently being made by the respondent and the respondent has also obtained registration in Australia of the word Jaws and of a drawing depicting the head and open jaws of the shark as trade marks in respect of, among other things, cinema films and printed matter. The film Great White was made by Italian film makers in early 1980. A full page advertisement in Weekly Variety, an American periodical, dated 7 May 1980 stated that the film was to be called The Last Jaws. When the film was first shown in Italy later in 1980 its name was [L’Ultimo] Squalo which translated into English as The Last Shark. The appearance of the advertisement in Weekly Variety excited the interest of the respondent. Steps were taken in Italy to prevent the showing of the film Great White and litigation ensued which is still pending. Litigation followed in other countries. The primary judge dealt at length with the various issues between the parties. The appellants do not dispute that the respondent has acquired and is entitled to sue in Australia to enforce any copyright which exists here in the novel, screenplay or film Jaws, but asserts that no such copyright exists. Counsel for the appellants made various submissions impugning the judgment from which they have appealed. Some of these submissions were disposed of in the course of discussion between counsel and the bench and need not be referred to further. Other submissions were put in various ways but in essence were the same as each other. We confine ourselves to the principal submissions made on behalf of the appellants. Counsel for the appellants submitted that the primary judge erred in holding that the novel Jaws was an original work for the purposes of the Copyright Act 1968 (the Act). It was submitted that there was no evidence or at least no sufficiently reliable evidence to support his Honour’s conclusion. The hearing was conducted, as applications for interlocutory injunctions usually are, on evidence by affidavit supplemented where necessary by cross-examination. We see no purpose in analysing in detail the evidence before his Honour touching this question, but it is sufficient to say that there was evidence of the originality of the novel Jaws … it was submitted by counsel for the appellants that the primary judge committed a fundamental error in his approach to the question whether the appellants had infringed the copyright of the respondent in the film Jaws. It was submitted that copyright in a film subsists only in those parts of the film capable of being the subject matter of copyright, that is, having the requisite character of originality, and that it is necessary to excise other parts from the whole. It was said that it is only the residue that can be the subject of copyright and thereby be protected from infringement. … [228] … Counsel for the appellants submitted that both films Jaws and Great White are genre films based upon the idea of a savage monster menacing a community. Each is a film about a killer shark terrorising human beings and it was said that neither film was entitled to protection as there is no copyright in that general idea. The difficulties involved in severing films into parts which are capable of characterisation as original works and other parts that are not is obvious. Indeed, it is the subject of only limited exploration by the laws of this country and the UK. We were referred to certain decisions of US courts where this question has been considered from time to time and we have found those cases helpful in resolving the questions before us. In general, there is no copyright in the central idea or theme of a story or play, 104 [4.200]

Criteria for Subsistence of Copyright

CHAPTER 4

Zeccola v Universal City Studios cont. however original it may be; copyright subsists in the combination of situations, events and scenes which constitute the particular working out or expression of the idea or theme. If these are totally different the taking of the idea or theme does not constitute an infringement of copyright. Of necessity certain events, incidents or characters are found in many books and plays. Originality, when dealing with incidents and characters familiar in life or fiction, lies in the association, grouping and arrangement of those incidents and characters in such a manner that presents a new concept or a novel arrangement of those events and characters. We accept that where a story is written based on various incidents which, in themselves, are commonplace, a claim for copyright must be confined closely to the story which has been composed by the author. Another author who materially varies the incidents and characters and materially changes the story is not an infringer of the copyright. If a literary or dramatic work is not wholly original there is no copyright in the unoriginal part so as to prevent its use. Additional factors may fall for consideration where the alleged infringement is by cinematograph film. The primary judge closely analysed the two films Jaws and Great White. Notwithstanding that the subject matter of the film Jaws was not particularly striking his Honour held the view, in essence, that the combination of the principal situations, singular events and basic characters was sufficient to constitute an original work that was susceptible of protection under the law of copyright in this country. In our opinion his Honour’s finding has not been shown to be in error. It must be remembered that all his Honour did was make his findings on the basis that a prima facie case was established. [229] He did not make any final or definitive finding on this, or indeed any other question. It was submitted that his Honour erred in holding that the question whether the respondent’s copyright was infringed by the making and showing of the film Great White came down to a question of whether Great White was a substantial adaptation or reproduction of the book or screenplay Jaws or a substantial copy of the film Jaws. Counsel for the appellants submitted that the film Great White could not be said to constitute an infringement of any copyright of the respondents in the film Jaws unless it was an exact or facsimile copy of the film Jaws. The argument was based on various matters including certain sections of the Act. Section 10 which defines the word copy and ss 86 and 101 are some of the sections referred to. No authority was cited for this proposition, but counsel adopted as part of his argument a passage from Lahore’s Intellectual Property in Australia. We do not find it necessary to answer this question. It raises important and difficult questions which, if they are relevant on the final hearing, may be debated then. At its narrowest, the major issue is whether or not the appellants’ film Great White substantially reproduced the novel Jaws or the screenplay based upon that novel from which the respondents’ film Jaws was made. In the resolution of that question it is appropriate to have regard to the operation of s 21 of the Act which deems cinematographic films to be reproductions of literary or dramatic works in certain circumstances. If the primary issue is so stated any problems of statutory interpretation arising out of the definition of “adaptation” in the Act, or as to what constitutes an infringement of one cinematographic film by another, can be avoided without risk of limiting the substance of the relief sought, which is to restrain the exhibition of the appellants’ film Great White. The primary judge correctly realised that two questions were involved in the resolution of what is the major issue: namely, the degree of objective similarity between the appellants’ film and the respondent’s novel and screenplay and, given sufficient objective similarity, whether copying was established. In relation to the question of copying, the appellants sought to show that the inspiration for the film Great White came partly from the imagination of its producer, Dr Tucci, and partly from a book by one Ramon Bravo called Carnada which is published only in Spanish. [4.200]

105

Intellectual Property: Commentary and Materials

Zeccola v Universal City Studios cont. His Honour was provided with a copy of the novel and screenplay Jaws, but did not have time to read them in the circumstances attending the claim for interlocutory relief. However, the proceedings before him were conducted on the basis that the screenplay closely followed the novel and that the film Jaws closely followed the screenplay. Thus the exercise of comparison between the novel and the screenplay Jaws on the one hand, and the film Great White on the other hand, was regarded as appropriately undertaken by a comparison of the two films. Further, all his Honour had of the book Carnada was a translation in condensed form. His Honour, with some degree of fortitude, viewed both films, one after the other. The comparative exercise which his Honour undertook was central to his decision. He considered that there was such a marked degree of similarity between the two films that there was an inescapable inference of copying and that the respondent had an excellent chance of success at the trial. The strength of his views in relation to the similarity between the two films [230] influenced the attitude which he took to much of the evidence, including expert evidence, and to the appellant’s denial of copying, most of which was held to be inadmissible. Much criticism was levelled by the appellants at the approach which his Honour took to such evidence and at the inference of copying which he drew. While our own viewing of the films did not instill in us the same degree of conviction that his Honour felt, we are not persuaded that his Honour was wrong. Appeal dismissed.

Is a public spectacle a dramatic work?

Nine Network v Australian Broadcasting Corp [4.210] Nine Network Australia Pty Ltd v Australian Broadcasting Corp (1999) 48 IPR 333 Federal Court of Australia HILL J: [334] … Around 9 pm on 31 December 1999, and especially around 12 midnight and half an hour thereafter into the year 2000, an event will occur in the City of Sydney focused particularly on Sydney Harbour and the Harbour Bridge. There will be fireworks accompanied by music displays on the Harbour Bridge. Eighteen barges will carry large lantern figures of sea creatures promenading around the harbour. It promises to be an event of significance to the city, to Australia and, indeed, to the world. The event is being financed by the Council of the City of Sydney which is not at least at present, a party to the current proceedings. To obtain some contribution to the cost of this and previous New Year events the Council entered into an agreement with Nine Network Australia Pty Limited (Channel Nine), the commercial television broadcaster which through its network and affiliated TV stations effectively covers in its “footprint” mainland Australia and Tasmania. That agreement takes the form of a letter written by the Council of the City of Sydney to Channel Nine and concerned New Year celebrations in December 1997 through to December 2000. Under it Channel Nine is required to contribute an amount to the costs in accordance with a formula in the letter. According to the evidence before me, the estimated contribution by Channel Nine to the 2000 event is in the order of $450,000. The total cost of the event is estimated to be approximately $3 million. In consideration of this contribution the city named Channel Nine the official television broadcaster and granted to it the exclusive right to record all performances, the fireworks spectacular and other entertainment organised by the city and connected with the event, and televise the coverage it recorded throughout Australia and Papua New Guinea. 106 [4.210]

Criteria for Subsistence of Copyright

CHAPTER 4

Nine Network v Australian Broadcasting Corp cont. The respondent Channel Two is the public television broadcaster in Australia. It has made arrangements with an international consortium of television stations led by the BBC for a worldwide television coverage of some 25 hours illustrating the events which will occur in various countries throughout the world to celebrate the arrival of what at least most people refer to as the new millennium. It is contemplated that that coverage will include a coverage of the happenings on Sydney Harbour. A confidential exhibit details the program as presently scheduled. The Australian segment goes of course beyond Sydney and [335] includes other state capitals, although Channel Two proposes to film the entire spectacle in Sydney Harbour and parts of that will form the international coverage which Channel Two proposes to broadcast in Australia and which will be broadcast internationally throughout a large part of the world to what could be no doubt an audience of millions. The fact that both channels propose to televise (Channel Nine the whole and Channel Two at least part thereof) the Sydney celebrations is not something that has only become known in the past few days. It has been known by the Council, Channel Nine and Channel Two at least since 16 August 1999 when Channel Nine sought from the Council the international television rights for its coverage presumably to block Channel Two passing what Channel Nine in the letter described as “stolen coverage” onto the BBC led international TV consortium of which Channel Two was to be a member. It is also clear that the shape, if I may call it that, of the event was settled by that time, though subject no doubt to fine tuning which fine tuning may well continue until 31 December. However it took until 13 December of this year for Channel Nine to commence proceedings in this Court. It seeks now, but a few working days before the event is to take place, urgent interlocutory relief restraining Channel Two from broadcasting in Australia a television broadcast featuring what are referred to as the bridge face device, the bridge word design, the Sydney Harbour lanterns and the fireworks production at 9 pm and midnight, subject to a proviso that any conduct constituting a fair dealing under s 42 of the Copyright Act 1968 (Copyright Act) would not be prohibited. The original threat made by Channel Nine went much further than the current proceedings do. Indeed they initially seemed to want to restrain Channel Two filming any of these events for inclusion in an international broadcast, although it is clear that Channel Nine’s rights, such as they are, extend only to Australia and Papua New Guinea and no further. However that has now been abandoned. Channel Nine base its claim for relief on copyright rights which it alleges vest in the City Council in each of these “works” of which it claims to be the exclusive licensee for TV broadcasts in Australia. … In what is copyright alleged to exist? … [337] … For Channel Nine its strongest case of copyright is with the drawing of the sea creatures and the lanterns which reproduce those drawings in a three-dimensional form. The drawings are on any view of the matter original and copyright exists, in my view, in those drawings and in the three-dimensional form the drawings take being, at the least, works of artistic craftsmanship. In my view, the weakest copyright case for Channel Nine, on the other hand, is the claimed copyright said to exist in the dramatic work originating from the schedule dealing with the fireworks display and what written submissions of senior counsel for Channel Nine referred to as “the fireworks production”. As I understand it, each type of firework produces a particular effect. Randomly set off the effect of those fireworks might be chaotic. It takes skill and artistry, perhaps, to determine the order in which particular kinds of fireworks are set off and to produce the spectacular effect which is hoped for to meet the occasion. The relationship between the music, its beat or rhythm, and the exploding fireworks is no doubt also of importance. Having said that I have difficulty in the conclusion that if the schedule is itself followed precisely, because that would have to be a prerequisite of the copyright protection (it is certainly contemplated [4.210]

107

Intellectual Property: Commentary and Materials

Nine Network v Australian Broadcasting Corp cont. that that will be the case although I suspect that fine tuning may still be possible between now and 31 December) the exploding fireworks display is a dramatic work within the definition of that expression in s 10(1) of the Copyright Act 1968. That section defines dramatic work to include: (a) a choreographic show or other dumb show; and (b) a scenario or script for a cinematograph film; but does not include a cinematograph film as distinct from the scenario or script for a cinematograph film. The expression of course has its ordinary English meaning in addition to the defined meaning to which I have referred. The question really is whether the setting off of the fireworks spectacular, ephemeral as it is, is a “dramatic work” in the ordinary sense of those words. It is not a matter upon which I have formed a concluded view but there are certainly difficulties it seems to me with the argument. It is or will be if the matter goes to trial the case for Channel Nine, that because the fireworks show alone or in combination with other events such as the barge display is in the nature of a series of composed events and has dramatic unity and interest, it is therefore a dramatic work. There is also the question whether the ultimate fireworks show is really a material form of what was planned. The requirement that it be scripted, directed and staged, assuming Sydney Harbour to be a gigantic outdoor stage for the present purposes may more readily be accepted to the extent that it is planned, but as I have already suggested there may be many a slip between the actual plan and the ultimate performance. It can be argued not to involve improvisation: Karno v Pathé Frères Ltd (1908) 24 TLR 588 at 590-591 affirmed on appeal (1909) 25 TLR 242 and see Australian Olympic Committee Inc v The Big Fights Inc [1999] FCA 1042 (3 August 1999) per Lindgren J at [42]. It is, one would think, common place in at least a half of the present decade that firework shows with music are planned. It has never been suggested to my [338] knowledge, and there is no reported case in which the matter has been subjected to legal analysis which has suggested that copyright subsists in a fireworks show set to music just because the sequence of events is scripted. That does not mean that copyright might not exist. It may merely be the result either of difficulties of enforcing the non-filming of such events or it may be that no one has thought deeply about the issue. At the heart of the problem may well be that copyright is a monopolistic right existing not to protect ideas as such but the physical manifestation of some original literary, artistic or dramatic work. Channel Nine’s argument cannot be said to be doomed to failure although at the present I am inclined to the view that it is not strong. The question of subsistence of copyright in the bridge face or bridge word drawings and the related question of the photography, recording and then showing of images of the actual bridge with the lit designs constituting infringement also had difficulties for Channel Nine. In each case the drawing of the bridge is a substantial part of what is said to be the original artistic work. No doubt a drawing of the bridge is capable of being an original artistic work but what is photographed is the actual Harbour Bridge, on any view an object in the public domain, to which is affixed a representation in lights of either the face or the word “Eternity”. The face itself is, on the evidence as it stands no doubt an original drawing, but I have reservations in whether copyright can subsist in a representation in copperplate in lights of the word “Eternity” made if not popular, at least prominent, as I have said, by Mr Stace …

Musical works [4.220] As with literary and dramatic works, there is no definition of “musical work” in the

Copyright Act 1968 (Cth). As with other categories, the description relates to the character of 108 [4.220]

Criteria for Subsistence of Copyright

CHAPTER 4

the work rather than merit. Hence there is no requirement that the music be of a particular quality. Thus the score of a song is a musical work, whether it is an advertising jingle or an operatic aria. Where words are set to music, the two works (literary and musical) remain separate. If the song is recorded, another copyright exists in the sound recording (in accordance with Part IV of the Act). Selections of existing music as such may attract copyright, separate from that which exists in the original. This is distinct from the issue of infringement of an existing work. The question of what degree of effort constitutes originality – yet another issue – will depend upon general principles. In CBS Records Australia Ltd v Guy Gross (1989) 15 IPR 385 (at [4.230] below), CBS was found not to have infringed any copyright which subsisted in the “multitude of differences” between two works, one the original work and the other a copy of that work. Note that the requirement of “material form” means that improvised or traditional music will not attract copyright protection unless or until it is written down or otherwise recorded. See Schott Musik International GMBH v Colossal Records (1996) 36 IPR 267.

CBS Records Australia v Guy Gross [4.230] CBS Records Australia Ltd v Guy Gross (1989) 15 IPR 385 Federal Court of Australia [Colette, an Australian singer, re-recorded for CBS a song called “Ring My Bell”, which was originally recorded during the 1970s by Anita Ward, an American singer. The original song was “in keeping with the black American ‘funk’ vocal tradition” (at 389) to which Anita Ward belonged. The Colette version was adapted to the style, range and capabilities of that singer resulting in a version which took “what may be called the line of least resistance to the song” (at 389). Colette had made a demonstration tape for CBS using an arrangement of “Ring My Bell” with instrumental parts supplied by Guy Gross, using a synthesiser. Gross claimed that the demonstration tape (the Trackdown version) embodied an original musical work, being an arrangement of the song sufficiently different from the Anita Ward version, and that CBS had infringed that copyright by copying the arrangement.] DAVIES J: … [392] As to whether any copyright subsists in the Trackdown version is a point of difficulty. For copyright in an arrangement to subsist, the differences from the work arranged must be such that a new original work can be identified. Differences resulting from mere interpretation, particularly differences brought about by an arrangement of a work to suit the qualities of a particular singer’s voice, do not result in the creation of an original work. Particularly is this so in the area of popular music where the latitude given to a performer may be much greater than that in classical works, where the notes, phrasing, emphasis and the like tend to be specified in great detail. Creational competition is required to bring into being an original work. [The Trackdown version was considered by Davies J to be an original musical work.] [394] … But this is not a case where a particular feature stands out, where an opera score has been rewritten for piano or where important new harmonisations have been composed. In the present case, I am unable to identify any such element. The work was a song having vocal lines and an instrumental backing. There were not two pieces of music. The vocal and instrumental parts were elements which combined together to form a single work. Whether there may be separate copyright in each map of a street directory, as discussed by Hill J in Universal Press Pty Ltd v Provest Ltd & Brothers Publishing Pty Ltd (1989) 14 IPR 623; 87 ALR 497, or in each chapter of a novel, as mentioned in University of New South Wales v Moorhouse (1975) 133 CLR 1; 6 ALR 193, the present is not such a case.

[4.230]

109

Intellectual Property: Commentary and Materials

Artistic works [4.240] The question of what amounts to an artistic work for copyright purposes is,

unusually, interpreted in the legislation rather than left to general principles. Also unusually, this interpretation imports aesthetic notions into the decision as to whether works of artistic craftsmanship are protected. The Copyright Act 1968 (Cth) provides a fairly exclusive list of “artistic work” at s 10(1), being: (a) a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not; (b) a building or a model of a building, whether the building or model is of artistic quality or not; or (c) a work of artistic craftsmanship whether or not mentioned in paragraph (a) or (b); but does not include a circuit layout within the meaning of the Circuit Layouts Act 1989.

Works of artistic craftsmanship are treated as “artistic” only if they have aesthetic appeal, whereas works encompassed within s 10(1)(a) and (b) above have only to exhibit the originality and substance generally required in order for copyright to subsist. Section 10(1) continues to add to this definition in respect of some of the abovementioned classes of work – such as drawing, engraving, photograph, and sculpture – but still does not exhaustively define them: Painting [4.250] “Painting” does not receive any further explanation in the Copyright Act 1968 (Cth) as to its characteristics, leaving the issue to the eye of the beholder, or, on occasion, to the courts to determine. See, for example, Merchandising Corporation of America v Harpbond [1983] FSR 32 (as per the extract at [4.290] below), in which Lawton LJ commented that “it was fantastic to suggest that make-up on anyone’s face could possibly be a painting”.

Painting or portrait? [4.260] In the following extract from Attorney-General v Trustees of National Art Gallery of New South Wales (1944) 62 WN (NSW) 212 (“Joshua Smith” Case), the court considered whether a caricature could be deemed to be a painting or a drawing.

Attorney General v Trustees of National Art Gallery of NSW [4.270] Attorney General v Trustees of National Art Gallery of NSW (“Joshua Smith” Case) (1944) 62 WN (NSW) 212 Supreme Court of New South Wales [The issue arose not in the context of copyright but as a result of awarding the Archibald Prize for 1943 to William Dobell for his portrait of Joshua Smith. Objection was made to the payment of the prize to Dobell for a work that was termed a caricature and not a likeness of Joshua Smith, when the prize was intended to be awarded for “the best portrait preferentially of some man or woman distinguished in Art, Letters, Science or Politics” from the income of a trust established for that purpose. As to the meaning of “portrait”, Roper J said:] ROPER J: [215] With the assistance of dictionaries and the many works to which I have been referred by counsel in this case, I think that the word “portrait” as used in this will, incorporating in its meaning the limitations imposed by its context, means a pictorial representation of a person, painted by an artist. This definition connotes that some degree of likeness is essential and for the purpose of achieving it the inclusion of the face of the subject is desirable and perhaps also essential. 110

[4.240]

Criteria for Subsistence of Copyright

CHAPTER 4

Attorney General v Trustees of National Art Gallery of NSW cont. The picture in question is characterised by some startling exaggeration and distortion clearly intended by the artist, his technique being too brilliant to admit of any other conclusion. It bears, nevertheless, a strong degree of likeness to the subject and is I think, undoubtedly, a pictorial representation of him. I find as a fact that it is a portrait, within the meaning of the word in this will, and consequently the trustees did not err in admitting it to the competition. Whether as a work of art or a portrait it is good or bad, and whether limits of good taste imposed by the relationship of artist and sitter have been exceeded, are questions which I am not called upon to decide and as the expression of my opinions upon them could serve no useful purpose I refrain from expressing them. I mention those matters, however, because I think that the witnesses for the informant, whose competency to express opinions in the realm of art is very great, were led into expressing their opinions that the work was not a portrait because they held strong views against it upon those questions. They excluded the work from portraiture, in my opinion, because they have come to regard as essential to a portrait characteristics which, on a proper analysis of their opinions, are really only essential to what they consider to be good portraiture. Finally I think that it is necessary to state my opinion on the claim that the picture cannot be included as a portrait because it is proper to classify it in another realm of art or work as caricature according to the information or as fantasy according to a witness for the informant. It is, I think, unnecessary to consider whether the picture could properly be classed as a caricature or a fantasy. If it could be so classed that would only establish to my mind that the fields are not mutually exclusive, because in my opinion it is in any event properly classed as a portrait. In the result I think that this suit must be dismissed. I make a decree accordingly and order that the relators pay the costs of the defendants. Judgment for plaintiff.

[4.280] In the UK case Merchandising Corporation of America v Harpbond (1983) FSR 32, below, Lawton LJ was required to consider the issue of whether face-painting as stage make-up could be deemed to be a work of copyright. In so doing, the issue of the intangible versus the tangible comes under scrutiny.

Merchandising Corp of America v Harpbond [4.290] Merchandising Corp of America Inc v Harpbond Ltd [1983] FSR 32 Court of Appeal (United Kingdom) LAWTON LJ: [42] … This is an appeal by the plaintiffs against an order of Walton J made on 25 November 1981, whereby he granted the plaintiffs some interlocutory relief by way of injunctions. But the plaintiffs, like Oliver Twist, have asked for more and, like Oliver Twist, they are not going to get it. The appeal centres round what seems to me to be a novel and startling proposition, that there can be copyright in unusual facial make-up. Perhaps it is a sign of the times that it does not arise in connection with women’s make-up but in connection with the make-up of the second plaintiff, Mr Stuart Leslie Goddard, it being make-up which he uses in the course of his performances as a pop star and in the publicity material with which he advertises himself to what no doubt is his adoring public. The plaintiffs are four in number. The principal one is Mr Goddard. His stage name is Adam and he is the singer and the leader of a group which perform under the name of “Adam and the Ants”. It is a matter within the knowledge of this court from another appeal a few weeks ago that, since 1979, the [4.290]

111

Intellectual Property: Commentary and Materials

Merchandising Corp of America v Harpbond cont. second plaintiff has arisen from comparative obscurity in the world of pop music to international fame. He has a large following in this country and it would appear from what we know of this case that he has followings outside the UK. The plaintiffs are an American corporation called Merchandising Corporation of America. They specialise in exploiting the commercial opportunities which exist these days out of the reputations of persons in the public eye, particularly those in the world of pop entertainment. The third and fourth plaintiffs are companies associated with Mr Goddard and they exist for various commercial purposes associated with his performances. One of the curiosities of the pop world is that there is a great deal of money to be made by putting on to the market what most of us would regard as garish material about pop stars. The first, second, third and fourth defendants are all concerned with publishing material of that kind. The fifth defendant, Mr Frank Langford, is a commercial artist. He comes into the story briefly but goes out again quickly. The reason he comes into the story is this, that at one stage, in the course of the activities of the first, second, third and fourth defendants, he was asked to paint a portrait of Mr Goddard, and he did so. That portrait was reproduced in various publications produced by the other defendants. The plaintiffs have taken exception to that portrait, alleging that it was published in breach of their copyright in the facial make-up of Mr Goddard. Mr Langford has, wisely, made his peace with the plaintiffs. So he is no longer involved in this litigation. He did, perhaps as part of making his peace (I know not), provide the plaintiffs with some information which he put into an affidavit to which I shall be referring later, stating the circumstances in which he came to paint the portrait and how he went about it. … [46] … Mr Wilson’s bold submission at the beginning of his presentation of his clients’ case was that the marks on Mr Goddard’s face by way of facial make-up were painting. That caused me very considerable surprise, because, although there are various statutory provisions in the Act defining various words used in it, there is no statutory definition of a painting. “Painting” is a word in the ordinary usage of the English language and it is a question of fact in any particular case whether that which is under discussion is or is not a painting. It seemed to me, right at the beginning of Mr Wilson’s submissions (and I want to be restrained in my language), that it was fantastic to suggest that make-up on anyone’s face could possibly be a painting. Mr Swift, in his succinct and concise reply, pointed out what had occurred to me and I had mentioned to Mr Wilson in the course of argument, that a painting must be on a surface of some kind. The surface upon which the startling make-up was put was Mr Goddard’s face and, if there were a painting, it must be the marks plus Mr Goddard’s face. If the marks are taken off the face there cannot be a painting. A painting is not an idea: it is an object; and paint without a surface is not a painting. Make-up, as such, however idiosyncratic it may be as an idea, cannot possibly be a painting for the purposes of the Copyright Act 1956. The next submission made by Mr Wilson was that there had been indirect copying of the sketch. That indirect copying was alleged to have been partly in the kind of photographs which were reproduced in the defendants’ magazines, to which I have already referred and clearly they were not reproductions of the sketch and partly (said Mr Wilson) in the portrait, because what had happened was that Mr Langford had used the concept of the make-up and, for the purposes of using that concept, had taken into account the photograph published in the Sun newspaper and had produced that which was remarkably like the photographs taken by Mr Ballard. Mr Swift, in a careful analysis of the portrait and the sketch, showed that there were a number of dissimilarities. Clearly the portrait was not a copy of the sketch. It was something entirely different. Mr Wilson was no doubt alive to that way of looking at the problem, because he based his argument largely on the assertion that what Mr Langford had done in the portrait and what the first, second, third and fourth defendants had done by reproducing the portrait in their magazines was to use a substantial part of the sketch, the part which he had used being the lines on the face. 112 [4.290]

Criteria for Subsistence of Copyright

CHAPTER 4

Merchandising Corp of America v Harpbond cont. Mr Wilson relied upon part of the speech of Lord Reid in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273. In [47] the course of his speech Lord Reid had referred to a “substantial” reproduction being something which was a “striking” part of the artistic work. But there are other passages in the case of Ladbroke which are of very considerable importance. The one which, in my judgment, is of particular importance occurs in the speech of Lord Pearce at 293. He asked this question: Did the defendants reproduce a substantial part of it? Whether a part is substantial must be decided by its quality rather than its quantity. The reproduction of a part which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation, not be a substantial part of the copyright and therefore the courts will not hold its reproduction to be an infringement. Two straight lines drawn with grease-paint with another line in between them drawn with some other colouring matter, in my judgment, by itself could not possibly attract copyright. It is only when they are put on Mr Goddard’s face that anything particularly relevant to Mr Goddard comes into existence. When they are taken away from the sketch, as they must be taken away if their reproduction on anything else is said to be a reproduction of a striking part of the artistic work, then Lord Pearce’s words apply.

Sculpture [4.300] “Sculpture” in Copyright Act 1968 (Cth) s 10(1) “includes a cast or model made for

purposes of sculpture”. See Lincoln Industries Ltd v Wham-O Manufacturing Co (1984) 3 IPR 115; and see also Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417, below.

Greenfield Products v Rover-Scott Bonnar [4.310] Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417 Federal Court of Australia PINCUS J: [419] The applicant and the respondent are competing manufacturers of ride-on mowers for use in parks and gardens. The applicant’s substantial case is that it designed a new kind of drive mechanism for its mowers; the respondent later used the same basic design, having carefully inspected the applicant’s. The suit seeks an injunction to restrain further breaches of copyright, damages for infringement of copyright, an account of profits and other relief. … [420] … There being no doubt that the respondent imitated the applicant’s design to a considerable extent, taking advantage of the applicant’s inventiveness and its development of that design over some years, some might have thought that the law would give the applicant some right of redress. The most obvious basis of a suit of that kind is the patent law, but the applicant had no patent for its invention (assuming it to be patentable) so that applicant has sued, as I have said, for breach of copyright, saying that the respondent copied its design. In a very broad sense it did, and there are high authorities which suggest that such a claim as this is proved if copying is proved: LB (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 at 619: The protection given by the law of copyright is against copying, the basis of the protection being that one man must not be permitted to appropriate the result of another’s labour. That [4.310]

113

Intellectual Property: Commentary and Materials

Greenfield Products v Rover-Scott Bonnar cont. copying has taken place is for the plaintiff to establish and prove as a matter of fact. The beginning of the necessary proof normally lies in the establishment of similarity combined with proof of access to the plaintiff’s productions. … [426] … Copyright in three-dimensional objects There are no two-dimensional objects; the above heading is intended as a shorthand way of referring to the applicant’s claim to copyright in certain moulds and in a drive mechanism, as opposed to its claim to copyright in drawings. The relevant parts of the statement of claim are paras 11(iii) (p 4) and 13 (pp 10, 11). These allege, in effect, that there is copyright in “moulds used in connection with the casting of” certain pulleys and clutch plates and in a certain drive mechanism. It is argued on behalf of the applicant that the Copyright Act, as presently construed, is wide enough to encompass such objects. Under Pt III of the Act, copyright may subsist in, inter alia, an artistic work and the applicant contends that the moulds and the drive mechanism [427] are artistic works. The expression “artistic work” is defined in s 10 to mean, inter alia: A painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not. Each of the words “sculpture” and “engraving” is separately defined: “Sculpture” includes a cast or model made for purposes of sculpture. “Engraving” includes an etching, lithograph, product of photogravure, woodcut, print or similar work, not being a photograph. It was argued on behalf of the applicant that copyright can subsist in the moulds and machine parts because they are “engravings” and that the drive mechanism is an “artistic work”, being made up of its components which are themselves sculptures and therefore artistic works. It is convenient to take the latter point first. Although the definition of “sculpture” is not exhaustive, in so far as the word remains undefined it must be given its ordinary meaning, in accordance with orthodox principles of construction. It is for that reason that I rejected evidence proffered on behalf of the respondent to prove what “sculpture” means in certain circles. The word “sculpture” is, at least in this context, not a technical term so as to make evidence admissible on the issue of statutory construction. It appears to me clear that neither the moulds nor the drive mechanism, nor the parts of the latter, are sculptures in the ordinary case. It is true, as was pointed out in the course of argument, that some modern sculptures consist of or include parts of machines, but that does not warrant the conclusion that all machines and parts thereof are properly called sculpture, and similar reasoning applies to moulds. I respectfully agree with the conclusion arrived at in the New Zealand Court of Appeal, in Lincoln Industries Ltd v Wham-O Manufacturing Co (1984) 3 IPR 115 at 131 that frisbees are not sculptures under the Copyright Act 1962 (NZ); that conclusion is consistent with mine. I therefore reject the submission that there can be copyright in the drive mechanism. I do so with more confidence having regard to the concept of infringement by copying objects made from a copyright drawing; the development of that doctrine would have been unnecessary if machinery were itself the subject of copyright. A submission which is not quite so easily disposed of is that moulds are “engravings” under the Act; this has some support from the Lincoln Industries case just referred to and from the reasons of the Court of Appeal of Hong Kong in Interlego AG v Tyco Industries Inc [1987] FSR 409 at 421 and 453. In the former case, there was evidence that the frisbee moulds were made by use of a tool, cutting medal blanks on a lathe. The court remarked (at 127): 114 [4.310]

Criteria for Subsistence of Copyright

CHAPTER 4

Greenfield Products v Rover-Scott Bonnar cont. We see no reason why the process involved in the production of the die or mould, particularly the creation of the cuts to produce the ribs and rings should not be regarded as the act of engraving within the provisions of s 2(1)(a) of the Act, and the mould or die so created an “engraving” just as a “print” is an engraving in terms of the extended definition in s 2 of the Act. The definition of “engraving” in issue there differed slightly from that with which I am concerned, but the difference is not of present significance. I do not well understand why the court thought that working at a lathe cutting into a rotating piece of metal with a tool is the work of engraving. One can use a tool fixed in a lathe to inscribe a pattern onto the surface of metal or other materials, but even that would not, perhaps, ordinarily be [428] called engraving. It is true that dictionary definitions of engraving refer to cutting, but it is not all cutting which is engraving; for example, to cut a piece of steel rod into lengths is not to engrave it. Nor, in my opinion, is the process of cutting metal from a block spinning of a lathe a process of engraving the block, in the ordinary sense of the word. The term does not cover shaping a piece of metal or wood on a lathe, but has to do with marking, cutting or working the surface typically, a fat surface of an object. The second edition of the Oxford English Dictionary cites usages of the word “engrave” which appear to support the New Zealand decision. For example, a translation of the Metamorphoses has: “The fatall steele … he waues Deepe in his guts, and wounds on wounds ingraues.” But that was published in 1626 and no modern similar example is given. More generally, the text under “engrave” supports the view that in current usage the physical meaning is confined to cutting, marking or otherwise working a surface. The same may be said of the dictionary’s treatment of “engraving”, except that “engraving” can mean the product as well as the process. I note that the Court of Appeal went on to say (at 219) that each frisbee made from a mould is an “image produced from an engraved plate” and therefore a “print”. I was urged by Mr Hanger QC to adopt what he described as the “flexible approach” evinced in this decision, particularly as it has at least the tentative approval of the Hong Kong Court of Appeal in the Interlego case. No consideration of policy, or other orthodox approach, could justify straining the English language so far as to call the moulds engravings. Despite the respect which one must have for any decision of the New Zealand Court of Appeal, I find myself unable to follow the approach in the Lincoln Industries case. In particular, I cannot, with respect, agree with the view that a frisbee is an image or that it is a print. Similarly, in my opinion, the moulds from which these machine parts are made are not engravings. It is unnecessary to consider the question whether “engraving” in the Act includes such objects as were dealt with in James Arnold & Co Ltd v Miafern Ltd [1980] RPC 397. I should add that I am by no means convinced that the New Zealand decision, even if correct, produces success for the applicant on this point; as was pointed out on behalf of the respondent, the basis of that decision appears to have been that operations which involve cutting to create a shape are properly called engraving. But here there was no evidence that the moulds were produced by any sort of cutting. The applicant also contended that the machine parts are themselves “engravings”. Counsel did not shrink from the proposition that a machined steel shaft, however enormous, is an “engraving”. That seems to me preposterous.

[4.310]

115

Intellectual Property: Commentary and Materials

Greenfield Products v Rover-Scott Bonnar cont. I therefore arrive at the conclusion that the applicant’s claim to copyright in the moulds and machine parts is ill-founded and cannot succeed, because they cannot be the subject of copyright.

Drawing [4.320] “Drawing” in the Copyright Act 1968 (Cth) s 10(1) “includes a diagram, map, chart or plan”. The question of whether a work amounts to a “drawing” is not usually in dispute. In view of the vast array of items that can begin life as a drawing in which copyright subsists, any difficulties are usually found when considering reproduction of the work in another dimension, which will amount to infringement. There may be a point at which a drawing is so close to an idea that copyright protection is of little value: Kenrick & Co v Lawrence & Co (1890) 25 QBD 99; Beck v Montana Constructions Pty Ltd [1964–65] NSWR 229; FAI Insurance Ltd v Advance Bank Aust Ltd (1986) 7 IPR 217. Almost certainly, the main area of commercial activity, with respect to litigating copyright in drawings, concerns the “architect’s plans” cases. See Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 43 IPR 1; (1999) 44 IPR 535; LED Builders v Eagle Homes (1999) 44 IPR 24; Carlisle County Homes v Brown [1999] QDC 284; Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309; Tolmark Homes v Paul (1999) 46 IPR 321; New England Country Homes Pty Ltd v Moore (1998) 45 IPR 186. Note the finding of “originality” in drawings of blocks similar to Lego blocks in Interlego AG v Croner Trading Pty Ltd (1993) 25 IPR 65.

Engraving [4.330] “Engraving” in the Copyright Act 1968 (Cth) s 10(1) “includes an etching,

lithograph, product of photogravure, woodcut, print or similar work, not being a photograph”. Lincoln Industries Ltd v Wham-O Manufacturing Co (1984) 3 IPR 115 appears to give a wide interpretation to “engraving”. In Greenfield Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417 (at [4.310] above), Pincus J said “I do not well understand why the court thought that working at a lathe cutting into a rotating piece of metal with a tool is the work of engraving”. Photograph [4.340] “Photograph” in Copyright Act 1968 (Cth) s 10(1) “means a product of photography

or a process similar to photography, other than an article or thing in which visual images forming part of a cinematographic film have been embodied, and includes a product of xerography …”. However, note that taking another identical photograph of the same subject matter as an earlier photograph does not infringe copyright: copying the first photograph creates the infringement. Building [4.350] “Building” in Copyright Act 1968 (Cth) s 10(1) “includes a structure of any kind”.

The copyright subsisting in a building is separate from any copyright in plans or drawings for that building. In Half Court Tennis Pty Ltd v Seymour (1980) 53 FLR 240, it was held that a half-sized tennis court was a copyright work. Dunn J said (at 248): The plaintiffs’ case was that Wills and K had, by using considerable industry and skill, produced an artistic work, namely a building, in which copyright subsists. The building in question, in my opinion, was a concrete slab with special markings upon it … 116 [4.320]

Criteria for Subsistence of Copyright

CHAPTER 4

The fact that a half court can scarcely be described as a thing of beauty does not matter. What does matter is that it is the result of skill and labour by Wills and K.

In Darwin Fibreglass Pty Ltd v Kruhse Enterprises Pty Ltd (1998) 41 IPR 649, it was held that a fibreglass swimming pool was a “structure” and therefore capable of being a building since it had the size and permanence of a building and was substantial enough to be within copyright concepts. The mould from which the pool was cast was a model of a building, since “the mould stores the form, or a substantial part of the form of the pool in a three dimensional way, from which it would be relatively easy to copy the form of the ideas therein expressed” (at 656). However, the Copyright Act 1968 (Cth) s 66 allows a two-dimensional – that is, a painting, drawing, engraving or photograph – copy of a three-dimensional building or model of a building to be made, without infringing copyright. Nor does the inclusion of a building or model in a film or television broadcast infringe copyright. Works of artistic craftsmanship [4.360] “Works of artistic craftsmanship” also do not receive any further explanation in the

Act as to their characteristics, leaving the issue to the eye of the beholder, or, on occasion, to the courts to determine. Despite the apparently narrow scope of protection offered under this heading, its importance lies in the fact that this is the only category of protection for three-dimensional objects, apart from sculptures, buildings and models of buildings. Many cases have sought protection as a “work of artistic craftsmanship” for what is otherwise an industrial mass-produced item. Furthermore, this is the only category of work where there needs to be some assessment of the merits of the creative effort. “Artistic” in this context seems to connote some aesthetic element: see Burke & Margot Burke Ltd v Spicers Dress Designs [1936] Ch 400; George Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64; [1975] RPC 31. The restriction placed on works of artistic craftsmanship reflects the law’s anxiety not to protect for the duration of copyright objects which may be more readily regarded as items of commerce, while at the same time recognising that artistic endeavour may be manifested in various media. A work of artistic craftsmanship must be fixed in material form to be protected, so moving sand landscapes, for example, would not protected by copyright (Komesaroff v Mickle (1986) 7 IPR 295). Aesthetic considerations are relevant to the existence of copyright in this category. The courts are reluctant to make aesthetic judgments themselves. In Cuisenaire v Reed [1963] VR 719 at 729, Pape J suggested that the test may be whether “the main object of the creator was to create an article which, even if it be utilitarian, nevertheless would have a substantial appeal to the aesthetic tastes of those who observed it”. His Honour continued (at 730): … it seems to me that it cannot be said that, objectively, these pieces of coloured wood present any indication of beauty or appeal to the aesthetic feelings or emotions of the beholder, or that the person or firm who made them applied his skill and taste to the production of an article intending to produce something which would have a substantial aesthetic appeal to its possessor. The rods are little more than tools or counters to be used for a particular purpose. Their function is primarily utilitarian and they present no aesthetic attraction …

However, in Coogi Australia v Hysport International (1998) 86 FCR 154; 41 IPR 593, below, the court held that a mass-produced and machine-made article can still be a work of artistic craftsmanship. [4.360]

117

Intellectual Property: Commentary and Materials

Coogi Australia v Hysport International [4.370] Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154; 41 IPR 593 Federal Court of Australia DRUMMOND J: [594] … The applicant has long been a designer and manufacturer of machine knitted fabrics and garments made up from its fabrics. In the early 1990s it made and [595] sold garments from a fabric it manufactured which embodied a design described as its “XYZ design”. The first respondent (of which the second to sixth respondents are directors) is a competitor. The applicant claims that the first respondent has “since at least May 1992” made and sold three styles of knitted garments (together with variations of those styles) which are identified as HY95, HY82 and HY96. The applicant claims that, by doing this, the first respondent has infringed its copyright: (1)

in two “artistic works”, viz, its fabrics and its garments that bear the XYZ design. It is said that each piece of fabric and each garment is an “artistic work” for the purposes of ss 31 and 32 of the Copyright Act 1911 because it is a “work of artistic craftsmanship” within the definition of “artistic work” in s 10 of that Act;

(2)

in a “literary work”, viz, “the computer program and/or data comprised in the computer program, made in or about 1989, used for the manufacture by computerised knitting machines of garments bearing the XYZ design, including the print out of the programming codes, known as the XYZ control program, and the XYZ graph in symbol form contained therein”.

It is said that this program is a “literary work” for the purposes of ss 31 and 32 of the Act because it is a “computer program” within the meaning of that term in the definition in s 10 of “literary work”, ie, it is within the definition of “computer program” in that section of the Act. … While Coogi, in its pleading, identified the subject matter of the first of its copyright claims as works of artistic craftsmanship comprising “fabric and/or garments manufactured by the applicant since 1989 bearing the XYZ design”, at trial it put this part of its case more narrowly. In the course of the hearing, Coogi’s counsel limited the subject matter of its copyright claim in the XYZ fabric to the form of the stitch structure of the fabric: Coogi produced the fabric in a total of eight colour ranges, but it made no attempt to identify them and disavowed that its colour selections comprised any part of this particular copyright claim. At trial, Coogi put its claim that Hysport had infringed its copyright in the XYZ fabric on the basis that there were so many similarities between the stitch structures of the two fabrics that Hysport had reproduced not the whole, but a substantial part, of the structure of the XYZ fabric. … [596] … The applicant’s case, as refined in counsel’s closing submissions, of infringement of copyright in its computer program is one of infringement by unauthorised adaptation, rather than reproduction. Counsel for the applicant also said that no claim was made to copyright in the data associated with the program, save in so far as that data actually forms part of the Coogi computer program. … [601] … The XYZ fabric as a work of artistic craftsmanship A substantial argument by Hysport against Coogi’s claim that its XYZ fabric is a work of artistic craftsmanship turns on the proposition, which I accept, that Coogi’s design effort was directed entirely to setting up a system for the mass production of fabric having particular features. The product of such a process, so Hysport says, is the antithesis of a work of artistic craftsmanship. In order to deal with this argument, it is first necessary to dispose of Coogi’s contention that each of the many mass-produced runs of fabric embodying the XYZ design (and each of the many garments made from that fabric) is itself an “original work of artistic craftsmanship” within s 32. Such a claim is not sustainable. Copyright only subsists, pursuant to s 32 of the Act, in an original work of which the author was a qualified person “when the work was made”. It is clear from s 22 that, since a work is made for the purposes of s 32 when it “was first reduced to … some … material form”, 118 [4.370]

Criteria for Subsistence of Copyright

CHAPTER 4

Coogi Australia v Hysport International cont. it is only the first expression or fixation of the author’s skill and labour that can constitute the work in which copyright subsists. If the fact that Coogi produced fabric to the XYZ design in eight separate colour ranges is ignored for the moment, Coogi [602] can, at most, have copyright only in that portion of the first roll of fabric produced by it in which the XYZ design was first completely embodied: it cannot sustain its claim to copyright in every length of fabric bearing the XYZ design. But the question remains: can Coogi claim copyright in the first embodiment of the XYZ design as a “work of artistic craftsmanship”, given that it too was the result of Coogi’s efforts in setting up a process for the mass production of fabric to that design. (If Coogi can make out this claim, it would be an infringement for Hysport to reproduce that copyright subject matter by indirectly copying it from any one of the 2,500 or so Coogi garments that incorporated it.) The law as to what is a work of artistic craftsmanship is not in a very satisfactory state: cf Lord Kilbrandon’s comment in George Hensher Ltd v Restawhile Upholstery (Lancs) Ltd [1976] AC 64 at 98. But current authority supports, I think, a number of propositions: (1)

The phrase “works of artistic craftsmanship” is a composite phrase that must be construed as a whole. There is nothing to suggest that any of the words is used in other than one of its ordinary senses: Hensher, per Lord Simon, at 91.

(2)

As is suggested by a comparison of paras (a) and (b) with para (c) of the definition of “artistic work” in s 10, a work will qualify as one of artistic craftsmanship only if it has an element of real artistic, ie, aesthetic, quality, whether or not it is a utilitarian article: Cuisenaire v Reed [1963] VR 719 at 730 lines 30 to 35; Hensher at 77F and 78F-G, 81H, 85H and 86E, 96G-H; Merlet v Mothercare PLC (1984) 2 IPR 456 at 465 and Bonz Group (Pty) Ltd v Cooke (1994) 3 NZLR 216 at 224.

(3)

Implicit in the proposition that the existence of utilitarian features will not disqualify an article from being a work of artistic craftsmanship is the further proposition that the article need not have such a high level of aesthetic quality as to make it a work of fine art. In Hensher, Lord Reid at 78H and Lord Simon at 90F-G said as much. Lord Simon explained why (at 90): the object of giving copyright protection to “works of artistic craftsmanship”, first conferred by the Copyright Act (UK), was to extend to works of applied art the protection formerly restricted to works of fine art, an extension made under the infiuence of the Arts and Crafts Movement.

(4)

The level of aesthetic appeal required for a work of artistic craftsmanship is higher than mere visual appeal (one of the tests for design registrability); Hensher at 79C-F, 81E-F, 84F-G and 93E-F, 95F-H.

(5)

In determining whether an article has sufficient aesthetic quality to be a work of artistic craftsmanship the Court is determining a question of fact on the basis of the evidence before it: Hensher at 82B, 87A-B, 94H and 97C-D. It has been said that in deciding whether a work of craftsmanship has artistic quality the Court must not act on its own aesthetic judgment: Hensher at 78CD, 87BC, 94G and 96H-97A; Bonz at 224 lines 1-5. Accordingly, Laddie, Prescott and Vitoria, in The Modern Law of Copyright and Designs (2nd ed), p 208, favour Lord Reid’s test in Hensher and suggest that the necessary artistic element in a work of artistic craftsmanship will be shown by evidence that the visual appearance of the article is such as to cause at least some members of the public to wish to acquire and retain the article “on especial account” thereof. That, the authors say, is a fact capable of objective ascertainment by the Court and the Court is not required to base its decision on its own aesthetic opinion. Viscount Dilhorne at 87D rejected this sort of test as did Lord Simon, at 93D-H. It cannot be right. The statute by its definition of “artistic work” requires that a work of artistic craftsmanship be “of artistic quality”; in this context, that seems clearly [603] to require that it have some aesthetic value. That a segment of the public can be found [4.370]

119

Intellectual Property: Commentary and Materials

Coogi Australia v Hysport International cont. which may have been persuaded by advertising or by a transient fad to want to own the work because of its visual appeal does not necessarily mean that it must have the requisite minimum level of aesthetic value. I do not think the Court can, in determining whether a work is one of artistic craftsmanship, avoid the task of making a judgment, on the evidence before it, whether the work has a sufficient level of aesthetic appeal to be “of artistic quality”. Forming a view, on confiicting evidence, as to what is essentially a matter of aesthetic taste is not a novel task for a court: see, eg, Attorney-General for NSW v Trustees of the National Art Gallery of New South Wales (1944) 62 WN (NSW) 212. (6)

Whether a work has the requisite aesthetic quality must be determined objectively: Hensher 81F-G (and cf 95B-C, where it was said that it is “the intent of the creator and its result” which will determine whether the work is one of artistic craftsmanship); Cuisenaire at 730 lines 50-55 and Bonz at 223-224.

(7)

In determining whether an article has the requisite aesthetic quality, evidence that the creator intended to make an article possessing aesthetic quality is important, although not essential: Hensher 78F-G, 81G, 95B-C; Merlet at 465 ll 25-30 and Cuisenaire at 730 lines 50-55. Because the test is objective, whether the work has aesthetic quality cannot depend solely upon the subjective intent of the creator, since he may have failed to realise his intent, if it was an aesthetic one: Bonz at 223-224 and Merlet at 465. In Hensher, Lord Kilbrandon, at 96F-H, appears to suggest that the presence of such an intention in the creator is determinative of whether the work will have the necessary artistic quality, although he also seems to say this is an objective test at bottom, in so far as he says that “[i]t must be possible to deduce the conscious purpose of artistic creation from the work itself or from the circumstances of its creation”. But the way he then qualifies this statement makes it difficult to be certain just what he means.

(8)

Expert evidence as to whether a work possesses the requisite aesthetic quality is admissible: Hensher at 78G, 82B-C, 87C, 94G-H (although the members of the House place differing emphases on the cogency of such evidence).

(9)

Beyond this, it is difficult to find any guidance as to the considerations relevant to identifying the existence of the requisite aesthetic quality. But one thing is clear enough: the presence of non-functional features cannot be the test since, as Lord Simon observes in Hensher at 93B-C, the anthesis between function and beauty is a false one, especially in the context of the Arts and Crafts Movement.

(10)

Before a work will qualify as a work of craftsmanship, it must be a manifestation of pride in sound workmanship and the result of the exercise of skill on the part of its creator in using the materials of which the article is made and the devices by which those materials are turned into the article. Lord Simon in Hensher said, at 91: A work of craftsmanship, even though it cannot be confined to handicraft, at least presupposes special training, skill and knowledge for its production: see Cuisenaire v Reed [1963] VLR 719; Cuisenaire v South West Imports Ltd [1968] 1 ExCR 493, 514. “Craftsmanship”, particularly when considered in its historical context, implies a manifestation of pride in sound workmanship–a rejection of the shoddy, the meretricious, the facile.

See also Merlet at 460, Bonz at 224 and Cuisenaire at 729. [604] (11)

There is a difference of judicial opinion as to whether craftsmanship connotes only something hand made. In Hensher Lord Reid at 77E referred to a work of craftsmanship suggesting “a durable useful handmade object” and Viscount Dilhorne at 84D said: “[a] work of craftsmanship is, in my opinion, something made by hand and not something mass produced”. Pape J, in Cuisenaire at 729, spoke of craftsmanship as involving the display of

120 [4.370]

Criteria for Subsistence of Copyright

CHAPTER 4

Coogi Australia v Hysport International cont. manual skill. In Hensher, Lord Simon, however, observed at 90F that Parliament deliberately used the words “artistic craftsmanship” not “artistic handicraft” and, in discussing the reason why copyright protection was given by the 1911 Act to works of artistic craftsmanship, viz, to give protection to works of applied art, in response to the influence of the Arts and Crafts Movement, said, at 91: [A]lthough “works of artistic craftsmanship” cannot be adequately construed without bearing in mind the aims and achievements of the Arts and Crafts movement, “craftsmanship” in the statutory phrase cannot be limited to handicraft; nor is the word “artistic” incompatible with machine production: see Britain v Hanks Brothers and Co (1902) 86 LT 765. … Pape J, in Cuisenaire, found support for his view that manual involvement was necessary to craftsmanship in the 1952 UK Copyright Committee’s comment that copyright protection given to works of artistic craftsmanship was not intended to be given to mass-produced articles, which could obtain protection under the registered designs legislation, even if they might otherwise qualify as works of artistic craftsmanship: s 22 of the Copyright Act 1911 (UK) then in force (the legislation with which Pape J was concerned – [605] see [1963] VR at 725) denied copyright protection to designs capable of registration under the designs legislation. Pape J therefore read down the expression to cover only unique, handmade objects. … Hysport put a similar argument to that which Pape J accepted. It contended that, since the object of Div 8 of Part III the Copyright Act was to deny copyright protection to artistic works applied in mass production and to permit only design protection for such works, achievement of that object would be impeded if the exemption of works of artistic craftsmanship from the general rule in Div 8 against dual protection for artistic works were widened by widening the meaning of the expression “a work of a artistic craftsmanship” to include mass-produced articles. But the Copyright Act treats works of artistic craftsmanship differently from other artistic works. Unlike the position reflected in s 22 of the 1911 UK Act and that which obtained under Div 8 of Part III the Copyright Act 1968 prior to the 1989 amendments, protection under both the Copyright Act 1968 and the Designs Act 1906 (Cth) is now available to works of artistic craftsmanship. It matters not whether such a work is intended to be the subject of or used in mass production. Copyright protection is only lost for a work of artistic craftsmanship if the owner chooses to obtain design registration for that work. Otherwise, he can enforce his intellectual property rights in such a work by relying only on the Copyright Act, even though it was always his intention that the work would be industrially exploited. See ss 75 and 77 of the Act. The Explanatory Memorandum to the Bill which became the 1989 amending Act suggests that the reason why works of artistic craftsmanship were exempted from the general rule in Div 8 that copyright should not be available to protect artistic works capable of industrial application was that, even though such works can embrace a wide range of works well capable of industrial application, they are a special case: “it is considered these articles are more appropriately protected under the [Copyright] Act whether industrially applied or not” (para 24). What may justify the special status conferred on works of artistic craftsmanship by ss 74-77 is recognition that the real artistic quality that is an essential feature of such works and the desirability of encouraging real artistic effort directed to industrial design is sufficient to warrant the greater protection and the accompanying stifling effect on manufacturing development that long copyright gives, in contrast to relatively short designprotection. Division 8 therefore provides no foundation for arguing that an expression “a work of artistic craftsmanship” should be narrowly construed.

[4.370]

121

Intellectual Property: Commentary and Materials

Coogi Australia v Hysport International cont. (12)

There is also a conflict of judicial opinion whether a work can be one of artistic craftsmanship only if it is the product of a person who combines both artistic and craft skills in making it or whether it is enough that the work meets the two criteria of being a work of craftsmanship and a work possessing the requisite minimum degree of aesthetic quality.

In Hensher at 94E-F, Lord Simon said that whether a work was one of artistic craftsmanship depended on whether it was produced by a person who is an artist-craftsman, not on whether it had two separate characteristics, viz, first, that it was produced by a craftsman and, secondly, that it had artistic quality: see also 95B-C. Statements in Cuisenaire at 729 and 730 suggest Pape J was of the same opinion. I have difficulty in accepting what is said in Cuisenaire (at 730 [606] lines 25-30) to the effect that the word “artistic” refers to some quality in the acts performed by the maker in the physical operation of making the article as distinct from “earlier cogitation and thought which produced the idea upon which the work was based”. It must be possible for many works of artistic craftsmanship to come into existence as a result of an artistic design fully realised before any of the skilled work to implement that design is undertaken, even where it is all the work of a single person. Despite what he said in Bonz, at 224, in apparent acceptance of Lord Simon’s view on the point, Tipping J in the passage immediately following considered that a work could be one of artistic craftsmanship even “[i]f two or more people combined to design and make the ultimate product”. He held that the garments there in question were works of artistic craftsmanship because “the designer of the garments can fairly be called an artist and the handknitters can fairly be described as craftsmen”. Once it is accepted, as I think it should be, that “works of artistic craftsmanship” are not confined to handmade objects, there is no reason why it should be essential for such a work to be the product of the efforts of a single person, ie, of an artist-craftsman. It is enough that it satisfies the two criteria of craftsmanship and aesthetic quality. It cannot be contended that the XYZ fabric does not have aesthetic value sufficient to show that it is “of artistic quality”. The way Coogi has used stitch structures and colour to produce an unusual textured and multi-coloured fabric for fashion garments suggests this. The experts, Mr Sonday, Mr Buckingham and Dr Dutton, agree that the fabric has aesthetic quality. Mass production is not inconsistent with the articles so produced each having aesthetic value. Many mass-produced articles, such as nails, screws, etc made as purely functional fasteners, will not be capable of being works of artistic craftsmanship simply because they lack any aesthetic element in themselves (even though their display by Marcel Duchamp might be said by some to transmute them into works of art). But other mass-produced articles (such as the works of Charles and Ray Eames, “American designers best-known for the beauty, comfort, elegance and delicacy of their massproducible furniture”: New Encyclopaedia Britannica, 15th ed, Vol 4, p 317) have real aesthetic quality. Nor do I accept that the only article capable of attracting copyright here, viz, the first production run of the XYZ fabric that was the first piece of fabric that the Coogi design team accepted as realising their design objective, was not also a work of craftsmanship. There is no necessary difference between a skilled person who makes an article with handheld tools and a skilled person who uses those skills to set up and operate a machine which produces an article. Such an article can still be a work of craftsmanship even though the creator has used a highly sophisticated computer-controlled machine to produce it, if nevertheless it is a manifestation of the creator’s skill with computer-controlled machinery, knowledge of materials and pride in workmanship. The expert witnesses, Dr Dutton, Mr Sonday and Mr Buckingham did not suggest the contrary. To hold otherwise would be to import a Luddite philosophy into copyright legislation enacted against a background of modern industrial organisation and intended to regulate rights of value to persons involved in that area of activity … [608] … In my opinion, the first run of the XYZ fabric is a “work of artistic craftsmanship” for the purposes of the Copyright Act, notwithstanding that it was made as, and intended by those involved in its creation 122 [4.370]

Criteria for Subsistence of Copyright

CHAPTER 4

Coogi Australia v Hysport International cont. to be, the first of many identical runs of fabric bearing that design. None of the runs of the fabric subsequent to the first one to bear the XYZ design is, however, capable of being such a work (subject only to the consideration that needs to be given to the significance to its copyright claim of the fact that Coogi produced XYZ design fabric in a limited number of different colourways).

Computer programs as literary works [4.380] Internationally, copyright is the preferred vehicle for protecting the IP in computer

software. The Copyright Act 1968 (Cth) s 10(1) interprets a computer program as “a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result”. The protection of computer programs in Australian copyright law came about following a High Court decision to the effect that computer programs were not literary works (or any other sort of subject matter known to copyright law) and could be copied with impunity: see Computer Edge Pty Ltd v Apple Computer Inc (1986) 65 ALR 33; [1986] HCA 19. In Apple Computer Inc v Computer Edge Pty Ltd (1983) 50 ALR 581, the trial judge held that computer programs in source code and object code were not literary works within the Copyright Act 1968 (Cth) because they did not afford information, pleasure or instruction, but merely drove a machine – that is, controlled the sequence of operations carried out by a computer, without performing those other functions. This was reversed on appeal to the Full Federal Court: Apple Computer Inc v Computer Edge Pty Ltd (1984) 53 ALR 225. On appeal, it was held that the source code was copyright as a literary work and the object code was an adaptation thereof within the Copyright Act 1968 (Cth) s 31(1)(a)(vi) since it could be viewed as a translation. The source code conveyed a meaning to suitably trained people and there is a distinction between the functioning of the machine due to electro-magnetic functions and the computer program itself, which contained instructions for the storage and reproduction of knowledge: Apple Computer Inc v Computer Edge Pty Ltd (1984) 2 IPR 1 at 11. The High Court restored the judgment of the trial judge. The majority held that the object code was not a literary work because, although original, they “were not visible or otherwise perceptible, and they were not, and were not intended to be, capable by themselves of conveying a meaning which could be understood by human beings”: Computer Edge Pty Ltd v Apple Computer Inc (1986) 65 ALR 33 at 39 per Gibbs CJ. Gibbs CJ and Mason, Wilson and Brennan JJ held that Apple source codes were literary works within Copyright Act 1968 (Cth) s 32. The decision led to consternation in the software industry, and in 1984, following a national symposium, computer software was hastily given the status of a “literary work” by amending the legislation. Amongst other changes, the Copyright Amendment Act 1984 (Cth) added to s 10(1) of the Copyright Act 1968 (Cth) the provision that literary work now included: (a) a table, or compilation, expressed in words, figures or symbols; and (b) a computer program or compilation of computer programs

The 1984 definition has achieved unexpected longevity and was subjected to fairly minor amendments as part of the “Digital Agenda” amendments in 2001. Those amendments to the Copyright Act 1968 (Cth) also introduced ss 47AB – 47H, which deal with the issue of [4.380]

123

Intellectual Property: Commentary and Materials

decompilation for the purposes of interoperability. Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1, below, discusses the meaning of “computer program”. However, the case was the subject of submissions to a review committee set up to examine problems arising out of IP law that needed to be addressed in order to enhance the effectiveness of the law for users of the copyright system.

Data Access v Powerflex Services [4.390] Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1 High Court of Australia GLEESON CJ, McHUGH, GUMMOW AND HAYNE JJ: Pursuant to the grant of special leave to appeal, Data [9] Access Corporation (Data Access) appeals to this Court against orders of the Full Court of the Federal Court (Black CJ, Hill and Sundberg JJ) which were based on a holding that copyright as original literary works did not subsist in commands in the Dataflex computer language contained in a computer program developed by Data Access in the US. The Full Court, reversing the judgment of the trial judge, Jenkinson J, held that those commands were not “computer programs” within the meaning of the definition in s 10 of the Copyright Act 1968 (Cth) (the Act) and were not entitled to protection under that statute. The provisions of the Act apply to the proceedings because, although Dataflex appears first to have been published in the US, the international arrangements implemented by s 184(1)(a) of the Act and by reg 4(1) of the Copyright (International Protection) Regulations (Cth) treat Dataflex as if it had been first published in Australia. … [12] … The Dataflex system Development of the Dataflex application development system commenced in 1979, and it was first published in 1981. Dataflex has been the subject of 18 revisions since that time, is well known, and has achieved a significant share of the market for programs of its kind. It is a system which allows a programmer or developer to develop customised database applications or databases. … Mr Cory Casanave, Executive Vice-President of Data Access, gave evidence as to the nature of the language used in computer programs. He said: A computer language defines the names of each word in the language and the rules governing the use of each word (syntax). Each word in a computer language is an instruction to the computer to invoke lower level processes, the word chosen to invoke those processes is generally chosen to suggest the nature of the process that will be invoked. A computer language is comprised of a set of reserved words which are used in accordance with the rules of syntax governing their use. A computer language syntax, like the syntax of a human [13] language, comprises the rules by which the words can be combined to form statements which are correct for the language. For each command or function there is a specific syntax which describes how arguments may be applied to the command. Arguments can be likened to a noun phrase, they describe what the command will act on. Various documents also refer to “functions” as well as commands. Functions are a type of command which perform a computation and return a result. Two hundred and fifty-four words of the Dataflex language are listed in the Dataflex encyclopedia. However, 29 of those words, which express commands for developing graphics, are not used at all in the PFXplus language. Of the other 225, 192 are used in the PFXplus language in a way which eventually causes the computer to perform the same function as those words perform in the Dataflex language. At first instance, the reasons of Jenkinson J suggest that he considered that copyright subsisted in each of these 192 common words and that the use of them in PFXplus infringed Data Access’ copyright in them. However, the orders made by his Honour restrain the use of only 169 of the 124 [4.390]

Criteria for Subsistence of Copyright

CHAPTER 4

Data Access v Powerflex Services cont. common words, three of which are “Macros”. It may be that, after judgment but before the orders were made, Data Access conceded that the remaining 23 words (which include words such as “SHOW” and “ENTRY”) were not protected by copyright. Perhaps a concession was made during argument and, in a complex case, overlooked when the reasons for judgment were being prepared. But whatever the reason for not dealing with these 23 words, the issue of copyright in this Court is confined to the 169 words the subject of the order made by his Honour. We will deal with the three “Macros” separately from the remaining 166 common words which can conveniently be called the “Reserved Words”. Of these Reserved Words, at least 55 are unique to the Dataflex program. But many are ordinary English words–such as “BOX”, “CHART”, and “RETAIN”. Others are a combination of two English words such as “PAGEBREAK”. Some are not only common English words but are used in most, if not all, computer programs. Examples are “DIRECTORY” and “SAVE”. The issues The only allegations of copyright infringement that are now in issue are the claims that by publishing PFXplus the respondents have infringed the copyright which Data Access has in: A.

The Reserved Words.

B.

The Macros.

C.

The Dataflex Huffman compression table, to which reference will later be made.

A. The Reserved Words … 1. Is each of the Reserved Words a “computer program” within the meaning of s 10(1) of the Act? The appellant contends that each of the Reserved Words is itself a “computer program” within the meaning of the definition in s 10(1) [15] of the Act. In order to determine the validity of the appellant’s submissions, it is convenient to divide the definition of “computer program” into its component parts. The definition of “computer program” requires that each Reserved Word be: (i)

“an expression”;

(ii)

“in any language, code or notation”;

(iii) (iv)

“of a set of instructions (whether with or without related information)”; “intended, either directly or after either or both of the following”: (a) conversion to another language, code or notation; (b) reproduction in a different material form; to cause;

(v)

“a device having digital information processing capabilities to perform a particular function.”

Each of the first four of these elements qualifies what follows and the scope of the definition is marked out by the requirement of an intention that the device be caused “to perform a particular function”. In form, the definition of a computer program seems to have more in common with the subject matter of a patent than a copyright. Inventions when formulated as a manner of new manufacture traditionally fell within the province of patent law, with the scope of the monopoly protection being fixed by the terms of a public document, the patent specification. In Australia claims to computer programs which are novel, not obvious and otherwise satisfy the Patents Act 1990 (Cth) and which have the effect of controlling computers to operate in a particular way, have been held to be proper subject matter for letters patent, as “achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour”, within the meaning of National Research Development Corporation v Commissioner of Patents. [4.390]

125

Intellectual Property: Commentary and Materials

Data Access v Powerflex Services cont. The amendment of the definition of “literary work” in s 10(1) of the Act to include as item (b) “a computer program or compilation of computer programs” obviously marked a significant departure from what previously had been the understanding of what was required for subsistence of copyright in an original literary work. It is true that copyright may subsist in a literary work which is related to the exercise of mechanical functions. A set of written instructions for the assembly and operation of a domestic appliance is an example. However, it is not to the point in copyright law that, if followed, the instructions do not cause the appliance to function. The protection of the function performed by the appliance will be for the patent law, including the law as to inutility. This is what was indicated by Bradley J in a passage in Baker v Selden which was repeated by Brennan J in Computer Edge. Bradley J said that no one would contend that the exclusive right to the manner of manufacture [16] described in a treatise would be given by the subsistence of copyright in that work, and continued: The copyright of the book, if not pirated from other works, would be valid without regard to the novelty, or want of novelty, of its subject-matter. … To give to the author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been officially made, would be a surprise and a fraud upon the public. That is the province of letters-patent, not of copyright. Further, the requirement in copyright law that a work be “original” is to be distinguished from the requirements that an alleged invention be novel and that it not be obvious. The question for copyright law is whether “the work emanates from the person claiming to be its author, in the sense that he has originated it or brought it into existence and has not copied it from another”. If so, the work does not lack originality because of the anterior independent work of another, although, in such circumstances, an invention might lack novelty. Finally, to say that the copyright law does not protect function and extends only to the expression of systems or methods does not deny that a work may serve utilitarian rather than aesthetic ends. A map and a recipe book are obvious examples. There is, with respect, some oversimplification of these principles in the following statement by Dawson J in Autodesk Inc v Dyason (Autodesk No 1): [W]hen the expression of an idea is inseparable from its function, it forms part of the idea and is not entitled to the protection of copyright. The 1984 amendment departed from traditional principles by identifying for copyright purposes a species of literary work, the very subsistence of which requires an expression of a set of instructions intended to cause a device to perform a particular function. The difficulties which arise from accommodating computer technology protection to principles of copyright law have been remarked upon but the Act now expressly requires such an accommodation. … [17] … In our opinion, none of the Reserved Words satisfies the statutory definition. Each Reserved Word is undoubtedly in “code or notation” – the Dataflex language. It follows that whether a Reserved Word is a “computer program” within the meaning of the definition depends on whether it is an “expression … of a set of instructions … intended … to cause a device having digital information processing capabilities to perform a particular function”. However, each of the Reserved Words is a single word; none is a set of instructions in the Dataflex language. Further, none of the Reserved Words intends to express, directly or indirectly, an algorithmic or logical relationship between the function desired to be performed and the physical capabilities of the “device having digital information processing capabilities”. Two competing interpretations of “computer program” … [24] … 126 [4.390]

Criteria for Subsistence of Copyright

CHAPTER 4

Data Access v Powerflex Services cont. The meaning of the phrase “expression … of a set of instructions” was referred to in the Explanatory Memorandum to the Copyright Amendment Bill 1984: The phrase “expression … of a set of instructions” is intended to make clear that it is not an abstract idea, algorithm or mathematical principle which is protected but rather a particular expression of that abstraction. The word “set” indicates that the instructions are related to one another rather than being a mere collection. It is the particular selection, ordering, combination and arrangement of instructions within a computer program which provide its expression. A computer program in a particular language may be relatively inefficient because it uses many instructions to achieve the function that a single instruction could achieve. A computer program in a particular language may also operate relatively inefficiently because of the way it is structured, in terms of the ordering of the instructions and the sequence in which they are executed. Considerations of efficiency are largely a function of the particular language which is used. It is the skill of the programmer in a particular language which determines the expression of the program in that language. … [26] … In our opinion, whether what is claimed to be a “computer program” is an “expression … of a set of instructions … intended … to cause a device having digital information processing capabilities to perform a particular function” must be answered separately for each language in which the item in question is said to be a computer program. Moreover, something is not a “computer program” within the meaning of the definition in s 10(1) unless it intends to express, either directly or indirectly, an algorithmic or logical relationship between the function desired to be performed and the physical capabilities of the “device having digital information processing capabilities”. Thus, in the sense employed by the definition, a program in object code causes a device to perform a particular function “directly” when executed. A program in source code does so “after … conversion to another language, code or notation”. Some support, by way of analogy, may be derived from considering the position in the US. In Baystate Technologies Inc v Bentley Systems Inc, it was held that whilst the computer program comprising “CADKEY” was protected, the particular “data structures” [27] with which the case was concerned “[did] not bring about any result on their own”, so that they were protected, if at all, only as part of the whole computer program. This was because, as was later expressed in the judgment: “a computer cannot read data structures and perform any function”. Once these principles are applied to each Reserved Word in the Dataflex language, it is clear that they are not “computer programs”. Each Reserved Word comprises but a single instruction in that language. Each Reserved Word, considered alone, is not a “set of instructions” in that language. It is not a “computer program” expressed in the Dataflex language. Meaning and syntax There remains to be addressed the further argument of the appellant that the relevant set of instructions at the level of the Dataflex language is the “meaning and syntax of the word or command in question”. In response to questions from members of this Court during the argument of the appeal, counsel for the appellant was asked on a number of occasions to identify the relevant “set of instructions”. His answer was that it was the “meaning and syntax of the word or command in question”. However, the function which will be executed by a particular Reserved Word depends entirely on the source code underlying the Reserved Word. Thus, its “meaning” depends on the source code underlying it. This is also the case with the “syntax”. There are, of course, grammatical and syntactical rules for the use of the Reserved Words. These rules would be written in the source code underlying the Dataflex commands. Equivalent rules would be written in the source code underlying the PFXplus [4.390]

127

Intellectual Property: Commentary and Materials

Data Access v Powerflex Services cont. commands. The meaning of the Reserved Words, and the grammatical and syntactical rules for their use, are not an “expression” until they are reduced to the underlying source code. However, the appellant does not, and could not, contend that Dr Bennett’s source code expression of the meaning of commands or of the grammatical and syntactical rules in PFXplus is a reproduction of the source code expression of those meanings or rules in the Dataflex language. There was a finding that the source code of PFXplus was dissimilar to the source code of Dataflex. … [29] … 2. Is the collocation of the Reserved Words a computer program? Furthermore, the collocation of the Reserved Words is not a “computer program”. Although the Reserved Words together form “an expression … of a set of instructions”, their simple listing together, without more, does not cause a computer to perform any identifiable function. There is no interrelationship of the instructions with one another which is an expression of a logical or algorithmic relationship between an identifiable function and the physical capabilities of the computer via the medium of the Dataflex language. It is no answer that there is a set of instructions with a single identifiable function in that it provides a programmer with the vocabulary to enable him or her to program in the Dataflex language. As in the case of each individual Reserved Word, this is a function which the author of the Reserved Words intended them to perform in relation to the user, not in relation to the computer. As we have indicated, the definition of a “computer program” requires that the set of instructions be intended to cause the computer to perform a particular function. … 4. Does copyright subsist in the table or compilation of the Reserved Words in the Dataflex User’s Guide? The Reserved Words are contained in the Dataflex User’s Guide. The appellant did not submit that any of the Reserved Words [35] themselves were traditional literary works protected by copyright, no doubt because they would face significant hurdles in the form of originality and substantiality. Given that the Reserved Words are arranged in alphabetical order in the Dataflex User’s Guide, very little skill or labour was involved in compiling the Reserved Words in the form in which they appear in the User’s Guide over and above the sum of the skill and labour involved in devising each individual Reserved Word. As the Full Court said: This is not a case where disconnected words are used in a particular order so that the order becomes the linchpin for copyright. Furthermore, as we have already said, each of the Reserved Words is suggestive of the function it performs. In many cases, it is an ordinary English word, or a concatenation of two or more ordinary English words. Even if the skill and labour involved in devising each individual Reserved Word is combined and consideration given to the total skill and labour, there may still be a real question as to whether there is sufficient originality for copyright to subsist in the combination. This is so even allowing for the inclusion in the definition of para (b) of “literary work” of a “compilation of computer programs”. The totality of the Reserved Words cannot be protected as a “compilation” within the definition because it requires a “compilation of computer programs” and the Reserved Words are not themselves programs. This does not necessarily preclude them together from protection as constituting a single program, but the set of instructions said to constitute such a program would still require identification. For the reasons leading to the conclusion that each of the Reserved Words does not constitute programs, a collection thereof does not constitute a program. The English letters which make them up are never at any stage executed by the computer. They are not instructions. They never cause a computer to perform a function. Their totality might be considered a “set”, but of labels or data, rather than of instructions as required by the definition. 128 [4.390]

Criteria for Subsistence of Copyright

CHAPTER 4

Data Access v Powerflex Services cont. In any event, even if copyright does subsist in the table or compilation of the Reserved Words, we do not think that the respondents have infringed this copyright. The Reserved Words appear in the PFXplus source code program not as an alphabetical list, but as literal strings to which certain commands are assigned. [36] B. The Macros The appellant also contends that copyright subsists in what are referred to as “Macros”. It contends that each of these commands is a “computer program” within the statutory definition and that Dr Bennett made an adaptation of the Dataflex Macro commands. Consequently, it submits that Dr Bennett infringed the appellant’s copyright in them. Three particular commands in the Dataflex language, “REPORT”, “ENTERGROUP” and “ENTER”, are described as “Macros” because they cause the performance of a more complex function than any of the other Reserved Words. Executing a Macro command causes a sequence of other functions to be executed, so that the overall effect of performing a more complex function is achieved. Are the macros computer programs in Dataflex? It follows from the nature of a “computer program” as defined in s 10(1) of the Act that the words assigned to the Macros, comprising as they do one instruction in the Dataflex language, cannot qualify as a “computer program”. However, the underlying source code of each Macro may qualify as a “computer program”. In practice, the source code underlying each Macro is a small fragment of the source code of the overall Dataflex computer program (the relevant portion was said by the Full Court of the Federal Court to be some 229 lines). The Full Court said that the question of whether a component part of a computer program is itself a computer program for the purposes of the Act is a question of fact. However, the Full Court went on to say that “[i]f a particular set of instructions is functionally separate from the entirety of the program, then … there is no difficulty in treating that set of instructions as being a literary work separate from the balance of the program”. Although it did not expressly say so, the Full Court must have considered that the particular set of instructions comprising each Macro was not functionally separate from the remainder of the Dataflex compiler program. This is because it said that “the relevant program to be considered here would not be that small fragment of program which causes the macro command to perform its function (some 229 lines), but the Dataflex compiler program itself”. … [37] … Reproduction or adaptation of the macros? The learned trial judge found strong objective similarity between the underlying source code of the PFXplus Macros and the underlying source code of the Dataflex Macros. Jenkinson J did not find that Dr Bennett had reproduced the Dataflex Macros, but instead found that Dr Bennett had “made an adaptation of the expression in I-Code of each of the three sets of instructions”. The finding of no reproduction was not challenged; the appellant contended that there was an adaptation. The meaning of “adaptation” in relation to computer programs, as set out in s 10(1) of the Act, is “a version of the work (whether or not in the language, code or notation in which the work was originally expressed) not being a reproduction of the work”. In examining the meaning of the word “version”, the Full Court referred to the meanings of the word “version” given by the Macquarie Dictionary: “2. a translation. 3. a particular form or variant of anything”. The Full Court also quoted the following passages from the Explanatory Memorandum: 11. Copyright in literary works includes exclusive rights to reproduce or adapt such works and computer programs will be treated as literary works. However, the present definition of adaptation in relation to literary works only includes translation, conversion between dramatic and non-dramatic forms, and [38] conversion to a pictorial form. [4.390]

129

Intellectual Property: Commentary and Materials

Data Access v Powerflex Services cont. 12. Of these, only translation is likely to be relevant to adaptation of programs and there are legal doubts as to whether this refers only to translations between human languages. 13. The new definition is intended to cover translation either way between the various so-called “high-level programming languages” in which the programs may be written by humans (often called “source code”) and languages, codes or notations which actually control computer operations (often called “machine code” or “object code”). Thus “adaptation” is intended, for example, to cover the compilation of a FORTRAN program to produce machine code which will directly control the operation of a computer. Languages, etc of intermediate level would also be covered. 14. It is also possible for a program to be converted from object code into source code, or between different languages of similar level. In some circumstances this process will result largely in a substantial reproduction of the original program. In other cases, however, such as compilation followed by de-compilation, the differences may be so substantial that one cannot speak of a reproduction although the final product is clearly derived from the original. The new definition of adaptation is intended to cover such situations. The Full Court said: The evidence is clear that while Dr D Bennett carefully studied the Dataflex program so as to ensure that the PFXplus commands in question performed the same functions as the Dataflex commands, the expression of the source program as written by him was an original expression, albeit having much which was objectively similar to the expression of the source code in the Dataflex program. But it is clear that the process involved no translation from one form or language to another, nor did it involve the kind of process referred to in para 14 of the Explanatory Memorandum involving compilation followed by decompilation, or vice versa. In our view, a process of devising a source code to perform the same function as is performed in some other source code expressed in original language does not involve creating a version of the original source code. Thus, the Full Court was of the opinion that there needed to be “translation from one form or language to another”, or, alternatively, “the kind of process referred to in para 14 of the Explanatory Memorandum involving compilation followed by decompilation, or vice versa” in order for there to be a “version” within the meaning of the statute. [39] … Paragraph 12 of the Explanatory Memorandum states that “only translation is likely to be relevant to adaptation of programs”. This indicates that Parliament did not intend the word “version” to cover situations where, although the functionality of a computer program was copied, original code has been written to perform that function. The focus on translation indicates that Parliament was concerned to ensure that the different languages in which a computer program may be expressed did not provide a means by which copying could occur and infringement be avoided on the ground that the expression in the new language was not a “reproduction”. The use of the words “derived from the original” in para 14 of the Explanatory Memorandum also indicates that the focus is on copying. In accordance with the fundamental principle that copyright protects expression and not ideas, this must relate to the copying of the code (the “expression … of a set of instructions”), rather than a copying of the idea or function underlying the code. There was no adaptation of the Macros. C. The Dataflex Huffman Compression Table The respondents seek special leave to cross-appeal against the Full Court’s finding that they infringed the copyright which the appellant held in the Huffman compression table embedded in the Dataflex program. 130 [4.390]

Criteria for Subsistence of Copyright

CHAPTER 4

Data Access v Powerflex Services cont. Usually, in storing data, all of the 256 characters which a computer recognises are stored in memory as bit strings which are eight bits in length. Huffman compression is a method of reducing the amount of memory space consumed by data files. It stores characters in a data file as bit strings which have a length which relates to the character’s frequency of occurrence in the data file. If a character occurs frequently in the data file, it is stored as a bit string of shorter length than a character which occurs infrequently in a data file. … The Huffman algorithm, when expressed in source code, analyses a data file to determine the relative frequency of the occurrence of characters, and then assigns a bit string of appropriate length to each character, depending on its frequency of occurrence. There is no allegation in this case that Dr Bennett copied the source code of the Huffman algorithm from the Dataflex program. Dr Bennett states that he obtained “freely distributable” source code for this purpose. … The definition of “literary work” in the Act includes: a table, or compilation, expressed in words, figures or symbols (whether or not in a visible form). The Explanatory Memorandum to the Copyright Amendment Bill 1984 stated: By removing the requirement that tables or compilations be in a visible form it is made clear that a computerised data bank, for example, may be treated as a compilation being a literary work. It is also important because data is often stored in a computer as a table. These changes are consistent with the definition of material form. In our opinion, the Dataflex Huffman table is a table expressed in figures and symbols, and falls squarely within the statutory definition of a “literary work”. The reference in the Explanatory Memorandum to “data … stored in a computer as a table” clearly describes the Dataflex Huffman table. The Dataflex Huffman table is similar to the look-up table in Widget C which, in Autodesk No 1, Dawson J considered was a “literary work” within the meaning of the above definition. His Honour thought this was so even though no reliance was placed on that point by Autodesk. For copyright to subsist in the standard Dataflex Huffman table, it must be an “original literary … work”. As we have indicated, the requirement that a work be “original” in copyright law is a requirement that “the work emanates from the person claiming to be its author, in the sense that he has originated it or brought it into existence and has not copied it from another”. At first instance, Jenkinson J found that “[t]he use of the Huffman system [42] to produce a compression table requires the employment of substantial skill and judgment and a very great deal of hard work”. The Full Court agreed with this finding. The skill and judgment employed by Dataflex was perhaps more directed to writing the program setting out the Huffman algorithm and applying this program to a representative sample of data than to composing the bit strings in the Huffman table. Nevertheless, the standard Dataflex Huffman table emanates from Dataflex as a result of substantial skill and judgment. That being so, the Full Court was correct in holding that the standard Dataflex Huffman table constituted an original literary work. In addition, in our opinion the Full Court was correct in holding that the process undertaken by Dr Bennett constituted a “reproduction” of the standard Dataflex Huffman table. The fact that Dr Bennett used an ingenious method of determining the bit string assigned to each character does not make the output of such a process any less a “reproduction” than if Dr Bennett had sat down with a print-out of the table and copy-typed it into the PFXplus program. The finding that the respondents infringed the appellant’s copyright in the Huffman table embedded in the Dataflex program may well have considerable practical consequences. Not only may the finding affect the relations between the parties to these proceedings, it may also have wider [4.390]

131

Intellectual Property: Commentary and Materials

Data Access v Powerflex Services cont. ramifications for anyone who seeks to produce a computer program that is compatible with a program produced by others. These are, however, matters that can be resolved only by the legislature reconsidering and, if it thinks it necessary or desirable, rewriting the whole of the provisions that deal with copyright in computer programs.

PART IV COPYRIGHT: SUBJECT MATTER OTHER THAN WORKS [4.400] The Copyright Act 1968 (Cth) Part IV introduces newer subject matter for copyright

protection, essentially in recognition of the broader nature of neighbouring rights. The purpose of these more recent categories is really to protect entrepreneurial investment, rather than authorship or the well recognised expression of creative endeavour inherent in the adjectives “literary, dramatic, musical and artistic”. Part IV protects sound recordings, cinematograph films, television and sound broadcasts, and published editions of works.

Sound recordings [4.410] “Sound recordings”, according to the Copyright Act 1968 (Cth) s 10(1), “means the aggregation of sounds embodied in a record”, while “record” includes (and thus is not limited to) a disc, tape, paper, electronic file or other device in which sounds are embodied. Section 85 protects sound recordings whether embodied in a video tape, cassette tape, DVD or some other form. In the case of a live performance, protection is provided to a sound recording made and recorded at the time of performance, including the actual sounds of the performance. Hence a cover recording made at a different time will not infringe that sound recording (although it may infringe copyright subsisting in the literary and musical works concerned. Protection is not available for sound recordings made prior to the commencement of the Act, although copyright might be claimed in some aspect of the recording, such as the literary work on which it is based. Note that the protection is only for the actual recording itself, and would not prevent “sound alike” or cover versions. Performers have very limited rights in relation to sound recordings made before 1 January 2005. Unless they have reached some agreement on assignment with the owners of the copyright in the sound recordings at the time they make their own recording, performers are not entitled to exercise these rights where this would interfere with the rights of the original copyright owners. Even for recordings made on or after 1 January 2005, performers’ rights are likely to be very limited in practice as a result of a number of the new provisions. In particular, unless the performer reaches an agreement assigning all or part of the future copyright to him or her, a performer will not own a share in the copyright in the sound recording if:

• the performance was in the course of his or her employment; or • the recording was commissioned (eg, a record company engages a production studio to produce a master recording: see Cope Allan (Marrickville) Ltd v Farrow (1984) 3 IPR 567). Note that in respect of sound recordings, amendments to the Copyright Act 1968 (Cth) in January 2005 as a result of the Australia–US Free Trade Agreement give performers the possibility of exercising some rights in relation to authorised recordings. The maker of a recording is the person who owns the first embodiment of that recording which is produced 132 [4.400]

Criteria for Subsistence of Copyright

CHAPTER 4

(Copyright Act 1968 (Cth) s 22(3)). As a result, the first owners of copyright in a sound recording of a performance may include both the performer and the person who owns the recording medium (the master recording).

Cinematographic films [4.420] “Cinematographic film” is defined in Copyright Act 1968 (Cth) s 10(1) as: … the aggregate of the visual images embodied in an article or thing so as to be capable by the use of that article or thing: (a) of being shown as a moving picture; or (b) of being embodied in another article or thing by the use of which it can be so shown; and included the aggregate of the sounds embodied in a sound track associated with such visual images.

It attracts a separate copyright from any underlying copyright in the script, choreography or score: see ss 10(1), 86, 90. This is a relatively narrow type of copyright protection, covering only the film itself: it does not therefore cover copyright infringements of the type which occurred in Zeccola v Universal City Studios Inc (Jaws Case) (1982) 67 FLR 225. Video games involving computer-generated images have been held to be cinematographic films for the purposes of this definition: see Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 145 ALR 21. The difficulty in interpreting provisions that are designed specifically for this “new” subject matter and reconciling them with the traditional principles of protection for works can be seen in Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 37 IPR 462, below, and “The Panel” High Court appeal case in respect of television broadcasts that follows at [4.450].

Galaxy Electronics v Sega Enterprises [4.430] Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 37 IPR 462 Federal Court of Australia WILCOX J: [469] … I agree with Burchett J [trial judge] that it would be wrong to interpret narrowly the definition of “cinematograph film” in s 10 and s 24. These provisions were intended to cover new technologies, the emphasis being on the end product – motion pictures – rather than the means adopted to create those pictures. Nonetheless, the definition will apply to any particular new technology only if that technology satisfies the words of the definition, liberally read. [470] … The definition of “cinematograph film” refers to “the aggregate of the visual images embodied in an article or thing”. Section 24 sets out circumstances under which “visual images shall be taken to have been embodied in an article or thing”. I also agree that the word “embodied” refers to the giving of a material or discernible form to an abstract principle or concept. The Lord Chancellor’s “Iolanthe” song neatly illustrates this meaning. According to his Lordship, the abstract concept of excellence achieves material manifestation in the Law; and the Law, in turn, is manifested in his noble person. It seems inherent in both the dictionary definition and the “Iolanthe” illustration that the abstraction must pre-exist the material manifestation. Counsel for the appellants argue that the images visible to players of the games do not exist before the moment of visibility; accordingly, it cannot be said that they represent an embodiment of pre-existing images. Counsel make the point that computer-generated images are fundamentally different to film or video images; in the latter case the images are fixed on celluloid or videotape before the moment of projection and viewing. This analysis is superficially attractive; but, I think, unsound. The visual images depicted in these video games did exist before the game was played. They existed in the minds of their creators and the [4.430]

133

Intellectual Property: Commentary and Materials

Galaxy Electronics v Sega Enterprises cont. drawings and models they made. The images were embodied in the computer program built into the video game machine so as to be capable, by the use of that program, of being shown as a moving picture. It does not matter that they were embodied in a different form; that is, three-dimension vertices of the polygon model, rather than a two-dimensional image. The statutory definition says nothing about the form of embodiment. Nor does it matter that the images seen by players are created by computer calculations only immediately before their appearance on the screen of the video game machine. Although that means, in a sense, that they are new, they are exact recreations of images previously devised by the graphic designers. Similarly, of course, it is unimportant that the images could not be seen on the screen as a moving picture until generated by the computer, any more than it matters that a length of video tape is incapable of being seen as a moving picture until passed through a video player. … Upon analysis, the present case seems to fall directly within the terms of the s 10 definition of “cinematograph film”, without the necessity of resorting to s 24. However, that section puts the matter beyond doubt. The visual images that constitute the moving picture are taken to have been “embodied” in the computer program because the computer program was so treated in relation to those images as to be capable of reproducing them. Counsel for the appellants argue it is not enough that a particular article was capable of producing particular sounds or visual images. If capability is the test, they say, every piano would have to be held a “sound recording” of Beethoven’s “Moonlight Sonata”. Every piano is capable of producing the notes that constitute that work. Counsel have in mind that the term “sound recording” is defined by s 10 as meaning “the aggregate of the sounds embodied in a record” and a “record” includes any “device in which sounds are embodied”. … [472] … I accept capability is not enough. It is important to note the requirement of s 24 that the article or thing “has been so treated in relation to those sounds or visual images” that they are capable of being reproduced from the article or thing. There must have been a treatment of the article or thing that is related to specific sounds or visual images. This can be said of a computer program, not of a piano. It is necessary to include a keyboard in a piano, if it is to be capable of reproducing the notes that constitute the “Moonlight Sonata”. But the inclusion of a keyboard is not something done “in relation to” those particular sounds; it is done in relation to piano music generally. I think Burchett J was correct in holding that the aggregate of the visual images generated by the playing of each of the two subject video games constituted a “cinematograph film” within the meaning of s 10 of the Copyright Act 1968. [Lockhart and Lindgren JJ concurred.]

Sound and television broadcasts [4.440] “Television broadcast” and “sound broadcast” are, again, a separate copyright: see

their definitions in s 10(1), and also in Copyright Act 1968 (Cth) ss 87 and 91. Broadcasts made before the 1968 Act are not protected by copyright law. Before the Copyright Amendment (Digital Agenda) Act 2000 (Cth), the definition of broadcasting included broadcasting to the public at large. There were, therefore, considerable difficulties with copyright for pay television (eg, Sky Channel), since those broadcasts were arguably only transmitted to a narrow range of subscribers and hence not to the public at large. There is now no distinction between free-to-air and cable services. Note that in Network Ten Pty Ltd v TCN 134

[4.440]

Criteria for Subsistence of Copyright

CHAPTER 4

Channel Nine Pty Ltd (The Panel Case) (2004) 59 IPR 1 below, the decision of the Full Federal Court decision was overturned by the High Court on appeal. The Panel High Court decision

Network Ten v TCN Channel Nine [4.450] Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (“The Panel” Case) (2004) 59 IPR 1 High Court of Australia McHUGH ACJ, GUMMOW AND HAYNE JJ: [3] … Nine seeks to uphold the Full Court decision in its favour that each visual image capable of being observed as a separate image on a television screen and accompanying sounds is “a television broadcast” in which copyright subsists. The gist of Ten’s complaint is that the term “a television broadcast” as it appears in the Act was misread by the Full Court, with the result that the content of that expression is so reduced that questions of substantiality have no practical operation and the ambit of the copyright monopoly is expanded beyond the interests the legislation seeks to protect. Ten’s submissions should be accepted and the appeal allowed. … [4] … The context in which the broadcasting right was introduced, including well-established principles of copyright law, the inconvenience and improbability of the result obtained in the Full Court, and a close consideration of the text of various provisions of the Act relating to the broadcasting right, combine to constrain the construction given to the Act by the Full Court and to indicate that the appeal to this Court should be allowed. … [6] … The legislative context In 1968, at the time of the enactment of the Act, the predecessor of the Broadcasting Act, the Broadcasting and Television Act 1942 (Cth) (“the 1942 Act”), was in force. As it stood in 1968, s 99(1) of the 1942 Act required the holder of a commercial television station licence to “provide programmes … in accordance with standards determined by the [Australian Broadcasting Control] Board”. With respect to what was then the Australian Broadcasting Commission, s 59 of the 1942 Act required the Commission to “provide, and … broadcast or televise from transmitting stations made available by the Postmaster-General, adequate and comprehensive programmes”. Section 121 of [7] the 1942 Act prohibited the broadcasting of programmes of other stations, and s 132 rendered an offence the contravention of any provision of the 1942 Act. The Act was preceded by the Report (“the Spicer Report”) delivered in 1959 of the Committee appointed by the Attorney-General of the Commonwealth to consider what alterations were desirable in the copyright law of the Commonwealth (“the Spicer Committee”). The Spicer Report had said it was significant that neither the Brussels Convention nor the Universal Copyright Convention recognised a copyright in sound broadcasts or television broadcasts (para 285). In the end, the Spicer Report concluded (paras 288, 289) that protection for broadcasters could properly be included in the copyright law with an adaptation of the provision then recently made by s 14 of the UK Act. The introduction by s 14 of the UK Act of the new species of copyright protection followed Recommendation 31 in the Report of the Copyright Committee (“the Gregory Report”) which had been presented in 1952. Recommendation 31 had been: That a broadcasting authority should have the right to prevent the copying of its programmes either by re-broadcasting, or by the making of records for sale and subsequent performance. (Paragraph 117) [4.450]

135

Intellectual Property: Commentary and Materials

Network Ten v TCN Channel Nine cont. Paragraphs 116 and 117 of the Gregory Report state the policy and objectives which were subsequently to find expression in the provisions of the Australian legislation upon which this appeal turns. Accordingly, pars 116 and 117 should be set out in full: 116. We now turn to the question whether a new right should be given to the broadcasting organisations in their own programme, additional to any copyright there may be in the individual items which go to make up those programmes, and we deal at this stage solely with a right to prevent other persons from copying the programme either by way of again broadcasting a programme (in the event of there being more than one broadcasting authority in the future) or by way of recording such programmes for subsequent performance in some other way. 117. On the question of copyright in the ordinary sense, the position of the [British Broadcasting Corporation (the BBC)], as we see it, is not, in principle, very different from that of a gramophone company or a film company. It assembles its own programmes and transmits them at considerable cost and skill. When using copyright material it pays the copyright owner, and it seems to us nothing more than natural justice that it should be given the power to control any subsequent copying of these programmes by any means. It has been represented to us that the absence of such a right [8] has already caused considerable embarrassment to the BBC. Apparently, indifferent reproductions both of sound and television programmes have been made, and sold to the public, to the detriment alike of the [BBC] and of those taking part. We consider that a right should be given to the BBC or any other broadcasting organisation to prevent this happening again. Any right so conferred would be additional to the right of the author or composer to prevent mechanical recording where copyright material is broadcast. It would also extend to prevent the mechanical recording of a broadcast of material which is either non-copyright, or of a nature in which a right to prevent recording may not, under the present law, subsist at all, eg news, talks, music-hall “gags”. [emphasis in original] In Australia, the Spicer Committee stressed the significance of the new head of copyright protection, saying (para 282): The conception of copyright which has hitherto been accepted is one which extends protection against copying and performing in public any work insofar as it is reduced to a permanent form. Copyright has not been extended to confer such protection in relation to a mere spectacle or performance which is transitory of its very nature. In Victoria Park Racing and Recreation Grounds Co Ltd v Taylor, the High Court had rejected the submission that by the expenditure of money the plaintiff had created a spectacle at its racecourse so that it had “a quasi-property in the spectacle which the law would protect” by enjoining the broadcast of a race-meeting there. The issue before the Spicer Committee was a different one, namely the protection of broadcasts themselves. The Spicer Committee added (par 284): It is true that in many cases the broadcast will be recorded on tape or film, in which case the record or film will enjoy its own copyright protection, but the copyright here being considered is one which attaches to the broadcast itself. In the second reading speech on the Bill for the Act, the Attorney-General, Mr N H Bowen QC, said that the matters of records and broadcasts were dealt with in the UK Act and that it was appropriate to deal with them in the Bill. He also referred to the provisions of the Rome Convention which had postdated the UK Act but to which Australia was yet to accede. The Rome Convention also provided for the grant of “neighbouring rights” to various persons including broadcasters. Article 13 of the Rome Convention provided that “[b]roadcasting organisations [were to] enjoy the right to authorise or prohibit”, among other things, “the rebroadcasting of their broadcasts”, “the fixation of their broadcasts” and “the reproduction … of fixations, made without their consent, of their broadcasts”. 136

[4.450]

Criteria for Subsistence of Copyright

CHAPTER 4

Network Ten v TCN Channel Nine cont. [On first Federal Court hearing of the dispute] Conti J noted that the Gregory Report had spoken of the right to prevent the copying of the “programmes” of broadcasting authorities, and the [9] broadcasting systems established by the 1942 Act spoke of the provision of “programmes” broadcast or televised from transmitting stations, and the Spicer Report spoke both of the protection of “broadcasts” and (in par 286) of “the programme received”. The Rome Convention, like the Act, used the term “broadcast”. There was no significant step taken with this shift in language. At this time, the use of “broadcast” as a noun indicated: a Broadcasting as a medium of transmission. b The material, music, or pictures broadcast; also, a single program of such material. The policy and objective in the recommendations of both Committees was to protect the cost to, and the skill of, broadcasters in producing and transmitting their programmes, in addition to what copyrights may have subsisted in underlying works used in those programmes. There is no indication, as Nine would have it, that, with respect to television broadcasting, the interest for which legislative protection was to be provided was that in each and every image discernible by the viewer of such programmes, so as to place broadcasters in a position of advantage over that of other stakeholders in copyright law, such as the owners of cinematograph films or the owners of the copyrights in underlying original works. The television broadcasting right Part III (ss 31-83) of the Act provides for copyright in original literary, dramatic, musical and artistic works. Part IV (ss 84-113) provides for copyright in subject-matter other than works, namely sound recordings, cinematograph films, television broadcasts and sound broadcasts, and published editions of works. Of Pt IV copyrights, it is accurately observed: In general, these subject matters receive a lower level of protection than works, with shorter terms and more restricted exclusive rights. … [10] … There are various points of contact made in the Act between the copyrights conferred by Pt III in respect of original works and the newer forms of copyright provided for in Pt IV … What is significant for present purposes is that the exclusive rights with respect to original literary, dramatic and musical works include the right to broadcast the works (s 31(1)(a)(iv)) whether by way of sound broadcasting or television (s 25(1)), and the exclusive rights with respect to original artistic works include the right to include the works in television broadcasts (s 31(1)(b)(iii)). The result is that a television broadcast may be more than a broadcast of some event or spectacle; it also in some cases may reproduce one or more works in which copyright subsists under Pt III and is vested in a different ownership to that of the broadcast. … [11] … However, for this appeal … what is comprehended by the “subject-matter” of the protection under Pt IV given to “a television broadcast”. That is the phrase used in ss 91, 95, 99 and 101(4). It should be observed that s 101(4) uses the phrase “the visual images and sounds comprised in the broadcast”. Likewise, for the purposes, for example, of fixing the commencement of the 50 year period specified in s 95(1), the television broadcast is treated by s 22(5) as having been made “by the person by whom, at the time when, and from the place from which, the visual images or sounds constituting the broadcast … were broadcast”. The decision which Ten challenges appears to discount the force of that phrase, redolent of plurality and interconnection of images and sounds, by treating as “a television broadcast” that which is capable of being observed as a separate image and (in an unexplained fashion) that capable [sic] of being heard and distinguished as the accompanying sounds (if any). The medium of communication [4.450]

137

Intellectual Property: Commentary and Materials

Network Ten v TCN Channel Nine cont. Where the “subject-matter” of copyright protection is of an incorporeal and transient nature, such as that involved in the technology of broadcasting, it is to be expected that the legislative identification of the monopoly (eg, by s 87) and its infringement (eg, by s 101) of necessity will involve reference to that technology. But that does not mean that the phrase “a television broadcast” comprehends no more than any use, however fleeting, of a medium of communication. Rather, as the Gregory Report indicated, protection was given to that which had the attribute of commercial significance to the broadcaster, identified by the use of the term “a broadcast” in its sense of “a programme”. In the same way, the words, figures and symbols which constitute a “literary work”, such as a novel, are protected not for their intrinsic character as the means of communication to readers but because of what, taken together, they convey to the comprehension of the reader. In fixing upon that which was capable of perception as a separate image upon a television screen and what were said to be accompanying sounds as the subject-matter comprehended by the phrase “a television broadcast”, the Full Court appears to have fixed upon the medium of transmission, not the message conveyed by its use. Because the medium is ephemeral, it is necessary to capture what a television broadcaster transmits if any practical use is to be made of the signal that is broadcast. … [12] … Section 87 of the Act, in pars (a) and (b), identifies the nature of copyright in a television broadcast by reference to two methods by which what is transmitted can be captured and recorded in permanent or semi-permanent form. One method (s 87(a)) is to take a still visual image of what otherwise appears on a television set as part of a continuous visual transmission. In that context it may be sensible to speak of a single visual image that is broadcast. However, it by no means follows that it is sensible to confine the understanding of “a television broadcast” by basing the meaning that is given to the expression upon the capacity to capture and record singular visual images. Especially is that so when it makes little sense to speak of a single “moment” of sound accompanying that image. The instantaneous fixing of single visual images is familiar, but the instantaneous fixing of single sounds is not. When it is further observed that s 87(c), with its reference to re-broadcasting, at least encompasses the capture and simultaneous retransmission of a television broadcaster’s signal, it is apparent that to understand “a television broadcast” as a singular and very small portion of the signal which a broadcaster transmits virtually continuously, and a person receiving is intended to receive continuously, is to give the expression a very artificial meaning. Yet that is what the Full Court did. The reasoning of the Full Court The conclusion of the Full Court with respect to s 87(a) rested largely upon a view taken of the significance of s 25(4). That sub-section treats the reference in s 87(a) to the making of “a cinematograph film” of “a television broadcast” as “including a reference to a cinematograph film … of any of the visual images comprised in the broadcast”. In that regard, Hely J held that “the expression ‘any of the visual images’ encompasses any one or more of those images, without any requirement that the images should amount to a substantial part of the broadcast” … [14] … The outcome of the decision of the Full Court now under appeal is that the interests of broadcasters are placed by the Act in a privileged position above that of the owners of copyright in the literary, dramatic, musical and artistic works which may have been utilised in providing the subject of the images and sounds broadcast. This is because the diminished requirements in respect of infringement of television broadcasts for the taking of a substantial part of the subject-matter facilitate the proof of infringement there while leaving the owners of copyrights under Pt III with a heavier burden. Ten points to this apparent incongruity as favouring a construction of the Act contrary to that adopted by the Full Court. [Their Honours discuss at length, and then reject, the Full Federal Court interpretation of s 87, its relation to s 25(4) and the relevance of substantial part.] 138 [4.450]

Criteria for Subsistence of Copyright

CHAPTER 4

Network Ten v TCN Channel Nine cont. … [19] … What is “a television broadcast”? The definition given in s 10 is “television broadcast”, which is drawn in terms of the technology of broadcasting which is to be utilised. But the phrase in the exclusive right provisions of s 87 (as also in ss 91, 95, 99 and 101(4)) is “a television broadcast” … In the present case, Hely J focused attention not upon the statutory phrase “a television broadcast”, but upon the use of technical language in the definition of “television broadcast”. His Honour concluded: Here the interest protected by the copyright is the visual images broadcast by way of television and any accompanying sounds. It is the actual images and sounds broadcast which constitute the interest protected. The interest protected is not defined in terms of some larger “whole” of which the visual images and sounds broadcast are but a part. The ephemeral nature of a broadcast, and the fact that copyright protection is conferred by reference to a broadcaster’s output, rather than by reference to the originality of what is broadcast, may also help to explain why the interest protected is defined in this way. That identification of the interest sought to be protected by the broadcast copyright should not be accepted. The interest sought to be protected by the conferral of the television broadcast copyright was identified by the Spicer Committee with reference to the experience of the BBC and the Independent Television Authority. The latter was established by the Television Act 1954 (UK) and charged by s 3 to “broadcast … programmes” of a certain standard. … [Their Honours set out the statutory obligations of the broadcasters TCN Ten and Channel Nine to provide free-to-air “programs”, noting that programs are defined under s 6(1) of the Broadcasting Act as:] (a) matter the primary purpose of which is to entertain, to educate or to inform an audience; or (b) advertising or sponsorship matter, whether or not of a commercial kind. … [21] … There can be no absolute precision as to what in any of an infinite possibility of circumstances will constitute “a television broadcast”. However, the programmes which Nine identified in pars 5.1-5.11 of its pleading as the Nine Programs, and which are listed with their dates of broadcast in the reasons of Conti J, answer that description. These broadcasts were put out to the public, the object of the activity of broadcasting, as discrete periods of broadcasting identified and promoted by a title, such as The Today Show, Nightline, Wide World of Sports, and the like, which would attract the attention of the public. However, Conti J was, with respect, correct in adding, with reference to Copinger and Skone James on Copyright, that: Television advertisements should be treated as discrete television broadcasts, particularly since “A television or cinema commercial is typically the product of the creative and administrative work of many separate individuals” … I would reject Ten’s submission that because advertising is the “life blood” of commercial television broadcasting, it is “impossible for [Nine] to avoid the conclusion that these advertisements are part of that program”. His Honour added: Moreover, where a given program divides into segments, it may be legitimate in the facts of a given case to use a segment of a program for measurement of the television broadcast, rather than the whole of the program. [4.450]

139

Intellectual Property: Commentary and Materials

Network Ten v TCN Channel Nine cont. We would reserve consideration of that proposition for a particular case where the point arises. However, the circumstance that a prime time news broadcast includes various segments, items or “stories” does not necessarily render each of these “a television broadcast” in which copyright subsists under s 91 of the Act. … [22] … Conclusions The appeal should be allowed with costs. … [The question as to what constitutes a “substantiality” under s 14(1)(a) of the Copyright Act 1968 (Cth) was sent back to the Full Court for determination. See discussion on “substantial part” at [6.50] and extract at [6.230] TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) (2005) 145 FCR 35. KIRBY J: [dissent] … I agree in the conclusion reached by Callinan J. In my view, the approach adopted by the Full Court was correct. … … [25] … Criticisms of the ambit of copyright protection I reach my conclusion without quite the same enthusiasm as Callinan J appears to feel for it. The opinion of the Full Court has been described as “highly literal”. Perhaps it is; but the language of the Act leaves no scope for another approach. The most telling criticism voiced of the Full Court’s interpretation is that it makes television broadcast copyright “an extraordinarily strong right, easily the strongest of all copyrights in Australia, able to be infringed by taking less than a substantial part of the broadcast”. This, it is said, is counterintuitive given the ephemeral nature of television broadcasts and the original reasons for granting copyright in them. If I were free of the constraints of the language of the Act, I would be happy to agree in the conclusion reached in this Court by McHugh ACJ, Gummow and Hayne JJ, whilst feeling anxiety about the lack of precision as to what, in any of an infinite range of circumstances, will constitute “a television broadcast” on that view. I also have some sympathy for the opinion expressed by Ms de Zwart in a comment upon the Full Court’s opinion in these proceedings: There are … many circumstances in which the public interest lies in permitting the use of a work without the permission of the owner of copyright, with or without payment. The Panel decision provides a good example of circumstances in which a licence would not be granted (between competitors). … It is vital to recognise the public interest element of copyright … Copyright is not solely concerned with economic returns for the owner. Neither was copyright intended to enable owners to exploit all possible uses and derivations of the work. The public domain is an important legacy of copyright law and its existence should also be protected in the face of the growth of digital capture and licensing of works. … The Panel serves as a vehicle for social comment and criticism, albeit in a relaxed, humorous fashion. … Copyright is a social as well as a commercial construct and its role in facilitating new creations as well as protecting existing creations should not be forgotten. (de Zwart, “Seriously entertaining: The Panel and the future of fair dealing” (2003) 8 Media & Arts Law Review 1 at 16-17). [26] … The Act contemplated a form of copyright apt to the particular technology involved in television broadcasting. It therefore provided that copyright would attach to “the visual images comprised in the broadcast”. Those who conceive the Parliament as confining the scope of the new copyright protection for television broadcasts to entire programmes (or defined and undefined sections and segments of a continuous day’s broadcasting) must not watch much television. It is the very power of particular, and often quite limited (even fragmentary) portions of “visual images” on television that makes it such a potent and commercially valuable means of expressing thoughts and ideas: noble and banal, serious and humorous, uplifting and discouraging. 140 [4.450]

Criteria for Subsistence of Copyright

CHAPTER 4

Network Ten v TCN Channel Nine cont. Everyone knows that still images or very brief segments in television broadcasts can constitute commercially valuable commodities, standing alone. The acquisition by a broadcaster of comparatively short filmed sequences will sometimes represent very important and commercially valuable rights that exist without the need of a surrounding context, let alone an extended programme or particular segment of a day’s broadcast. The parties to the present appeal were in commercial competition with each other. That fact is itself also a consideration that generally favours the claim of a copyright owner. … [27] … The proper approach to the meaning of the Act It follows that the Parliament did not envisage the striking of a balance between public and private interests in the Act by the adoption of an unspecified and ultimately undefinable notion of “a television broadcast” in the sense of a “unit of programming”. The Act does not refer to that notion of a “programme” or unit thereof. It might have done so. But it did not. CALLINAN J: [dissent] [39] … The Act falls to be read therefore against the background of these indisputable facts. The parties compete with each other. The production of any programme, indeed each and every frame and segment of it, comes at a cost. It is produced in order to make money by inducing advertisers to pay to have their activities advertised in association with its broadcast one or more times. Further value may arise from the isolation, reproduction and broadcasting of an image or images, with or without sound, from it, and the licensing of it or an isolated image or images from it, whether by and in a photograph, a film or a video film. What is clear in this case is that value did lie in the copying, reproduction and rebroadcasting of segments, albeit generally fairly brief segments, of the respondents’ programmes. That value had two aspects: it enabled the appellant to gain revenue from advertising associated with The Panel; and it relieved the appellant of the cost of buying or producing other matter to occupy the time taken by the rebroadcasting, during The Panel, of the copied and reproduced segments. The intention of Pt IV Div 2 of the Act was, as the Attorney-General said, broadly not only to place television footage on at least the same basis as other original work, particularly moving films, protected by the Act, but as appears from the language used in it, with necessary adaptations to suit the medium and the means available to competitors to exploit it, and in consequence to create new rights. Why should, it is reasonable to ask, the appellant, save to the extent that it deals fairly with any of the respondents’ valuable broadcasted matter, get it and rebroadcast it for its own commercial benefit, for nothing? The question in this case is whether the Act prevents it from doing that. The use by the appellant of excerpts from the respondents’ broadcasts was blatant. And although blatant appropriation of the kind which has occurred here might not be such as to warrant an evangelical fervour in responding to it, in the nakedly commercial context of television broadcasting in Australia, the test of “what is worth copying is prima facie worth protecting” posed by Peterson J in University of London Press Ltd v University Tutorial Press Ltd has much to commend it, and provides at least a reasonable starting point. After all, in recognising the validity of the respondents’ copyright in excerpts from their programmes, the Court would not be denying access to the general public of the golden words of a new Shakespeare. This is a case of blatant commercial exploitation, neither more nor less. It has always been the respondents’ case that the appellant has infringed both ss 87(a) and 87(c) of the Act. The appellant has never denied that it copied by reproducing in full the respondents’ programmes. It has therefore infringed, on any view, s 87(a) of the Act. As to s 87(c) however, the appellant argues that because it did not rebroadcast other than an excerpt from, that is to say, less, indeed much less than, [40] the whole of any of the programmes of the respondents, it did not rebroadcast “a television broadcast” of the respondents. In short the appellant submits that a television broadcast within s 87 of the Act cannot be less than the whole or a [4.450]

141

Intellectual Property: Commentary and Materials

Network Ten v TCN Channel Nine cont. substantial part of a television programme, notwithstanding that the relevant sections do not anywhere use that term, and the Act attempts no definition of it. The appellant’s proposition, it further argues, is correct because otherwise there is no, or little work for s 14 of the Act to do. I am unable to agree. … That the appellant thought a few seconds of the respondents’ broadcast worth rebroadcasting provides some indication of the understanding in the industry of what is sufficient to constitute a broadcast. Hely J was right to hold that “any of the visual images”, the expression used in s 25(4) of the Act, means a visual image, that is something that can be isolated and fixated. The Act was not enacted in a vacuum of awareness as to how the industry operated, or without regard to practicalities. Those practicalities include the certain knowledge that one television licensee would only seek to use what would be of real value to it: it would have no interest, commercial or otherwise, in anything less than something complete enough in itself to be viewed, in short, a broadcast. In that sense the term “broadcast” is almost self-defining. To regard a broadcast differently, as for example, a “programme”, is not only to introduce a concept not reduced to concrete language or even implied anywhere in the Act, but is also to create a deal of uncertainty about its operation. … [41] … Nothing turns, in my opinion, upon any perceived differences between the quality or nature of the copyright afforded by the Act to television broadcasts and other copyright holders. It was and was intended to be a new and unique right. The medium is very different from others. To exploit it, different and perhaps more expansive infrastructures, fees, techniques and resources are required. The industry is, and has always been in this country, a highly competitive, and, as this case shows, a highly commercialised one. There may have been good reason for the legislature to single it out for special treatment. It is for the Court to give effect to the language of the Act and not to speculate about that. I would dismiss the appeal with costs.

Published editions of works [4.460] “Published editions of works” is a special category under Copyright Act 1968 (Cth)

ss 88 and 92 to protect publishers who make beautiful “special editions” of works (particularly those on which copyright has expired). In the case of works or editions of works, s 29(1)(e) deems “publication” to have occurred if reproductions of a work or edition have been supplied (whether by sale or otherwise) to the public. While “the public” may be very small, even if it consists of only one or two people, it must not be limited to particular classes of people. Thus underground circulation of a politically sensitive work is not publication.

Adaptation of works [4.470] The idea–expression dichotomy implies that certain kinds of uses of another’s work are permissible as long as the forms of expression of the two works remain different. However, free access to a copyright work needs to be qualified in view of the exclusive right under the Copyright Act 1968 (Cth) s 31(1)(a)(vi) to “make an adaptation” of a literary, dramatic and musical work. Note there is no adaptation right for artistic works, or in relation to other copyright subject matter. 142 [4.460]

Criteria for Subsistence of Copyright

CHAPTER 4

Section 10 defines the meaning of adaptation. In relation to literary works, the adaptation right includes an exclusive right to make dramatised versions of non-dramatic forms of literary works. For example, Peter Benchley, as author of the novel (literary work) Jaws, has an exclusive right to adapt it into the form of a film script (dramatic work) Jaws. The adaptation right also includes the reverse situation of making non-dramatic versions of a dramatic form of a literary work. There is also a right to make a version of a work where the story is conveyed solely or principally in pictures, such as in a printed format. Translating a work is also included as part of the “adaptation” right for literary works, (whether or not the work is in dramatic or non-dramatic form). The adaptation right in relation to musical works is a right to make an arrangement or transcription of the work. With respect to computer programs, “adaptation” means a right to make a version of a work, whether or not in the same language, code or expression as the original program. Thus, with literary works expressed as computer programs, an infringement may occur through reproducing the computer program and through making a different version of it, and in both instances the literary expression of an infringing computer work may differ from that of the original computer program. This has led to ongoing confusion over defining the role of the idea–expression dichotomy in relation to computer programs. Adaptation of a computer program

Coogi Australia v Hysport International [4.480] Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154; 41 IPR 593 Federal Court of Australia [See [4.370] for the facts of this case.] DRUMMOND J: … [620] … Do the Hysport programs infringe Coogi’s copyright in its XYZ program? Hysport’s major answer to the charge of infringement of copyright in the Coogi XYZ computer program, however, is that there is no objective similarity between the XYZ and the Hysport programs so Coogi cannot prove an essential element of its infringement claim. Alternatively, it was submitted that if there is such similarity between them, as Professor Goldschlager asserts, and which is revealed by his manipulation of the XYZ program in order to compare it with the Hysport programs, that must be the consequence of such form of expression as is common to both being entirely determined by function. That is, if there is any objective similarity between the forms of expression that constitute the two programs at a particular level of programming language, that is a consequence of it being impossible to write the instructions comprising a program to cause any computer-controlled knitting machine to knit fabric to the XYZ design in any other form because that particular form of expression is wholly dictated by that particular function. … [621] … Despite the criticisms that have been made of the accuracy of the proposition, it is settled law in Australia that copyright protects not the underlying idea, but only the form of expression of the idea. See Autodesk (No 1) at 344-345 and Powerflex Services at 450. It is also the law in Australia that merely because one program performs the same function as another, that is insufficient to make the one an infringement of copyright in the other: Autodesk (No 1) at 344; Autodesk (No 2) at 304 and Powerflex Services at 455. Consistently with this, a computer program can only be an “adaptation” of another when it is “a version of the work”, ie, a version of the particular form of expression of that other in which alone copyright can subsist, and not merely an expression of the idea or function of that other program. [4.480]

143

Intellectual Property: Commentary and Materials

Coogi Australia v Hysport International cont. In Powerflex Services, the Full Court placed a precise and limiting gloss on the statutory definition, holding, at 454, that, while the word “version” in the statutory definition of “adaptation” is used in its ordinary English sense, the legislature intended that it should bear one particular meaning of those which it has in ordinary speech, viz, a translation; at 457 it repeated that “the word ‘adaptation’, as used in s 10, means ‘translation’”. In ordinary usage, the term “version” is applicable to a wider range of renderings of the original literary work than is the term “translation”: a version can apply to as literal as possible a [622] rendering of the original in another language, as well as to a work in the same or another language that is only recognisable as related to the original because that is the identifiable source of the theme of the version. The term “translation” has a much narrower reach. In ordinary speech, Piave’s libretto in Italian for Verdi’s opera “Macbeth” could fairly be called a version of Shakespeare’s play; it could not, however, be properly described as a translation of the English original. … [624] … Translation, as that term is ordinarily used, connotes more than conveying in a different language the same ideas expressed in another language. It describes a closer connection between the original and the translated text than that. I do not think an activity could be described in ordinary speech as a translation unless it involves the expenditure of effort on the original words or text to render them into words or text in a different language that conveys with precision the same meaning as that conveyed by the original. A person can probably be said to make a translation, in the ordinary meaning of that term, indirectly, eg, by translating into English from a French rendering of the original German text. But there can be no translation without the expenditure of effort, directly or indirectly, on the original text. Further, translation into a second language of instructions for achieving a result expressed in another language involves more than describing in the second language some method for achieving that same result: to be a translation, as that term is ordinarily used, of the original instructions, the new text would have to describe the particular sequence of steps for achieving the result that are expressed in the original text. Assume A writes in German a set of instructions for the making of a device, eg, a clock, and that someone uses those instructions to make a clock. B does not make a translation of A’s original instructions by taking the clock, breaking it down into its parts and then writing his own set of instructions in English for reproducing the clock. The reason is that he has not produced his manual of instructions in English by working directly or indirectly (via a translation of the original in a third language) from the original text in German. It is, I think, in this narrow sense which the word “translation” has in ordinary speech that the Full Court in Powerflex Services considered that the definition of “adaptation” applicable to computer programs should be understood. One computer program will therefore be an unauthorised “adaptation” of another firstly, only if the whole or a substantial part of the particular form of expression of the program in which copyright is claimed appears in the allegedly infringing program in a different computer language, either at the same language level or at a different language level and, secondly, only if the allegedly infringing program has been produced by direct or indirect use, in the sense described, of the copyright program. It is a meaning of “adaptation” that is supported by paras 13 and 14 of the Explanatory Memorandum and one which preserves, so far as concerns copyright in computer programs, the function/expression dichotomy that is currently entrenched in Australian copyright law. … [625] … I consider that a computer program will be an infringing “adaptation”, ie, translation, of an original program only if the Court can be convinced that, although the two programs are quite different so far as their forms of expression are concerned, use has been made of the original not just to identify the idea of the original or the function it performs, but as an aid to devising the descriptions of the activities (and any accompanying data) which together comprise the allegedly infringing program. Unless the expression “objective similarity” as used in copyright infringement law is to be given a new, 144 [4.480]

Criteria for Subsistence of Copyright

CHAPTER 4

Coogi Australia v Hysport International cont. highly artificial and technical meaning, instead of the ordinary usage meaning it has hitherto had, so that it will import into infringement law tests like that adopted in the American case, Computer Associates International Inc v Altai Inc (1992) 23 IPR 385 and favoured by the Copyright Law Review Committee Report (Canberra, 1995), para 9.27, it cannot sensibly be employed, in my opinion, in order to determine whether one program is an unauthorised adaptation of another. In my opinion, the F823 program is not an adaptation, in the sense of a translation, of the particular form of expression of instructions that constitutes the Coogi XYZ program. … [626] … I would therefore dismiss Coogi’s claim against all respondents for this reason. … Here, on the view I have taken of the evidence, Shima Seiki, and thus Hysport, never had access to any literary form in which the XYZ computer program was expressed, only to a garment manufactured by running that program in the computer control of a knitting machine. They could never therefore be in a position to make a translation, directly or indirectly, of the XYZ program. Instead, the F823 program and the Hysport programs based on it were the product of the extensive skill and effort of their own which they put into writing those programs. In my opinion, it will never be possible to make out a case that one program constitutes an infringement of another computer program where the purpose of the original is to control the manufacture of an object and the alleged infringer has produced its own computer program to enable it to manufacture a like object by reverse engineering the original object, ie, by analysing it to see how it has been constructed and then by writing its own program to identify the steps that have to be gone through to make the object. I reject Coogi’s submission to the contrary.

DURATION OF COPYRIGHT [4.490] Under the Statute of Anne 1709 (ENG), copyright protection was originally granted

for a term of 14 years – equal to two terms of an apprenticeship. It could be renewed for a further 14 years if the author remained alive. Under pressure from well-connected romantic creators, such as William Wordsworth, who claimed they could not publish in their lifetime as they needed to reserve texts for their family to live off after their deaths, the Literary Copyright Act 1842 (UK) introduced a life-plus term. This allowed copyright protection for life plus seven years, with a maximum of 42 years. Since those times, the duration of protection terms has varied; however the life-plus term model was established as the norm for most original works. The TRIPS Agreement, when it entered into force in 1995, established a virtually universal minimum standard of life of creator plus 50 years in the case of literary and artistic works (except for photographs and works of applied art, which were protected for only 25 years). In the case of performers and producers of phonograms, its declared term of protection was 50 years from date of performance or fixation of the recording. Broadcasts were protected for a period of 20 years from end of the year of broadcast. Until recently Australia generally agreed with the TRIPS Agreement minimum standards, although it extended that standard to include photographs and works of applied art. Where the original work has joint authorship, the relevant date for computation of the protection period is the death of the last surviving author (Copyright Act 1968 (Cth) s 80). The duration of copyright remains tied to the creator’s lifetime, even though ownership may be transferred. [4.490]

145

Intellectual Property: Commentary and Materials

For subject matter other than works, such as film and sound recordings (s 181), and Crown copyright (s 180(1)(b), (3)), protection was originally and generally a term of 50 years from the end of the year of first publication. Unpublished works had indefinite copyright until such time as they are published, at which point the term periods of protection come into effect. The European Union (EU), in 1995, extended the copyright term for its member states to life of the author plus 70 years. This extension does not apply to sound recordings. The change is a consequence of a Directive of the European Commission in 1993 requiring member states to increase their basic term of protection to this standard. Ostensibly, the purpose of the Directive was to harmonise the laws of EU members on the matter of term, as national laws ranged from between life plus 50 years (the minimum Berne Convention requirement), life plus 60 years (Spain) and life plus 70 years (Germany). The United States also extended the term of copyright protection in line with the European move with the passing of the Sonny Bono Copyright Term Extension Act 1998 (US). Sonny Bono, from the 1970s pop group and variety hour television show Sonny and Cher, believed copyright should last forever. As a Florida senator, he introduced the American legislation. Critics of the term extension argue that the effect of expanding the copyright term is to prevent valuable copyright works – for example, Disney’s Mickey Mouse – from falling into the public domain, but without any “incentive” effect leading to greater creative activity. While expansion of the copyright term in the interest of “harmonisation” has a level of support within Australia, as a net importer of copyright material, this would have a detrimental effect on balance of trade figures since payment for material that would otherwise be in the public domain would be required. A number of changes to Australia’s terms of protection were made pursuant to the Australia–US Free Trade Agreement coming into effect on 1 January 2005. Under this Agreement, copyright duration was generally extended to 70 years from the end of the year of the death of the creator or when the material was first published. Copyright does not revive for works in which copyright had expired under the Copyright Act 1968 (Cth). However, photographs are now entitled to protection for the term of the life of the author plus 70 years. Rather incongruously, performances remain protected for only 20 years, although performers now also have economic rights in relation to authorised sound recordings of their performances. Determining whether a work is within or out of copyright can be problematic and rather complex. The term of protection for different kinds of works can vary depending on the applicable legislative provision. For example, it will require translating a piece of music into the respective rights that attach to the literary and musical works, and to the sound recordings. These will most likely belong to different parties. It will then require knowledge of the date of first publication or date of the death of the author for each of the rights, and knowledge of the various applicable statutory schemes that have applied. In some instances, some rights may have expired, but not all of them.

146 [4.490]

Criteria for Subsistence of Copyright

CHAPTER 4

[4.500]

TABLE 4.1 Duration of copyright Duration of Copyright Copyright Act section s 33(2)

Subject matter

Duration

Published literary, musical, dramatic and artistic works etc Unpublished or non-performed literary, musical, dramatic works at time of author’s death Unpublished engravings at time of author’s death Anonymous and pseudonymous works Sound recordings Unpublished films

From time made to 70 years after end of year of author’s death 70 years after first publication, performance, broadcast or public offering 70 years after first publication

s 33(5)

70 years after first publication

s 34(1)

70 years after first publication From time made to 70 years after first publication 70 years after year of first publication 50 years after year of first made 25 years after year of publication From time made to 50 years after year of first publication 50 years after year made

s 93 s 94(1)

50 years after year of first publication 50 years after year of first publication 70 years after year of first publication 70 years after year of first publication 25 years after year of first publication 20 years after year of first performance 50 years after first performed

s 180(3)

Published films Television and sound broadcasts Published editions of works Literary, dramatic and musical works subject to Crown copyright Artistic works subject to Crown copyright Engravings and photographs subject to Crown copyright Sound recordings and films subject to Crown copyright Works by international organisations Sound recordings and films made by international organisations Published editions made by international organisations Performances Sound recording of a performance

s 33(3)

s 94(2) s 95 s 96 s 180(1) s 180(2)

s 181 s 187 s 188(1) s 188(3) s 248CA(1) s 248CA(3)

Overlap between copyright and circuit layouts legislation [4.510] It is ordinarily said that there is no dual protection between the Circuits Layouts Act 1989 (Cth) and the Copyright Act 1968 (Cth) or Designs Act 2003 (Cth). This is true in the sense that those aspects of the design for a circuit or the circuit itself which give rise to “eligible layout” rights are not the subject matter of the copyright or designs systems. However, a computer chip as a memory device can hold or store “embodiments” or “aggregations” of information that are works or subject matter other than works within the meaning of the [4.510]

147

Intellectual Property: Commentary and Materials

Copyright Act 1968 (Cth). This question was addressed by the Australian courts on two occasions. In Avel Pty Ltd v Wells (1992) 23 IPR 353 at 362, the court said: [A] chip, that is to say an integrated circuit, may embody two different subject matters of protection: a circuit layout and a copyright work. The subject of copyright protection, usually a computer program, has protection only under one Act, namely the Copyright Act. A person importing a chip into Australia having purchased it as a result of a commercial exploitation abroad does not obtain as a result of s 24 or any other section of the Layouts Act the right to reproduce the computer program. To do so would remain an infringement of the Copyright Act. All that subs (2) of s 24 ensures is that the commercial exploitation of the chip in Australia will not be hindered in such a case, provided that the making of a copy or adaptation of the work stored in the chip and otherwise the subject of copyright protection did not constitute a copyright infringement.

In Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1996) 35 IPR 161, Burchett J held that certain computer games, “Virtua Cop” and “Daytona USA”, which were stored in integrated circuits imported into Australia, were “cinematographic films” within the meaning of the Copyright Act 1968 (Cth). His Honour rejected an argument that the fact that these games were stored within a computer meant that they should find protection, if at all, in the Circuits Layouts Act 1989 (Cth). His Honour stated (at 168): The fact that there are here integrated circuits and that these give rise to the application of particular statutory provisions, does not subtract from the further and relevant fact that the use of the integrated circuits is capable of bringing to the screen, so as to be shown as a moving picture, the aggregate of visual images making up Virtua Cop. That attracts the operation of the provisions of the Copyright Act in respect of cinematographic films.

In the recent case of Acohs Pty Ltd v Ucorp Pty Ltd [2010] FCA 577 before the Federal Court, the court was asked to determine whether Ucorp had breached copyright by reproducing in a material form utilising source codes in which Acohs claimed copyright, and electronic information sheets on hazardous substances and dangerous goods (MSDSs). Acohs and Ucorp prepared and supplied MSDSs (material safety data sheets) respectively: Acohs prepared MSDSs by way of a central database and a software program through which Acohs employees entered the appropriate data, while Ucorp supplied MSDSs to subscribers by providing access to an electronic library containing MSDSs created by Ucorp as well as existing MSDSs downloaded from the internet. While Jessup J found that the source codes could be “literary works” within the meaning of the Copyright Act 1968 (Cth), they were not original literary works as they were generated by a computer software program manipulating raw data, rather than created by a human author or authors. Accordingly, copyright did not subsist in them. Jessup J also rejected Acohs’ assertion that the source codes were works of joint authorship between the computer programmers who originally wrote the software and its employees who entered the MSDS raw data pursuant to s 10 of the Act. His Honour found (at [59]): In short, the respective contributions of the programmers and the authors/transcribers to the source code for a particular MSDS were separate each from the other along the axes of communication, time, expertise and content. Only by a quite artificial straining of the language … might those contributions be regarded as a matter of collaboration in the statutory sense. I do not consider that the source code for any of the MSDSs on which Acohs sues was a work of joint authorship.

148 [4.510]

Criteria for Subsistence of Copyright

CHAPTER 4

Circuit layout litigation in Australia [4.520] During the period in which the Circuit Layouts Act 1989 (Cth) has been in force there

have been only a limited number of relevant reported cases. They include Brooktree Corp v Advanced Micro Devices Inc (1998) 14 IPR 85 (a copyright case); Avel Pty Ltd v Jonathan Wells (1991) 22 IPR 305; Avel Pty Ltd v Wells (1992) 23 IPR 353; Nintendo Co Ltd v Centronics Systems Pty Ltd (1991) 23 IPR 119; Centronics Systems Pty Ltd v Nintendo Co Ltd (1992) 24 IPR 481; Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 28 IPR 431; Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1996) 35 IPR 161. These cases involved either gambling machine chips or computer game chips. There are several possible explanations for the low level of attempted enforcement through court action. One is that the possibility of litigation has discouraged infringement. Another is that rights owners are able to use the threat of litigation to successfully resolve any dispute. Yet another possibility is that it is simply not worthwhile to copy chips of leading manufacturers directly because of the costs and difficulty in reproducing the process technology. Genuine chips are readily available and cheap for nearly all applications. If this last explanation is the major reason, it may be that the copying of chips is not, in fact, the significant problem it was feared it would become. Another possibility is that most protection for computer technology is achieved through the Copyright Act 1968 (Cth), and litigation tends to rely on that Act.

Overlap between copyright and designs legislation [4.530] In certain circumstances, artistic works may be protectable under both copyright and

design law (currently the Designs Act 2003 (Cth)). This potential overlap may occur, for example, where a two-dimensional architectural design or a three-dimensional sculpture or model may satisfy the definition of an artistic work for copyright purposes, and may also satisfy registration requirements under the designs legislation. Without some limiting provisions, dual statutory recognition creates the undesirable potential for a design to be protected for 70 years or more under copyright provisions instead of the maximum 10 years under designs legislation. General policy strategy in respect of the copyright and designs overlap is that artistic works that are commercially exploited or “applied industrially”, should be denied copyright protection and rely on the designs legislation for protection. The Copyright Act 1968 (Cth) ss 74 – 77A are designed to minimise this overlap by recognising a “corresponding design” as being: … in relation to artistic work, … visual features of shape or configuration which, when embodied in a product, result in a reproduction of that work, whether or not the visual features constitute a design that is capable of being registered under the Designs Act 2003.

By virtue of being “embodied” – that is, woven into, impressed on, or worked into the product – overlap occurs where the corresponding design becomes three-dimensional. The Copyright Act 1968 (Cth) s 77(4) defers to the Copyright Regulations 1969 (Cth) to specify the circumstances in which a design is taken to be applied industrially; the Copyright Regulations 1969 (Cth) reg 17 stipulates that a design is deemed to have been applied industrially where it is applied to 50 or more articles. Hence, two situations arise where copyright protection will no longer apply to an artistic work; namely, where a corresponding design has been industrially manufactured or commercially made, and where a corresponding design has been registered under designs legislation. See Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) 4 IPR 120; Gold [4.530]

149

Intellectual Property: Commentary and Materials

Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd [2005] FCA 1521; Burge and Others v Swarbrick [2007] HCA 17; 72 IPR 235; Polo/Lauren Co LP v Ziliani Holdings Pty Ltd (2008) 80 IPR 531, [2008] FCAFC 195; Seafolly Pty Ltd v Fewstone Pty Ltd (2014) 106 IPR 85. In the recent case of Seafolly Pty Ltd v Fewstone Pty Ltd (2014) 106 IPR 85, before the Federal Court, the applicant, which designs, manufactures and sells swimwear and beachwear, alleged that the respondent (trading as City Beach Australia) which also designs, manufactures and sells swimwear and beachwear, had infringed its copyright in three artistic works. The action proceeded under a number of sections of the Copyright Act 1968 (Cth), including ss 74, 75 and 77 in respect of “corresponding designs”. The respondent contended that certain design elements in the “Senorita” garment was a three-dimensional embodiment of the artwork which was woven into, and had become part of, the “Senorita” garment structure. Accordingly, artwork applied to the fabric used to make garments was a “corresponding design” for the purposes of Copyright Act 1968 (Cth) s 74(1) and thus infringement had not occurred. His Honour held that the “Senorita” diamond pattern embroidery design was not embodied in the “Senorita” garments because the garments did not embody the features of shape or configuration of the underlying artwork. Rather, it was included as a constituent element. Therefore, the “Senorita” artwork was not a corresponding design within the meaning of Copyright Act 1968 (Cth) s 74 and City Beach was unable to rely on a defence to copyright infringement pursuant to Copyright Act 1968 (Cth) s 77: at [466], [470]–[472], [483].

Sheldon & Hammond v Metrokane [4.540] Sheldon & Hammond Pty Ltd v Metrokane Inc (2004) 135 FCR 34 Federal Court of Australia CONTI J: [36] … This litigation has its origins in a corkscrew product called Rabbit, the development whereof was initiated in the United States of America, in or about September 1997 by the Respondent/Cross-Claimant Metrokane Inc (“Metrokane”), a company established in 1983 in the United States. Metrokane conducts the business of designing and selling unique houseware products … In about October 1997, Metrokane engaged Edward Kilduff, (“Mr Kilduff”) being the second cross-claimant and a citizen of the United States, and then associated informally with Daniel Winigrad (“Mr Winigrad”) … to develop a new design for a corkscrew having a lever-action. His instructions were to produce a design which would be refined and elegant yet be “utilitarian and homely”. It was also to have award winning aesthetics, with a distinctive design and an aesthetically visual appeal, rather than something merely utilitarian and functional … The mechanism of the corkscrew was to be based upon the technical principles of a patent for lever action corkscrews, owned by the multinational manufacturer Le Creuset, which was due to expire in July 1999. The trade name of the Le Creuset corkscrew was and apparently still is Screwpull. Mr Larimer informed Mr Kilduff that he expected that a number of lever-action corkscrews would be produced and arrive on the market after the expiry of that patent … [38] … Mr Kilduff said that he oversaw the design and assembly in the factory in China, in order “… to make sure it is what I had in mind”. Although the Rabbit corkscrew is a so-called “functional or utilitarian article”, Metrokane’s case was that the same had nevertheless “real aesthetic qualities”. The design of the Rabbit corkscrew received the following two awards in 2001: (i)

150

The IDSA 2001 Award for design excellence in consumer products, which was judged by the Industrial Designers Society of America, and sponsored by Business Week Magazine; and [4.540]

Criteria for Subsistence of Copyright

CHAPTER 4

Sheldon & Hammond v Metrokane cont. (ii)

The Good Design Award from the Chicago Athenaeum Museum for “The World’s Best and Most Innovative New Product Designs”. The IDSA press release described the Rabbit corkscrew as having “… an ergonomic design that sets a new standard for ease of use without sacrificing beauty”. … [47] …

The controversy as to boundaries of statutory protection of copyright and designs S & H drew attention to what was described as the enigma of the so-called copyright/design “overlap” protection provisions, in support of a contention that s 77 could not sensibly have been intended, as a matter of legislative intention, to permit an article, said by S & H to be registrable under the Designs Act, to secure so much longer protection as an artistic work under the Copyright Act. [49] … It is … apparent that the presence within s 77 of the undefined expression “artistic craftsmanship” has left open for the Courts to determine its parameters. So much was in effect acknowledged by the Gregory Committee Report of 1953 in the following terms: It is clear that some protection of this kind is required to cover works of art other than such things as works of painting, drawing and sculpture, which are mentioned by name. We are here concerned not with articles manufactured under conditions of ordinary industrial production (artistically meritorious as many of these are) which can secure their own appropriate protection under the Registered Designs Act, but with the works of craftsmen working in many media (silversmiths, potters, woodworkers, hand-embroiderers and many others) in circumstances for which that Act does not provide appropriate protection. We do not think it will be questioned that original works of the kind we have in mind are fully entitled to protection and but for the Copyright Act this would be lacking. We believe that copyright provides the proper basis for protecting these works and to ensure this protection we believe that it is necessary to retain the term “works of artistic craftsmanship” in the Act. It is by no means certain that full preliminary sketches or drawings are prepared for all kinds of articles made by the craftsman (in which case copying the article itself might infringe copyright as a reproduction of the sketch), or, even where there is a full design, that the finally finished article as it leaves the craftsman’s hands would unquestionably be regarded in every case as a reproduction of that copyright design. In these circumstances the only safe way to ensure protection is by making specific mention of this class of work. In doing so, it will be necessary, we believe, to retain the word “artistic” in conjunction with “craftsmanship”, but we do not believe it is practicable to draft a statutory definition equally applicable to each of the whole range of activities and of the varieties of materials used. Faced with these almost endless possibilities we feel that, as now, the decision in doubtful cases must be left to the courts to decide on the facts before them, and we recommend that while the protection given to “works of artistic craftsmanship” should remain, the term should not be defined in the Act. It would appear that the copyright protection which Metrokane seeks to enforce in the present proceedings is conceptually beyond the scope of what was envisaged by the Gregory Committee Report, unless Metrokane could establish its claim as one of the “doubtful cases” which the Report seemingly had in mind. To that observation I would add reference to dictum in Interlego AG v Croner Trading Pty Ltd (1992) 25 IPR 65 at 97, where Gummow J, with whom Black CJ and Lockhart J agreed, said as follows, in terms of the distinction between the principles of protection respectively afforded by the general law as to copyright, designs and patents: It is well established that in copyright law originality is a concept distinct from novelty in design law and patent law and from obviousness in patent law. Whilst the author of what is claimed to be an original artistic work must have expended a significant amount of his skill and labour, “originality” does not mean novelty or uniqueness and does not require inventiveness in the sense of patent law … The degree of skill and labour required of the artist will vary with the nature of the work. My resolution of the issue as to whether the Rabbit corkscrew constituted a work of artistic craftsmanship [4.540]

151

Intellectual Property: Commentary and Materials

Sheldon & Hammond v Metrokane cont. … There is something antithetical in the notion of a manufacturer gaining exclusive protection of a mass-produced article by way of copyright, for a period of time substantially longer than that provided by statute law in relation to designs and patents. The circumstances of the present case exemplify the kind of conceptual enigmas which may thus arise. Inferentially essential to the purpose of creation and distribution of this mass-produced Rabbit corkscrew is its function as a corkscrew based upon its lever-action mechanism being the same as or virtually identical to the celebrated Le Creuset mechanism the subject of recently expired international patent protection. No member of the public would have sensibly purchased the Rabbit corkscrew, I would infer, in the absence of its mechanism, or in other words, would have purchased the same merely to enjoy the sight and feel of its handle or body structure, attractive as they may be. The emphasis of the Australian authorities, to which I have earlier referred, is upon the object of the author in purportedly creating a work of artistic craftsmanship, rather than upon the reaction of the viewer to the completed work, the merit or otherwise thereof being immaterial for qualification within that statutory description. That emphasis also appears from what I have cited from the speeches in the House of Lords in Hensher of Lord Reid and Lord Simon. Moreover the related theme as to the inappropriateness of the courts making aesthetic judgments also appears in what I have cited from the speeches in Hensher of Viscount Dilhorne, Lord Simon and Lord Kilbrandon, and has been similarly emphasised in the Australian authorities which I have reviewed, and to which I would add reference to the opening observation in the judgment of Hill J, as a member of a Full Federal Court, in Schott Musik International GMBH & Co v Colossal Records of Australia Pty Ltd (1997) 75 FCR 321 at 325. I am unable to accept the submission of Metrokane that the object of Metrokane in creating the Rabbit corkscrew was for a sole or dominant purpose of creating a work of artistic craftsmanship per se. … [81] … As I have already inferred, the motivation of Metrokane in manufacturing the Rabbit corkscrew originated in the pending expiration of the Le Creuset patent relating to what appears to have been a somewhat sophisticated corkscrew mechanism. It could not sensibly be postulated, nor was it postulated, that consumers would buy the Rabbit corkscrew without that mechanism. The attraction to consumers, I would infer, has been to acquire an efficient corkscrew mechanism contained within an attractively presented framework. The present circumstances are thus distinguishable from those in Coogi. The manufactured fabric there involved would have been purchased by consumers for use as clothing per se, and not as a framework for an every day consumer facility. … What is here claimed to reflect “the main object of appealing to the aesthetic tastes of those who view it”, to cite further from Cuisenaire, consists only of the body or framework of something which would not be acquired by a consumer, at least in the normal course, without the working parts installed within that framework. It is in that respect that I think there is something to be said in favour of the contention of S & H to the effect that the law of copyright should not be afforded an “overlapping” operation, notwithstanding that I have not given effect to that contention. The objective of Metrokane in creating the Rabbit corkscrew may be described, perhaps repetitively, as the reproduction in attractive clothing of the mechanism of an expired, and apparently well known patent earlier developed by a third party (Le Creuset), with a view to mass production for the sole purpose of substantial profit-making by sale. That objective appears to have been achieved. … [83] … In the result, as a judge of fact at first instance, I would reject the characterisation of the Rabbit corkscrew as a work of artistic craftsmanship.

152 [4.540]

CHAPTER 5 Copyright: Ownership, Rights and Exploitation [5.10] [5.10]

EXCLUSIVE RIGHTS PROVIDED BY COPYRIGHT ................................................. 154 Economic rights ..................................................................................................... 154

[5.20] [5.20] [5.30] [5.40] [5.50] [5.70]

MORAL RIGHTS ...................................................................................................... 156 Moral rights ............................................................................................................ 156 Duration of moral rights ....................................................................................... 157 Performers’ rights and moral rights ..................................................................... 157 Film directors, screenwriters and producers’ rights and moral rights .............. 158 Performer or author of musical works ................................................................. 158 [5.70]

Hadley v Kemp ...................................................................... 158

[5.80] [5.90]

AUTHORSHIP OF WORKS ...................................................................................... 163 Joint authorship and ownership ........................................................................... 164

[5.110]

Joint ownership ...................................................................................................... 165

[5.100] [5.120]

Prior v Lansdowne Press ........................................................ 164 Primary Health Care v Commissioner of Taxation .................... 166

[5.130] [5.130] [5.140]

NON-AUTHORS ..................................................................................................... 169 Commissioned works ............................................................................................ 169 Journalists’ copyright ............................................................................................. 170

[5.160]

Employment: Contract of service or apprenticeship .......................................... 173

[5.150] [5.170]

[5.200]

Redrock Holdings v Adam Hinkley ........................................... 179

Community ownership ......................................................................................... 182 [5.230]

[5.240]

University of Western Australia v Gray .................................... 175

Employee or independent contractor? ............................................. 178 [5.210]

[5.220]

De Garis v Neville Jeffress Pidler .............................................. 171

John Bulun Bulun v R & T Textiles ........................................... 182

CROWN COPYRIGHT ............................................................................................ 187 [5.250]

Copyright Agency v New South Wales ..................................... 188

[5.260]

EXPLOITATION ....................................................................................................... 190

[5.270]

ASSIGNMENT ......................................................................................................... 191

[5.290]

Effect of assignment .............................................................................................. 196

[5.300]

LICENSING ............................................................................................................. 196

[5.320] [5.330]

Exclusive licence ..................................................................................................... 200 Implied licences ..................................................................................................... 200

[5.280]

[5.310]

[5.340] [5.360]

[5.370] [5.380] [5.400]

Wilson v Weiss Art ................................................................. 192

Seven Network (Operations) v TCN Channel Nine ................... 197

Gruzman v Percy Marks ........................................................ De Garis v Neville Jeffress Pidler .............................................. Compulsory licence ............................................................................................... The Copyright Tribunal ......................................................................................... [5.390] Re Phonographic Performance Company of Australia ............... Collecting societies ................................................................................................ [5.420] Resale Royalty Right for Visual Artists Act 2009 (Cth) ...............

201 203 205 205 206 208 209 153

Intellectual Property: Commentary and Materials

[5.430]

PARALLEL IMPORTING ........................................................................................... 211 [5.440]

[5.460] [5.460]

Ozi-Soft v Wong .................................................................... 212

RESALE ROYALTY RIGHTS ...................................................................................... 217 Resale Royalty Right for Visual Artists Act 2009 .................................................. 217 [5.470]

Resale Royalty Right for Visual Artists Act 2009 (Cth) ............... 218

EXCLUSIVE RIGHTS PROVIDED BY COPYRIGHT Economic rights [5.10] The right enjoyed by the holder of a copyright in a work or other subject matter is an exclusive right to do something with the work or other subject matter. Thus it is essentially a right of economic exploitation. Although the Copyright Act 1968 (Cth) also provides for other forms of right – that is, the moral rights of attribution and recognition – they are in essence a secondary addition to the Act, having only being introduced in 2000 by the Copyright Amendment (Moral Rights) Act 2000 (Cth). The Copyright Act 1968 (Cth) s 31 lists the rights relating to original literary, dramatic, musical and artistic works, while ss 85 – 88 list the rights relating to other subject matter, such as, sound recordings, cinematographic films, television and sound broadcasts and published editions of works. In respect of works that come within Part III – Original Literary, Dramatic, Musical and Artistic Works, the owner (although this term is not actually used) has the exclusive right to do the following s 31(1)(a):

(a)

in respect of a literary, dramatic or musical work, to (s 31(1)(a)): • reproduce the work in a material form; • publish the work; • perform the work in public; • communicate the work to the public; • make an adaptation of the work (to which the above rights would also apply); • enter into a commercial rental arrangement for sound recording of the work.

(b)

In respect of a computer program, to enter into a commercial rental arrangement (s 31(1)(d)):

(c)

In respect of an artistic work, to (s 31(1)(b)): • reproduce the work in a material form; • publish the work;

• communicate the work to the public. In respect of works that come within Part IV – Subject Matter Other Than Works, the owner (although this term is not actually used) has the exclusive right to do the following (ss 85 – 89): For subject matter other than works, the exclusive rights include the following (ss 85 – 89): (a)

in respect of sound recordings, to (s 85): • make a copy of the sound recording; • cause the sound recording to be heard in public; • communicate the sound recording to the public;

154 [5.10]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

• enter into a commercial rental arrangement in respect of the sound recording; (b)

in respect of cinematographic films, to (s 86): • make a copy of the film; • cause the film to be seen or heard in public; • communicate the film to the public;

(c)

in respect of television and sound broadcasts, to (s 87): • insofar as it consists of visual images, make a film of the broadcast or a copy of such a film; • insofar as it consists of sounds, make a sound recording of the broadcast or a copy of the sound recording; • in either case, to re-broadcast it or to communicate it to the public other than by broadcasting it.

(d)

in respect of published editions of a work, to make a facsimile of the edition (s 88). In respect of Performances, Part XIA recognises some level of protection for performers. Prior to amendments to the Copyright Act 1968 (Cth) in 2004, performers gained virtually no protection for their live performances, although playwrights, composers, set designers and choreographers acquired copyright protection for their work. If the performance was recorded the copyright belonged to the maker of the recording. The unsatisfactory convention was that performers relied on some form of protection through a contractual arrangement with the producer or entrepreneur. The limited form of performers’ rights was not proprietary in nature, and only lasted for 20 years. Consequent upon changes arising from the AustraliaUnited States free trade agreement, as given effect by the US Free Trade Agreement Implementation Act 2004 (Cth), performers now have proprietary rights over their performances. Section 248CA(1) provides for a period of protection of a performance for 20 years beginning on the day the performance was given and ending at the end of the 20th calendar year. Section 248CA(3), however, provides a period of protection of 50 years in the case of a sound recording of the performance. Hence performers may enjoy similar exclusive rights as other owners of recordings. These changes are also retrospective to 1994. A performer may: • refuse any request to allow a performance to be taped, recorded or filmed; • stipulate, as a condition of entry to a performance, that any taping, recording or filming done is to be used for domestic and non-commercial purposes only; • negotiate a contractual arrangement with anyone filming, taping or recording for commercial purposes with regard to any or all subsequent uses of the filmed, recorded or taped material. Note also that a person who records a performance may be infringing on the rights of the writer or musician who wrote the work being performed. The inclusion in the definition of performance in s 248(1) of an expression of folklore has significance, since it may extend protection to certain indigenous performers and groups whose work has not otherwise been reduced to material form. The definition of performance also includes provision that a live performance does not necessarily need to be in the presence of a performance. [5.10]

155

Intellectual Property: Commentary and Materials

MORAL RIGHTS Moral rights [5.20] Moral rights are rights which an author, artist or creator possesses, and retains even after the right to exploit the copyright in the work (the economic rights) has been transferred. They are personal rights which cannot be transferred or sold. They give the author or artist the right to be credited as the creator of a work, and to restrain derogatory treatment of it which might affect their honour or reputation. It is only relatively recently in Australian law that there has been any consideration of copyright as encompassing personal, non-economic rights, known as moral rights. To some extent, this reflection has been prompted by the requirements of international treaties to which Australia belongs, beginning with the fact that Australia is a signatory to the Berne Convention, which, in Article 6bis, sets up an obligation for members to protect the rights of “paternity” and “integrity”. However, Article 6bis and moral rights were explicitly excluded from the TRIPS Agreement. Traditionally, copyright laws in Australia were only concerned with economic rights. They did not prevent work being distorted, mutilated, or used in an insulting, prejudicial or offensive way. Nor did they protect a person’s right to be recognised as the creator of the work. Moral rights were finally introduced in December 2000 by the Copyright Amendment (Moral Rights) Act 2000 (Cth). Part IX of the Copyright Act 1968 (Cth) is headed “moral rights of performers and of authors of literary, dramatic, musical, or artistic works and cinematographic films”. It now makes provision for the following moral rights:

• the right of attribution – an author’s right to be identified as the author of a work (ss 193-195AB); • the right to take action against false attribution by another (s 195AC-AH); and • the right of integrity – the right to object to derogatory treatment of a work which prejudicially affects the author’s honour or reputation (s 195AI-AW). Under the right of attribution, the creator’s right to recognition as creator of a work consists of four sub-rights, which are to: (a)

be known as the creator of a work;

(b)

prevent others from claiming to be the creator of a work;

(c)

prevent the false attribution of works to the creator; and

(d) prevent attribution to the creator of unauthorised altered versions of a work. The right of integrity is the creator’s right to object to derogatory treatment of a work, and covers both changes made to the work itself (ie, distortion, mutilation or other modification of the work), or the manner in which the work is presented. Section 193 stipulates in particular that “the moral rights of an author of a work are in addition to any other rights in relation to the work ...”, while s 195AN(3) emphasises the personal nature of the right by stipulating that “a moral right in respect of a work is not transmissible by assignment, by will, or by devolution by operation of law”. Moral rights apply to all works, except films, that existed on 21 December 2000 and which are still protected by copyright, as well as to all works, including films, that were created after that date. With the exception of the right of integrity in film, moral rights normally last as long as the author’s economic rights. Authors can consent in some circumstances to an act or 156 [5.20]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

omission which would otherwise constitute a breach of moral rights (ss 195AW, AWA and AWB), but there is no scope for an enforceable generalised waiver outside the scope of these provisions. Only individuals can possess moral rights (s 190). Thus, for example, where a body corporate was the producer of a film, only the director or screenwriter could exercise moral rights. It also means that an Aboriginal clan that traditionally owned a design or painting could not exercise moral rights if that painting was shown in a derogatory manner, without designating or deferring that right to an individual member. However, it is possible to consent to subsequent uses of copyright material that may offend the moral rights, but the owner of a work may not have the right to alter a work against the wishes of the creator. This could have implications for the use of material that is taken from its traditional form and written into material that is used for teaching and learning contexts in the digital environment. Generally, the courts will provide guidance as to what is acceptable use that will not infringe the moral rights in copyright material. More generally, in determining infringement of the rights of integrity and attribution in relation to works, ss 195AR and 195AS provide for consideration of the reasonableness of the acts or omissions done in relation to the work, as well as industry and voluntary codes of practice. One of the recommendations of the Report of the Contemporary Visual Arts and Craft Inquiry (2002) (Myer Report) related to indigenous communal moral rights. In 2003, the Federal Government indicated it would introduce amendments to the Copyright Act 1968 (Cth) to provide indigenous communities with the right to take action against inappropriate, derogatory or culturally insensitive use of creative works embodying traditional community knowledge and wisdom. The Copyright Amendment (Indigenous Communal Rights) Bill 2003 (Cth) was introduced, but was criticised as being unlikely to deliver its intended benefits to indigenous communities. The legislation never eventuated.

Duration of moral rights [5.30] Under the Copyright Act 1968 (Cth), an author’s moral rights in respect of a literary or

artistic work exist until copyright ceases in the work, while an author’s moral rights in respect of a film continue until the author dies (s 195AN). A performer’s right of attribution (or false attribution) in respect of a performance continues until copyright ceases to subsist in the performance, while the right of integrity continues until the performer dies (s 195ANA).

Performers’ rights and moral rights [5.40] A performer’s right is a “neighbouring right” to copyright or author’s rights and originally was not a full property right, in that the rights were personal to the performer and could not be assigned. Further, the performer’s right is not, in fact, a “copyright” in the traditional meaning, since protection of an actual performance not fixed in some permanent form goes beyond the nature of protection conferred by the rest of the Copyright Act 1968 (Cth). Copyright in a sound recording of a live performance supplements the existing performer’s rights to prevent unauthorised recordings of a performance of a dramatic, literary or musical work or improvisation thereof, a dance, circus act, variety act or similar presentation. Further, since 2004, the definition of “performance” has been expanded by the Copyright Act 1968 [5.40]

157

Intellectual Property: Commentary and Materials

(Cth) s 248A(1)(f) to include an “expression of folklore”. However, it is worth noting that “folklore” is a term generally not used in the context of indigenous traditional knowledge and cultural heritage – the widely adopted term is indigenous cultural intellectual property (ICIP). In addition to copyright in performances, performers also enjoy moral rights in their live performances and recordings thereof under the Copyright Act 1968 (Cth) Part IX. These additions arose out of obligations under the Australia–US Free Trade Agreement designed to ensure more perfect adherence to the World Intellectual Property Organization’s WIPO Performances and Phonograms Treaty (1996). The US Free Trade Implementation Act 2004 (Cth) has also been responsible for the introduction of the term “performership” into Copyright Act 1968 (Cth) Part IX – meaning “participation in a performance as a performer or one of the performers” (s 189). Performers’ moral rights are akin to those granted to authors, namely: • the right of attribution of performership (which must be clear and reasonably prominent or reasonably audible) (s 195ABD); • the right not to have a performance falsely attributed (which includes an altered recorded performance) (ss 195AHB(1) and 195AHC(1)); and • the right of integrity of performance.

Film directors, screenwriters and producers’ rights and moral rights [5.50] In the context of the Copyright Act 1968 (Cth) Part IX, “author” in relation to a cinematographic film means the maker of the film (s 189). “Maker” is further defined in the same section as “in relation to a cinematographic film, … the director of the film, the producer of the film and the screenwriter of the film”. However, s 22(4) of the Act provides that, for the purpose of the Act, a reference to the making of a cinematographic film shall be read as a reference to the doing of the things necessary for the production of the first copy of the film, while the maker is the person by whom the arrangements necessary or the making of a film were undertaken. In effect, this means that the moral rights in a film could be vested in the producer, director or screenwriter provided, of course, that the entity is a person, and not a body corporate or other organisation.

Performer or author of musical works The following extract from the case of Hadley v Kemp [1999] EMLR 589 not only illustrates issues in respect of performers’ moral rights, but also joint authorship and communal ownership and the principle of “material form”.

Hadley v Kemp [5.70] Hadley v Kemp [1999] EMLR 589 High Court of Justice, Chancery Division (United Kingdom) PARK J: [593] … The plaintiffs, Mr Tony Hadley, Mr John Keeble and Mr Steve Norman, were three members of a former pop group, Spandau Ballet. In this case they are suing a fourth member, Mr Gary Kemp, and Reformation Publishing Company Ltd, a company owned by him. They have a main case, which I will call “the contractual claim”, and an alternative case, which I will call “the copyright claim”. … The copyright claim, their alternative argument, was first advanced in 1998. The plaintiffs contend that, contrary to what everyone had believed before then, Mr Kemp and his company, Reformation, were not the sole owners of the copyrights in the band’s songs. Rather they now say either that they 158 [5.50]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Hadley v Kemp cont. were all joint owners with Mr Kemp of the copyrights in all the songs, or that one or more of them were joint owners with him of some or all of the copyrights. They also say that, if they are right, this gives them rights to receive large amounts of money from Reformation. … [639] … N3. The copyright claim: the facts and the evidence Records, CDs and other forms in which recorded songs are marketed to the public always identify the writers of the music and the lyrics. I believe that Spandau Ballet recorded something like 60 tracks, which were split between six albums and a number of singles. On all except one of them the credit for writing the music and the lyrics was accorded to Gary Kemp. All the plaintiffs thought at the time that that was right. … To describe Gary Kemp as the “writer” of the music could be misleading without adding a little explanation. As I have said once or twice already he did not write the music down on paper. We have all seen imaginative sketches of the great classical composers of the past sitting at their desks in what one imagines might be an attic, quill pens in hand and sheafs of musical paper before them, writing out their compositions by hand. Popular music is not usually created that way, and Gary Kemp did not create his music that way. He composed at home, with a guitar and sometimes a piano. In this way for each song he developed, and fixed in his musical consciousness, the melody, the chords, the rhythm or groove, and the general structure of the song from beginning to end. Usually at the same stage he wrote the entire lyrics for the song. When Mr Kemp had created a song in this way, and not before then, he presented it to the other members of the band. Usually this happened in a rehearsal studio. Mr Kemp played the complete song on an acoustic guitar, and sang it. A process then followed of rehearsals leading into recording. At the rehearsal stage the members of the band [640] learned the song, interpreted it on their own instruments, practised and perfected the playing or (in Mr Hadley’s case) the singing of their own parts, and rehearsed the performance of it as an ensemble. They did these things aurally, and without music sheets setting it all out in musical notation. As Mr Kemp said in evidence: “We can talk music to each other. All popular music is achieved in that way.” At the recording stage they moved from the rehearsal studio into the recording studio (which was much more expensive). They were joined there by the record producer and technicians, and the definitive recording was made. Invariably there would be several takes of the same song, and the master recording to be delivered to the record company would be a composite put together by the record producer (or under his supervision) from the whole series of takes. … I need to say more about the rehearsals, but I think that it might be useful for me first to say what did not happen. What did not happen was a process such as was described by the judge (Thomas Morison QC, as he then was) in Stuart v Barrett [1994] EMLR 448 at p 455: The plaintiff says that he can remember that there was a moment when they stopped playing and the second defendant played a riff on the guitar and looked towards him as though tacitly inviting the plaintiff to put something to support what he was playing. He tried different drum beats and ended up with an off-beat drum pattern which seemed to fit well; and the others joined in, embellishing and changing octave. By the end of the session they had a completed piece of music without words, which became the song “The Outsider”. This kind of collective creation of a song is often referred to as “jamming”. It is not the way that Spandau Ballet did things. I suspect that, [641] before the evidence, Mr Sutcliffe entertained hopes on behalf of the plaintiffs that it might appear to me that, although Gary Kemp started the process off, the band’s songs emerged from a process of collective jamming such as Mr Morison described. [5.70]

159

Intellectual Property: Commentary and Materials

Hadley v Kemp cont. In my view, however, that is not borne out by the evidence. There are two specific points which I wish to make. First, both at rehearsals and in the recording studio Gary Kemp was in charge. His own evidence was that they were not a democratic band; they were a hierarchy and people would listen to him where music was concerned. Mr Keeble said that it was more organic than Mr Kemp said, but he accepted that Mr Kemp was a perfectionist and decisive. He was asked whether Mr Kemp was very definite about what he (Mr Keeble) should play, and he answered: “Gary often had very strong ideas, yes”. Mr Norman accepted that Mr Kemp, the songwriter, had to have the last word (as Mr Norman had when the band recorded his own song “Motivator” for the last album). There was a substantial body of evidence from witnesses who were not members of the band but who were present during rehearsals or recording sessions or both. All of them (including the witness called on behalf of the plaintiffs) gave evidence to the effect that Mr Kemp had definite ideas about how his songs should sound, and was clearly the person in charge. I give one other example, but could give more. Mr Gary Langan was involved on the first album (Journeys to Glory) as a recording engineer, and on the last two albums as producer. He said that Mr Kemp was a “control freak”, and that the other members of the band went along with what he said. Second, once Mr Kemp had presented his songs to the band with a view to them being rehearsed and recorded, there were very few changes made to them. Mr Norman could not remember an instance when the melody as presented by Mr Kemp was not complete, but added that “with any song you refine it. There were never radical changes to the melody but there were slight changes”. No other witness went even that far. Mr Dagger said that, in terms of changing the songs, he never saw or heard of it happening. (In fairness I should add that Mr Dagger, being the band’s manager, was commonly not present at rehearsals or recording sessions.) Richard Lengel, a recording engineer, said that in the recording studio nobody changed the melody. Toby Chapman (a session musician who was present at rehearsals as well as at recording sessions) gave evidence that Mr Kemp did not allow anyone to change his songs; Mr Kemp had very set ideas. Tony Swain, the record producer on the second and third albums, said that Mr Kemp was very sensitive about anyone changing his songs. [642] N4. The copyright claim: authorities on joint authorship I do not wish to review all the cases which over the years have examined the concept of joint authorship, but I would like to say something about two which have been concerned with pop music, and to quote briefly passages from other recent decisions. I have already referred to the decision of Thomas Morison QC in Stuart v Barrett [1994] EMLR 448. He described the way in which the group created songs by a process of collective “jamming”. He summed it up in these words (at 458): Someone started to play and the rest joined in and improvised and improved the original idea. The final piece was indeed the product of the joint compositional skills of the members of the group present at the time. In those circumstances he held that all the members were joint authors of the songs. But he stressed that this was a conclusion on the particular facts and in no sense represented a rule of law: It would not be sensible to try and lay down any general rules which would apply to all group compositions. One member of a pop group may have an idea which is so nearly perfected that the compositional input of any of the other members of the group would be regarded as insignificant … It may be that, within a group, only one member is the composer. It must depend entirely on the individual circumstances of the band. Later he said: Ultimately, as it seems to me, the question of whether a person is a joint author or not within the Copyright Act is simply a question of fact and degree. 160 [5.70]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Hadley v Kemp cont. Godfrey v Lees [1995] EMLR 307 is a decision of Blackburne J. The plaintiff was a classically trained musician who worked closely with the pop group Barclay James Harvest. On several tracks the band had an orchestral accompaniment. The plaintiff provided the orchestral arrangements and conducted the orchestra. And he contributed other musical ideas and material. He claimed to be a joint author of six of the recorded tracks, and the judge agreed on the facts. (It did not do the plaintiff any good in the end, as I will explain in N7 below). Blackburne J stated the principle as follows: What the claimant to joint authorship of a work must establish is that he has made a significant and original contribution to the creation of the work and that he has done so pursuant to a common design. See, for example, Stuart v Barrett [1994] EMLR 448. It is not necessary that his contribution to the work is equal in terms of either quantity, quality or originality to that of his collaborators. Nor, in the case of a [643] song, does it matter that his contribution is to the orchestral arrangement of the song rather than to the song itself. In my view the crucial expression (with which I respectfully agree in every respect) is “a significant and original contribution to the creation of the work”. There are four elements. (1) The claimant must have made a contribution of some sort. (2) It must have been significant. (3) It must have been original. (4) It must have been a contribution to the creation of the musical work. The last point is particularly important. There is an echo of it in the words of Laddie J in the more recent case of Flyde Microsystems Ltd v Key Radio Systems Ltd [1998] FSR 449 at 457 (a case about computer software): the putative author must have contributed “the right kind of skill and labour”. In the present case contributions by the plaintiffs, however significant and skilful, to the performance of the musical works are not the right kind of contributions to give them shares in the copyrights. The contributions need to be to the creation of the musical works, not to the performance or interpretation of them. In the second part of the passage which I have quoted Blackburne J says that the contribution to a song of a person claiming to be a joint author of it does not have to be equal in terms of quantity, quality or originality to that of his collaborators. However, it still has to be “significant”. Further, all the cases (including Godfrey v Lees) agree that, if two or more persons are joint authors, they own the copyright in equal shares (unless of course they have made an agreement which specifies different shares). It would be surprising if a slight contribution was enough to make a person a joint author and thereby make him an equal owner with another or others who had contributed far more than he had. … [645] N5. The copyright claim: conclusions. The claim for communal joint authorship As I listened to Mr Sutcliffe’s argument on this part of the case it appeared to me that he advanced two different theories in support of the plaintiffs’ claim to be communal joint authors with Gary Kemp of the songs. The main theory contended for in the pleadings (at least as I read them) was that Gary Kemp came along with the bare bones of a song, but that thereafter all the members of the band contributed creatively and collectively to changes and developments to all parts of the song. The result was a whole new song of which they were all joint authors. On this theory it was rather like the jamming process described by Mr Morison QC in the passage from Stuart v Barrett [1994] EMLR at 448, which I quoted earlier. However, for the reasons which I gave in N3 above, I do not believe that the theory can survive the evidence. When Mr Kemp presented a song to the band the melody was complete, the chord structure was complete, the rhythm or groove was apparent in the song as presented, and the structure of the song from start to finish was already laid out. Very few changes were made in the process leading up to the recording of it, and Mr Kemp had the last word on such changes as were made. [5.70]

161

Intellectual Property: Commentary and Materials

Hadley v Kemp cont. The second theory is rather different. It seeks to claim joint authorship for all the members of the band by relying on the combination of three factors: (i)

as a matter of law copyright did not arise when Mr Kemp first presented a song to the band, because the song was not then reduced to some material form (as required by s 49(4));

(ii)

copyright in the musical work arose when it was first recorded, and that was a recording made by all the members of the band, not by Mr Kemp alone;

(iii)

for the purpose of that first recording the members of the band sang or played their instruments in their own creative ways. I comment on the three factors.

As to (i), the proposition that copyright does not exist in a musical work until it is first reduced to a material form does not mean that the musical work does not exist until it is first reduced to a material form. Quite the contrary: the Act assumes that a work may exist before it is reduced to material form. In my judgment a song devised by Mr Kemp and worked up by him in his own mind to the developed stage at which he presented it to the band was already a musical work. Further, at that stage he was undoubtedly the sole author of it. As to (ii) the critical point is that, in my opinion, the songs in their recorded form were the same musical works as the songs which Mr Kemp had composed in his mind and his memory. Of course there was a marked difference between (a) the sound of the song sung by [646] Mr Kemp to the accompaniment of himself on an acoustic guitar, and (b) the sound of the song sung by Mr Hadley with the backing of the whole Spandau Ballet band. But that does not mean that the whole band were creating a new and different musical work. Rather they were reducing Mr Kemp’s musical work to the material form of a recording. After all, when Mr Kemp devised the song he devised it for performance, not by himself as a solo artist, but by Mr Hadley and the whole band. A composer can “hear” the sound of his composition in his mind before he ever hears it played. Beethoven could hear his music in this sense even when he was deaf. When Mr Kemp was devising his songs the sound which he had in his musical consciousness must surely have been the sound they would have when performed by Spandau Ballet, not the sound they would have when sung by Mr Kemp alone to the accompaniment just of his own guitar. … As to (iii) (the members of the band sang or played their instruments in their own creative ways), there is a vital distinction between composition or creation of a musical work on the one hand and performance or interpretation of it on the other. Mr Protheroe’s evidence frequently stressed this point. It is certainly true that the members of the band sang or played in their own ways (and, in so far as I am able to judge, did so excellently). But these are matters of performance, not matters which go to the creation of a new musical work. To repeat the words of Laddie J in the Flyde Microsystems case ([1998] FSR at 457), what the plaintiffs contributed was not “the right kind of skill and labour”. The members of the band (and the session musicians, who cannot be differentiated from the other artists so far as this point is concerned) did what any good musician does: they performed the songs to the best of their considerable abilities, injecting elements of individuality and [647] artistry into their performances. That did not make them joint authors of the songs. In my judgment that remains so even if there were some elements of improvisation in their performances. Very interesting evidence was given on this by Mr Charlie Morgan, who was an expert witness for the defendants on the role of a drummer. He explained that a composer with an idea of how he wanted the drums to sound could, without writing it down, sing the rhythm part to the drummer. He agreed that the improvisation by the drummer with the beat in his head was a creative part of the compositional process, but he added:

162 [5.70]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Hadley v Kemp cont. Yes, but I think it is no more than the input that any musician would be expected to make: any musician of any kind. I think that is the area of expertise of the drummer, and certainly if I was present on a session I would be expected to inject something of my own persona, if you like, into the part. For these reasons I do not accept either of the theories on which it is suggested that all of the plaintiffs became collective joint authors of the songs.

AUTHORSHIP OF WORKS [5.80] “Author” is not defined by the Copyright Act 1968 (Cth) except in regard to

photographs, where the author of a photograph is the person who takes it (s 10(1)). But the concept is obviously focused upon the first reduction of ideas to material form (Tate v Thomas [1921] 1 Ch 503). In Kenrick v Lawrence (1890) 25 QBD 99, it was stated that a person who had an idea for a drawing could not be regarded as the author where the idea was actually drawn by another person. Compare Mitchell v Brown (1880) 6 VLR 168. In Walter v Lane [1900] AC 539, the reporters who took down verbatim speeches were regarded as authors, having exercised sufficient skill to bring an original work into being. This case may be of dubious authority today since it was decided under the Copyright Act 1911 (UK), but it points out the connection between authorship and originality, which remains relevant. See Donoghue v Allied Newspapers [1938] Ch 106; Cummins v Bond [1927] 1 Ch 167; Express Newspapers Plc v News (UK) Ltd (1990) 18 IPR 201. The fundamental principle in respect of copyright of a work, as established by the Copyright Act 1968 (Cth) s 35(2), is that the author or creator of the work is the owner of the copyright subsisting in the work. A similar principle applies in respect of sound recordings (s 97(1)), films (s 98(1)), broadcasts (s 99) and published editions (s 100), in that the “maker” or publisher of the subject matter is the owner: see Seven Networks (Operations) Ltd v TCN Channel Nine Pty Ltd [2005] FCAFC 144 at [5.240]. This is separate from, and additional to, any copyright in works which are incorporated in the other related subject matter: WEA Records Pty Ltd v Stereo FM Pty Ltd (1983) 1 IPR 6 at 10; CBS Records Australia Ltd v Telmak (Aust) Pty Ltd (1987) 9 IPR 440. Numerous provisions elaborate on who is the maker of the subject matter, depending upon the nature of the recording medium. Note that the Copyright Act 1968 (Cth) ss 22 and 97 – 100 provide that a literary, dramatic or musical work can be embodied through the making of a sound recording of it, leading to two separate but related rights coming into being contemporaneously: one in the underlying literary, dramatic or musical work, and one in the sound recording of it. However, there are a few significant exceptions to these principles, with the result that, in certain circumstances, the owner of the copyright is not necessarily the author or creator. These exceptions include circumstances where the work is:

[5.80]

163

Intellectual Property: Commentary and Materials

• created jointly by the collaboration of two or more contributors; • a commissioned work; • created under a contract of employment or apprenticeship generally; • created by a journalist under a contract of employment.

Joint authorship and ownership [5.90] The term “work of joint authorship” is defined in the Copyright Act 1968 (Cth) s 10(1) as “a work that has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors”. Hence the contribution of one author is not distinguishable or separable from those of the other authors. However, as seen in the case of Prior v Lansdowne Press Pty Ltd (1975) 12 ALR 685 (at [5.100] below), joint authorship requires some material contribution by all authors involved, unless there is some form of agreement to the contrary. Provision of ideas alone would not, in the absence of such agreement, constitute joint authorship. In Prior v Lansdowne Press, the court rejected the argument that a person could not be an “author” where their major function had been merely to supply material for a book because there had been agreement and actions by the parties concerned to recognise a supplier of copy as one of the joint author and to give effect to that recognition by allocating a share of the royalties in the work. It also held that owners of a work of joint authorship are tenants in common, each of whom can sue, seek relief and seek damages for a moiety in respect of an infringement, without necessarily joining the other authors as plaintiffs.

Prior v Lansdowne Press [5.100] Prior v Lansdowne Press Pty Ltd (1975) 12 ALR 685, Supreme Court of Victoria (exercising Federal jurisdiction) [Prior, in combination with two others, produced a book that Lansdowne Press agreed to publish. After publication, Lansdowne later arranged with another publisher to publish a new and cheaper edition. Later still, that publisher, without the consent of Prior, made a copy of the book available gratuitously to a newspaper to enable it to publish extracts from the book. The action was for damages for breach of agreement and for damages for infringement of the copyright in the book, including additional damages under Copyright Act 1968 (Cth) s 115(4).] GOWANS J: [688] In Copinger and Skone James on Copyright (11th ed) par 692, it is said: “Co-authors hold the copyright as tenants in common rather than as joint tenants, and, presumably, in the absence of agreement to the contrary, in equal shares.” The plaintiff has put forward a submission that I should treat his fellow worker, Nunn, as excluded from the ownership of the copyright on the basis of evidence given by the plaintiff as to the part the latter had played in the compilation of the book being confined to supplying material but not writing any of it. But this was a late submission made only when the issue of damages came to be discussed at the end of the case. The evidence shows that Nunn helped to compile the material in the book and he was referred to in the publishing agreement, executed by the plaintiff, as one of the authors and as taking part in the publishing of the book, and as entitled to share in the royalties payable to the authors. And the evidence also shows that his name appeared in editions of the book as one of the co-authors. It is by no means clear that his part in the compilation would not make Nunn an author 164 [5.90]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Prior v Lansdowne Press cont. (Copinger and Skone James, supra, par 305). But, in any case, I hold that, for the purpose of this case, I should proceed upon the basis of there being three co-authors who hold the copyright as tenants in common. And as to [689] the shares in which they so hold it, there is evidence provided by the publishing agreement that the royalties were divisible between the authors in the proportions of 60 per cent to the plaintiff, 30 per cent to Wannan, 10 per cent to Nunn, and there is evidence that this was acted on in the process of distribution. In view of this evidence, and the absence of any other, I think I should hold that, for the purpose of this case, the copyright was held by the co-owners as tenants in common in unequal shares according with those proportions of 60, 30 and 10 per cent. I therefore treat the plaintiff as entitled to 60 per cent of the copyright. In the passage cited from Copinger and Skone James, supra, par 692, it is said: “One of the joint authors can sue in respect of an infringement and obtain an injunction and his share of the damages without joining the other authors as plaintiffs.” There is a footnote which raises a query whether the plaintiff cannot recover the full amount of damages subject only to a liability to account to his co-authors. But, on principle, while it is true that an infringement injuring the copyright is an injury done to the copyright as a whole, owned by all the co-owners, one co-owner can only recover compensation in respect of the injury suffered by him, that is, in respect of so much of the copyright as belongs to him. There is authority, too, that one of two tenants in common can recover damages only for a moiety (Blackborough v Graves (1673) 1 Mod Rep 102; 86 ER 765). I therefore proceed upon the basis that it is the injury so far as affects this share of the plaintiff (a 60 per cent share) that is to be the subject of damages.

Joint ownership [5.110] Note that not all jointly produced works result in joint authorship: for example, separate copyrights exist in the words and the music respectively of a song (unless two or more persons produced them together in such a way as to come within the definition of joint authorship): see Hadley v Kemp [1999] EMLR 589 (Chancery Division, Court of Appeal, UK), and the extract from the case above at [5.70]. In Mitchell v Brown (1880) 6 VLR 168, the plaintiff, a veterinary surgeon, had spent many years making observations and taking notes in order to be able to produce a complete picture of the anatomy of the horse. He consulted with an artist who agreed to execute the drawing, based on the information and guidance provided by the plaintiff. The parties agreed to share equally any profits resulting from the sale of copies of the picture. When the artist claimed that it was his work alone, Molesworth J held the picture to be the result of their “joint labour”. Joint ownership of a copyright work may arise independently of authorship through an agreement between the creator and another person or persons (see Stovin-Bradford v Volpoint Properties Ltd [1971] Ch 1007; Rebeschini v Miles Laboratories (Aust) Ltd (1982) 1 IPR 159; Acorn Computers Ltd v MCS Microcomputer Systems Pty Ltd (1984) 57 ALR 389), or may occur as a result of assignment (see Murray v King (1984) 55 ALR 559; Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417), inheritance or devolution by operation of the law (see O’Brien v Komesaroff (1982) 41 ALR 255). While joint owners may sue independently, the consent of all joint owners is required in the granting of assignment or licence. A recent case before the Federal Court demonstrates that where the individual contributors to a joint work cannot be identified, as distinct from their contributions, there is a risk that copyright cannot be claimed in the work unless the individual creations and their creators can [5.110]

165

Intellectual Property: Commentary and Materials

be identified and separated out. This risk is increased when the works are created through separate contributions of individuals working autonomously, rather than as a result of collaborative effort. This problem arises since the “originality” criterion of copyright requires that the work “originate” with the author; otherwise it would not be possible to establish that a work was an original product of independent intellectual effort without identifying the author. In Primary Health Care Ltd v Commissioner of Taxation [2010] FCA 419 (see extract below at [5.120]), the applicant Primary Health Care sought a determination from the court as to whether copyright subsisted in any part of the patient records of one of its clinics and, if so, whether Primary Health Care, as the beneficial owner of a trust operating medical clinics, owned the relevant copyright. The majority of the patient records consisted of a series of entries by way of consultation notes and prescriptions written by whichever medical practitioner was seeing a patient at any given time, while clerical staff recorded a patient’s personal details and medical history on health summary sheets. The court held that where multiple contributors were involved, the patient records could only be regarded as a single work for the purposes of copyright if they could be regarded as either compilations or “works of joint authorship”. In any case, the court did not consider that the patient records could be regarded as works of joint authorship since they consisted of individual entries that were separate contributions by each author using their own intellectual effort, rather than being the product of collaboration between the various authors. Another problem that existed for Primary Health Care in establishing its claim to ownership of the copyright in the patient records was that, since not all likely contributors could be regarded as employees of the relevant clinic, it could not prove that the contributions had been made in pursuance of terms of employment. Hence, copyright ownership could not be held to have been automatically vested in Primary Health Care under the Copyright Act 1968 (Cth) s 35(6). Furthermore, the court did not consider that the entries (which, in the main, consisted of only a few words describing patients’ medical conditions, medications and physiological and pathological data) demonstrated the level of originality and independent intellectual effort that was required for them to qualify as original literary works. While there may have been considerable medical expertise and professional skill underlying the diagnoses, the selection of medications or the interpretation of the above data, the relevant independent intellectual effort required to produce an original literary work needed to be directed to the expression of an idea rather than its formulation.

Primary Health Care v Commissioner of Taxation [5.120] Primary Health Care Ltd v Commissioner of Taxation [2010] FCA 419 Federal Court of Australia [This case involves six separate applications for appeals under Taxation Administration Act 1953 (Cth) Part IVC in respect of objection decisions made by the respondent, the Commissioner of Taxation. Primary Health Care Ltd (PHC) was a public company and the sole beneficial owner of all issued units in a unit trust that operated a group of medical clinics. The issues in these applications arose out of the purchase of certain medical and dental practices and concern as to whether the trustee was entitled to claim income tax deductions arising from the acquisition of copyright interests as part of this purchase. The preliminary questions concerned issues pertaining to whether the 166 [5.120]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Primary Health Care v Commissioner of Taxation cont. applicant was entitled to claim deductions with respect to intellectual property rights – namely, copyright in patient records – allegedly acquired by it in the relevant year of income under Income Tax Assessment Act 1997 (Cth) s 373-10(1).] STONE J: [121] Works of joint authorship 121. The fact that all except one of the sample practice patient records have multiple authors warrant some comments as to why these records cannot be regarded as works of joint authorship. The definition of works of joint authorship is set out at [40] above. As the statutory definition indicates, it is central to the concept of joint authorship (as opposed to co-authorship) that the product of the collaboration between the authors is a joint work, not one in which the individual contributions are separate. 122. Although in some cases the consultation notes and history of a patient where entries made by more than one doctor, could be seen as forming a continuous narrative with the patient as its subject, the individual entries are separate and distinct and, on the evidence, not the result of collaboration between the doctors. The description of the process given by the doctors both in their affidavit evidence and in cross-examination indicates that each entry in the consultation notes is created by the doctor using his or her individual expertise and intellectual effort to form and record an opinion as to the patient’s condition and treatment. Whether or not the individual doctors collaborated in their care of a patient, there is no evidence of collaboration in the production of the patient records. The copyright status of individual entries in the consultation notes 123. Where there are multiple individual entries in the consultation notes issues concerning the copyright status of the individual contributions are raised. They include identification of each work for which copyright is claimed, the identity of the author, whether the author is a qualified person and whether the work is an original literary work. The identification of each work 124. The applicant submitted that the summary sheet and consultation notes for each patient comprise one (or in the alternative, two) original literary work. It also submits that each referral letter comprises one original literary work. The referral letters are considered below at [136]. The submission concerning the consultation notes, and the alternative, must be rejected. With the possible exception of the records of Dr di Michiel’s sample practice there is more than one author of the entries in the consultation notes for all the sample practices that are in evidence. As the patient records are not works of joint authorship and are not compilations, the consultation notes cannot be regarded as one work for the purposes of copyright. It is therefore necessary to identify each work for which copyright is claimed; IceTV at [15] per French CJ, Crennan and Kiefel JJ and [105] per Gummow, Hayne and Heydon JJ. This has not been done. The author of each work 125. Assuming for the moment that each individual entry in the consultation notes and summary sheets is an identified work, it would be necessary for the author of each work to be identified. The summary of the patient records for each doctor shows that this has not been done. Even if it has been established that each author of entries in the consultation notes and summary sheets was an employee of the sample doctor or (where relevant) the owner of the sample practice, the statutory vesting of copyright in an employee under s 35(6) operates only where the relevant work “is made by the author in pursuance of the terms of his or her employment”. For this requirement to be met the individual authors need to be identified. 126. Furthermore, it is also necessary to prove that each author is a qualified person. Although the evidence establishes that each sample doctor is an Australian citizen and therefore a qualified person there is no such evidence in relation to the other authors of the medical records. [5.120]

167

Intellectual Property: Commentary and Materials

Primary Health Care v Commissioner of Taxation cont. Whether the individual entries are original literary works 127. The respondent submits that the individual contributions consisting in the most part of no more than a word or a few words naming medical conditions are not sufficiently substantial or original to qualify as original literary works and therefore do not attract copyright. … These notes convey information but, as French CJ, Crennan and Kiefel JJ commented in IceTV at [45], “Not every piece of printing or writing which conveys information will be subject to copyright”. Many more examples can be seen in the discussion of the patient records tendered in respect of each sample practice. 128. In support of this submission, the respondent cited the decision in Noah v Shuba [1991] FSR 14 where the plaintiff claimed that a short extract taken from a publication entitled A Guide to Hygienic Skin Piercing in which he held the copyright constituted a work in its own right. The extract was: “Follow clinic procedure for aftercare. If proper procedures are followed, no risk of viral infections can occur”. As it happened, it was not necessary for Mummery J to decide the issue however his Honour, having heard argument from both sides, said, at 33, that he would have rejected the submission that the extract was a work in its own right as “Those two sentences on their own do not afford sufficient information, instruction or literary enjoyment to qualify as a work”. 129. Invariably, findings as to whether an extract such as Mummery J considered is an original literary work will involve fine distinctions and an obiter dictum should not be scrutinised too carefully. Nevertheless, the case for copyright existing in the entries put forward as examples by the respondent is much less persuasive than for the extract considered by his Honour. 130. In Brodel v Telstra Corporation Ltd [2004] FCA 505 (Brodel), Kenny J held at [13], that the word “Smartfax” did not constitute an original literary work in which copyright was capable of subsisting. A similar view was expressed about the word, “Exxon” in Exxon. In Exxon Stephenson LJ commented at Ch 143; All ER 248, that “a literary work would be something which was intended to afford either information and instruction, or pleasure in the form of literary enjoyment” and that the word, “Exxon” was neither a work nor literary, despite the admitted originality in its creation. Other relevant examples referred to by Kenny J in Brodel include Francis Day and Hunter Ltd v Twentieth Century Fox Corporation Ltd [1940] AC 112 where the song title “The Man who Broke the Bank at Monte Carlo” was held not to be an original literary work and Green v Broadcasting Corporation of New Zealand (1983) 2 IPR 191 which took the same view of the title of a talent quest show, “Opportunity Knocks”. 131. As Stephenson J accepted, “Smartfax” and “Exxon” being invented words are undoubtedly original expressions, however, that very novelty detracted from any argument that they could inform, instruct or entertain. Entries in medical records even where they are limited to clinical data and names of medications have a greater capacity to inform and instruct (if not to entertain) than the expressions in these examples. This, however, is not sufficient to support a claim for copyright in those entries. The clinical data and names of medications are not expressions that originate with the doctor who has recorded them. 132. Even entries that contain some comment are not sufficiently substantial to qualify as works the product of independent intellectual effort directed to expression. … 133. None of this denies the intellectual effort and professional skill needed to form the diagnoses, to select methods of treatment or to understand the significance of clinical data that is recorded, however, copyright protects a form of expression not this underlying expertise. Conclusions as to subsistence of copyright 134. As mentioned above, PHC claims copyright in the patient records of the sample practices as described above at [48]. As the summaries above show, in evidence in this proceeding were examples of consultation notes for all the sample doctors, some examples of summary sheets and a few examples of referral letters and prescriptions. Applying the principles identified above, and contrary to 168 [5.120]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Primary Health Care v Commissioner of Taxation cont. PHC’s submission that the subsistence of copyright in these records is “uncontroversial”, I have found little evidence to support a finding that copyright subsists in them. In fact, as explained below, I find copyright only in the referral letters and in the consultation notes for di Michiel patient 6. I have not found any instances of copyright in prescriptions written in the sample practices or in health summaries. Prescriptions and health summaries 135. The prescriptions consisted only of the names of medications, dosage and standard directions, such as “nocte” or “10mg 1/2 m”. There were only a few examples of health summary sheets that were distinct from the consultation notes. Often the health summaries were merely noted at the beginning of the consultation notes as for instance in the case of Drs di Michiel and Galati; see above at [56] and [60] … Irrespective of the method of recording health summaries, however, they generally contained only a list of previous illnesses and procedures … These records were not sufficiently substantial to qualify as original literary works embodying independent intellectual effort directed towards expression. … Consultation notes 137. The consultations notes in respect of di Michiel patient 6, described above at [58], were wholly written by the identified author, Dr di Michiel, who is a qualified person. As there was only one author it is possible to regard the accumulated record as forming a single work rather than having to consider individual entries. That being so it was possible to discern a continuous narrative showing independent intellectual effort expended in expression. While that effort was probably minimal, taken as a whole, I find that these notes constitute an original literary work authored by Dr di Michiel. … 138. In relation to the records in evidence for the other sample practices, I am not satisfied that the consultation notes are original literary works in which copyright subsists. In summary, the entries in the notes are largely restricted to notations of the names of medical conditions and medications as well as physiological and pathological data such as blood pressure and blood count readings. As such their expression does not display the independent intellectual effort in their expression necessary for copyright protection.

NON-AUTHORS Commissioned works [5.130] As a general rule, the copyright of a commissioned work rests with the creator or

author unless there is any agreement made between the parties as to assignment or other dealing with copyright. There are specific exceptions for commissioned photographs, portraits and engravings in the Copyright Act 1968 (Cth) s 35(5), and for commissioned sound recordings and films in ss 97(3) and 98(3). Section 35(5) addresses the vesting of copyright in a commissioned portrait, engraving or photograph. It draws a significant distinction between portraits and engravings on the one hand, and commissioned photographs on the other. In the case of a commissioned portrait or engraving, the copyright remains with the person who commissioned the work; in the case of commissioned photographs, the copyrights remains with the person who commissioned the photograph, but only where the photographs are taken “for a private or domestic purpose”. [5.130]

169

Intellectual Property: Commentary and Materials

This purpose is defined in s 35(7) as including a portrait of family members, a wedding party or children. In other circumstances, such as major commercial works, the photographer, as the creator of the photograph owns the copyright. This restriction in respect of commissioned photographs arises out of amendments introduced into the Copyright Act 1968 in 1998. Prior to 1 July 1998, copyright was vested in the person who commissioned them. The restriction recognised the distinction between major commercial works by professional photographers and private works. Further, s 35(5) provides that where the purpose of a portrait, engraving or photograph commission is made known or implied at the time of the commission, and the copyright rests with the person commissioning it, the author or creator of the work is entitled to restrain the copyright owner from using the work for any other purpose than that for which it was commissioned. Similar provisions exist in respect of subject matter other than works (ie, subject matter covered by Part IV of the Act). Section 97(2) provides that the maker of a sound recording is the owner of the subsisting copyright. However, s 97(3) provides that the person commissioning a sound recording is the owner of the recording in the absence of any agreement to the contrary, while s 98(2) and (3) make an identical provision in respect of films. Note that the copyright in a film or video only relates to the moving images and sound – works incorporated into a film or video, such as the screenplay and the music, must be considered separately.

Journalists’ copyright [5.140] Prior to 1998, employee journalists retained general control over the copyright of

their work, other than for some limited exceptions for which rights rested with the employer/proprietor. These employer exceptions applied in respect of broadcasting the work, or for reproduction for publishing or broadcasting purposes. The rights of journalists were redefined and curtailed in amendments to the Copyright Act 1968 (Cth) in 1997 (which came into effect in 1998) that were intended to clarify and establish the ownership of material in electronic form. Publishers sought amendments to the Act to ensure they retain those electronic reproduction and distribution rights. Section 35(4)(d) provides that generally a work made by a journalist under a contract of employment for the purpose of inclusion in a newspaper, magazine or similar periodical is vested in the employer or proprietor of the newspaper, magazine or similar periodical. However, there is a limited exception to this general provision that allows for the journalist to retain copyright in some circumstances in the print medium only. Section 35(4)(c) allows the journalist to retain copyright in a work or similar for the purposes of reproducing it for inclusion in a book, or for making photocopies from a hard copy of the original publication. But it does not include copyright over reproductions made by the proprietor for the purpose connected with the publication of the newspaper, magazine or similar periodical. Nor does it include any rights in respect of electronic reproduction of the work or its reproduction in the digital environment. All other rights, including those in the print medium not included in the limited journalists’ rights described above, are vested in the proprietor. In the following extract from De Garis v Neville Jeffress Pidler (1990) 95 ALR 625, a range of issues relating to the reproduction of journalists’ work for a news clipping service were examined. The case includes a statement that the journalist retains the right to “control and 170 [5.140]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

license such things as publication in book form, photocopying and clipping services, inclusion of the work in certain data-base systems, filming and probably merchandising of cartoon characters, for example on badges and tee-shirts”. But note, in particular, that this case predates the abovementioned changes to the Copyright Act 1968 (Cth) that were introduced in 1998.

De Garis v Neville Jeffress Pidler [5.150] De Garis v Neville Jeffress Pidler Pty Ltd (1990) 95 ALR 625 Federal Court of Australia [The two applicants, Brian de Garis and Matthew Moore, were authors of articles published in The West Australian and Sydney Morning Herald newspapers respectively. De Garis’s work was supplied pursuant to a contract of services, whereas Moore’s work was provided in the course of his employment as a journalist with the Sydney Morning Herald. The applicants claimed that the respondent, Neville Jeffress Pidler Pty Ltd (Jeffress), infringed the copyright in their respective works in its business as a press-clipping service. Jeffress “monitor[ed]” newspapers and other media for “subjects” required by a subscriber to the service and provided a photocopy of the material requested, together with a statement of the source of the material, in return for a fee.] BEAUMONT J: 14. By s 32(1), it is provided that, subject to the Act, copyright subsists in an original literary work that is unpublished and of which the author was a qualified person at the time when the work was made. By s 32(4), a “qualified person” includes a person resident in Australia. By s 22(1), a literary work is “made” when it is first reduced to writing or some other material form. By s 32(2), it is provided that, subject to the Act, where an original literary work has been published, if copyright in the work subsisted immediately before its first publication, copyright continues to subsist in the work if the first publication of the work took place in Australia. By s 29(1)(a), subject to that section, for the purposes of the Act, a literary work shall be deemed to have been published if reproductions of the work have been supplied, whether by sale or otherwise, to the public. 15. By s 35(2), subject to that section, the author of a literary work is the owner of any copyright subsisting in the work by virtue of Part III of the Act. 16. It is not, and could not be, seriously disputed, that Mr de Garis is the author of an original literary work being the article now in question. It follows, in my opinion, that Mr de Garis was the owner of the copyright in the literary work, being the unpublished article. Upon publication of the article, copyright continued to subsist in the article and Mr de Garis is the owner of copyright in that work. 17. The provisions of both s 35(4) and s 35(6), to which reference will be made later in considering Mr Moore’s claim, cannot apply here since Mr de Garis was a “contributor” or “freelance” writer and was not employed by the proprietor of “The West Australian” under a contract of service (see Hexagon Pty Ltd v Australian Broadcasting Commission (1975) 7 ALR 233 at p 257; Walker, The Law of Journalism in Australia at p 338; Halsbury’s Laws of England, 4th ed at p 715, para 1958). 18. Although the proprietor of the newspaper may have commissioned the work, since the contract was one for the provision of services, (other than in respect of a photograph, a portrait or an engraving – see s 35(5) of the Act) the newspaper proprietor does not acquire the copyright in the work at law (see Copinger and Skone James on Copyright, 12th ed at p 130, para 342; cf Beloff v Pressdram Limited (1973) RPC 765 at pp 772-6). Nor, in my view, under an “open” contract of the present kind is there any basis for holding that the newspaper proprietor was entitled to the copyright in equity (see Copinger and Skone James at p 139, para 369; cf University of London Press Limited v University Tutorial Press, Ltd (1916) 2 Ch 601 at p 612). The relevant nature of the copyright [5.150]

171

Intellectual Property: Commentary and Materials

De Garis v Neville Jeffress Pidler cont. 19. By s 31(1)(a), in the case of a literary work, copyright is the exclusive right, inter alia, to reproduce the work in a material form. Infringement 20. By s 36(1), subject to the Act, the copyright in a literary work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner, does in Australia any act comprised in the copyright. 21. In the present case, in my opinion, Jeffress has reproduced the work in a material form. … The evidence in Mr Moore’s claims (i)The contract of employment 76. Mr Moore is a journalist employed by John Fairfax and Sons Limited (“John Fairfax”) as State Political Correspondent of the Sydney Morning Herald. It is now common ground that Mr Moore’s employment was negotiated orally in November 1983 when he was offered, and accepted, “a job as a cadet on the Sydney Morning Herald”. Mr Moore was then informed that a letter would be sent to him. He did receive a letter from John Fairfax which is no longer available. It is also now common ground that attached to the letter was a copy of the Journalist (Metropolitan Daily Newspapers) Award 1986. The letter said nothing about questions of copyright. It is further common ground that Mr Moore is a full-time employee of John Fairfax and subject to editorial direction and control. It is also agreed, for the purposes of this litigation that, apart from remuneration, there has been no variation of the original terms of his employment. (ii) Authorship of the works 77. In September 1987, in the course of his employment with John Fairfax, Mr Moore wrote the three articles already described. … At the time, Mr Moore was an Australian citizen (see s 32(4)). (iii) Publication of the works 78. The works were published in the editions of the Sydney Morning Herald dated 9 September, 4 September and 11 September 1987 respectively. (iv) Reproduction of the works by Jeffress 79. Jeffress acknowledges that, under the trade name “NJP News Express”, it has reproduced each of the articles written by Mr Moore and published by John Fairfax. It is not suggested that this was done pursuant to any express authority of Mr Moore. The legal issues 80. Again it is convenient to deal with the issues in stages. Ownership of the relevant copyright 81. In addition to the statutory provisions described in dealing with the claims made by Mr de Garis, it is necessary, for present purposes, to refer to s 35(4) which provides, so far as presently relevant, that where a literary work is made by the author in pursuance of the terms of his employment by the proprietor of a newspaper under a contract of service and is so made for the purpose of publication in a newspaper, the proprietor is the owner of any copyright subsisting in the work insofar as the copyright relates to – (a)

publication of the work in any newspaper, magazine or similar periodical; (b) broadcasting the work; or (c) reproduction of the work for the purpose of its being so published or broadcast, but not otherwise.

82. In my opinion, the operation of this provision in the circumstances of the present case is as follows: (1)

Each of the articles written by Mr Moore is a “literary work”.

172 [5.150]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

De Garis v Neville Jeffress Pidler cont. (2)

Mr Moore is the author of the works.

(3)

The works were made pursuant to the terms of Mr Moore’s employment under a contract of service with John Fairfax (cf Sun Newspapers Ltd v Whippie (1928) 28 SR (NSW) 473 at p 478; see also Beloff’s Case, above, at pp 768-776).

(4)

The works were made for the purpose of publication in the Sydney Morning Herald.

(5)

It follows, in my view, that John Fairfax is the owner of the copyright in the works for the purposes (a), (b) and (c) above, but that Mr Moore is the owner of the copyright for other purposes.

The consequences of the division of the ownership of the copyright under s 35(4) 83. As has been seen, the newspaper proprietor owns the copyright insofar as it relates to publication in a newspaper. What is meant by “publication” in this context? 84. In Infabrics Ltd v Jaytex Ltd (1982) AC 1, the House of Lords held that “publishing” in the context in question there meant “making public in the territory a work not previously made public” (per Lord Wilberforce at p 17; see also per Lord Scarman at p 25). 85. By s 29(1)(a) of the Act, a literary work shall be deemed to have been published if, but only if, reproductions of the work have been supplied (whether by sale or otherwise) to the public. 86. It is a moot point, which need not now be decided, whether, by virtue of the operation of s 35(4), the rights of a newspaper proprietor are limited to first publication only and do not extend to subsequent publications such as syndication to newspapers other than the first in which the work appeared (see Susan Bridge, Journalists as Copyright Owners, Copyright Bulletin, Vol XXIII, No 3 1989 10 at p 13). The present question is a different one. In her article, Susan Bridge goes on to say (at p 13): Rights of the journalist The employed journalist retains copyright for all purposes other than those specifically granted to the proprietor. Owning “the rest” enables the journalist to control and license such things as publication in book form, photocopying and clipping services, inclusion of the work in certain data-base systems, filming and probably merchandising of cartoon characters, for example on badges and tee-shirts. 87. So far as “photocopy and clipping services” are concerned, I agree. It is not necessary to express an opinion on the other activities mentioned. … 92. It follows, in my opinion, that Mr Moore is the owner of the relevant copyright and that, for present purposes, he is entitled to sue for any infringement. The statutory and other defences 93. For the reasons given in considering the claims of Mr de Garis, I am of the opinion that Jeffress has failed to establish any of the statutory or other defences raised. Infringement and relief 94. It also follows, in my view, that there has been an infringement by Jeffress of Mr Moore’s copyright and that Jeffress should be enjoined from further infringement.

Employment: Contract of service or apprenticeship [5.160] The Copyright Act 1968 (Cth) s 35(6) provides that the general rule in respect of copyright in the employment context is that copyright in works created by employee authors, [5.160]

173

Intellectual Property: Commentary and Materials

pursuant to the terms of their employment under a contract of service, remains with their employer. This statement raises two critical issues, namely: • what is the distinction between employment pursuant to a “contract of service” (ie, an employee) and a independent “contract for services” (ie, an independent contractor; and • what constitutes “pursuant to the terms of their employment”? The distinction between employee and contractor may be determined by the general principles of employment law. Both questions are particularly relevant and problematic where the work is prepared with little or no “direction” from the alleged employer. In Stephenson, Jordan & Harrison v McDonald and Evans (1952) 69 RPC 10, Denning LJ considered that the extent to which a person is an integral part of a business or only an accessory to it was a key factor in deciding whether they were an employee. In Nora Beloff v Pressdram Ltd [1973] 1 All ER 273, Ungoed-Thomas J opined: Control is just one of many factors whose influence varies according to circumstances. In such highly skilled work as that of the plaintiff it seems of no substantial significance. The test which emerges from the authorities seems to me, as Lord Denning said, whether on the one hand the employee is employed as part of the business and his work is an integral part of the business, or whether his work is not integrated into the business but is only accessory to it, or … the work is done by him in business on his own account.

The distinction between contract of service and contract for services was examined at some length in De Garis v Neville Jeffress Pidler (1990) 95 ALR 625 (see [5.80] above) in respect of the status of each of the plaintiffs, de Garis (a freelance writer) and Moore (employed by a newspaper). Hence, de Garis retained copyright ownership in his articles, while the copyright ownership over Moore’s articles was divided between him and his employer in accordance with Copyright Act 1968 (Cth) s 35(4) as it then existed (ie, prior to the amendments of 1998 mentioned above at [5.70]). In respect of academic authors, some older cases suggest that copyright in lectures remains with the academic who produced them. In Stephenson, Jordan & Harrison v McDonald and Evans (1952) 69 RPC 10, Lord Eversham MR commented (at 18): Lectures delivered, for example, by Professor Maitland to students have since become classical in the law. It is inconceivable that because Professor Maitland was in the service at the time of the University of Cambridge that anybody but himself, one would have thought, could have claimed the copyright in those lectures.

See also Oceanroutes (Australia) Pty Ltd v M C Lamond (1984) AIPC 90-134, Redrock Holdings Pty Ltd v Hinkley (2001) 50 IPR 565; Seven Network (Operations) Ltd v TCN Channel Nine Pty Ltd (2005) ALR 569. The interpretation in Stephenson, Jordan & Harrison v McDonald and Evans (1952) 69 RPC 10 appears to still have carriage. In two recent cases, the Federal Court clarified the circumstances in which employers may claim ownership of copyright works created by their employees, and in particular how the court may determine whether works are made in pursuance of an employment contract. The cases, University of Western Australia v Gray [2009] FCAFC 116 and EdSonic Pty Ltd v Cassidy [2010] FCA 1008, indicate that courts will use an exclusive interpretation of employment contracts and only assign copyright to employers where works are created in direct furtherance of employment. While University of Western Australia v Gray [2009] FCAFC 116 concerned the issue of ownership of inventions and patents, the legal principles it raises in respect of the conditions and parameters of the employment context apply equally to copyright. The respondent 174 [5.160]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Professor Gray was a full-time professor of surgery at the University of Western Australia (UWA). When Professor Gray ceased to be a full-time employee at UWA in 1997, he assigned various property rights to Sirtex Medical Ltd, a company created for the purpose of commercialising and marketing technologies developed from his research. The university argued that Professor Gray had breached his contract of employment by failing to comply with an implied term of the contract that provided that UWA owned the inventions developed by him in the course of his employment there. The Full Federal Court determined that the law did not imply any term into Professor Gray’s contract of employment to stipulate that Dr Gray was under a duty to provide UWA with the benefit of his inventions, even though the nature of Professor Gray’s research meant that it was likely inventions could quite likely result.

University of Western Australia v Gray [5.170] University of Western Australia v Gray [2009] FCAFC 116 Federal Court of Australia (FC) [The respondent, Dr Gray, was employed by the University of Western Australia (UWA) as Professor of Surgery on a full-time basis from February 1985 until March 1997. He moved to a fractional 30 percent appointment, focusing on clinical work at the Royal Perth Hospital while remaining Professor of Surgery at UWA. Dr Gray resigned from UWA in November 1999. As a full-time employee, Dr Gray was required by the terms of his appointment, relevantly: (a) to teach, to conduct examinations and to direct and supervise the work in his field; and (b) to undertake research, to organise research and generally to stimulate research among the staff and students. In substance, UWA’s claim against Dr Gray was that, by reason of his employment, he had obligations to the university in respect of the inventions arising from his research, and that, as a result, it had proprietary rights in respect of those inventions and of associated patent applications and patents, and that by reason of Dr Gray’s having dealt with the inventions as his own, UWA was entitled to obtain certain remedies. The university was appealing from a judgment of the primary court which dismissed its claims in its entirety.] … LINDGREN, FINN AND BENNETT JJ: 150 … The law is well settled upon the position of an officer or employee who makes an invention affecting the business of his or her employer. It is an implied term of employment that any invention or discovery made in the course of the employment of the employee in doing that which he is engaged and instructed to do during the time of his employment, and during working hours, and using the materials of his employers, is the property of the employer and not of the employee. Having made a discovery or invention in course of such work, the employee becomes a trustee for the employer of that invention or discovery, and he is therefore as a trustee bound to give the benefit of any such discovery or invention to his employer. But the mere existence of the employer/employee relationship will not give the employer ownership of inventions made by the employee during the term of the relationship. And that is so even if the invention is germane to and useful for the employer’s business, and even though the employee may have made use of the employer’s time and resources in bringing the invention to completion. Certainly, all the circumstances must be considered in each case, but unless the contract of employment expressly so provides, or an invention is the product of work which the employee was paid to perform, it is unlikely that any invention made by the employee will be held to belong to the employer. 151 The fundamental idea said to inform when and why an employee’s trusteeship of an invention arises is not hard to find and is deeply rooted in the general character of what in times past was [5.170]

175

Intellectual Property: Commentary and Materials

University of Western Australia v Gray cont. described as the master-servant relationship. Viscount Simonds and Lord Reid both made this plain in Sterling Engineering Co Ltd v Patchett [1955] AC 534 (Sterling Engineering). Viscount Simonds stated (at 543): It is elementary that, where the employee in the course of his employment (ie, in his employer’s time and with his materials) makes an invention which it falls within his duty to make (as was the case here) he holds his interest in the invention and in any resulting patent as trustee for the employer. The implied term procuring this result his Lordship considered (at 544) was: … only an implied term in the same sense that it is an implied term, though not written at large, in the contract of service of any workman that what he produces by the strength of his arm or the skill of his hand or the exercise of his inventive faculty shall become the property of the employer. Likewise Lord Reid stated (at 547): No doubt the respondent was the inventor and in the ordinary case the benefit of an invention belongs to the inventor. But at the time when he made these inventions he was employed by the appellants as their chief designer and it is, in my judgment, inherent in the legal relationship of master and servant that any product of the work which the servant is paid to do belongs to the master: I can find neither principle nor authority for holding that this rule ceased to apply if a product of that work happens to be a patentable invention. For a like view where the work product was a copyright article, see Report of the Committee to Consider the Law on Copyright and Design (1977), Cmnd 6732, (UK) para 571. Unless varied or excluded by the parties, the implied term was “the ordinary rule inherent in the parties’ relationship of master and servant” (per Lord Reid at 548). 152 Unsurprisingly, express contractual stipulation apart, with the employer’s entitlement turning on that which it was the employee’s “duty” to do – and for which the employee was paid – the recurrent preoccupation in the case law has been in each instance with the actual subject matter and purpose of the employee’s engagement itself and with the question: “[w]hat is it that he is employed to do?”; cf LIFFE Administration & Management v Pinkava [2007] EWCA Civ 217; [2007] 4 All ER 981 (LIFFE) at [97]. The end of this inquiry is to ascertain whether, if at all, it was part of an employee’s engagement with his or her employer to utilise his or her “inventive faculty” (cf Sterling Engineering at 544; Vokes at 136) in an agreed way or for an agreed purpose for the benefit of, or to further the purposes of, the employer. To use the shorthand of Electrolux Ltd v Hudson [1977] FSR 312 at 326, was the employee “employed to make or discover inventions at all?”, or, as French J put it, did the employee have “a duty to invent?” 153 If the employee’s invention is the, or a, product of what he or she was employed to do, and did do, it will belong to the employer unless otherwise agreed: see eg British Reinforced Concrete Engineering Co Ltd v Lind (1917) 34 RPC 101 (British Reinforced Concrete); Adamson v Kenworthy (1932) 49 RPC 57; Triplex Safety Glass Co v Scorah [1938] 1 Ch 211 (Triplex Safety Glass); and see also Electrolux Ltd, at [97]. In such a case, it would be “inconsistent with [the employee’s] duty to appropriate to himself an invention of this kind”: Edisonia Ltd v Forse (1908) 25 RPC 546 at 552. 154 By way of contrast, if (a) the employee was not engaged to use his or her inventive capacity at all (cf Re Charles Selz Ltd’s Patent Application (1954) 71 RPC 158); or (b) was so engaged only by way of additional duties to use his or her inventive capacity as and when asked (Spencer Industries Pty Ltd v Collins [2003] FCA 542; (2003) 58 IPR 425) or only for an agreed purpose, the employer would have in case (a) no claim on the employee’s invention at all and in case (b) such a claim only if the invention resulted from a task the employee was asked to perform by way of additional duty or if the invention was related to the effectuation of the agreed purpose. … 176 [5.170]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

University of Western Australia v Gray cont. Conclusion 206 His Honour’s conclusion that UWA failed at the threshold is correct and for a variety of reasons. Justice French was well aware that the circumstances of Dr Gray’s employment were a long way removed from the situations that gave rise to the common law implication of employer ownership of employee inventions that were developed in the course of, and as a product of, what the employee was employed actually to do. Dr Gray’s employer was a university; he was a member and an employee of it. In determining whether such an employment was nonetheless one which attracted the common law implication, French J was obliged to have regard to what Viscount Simonds in Sterling Engineering described as “more general considerations” and he did have regard to them. As we have indicated, these include both considerations of policy and consequentialist considerations. Importantly, regard can be had to considerations of these kinds, not only in support of making the implication into a class, but also to negative the implication. In this matter, and again rightly in our view, his Honour relied upon them to negative the implication. His Honour also relied, as we have indicated, upon four specific and differentiating aspects of Dr Gray’s employment and research environment. One of these alone – that Dr Gray had no duty to invent – could well of itself have justified the dismissal of UWA’s claim. What we wish to highlight, because it was a central pillar in his Honour’s reasons and is in our own, is the distinctiveness of a university such as UWA and of academic employment in it as considerations relevant to the determination of the “threshold question”. 207 The employee invention implied term is a particularly blunt instrument to settle the ownership of employee inventions. UWA recognised as much in the provision it made in the Patents Regulations, and then the IP Regulations, in relation to the apportionment of the benefits derived from patents and other intellectual property, as between UWA and the inventor/originator. Equally importantly, as we have indicated, in employment contracts to which it applies, the implied term presupposes the common law duty of fidelity and the equitable duty of confidence to protect for the employer’s benefit confidential (and other) information generated during the course of the employment, which is not, or is not yet, patentable. As this case highlights, it is important to appreciate what the implication itself presupposes about how the employment relationship is already regulated when considering the threshold question. It is this which explains and justifies French J’s concern with Dr Gray’s employment circumstances and his conclusions that Dr Gray’s freedom to publish research results and the need to collaborate with external institutions told against the implication. 208 His Honour obviously considered freedom to publish as an important value in the setting of a university given its nature and public purposes. And we would note in passing that, in other contexts involving education (eg charitable trusts for the advancement of education), the law has placed a particular value upon the dissemination of the results of research: see Taylor per Griffith CJ at 231. Justice French obviously attributed a like significance to the academic researcher’s freedom to choose the subject and manner of research without being subject to a duty to invent. As is quite clear from [160] of his Honour’s reasons, these two features plus the fact that the contract of employment was with a university serving public purposes, were significant characteristics of the general class or type of contract that was under consideration for the purposes of the threshold question. Dr Gray’s contract, as his Honour later found, had those characteristics: see [1359]-[1363]. 209 In appraising that contract, the primary Judge necessarily had regard both to the nature and public purposes of universities and to the distinctiveness of academic employment in universities, focusing in particular on the two “freedoms”. None of these matters, though, were ones upon which significant evidence was adduced. This explains why his Honour’s focus was on such material as there was relating to UWA in its statutory setting and to the terms and circumstances of Dr Gray’s employment. Nonetheless, it was not only proper but also necessary for his Honour to have regard to the more general issues of policy suggested by that material (especially as they related to the two freedoms) which would arise if the implication was, or was not, to be made. In that regard his [5.170]

177

Intellectual Property: Commentary and Materials

University of Western Australia v Gray cont. reference to the work of Monotti and Ricketson and to “academic freedom” was entirely appropriate. After all, what was being made was a judgment as to the “necessity” of implying a term into a particular class or type of contract. There was ample reason for not making the implication sought given the class or type of contract in question.

[5.180]

Note

On 12 February 2010, the High Court refused the University’s application for special leave to appeal from the Full Federal Court’s decision in favour of Professor Gray. [5.190] In EdSonic Pty Ltd v Cassidy [2010] FCA 1008, the Federal Court further clarified

the circumstances in which employers may claim ownership of copyright works created by their employees, and, in particular, how courts will determine whether works are made in pursuance of an employment contract. Courts will only assign copyright to employers where works are created in direct furtherance of employment. EdSonic had worked with the respondent to adapt teaching materials she had previously developed into a format that could be commercialised. The respondent was to be compensated for her work with shares in EdSonic and royalties from any sale of the online materials. The central issue in this case was the interpretation and application of the Copyright Act 1968 (Cth) s 35(6) and, thus, whether the respondent was an employee of EdSonic and the online materials produced in “pursuance of the terms” of her employment. Moore J noted that the key consideration was: … not the bare question of whether the author is employed under a contract of service at the time a work is made but whether the relevant work is made in furtherance of the contract of employment for the employer … that is, did the employee make the work because the contract of employment expressly or impliedly required or at least authorised the work to be made. Approached in this way, it is an expression which comprehends notions similar to those addressed by the Full Court in Gray in the context of patent law …

On the facts, it was concluded that the respondent had not been an employee of the applicant when developing the materials in dispute. The respondent had commenced writing the materials prior to any engagement with the applicant, and the materials were substantially completed while operating her own business prior to any association with the applicant. See also The Royal Children’s Hospital v Robert Alexander [2011] APO 94, which further illustrates the employer-employee relationship. Although it deals with ownership of patents, like Gray, the principles in respect of the employer-employee relationship still apply. The Alexander case demonstrates an interesting distinction between two related inventions by Dr Alexander while employed at the hospital, one which was deemed by the delegate for the Commissioner of Patents to have been conceived in the course of Dr Alexander’s employment, and the other which was deemed not to have been in the course of his employment. Employee or independent contractor? [5.200] The case of Redrock Holdings Pty Ltd & Hotline Communications Ltd v Adam Hinkley (2001) 50 IPR 565 in the Supreme Court of Victoria involved a dispute over ownership of computer programs created under a rather informal and largely undocumented contract of employment, as well as the software used to create those programs. Hinkley’s 178 [5.180]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

employment situation was complicated by rather flexible and informal arrangements in both his workplace and working hours, as well as enabling him to work concurrently on his employer projects and other independent projects for other parties.

Redrock Holdings v Adam Hinkley [5.210] Redrock Holdings Pty Ltd & Hotline Communications Ltd v Adam Hinkley (2001) 50 IPR 565 Supreme Court of Victoria HARPER J: [567] These proceedings concern an acrimonious dispute about the ownership of software written by Mr Adam Hinkley, the first defendant in each proceeding. Mr Hinkley’s father, Mr Paul Hinkley, and Mr Paul Hinkley’s business vehicle, Meta Consultants Pty Ltd (Meta Consultants), are also defendants to the proceedings. There is no dispute that Mr Adam Hinkley was the author of the programs in question. Rather, the issues in contention concern the identity of the owner of the copyright in the programs. … [568] … Adam Hinkley is a young man of great talent. He is a computer programmer. Before he left school, he had embarked on the development of a “library” (he referred to it as a “class library”) as that expression is defined in the computer lexicon: that is, a collection of files, computer programs, or sub-routines; a collection of reference materials and software tools: see Dictionary of Computer and Internet Terms (6th ed) by Douglas Downing, Michael Covington and Melody Covington. Another definition, used in this case by Professor Justin Zobel, Associate Professor, Department of Computer Science, RMIT University, is “a collection of functions that a programmer can call upon when writing a piece of software”. Mr Hinkley defines the expression “class library” as “a software tool that is used for making other software”. One of the features of this library is that it comprises reusable code that can be used in many applications. Moreover, it was designed as a “cross-platform” program which is defined as being “applicable to more than one kind of computer (for example PC and Macintosh)”: Dictionary of Computer and Internet Terms (supra). In this case, the library was used to write, or assist in writing, software that is indisputably owned by Redrock as well as software that was being developed by or on behalf of Mr Paul Hinkley and Meta Consultants. It was similarly used by Mr Adam Hinkley in writing software which according to him was exclusively his. … [570] … By the last quarter of 1995 Redrock was ready to employ a programmer with Macintosh skills. Adam Hinkley had those skills, as he demonstrated during a meeting with Messrs Hamilton, Spearritt, and another Redrock director, Rohan Lean. … [571] Mr Hinkley brought with him to the interview his Macintosh prototype of WinPage. There was some dispute at trial about the degree of sophistication of this prototype, but it appears that it comprised a graphic representation of the user interface with limited functionality. … The interview achieved its purpose. Several days later, Redrock offered Mr Hinkley a position. Mr Hinkley accepted. In doing so, he assumed (he says) that the library would remain his; and there can be no doubt that, before he joined Redrock, it was with him that the copyright resided. For the purposes of the Copyright Act 1968, a computer program or compilation of computer programs is a literary work: s 10. By s 31(1) of that Act, copyright in relation to a literary work is (unless the contrary intention appears) the exclusive right to (among other things) reproduce the work in a material form, to publish it, to make an adaptation of it and, if it is an adaptation, to reproduce or publish that adaptation. Subject to s 35 of the Act, the author of a literary work is the owner of any copyright subsisting in it: s 35(2). Where, however, a computer program is made by its programmer in pursuance of the terms of his or her employment under a contract of service, the employer is the owner of any copyright subsisting in the program: s 35(6). … [572] … [5.210]

179

Intellectual Property: Commentary and Materials

Redrock Holdings v Adam Hinkley cont. Mr Hinkley relies upon the circumstance that there was no express agreement for the transfer of copyright in the library from him to Redrock. But if, having taken to his new employer a library which was then in embryonic form, Mr Hinkley in pursuance of the terms of his employment under a contract of service transformed that library into something that was qualitatively and quantitatively quite different, the copyright in the work will vest in Redrock by virtue of the operation of s 35(6) of the Copyright Act 1968. It is not necessary for there to be any transfer agreement or licence, either written or oral. In such circumstances, copyright in the qualitatively and quantitivately different library vested in Redrock by operation of law. Mr Hinkley submits that he was employed under a contract for services rather than under a contract of service. He relies on the so-called “control test”, saying that he was given little, if any, direction or control by Redrock and cites passages from the judgment of Evershed MR in Stevenson Jordan & Harrison Ltd v MacDonald & Evans [[1952] I TLR 101]. However, legal authority to control, while remaining relevant and indeed often decisive, is no longer the sole determining factor when assessing whether a person is employed under a contract of service, in particular where that person exercises a high degree of professional skill and expertise in the performance of his or her duties. So, in Beloff v Pressdam Ltd [[1973] 1 All ER 241]] Ungoed-Thomas J cited with approval a number of passages to this effect and then said at 250: It thus appears, and rightly in my respectful view, that, the greater the skill required for an employee’s work, the less significant is control in determining whether the employee is under a contract of service. Control is just one of many factors whose influence varies according to circumstances. In such highly skilled work as that of the plaintiff it seems of no substantial significance. The test which emerges from the authorities seems to me, as Denning LJ said, whether on the one hand the employee is employed as part of the business and his work is an integral part of the business, or whether his work is not integrated into the business but is only accessory to it, or, as Cooke J expressed it, the work is done by him in business on his own account. [573] In this case, there is no doubt that Mr Hinkley as a software programmer exercised a high degree of professional skill and expertise in the performance of his duties for Redrock. Moreover, as a skilled Macintosh technician employed to fill a gap in Redrock’s technical staff, it could be expected that even as an employee he would be given a great deal of latitude. I therefore conclude that the evidence about control does not in the circumstances of this case establish that Mr Hinkley was employed under a contract for services. In his judgment in Stevenson Jordan & Harrison Ltd v MacDonald & Evans [op cit at 111] Lord Denning expressed reservations about the control test, and instead enunciated the famous passage which was to become the “integration test”: As [Evershed MR] has said it is almost impossible to give a precise definition of the distinction [between a contract of service and a contract for services]. It is often quite easy to recognise a contract of service when you see it, but very difficult to say wherein the difference lies. A ship’s master, a chauffeur, and a reporter on the staff of a newspaper are all employed under a contract of service; but a ship’s pilot, a taxi-man, and a newspaper contributor are employed under a contract for services. One feature which seems to me to run through the instances is that, under a contract of service, a man is employed as part of the business and his work, although done for the business, is not integrated into it but is only accessory to it. The “integration” or “organisation” test has not been embraced by the High Court of Australia. However, it may be helpful in an appropriate case as one indicator of the totality of the relationship between the parties, all aspects of which must be considered: Stevens v Brodribb Sawmilling Co Pty Ltd [(1986) 160 CLR 16 at 27 per Mason J, and at 36-37 per Wilson and Dawson JJ]. In doing so, I find that Mr Hinkley’s work as a software programmer was integrated into the business of Redrock. Mr Hamilton gave evidence in his witness statement that in the first four years of its business Redrock’s emphasis 180 [5.210]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Redrock Holdings v Adam Hinkley cont. was in developing the intellectual property in its products and that, after its staff, those products were the most significant asset of the company. Mr Hinkley’s work as a programmer was therefore central to developing the business of Redrock. There is other evidence which satisfies me that Mr Hinkley was employed under a contract of service. He was on a fixed salary, from which group tax was deducted. He signed an Australian Taxation Office Employee Declaration on 3 November 1995. He was entitled to annual leave, to sick leave and to long service leave. Superannuation contributions were made by Redrock on his behalf. Redrock provided Mr Hinkley with necessary equipment and with programs such as CodeWarrior all specially purchased to assist him in writing software for the company, together with access to the Internet to download manuals, information or software as needed. Indeed, in his written submissions Mr Hinkley states on the issue of the use of an external hard disk owned by him that it would be “unbelievable to suggest that I was expected to use my equipment for Redrock’s work”. All the indicia put forward in the evidence are consistent with the conclusion that Adam Hinkley became an employee of Redrock in or about November 1995. … [574] … A very significant aspect of this case, already touched upon, must now be emphasised. The library was from November 1995 being developed not only to better serve as a tool with which to write software (a) for Adam Hinkley and his father, and (b) for the clients of Redrock, but also as a necessary component in the operating capacity of all the software in categories (a) and (b). In other words, the latter, as well as being built by means of the former (that is, with the class library being used as a tool), could not “run” without the class library. In these circumstances, if Mr Hinkley proposed to fulfil his obligations to his employer by drawing upon the library by means which might in the absence of prior agreement blur the question of ownership of the copyright in the library, it fell to Mr Hinkley, as the only repository of the relevant information, to place his employer in a position from which employer and employee, both being fully informed of the relevant facts, could either negotiate a mutually satisfactory resolution to the copyright problem or go their separate ways. … By contrast, it was immaterial to Redrock whether Mr Hinkley developed the software that he was employed to write by resort to one “library” or another – or, indeed, if it was technically feasible, by resort to no library at all. It was similarly immaterial to Redrock whether Mr Hinkley so arranged the software he wrote that some part of an entire package could or could not function independently of another part of the package; if he chose to design a program in such a way that some part of it could not “run” without resort to another, that was his business. But he was employed to create a functional software package, and Redrock were entitled to such protection as was necessary to ensure that functionality. … [580] … I turn now to the question of whether the library software was written during working hours at Redrock. This was an issue to which much time was devoted during the course of the trial. It is an important issue. It is nevertheless also important to record that the ultimate question – that concerning the ownership of copyright in the AW library – depends more on the relationship between the library and the programs written by Mr Hinkley for Redrock than on an identification of the times during which work on the library continued. The plaintiffs contend that, while at work, Mr Hinkley wrote a significantly large part of the library for the purpose of developing software for use by customers of Redrock. Mr Hinkley says the library was developed “almost entirely” outside his life as an employee of Redrock. He says he frequently worked throughout the night and on the weekends making substantial changes to the library. He relies on the fact that he used a portable hard disk to carry the library to and from work, much as a builder might carry his toolbox to work. … [583] … I have little doubt that Mr Hinkley spent some time, outside the hours of his employment, working on the class library as well as on Hotline and eText. I nevertheless find that something in the order of [5.210]

181

Intellectual Property: Commentary and Materials

Redrock Holdings v Adam Hinkley cont. 90% of the development of the AppWarrior library occurred during ordinary business hours and while Mr Hinkley was physically present at the Redrock premises. Much of this time was used in refining AW to operate more effectively with software which Mr Hinkley was writing for Redrock; but, the library being a tool of general application, this work would have assisted, directly or indirectly, the development of the Hotline and eText software as well. This of itself, being a natural concomitant of work that directly benefited Redrock, could not have been the ground of any complaint by that company as Mr Hinkley’s employer. On the other hand, neither could it found any viable claim by Mr Hinkley to copyright in anything. … [584] … For all these reasons, I conclude that, on the balance of probabilities, a very significant proportion of the AW software was written by Mr Hinkley for work-related purposes and during work hours. I also conclude that all the Redrock software written by Mr Hinkley was written during the course of his employment and (with the possible exception of work done at home during transport strikes or other irregular and infrequent circumstances) during work hours. My additional finding that SPFS and other Redrock programs were dependent for their operational capacity upon the AW software leads me to the further conclusion that Redrock was the owner of the copyright in the AW library when Mr Hinkley, without any warning, left that company’s employ in September 1997. During the period of his employment, moreover, the library had been transformed. The copyright which subsisted in November 1995 subsisted in the library as it then was. By September 1997, it was no longer that library. What little original material then remained had been absorbed into a much larger entity capable of performing altogether different tasks. The literary work of September 1997 was a new literary work, made by Adam Hinkley “in pursuance of the terms of his … employment … under a contract of service”: Copyright Act, s 35(6).

Community ownership [5.220] In John Bulun Bulun v R & T Textiles Pty Ltd (1998) 41 IPR 513 in the Federal

Court, the plaintiff attempted to establish a claim of community ownership in the copyright of the artistic works that he had created and which had been subject to infringement of copyright.

John Bulun Bulun v R & T Textiles [5.230] John Bulun Bulun v R & T Textiles Pty Ltd (1998) 41 IPR 513 Federal Court of Australia VON DOUSSA J: [515] These proceedings arise out of the importation and sale in Australia of printed clothing fabric which infringed the copyright of the first applicant Mr Bulun Bulun, in the artistic work known as “Magpie Geese and Water Lilies at the Waterhole” (the artistic work). The proceedings were commenced on 27 February 1996 by Mr Bulun Bulun and the second applicant, Mr George Milpurrurru. Both applicants are leading Aboriginal artists. The respondents were at that time, R & T Textiles Pty Ltd (the respondent) and its three directors. Mr Bulun Bulun sued as the legal owner of the copyright pursuant to the Copyright Act 1968 (Cth) for remedies for the infringement, for contraventions of sections of Part V of the Trade Practices Act 1974 (Cth) dealing with misleading or deceptive conduct, and for nuisance. Mr Milpurrurru brought the proceedings in his own right and as a representative of the traditional Aboriginal owners of Ganalbingu country which is situated in Arnhem Land, in the Northern Territory of Australia. He claims that the traditional Aboriginal owners of Ganalbingu country are the equitable owners of the copyright subsisting in the artistic work. These proceedings represent another step by Aboriginal people to have communal title in their traditional ritual knowledge, and in particular in their artwork, recognised and protected by the 182 [5.220]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

John Bulun Bulun v R & T Textiles cont. Australian legal system. The inadequacies of statutory remedies under the Copyright Act 1968 as a means of protecting communal ownership have been noted in earlier decisions of this Court: see Yumbulul v Reserve Bank of Australia (1991) 21 IPR 481 at 490 and Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240 at 247. See also McKeough and Stewart “Intellectual Property and the Dreaming”, published in Indigenous Australia and the Law, Johnston, Hinton & Rigney eds (1997); Henderson “What’s in a Painting? The Cultural Harm of Unauthorised Reproduction” (1995) 17 Syd Law Rev 591 at 593; Ellison, “Unauthorised Reproduction of Traditional Aboriginal Art” (1994) 17 UNSWLJ 327; and Stopping the Rip-Offs: Intellectual Property Protection for Aboriginal and Torres Strait Islander Peoples (1994, National Capital Printing) where it was said at p 6: While joint authorship of a work by two or more authors is recognised by the Copyright Act, collective ownership by reference to any other criterion, for example, membership of the author of a community whose customary laws invest the community with ownership of any creation of its members is not recognised. … Evidence in Mr Milpurrurru’s claim [517] … The amended application in this case alleges that the Ganalbingu people are the traditional Aboriginal owners of Ganalbingu country who have the right to permit and control the production and reproduction of the artistic work under the law and custom of the Ganalbingu people. … Mr Milpurrurru is the most senior person of all the Ganalbingu people. The Ganalbingu people are divided into “top” and “bottom” people as is the Ganalbingu country. Mr Milpurrurru is a “top” Ganalbingu. Mr Bulun Bulun is the most senior person of the “bottom” Ganalbingu and is second in line to Mr Milpurrurru of the Ganalbingu people generally. Djulibinyamurr is the site of a waterhole complex situated close to the eastern side of the Arafura Swamp between the Glyde and Goyder river systems and the Woolen River. Djulibinyamurr, along with another waterhole site, Ngalyindi, are [518] the two most important sites on Ganalbingu country for the Ganalbingu people. … Mr Bulun Bulun explained that the classes of people, described earlier in these reasons, who comprise the traditional Aboriginal owners of Ganalbingu country have interests in Djulibinyamurr and also in the Madayin including paintings such as the artistic work. Many of these people would need to be consulted on any matter that concerned Djulibinyamurr. He went on to say: In … cases where it has been agreed in principle that the types of uses in question are allowable direct consultation and approval may not be necessary. If Bulun Bulun wanted to licence “at the Waterhole” so that somebody could mass produce it in the way that the Respondents have he would need to consult widely. If he wanted to licence “at the Waterhole” to a publisher to reproduce the painting in an art book he probably would not need to consult the other traditional Aboriginal owners at all. The question in each case depends on the use and the manner or mode of production. But in the case of a use which is one that requires direct consultation, rather than one for which approval has been already given for a class of uses, all of the traditional Aboriginal owners must agree. There must be total consensus. Bulun Bulun could not act alone to permit the reproduction of “at the Waterhole” in the manner as was done. … Why the claim is confined to one for recognition of an equitable interest The submissions of counsel for the applicants reflected a wide ranging search for a way in which the communal interests of the traditional Aboriginal owners in cultural artworks might be recognised under Australian law. This exercise was painstakingly pursued by counsel for the applicants (and later [5.230]

183

Intellectual Property: Commentary and Materials

John Bulun Bulun v R & T Textiles cont. by counsel for the Minister). That the claim was ultimately confined to one for recognition of an equitable interest in the legal copyright of Mr Bulun Bulun is an acknowledgment that no other possible avenue had emerged from the researches of counsel. While it is superficially attractive to postulate that the common law should recognise communal title, it would be contrary to established legal principle for the common law to do so. There seems no reason to doubt that customary Aboriginal laws relating to the ownership of artistic works survived the introduction of the common law of England in 1788. The Aboriginal peoples did not cease to observe their sui generis system of rights and obligations upon the acquisition of sovereignty of Australia by the Crown. The question however is whether those Aboriginal laws can create binding obligations on persons outside the relevant Aboriginal community, either through recognition of those laws by the common law, or by their capacity to found equitable rights in rem. … Section 35(2) of the Copyright Act 1968 provides that the author of an artistic work is the owner of the copyright which subsists by virtue of the Act. That provision effectively precludes any notion of group ownership in an artistic work, unless the artistic work is a “work of joint ownership” within the meaning of s 10(1) of the Act. A “work of joint authorship” means a work that has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors. In this case no evidence was led to suggest that anyone other than Mr Bulun Bulun was the creative author of the artistic work. A person who supplies an artistic idea to an artist who then executes the work is not, on that ground alone, a joint author with the artist: Kenrick & Co v Lawrence & Co (1890) 25 QBD 99. Joint authorship envisages the contribution of skill and labour to the production of the work itself: Fylde Microsystems Ltd v Key Radio Systems Ltd (1998) 39 IPR 481 at 486. In Coe v The Commonwealth (1993) 118 ALR 193 at 200 Mason CJ rejected the proposition that Aboriginal people are entitled to rights and interests other than those created or recognised by the laws of the Commonwealth, its States and the common law. See also Walker v New South Wales at 45-50 and Kirby J in Wik Peoples v Queensland at 214. To conclude that the Ganalbingu people were communal owners of the copyright in the existing work would ignore the provisions of s 8 of the Copyright Act, and involve the creation of rights in indigenous peoples which are not otherwise recognised by the legal system of Australia. [526] Do the circumstances in which the artistic work was created give rise to equitable interests in the Ganalbingu people? The statement of claim alleges “on the reduction to material form of a part of the ritual knowledge of the Ganalbingu people associated with Djulibinyamurr by the creation of the artistic work, the First Applicant held the copyright subsisting in the artistic work as a fiduciary and/or alternatively on trust, for the second applicant and the people he represents”. The foundation for this contention is expanded in written submissions made on Mr Milpurrurru’s behalf. It is contended that these rights arise because Mr Milpurrurru and those he represents have the power under customary law to regulate and control the production and reproduction of the corpus of ritual knowledge. It is contended that the customs and traditions regulating this use of the corpus of ritual knowledge places Mr Bulun Bulun as the author of the artistic work in the position of a fiduciary, and, moreover, make Mr Bulun Bulun a trustee for the artwork, either pursuant to some form of express trust, or pursuant to a constructive trust in favour of the Ganalbingu people. The right to control the production and reproduction of the corpus of ritual knowledge relating to Djulibinyamurr is said to arise by virtue of the strong ties which continue to exist between the Ganalbingu people and their land. Was there an express trust? 184 [5.230]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

John Bulun Bulun v R & T Textiles cont. The possibility that an express trust was created in respect of the artistic work or the copyright subsisting in it was not at the forefront of the applicants’ submissions. In my opinion that possibility can be dismissed on the evidence in this case. … [527] … Did Mr Bulun Bulun hold the copyright as a fiduciary? In Breen v Williams (1996) 186 CLR 71 at 82, Brennan CJ identified two sources of fiduciary duties, the first being the circumstances in which a relationship of agency can be said to exist, and the other is founded in a relationship of ascendancy or influence by one party over another, or dependence or trust on the part of that other. The applicants’ counsel did not seek to characterise the fiduciary relationship for which he contends as derived from either source in particular. The existence of a fiduciary relationship is said to arise out of the nature of ownership of artistic works amongst the Ganalbingu people. … [528] … The factors and relationships giving rise to a fiduciary duty are nowhere exhaustively defined: Mabo [No 2], at 200 per Toohey J, Hospital Products v USSC (1984) 156 CLR 41 at 68, 96-97, PD Finn, Fiduciary Obligations (1977), p 1, and News Ltd v ARL at 564. It has been said that the term “fiduciary relationship”, defies definition: Breen v Williams at 106 per Gaudron and McHugh JJ, see also Gibbs CJ in Hospital Products v USSC at 69. For this reason the fiduciary concept has developed incrementally throughout the case law which itself provides guidance as to the traditional parameters of the concept. The essential characteristics of fiduciary relationships were referred to by Mason J in Hospital Products at 96-97: The critical feature of [fiduciary] relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position … It is partly because the fiduciary’s exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed. In Mabo, Toohey J said at 200: Underlying such relationships is the scope for one party to exercise a discretion which is capable of affecting the legal position of the other. One party has a special opportunity to abuse the interests of the other. The discretion will be an incident of the first party’s office or position. … [529] … The relationship between Mr Bulun Bulun as the author and legal title holder of the artistic work and the Ganalbingu people is unique. The “transaction” between them out of which the fiduciary relationship is said to arise is the use with permission by Mr Bulun Bulun of ritual knowledge of the Ganalbingu people, and the embodiment of that knowledge within the artistic work. That use has been permitted in accordance with the law and customs of the Ganalbingu people. The grant of permission by the djungayi and other appropriate representatives of the Ganalbingu people for the creation of the artistic work is predicated on the trust and confidence which those granting permission have in the artist. The evidence indicates that if those who must give permission do not have trust and confidence in someone seeking permission, permission will not be granted. The law and customs of the Ganalbingu people require that the use of the ritual knowledge and the artistic work be in accordance with the requirements of law and custom, and that the author of the [5.230]

185

Intellectual Property: Commentary and Materials

John Bulun Bulun v R & T Textiles cont. artistic work do whatever is necessary to prevent any misuse. The artist is required to act in relation to the artwork in the interests of the Ganalbingu people to preserve the integrity of their culture, and ritual knowledge. This is not to say that the artist must act entirely in the interests of the Ganalbingu people. The evidence shows that an artist is entitled to consider and pursue his own interests, for example by selling the artwork, but the artist is not [530] permitted to shed the overriding obligation to act to preserve the integrity of the Ganalbingu culture where action for that purpose is required. In my opinion, the nature of the relationship between Mr Bulun Bulun and the Ganalbingu people was a fiduciary one which gives rise to fiduciary obligations owed by Mr Bulun Bulun. The conclusion that in all the circumstances Mr Bulun Bulun owes fiduciary obligations to the Ganalbingu people does not treat the law and custom of the Ganalbingu people as part of the Australian legal system. Rather, it treats the law and custom of the Ganalbingu people as part of the factual matrix which characterises the relationship as one of mutual trust and confidence. It is that relationship which the Australian legal system recognises as giving rise to the fiduciary relationship, and to the obligations which arise out of it. … The fiduciary obligation Central to the fiduciary concept is the protection of interests that can be regarded as worthy of judicial protection: Glover, Commercial Equity – Fiduciary Relationships (1995), para 3.4. The evidence is all one way. The ritual knowledge relating to Djulibinyamurr embodied within the artistic work is of great importance to members of the Ganalbingu people. I have no hesitation in holding that the interest of Ganalbingu people in the protection of that ritual [531] knowledge from exploitation which is contrary to their law and custom is deserving of the protection of the Australian legal system. Under the Copyright Act, the owner of the copyright has the exclusive right to reproduce the work in a material form, and to publish the work. The copyright owner is entitled to enforce copyright against the world at large. In the event of infringement, the copyright owner is entitled to sue and to obtain remedies of the kind actually obtained by Mr Bulun Bulun in this case. Having regard to the evidence of the law and customs of the Ganalbingu people under which Mr Bulun Bulun was permitted to create the artistic work, I consider that equity imposes on him obligations as a fiduciary not to exploit the artistic work in a way that is contrary to the laws and custom of the Ganalbingu people, and, in the event of infringement by a third party, to take reasonable and appropriate action to restrain and remedy infringement of the copyright in the artistic work. Whilst the nature of the relationship between Mr Bulun Bulun and the Ganalbingu people is such that Mr Bulun Bulun falls under fiduciary obligations to protect the ritual knowledge which he has been permitted to use, the existence of those obligations does not, without more, vest an equitable interest in the ownership of the copyright in the Ganalbingu people. Their primary right, in the event of a breach of obligation by the fiduciary is a right in personam to bring action against the fiduciary to enforce the obligation. In the present case Mr Bulun Bulun has successfully taken action against the respondent to obtain remedies in respect of the infringement. There is no suggestion by Mr Milpurrurru and those whom he seeks to represent that Mr Bulun Bulun should have done anything more. In these circumstances there is no occasion for the intervention of equity to provide any additional remedy to the beneficiaries of the fiduciary relationship. … On the other hand, were Mr Bulun Bulun to deny the existence of fiduciary obligations and the interests of the parties asserting them, and refuse to protect the copyright from infringement, then the 186 [5.230]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

John Bulun Bulun v R & T Textiles cont. occasion might exist for equity to impose a remedial constructive trust upon the copyright owner to strengthen the standing of the beneficiaries to bring proceedings to enforce the copyright. This may be necessary if the copyright owner cannot be identified or found and the [532] beneficiaries are unable to join the legal owner of the copyright: see Performing Rights Society Ltd v London Theatre of Varieties [1924] AC 1 at 18. It is well recognised that interlocutory injunctive relief can be claimed by a party having an equitable interest in copyright: Laddie, Prescott and Vittoria, The Modern Law of Copyright (1995), para 11.79-11.81, although as a matter of practice injunctive relief will not be granted without the legal owner of copyright being joined: Performing Rights Society Ltd v London Theatre of Varieties at 19-20, 29, Acorn Computers Ltd v MCS Microcomputer Systems Pty Ltd (1984) 57 ALR 389 at 394. For an example of proceedings brought to establish the existence of an equitable interest in copyright based on a constructive trust imposed in consequence of a breach of fiduciary duty see Missinglink Software v Magee [1989] 1 FSR 361 at 367. I do not consider Mr Milpurrurru and those he seeks to represent have established an equitable interest in the copyright in the artistic work. In my opinion they have established that fiduciary obligations are owed to them by Mr Bulun Bulun, but as Mr Bulun Bulun has taken appropriate action to enforce the copyright, he has fulfilled those obligations and there is no occasion to grant any additional remedy in favour of the Ganalbingu people. However, in other circumstances if the copyright owner of an artistic work which embodies ritual knowledge of an Aboriginal clan is being used inappropriately, and the copyright owner fails or refuses to take appropriate action to enforce the copyright, the Australian legal system will permit remedial action through the courts by the clan. For these reasons, the proceedings by Mr Milpurrurru must be dismissed.

CROWN COPYRIGHT [5.240] The Copyright Act 1968 (Cth) ss 176 – 183F deal with copyright in original works

and subject matter made or published in Australia under the direction of the Crown. The Crown owns copyright of works, recordings and films “made by, or under the direction or control of, the Commonwealth or a State, as the case may be” (s 176(2)). “State” includes the administration of a “Territory” (s 10(3)(n)). Copyright may arise (and be owned by the Crown) in material that would not otherwise fulfil the criteria of the Copyright Act 1968 (Cth) as to subsistence of copyright; for example, due perhaps to the author not being a qualified person. Thus, the Crown has copyright in material made under its direction or control, irrespective of the nationality or residence of the author, or the place of first publication, but of course it may arise in the normal way and belong to the Crown by virtue of s 35(6): see Director-General of Education v Public Service Association of New South Wales (1985) 4 IPR 552. The interpretation of “under direction or control” was examined in Copyright Agency Ltd v State of New South Wales [2007] FCAFC 80. The Full Federal Court held that in order for a work to be made under the direction or control of the Crown, the Crown must bring about the making of the work. It was not sufficient that the Crown prescribed how such a work is to be made, if a citizen chooses to make a work without any obligation to do so (at [125]). The term of Crown copyright is generally 50 years from the end of the calendar year in which the work is published (in the case of literary, dramatic or musical works, engravings or [5.240]

187

Intellectual Property: Commentary and Materials

photographs, or films) or first made (in the case of artistic works) (ss 180 – 181). In the case of unpublished works, the copyright continues to subsist in the Crown so long as the work remains unpublished (s 180(1)(a)). The Copyright Act 1968 (Cth) makes it clear in s 8A(1) that no prerogative right or privilege of the Crown is affected by the legislation. The extent of this prerogative is unclear, but it seems to be a relic of the censorship and concern with public order evinced by the Crown in Anglo-Australian copyright law. In 2005, the Copyright Law Review Committee (CLRC) examined “Crown Copyright”. The chief concern was whether government should be in a privileged position compared with other owners of copyright. The CLRC recommended the repeal of special Crown copyright subsistence and ownership provisions in the Copyright Act 1968 (Cth) Part VII Division 1 (ss 176 – 179). The Committee preference was that the usual copyright ownership rules should apply, rather than special default provisions that advantage the government in negotiations and mean that failure to conclude negotiations result in the creator losing copyright. In the interest of the public domain, the Committee recommended retaining a 50-year duration of copyright for published literary, dramatic and musical works, films, sound recordings and artistic works. The CLRC also noted that “new technology has improved the accessibility of information for many people, (but) it has also allowed the development of new protection measures which can restrict that access”. 1 Accordingly, a general policy consideration in regard to Crown copyright should be recognition that “open access to government information is an essential characteristic of modern democracy” and “there is great danger in the possibility of government using copyright as an instrument of censorship”. 2 However, the CLRC’s recommendations have not been acted upon to date, and the CLRC has since been disbanded.

Copyright Agency v New South Wales [5.250] Copyright Agency Ltd v State of New South Wales (2007) [2007] FCAFC 80 Federal Court of Australia, Full Federal Court [The Copyright Agency Ltd is a collecting society, for the purposes of the Copyright Act 1968 (Cth). The members of the society include members of the Australian Consulting Surveyors Association (Surveyors’ Association). The Copyright Agency Ltd Society applied to the Copyright Tribunal (the Tribunal) for orders under Copyright Act 1968 ss 183(5) and 183A(2) in respect of dealings by the State of New South Wales (the State) with survey plans prepared by surveyors who were members of the Surveyors’ Association. The Federal Court was requested by the Tribunal to determine certain questions of law concerning copyright in survey plans made by members of the Surveyors’ Association, which are artistic works within the meaning of the Copyright Act 1968.] EMMETT J: Copyright and the Crown 120. There are relevantly two aspects of copyright in original literary, dramatic, musical or artistic works, in relation to the Crown. The first concerns ownership of copyright by the Crown. That aspect is regulated by ss 176 and 177 of the Copyright Act. The second aspect concerns the right of the 1 2

Copyright Law Review Committee, Crown Copyright, Report, Commonwealth of Australia (2005), p xxv. Copyright Law Review Committee, Crown Copyright, Report, Commonwealth of Australia (2005), pp xxvxxvi.

188 [5.250]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Copyright Agency v New South Wales cont. Crown to do acts comprised in the copyright in a work owned by someone else. That aspect is regulated by ss 183 and 183A of the Copyright Act. Ownership of copyright by the Crown 121. Section 176(2) of the Copyright Act relevantly provides that the State is the owner of the copyright in an artistic work made by, or under the direction or control of, the State. Section 177 of the Copyright Act relevantly provides that a State is the owner of the copyright in an artistic work first published in Australia if first published by, or under the direction or control of, the State. Sections 176 and 177 have their genesis in s 39 of the Copyright Act 1956 (UK). Those provisions, in turn, trace their origin to s 18 of the Copyright Act 1911(UK) (the 1911 Act). 122. Since the enactment of the 1911 Act, the phrase “by, or under the direction or control of, the [Crown]” has governed ownership of copyright by the Crown, both in works made by or under the direction or control of the Crown in its various manifestations, and works first published by or under the direction or control of the Crown. “By” is concerned with those circumstances where a servant or agent of the Crown brings the work into existence for and on behalf of the Crown. “Direction” and “control” are not concerned with the situation where the work is made by the Crown but with situations where the person making the work is subject to either the direction or control of the Crown as to how the work is to be made. In the copyright context, that may mean how the work is to be expressed in a material form. 123. Direction might mean order or command, or management or control (Macquarie Dictionary Online). Direction might also mean instructing how to proceed or act, authoritative guidance or instruction, or keeping in right order management or administration (Oxford English Dictionary Online). 124. Control might mean the act or power of controlling, regulation, domination or command (Macquarie Dictionary Online). Control might also mean the fact of controlling or of checking and directing action, the function or power of directing and regulating, domination, command, sway: Shorter Oxford English Dictionary (5th ed, Oxford University 2002). 125. Thus, when the provisions refer to a work being made under the direction or control of the Crown, in contrast to being made by the Crown, the provisions must involve the concept of the Crown bringing about the making of the work. It does not extend to the Crown laying down how a work is to be made, if a citizen chooses to make a work, without having any obligation to do so. 126. The question is whether the Crown is in a position to determine whether or not a work will be made, rather than simply determining that, if it is to be made at all, it will be made in a particular way or in accordance with particular specifications. The phrase “under the direction or control” does not include a factual situation where the Crown is able, de facto, to exercise direction or control because an approval or licence that is sought would not be forthcoming unless the Crown’s requirements for such approval or licence are satisfied. The phrase may not extend much, if at all, beyond commission, employment and analogous situations. It may merely concentrate ownership in the Crown to avoid the need to identify particular authors, employees or contracting parties. 127. The Parliament did not intend that the Crown would gain copyright, or share in copyright, simply as a side effect of a person obtaining a statutory or other regulatory approval or licence from the Crown. The Parliament is hardly likely to have intended that copyright would be lost merely by reason of satisfying a requirement or prerequisite for the grant by the Crown of an approval or a licence for something. The provisions in question were not intended to have the consequence that, where an approval or licence by the Crown was required in respect of a work, copyright would vest in the Crown as a side wind of the work complying with the requirements for such approval or licence (see Land Transport Safety Authority of New Zealand v Glogau [1999] 1 NZLR 261 at 272-273). [5.250]

189

Intellectual Property: Commentary and Materials

Copyright Agency v New South Wales cont. 128. In relation to the first publishing of a work, as distinct from the making of a work, there must also be an element of the Crown determining whether or not the work is to be published. That may occur by operation of a statute or other regulatory provision that requires publication of a work that has a particular status, such as being registered, approved or the subject of a licence. The critical question, however, will be when such a work is first published. 129. Under s 29(1)(a) of the Copyright Act, an artistic work is to be deemed to be published if, but only if, reproductions of the work have been supplied to the public. Under s 29(6), in determining whether a work has been published or whether a publication of the work was the first publication of the work, any unauthorised publication or the doing of any other unauthorised act is to be disregarded. Under s 29(7), a publication is for those purposes to be taken to have been unauthorised if, but only if, copyright subsisted in the work and the act concerned was done otherwise than by, or with the licence of, the owner of the copyright. 130. Under s 31, copyright, in relation to an artistic work, is the exclusive right to do all or any of the following acts: • to reproduce the work in a material form; • to publish the work; • to communicate the work to the public. 131. Under s 183(8), an act done under s 183(1) does not constitute publication of a work. Thus, if the making available of a work to the public by the State is done under s 183, it does not constitute publication. A fortiori, it is not first publication. On the other hand, if such making available by the State is not done under s 183(1), and there is no other licence taken to have been granted to the State to make a work available, it would follow that those acts of the State would be an unauthorised publication and, accordingly, under s 29(6) must be disregarded in determining whether the work has been published and whether the publication was the first publication of the work.

EXPLOITATION [5.260] Despite the introduction of moral rights into Australian copyright law in late 2000,

and although the branches of copyright may share some notion of non-utilitarian, cultural significance, it has been the case that, in Australian law, copyright is basically concerned with economic exploitation. The introduction of more recent “other subject matter” varieties of copyright in Copyright Act 1968 (Cth) Part IV emphasises this commercial aspect. The rights in subject matter other than works derive from manufacturing and technological procedures, and engender discrete copyrights, while embodying concomitant author’s copyrights in the works thus represented. The protection of economic rights – which may be dealt with as a form of property – may have emphasised one aspect of copyright at the expense of moral rights, which have long been recognised in Europe. The Berne Convention for the Protection of Literary and Artistic Works (Paris 1971 version), of which Australia is a member, states in Article 6(1) that: Independently of the author’s economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honour or reputation.

The new regime of moral rights is regarded by some users of copyright work as a commercial problem or inconvenience. See, for example, Wilson v Weiss Art Pty Ltd (1995) 31 IPR 423 (at 190 [5.260]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

[5.280] below), where the use of material by an advertising agency may be subject to moral rights. One of the most debated aspects of the moral rights regime was the issue of whether the rights could be waived; obviously no-one would contract with a writer who refused to waive their rights, and the view put forward was that the personal moral rights are inalienable and can never be waived. In the end, there are “consent” provisions in the legislation (Copyright Act 1968 (Cth) ss 195AW – 195AWA) allowing written permission to be given by an author to excuse acts or omissions that may otherwise contravene the author’s moral rights. The most lucrative copyright works are often exploited in a number of ways. A popular novel may be marketed as a volume (book), serial (in newspapers and magazines), translation, film, play, opera, musical or ballet. In addition, licensing for inclusion in electronic databases, and other digital uses, are all within the copyright owner’s rights. The Copyright Act 1968 (Cth) s 196(2) allows these rights to be assigned or licenced separately. Furthermore, these rights can be confined geographically (s 196(2)(b)) and temporally (s 196(2)(c)). An assignment is a transfer of ownership of the copyright in the work or other subject matter, whereas a licence is merely the granting of permission to do an act comprised in the copyright.

ASSIGNMENT [5.270] An assignment is a transfer of the exploitation rights of copyright. It enables the

creator of an original work to sell or transfer their copyright in all or in part to another individual or corporation. The Copyright Act 1968 (Cth) s 196 provides that copyright is personal property and transmissible by assignment, will and devolution of law. An assignment of copyright may be partial or total. It may also be perpetual or for a specific period. If unlimited in terms of scope and duration, there is no right of reversion. When a right is assigned the assignor has no power to control the way the work is exploited unless by contract with the assignee. Under s 196(1), “Copyright is personal property and, subject to this section, is transmissible by assignment, by will and by devolution by operation of law”. An assignment may be unlimited, giving the purchaser rights for all purposes throughout the entire life of the copyright. An assignment may be limited, that is apply only in relation to a limited part of the rights under copyright (s 196(2)), or to a period of time, or to a specific purpose, or to a certain region or territory. The assignment (whether total or partial) does not have effect unless it is in writing signed by or on behalf of the assignor (s 196(3)). It is possible to make an agreement in relation to future copyright in works not yet created to assign such copyright to another party (s 197). For example, an aspiring musician may make an agreement with a record company to assign the copyright in all works they will create in the next five years. Such assignments should be avoided because they are rarely made in the interests of the creator. However, any assignment, whether total or partial, has to be in writing and signed by the assignor. While the Act does not require any specific formulation or wording for the purposes of s 196(3), it must be apparent that the formal document is one of assignment and not a mere licence or conveyance of rights of property other than copyright (see Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 95 ALR 275; Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd (2005) 67 IPR 497).

[5.270]

191

Intellectual Property: Commentary and Materials

Wilson v Weiss Art [5.280] Wilson v Weiss Art Pty Ltd (1995) 31 IPR 423 Federal Court of Australia [Faye Wilson, the applicant, was an artist and an illustrator. Between 1982 and 1987, at the request of McSpedden Carey, an advertising agency, she executed various drawings. At least at the outset, the agency was the advertising agent for Peter Weiss, a clothing manufacturer and vendor. In these these proceedings, she claimed that the respondent, Weiss Art Pty Ltd, without her licence, reproduced or procured the reproduction of some or all of these drawings, published them or sold articles, which constituted an infringement of her copyright in the drawings. In consequence, she claims, inter alia, a declaration that the respondent has infringed her copyright, injunctive relief and damages or an accounting of profits.] HILL J: [425] … There is little evidence of the initial commercial arrangement between Ms Wilson and the Agency. Mr Pavlovitch did not suggest in his evidence that he had any commercial discussions with Ms Wilson. He led her to believe that the Agency wished to have the right to cut up and change the illustrations if they were to be used. Most of the discussion probably centred upon the requirement that the drawings be in “the Weiss style”. There was no discussion about copyright. Mr Pavlovitch made it clear to Ms Wilson that the drawings were for use in advertising products of Weiss and there was no discussion concerning the use of the drawings for merchandising purposes. From 1982 Ms Wilson supplied drawings upon request. The initial procedure adopted where drawings were required was that the Agency would issue a work order indicating the subject or concept to be adopted. Ms Wilson would prepare a number of drawings and present them. It was clearly understood by the parties that not all of the drawings would be used and payment would be made only in respect of drawings which the Agency wished to use. Having made that decision, the Agency issued a purchase order to Ms Wilson in respect of the drawing to be used. She, in turn, then invoiced the Agency by reference to that purchase order. Initial drawings were for use in advertisements to be placed in the media. According to Ms Wilson’s evidence Mr Pavlovitch said to her, words to the effect, “these are for newspaper advertisements and when you invoice me make a note to that effect”. … [427] … It seems clear enough that Ms Wilson was told nothing about the plans which Mr McSpedden had for a joint venture between the Agency and PWPL. The proposal for that joint venture appears to have been under way by about May 1986 when a shelf company was acquired, the shares in which were held as to one share by Mr McSpedden, one share by Mr Carey and two shares by Talbridge Pty Ltd, a company associated with Mr Peter Weiss. That company changed its name to Weiss Art Pty Ltd, the respondent, on 8 October 1986. Although little is known of the circumstances surrounding the acquisition by Mr McSpedden and others of the respondent company, it is clear that its purpose was to engage in a merchandising activity, manufacturing or procuring the manufacture at a profit of various items on which appeared drawings in the Weiss style, including those of Ms Wilson. The venture was ultimately profitable. Mr McSpedden had a further conversation with Ms Wilson on or about 25 August 1986. According to Ms Wilson, this was a shorter conversation in which Mr McSpedden said words to the following effect: Look, I’ve spoken to Weiss and they’ve agreed to the proposal we discussed when I last spoke to you. I’ll send you out a cheque for $1000 for the “other uses” rights for the old illustrations and a letter outlining the new terms of payment as discussed. Mr McSpedden’s version of the conversation was as follows: Mr McSpedden: Faye, I’m just following up our last conversation when I mentioned we would be using some of your drawings on various items. 192 [5.280]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Wilson v Weiss Art cont. Ms Wilson: What are they being used for? Mr McSpedden: We are trying to put them on everything from towels to T shirts. What we’re thinking is that we will pay you $1000 for merchandising rights for everything you have done to date. But we will also need additional drawings and for those we will pay you $500 for the drawing for advertising plus an additional $500 if we use it for merchandising. Ms Wilson: That sounds fine. Do you want me to invoice you for that or how will it happen? [428] Mr McSpedden: Well, we’ll send a cheque to you for the $1000, and you’ll invoice us as usual for new drawings after we’ve advised you they’re being used. I think it is more probable than not that Mr McSpedden was not as open as he says he was in his conversation with Ms Wilson. In particular, I would not find that he made it clear that the drawings could be used for merchandising on anything from towels to T shirts. It is clear, however, that Ms Wilson was aware that the additional payment she was to get was to permit her drawings to be used on shopping bags, caps and T shirts which were promotional adjuncts to the clothes sold by Weiss. I do not think that the conversation went beyond this. I find that no reference was made to the proposal that the respondent would merchandise for a profit a large range of items incorporating Ms Wilson’s drawings. Shortly after that telephone discussion, Mr McSpedden wrote a letter, on the Agency’s letterhead, to Ms Wilson. In that letter Mr McSpedden purported to confirm the two conversations of 11 June and 25 August “regarding costs”. The letter said, relevantly: (1) We will pay you $1000 for all rights to all material to June 1986. (2) We will pay $500 for each future illustration used for advertising. (3) We will pay an additional $500 for all rights for these illustrations. The letter enclosed a cheque for $1000 “for the rights to work up to June 1986”. … [429] The respondent launched a large range of products at David Jones in May 1987. All windows of the store displayed products bearing Ms Wilson’s drawings and the fifth and sixth floors were taken up with all manner of merchandise bearing them … At the time no order had been placed for four of these illustrations, nor had any payments been made for rights other than advertising with respect to them. Ms Wilson was away at the time of this launch but saw the display upon her return. Ms Wilson’s recollection of the next conversation with Mr McSpedden is [430] “very vague”. It seems that Mr McSpedden rang Ms Wilson after the David Jones launch to gauge her reaction to the display at that store. There was some discussion of an article in The Bulletin written about the Weiss Art concept, in which no credit was given to Ms Wilson. That was the last time that Mr McSpedden and Ms Wilson spoke to each other. There was, at the outset of the case, some dispute between the parties as to the usage of Ms Wilson’s drawings on merchandise sold by the respondent. There was also dispute as to the occasions upon which payments had been made to her. That dispute was largely resolved during the course of the hearing as a result of evidence given. … On 1 July 1987 solicitors instructed by Ms Wilson wrote to the Agency alleging copyright infringement and demanding undertakings, inter alia, to deliver up offending works. For its part, the Agency claimed that copyright in all relevant drawings vested in their client, by implication, the respondent. The correspondence led to the present proceedings. The issue between the parties is of relatively narrow compass. The respondent claims that the applicant has assigned or agreed to assign the copyright in the drawings, so far as that copyright extends to the right to reproduce the drawings on merchandise directly or indirectly, to it. [5.280]

193

Intellectual Property: Commentary and Materials

Wilson v Weiss Art cont. Alternatively, the respondent says that the agreements arranged by Mr McSpedden with Ms Wilson should be construed as a licence from her to use the drawings in the manner in which they have been used by the respondent. The applicant, on the other hand, denies that there has been an assignment or agreement to assign, and claims that the agreement entered into with the Agency should be construed as a personal licence operating in favour of PWPL, not the respondent. Alternatively, the respondent submits that if otherwise there was no assignment but a licence which was personal to PWPL, that the applicant is estopped from asserting that she did not irrevocably give the rights identified to the respondent. [431] … The onus in the present case lies upon the applicant to show that she is the owner of the copyright and that she has not licensed the respondent to use the drawings in the manner described: Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88. Was there a partial assignment of Ms Wilson’s copyright? It is obvious enough that the questions whether there was an assignment, or equitable assignment, and the extent of the rights assigned, depend upon the construction of the agreement reached between the parties as reflected in the letter of 26 August 1986. That agreement was not wholly in writing, so the terms of the agreement must be found against the background of the two conversations of 11 June and 25 August to which reference has already been made. Nor does the parol evidence rule preclude reference to the way the parties subsequently acted for the purpose of ascertaining what their agreement was: Australian Estates Ltd v Palmer (New South Wales Court of Appeal, 22 December 1989, per Samuels JA, with whose judgment Kirby P and Meagher JA agreed). It is clear that, prior to the letter of August 1986, payment for drawings from time to time related solely to the right to reproduce the drawings for advertising products of PWPL in the print media and perhaps in other media as well. I exclude from this payments made for reproduction of particular drawings in the promotional booklet intended to be taken to Japan, where the rights conferred on PWPL were limited to that purpose. [432] … Clearly Ms Wilson did not intend, when this initial arrangement was entered into, to assign to PWPL absolutely the right to reproduce the drawings in a material form, being one of the rights referred to in s 31(1)(b) of the Copyright Act. It is clear, also, that the relations between the Agency and Ms Wilson proceeded with some informality, particularly with reference to copyright, a topic of which it would seem Mr McSpedden had a somewhat inexact knowledge. Surprising as it might seem, the Agency never attempted to obtain formal assignments of copyright in copy or drawings for the benefit of its clients, nor did it seek to document in any formal way the rights which it, on behalf of clients, obtained in works the subject of copyright. It was submitted for the respondent that the cases show that the courts “strive” to find that a particular contract operates as an assignment, rather than as a licence. This is said particularly to be the case where artistic works are concerned. I was referred to a number of cases, among which were London Printing & Publishing Alliance Ltd v Cox (1891) 3 Ch 291; EW Savory Ltd v The World of Golf Ltd [1914] 2 Ch 566; Murray v King (1984) 4 FCR 1; Chaplin v Leslie Frewin (Publishers) Ltd [1966] Ch 71; Wintergarden Theatre (London) Ltd v Millennium Productions Ltd [1948] AC 173; and Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417. Ultimately, the question whether there has been an assignment, if a legal assignment is relied upon or, if not, whether there has been an equitable assignment will depend upon whether the writing or the terms of the agreement reached reflects or reflect an intention on the part of the assignor to effect an assignment of, or to agree to assign, copyright. In reaching a conclusion upon intention the commercial significance of the transaction to the parties will, no doubt, form part of the surrounding 194 [5.280]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Wilson v Weiss Art cont. circumstances to be considered: Messager v British Broadcasting Corporation Ltd [1929] AC 151; Loew’s Inc v Littler [1958] 2 All ER 200, both cases on facts wildly different, however, from the present. [433] Although much was made in argument of the distinction between assignment and licence, I am of the view that in the present case nothing really turns upon that distinction. It is difficult to see for present purposes what difference there could be between an equitable assignment of a limited right and the irrevocable grant for consideration of an exclusive licence to use copyright limited in a particular way. The grant of an irrevocable and exclusive licence for consideration must create in equity in favour of the licensee an interest in the copyright, no different from that created in favour of an assignee by an equitable assignment, except for the right, in an appropriate case, to call for a legal assignment. An assignee under an assignment of limited rights has by force of that assignment the exclusive right to use the rights assigned the same way as a licensee has. The important question in the present case is, if the matter is approached as an equitable assignment the extent or definition of the rights assigned or, if the matter is approached as a licence, the terms of that licence. It should be noted that no evidence was led of any assignment of rights from PWPL to the respondent. In the present case it is clear that both parties believed that the effect of the initial transaction was to confer upon PWPL, as the Agency’s client, a limited but clearly exclusive and irrevocable right to use the drawings in connection with the Weiss logo for the purposes of advertising Weiss fashion goods in the media. The real dispute between the parties is as to the legal effect of the agreement relating to the “other rights”. Although the letter from the Agency referred to “other rights”, it is clear from the context of the discussion between Mr McSpedden and Ms Wilson that neither contemplated that Ms Wilson was assigning the residue of her rights in the drawings to the Agency’s client … I would find that neither party to the agreement intended that the Agency’s principal should have the exclusive right to use the drawings upon any merchandise unconnected with “Weiss” brand fashion goods, or indeed upon any merchandise of any merchandiser. As an example discussed in the evidence illustrated, it could hardly have been contemplated that Ms Wilson was authorising the use of the drawings by some assignee of the right upon products for use in a brothel. She was clearly content, however, to authorise use of her drawings by PWPL upon items to be separately merchandised by that company, in the context that these items could be seen to be related to advertising “Weiss” brand fashion goods. Although Ms Wilson wrote on her copy of an invoice (repeating what had been written upon the purchase order from the Agency delivered to her) the words “for merchandising rights”, she did so in the context to which I have referred. … [435] Thus, if the arrangement be characterised as an equitable assignment it can be seen that Ms Wilson agreed to assign to PWPL a limited right, namely the right to reproduce the drawings in which copyright subsisted on articles to be merchandised by PWPL in connection with the Weiss logo, and as part of advertising the fashion goods which PWPL merchandised. It might be added that no evidence was adduced of any assignment of relevant copyright from PWPL to the respondent. There was evidence of an agreement between the Agency and the respondent on the Agency ceasing to be a shareholder that the Agency would assign any copyright rights to the respondent, but that would be of no assistance to the respondent’s case here. If the arrangement should properly be characterised as an exclusive licence, that licence is limited in the same way, namely, to use of the drawings on articles which would be merchandised by PWPL in connection with the Weiss logo and as part of advertising the fashion goods which PWPL merchandised. [5.280]

195

Intellectual Property: Commentary and Materials

Wilson v Weiss Art cont. Although, as I have said, I do not think the result in the present case differs depending upon the characterisation of the right conferred as an equitable assignment or irrevocable licence, I am inclined to the view that a licence was intended, particularly having regard to the close connection which the right conferred had to PWPL and the products which that company marketed. … [436] I would thus conclude that the use by the respondent of the drawings, the copyright in which continued in Ms Wilson, involved an infringement of Ms Wilson’s copyright without her licence.

Effect of assignment [5.290] Once an assignment of copyright is made, the assignee may exercise and enforce all

relevant rights to the exclusion of the assignor. Areas of difficulty with regard to the assignment of copyright may arise in three ways: • where the assignor seeks to continue to exercise moral rights; • where a later work by the same creator may infringe the assigned work (see Copyright Act 1968 (Cth) s 72); and • in respect of the trade practices implications of certain organisations wielding power due to the aggregation of assigned rights. All exercises of IP rights, including assignment and licensing of copyright, have been subject to the operation of Part IV of the Trade Practices Act 1974 (Cth). Part IV regulated restrictive dealings affecting competition within a market, and encompassed anti-competitive conduct, resale price maintenance, and misuse of market power. Section 51(3) of the Act exempted conditions in intellectual property assignments and licences from Part IV to the extent that they related to the subject matter of an intellectual property right. However, this exemption did not extend to the misuse of market power (ss 46, 46A) or resale price maintenance (s 48). On 1 January 2011, the Trade Practices Act 1974 (Cth) was restructured as the Competition and Consumer Act 2010 (Cth), after an extensive revamping. The unconscionable conduct and consumer protection Parts (including Part IV) of the Trade Practices Act 1974 (Cth) were replaced by the Australian Consumer Law as Schedule 2 to the Competition and Consumer Act 2010 (Cth). The Australian Consumer Law generally maintains the existing provisions as well introducing new provisions. One provision in particular now brings the conduct of natural persons within the ambit of the Act (whereas the Trade Practices Act 1974 (Cth) applied solely to corporations). General principles applicable in cases of restraint of trade or undue influence will apply to assignments (and licensing arrangements) that are unduly restrictive and contrary to public policy as an unreasonable restraint of trade. See Schroeder Music Publishing Co Ltd v Macauley [1974] 1 WLR 1308; Clifford Davis Management Ltd v WEA Records Ltd [1975] 1 WLR 61; Davidson v CBS Records (1983) AIPC 90-106; Elton John v Richard Leon James [1991] FSR 397.

LICENSING [5.300] Whereas an assignment is basically a transfer of ownership, a licence is merely

permission to do what would otherwise amount to an infringement. If more than a mere 196 [5.290]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

permission, a licence may confer property rights that could interfere with revocation of the licence or the exercise of rights thereunder. The licensee may not be allowed to make alterations to the work or to assign or sub-license their interest. A licence granted in respect of a copyright by the owner thereof binds successors in title of the grantor to the same extent (Copyright Act 1968 (Cth) s 196(4)). This is also the case in relation to the licensing of future copyright (s 197(3)). Licences may be granted for the exercise of all or any of the rights comprised in the copyright, and thus may be full or partial. They may be also exclusive (ss 117 – 125) or non-exclusive, compulsory (statutory) licences (ss 54 – 64); or express or implied. Licences can also be verbal or written. In the case below, the informal relations that gave rise to co-ownership created confusion over the scope of implied licences, including the right to assign copyright.

Seven Network (Operations) v TCN Channel Nine [5.310] Seven Network (Operations) Ltd v TCN Channel Nine Pty Ltd [2005] FCAFC 144 Federal Court of Australia (FC) LINDGREN J: … 35 For whatever agreement Seven made at the meeting, Mr Murray furnished consideration: he agreed to permit Seven’s Mr Shannon and Mr Lynch to go on the trip and to record the moving images and accompanying sounds, to bear the cost of their fares, accommodation and other expenses, and to allow Seven first use of the raw footage for the purpose of the making of a story and the broadcasting of it on Today Tonight. 36 Was the consideration furnished by Mr Murray furnished for a promise by Seven to him to assign to him Seven’s interest in the copyright in the cinematograph film to be made, or was it furnished for the grant of a licence by Seven? The answer to this question is not obvious. As McCardie J observed in Messager v British Broadcasting Co [1927] 2 KB 543 at 550, whether an assignment or licence is created often gives rise to difficulty, and (at 551): Intention must be the ultimate test for deciding whether an agreement be an assignment or a licence, and intention is to be gathered from the document itself and the surrounding circumstances. 37 The primary Judge was persuaded to find a promise to assign. In support he referred to the facts that Seven and Mr Murray were to be co-owners of the copyright; that Seven had no continuing use for the Camera Tapes after the broadcasting of the story on Today Tonight; and that through Mr Simond, Seven handed over to Mr Murray the Camera Tapes, which were the only embodiment of the subject matter of the copyright. 38 To my mind, the handing over of the Camera Tapes carries little weight: since they were the only embodiment of the Camera Tapes film and Seven had no further use for them, it was inevitable that they would be delivered to Mr Murray in order that he be able to do any act at all comprised in the copyright, no matter how minor. For example, if Seven had consented to Mr Murray’s copying a substantial part of the Camera Tapes film for the purpose of screening it for his family, the Camera Tapes would have had to be handed over (cf the delivery of the electro blocks of illustrative drawings in Cooper v Stephens [1895] 1 Ch 567 and W Marshall & Co Ltd v AH Bull Ltd (1901) 85 LT 77). In any event, Mr Murray agreed in cross-examination that the basis on which he was handed the Camera Tapes at Soldiers Beach was the basis, whatever it was, that had been agreed at the meeting on 11 February 2004. The property in them passed from Seven to Mr Murray upon delivery; but in implementation of the contract of 11 February 2004. … [After considering the evidence in detail, his Honour concluded]: [5.310]

197

Intellectual Property: Commentary and Materials

Seven Network (Operations) v TCN Channel Nine cont. 69. Seven agreed, for valuable consideration, that Mr Murray was to have a nonassignable licence to do the acts comprised in the copyright for the promotion of Camp Dare. 70. The proposed communication by Nine to the public of the documentary “DAREing the Kokoda”, lies outside that licence, and would, for lack of a licence binding on Seven, infringe the copyright in the Camera Tapes film. 71. The appeal should be allowed with costs, and there should be an injunction. … FINKELSTEIN J: 72 The point we have to decide on this appeal lies in a narrow compass, but the matter is of some consequence to the parties. The issue is this. Who is the owner of the copyright in a cinematograph film, being footage taken on a trip to the Kokoda Trail? The judge decided (and his finding is not challenged) that the footage was made by the appellants (collectively “Seven”) and Mr Murray, and therefore they were joint owners. In Prior v Lansdowne Press Pty Ltd [1977] VR 65 at 68, Gowans J held that co-authors hold copyright as tenants in common rather than as joint tenants and, in the absence of agreement to the contrary, in equal shares. Mr Murray contends that at a meeting held on 11 February 2004 Seven agreed to assign to him absolutely its then future interest (the film was taken the following month) in the copyright. Thus he says he was entitled to authorise the fifth and sixth respondents, production companies, to make from the footage a documentary to be shown in a broadcast by the first respondent, TCN Channel Nine Pty Ltd (“Nine”). The judge accepted these contentions. They are challenged on appeal. [His Honour outlines conversations surrounding the making and usage of the footage.] … 87 The general approach taken by the [trial] judge adopts “top-down” reasoning. He inquired whether copyright had been assigned (and found that it had) and then investigated whether there was any exception to an absolute assignment. I would prefer a “bottom-up” approach and determine precisely what has been given over. 88 In deciding exactly what has been agreed, we are confined to an examination of what the parties said and did. This examination is to be approached from the perspective of the reasonable person, who previously only had work in torts cases. What would the reasonable person think the parties meant? 89 The discussion between the parties must be understood in the following context. I have already mentioned that the judge found that the footage was jointly owned by Seven and Mr Murray. He reached this conclusion in the following way. Copyright in a cinematograph film lies with the maker of the film: Copyright Act 1968 (Cth), s 98(1). The maker is “the person by whom the arrangements necessary for the making of the film were undertaken”: s 22(4). Mr Murray made the arrangements for the Kokoda expedition. The trip was filmed by Seven personnel. So, according to the judge, each was a maker of the film. This finding is probably incorrect, but was not challenged on appeal. Notwithstanding the finding of joint ownership, it is clear that at the meeting the discussion proceeded upon the assumption that the footage of the trip would, in the absence of some agreement to the contrary, belong to Seven. If anyone had turned their mind to the ownership of copyright (it is possible that Mr Townhill had copyright in mind but he made no mention of it), it seems also to have been assumed that copyright would belong to Seven. 90 Turning then to what the parties said, the first thing the reasonable person would think having observed the discussion is that the parties implicitly agreed (that is the observer would be required to presume the existence of the agreement, for the topic was not discussed) that Seven could use the film for a program to be broadcast to the public through its network. Mr Murray wanted this broadcast to be a one-hour special program but even if it were not, the reasonable observer would implicitly understand that Seven could broadcast whatever section of the film it saw fit. In legal terms, the joint 198 [5.310]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Seven Network (Operations) v TCN Channel Nine cont. owners of the copyright, Seven and Mr Murray, conferred a licence on Seven to do an act that would otherwise be in breach of their jointly owned copyright. 91 It is equally clear that Mr Murray was given some “right”. What was the nature of that right? The proper approach is to examine what right Mr Murray requested. He asked for nothing more than to be given the footage so that he could use it for promotional purposes. He had made a similar request in the past. He confirmed in May 2004 that this is what he was seeking. Mr McPherson agreed to give Mr Murray what he wanted. Nothing that has been attributed to Mr McPherson can be taken by our reasonable observer as a promise to give Mr Murray any more than he had requested. Another way of looking at it is this. In negotiating a contract the language used by the parties is often imprecise. Then it is the duty of the court to give a common sense meaning to the words used: Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191. The court’s duty is to separate the “purposive sheep from the literalist goats”: Summit Investment Inc v British Steel Corporation (The “Sounion”) [1987] 1 Lloyd’s Reps 230 at 235. The sheep must win the day. 92 It will be necessary to further define the legal character of the “right” obtained by Mr Murray. But first I should say something about the content of the “right” to use the film. It had several aspects. First, the right was conferred on Mr Murray and him alone. Second, it was not a right that was capable of being passed on; it was personal to Mr Murray. Third, the right to use the film was for a limited purpose, namely to use the film for promotional purposes. That is, the film could not be used for commercial purposes. The distinction between the two types of use is important. It is, I think, clear that the parties intended that Mr Murray could use the footage to promote DARE’s activities and thereby raise funds. Indeed that was the reason he sought the right in the first place. But the right to use the film for promotional purposes did not carry with it the right to lease, hire or assign the right to use the film to a third party for use by that third party, even if that use would promote the activities of DARE. 93 Turning now to the legal character of the rights given to Mr Murray. On the view that I take, Seven did not assign copyright to Mr Murray. If copyright were assigned he would have the full power to deal with the footage in any way he chose. No such thing was intended by the parties to the agreement. It is perfectly clear that what was intended was the grant of permission (or to use the statutory term – a licence) to Mr Murray for him to use the footage for a limited purpose. Being for consideration, the licence was granted in perpetuity. In the absence of that licence Mr Murray could not make any use of the film although he is a co-owner: Ray v Classic FM plc (1998) 41 IPR 235. The licence granted protected Mr Murray from an action for infringement. Whether the permission is capable of protection by action by Mr Murray (as to which see British Actors Film Company, Limited v Glover [1918] 1 KB 299, 309) need not be decided. 94 The next point is this. Nine’s ability to broadcast the film to the public is dependent upon it having permission to do so from the copyright owner or owners: Copyright Act, ss 86, 101. It has Mr Murray’s permission, but he is not the sole owner of the copyright. So Nine also requires the permission of Seven. It does not have that permission directly from Seven. It could only obtain that permission if the licence given to Mr Murray contained an implied term that it could be assigned. Here we look to the presumed intention of the parties and ask whether the putative implied term is necessary for the reasonable or effective operation of the licence: Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41. The judge made a finding that is inconsistent with the implication of the supposed term. The finding is that “if the possibility of any part of the [film] being broadcast on Nine had been raised, it is likely that McPherson would not have agreed to that possibility”.

[5.310]

199

Intellectual Property: Commentary and Materials

Exclusive licence [5.320] See Copyright Act 1968 (Cth) ss 117 – 125.

A licensor may retain the right to grant licences to others unless exclusivity has been promised to the licensee. In the Copyright Act 1968 (Cth), exclusive licence is defined in s 10(1) as follows: “exclusive licence” means a licence in writing, signed by or on behalf of the owner or prospective owner of copyright, authorizing the licensee, to the exclusion of all other persons, to do an act that, by virtue of this Act, the owner of the copyright would, but for the licence, have the exclusive right to do, and “exclusive licensee” has a corresponding meaning.

An exclusive licensee has the same rights of action in respect of the copyright work as the original owner – that is, the right to sue for infringement (s 119(a)), and to seek damages for conversion and detinue (s 116) subject to the discretion of the court as to the adequacy of the remedy under s 115. A non-exclusive licence, on the other hand, does not enjoy the right of independent action in respect of the work in which it holds a licence, and needs to join the copyright owner as a co-plaintiff in an action: see Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1998) 39 IPR 577. In Flashback Holdings Pty Ltd v Showtime DVD Holdings Pty Ltd (No 6) [2010] FCA 694 – a rather complicated case of owners and licensees – the applicant, Flashback Holdings (Flashback), sought damages for lost profits and an injunction restraining Showtime DVD Holdings (Showtime) from distributing or selling a range of children’s digital video disks (DVDs) to the ALDI supermarket chain. Since September 2007, Flashback had held an exclusive licence from Absolute Home Entertainment (Absolute) – a New Zealand company and the purported owner of the copyright in the range of children’s DVDs in Australia – to distribute the DVDs in Australia. ALDI was one of Flashback’s clients. Shortly after being granted the licence, Flashback found that Showtime had imported and sold almost 30,000 of the DVDs to ALDI, supposedly in breach of Flashback’s exclusive licence. Showtime alleged that it had entered into a non-exclusive licence agreement with Absolute, dating from June 2007, to distribute the DVDs in Australia. Showtime sought declarations that Flashback was not entitled to continue with proceedings unless it joined with Absolute as the purported copyright owner. Absolute declined to pursue Showtime. During earlier proceedings in the dispute, it transpired that Absolute was not the copyright holder of the DVDs, but merely a licensee of the real copyright holder, Gaiam Inc. In November 2008, Flashback applied to join Gaiam Inc as the copyright owner in the action, and the application was granted. In July 2010, in the sixth judgment in the dispute, the court granted Flashback the injunction restraining Showtime and awarded Flashback $40,000 in damages.

Implied licences [5.330] Implied licences may frequently be oral, or may frequently arise from the

circumstances in which copyright material is to be used or is made available. However, a licence will only be implied where business efficacy requires it – for example, continued use of an architect’s plans for a building after the business relationship between client and architect may have concluded: see Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577. 200 [5.320]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Gruzman v Percy Marks [5.340] Gruzman Pty Ltd v Percy Marks Pty Ltd and Anor (1989) 16 IPR 87 Supreme Court of New South Wales [The plaintiff applied for an interlocutory injunction to restrain infringement of copyright. Note the “moral rights” argument.] MCLELLAND J: [88] The plaintiff is a company which provides the architectural services of its director, Mr Neville Gruzman. The first defendant is a retailer of high quality jewellery. In May 1989 the first defendant retained the plaintiff to provide Mr Gruzman’s services in relation to the fitting out of new shop premises for the first defendant, at 70 Elizabeth Street, Sydney. Thereafter Mr Gruzman prepared plans, and performed various other functions in connection with the proposal, including (i) the engagement on behalf of the first defendant, of the second defendant, a builder, to carry out the construction work, and (ii) the supervision of that work. The work commenced on 13 July 1989, and is still in progress. However, differences arose between Mr Gruzman and the first defendant, and on 6 October 1989 the first defendant purported to terminate the plaintiff’s retainer, alleging among other things, very substantial cost overruns, and claims for excessive fees. Negotiations followed which terminated on 3 November 1989 without resolution of the dispute. In the meantime, the defendants have been proceeding with the work, with various modifications designed to reduce cost. The present proceedings were commenced on 6 November 1989, by summons in which the plaintiff claims a declaration that it is the owner of the copyright in the plans prepared by Mr Gruzman, an order restraining the defendants from using those plans in relation to the fitting out of the shop, an order for delivery up of the plans to the plaintiff, and damages. The substantial matter now before the court is whether the plaintiff should have an interlocutory injunction to prevent the defendants from using the plans for the purpose of completing the fitting out of the shop. For the purpose of the present application, it is common ground that the plaintiff is the owner of the copyright in the plans. The plaintiff’s case is based on the contention that use of the plans for the purpose of completing the fitting out work, would infringe the plaintiff’s copyright therein. [89] When an architect contracts with a building owner to produce plans for the purpose of their being used to carry out construction work at a particular site, there arises, subject to any contractual provision to the contrary, an implied licence from the architect for the use of the plans for that purpose: see Beck v Montana Constructions Pty Ltd (1963) 80 WN (NSW) 1578; Blair v Osborne & Tomkins [1971] 2 QB 78, and Ng v Clyde Securities Ltd [1976] 1 NSWLR 443. It was held in Clyde Securities that once granted and acted upon by the commencement of the work, the licence was irrevocable, notwithstanding any subsequent failure by the owner to pay the architect’s fees. The question whether the licence could be effectively revoked in the event of the repudiation by the building owner of a contractual right in the architect to continue employment on the project did not there arise, and was expressly left open. Although I doubt whether even such a repudiation would enable the licence to be revoked, time constraints have precluded proper argument on, or full consideration of, that question, and it is better left until the facts relating to the termination of the retainer have been established: see Kolback Securities Ltd v Epoch Mining (1987) 8 NSWLR 533 at 535. For present purposes I will treat the proposition as arguable. It has been submitted for the plaintiff that even if there is an irrevocable implied licence of the kind already referred to, any departure from, or modification of, the plans in order to reduce costs would fall outside the licensed use, on the basis that the implied licence is for use of the plans in respect of construction work in accordance with the plans, and not otherwise. This submission proceeded by reference to the broad expression “use” of the plans, which occurs also in the claims for relief. However, architects’ plans are, for the purposes of the Copyright Act 1968 (Cth), to be classified as an [5.340]

201

Intellectual Property: Commentary and Materials

Gruzman v Percy Marks cont. “artistic work” (see definitions of “artistic work” and “drawing” in s 10), and what would relevantly constitute an infringement of the plaintiff’s copyright, would be the “reproduction” of that work “in a material form” “without the licence of” the plaintiff: see ss 31(1)(b), and 36. For the purposes of the Act, “an artistic work shall be deemed to have been reproduced … in the case of work in a two-dimensional form if a version of the work is produced in a three-dimensional form” (s 21(3)). … In the light of these provisions the plaintiff’s submission based on a departure from, or modification of, the plans, has a paradoxical element in that the more the work departs from the plans, the less likely it is that it will reproduce those plans. However this may be, I do not consider that any arguable basis has been shown for restricting the implied licence in the manner contended for. Subject to any contractual provision to the contrary, such an implied licence would in my view extend to the use of the plans for the purposes of the construction work, to such extent as the owner may decide, and involves no implied restraint on the carrying out of work which [90] departs from those plans: see Barnett v Cape Town Foreshore Board (1960) 4 SA 430; [1978] FSR 176, and Hunter v Fitzroy Robinson & Partners [1978] FSR 167. It should be noted that the decision of the British Columbia Court of Appeal in Netupsky v Dominion Bridge Co referred to in Hunter was reversed by the Supreme Court of Canada: see (1972) 24 DLR (3d) 484. … In the circumstances of the present case, the course best calculated to achieve justice between the parties, is to refuse any interlocutory injunction. The plaintiff’s claim of infringement of its copyright in the plans, although arguable, may very well fail. Even if that claim were ultimately to succeed, it may well be held that damages are an adequate remedy and final injunctive relief inappropriate: see for example Hunter v Fitzroy Robinson & Concrete Systems Pty Ltd v Devon Symonds Holdings Ltd (1978) 20 SASR 79. There would be grave difficulties in framing the terms of any interlocutory injunction with sufficient precision to enable the defendants to know what they can, and what they cannot, do, and yet so as to confine any restraint to what, on the most favourable view of the plaintiff’s case, would be justifiable. Moreover, in granting an interlocutory injunction there would be a serious risk that the court would be allowing itself to be used as an instrument of unjustified economic pressure on the defendants. Finally, the adverse consequences to the first defendant of an injunction which ultimately turns out to be unjustified, would be far greater than the adverse consequences to the plaintiff, of refusing an injunction which ultimately turns out to have been justified. The loss to the first defendant of business and goodwill if completion of the fitting out work is further delayed, or interrupted, as would almost inevitably be the consequences of any injunction, is likely to be both very substantial and very difficult of assessment in monetary terms. The plaintiff asserts potential damage to Mr Gruzman’s reputation if the fitting out is completed otherwise than in accordance with his plans, having regard to his known association with the project. This is a somewhat speculative claim in so far as it is based on what [91] is said to be the possibility of aesthetic deficiencies in the new shop, arising from departures from, or modifications of, Mr Gruzman’s plans. Its legal basis appears slight, having regard to what I have held to be the right, subject to any contrary provision of an owner to depart from his architect’s plans to such extent as he may wish. Even if there were a solid basis for such a claim it would not in my view swing the balance of potential injustice sufficiently to justify interlocutory relief. Application for interlocutory relief dismissed.

[5.350] In De Garis v Neville Jeffress Pidler (1990) 95 ALR 625, Neville Jeffress tried to claim

that an implied licence existed in respect of de Garis’s material by virtue of the fact that the 202 [5.350]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

material had already been published – a defence that did not succeed (see also [5.160] above in respect of contract for service versus contract of service issues in this case).

De Garis v Neville Jeffress Pidler [5.360] De Garis v Neville Jeffress Pidler (1990) 95 ALR 625 Federal Court of Australia [See [5.160] above for the facts of the case.] BEAUMONT J: The implied licence defence 58. No express licence by Mr de Garis is relied on. But, on behalf of Jeffress, the defence pleaded is that a licence authorising Jeffress to reproduce the work in the way it does should be implied – from the provision of … the … work to the publisher … of the newspaper … in which (it) appeared and from the fact that (it) appeared in the … newspaper …, copies of which were sold or supplied to the public. 59. The onus of establishing this defence lies on Jeffress. In my opinion, it has not discharged that burden. 60. If copyright material is produced for a particular purpose, then there is an implied permission or consent or licence to use that material to carry out that purpose (see R and A Bailey and Co Ltd v Boccaccio (1986) 4 NSWLR 701 at p 711). Thus, generally speaking, a freelance writer submitting material for publication impliedly licences the relevant media organisation to publish it. But if a freelance journalist submits an article to a media organisation for publication in a particular newspaper or magazine or submits a film or recording for broadcast by a particular station, a licence to publish it in another publication or to broadcast it on another station is not, ordinarily, implied (see Walker, op cit at p 350). 61. In my opinion, Jeffress has not established any proper basis for the making of the implication alleged. 62. It is one thing to imply from the circumstances surrounding the relationship between Mr de Garis and the proprietor of “The West Australian” a licence to reproduce the work in that newspaper. But it is a different thing to ask the Court to imply a licence from Mr de Garis so as to permit the reproduction of his work by any commercial press-clipping service which desires to deal with it in the course of its trade. 63. In the former case, the implication is necessary to give business efficacy to the contractual relationship between Mr de Garis and a particular newspaper proprietor. Without such an implied licence, the contractual arrangement between those parties would have been ineffective. In the latter case, different considerations apply. The activities of Jeffress are separate, in ownership and commercially, and distinct in character, from the activities of the newspaper proprietor. Jeffress is not publishing a newspaper. It is retrieving, for a fee, information previously published in a newspaper. Whilst Mr de Garis has a direct, contractual relationship with the newspaper proprietor, he has no relationship of any kind with Jeffress. Although a licence to publish the work in a particular way may be necessary to make the relationship of writer and newspaper proprietor efficacious, in the case of a third party having no relationship with Mr de Garis, such as Jeffress, the implication by the Court of a licence to do what would otherwise be unlawful is not called for. 64. It may be (and Jeffress led no evidence on the point) that the provision of press clippings is now a common practice in this country. Even if the evidence had established this, it would not follow that this justified the conduct of Jeffress in reproducing the work without the permission of the owner of the copyright (see Maxwell v Somerton (1874) 30 LT 11). In any event, the basis of the alleged implication which is pleaded does not seek to raise any general considerations of this kind. 65. On behalf of Jeffress, reliance is placed upon the decision of Jacobs J in Beck v Montana Constructions Pty Ltd (1963) 80 WN (NSW) 1578. In my view, the case is distinguishable on its facts. There, the question was whether the vendors of land were entitled to assign to their purchasers the [5.360]

203

Intellectual Property: Commentary and Materials

De Garis v Neville Jeffress Pidler cont. right to use sketch plans prepared by the vendors’ architect. The architect had been retained to prepare plans of a building proposed to be constructed on the land. Jacobs J said (at p 1581): The question raised is quite a broad one because it applies not only to architects but would apply for instance to artists who are engaged to prepare a particular work which would of its nature be reproduced, for instance a cartoon for a tapestry or a mosaic, or which would apply to persons who prepared written material with the intention that it should be used in a particular manner. It seems to me that the principle involved is – that the engagement for reward of a person to produce material of a nature which is capable of being the subject of copyright implies a permission or consent or licence in the person making the engagement to use the material in the manner and for the purpose in which and for which it was contemplated between the parties that it would be used at the time of the engagement. It seems to me that this must be regarded as a principle of general application. 66. Jacobs J added (at p 1582): I think it is a principle which can be found to be applied in a number of cases. It relates to permission or consent to what must have been taken to have been within the contemplation of the parties at the time of the engagement. After all, it must be borne in mind that it is the engagement which brings the copyright material into existence. When that principle is applied in the present case it seems to me to be inevitable that one should conclude that the payment for sketch plans includes a permission or consent to use those sketch plans for the purpose for which they were brought into existence, namely, for the purpose of building a building in substantial accordance with them and for the purpose of preparing any necessary drawings as part of the task of building the building. 67. The general principles stated in Beck’s Case are accepted. The application of those principles will depend upon the particular circumstances. For instance, in Stovin-Bradford v Volpoint Properties Ltd (1971) Ch 1007, a licence to use drawings and plans to a very limited extent was implied because the fee paid to the architect was only nominal (cf Ng v Clyde Securities Limited (1976) l NSWLR 443 at p 446). In Stovin-Bradford’s Case, the licence was implied to use the drawings and plans for the purpose of obtaining planning permission but for no further purpose. 68. In the present case, there was an implied licence granted by Mr de Garis to the proprietor of “The West Australian” to publish the article in the newspaper. However, it does not follow that there should also be implied another, distinct licence in favour of Jeffress, authorising it to use the work for the purposes of its commercial press-clipping service. Unlike the situation in Stovin-Bradford’s Case Jeffress did not provide any consideration, not even a nominal consideration, to Mr de Garis yet Jeffress took the work in its entirety. 69. Further, it is now well established that silence on the part of Mr de Garis as to the imposition of a restriction is not necessarily indicative of a grant of freedom from restriction (see Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV [1977] HCA 52; (1977) 138 CLR 534 per Jacobs J at pp 556-7; Computer-Mate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 83 ALR 492 at p 498). Infringement 70. It follows in my view, that Jeffress has infringed copyright.

204 [5.360]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Compulsory licence [5.370] The Copyright Act 1968 (Cth) provides for a number of compulsory or statutory

licence arrangements. Conferred by statute, compulsory licences exist to draw a balance between the rights of the copyright owner and the interests of the public. This is most evident in the record, music and broadcasting industries where aggregation of market power is possible due to the licensing of organisations to act on behalf of copyright owners. 3 The use of copyright material in an educational context is also relevant here, in recognising the inevitability of copying in the university context. The Copyright Act 1968 (Cth) establishes various types of compulsory licences – for which royalties must be paid in order to exercise them – as distinct from providing defences to infringement. The various types of compulsory licences include: copying by educational institutions or institutions assisting persons with a print or intellectual disability; recording of musical works; broadcasting sound recordings or causing them to be heard in public; recording or filming works for the purpose of ephemeral broadcast by another person, or copying such a recording; copying of broadcasts by educational institutions or institutions assisting persons with an intellectual disability; copying of artistic works and Crown use of copyright material. Amendments introduced by the Copyright Amendment Act 1989 (Cth) streamlined the system of granting compulsory licences, largely by recognising and giving statutory force to the licensing arrangements agreed upon between copyright owners and users, as well as introducing a statutory scheme to allow for copying of audio-visual broadcast material by educational institutions and institutions assisting readers with a print or intellectual disability. There is a distinction to be drawn between the compulsory licensing and fair dealing provisions of the Copyright Act 1968 (Cth). In Haines v Copyright Agency Ltd (1982) 42 ALR 549, the Director-General of Education for New South Wales circulated a memorandum to school principals entitled Further Information on the Copyright Act in order to explain certain aspects of the Act concerning the copying of educational material for teaching purposes. The memorandum pointed out that the Copyright Act 1968 (Cth) s 40 (providing for fair dealing): … allows for virtually the same amount and type of copying without imposing any need to keep records or make payments. A teacher could use s 40, for example, in preparing his/her own materials and students could use s 40 for themselves simply by doing their own copying on the photocopying machine in the library or elsewhere.

The Full Federal Court emphasised the distinction between fair dealing and copying under the compulsory licence, and denied that s 40 was “an attractive alternative” to the compulsory licence for multiple copying. An important feature of the compulsory licence scheme is the role played by the Copyright Tribunal, established under the Copyright Act 1968 (Cth) Part VI. It has jurisdiction to determine royalty rates under statutory licensing schemes in the absence of agreements by the parties, to settle disputes relating to fixing royalties or equitable remuneration, and arbitrating disputes between parties to licence agreements.

The Copyright Tribunal [5.380] In June 2010, the Copyright Tribunal approved a scheme which dramatically

increased the licence fees payable by fitness class providers for the use of recorded music. The 3

See House of Representatives, Debates, second reading debate on the Copyright Bill 1968 (Cth), 16 May 1968, p 1527. [5.380]

205

Intellectual Property: Commentary and Materials

applicant, a copyright collecting society called Phonographic Performance Company of Australia Ltd (PPCA), proposed to replace the existing scheme relating to the use of sound recordings for fitness class use. Under the existing scheme, fitness class providers are charged 96.8 cents per class, with a cap of $2654 per year. PPCA relied on a consumer survey of users of fitness centres, using centre membership figures as the key basis for an increase in the licence fee. The Tribunal was not prepared to rely on the survey results and instead decided that it would proceed on a process of judicial estimation, with a figure derived from an initial pilot study as the starting point. The Tribunal held that the current licence scheme should be replaced, finding that a rate of $15 per class or $1 per attendee per class should apply in the future. Although the Tribunal accepted that music plays a different role in flexibility classes, such as yoga and pilates, than it does in rhythmic classes, it held that a reduced rate for flexibility classes was not justified. Fitness Australia Ltd, which had joined PPCA as a party to the original application to the Tribunal, sought judicial review in the Federal Court, principally for breach of the rules of natural justice in connection with the making of the Tribunal’s decision. In December 2010, the court set aside the Tribunal’s decision and referred the matter back to the Tribunal for its reconsideration.

Re Phonographic Performance Company of Australia [5.390] Phonographic Performance Company of Australia Limited (ACN 000680 704) under section 154(1) of the Copyright Act 1968 [2010] ACopyT 1 Copyright Tribunal of Australia Protected recordings 24 PPCA asserts that, if a performer who contributes to the making of a sound recording has an Australian connection or is a citizen of a Schedule 3 country, the recording qualifies as a protected recording. Accordingly, if there is any musician satisfying this description who contributes to the recording, even if only as a member of the orchestra, chorus or backing band or vocalists, the record will be protected in Australia. It also relies on the definition of “live performance” to claim that it does not matter if the recording is made in a studio or is not made with all performers present at the one time. It points out that recording techniques involve a layered or iterative process in which various tracks are made and mixed. It is the exceptional case for a recording to be made as a one off exercise with all contributors present. 25 This approach results in many of the records used in fitness classes being classified as protected recordings. It is rejected by the respondents. 26 Fitness Australia asserts that the reference to the “maker” of a sound recording in regulation 6(2) of the CIPR requires all persons who fall within the description of “maker” to satisfy the nationality requirements before the recording can be regarded as being protected. This is the reverse of the PPCA argument. On the Fitness Australia approach, in those cases where the protection for the recording is reliant upon the connection of a person with a Schedule 3 country, if any contributor to the recording does not have that connection, the recording will not be protected. 27 Fitness Australia also rejects the claim by PPCA that a live performance does not require the presence of all performers at the one time. In Fitness Australia’s view, a studio recording of a work does not qualify as a protected record unless the work is performed and recorded at the one time by the whole group of performers. 28 This issue became of significance in the hearing before the Tribunal because Ms Lynne Small, Manager, Finance, Operations & Administration at PPCA, undertook an analysis of the track listings of new CDs issued by Fitness Compilation Vendors, ie, vendors of recordings made for use in fitness classes. This analysis applied PPCA’s meaning of protected records. It led Ms Small to conclude that 206 [5.390]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Re Phonographic Performance Company of Australia cont. around 70 per cent of the tracks included in the records were protected. The overwhelming majority of these tracks would thereby fall within the scope of PPCA’s licence. 29 Fitness Australia sought to discredit this analysis. Applying its basis for determining whether a recording is protected under the Copyright Act, it asserted that, at best, 60 per cent and more probably 40 per cent of the tracks sampled were protected. (However, this basis for the number derived is affected by the fact that it is asserted that the Les Mills programmes do not require a PPCA licence, as to which see [72]). Fitness Australia also questioned the methodology adopted by Ms Small to arrive at her conclusion. Fitness Australia claimed that the analysis undertaken was not rigorous and inflated the number of records that could be claimed as protected. 30 In this context it is pertinent to note that the Tribunal had brought to its attention that Rhythm Express Music, one of the largest Australian companies that produces music compilations for use in fitness classes states on its website that: The greatest advantage of all our CDs is that we license the biggest tracks from all the major record companies. We only publish the original artists. 31 The Tribunal does not think it appropriate that it should express a view on the correct approach to be taken to determining what sound recordings fall within the protection provided by the Copyright Act. It involves a very difficult question of the interpretation of the copyright legislation that should be left for a court to resolve in a case where the interpretation bears upon the outcome of an application. It is sufficient for present purposes to indicate that the Tribunal is persuaded that many, but not all, records that are used in fitness classes are protected recordings and that some of these will not be covered by the PPCA licence. The Tribunal has taken this into account in arriving at the figure that it has fixed as the appropriate rate to be paid for the use of such records. It returns to the issue at [275] and [308]. 32 The Tribunal also takes into account that obtaining a PPCA licence largely overcomes the problem of deciding whether a record is protected. A licence provides access to the whole PPCA repertoire. In practical terms, the need to seek the consent of the owner of the copyright to use a particular track on a record for the purposes of a fitness class is taken away. If a record is not protected, no licence to use it is required. If it is protected, the PPCA licence will in practice remove the need to seek permission to use it. While not all protected records are covered by the PPCA licence, it is pertinent to a consideration of the value of the licence to a fitness provider that PPCA is not aware of an instance where a licensee has been called to account for using a record not covered by the PPCA licence. Neither did the respondents identify any such instance. … Tribunal’s role in determining licence fees 114 The appropriate fee for payment for the use of sound recordings in public was recently considered by the Tribunal in the Nightclubs case. In the course of its judgment the Tribunal summarised its role in relation to an application for approval of a licence scheme as follows: [10] In each reference under s 154, the Tribunal must make a value judgment as to what it considers reasonable in the circumstances. It is not usually possible to calculate mathematically the correct licence fee in any particular case (APRA v AFRB [1999] ACopyT 4; 46 IPR 20 at [19] and [11]). Where approval of a scheme would lead to a substantial increase in fees, the increases can be phased in over a period of years rather than being introduced immediately. In the present case, the Society proposes that there be a phasing in of the increase claimed by it. [11] In determining whether a proposed scheme, and the licence fee payable under it, are reasonable, a number of approaches might be adopted. The approaches include the following, which may overlap to a certain extent: • Market rate: the rate actually being charged for the same licence in the same market in similar circumstances. • Notional bargain rate: the rate on which the Tribunal considers the parties would agree in a hypothetical [5.390]

207

Intellectual Property: Commentary and Materials

Re Phonographic Performance Company of Australia cont. negotiation, between a willing but not anxious licensor and a willing but not anxious licensee. • Comparable bargains: bargains not in the same market but sufficiently similar to such a notional bargain as to provide guidance to the Tribunal. • Judicial estimation: the rate determined by the Tribunal after taking into account a range of matters such as: • previous agreements or negotiations between the parties; • comparison with other jurisdictions; • comparison with rates set by other licensors, capacity to pay, value of the copyright material, the general public interest and the interests of consumers; and • administrative costs of a licensing body (see Audio Visual Copyright Society Ltd v Foxtel Management Pty Ltd No 4 68 IPR 367 at [131] and [142]). 115 The Tribunal accepts this analysis as appropriate for it to follow in the present application.

Collecting societies [5.400] The Copyright Act 1968 (Cth) s 135ZZB provides generally for the creation of collecting societies, while s 135P provides for the declaration of a collecting society in respect of copying and communicating of broadcasts by educational and other institutions. Any body may apply to the Minister to be declared as a collecting society for all relevant copyright owners or for specified classes of relevant copyright holders. The Minister may so declare or refuse the application, or refer it to the Copyright Tribunal for possible declaration. Copyright collecting societies are non-governmental, non-profit organisations that administer statutory and voluntary licences for copying and communicating literary, dramatic and artistic works, ensuring that authors, artists and other creators of copyright works are rewarded for the commercial exploitation of their works. The societies negotiate licences with users and receive payments which they pass on to their members. Each collecting society generally represents a different aspect of copyright. Collective administration has a number of benefits for individual owners of rights and those that wish to use those rights. For individual owners, it is often difficult to maximise the economic value of their rights and to protect them. Similarly, third parties who wish to use those rights must incur the trouble and expense of finding the appropriate rights owners, negotiating individual deals, and administering and accounting to a vast number of such rights owners. The collective administration of copyright is often the most effective method of managing the rights for both parties. Collecting societies have three common functions, namely:

• documentation of works within their particular area of copyright protection or operation, which may have a potential commercial application; • identification and monitoring of usage of their members’ copyrighted works; and • collection and distribution of royalties and licence fees to their members. The major collecting societies operating in Australia include the following: • Aboriginal Artists Agency: aboriginal artists rights across cross media including print, digital uses, film and video, theatre and architecture. • Australasian Mechanical Copyright Owners Society (AMCOS): rights to reproduce a musical work in a material form; • Australian Performing Rights Association (APRA): public performance, broadcasting and cable diffusion rights in musical works (eg, music compositions and lyrics); 208 [5.400]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

• Australian Screen Directors Authorship Collecting Society: film screen rights; • Australian Writers’ Guild Authorship Collecting Society: film screen rights; • Copyright Agency Limited (CAL): statutory and voluntary licences for copying and communicating literary, dramatic and artistic works and images; • ScreenRights: the Audio Visual Copyright Society (AVCS): statutory licences for educational institutions and institutions assisting intellectually handicapped people to copy programs from radio or television for educational purposes; • Phonographic Performance Company of Australia (PPCA): broadcast and public performance vested in sound recordings and music videos; • Visual Arts Copyright Collecting Agency (VISCOPY): visual artists’ rights over their artistic works. Resale Royalty Right for Visual Artists Act 2009 (Cth) [5.410] The Resale Royalty Right for Visual Artists Act 2009 (Cth) made provision for the

establishment of a collection agency or collecting society to administer a scheme for the identification of works that are eligible for the payment of royalties and for the collection and distribution of those royalties. In June 2010, the government appointed the Copyright Agency Limited (CAL) as the collecting agency, which operates along similar lines to copyright collection. The statutory requirements for the operation of the agency are described in the following extract from the Resale Royalty Right for Visual Artists Act 2009 (Cth), Division 5 (“Collecting resale royalty”).

Resale Royalty Right for Visual Artists Act 2009 (Cth) [5.420] Resale Royalty Right for Visual Artists Act 2009 (Cth), Division 5 (“Collecting resale royalty”) 23 Collection of resale royalty by the collecting society (1)

This section applies unless: (a)

the holder of the resale royalty right on the commercial resale of an artwork; or

(b)

if there is more than one holder of the resale royalty right on the commercial resale of an artwork – all the holders of the resale royalty right on the commercial resale of the artwork; notify the collecting society in writing, within 21 days after notice of the commercial resale is published on the collecting society’s website, that the collecting society is not to collect the resale royalty, or enforce the resale royalty right, on the commercial resale on behalf of the holder or holders of the right. (2)

The collecting society must use its best endeavours to collect the resale royalty payable under this Act, and, if necessary, enforce any resale royalty right held under this Act, on the commercial resale of the artwork on behalf of the holder or holders of the resale royalty right.

(3)

The collecting society is not subject to the direction of any holder or holders of the resale royalty right in collecting the resale royalty or enforcing that right.

… 25 Resale royalty right under this Act only enforceable in Australian jurisdiction Resale royalty right held under this Act is only enforceable in an Australian federal court, or a court of a State or Territory, of competent jurisdiction. [5.420]

209

Intellectual Property: Commentary and Materials

Resale Royalty Right for Visual Artists Act 2009 (Cth) cont. 26 If resale royalty is paid to the collecting society (1)

If resale royalty on the commercial resale of an artwork is paid to the collecting society, the collecting society must: (a) pay to each entity that has given the collecting society notice under subsection 27(1) and established a claim to a share of the resale royalty on the commercial resale, that entity’s share of the resale royalty less the collecting society’s administration fee; and (b)

use its best endeavours to locate each holder of the resale royalty right on the commercial resale of the artwork who has not given the collecting society notice under subsection 27(1), and pay that holder the holder’s share of the resale royalty, less the collecting society’s administration fee.

(2)

The collecting society’s administration fee must not be such as to amount to a tax.

(3)

The Minister may, by notice in writing given to the collecting society, limit the administration fee to be imposed by the collecting society.

(4)

A notice given under subsection (3) is not a legislative instrument.

27 Notice of resale royalty right (1)

(2)

An entity that claims to hold a resale royalty right, or an interest in a resale royalty right, under this Act may give the collecting society written notice in the manner and form approved by the collecting society setting out: (a) the entity’s name; and (b)

the entity’s address; and

(c)

the proportion of the resale royalty right to which the entity claims that it is entitled; and

(d)

details of the basis on which the entity makes that claim.

The collecting society may, by written notice, request an entity that has given the society notice under subsection (1) to provide further information in support of the claim within a specified time of no less than 60 days.

28 Notice of commercial resale (1)

(2)

A person must give the collecting society notice complying with subsection (2) of the commercial resale of an artwork if: (a) the person is a seller under the commercial resale; and (b) the person is: (i) an Australian citizen; or (ii)

a permanent resident of Australia; or

(iii)

a corporation incorporated under the Corporations Act 2001; or

(iv)

a person (including a body corporate) who carries on an enterprise in Australia; or

(v)

a trustee of a trust of which one of the persons mentioned in subparagraphs (i) to (iv) (inclusive) is a beneficiary.

… The notice must: (a) be in writing; and (b) (c)

210 [5.420]

be given to the collecting society within the period of 90 days beginning at the time of the commercial resale; and include sufficient detail to allow the collecting society:

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Resale Royalty Right for Visual Artists Act 2009 (Cth) cont.

(3)

(i)

to work out whether resale royalty is payable on the commercial resale under this Act; and

(ii)

to work out the amount of resale royalty payable under this Act; and

(iii)

to identify who is liable to pay the resale royalty.

The seller may satisfy the requirement to give notice in accordance with this section through an agent.

(4)

If: (a)

there is more than one seller under the commercial resale of an artwork; and

(b) one of the sellers gives the collecting society notice in accordance with this section; then all of the sellers are taken to have given the collecting society notice in accordance with this section. (5)

A person who wishes to rely on subsection (3) or (4) bears an evidential burden in relation to those matters.

29 Requesting information about the commercial resale of an artwork (1)

If the collecting society believes on reasonable grounds that a person is: (a)

a seller under a commercial resale of an artwork; or

(b)

a buyer under a commercial resale of an artwork; or

(c)

an agent of a seller or buyer under a commercial resale of an artwork; or

(d) an art market professional otherwise involved in a commercial resale of an artwork; the collecting society may, in writing, request the person to give the collecting society information in relation to the commercial resale relevant to determining: (e) the amount of any resale royalty payable on the commercial resale under this Act; and (f) (2)

who is liable to make the payment.

If: (a)

a request is made to a person in accordance with subsection (1); and

(b)

the commercial resale in relation to which the request was made occurred within 6 years before the request was made; the person must comply with the request within 90 days after it is given. …

PARALLEL IMPORTING [5.430] Under the Copyright Act 1968 (Cth), copyright owners are able to prevent the

importation into Australia of books that have been lawfully published in another country without the appropriate licence of the owner of the copyright. To qualify for protection, an Australian copyright holder (commonly a publisher or author) must publish a book for which they hold copyright within 30 days of its overseas release and (subject to some exceptions) maintain a capacity for resupply within 90 days. Once a rights holder is protected, booksellers cannot import and sell the same title in commercial quantities. It might be expected that purchasing quantities of books, compact disks or computer software from a legitimate supplier would enable the purchaser to import and sell such items in Australia, since, unless the items are “pirated” the copyright owner gets the royalties on the [5.430]

211

Intellectual Property: Commentary and Materials

sales. Further, since copyright is an “incorporeal” right it does not necessarily entail the right to control the physical movement of goods. See Pacific Film Laboratories Pty Ltd v Commissioner of Taxation (at [3.90]). The Copyright Act 1968 (Cth) has, however, been construed in such a way as to allow authorised distributors to uphold territorial restrictions and maintain Australia as a closed market for the products mentioned. The importing of legitimate copies of copyright works and other subject matter by someone other than an authorised importer is known as “parallel importing”. In Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV (1977) 138 CLR 534 (Time-Life), the High Court held that the Copyright Act 1968 (Cth) s 37 requires that an importer must have a positive licence to import works for sale in Australia. When the bookseller Angus and Robertson purchased supplies of a cookbook from a wholesaler in the United States, with no restrictive terms on the use to which the buyer might put the books, including their resale anywhere in the world, this did not involve the grant of a licence by the copyright owner to Angus and Robertson to deal with the books in a manner inconsistent with the rights of an appointed distributor. Time-Life has been discussed and applied in subsequent cases, one point in issue being whether the purchase of quantities of books or other such product direct from the copyright owner (rather than from a wholesaler, as in Time-Life) leads to the implication of a positive licence to resell. The Full Federal Court discussed the nature of a “licence” under the Copyright Act 1968 (Cth) s 37 in Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 12 IPR 487; Avel v Wells (1991) 22 IPR 305. See also Lotus Development Corp v Vacolan Pty Ltd (1989) 16 IPR 143; Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 18 IPR 443; RA Bailey & Co Ltd v Boccaccio Pty Ltd (1986) 6 IPR 279; Ozi-Soft Pty Ltd v Wong (1988) 12 IPR 487. Einfeld J’s comments in Ozi-Soft Pty Ltd v Wong (1988) 10 IPR 520, extracted below, concerning the detriment to the Australian public caused by the prohibition on parallel importing were extensively discussed in the media.

Ozi-Soft v Wong [5.440] Ozi-Soft Pty Ltd v Wong (1988) 10 IPR 520 Federal Court of Australia [The first applicant was the exclusive licensee in Australia of the copyright in a number of computer programs, which were mainly games and some educational software. The other 14 applicants were the owners of copyright in the programs. The respondents purchased commercial quantities of disks embodying the programs in the United Kingdom, and imported them to sell in Australia.] EINFELD J: [520] On 13 March 1987 Wilcox J ordered that the following question be tried separately upon the basis of a statement of agreed facts filed in court on 13 March 1987: “Whether the importation and sale by the respondents of the diskettes referred to in the statement of agreed facts was done with the licence of the respective applicants?” [521] … It is clear from the agreed facts that the importation and sale by the respondents of the diskettes was not done with the express consent of the applicants. If consent cannot be implied, s 37 of the Copyright Act 1968 (the Act) forbids such importation and sale. The applicants submit that s 37 casts the onus upon the respondent to show that there was licence and not on them to prove that they have, or could have, imposed a restriction. Legislation, case law and various international conventions have developed in this area favouring exclusivity of ownership for the copyright owner. Under s 13 of the Act, for example, the copyright owner has both the exclusive right to do or to authorise another person to do acts protected by the copyright. 212

[5.440]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Ozi-Soft v Wong cont. There is no argument that the diskettes are encompassed in copyright legislation. A computer program is defined in s 10 of the Act as: “an expression in any language, code or notation of a set of instructions intended … to cause a device having digital information processing [522] capabilities to perform a particular function.” By s 10(1)(b), a literary work includes a computer program or compilation of computer programs. … The only issue to be determined here is whether there was an implied unrestricted licence to import and sell these diskettes. Counsel for the applicants argued that the decision in Interstate Parcel Express Co Pty Ltd (Ipec) v Time-Life International (Nederlands) BV (1977) 138 CLR 534 (the Time-Life case) is a most profound statement by the High Court on facts alleged to be indistinguishable for present purposes. The proposition relied on is that in copyright law a licence cannot be implied from the mere fact that the copyright owner had sold the goods without any express restriction on their subsequent disposal. It is necessary to consider this case in some detail as the success of either party in this matter depends on an understanding of the decision. The Time-Life case was an appeal from a judgment of the New South Wales Supreme Court making certain declarations and orders in respect of copyright infringement, in favour of Time-Life against Ipec, which was then operating the Angus and Robertson bookshops. Time-Life, a Dutch company, was at the time the exclusive licensee of Time Inc, a New York company (Time Inc), in respect of certain books of which Time Inc was the copyright owner. The proceedings were originally instituted by both these companies but Time Inc discontinued, fearing that to proceed might involve advancing an argument that could be construed as an infringement of the anti-trust legislation of the US. Time-Life’s distributor, Little Brown & Co, sold books to an American company, Raymar Inc, without restriction. Raymar sold them to Ipec which imported the books to Australia and sold them. There was no express licence from Time-Life or Time Inc to do so, nor were there any restrictions placed on the sales to Raymar or Ipec. The issue was whether Ipec imported the books into and sold them in Australia without the licence of the owner of the copyright. The High Court was of the view that the word licence as it appears in s 37 means no more than consent; and that a licence in this context may be given orally or be implied by conduct. As in the present case, there was no question in the Time-Life case of an express licence or of consent to the importation and sale. Reliance was placed on a line of authorities in patent cases, the principle there being that when a patented article is bought, control is implied unless there is explicit indication by the vendor that the buyer cannot sell it. The High Court distinguished the patent cases from copyright because, under patent law, the patentee has the exclusive right to make, exercise and vend [524] the product. Therefore to avoid a licence being implied, an express restriction needs to be placed on resale. Copyright differs. Gibbs J (1977) 138 CLR 534 at 542 said: The owner of copyright has not the exclusive right to use or sell the work in which copyright subsists. The buyer of a book in which copyright subsists does not need the consent of the owner of the copyright to read the book. The necessity to imply a term in the contract which exists when a patented article is sold does not arise on the sale of a book the subject of copyright. It was not, and could not be, suggested that the sale of a copy of a book is a licence to do the acts comprised in the copyright. His Honour continued that in some circumstances when the owner of copyright sells a book, his consent to a particular use may be implied. He said that in the Time-Life case, there were only the bare facts of a sale without restriction and no evidence put forward of the copyright owner knowing who the identity of the purchaser is. [5.440]

213

Intellectual Property: Commentary and Materials

Ozi-Soft v Wong cont. Gibbs J continued (at 544): It would therefore appear that in the US, as in Australia, it is not necessary, in order to give business efficacy to the sale of a book in which copyright subsists, to imply a term of vendor’s consent. Gibbs J (at 544) held that a licence: means the consent of the owner to the importation of the articles into Australia for the purpose of selling them, or to their sale after importation, and such a licence cannot be inferred from the mere fact that the owner of the copyright has sold the goods without any express restriction on their subsequent disposal. Stephen J (at 555) said: There is, then, no novelty in the view that indirect infringement of copyright may result from the importation of material which until imported infringed no copyright … Any undesirable economic or cultural effects which some may discern as flowing from this aspect of copyright protection are a matter for the legislature. Jacobs J (at 556) said: The purpose of s 37 is to make it clear that a positive licence is required. But the section does not say that importation for sale is allowed unless a restriction is given. It is thus obviously easier to argue an implied licence, Jacobs J said, if the copyright owner is selling the goods in commercial quantities direct to a purchaser in another country and does not impose any restriction on importation. In this case, counsel for the respondent sought to confine Time-Life to its facts and relied on two matters to dictate a different result. The first was the absence of any self-imposed or agreed restriction falling upon the copyright owner in Australia. The second was that Time-Life was decided against the background that it would have been illegal under the Sherman Antitrust Act for an American company to impose a restriction on end use and export when it granted Time-Life its licence. Counsel for the respondents by contrast placed reliance on Polydor Ltd v Harlequin Record Shop [1980] FSR 362. This case involved an argument about whether there was an implied licence to import a recording into the UK. Polydor Ltd was the exclusive licensee in the UK from the copyright owner of a certain recording. The licensee in Portugal was a Polydor company. The records were bought [524] legally in Portugal by Harlequin but imported into the UK without the consent of Polydor. Harlequin argued that the sale in Portugal implied a licence by every member of the Polydor group for the importing of records into the UK. This argument was rejected and the English Court of Appeal, following the High Court in the Time-Life case, held (at 366): The sale of records by the Portuguese licensees conferred ownership and possession on the defendants (Harlequin), but did not constitute a licence from anyone to import those records into the UK. This was relied on by the respondents for the proposition that, just as it was not permissible to exercise territorial or national rights in the nature of copyright so as to delimit markets as between England and Portugal, arising from a prohibition of that type in the Treaty of Rome affecting the states in the European Community, so it should be in Australia. Counsel submitted that the effect of Art 30 of the Treaty of Rome is that in a member state of the European Community, no contractual right or copyright can be exercised that has the effect of limiting the trade use in the UK of a copyright item. Notwithstanding the earnest submissions of counsel in this regard, I cannot see how this case assists the interpretation of the Copyright Act in Australia. 214 [5.440]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Ozi-Soft v Wong cont. The High Court in Time-Life expressly recognised that it is a question of fact as to the nature of the contract as to whether any licence is to be implied. Nevertheless, the court made substantial pronouncements of law, and I must seek to apply them here. The respondent argued that the fact that in Time-Life the US parent company did not have legal freedom to impose any restrictions forced the High Court to find a solution in the interests of commercial efficacy against a licence employing importation into Australia. Despite developing thought that it is or may be impermissible to impose restrictions upon the resale of goods because they infringe European Community law or the Sherman Antitrust legislation, the result surely cannot be that there is necessarily a licence by implication. However, as Murphy J observed in the Time-Life case, there is an element of public interest in copyright enforcement cases and, should the facts show a reasonable possibility of serious breach of the Trade Practices Act or injury to the public, the court can and should require the offending party to negate this before upholding its copyright. In Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 the Full Federal Court repeated (at 181) the well established principle that any uncertainty or ambiguity in the provisions of the Copyright Act would be resolved with regard to the Berne Convention of 1886. As already mentioned, this supports what has become known as the Doctrine of National Treatment, which means that foreign authors should have in Australia that which is granted to Australian nationals. As both counsel conceded, this was regarded by both parties as a test case because, other than the Time-Life case, there is no apparently substantive authority directly in point. [525] It may be that some other mechanism needs to be developed to resolve these issues, because the interests of the Australian people in having free access to literary, musical and artistic works, even computer video entertainment, are adversely affected if oppressive restrictions on importation and sale may be imposed by copyright owners who are not themselves importing or intending to import the works in question. Nevertheless, despite the force of the respondent’s argument, they have failed to persuade me that I ought not to follow the principles enunciated in Time-Life and its result. There is no evidence of any serious breach of trade practices legislation, nor any allegations of grave injury being caused to the public if the diskettes cannot be marketed here at this time. Adapting the comments of Stephen J in Time-Life (at 555), any undesirable community or societal consequences which may flow from this aspect of copyright protection are matters for the legislature. I do not think that I am able to shape the result of this case to counter any that may appear to flow if the respondents fail here. I answer the question posed by Wilcox J on 13 March 1987 in the negative.

[5.450] Discussion of the issue of restrictions on parallel importing was a major focus of the

Ergas Committee report, which recommended the removal of all restrictions on parallel importation from copyright legislation. 4 The recommendations proved controversial and subject to attack by major overseas copyright producer interests. Some of the recommendations, to free up the market for copyright material, were incorporated in the Copyright Amendment (Parallel Importation) Act 2003 (Cth), with the exception of cinematograph films. The amendments also closed a loophole whereby owners had previously 4

Intellectual Property Competition Review Committee, Review of Intellectual Property Legislation under the Competition Principles Agreement, Final Report (AGPS, September 2000). [5.450]

215

Intellectual Property: Commentary and Materials

been able to prevent the parallel importation of sound recordings by relying on the copyright in secondary material (eg, computer programs or short video clips) included on a music CD. However, following Australian Video Retailers Association v Warner Home Video Pty Ltd (2001) 53 IPR 242, an amendment was also made to the definition of “feature film” that prevented the parallel importation of DVDs with interactive components (and, hence, incorporated both a film and a computer program). The right to import music CDs led to litigation under the Trade Practices Act 1974 (Cth) ss 45, 46 and 47 (see now the Competition and Consumer Act 2010 (Cth)). The Australian Competition and Consumer Commission (ACCC) instigated proceedings arguing that the big recording company labels, Universal and Warner, had ceased to supply certain retailers who had imported CDs from overseas. The Full Federal Court found that while neither Universal nor Warner had a substantial degree of power in the relevant market, the companies had engaged in exclusive dealing for the purpose of substantially lessening competition in breach of the Trade Practices Act 1974 (Cth) s 47. Each company was ordered to pay $1 million in penalties and half the ACCC’s appeal costs. See Universal Music & Ors v Australian Competition and Consumer Commission [2003] FCAFC 193. Australian authors and publishers have campaigned vigorously against any proposal which would see parallel importation restrictions on books removed. The 2009 Productivity Commission Report, while it acknowledged that removing the parallel importation restrictions would have an adverse impact on Australian authors and publishers, nevertheless recommended that the restrictions be removed and that authors and publishers be provided with additional funding to compensate them for the loss. Presently under the Copyright Act 1968 (Cth), s 37(1), booksellers are prevented from sourcing a cheaper edition of a book from overseas markets, as long as the Australian rights holder has released the book within 30 days of it being published elsewhere. This protection has benefited Australian publishers and authors who have been able to sell in the Australian market without being undercut by cheaper commercial imports. In addition, the parallel importation restrictions have operated to place a higher demand on local printing. While these costs are likely to be met by consumers through higher prices on book titles, there is an exception to the restriction, with consumers able to purchase books directly from overseas via the internet through outlets such as Amazon.com, The Book Depository and DA Direct. In November 2009, the government announced that it would not change the existing regulatory regime for importing books, notwithstanding the Productivity Commission’s recommendations that the parallel importation restrictions on books be repealed. The government stated that its decision not to remove the import restrictions was made in light of the “strong competitive pressure” from international online book retailers, such as Amazon.com, and the increasing availability of e-books. The government considered that these sources and the easy availability of literary material through them would inevitably place a downward pressure on book prices. The government’s view was that this competition meant the abolition of parallel importation restrictions would not have “any material effect on the availability of books in Australia”. Previous reviews conducted by the ACCC (and its predecessor, the Trade Practices Commission) and other review committees in 1995, 1999, 2000 and 2001 have all recommended the removal of parallel importation restrictions on books. Restrictions on 216 [5.450]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

parallel importing for recorded music and computer software were lifted in 1998 and 2003, respectively.

RESALE ROYALTY RIGHTS Resale Royalty Right for Visual Artists Act 2009 [5.460] On 26 November 2009, the Australian Parliament passed the Resale Royalty Right

for Visual Artists Act 2009 (Cth). The Act received Royal assent on 9 December 2009, and the scheme came into effect on 9 June 2010. The then Minister for the Environment, Heritage and the Arts, the Honourable Peter Garrett, declared during the second reading speech of the Bill: The introduction of this Bill marks a landmark day for Australia’s visual artists, whose right to an ongoing economic interest in the value of their artistic works will be appropriately recognised in Australia for the first time.

Through this legislation, a resale royalty right (or droit de suite as it is universally known) now entitles qualifying artists to receive payment from subsequent sales of their artworks after their original sale. The royalty is payable whenever a work is re-sold during the artist’s lifetime and for 70 years thereafter, consistent with the rights applicable to copyright works under the Copyright Act 1968 (Cth). In support of the proposed legislation, the government asserted that visual artists did not have access to the IP rights in the multiple reproductions of their works that was enjoyed by authors and by creators and performers of dramatic and musical works. The Resale Royalty Right for Visual Artists Act 2009 (Cth) was intended to redress that imbalance, and to give effect to the government’s election policy commitment to introduce resale royalty rights for artists. The Act is also meant to give effect to the droit de suite provisions of Article 14ter of the Berne Convention for the Protection of Literary and Artistic Works (1886). In brief, the Resale Royalty Right for Visual Artists Act 2009 (Cth) provides for a royalty payment to the artist or creator of an artwork on the transfer of ownership of that work through a commercial sale. The Act applies only to commercial sales, which are limited to sales by auction or private treaty through art auction houses, art galleries and art dealers. The definition of “commercial sales” includes sales between private parties and public institutions, but not private sales between individuals, nor sales by or involving organisations not mainly in the business of dealing in artworks. By this definition, general auctioneers who sell artworks as part of deceased estates, general consignments or bankruptcies, would not be deemed to be art market professionals. The royalty has been set at 5 percent of the sale price, subject to a minimum qualifying sale price of $1000. In the case of existing artwork, Resale Royalty Right for Visual Artists Act 2009 (Cth) s 11 provides that the royalty obligation does not apply to the first sale of the artwork after the law came into force, but only to subsequent sales. Section 11 is a crucial element of the Act, and has attracted considerable critical attention. It has been decried as seriously undermining the short- to medium-term benefits to most visual artists and will denying the current generation of artists any significant royalties at all.

[5.460]

217

Intellectual Property: Commentary and Materials

Administration of the resale royalty scheme and enforcement of the collection of royalties is undertaken by a government-appointed collecting agency, the Copyright Agency Limited (CAL) (see [5.410]–[5.420]). While the royalty right enshrined in the legislation is inalienable and is not subject to waiver, “opt out” provisions entitle artists or holders to direct the collecting agency not to collect the royalty or to enforce the resale royalty right on their behalf. The Act provides that sellers, buyers and art market professionals are jointly and severally liable to the artist for the relevant amount. Sellers are required to notify CAL of all commercial resales of an artwork within 90 days of a sale. Sellers who fail to comply with their obligations under the Act face civil penalties of up to $110,000 for a corporation and $22,000 for an individual. According to Copyright Agency, the collection society appointed under the Act by the then Minister for Arts in May 2010 to manage the artists’ resale royalty scheme, since its commencement on 9 June 2010 until 30 June 2016, the scheme has generated more than $4.3 million in royalties from almost 13,000 sales for more than 1,200 artists. 5 Over 65% of the artists receiving royalties are Aboriginal or Torres Strait Islander artists and they have received 38% of the total royalties.

Resale Royalty Right for Visual Artists Act 2009 (Cth) [5.470] Resale Royalty Right for Visual Artists Act 2009 (Cth) Part 2 Division 1 (ss 6 – 11) Part 2–Resale royalty right Division 1–When does resale royalty right arise? 6 Resale royalty right “Resale royalty right” is the right to receive resale royalty on the commercial resale of an artwork. (1)

(2)

5

7 What is an artwork? An artwork is an original work of visual art that is either: (a) created by the artist or artists; or (b) produced under the authority of the artist or artists. Works of visual art include, but are not limited to, the following: (a) artists’ books; (b)

batiks;

(c)

carvings;

(d)

ceramics;

(e)

collages;

(f)

digital artworks;

(g)

drawings;

(h)

engravings;

(i)

fine art jewellery;

(j)

glassware;

(k)

installations;

(l)

lithographs;

(m)

multimedia artworks;

Copyright Agency, “Resale Royalty”, at http://www.resaleroyalty.org.au/.

218 [5.470]

Copyright: Ownership, Rights and Exploitation

CHAPTER 5

Resale Royalty Right for Visual Artists Act 2009 (Cth) cont. (n)

paintings;

(o)

photographs;

(p)

pictures;

(q)

prints;

(r)

sculptures;

(s)

tapestries;

(t)

video artworks;

(u)

weavings;

(v)

any other things prescribed by the regulations.

8 What is commercial resale of an artwork? (1)

There is a commercial resale of an artwork if: (a) ownership of the artwork is transferred from one person to another for monetary consideration; and (b)

the transfer is not the first transfer of ownership of the artwork; and

(c)

the transfer is not otherwise one of an excluded class.

(2)

The transfer of ownership of an artwork from one individual to another in circumstances that do not involve an art market professional acting in that capacity, is an excluded class of transfer.

(3)

Art market professional means: (a) an auctioneer; or (b)

the owner or operator of an art gallery; or

(c)

the owner or operator of a museum; or

(d)

an art dealer; or

(e)

a person otherwise involved in the business of dealing in artworks.

9 No resale royalty right on certain works There is no resale royalty right on the commercial resale of: (a)

a building, or a drawing, plan or model for a building; or

(b)

a circuit layout within the meaning of the Circuit Layouts Act 1989; or

(c)

a manuscript (in whatever form) of a literary, dramatic or musical work.

10 No resale royalty right unless consideration above threshold Threshold (1)

There is no resale royalty right on the commercial resale of an artwork for a sale price of less than: (a)

(b)

$1,000 or, if the sale price is paid in a foreign currency, the amount worked out using the exchange rate applicable at the time of the commercial resale that is equivalent to $1,000; or if a higher amount is prescribed by the regulations–that higher amount.

[5.470]

219

Intellectual Property: Commentary and Materials

Resale Royalty Right for Visual Artists Act 2009 (Cth) cont. Definition of sale price (2)

The sale price on the commercial resale of an artwork means the amount paid for the artwork by the buyer on the commercial resale including GST, but does not include any buyer’s premium or other tax payable on the sale.

11 Resale royalty right on artworks in existence when Act commences If an artwork exists on the commencement of this Part, there is no resale royalty right on the first transfer of ownership of the artwork on or after commencement, even if the transfer of ownership is under a commercial resale.

220 [5.470]

CHAPTER 6 Copyright Infringement, Defences and Remedies [6.10] [6.20] [6.30]

INTRODUCTION .................................................................................................... 222 Infringement of literary, dramatic, musical or artistic works and other works ....................................................................................................................... 222 What is worth copying is worth protecting ........................................................ 223 [6.30]

[6.50] [6.50]

Network Ten v TCN Channel Nine .......................................... 223

INFRINGEMENT ..................................................................................................... 225 Substantial part requirement ................................................................................ 225 [6.60] [6.80]

[6.100] [6.110]

Hawkes & Son v Paramount Film Service ................................ 226 Milpurrurru v Indofurn ........................................................... 228 Direct and indirect infringement ......................................................................... 231 Infringement and the exclusive right of reproduction ....................................... 231

[6.120]

Causal connection ............................................................................... 232 [6.130]

Francis Day & Hunter v Bron .................................................. 232

[6.150] [6.160]

[6.140] Objective similarity ............................................................................. 236 Infringement and the exclusive right of publication .......................................... 237 Infringement and the exclusive right of public performance ........................... 238

[6.180]

Authorisation of performances in public and infringement .............................. 240

[6.170]

Telstra v APRA ....................................................................... 239

[6.190] [6.200]

[6.210] [6.220] [6.250] [6.260] [6.270] [6.280] [6.320] [6.330] [6.330] [6.340]

APRA v Jain ........................................................................... APRA v Tolbush ..................................................................... Subject matter other than works ......................................................................... Substantial part and Part IV copyright (television broadcasts) ......................... [6.230] TCN Channel Nine v Network Ten (No 2) ............................... Indirect infringement – knowing, or having reason to know ........................... Authorisation of educational copying ................................................................. Copying for personal use ......................................................................................

241 245 247 247 248 255 256 256

Technological protection measures and rights management information ............................................................................................................. 257 Copyright on the internet ..................................................................................... 258 DEFENCES AND EXCEPTIONS TO INFRINGEMENT ........................................... Restrictions on the exercise of rights: defences and remedies for infringement .......................................................................................................... Fair dealing and other non-infringing use .......................................................... [6.350] Research and study ............................................................................. [6.360]

[6.370]

[6.420]

[6.440]

258 259

260 Copyright Act 1986 (Cth) ...................................................... 261

Criticism and review ........................................................................... 262 [6.380]

[6.390]

258

Commonwealth v John Fairfax & Sons .................................... 263

Parody and satire ................................................................................ 265 [6.400] TCN Channel Nine v Network Ten .......................................... 266 .............................................................................................................. 268 [6.420] Nine Network Australia v ABC ................................................ 268 [6.430] Fairfax Media Publications v Reed International Books Australia ............................................................................... 270

Judicial reporting and professional legal advice ............................... 273 221

Intellectual Property: Commentary and Materials

[6.450] [6.460] [6.465] [6.470] [6.470] [6.480]

Private and domestic use ................................................................... 274 Other exceptions and non-infringing acts ....................................... 274 Fair Dealing v Fair Usage .................................................................... 275

REMEDIES AND PENALTIES FOR INFRINGEMENT OF COPYRIGHT .................. 276 Locus standi ............................................................................................................ 276 Civil remedies ......................................................................................................... 276 [6.490] Interlocutory relief ............................................................................... 277 [6.500] Injunction ............................................................................................. 277 [6.510] Ex parte orders .................................................................................... 277 [6.560] [6.580]

[6.590] [6.600]

Account of profits ................................................................................ 283 Orders for delivery up ......................................................................... 283 [6.610]

[6.620] [6.630]

Milpurrurru v Indofurn ........................................................... 278 Urban Ventures v Solitaire Homes ........................................... 281

Larrikin Music Publishing v EMI Songs Australia ....................... 284

Criminal offences and penalties ........................................................................... 285 [6.620] Criminal offences involving copyright infringement ....................... 285 Groundless threats ................................................................................................. 288

INTRODUCTION [6.10] Acts amounting to infringement of copyright are described in the Copyright Act 1968 (Cth) ss 36 – 39A in respect of works, ss 100A – 104B in respect of subject matter other than work, and ss 195AO – 195AXL in respect of moral rights of authors and performers, and ss 248G – 248J in respect of performers. Infringement of copyright may be direct (ss 13(2), 36(1) and 101(1)) or indirect (ss 37, 38, 39(1), 102 and 103). Since the implementation of the Copyright Amendment (Digital Agenda) Act 2000 (Cth) in 2001, infringement of copyright includes commercially dealing with circumvention devices or tampering with electronic rights management information (Copyright Act 1968 (Cth) ss 116A 116D).

Infringement of literary, dramatic, musical or artistic works and other works [6.20] In simple terms, according to the Copyright Act 1968 (Cth) s 36(1), “the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia, of any act comprised in the copyright.” “Authorizes” is described in s 36(1A) as requiring the taking into account the following: (a) the extent (if any) of the person’s power to prevent the doing of the act concerned; (b) the nature of any relationship existing between the person and the person who did the act concerned; (c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry code of practice.

In a similar fashion, in respect of “other works”, s 101(1) provides that: … the copyright subsisting by virtue of this part is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia, of any act comprised in the copyright. 222 [6.10]

Copyright Infringement, Defences and Remedies

CHAPTER 6

“Authorizes”, both in respect of literary works and in respect of other works, is discussed further in [6.180] – [6.200] following. Sections 37 – 39 of the Act add to the generality of s 36(1) in respect of literary, dramatic, musical or artistic works. They identify infringements by virtue of the following acts: • unlicensed importation of the copyright good for sale and hire; • sale and other dealings of an infringing work; • permitting a place of public entertainment to be used for performance of the work; and • infringing copies made by photocopying machines in libraries and archives. Section 39 also provides that a library or its officers shall not be liable for authorising the infringement of copyright where it affixes a notice in the prescribed form near a photocopying machine. Similarly, ss 101 – 102 add to the generality of s 101(1) in respect of “other works” by identifying infringements by virtue of: • unlicensed importation of the copyright good for sale and hire; and • sale and other dealings of an infringing work; In summary, copyright is generally infringed if copyright material is used without permission, in one of the ways that is exclusively reserved to the copyright owner. There are some situations in which copyright material can be used without authorisation, either for free or on other terms, which serve as a defence against charges of infringement, such as the “fair dealing” provisions discussed below. A copyright owner is entitled to commence a civil action in court against another party or person who has infringed his or her copyright, and may be entitled to various remedies. Some infringements of copyright – generally those that are on a commercial scale or involve a commercial element – may also be criminal offences. Since ideas as such are not protected by copyright, the line must be drawn between the taking of a concept and the copying of the form of expression. See Kenrick v Lawrence (1890) 25 QBD 99. Borrowing an idea that has its origins in another’s work and producing a new original work by sufficient independent effort does not amount to infringement. See Joy Music Ltd v Sunday Pictorial Newspapers (1920) Ltd [1960] 2 QB 60; cf Krisarts SA v Briarfines Ltd [1977] FSR 577. If the alteration is so slight that there is no independent work, then substantial reproduction will be found: Dronpool Pty Ltd v Hunter (1984) 3 IPR 310. This will always be a question of degree that must depend upon the circumstances of each particular case: Blackie & Sons v Lothian Book Publishing Co (1921) 29 CLR 396. For an example of a painting that was “inspired by” but was not a substantial reproduction of a photograph, see Bauman v Fussell [1978] RPC 485. See also Baigent v Random House Group [2006] EMLR 16 (The “Da Vinci Code” case) at [3.120].

What is worth copying is worth protecting Network Ten v TCN Channel Nine [6.30] Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 59 IPR 1 High Court of Australia McHUGH ACJ, GUMMOW AND HAYNE JJ: [4] … Copyright and copying [6.30]

223

Intellectual Property: Commentary and Materials

Network Ten v TCN Channel Nine cont. Counsel for Nine invoked a well-known statement made in University of London Press Ltd v University Tutorial Press Ltd. This was a case of infringement of copyright in an original literary work and Peterson J applied “the rough practical test that what is worth copying is prima facie worth protecting”. But later authorities correctly emphasise that, whilst copying is an essential element in infringement to provide a causal connection between the plaintiff’s [5] intellectual property and the alleged infringement, it does not follow that any copying will infringe. The point was stressed by Laddie J when he said: Furthermore many copyright cases involve defendants who have blatantly stolen the result of the plaintiff’s labours. This has led courts, sometimes with almost evangelical fervour, to apply the commandment “thou shalt not steal”. If that has necessitated pushing the boundaries of copyright protection further out, then that has been done. This has resulted in a body of case law on copyright which, in some of its further reaches, would come as a surprise to the draughtsmen of the legislation to which it is supposed to give effect. Professor Waddams, speaking of the use of terms such as “piracy”, “robbery” and “theft” to stigmatise the conduct of alleged infringers of intellectual property rights, describes “the choice of rhetoric” as “significant, showing the persuasive power of proprietary concepts”. He also remarks: Against the merits of enlarging the property rights of one person or class of persons must always be set the loss of freedom of action that such enlargement inevitably causes to others. In another English decision, Jacob J identified Peterson J’s aphorism in University of London Press as an indication of the dangers in departing too far from the text and structure of the legislation; his Lordship said that the aphorism “proves too much” because if “taken literally [it] would mean that all a plaintiff ever had to do was to prove copying” so that “appropriate subject matter for copyright and a taking of a substantial part would all be proved in one go”. In Australia, the dangers in the use of the remarks in University of London Press were explained by Sackville J in Nationwide News Pty Ltd v Copyright Agency Ltd as follows: [T]he test has a certain “bootstraps” quality about it. The issue of substantiality, in relation to a literary work, arises only where the work has been reproduced or published, at least in part. If applied literally, the test would mean that all cases of copying would be characterised as reproducing a substantial part of the work. It is therefore unlikely to be of great assistance in determining whether a particular reproduction involves a substantial part of a work or subject matter of copyright. “Substantial part” All the species of copyright enjoy a protection which is not limited to infringement by the taking of the whole of the protected subject-matter. The taking of something less will do. That lesser degree of exploitation is identified in s 14(1) by the phrase “a substantial part”. The decision in Data Access Corporation v Powerfiex Services Pty Ltd [6] with respect to infringement of the literary works in computer programs provides a recent example of the operation of s 14(1). The sub-section states: In this Act, unless the contrary intention appears: (a) a reference to the doing of an act in relation to a work or other subject-matter shall be read as including a reference to the doing of that act in relation to a substantial part of the work or other subject-matter; and (b) a reference to a reproduction, adaptation or copy of a work shall be read as including a reference to a reproduction, adaptation or copy of a substantial part of the work, as the case may be. 224 [6.30]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Network Ten v TCN Channel Nine cont. … The term “substantial part” has a legislative pedigree. It appeared in s 1(2) of the Copyright Act 1911 (Imp) (“the 1911 Act”). … The scheme of the 1911 Act, as with the UK Act and the Australian legislation which succeeded it, keeps separate the concepts of substantial part and fair dealing. Accordingly: acts done in relation to insubstantial parts do not constitute an infringement of copyright and the defences of fair dealing only come into operation in relation to substantial parts or more. It would be quite wrong to approach an infringement claim on the footing that the question of the taking of a substantial part may be by-passed by going directly to the fair dealing defences.

[6.40] It may be particularly difficult to distinguish between the mere taking of an idea and the expression thereof that infringes copyright in a dramatic work. The plot or dramatic incidents of a play or film may not be literally copied in the sense of using the actual words of the script, but infringement can occur by the reproduction of sufficiently similar situations and incidents (Hexagon Pty Ltd v Australian Broadcasting Commission (1975) 7 ALR 233; Zeccola v Universal City Studios Inc (1982) 46 ALR 189), as long as these are in material form and substantial enough to warrant attention (Tate v Thomas [1921] 1 Ch 503; Green v Broadcasting Corp of New Zealand (1983) 2 IPR 191; (1989) 16 IPR 1). Similar considerations apply to infringement in a dramatic work of another category of work. The matter is very much one for the trial judge’s assessment and impression: Corelli v Gray (1913) 29 TLR 570. A fertile area of litigation is found in the “architect’s plan cases”. However, the issues of subsistence of copyright in project home plans and the infringement of plans require assessment at the very edges of copyright protection. Most cases depend almost entirely on their facts, and the court must form an impression of the originality and infringement issues in circumstances where “the borderline area is clouded by a band of grey within which opinions and conclusions may differ” (LED Builders v Masterton Homes (NSW) Pty Ltd (1994) 30 IPR 447 at 451, citing the Ancher Mortlock Murray Case). See also Half Court Tennis Pty Ltd v Seymour (1980) 53 FLR 240 (Supreme Court of Queensland).

INFRINGEMENT “Substantial part” requirement [6.50] Under the Copyright Act 1968 (Cth) s 14(1), the infringing reproduction or other act

need not be done in relation to the entire work in order for infringement to occur. Infringement still occurs if the act is done to a “substantial” part of the copyrighted material. On the other hand, it is possible to copy an “insubstantial part” of a copyright work without infringing that copyright. What is a “substantial part”, however, is subject to interpretation by the courts, which may determine this by looking at whether that “substantial part” is an important, distinctive or essential part. The part does not necessarily have to be a large part to be “substantial” for the purposes of the Act. Quality is the crucial element, rather than quantity. The issue of substantiality has both a quantitative and qualitative aspect, although “the question of whether a defendant has copied a substantial part depends much more on the quality than the quantity of what he has taken”: Ladbroke v William Hill [1964] 1 WLR 273 [6.50]

225

Intellectual Property: Commentary and Materials

at 276 per Lord Reid; see Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417; Dixon Investments Pty Ltd v Hall (1990) 18 IPR 481. A substantial reproduction is not necessarily reproduction of a “substantial part”, where that part by itself has no originality: Klissers Bakeries v Harvest Bakeries (1986) 5 IPR 533. The question of what amounts to a substantial part of a work must depend upon the nature of the work itself, and the characteristics or essential features that may identify the work. In Hawkes & Son (London) Ltd v Paramount Films Service Ltd [1934] 1 Ch 593, a newsreel of the then Prince of Wales opening a hospital in Suffolk UK included a segment of a local boys’ band playing a part of the “Colonel Bogey March”. The segment consisted of 20 seconds or 28 bars of a four-minute musical work. Romer LJ held (at 609) that a substantial part of the work had been taken because the 28 bars contained “the principal air … the air which everyone who heard the march played through would recognise as being the essential air”. The intention of the infringer was held to have been immaterial, as was the fact that there was little or no actual damage suffered by the plaintiff. The test was simply that of the “quantum” that was taken, which seems to have been tested by means of a “recognition” test.

Hawkes & Son v Paramount Film Service [6.60] Hawkes & Son (London) Ltd v Paramount Film Service [1934] 1 Ch 593 Court of Appeal (United Kingdom) [A news reel recording the opening of a new school also recorded a band playing a few bars of the “Colonel Bogey March”, in which the plaintiffs held copyright. At trial, Eve J held that there was no reproduction of a “substantial part” of the musical work.] LORD HANWORTH MR: [603] … It is plain that the second defendants have made a record, by the contrivance of which the Colonel Bogey march may be mechanically performed, and they have in so doing infringed the right of the owner of the copyright. But, it is said, first, that there is no substantial part of this musical work taken, and that the cases show that we must look into the question of degree and what was the nature of the reproduction. In one case to which Lindley LJ refers, he points out that in that case a worsted work copy of an engraving was held not to be an infringement of the copyright therein. On the other hand, photographs of pictures have been held to infringe the copyright, although there is a vast difference between a photographic reproduction and the picture itself. Therefore, when one deals with the word “substantial”, it is quite right to consider whether or not the amount of the musical march that is taken is so slender that it would be impossible to recognise it. … Having considered and heard this film, I am quite satisfied that the quantum that is taken is substantial, and although it might be difficult, and although it may be uncertain whether it will be ever used again, we must not neglect the evidence that a substantial part of the musical copyright could be reproduced apart from the actual picture film. … [605] … SLESSER LJ: I am of the same opinion. The learned judge has come to the conclusion that no substantial part of the work has been reproduced. He continues: “It appears that the whole work would take a band about four minutes to play, and that the part recorded on the news reel takes 20 seconds.” The learned judge, no doubt, in coming to the conclusion that no substantial part of the film has been reproduced, was not unmindful of the history of the words “substantial part” which appear in the Copyright Act 1911, and which are an essential ingredient if the plaintiffs are to succeed or have judgment found in their favour. Those words, as Mr Macgillivray has pointed out, had not appeared before that time in any statute, but they are words which are derived from several of the cases in which learned judges have used either those particular words or language similar. It is to be observed that in the old Copyright Act (5 & 6 Vict c 45), under which Bradbury v Hotten (1872) LR 8 Ex 1 and Chatterton v Cave (1878) 3 App Cas 483 and other cases fell to be decided, there is no such 226 [6.60]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Hawkes & Son v Paramount Film Service cont. distinction. It is there provided [606] by s 15 “That if any person shall in any part of the British dominions … print or cause to be printed either for sale or exportation any book in which there shall be subsisting copyright”: no distinction is there made between the whole of the book and a substantial part of it, and, of course, the literal reading of those words would of necessity have produced absurdities, and the learned judges in several cases were at pains to point out that where the statute says “any book”, it means any essential, vital or substantial part of the book as words, all of which appear in different judgments. The matter is put perhaps most clearly, or as clearly as anywhere else, by Lord Hatherley in Chatterton v Cave, where he says: “if the quantity taken be neither substantial nor material, if, as it has been expressed by some judges, ‘a fair use’ only be made of the publication, no wrong is done and no action can be brought.” The learned Lord in his speech there uses the words “neither substantial nor material,” and the words “a fair use only be made,” in apposition, and it is in that sense, I think, that before the Act of 1911 the matter has to be considered. Mr Archer is perfectly right when he points out that the authorities indicate that other matters beyond mere quantity may and have to be looked at; indeed it is a criticism, I think, if I may respectfully make it, of the judgment in this case, that the only ground on which the learned judge held that no substantial part had been reproduced was that the whole work would take not more than four minutes to play, and the part recorded on the news reel took 20 seconds. I agree with my Lord that this reproduction is clearly a substantial part of Colonel Bogey, looked at from any point of view, whether it be quantity, quality, or occasion. Any one hearing it would know that it was the march called Colonel Bogey, and though it may be that it was not very prolonged in its reproduction, it is clearly, in my view, a substantial, a vital, and an essential part which is there reproduced. Appeal allowed.

[6.70] Note that this use, namely the news reporting of the event, would today most likely be considered fair dealing within the Copyright Act 1968 (Cth) s 42(1)(b) and (2) (see [6.340] – [6.360] following). As demonstrated by Hawkes & Son (London) Ltd v Paramount Films Service Ltd [1934] 1 Ch 593, there is no precise quantitative or percentage test for a “substantial part”. The test is “qualitative” rather than quantitative: even a reproduction of a very small amount of the work or a small element or distinctive feature could be substantial if the part or feature was critically important. The quoting of a short passage from a long work may infringe copyright if the passage is a paragraph which neatly sums up all that has preceded it. A substantial part may be one of the underlying components or “sinews” of a work, rather than a simple block or section of it, such as a few pages or a few bars. In the case of Milpurrurru v Indofurn (1994) (1994) 30 IPR 209, a number of bark paintings by internationally known Aboriginal artists were unlawfully reproduced by the defendant for designs on carpets that were manufactured in Vietnam and imported into Australia. Of the eight artworks reproduced, one was reproduced partly and two others were reproduced both entirely and partly. One of the main questions for determination was whether the partial reproductions constituted substantial reproductions. See discussion on other elements of this case at [6.560] and [17.30]. Von Doussa J focused in detail on three carpet designs, which, it was contended by the applicants, were reproductions of a substantial part of the artworks “Wititj”, “Emu Dreaming”, and “Kangaroo and Shield People Dreaming”. These were referred to as the snake carpet, the waterholes carpet, and the green centre carpet respectively (at 249). Von Doussa J stated: [6.70]

227

Intellectual Property: Commentary and Materials

There are features about these three carpet designs which clearly indicate that the designer made reference to the Wititj, the Emu Dreaming and the Kangaroo and Shield People Dreaming artworks. There can be no real doubt that these carpet designs were the result of the instruction to produce carpets in designs that were less busy than the original artworks.

According to Von Doussa J, there were four principal matters to be taken into account in deciding whether copying is “substantial”, for the purpose of the Copyright Act 1968 (Cth) s 14.

Milpurrurru v Indofurn [6.80] Milpurrurru v Indofurn (1994) 30 IPR 209 Federal Court of Australia [The first respondent commenced importation of carpets that were manufactured in Vietnam that reproduced Aboriginal artworks, in which the applicants owned the copyright. The applicants had not given permission for their artworks to be reproduced on the carpets, nor for the carpets bearing the artworks to be imported into Australia. Each of the artworks reproduced were well known, and were reproduced in a number of authorised publications to which the Vietnamese factory that made the reproductions, on behalf of the first respondent, had access. The applicants claimed infringement of copyright by reason of the unauthorised importation of carpets, under Copyright Act 1968 (Cth) s 37. They also claimed breaches of Trade Practices Act 1974 (Cth) ss 52, 53(c) and (d) and 55 with specific regard to the form of labelling used in connection with the carpets, which stated that the carpets had been designed by Aboriginal artists and that royalties were paid to the artists on every carpet sold.] VON DOUSSA J: [227] … The relevant inquiry in this case is not whether the disputed carpets are an adaptation but whether the carpets reproduce a substantial part of one of the artworks: see ss 14(1)(a) and 31(1)(b)(i). In International Writing Institute Inc v Rimila Pty Ltd [1993] AIPC 39,736 Lockhart J said (at 39,746): Reproduction in a material form of a substantial part of a work in which copyright exists is determined by applying the test of substantial use of the features of the applicant’s work in which copyright subsists: see Copinger on Copyright (12th ed, 1980), par 472 and Krisarts SA v Briarfine Ltd [1977] FSR 557. Though it is permissible to look to the quantity of what the respondent is alleged to have taken from the applicant’s work, the test of substantial reproduction is essentially to look to the quality of what has been taken, although, depending on the facts of the case, the two often overlap. A useful statement of the four tests of substantial copying [228] is to be found in Ravenscroft v Herbert & New English Library Ltd [1980] RPC 193 at 203, 205, 207; see also Copinger, pars 468-469. In Ravenscroft v Herbert & New English Library Ltd [1980] RPC 193 Brightman J in the passages referred to by Lockhart J observed that the first question is whether there has been copying, and then secondly whether the copying is substantial. In the present there can be no question that parts of the Wititj have been copied on to the snake carpet. The depiction of the tail portion of the snake, the rarrk, the border and the colouring itself are all aspects of that copying. In determining whether the copying is substantial Brightman J accepted the submissions of counsel for the defendants that there are four principal matters to be taken into account in deciding whether copying is substantial (at 203): First, the volume of the material taken, bearing in mind that quality is more important than quantity; secondly, how much of such material is the subject matter of copyright and how much is not; thirdly, whether there has been an animus furandi on the part of the defendant; this was treated by Page-Wood VC in Jarrold v Houlston (1857) 3 K & J 708; 69 ER 1294 as 228 [6.80]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Milpurrurru v Indofurn cont. equivalent to an intention on the part of the defendant to take for the purpose of saving himself labour; fourthly, the extent to which the plaintiff’s and the defendant’s books are competing works. Brightman J also cited with approval passages from Harman Pictures NV v Osborne [1967] 1 WLR 723; [1967] 2 All ER 324 one of which is material to the present case where part of the respondent’s case is that the image of the Wititj is common in many Aboriginal artworks and involves no originality. That passage from Harman Pictures NV v Osborne (at 732; 331) reads: In the case of works not original in the proper sense of the term, but composed of, or compiled or prepared from materials which are open to all, the fact that one man has produced such a work does not take away from anyone else the right to produce another work of the same kind, and in doing so to use all the materials open to him. But as the law has been precisely stated by Hall VC in Hogg v Scott [1947] KB 759 “the true principle in all these cases is that the defendant is not at liberty to use or avail himself of the labour which the plaintiff has been at for the purpose of producing his work, that is, in fact, merely to take away the result of another man’s labour or, in other words, his property”. Applying these principles to the snake carpet I am in no doubt that it constitutes a reproduction of a substantial part of the artwork. There are striking similarities on a visual comparison of the artwork with the carpet. Whilst the dreaming of the Wititj is often told in Aboriginal artwork, the particular depiction of the tail and the rarrk used in this artwork is original and distinctive. There is on any view a substantial use of that part of the artwork in the carpet. I reject the arguments of the respondents that the particular depiction of the Wititj on the carpet is common to many Aboriginal artworks and involves no originality. … In my view the artworks that they have identified to support this argument establishes that the contrary is the case. None of the other artworks show anything which closely resembles the main features of the snake carpet. The most important consideration however concerns the existence of an “animus furandi” on the part of the designers of the carpets, that is to say an intention on the part of these people to take from the Wititj artwork for the purpose of saving themselves labour; cf Ravenscroft v Herbert & New English Library Ltd (at 207). The evidence of Mr Bethune is revealing. The artwork [229] was before him and the factory manager. Mr Bethune said it was too complicated (otherwise, by inference, the artwork without modification would have been copied), so he instructed that it be simplified. This was achieved by an uncomplicated elimination of part of the body of the adult Wititj, the removal of the babies, and a transfer of the striking colour from one of the baby pythons to the head of the adult. The complex parts of the design and artwork in the tail and body colouring was copied exactly to form the predominant feature of the carpet. … It is surprising in light of the evidence, that the argument that the snake carpet does not substantially reproduce the artwork has been maintained to the last, and even more surprising that the respondents have maintained that they are not in breach of the assurance they gave to AAMA following its letter of 10 December 1992 that carpets “which may bear some resemblance to artworks by your clients have been withdrawn from sale and manufacture”. It is unbelievable that the respondents did not understand that the snake carpet was asserted to be one of the infringing copies by the applicants’ case. … The applicants contend that the continued import and sales of the snake carpet is flagrant conduct relevant to the claim for additional damages under s 115(4). Green centre carpet Like the snake carpet, this carpet was the product of Mr Bethune’s direction to make a more simple design, as Kangaroo and Shield People Dreaming was too complicated. The original artwork is a very complex painting which incorporates numerous important sites, represented by concentric circles, joined by dreaming or journey tracks in a multi-coloured dot-painting style … A close comparison of the [230] carpet with the artwork reveals that the unusual border pattern is extracted from one portion of the artwork – a portion comprising not more than 5-10 [6.80]

229

Intellectual Property: Commentary and Materials

Milpurrurru v Indofurn cont. per cent of the artwork – and then repeated with few modifications in sequence around the border of the carpet. The colours, sizes, and joining tracks in the border are a very close copy of part of the artwork. When the pattern is studied it is highly distinctive. … It adopts common western desert symbols as part of the design, but that does not prevent the result having a high degree of originality. … Again, a perusal of the works on Aboriginal art tendered by the respondents to show the absence of originality in my view demonstrates the contrary, and shows just how distinctive is the pattern (including the colours) taken from the artwork. Although as a proportion either of the total artwork, or the total carpet, the area of copied material in comparison with the whole is not great, in a qualitative sense the copying is substantial. The pattern taken from the artwork constitutes the striking feature of the carpet. And again a predominant consideration is the animus furandi of those responsible for the design … I find that the copying of the artwork is substantial. Waterholes The waterholes carpet is also in my view a substantial reproduction of Emu Dreaming. … [231] The waterholes carpet has a background of ochre colours. It is bordered on all four sides by a continuous track of double ochre lines, bordered by double white lines and punctuated by sites represented by concentric circles. In visual effect it takes from the artwork the outer border which appears on two sides of it and extends it completely around the design. Then within the border the carpet has a pattern which very closely resembles the central pattern of the artwork, utilising a similar layout, number of tracks and sites and similar colours. The number of concentric circles and the exact proportions of the pattern varies somewhat from carpet to carpet – a matter of necessity I infer to accommodate the design to the size and shape of the particular carpet … the visual impression of the colours and design of the carpets is the same, and in my view is strikingly similar to the central feature of the original artwork. … I hold that the waterholes carpet is a copy of a substantial part of the original artwork.

[6.90] See also Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300, in which Mason CJ said (at 305): Whether a part is substantial must be decided by its quality rather than its quantity. The reproduction of a part which by itself has no originality will not normally be a substantial part and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation not be a substantial part of the copyright and therefore the courts will not hold its reproduction to be an infringement … “[T]here is no copyright” in some unoriginal part of a whole that is copyright.

A very recent case highlights the range of unauthorised copying that might constitute a “substantial part”, and thus stands in contrast in terms of the dimension to Milpurrurru v Indofurn (1994) 30 IPR 209. In Tolkien Estate Ltd v Saltalamacchia [2016] FCA 944, in the Federal Court, Beach J considered whether the unauthorised reproduction of two lines in a fictional language from a poem could constitute a “substantial part” and a breach of copyright. The applicant sought summary judgment against the respondent for the unauthorised reproduction of two lines of text from the JRR Tolkien’s epic work, The Lord of the Rings, inscribed on rings offered for sale online by the respondent. The two lines in question were taken from Tolkien’s “One Ring” poem, which was written in a fictitious language created by Tolkien and described by him in the Lord of the Rings as “Black Speech”. The respondent reproduced that fictitious language as the inscription on the rings. 230 [6.90]

Copyright Infringement, Defences and Remedies

CHAPTER 6

His Honour found that: The respondent has infringed the applicant’s copyright in the copyright work set out in the annexure to these orders (the One Ring Inscription) by: (a) reproducing in material form the One Ring Inscription or a substantial part of it; (b) communicating the One Ring Inscription or a substantial part of it to the public; (c) selling rings bearing a reproduction of the One Ring Inscription or a substantial part thereof; (d) offering or exposing for sale rings bearing a reproduction of the One Ring Inscription or a substantial part thereof; (e) by way of trade exhibiting in public rings bearing a reproduction of the One Ring Inscription or a substantial part thereof, including: (f) on the websites located at the domain names www.ebay.com.au, www.ebay.co.uk and www.ebay.com; (g) on the website located at the domain name www.australianjewellerysales.com.

His Honour granted an injunction permanently restraining the respondent from reproducing the One Ring Inscription or a substantial part of it, and communicating it to the public or selling products bearing a reproduction of the One Ring Inscription or a substantial part thereof.

“Direct” and “indirect” infringement [6.100] A distinction can be drawn between “direct” and “indirect infringement”. Direct

infringement occurs where a person commits the infringing act (Copyright Act 1968 (Cth) ss 36(1) and 101(1)) or authorises others to do so. Indirect infringement occurs as an act of further dealing resulting in an infringing act (ss 37 and 38). This latter situation includes, for example, the importation or sale of infringing copies without a licence (“grey importation” or parallel importation), or permitting (as distinct from authorising) use of infringing material by way of performance in a place of public entertainment. A person could be liable under both ss 36 and 38 for direct and indirect infringement if the person who deals in the infringing article also makes it. Liability for direct infringement is not dependent on an intention to infringe or knowledge of the existence of copyright and the infringing nature of the act. However, liability for indirect infringement requires establishment of a knowledge element on the part of the alleged infringer. Note however, that the Act does not refer specifically to direct or indirect infringement (except for a reference to the latter in s 103).

Infringement and the exclusive right of reproduction [6.110] Whether a reproduction right has been infringed requires determination of the

following three issues, namely: • whether there is a clear causal connection between the original work and the alleged copied work, in the sense that the latter is derived from the former; • whether there is an objective similarity between the original work and the alleged copied work; and • whether this similarity exists in relation to at least a substantial part of the expression of the original work, rather than the ideas, information or facts contained in that work. [6.110]

231

Intellectual Property: Commentary and Materials

The need for a causal connection presents difficulties where the defendant denies having had access to the plaintiff’s work. This was demonstrated in Francis Day & Hunter Ltd v Bron [1963] Ch 587, where the appeal court agreed with the trial judge’s conclusion that the degree of objective similarity, coupled with the fact that at some time and in some circumstances the composer must have heard the plaintiff’s tune before, was not enough to prove the plaintiff’s case. It was said (at 616) that the “devices used by the two composers for developing the phrase stated in the first bar are among the commonest tricks of composition.” The question of “objective similarity” merges with the basic requirement that the idea itself cannot be copyrighted, only its expression. Thus, for literary or dramatic works the less developed the characters, the less they can be copyrighted: see Learned Hand J in the US case Nichols v Universal Pictures Corporation 45 F (2d) 119 (1930); see also Zeccola v Universal City Studios (Jaws Case) (1982) 46 ALR 189. In Waterlow Publishers Ltd v Rose (1990) 17 IPR 493 (Court of Appeal – Civil Division (UK)), the court was of the view that publications of lists or compilations of the type which were the subject of that case (lists of legal practitioners) were often intended to be used: there was therefore an “implied licence” to reproduce their contents, but only by a subsequent compiler “in order to ascertain where he must go for his material”, not “for the purpose of producing a second work of a similar nature” (at 506). Causal connection [6.120] The plaintiff must show that the alleged infringing material is derived from the work

or subject matter in which copyright is claimed. In other words, there must be copying or reproduction within the Copyright Act 1968 (Cth) s 31(1), not just a similar result achieved by independent effort: see Corelli v Gray (1913) 29 TLR 570; Ainsworth Nominees Pty Ltd v Andclar Pty Ltd (1988) 12 IPR 551. If the evidence establishes sufficient similarity between the alleged infringing material and the original, and that the latter was earlier in time and the defendant had access to the work, there appears to be a shift of onus to the defendant to explain the similarity. In King Features Syndicate Inc v O & M Kleeman Ltd [1941] AC 417, Lord Wright in the House of Lords held (at 435): I think, however, that, where there is substantial similarity, that similarity is prima facie evidence of copying which the party charged may refute by evidence that, notwithstanding the similarity, there was no copying but independent creation. In the present case, on a careful comparison of the brooches and the sketch, I find substantial similarity … sufficient to raise a prima facie case of actual copying. The respondents have called no evidence to rebut that prima facie case. I agree, accordingly, with Simonds J in finding that copying is proved in respect of the brooches, equally with the dolls and toys.

The appeal was allowed. This reversal of onus is not an invariable rule. Proof of copying may be deduced from a composite of elements, and need not be confined to conscious imitation.

Francis Day & Hunter v Bron [6.130] Francis Day & Hunter Ltd v Bron [1963] Ch 587 Court of Appeal (United Kingdom) WILLMER LJ: [608] This is an appeal from a judgment of Wilberforce J, given on 27 July 1962, whereby he dismissed an action brought by the plaintiffs for infringement of their copyright in a song called “In a Little Spanish Town” (to which I will refer hereafter as “Spanish Town”). This was composed in 1926, and (as has been admitted by the defendants) was extensively exploited in the US 232 [6.120]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Francis Day & Hunter v Bron cont. and elsewhere by the publication of sheet music, by the distribution of gramophone records and by broadcasting. Unlike many popular songs, “Spanish Town” appears to have retained its popularity over the years. Records published in this country (some of them quite recently) were played to us during the course of the hearing; and, speaking for myself, I was readily able to recognise the tune as a familiar one which I had heard on frequent previous occasions. The defendants are the publishers of another song called “Why”, which was composed in 1959 by Peter de Angelis. “Spanish Town” is written in 3/4 time, and “Why” in 4/4 time. There are a number of other differences between the two works which were the subject of a good deal of evidence by musical experts on both sides. But when the two songs were played to us, it was immediately apparent, to me at any rate, that the effect on the ear was one of noticeable similarity. This is a matter which is not without importance, for, as was pointed out by Astbury J in Austin v Columbia Gramophone Co Ltd [1923] Mac CC 398: “Infringement of copyright in music is not a question of note for note comparison” (at 415) but falls to be determined “by the ear as well as by the eye” (at 409). Wilberforce J included in his judgment a detailed analysis of the musical structure of the two songs. I accept this as correct, and it is, I think, unnecessary for me to repeat it except in summary form. In each case the essential feature of the song is contained in the first eight bars, which constitute what has been [609] described as a musical sentence, and in which the main theme is stated. It is common ground that in the case of “Spanish Town”, these first eight bars of the chorus constitute a “substantial part” of the work within the meaning of s 49 of the Copyright Act 1956. In “Spanish Town” a subsidiary and contrasting theme is then introduced, after which there is a return to the original theme, which is then re-stated with variations. By way of contrast, “Why” is described as a “thematic” song; there is no subsidiary or contrasting theme, but, practically speaking, the whole song is devoted to the development of the original theme. [610] … Having stated these various points of similarity and difference (which I wholly accept) the judge expressed the view that, in relation to the aural appeal of the sentence as a whole, there is an undoubted degree of similarity between the two songs, the only question being what adjective to put before the word “degree”. He expressed his conclusion as follows: On the whole, I think Mr Palmer’s word “definite” or “considerable” is the right weight to put upon the degree of similarity; it is such that an ordinary reasonably experienced listener might think that perhaps one had come from the other. With that conclusion I entirely agree. If the matter stopped there, I do not think it could be doubted that there was material on which to base the inference that the composer of “Why” deliberately copied from “Spanish Town”. Were that the right inference, I am satisfied that the degree of similarity would be sufficient to constitute an infringement of the plaintiff’s copyright. But the composer of “Why” was called as a witness, and not only denied copying, but denied that he had ever seen the music of “Spanish Town”, or even consciously heard it. He was a man of 33 years of age, and had lived most of his life in the US. He stated that he had been composing music ever since he was 11, and had played various instruments in dance bands. In cross-examination he admitted that at a younger age he might have heard “Spanish Town”, because he had heard a lot of music, but he adhered to his statement that he had never consciously studied it, and said that he did not recall ever playing it. Wilberforce J accepted his evidence, and I do not think that we in this court could properly interfere with that finding even if we were invited to do so, which we were not. But that, the plaintiffs say, is by no means the end of the case, for de Angelis could well have copied from “Spanish Town” subconsciously. The song having been extensively exploited in the US, the overwhelming probability [611] (it is said) is that he must have heard it; and the degree of similarity between “Spanish Town” and “Why” is such that an inference of, at any rate, subconscious copying [6.130]

233

Intellectual Property: Commentary and Materials

Francis Day & Hunter v Bron cont. should be drawn. That, it is contended, would be enough to constitute an infringement of the plaintiff’s copyright. Wilberforce J, however, decided that there was not sufficient material to justify the inference that de Angelis copied the plaintiff’s work, even subconsciously; and he accordingly dismissed the action. It is to this point that the present appeal has been mainly directed. In approaching the suggestion of subconscious copying on the part of de Angelis, it is to be observed that the Copyright Act 1956, nowhere uses the word “copying”. [His Lordship read Copyright Act 1956 (UK) s 2(5) and continued:] By subs (6)(b) “adaptation” in relation to a musical work is defined as meaning “an arrangement or transcription of the work”. By s 48(1) “reproduction” is defined as including reproduction in the form of a record. There is no further relevant definition of the word, and it has been left to judicial decision to introduce the notion of copying. Mr Arnold, in presenting his argument on behalf of the defendants, drew attention to the fact that in relation to musical copyright there are, under s 2 of the Act, only three forbidden processes, namely, “reproduction”, “arrangement”, and “transcription”. Arrangement and transcription, he submitted, can be only the result of a conscious and deliberate process; a man cannot arrange or transcribe without knowing that he is doing so. Wilberforce J’s acceptance of the evidence of de Angelis, therefore precludes the possibility of finding any infringement of the plaintiff’s copyright by arrangement or transcription. This submission must, I think, be accepted. Mr Arnold conceded that reproduction could possibly be the result of a subconscious process. But he went on to submit that reproduction within the section could mean nothing short of identity. Reproduction, under s 49, may be of a substantial part; but there is no suggestion in the Act of any such thing as a “substantial reproduction”. In the present case it cannot be said that there is anything approaching identity between the plaintiff’s work and that of de Angelis. Consequently, Mr Arnold submitted, there could be no infringement of the plaintiff’s copyright, whether conscious or unconscious, by way of reproduction. I find myself quite unable to accept this submission, for I can find no warrant for the suggestion that reproduction, within the [612] meaning of the section, occurs only when identity is achieved. This not only offends against common sense, but is, I think, contrary to authority. In Austin v Columbia Gramophone Co Ltd [1923] Mac CC 398 the headnote reads: “Infringement of copyright in music is not a question of note for note comparison, but of whether the substance of the original copyright work is taken or not.” In the course of his judgment in that case Astbury J (at 409, 410), quoted from the earlier case of D’Almaine v Boosey (1835) 1 Y & C 288; 160 ER 117 where it was laid down that (at 302) “it must depend on whether the air taken is substantially the same with the original”. I accept that as a correct statement of the principle. On the other side, Mr Foster, for the plaintiffs, submitted in the first place that de Angelis’s denial of copying was wholly irrelevant. For where, as was said to be the case here, a sufficient degree of similarity is shown, and it is further proved that the composer of the second work had access to the earlier work in the sense that he must probably have heard it, an irrebuttable presumption arises that the former has been copied from the latter. No authority was cited in support of this proposition, which, if well-founded, would eliminate the necessity for any further evidence once similarity coupled with access had been proved. In my judgment the proposition contended for is quite untenable; the most that can be said, it seems to me, is that proof of similarity, coupled with access, raises a prima facie case for the defendant to answer. Mr Foster contended in the alternative that the degree of similarity found by Wilberforce J in the present case is such as to compel an inference of copying which, even if subconscious, is sufficient to give the plaintiffs a cause of action for infringement. I confess that I have found the notion of subconscious copying one of some difficulty, for at first sight it would seem to amount to a contradiction in terms, the word “copying” in its ordinary usage connoting what is essentially a 234 [6.130]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Francis Day & Hunter v Bron cont. conscious process. The textbooks on copyright make no reference to the subject, and English authority in relation to it is confined to a single dictum of Luxmore J in G Ricordi & Co (London) Ltd v Clayton & Waller Ltd [1930] Mac CC 154. Our attention was, however, called to a number of cases in the US in which the subject has [613] been discussed, and in some of which a decision in favour of the plaintiff has been based on a finding of subconscious copying. It appears to me that the question must be considered in two stages, namely, (1) whether subconscious copying is a psychological possibility, and (2) if so, whether in a given case it is capable of amounting to an infringement of the plaintiff’s copyright. … [614] … The conclusion at which I arrive on this part of the case is that subconscious copying is a possibility which, if it occurs, may amount to an infringement of copyright. But in order to establish liability on this ground, it must be shown that the composer of the offending work was in fact familiar with the work alleged to have been copied. This view is, I think, not inconsistent with the submissions put forward by Mr Skone James. In the course of an argument which, for my part, I found convincing, he submitted that in considering whether there has been reproduction, so as to constitute an infringement within the Act, it is wholly irrelevant to inquire whether any copying has been conscious or subconscious. It is for this reason, he modestly suggested, that the textbooks are silent on the subject of subconscious copying. Mr Skone James presented his argument in four propositions which, if I understand him correctly, may be summarised as follows: (1)

In order to constitute reproduction within the meaning of the Act, there must be (a) a sufficient degree of objective similarity between the two works, and (b) some causal connection between the plaintiffs’ and the defendants’ work.

(2)

It is quite irrelevant to inquire whether the defendant was or was not consciously aware of such causal connection.

(3)

Where there is a substantial degree of objective similarity, this of itself will afford prima facie evidence to show that there is a causal connection between the plaintiffs’ and the defendants’ work; at least, it is a circumstance from which the inference may be drawn.

(4)

The fact that the defendant denies that he consciously copied affords some evidence to rebut the inference of causal connection arising from the objective similarity, but is in no way conclusive.

If this is the right approach (as I think it is) it becomes a simple question of fact to decide whether the degree of objective similarity proved is sufficient, in all the circumstances of the particular case, to warrant the inference that there is a causal connection between the plaintiffs’ and the defendants’ work. This is the way in which, as it seems to me, Wilberforce J in the present case approached the question which he had to decide. In his judgment, he directed himself as follows: The final question to be resolved is whether the plaintiffs’ work has been copied or reproduced, and it seems to me that the answer can only be reached by a judgment of fact upon a number of composite elements: The degree of familiarity (if proved at all, or properly inferred) with the plaintiffs’ work, the character of [615] the work, particularly its qualities of impressing the mind and memory, the objective similarity of the defendants’ work, the inherent probability that such similarity as is found could be due to coincidence, the existence of other infiuences upon the defendant composer, and not least the quality of the defendant composer’s own evidence on the presence or otherwise in his mind of the plaintiffs’ work. In my judgment that was a proper direction, against which no criticism can fairly be brought. … [616] … The devices used by the two composers for developing the phrase stated in the first bar are among the commonest tricks of composition and, I would add, exactly the sort to be expected from the composer of a popular song. I do not think, therefore, that in the circumstances of this case, the fact [6.130]

235

Intellectual Property: Commentary and Materials

Francis Day & Hunter v Bron cont. that de Angelis developed the opening phrase stated in the first bar by way of the same devises as were employed by the composer of “Spanish Town” can be taken as in any sense proof of copying. There is at least an equal probability that his choice of these devices was the result of coincidence. In my judgment, no sufficient reason has been shown for interfering with Wilberforce J’s decision, and I would, accordingly, dismiss the appeal.

Objective similarity [6.140] Francis Day & Hunter Ltd v Bron [1963] Ch 587 was the only relevant authority in EMI Music Publishing Ltd v Papathanasiou [1993] EMLR 306, where the defendant, Vangelis, the composer of “Chariots of Fire” (the theme for a successful film of the same name), was alleged to have reproduced a substantial part of the plaintiff’s earlier composed tune “City of Violets”. The trial judge accepted the defendant’s testimony that he did not copy the earlier tune; the appeal was on the basis that subconscious copying had occurred. Although there were some similarities between the two works, they were not similar enough to convince the judge that copying had occurred, conscious or otherwise. Furthermore, the similarities could be explained by the use of certain musical “commonplaces” or features often found in popular music. In assessing reproduction for the purposes of finding copyright infringement, establishing similarity is only the first step, the next being the issue of access by the defendant to the work. As Francis Day & Hunter Ltd v Bron [1963] Ch 587 makes clear (and is also the case in the US), Murnaghan J in William L Dawson v Hinshaw Music Inc (1990) 18 IPR 256 at 257 outlined the process: [B]ecause of the difficulties in proving copyright infringement by direct evidence, the law has established a burden shifting mechanism whereby plaintiffs can establish a prima facie case of infringement by showing possession of a valid copyright, the defendant’s access to the plaintiff’s work, and substantial similarity between the plaintiff’s and defendant’s works.

It is not always easy to distinguish between the first inquiry and the second. The question of whether something has been reproduced is easier to answer where there is a strong degree of similarity between the copyright work and the alleged infringing copy. In, Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Ltd [2010] FCA 29, an action was brought by Larrikin Music, the owner of the copyright in Kookaburra Sits in the Old Gumtree (“Kookaburra”), a children’s song from the 1930s. Larrikin Music alleged that the reproduction in the song “Down Under” of a two-bar flute riff from “Kookaburra” constituted a substantial part of “Kookaburra”, thereby infringing Larrikin’s copyright (see also further discussion on this case at [6.600] and extract at [6.610]). In determining whether infringement had occurred, Jacobsen J considered two principal issues: namely, whether there was an objective similarity between the two works; and, if so, whether the two bars of “Kookaburra” that were reproduced were a substantial part of that work. In considering whether there was a sufficient degree of objective similarity to amount to a reproduction of part of the original work, Jacobsen J followed the approach taken in the English case of Francis Day & Hunter Ltd v Bron [1963] Ch 587 at 608, where it was stated that objective similarity in musical works was “not to be determined by a note for note comparison but is to be determined by the eye as well as the ear”. His Honour considered a 236 [6.140]

Copyright Infringement, Defences and Remedies

CHAPTER 6

number of musical elements, namely, melody, key, tempo, harmony and structure. Based on his own aural and visual comparisons of these elements, as well as expert evidence, His Honour concluded that there was a sufficient degree of objective similarity between the bars of “Kookaburra” and “Down Under” to amount to reproduction. In coming to this conclusion, he noted (at 227): The short answer to the qualitative test is to be found in Mr Hay’s performance of the words of Kookaburra to the tune of the flute riff in Down Under. In my opinion, that was a sufficient illustration that the qualitative test is met.

Having found the requisite degree of objective similarity, His Honour determined that the portion of “Kookaburra” reproduced in “Down Under” constituted a substantial part of “Kookaburra”, and went on to note that, because two of the four bars of “Kookaburra” were reproduced in “Down Under”, any quantitative test was also satisfied: “Moreover, although the question of quantity is secondary to that of quality, it is worthwhile noting that two of the four bars or phrases of Kookaburra have been reproduced in Down Under (or 50% of the song)” (at 229). On appeal, in EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 47 before the Full Federal Court, Emmett, Jagot and Nicholas JJ, the court stated that: [53] In order for infringement to occur, what is taken must be a substantial part of the copyright work. However, the taken part need not form a substantial part of the alleged infringing work. There may be a taking of a substantial part even if the overall appearance of the alleged infringing work is very different from the work in which copyright subsists. Whether what has been taken constitutes a substantial part of the copyright work depends upon its importance to the copyright work, not upon its importance to the alleged infringing work: see Designers Guild Ltd v Russell Williams (Textiles) Ltd [2001] 1 All ER 700 at 708–9. [54] … A significant element is the importance that the alleged substantial part bears in relation to the work as a whole. If it is a vital or material part, even though quantitatively it may be only a small part, it may nevertheless be sufficient. There will be infringement if the alleged infringing work bears a similarity to a substantial part of the copyright work, even if it differs markedly in other ways. It is not necessary that there be a substantial similarity overall between the two works: see Dixon Investments Pty Ltd v Hall (1990) 18 IPR 490 at 494-5. [55] While the question of whether a substantial part has been copied is one of fact and degree, a critical factor in the assessment of the quality of what is copied is the originality of the part that is copied. Originality means that the creation or production of the copyright work required some independent intellectual effort: see IceTV at [32]-[33]. The more that the copyright work is simple or lacking in substantial originality, the greater the degree of taking that will be needed before the substantial part test will be satisfied: see IceTV at [40].

The court dismissed the appeal and allowed in part the cross-appeal.

Infringement and the exclusive right of publication [6.150] Since the right to publish a work – that is, to supply copies of a work to the public – is

an exclusive right of the copyright owner, a person who first publishes a work without the authority of the copyright owner is therefore in breach of copyright under Copyright Act 1968 (Cth) s 31, regardless of whether or not they knew they were in breach. The issue arises as to whether the offering for sale of an already published work comes within this section. Does offering such a work for sale constitute “publication”, or does only first publication come within the definition for this purpose? A person who offers a copyright work for sale without authority is clearly in breach of copyright under the indirect infringement provisions of the ss 37 and 38; however, these provisions require actual or constructive knowledge. [6.150]

237

Intellectual Property: Commentary and Materials

This question arose in Avel Pty Ltd v Multicoin Amusement Pty Ltd (1990) (1991) 18 IPR 443, where McHugh J held that “publish” in this context meant publish for the first time, since otherwise the indirect infringement provisions would be rendered superfluous. Mason CJ, (Deane and Gaudron JJ agreeing) considered that “the words ‘to publish’ in s 31(1) should be read as meaning to make public that which has not previously been made public in the copyright territory” (at 445).

Infringement and the exclusive right of public performance [6.160] Literary, dramatic or musical works will have copyright infringed if they are

performed in public without authorisation of the right holder. See the Copyright Act 1968 (Cth) ss 27, 28, 31(1)(a)(iii) and 39. “Performance” is defined in s 27 as including “any mode of visual or aural representation”, whether it be radio, film or delivery by lecture, address, speech or sermon. See Australasian Performing Rights Association (APRA) v Tolbush (1985) 62 ALR 521 (see [6.200] below), and Rank Film Production Ltd v Dodds (1983) 2 IPR 113. In the latter case, the court held that it was (at 120): … to consider the character of the audience, and ask whether that audience may fairly be regarded as part of the monopoly of the owner of the copyright. The relevant character of the audience is not its character of an individual or individuals in a private or domestic situation, but in its character as a guest or guests of the motel … he is in this character a member of the copyright owner’s public.

The Copyright Act 1968 (Cth) s 39 provides that the copyright in a literary, dramatic or musical work is infringed by a person who permits a place of public entertainment to be used for the performance in public of the work, where that performance constitutes an infringement of the copyright in the work. However, liability is limited where the person so permitting was not aware, or had no reasonable grounds for suspecting, that the performance would be an infringement of copyright, or where the permission was gratuitous or for a nominal consideration only. “Places of public entertainment” include premises that are occupied principally for purposes other than public entertainment but that are, from time to time, made available for hire for public entertainment purposes. Although clubs and other venues where live music is played may be directly liable for the performance of works in public through the musicians they engage to play (Australasian Performing Right Association Ltd v Miles (1961) 3 FLR 146), the defendants in such actions are inevitably sued for authorising infringement as well. See Australian Performing Right Association Ltd v Canterbury-Bankstown League Club Ltd (1964) 5 FLR 415; Australasian Performing Right Association Ltd v Jain (1990) 18 IPR 663 (see [6.190] for an extract of this case). The concept “to the public” is an essential element of infringement where the use of copyright material takes the form of performance or transmission. The right of “communication to the public” has only recently been introduced, but it is expected that the wider concept of “the public” developed by the courts will continue to be relevant. See Telstra Corporation v Australasian Performing Right Association Ltd (1997) 38 IPR 294, following. In Australasian Performing Right Association Ltd v Commonwealth Bank of Australia (1992) 25 IPR 157, the playing of a few seconds of music on a staff training tape was held to be a performance in public. Playing music in a record shop is also “in public” and is actionable, 238 [6.160]

Copyright Infringement, Defences and Remedies

CHAPTER 6

despite the fact that the purpose of the performance is to promote the sale of copyright material. See Performing Right Society v Harlequin Record Shops [1979] FSR 233; Rank Film Production v Dodds (1983) 2 IPR 113.

Telstra v APRA [6.170] Telstra Corporation Ltd v Australasian Performing Right Association (1997) 38 IPR 294 High Court of Australia DAWSON AND GAUDRON JJ: [302] The concept of the copyright owner’s public was developed in a series of cases which, however, were concerned with the distinction between a performance in public and a private or domestic performance. Section 31(1)(a)(iii) speaks of the right to perform a work “in public”, but the definition of “broadcast”, with which we are concerned, speaks of transmission “to the public”. If anything, the use of the words “to the public” conveys a broader concept than the use of the words “in public” since it makes clear that the place where the relevant communication occurs is irrelevant. That is to say, there can be a communication to individual members of the public in a private or domestic setting which is nevertheless a communication to the public. A broadcast by a radio station is just such a communication. A performance or broadcast to the world at large is obviously a performance or broadcast to the public. But the situation becomes a little more difficult in the case of a performance or broadcast to a limited class of persons. In that context, in considering what constitutes a performance in public, the cases recognise that the relationship of the audience to the owner of the copyright is significant in reaching a conclusion. It is from this that the notion of the copyright owner’s public developed. In Duck v Bates Brett MR said: [T]he representation must be other than domestic and private. There must be present sufficient part of the public who would go also to a performance licensed by the author as a commercial transaction; otherwise the place where the drama is represented will not be a “place of dramatic entertainment” within the meaning of the statute. In Harms (Incorporated) and Chappell & Co v Martans Club Lord Hanworth MR said: In dealing with the tests which have been applied in the cases, it appears to me that one must apply one’s mind to see whether there has been any injury to the author. Did what took place interfere with his proprietary rights? As to that, profit is a very important element. The idea of the copyright owner’s public first explicitly emerged in Jennings v Stephens where Greene LJ said: The question may therefore be usefully approached by inquiring whether or not the act complained of as an infringement would, if done by the owner of the copyright himself, have been an exercise by him of the statutory right conferred upon him. In other words, the expression “in public” must be considered in relation to the owner of the copyright. If the audience considered in relation to the owner of the copyright may properly be described as the owner’s “public” or part of his “public”, then in performing the work before that audience he would in my opinion be exercising the statutory right conferred upon him; and any one who without his consent performed the work before that audience would be infringing his copyright. The view expressed by Greene LJ in Jennings v Stephens was repeated by him [303] in Ernest Turner Electrical Instruments Ltd v Performing Right Society Ltd and was adopted by Luxmoore and Goddard LJJ, the latter adding that the relevant question is: “Is the audience one which the owner of the copyright could fairly consider a part of his public?” In Performing Right Society Ltd v Harlequin Record Shops Ltd Browne-Wilkinson J also adopted the view of Greene LJ, saying that it is important to see whether the performance is given to an audience for performances to which the composer would expect to receive a fee, this being what he understood Greene LJ to have meant by the copyright owner’s public. [6.170]

239

Intellectual Property: Commentary and Materials

Telstra v APRA cont. In this country, the concept of the copyright owner’s public was adopted in APRA v CanterburyBankstown League Club Ltd and Rank Film Production Ltd v Colin S Dodds. In the latter case the playing of films transmitted by a video cassette recorder to television sets in motel rooms was held to be “in public”. Rath J observed: In the present case the motel guest in his room may easily be envisaged as part of the copyright owner’s public. It is not the restricted size of the audience, or the privacy of the surroundings, that is decisive on the issue; the critical matter is the presentation of the movie by the occupier of the motel to his guest in that capacity. The distinction between what is “in public” and what is “in private” is of little assistance in determining what is meant by transmission “to the public”. The transmission may be to individuals in private circumstances but nevertheless be to the public. Moreover, the fact that at any one time the number of persons to whom the transmission is made may be small does not mean that the transmission is not to the public. Nor does it matter that those persons in a position to receive the transmission form only a part of the public, though it is no doubt necessary that the facility be available to those members of the public who choose to avail themselves of it. In Rank Film Production Ltd v Colin S Dodds the number of guests playing films in their rooms may not have been large, but the motel was open to the paying public. Similarly, those members of the public who choose to call a relevant number on their mobile telephone may be relatively small, but the facility is available to members of the public generally. What is important is the nature of the audience constituted by those who receive music on hold. Lying behind the concept of the copyright owner’s public is recognition of the fact that where a work is performed in a commercial setting, the occasion is unlikely to be private or domestic and the audience is more appropriately to be seen as a section of the public. It is in a commercial setting that an unauthorised performance will ordinarily be to the financial disadvantage of the owner’s copyright in a work because it is in such a setting that the owner is entitled to expect payment for the work’s authorised performance. In this case it is not so much the preparedness of the audience of music on hold to pay to hear the works were it not for their unauthorised performance that is significant. That simple analysis belongs to an age where communications were less technologically advanced and business and marketing techniques were less [304] developed. Rather, it is the preparedness of those who wish the music on hold to be played to bear the cost of the arrangement which provides the key, for it reveals the commercial character of the broadcast and the commercial deprivation suffered by the copyright owner. Callers on hold constitute the copyright owner’s public, not because they themselves would be prepared to pay to hear the music, but because others are prepared to bear the cost of them having that facility. For the performance of the music to that audience the copyright owner would expect to receive payment, even if not from the members of the audience. For these reasons, we conclude that when the works were transmitted to persons using mobile telephones when placed on hold, in each of the three situations revealed by the evidence, they were broadcast within the meaning of s 31(1)(a)(iv).

“Authorisation” of performances in public and infringement [6.180] The fundamental issue arises as to what might constitute “authorisation” in respect

of performances in public. In the leading case of University of New South Wales v Moorhouse (1975) 6 ALR 193, in the High Court of Australia, Gibbs J (with whom McTiernan ACJ agreed) stated that “authorise” had its dictionary meaning of “sanction, approve, countenance”, and could also mean “permit”. There is no need for “express or formal 240 [6.180]

Copyright Infringement, Defences and Remedies

CHAPTER 6

permission or sanction, or active conduct indicating approval”; rather “inactivity or indifference, exhibited by acts of commission or omission, may reach a degree from which authorisation can be inferred” (at 200). In this case the High Court declared that the University had authorised the breach of copyright by providing an unqualified supply of books and photocopying machines, amounting to an invitation to users of the library to make such use of the machines as they saw fit. Any steps taken to supervise machine use and exclude excessive copying were inadequate and directed towards giving students access to machines rather than safeguarding copyright owner’s rights. See University of New South Wales v Moorhouse (1975) 133 CLR 1 in the extract from Australasian Performing Right Association v Jain (1990) 18 IPR 663. In Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 12 IPR 487, it was accepted that the word “licence” in the Copyright Act 1968 (Cth) s 37 meant no more than simply “consent”. The importer argued that it had a “bare licence” or one not supported by consideration, which could be revoked at will on giving reasonable notice. The court accepted this interpretation of “bare licence”. However, it held that “nevertheless there must be evidence of the necessary facts from which one can properly infer the giving of that consent or permission by the copyright owner” (at 493). See also CBS Songs Ltd v Amstrad Consumer Electronics plc (1988) 11 IPR 1. In Australasian Performing Right Association Ltd v Jain (1990) 18 IPR 663, following, it was stated that: Plainly Mr Jain had the power to control what music was played at the tavern and also to determine whether a licence from the appellant would be applied for. He did nothing about the matter at all. He allowed a situation to develop in which bands went on playing the appellant’s music night after night.

The evidence revealed a: … studied and deliberate course of action in which Mr Jain decided to ignore the appellant’s rights and to allow a situation to develop and to continue … It was within his power to control what was occurring but he did nothing at all. In those circumstances we have reached the conclusion that … Mr Jain authorised the infringement of copyright in question contrary to s 36 of the Act.

APRA v Jain [6.190] Australasian Performing Right Association Ltd v Jain (1990) 18 IPR 663 Federal Court of Australia [Mr Jain, the principal executive officer of a company which owned the Old Windsor Tavern, Sydney, was alleged by the Australasian Performing Right Association (APRA) to have authorised infringement of copyright in works performed by bands and played on the jukebox at the tavern. APRA had written to Mr Jain advising him that the tavern should obtain a licence from APRA for the music played on the jukebox.] SHEPPARD, FOSTER AND HILL JJ: [663] … This is an appeal from a judgment of a judge of the court (Davies J) in which his Honour dismissed an application brought [664] by the appellant against the respondent for injunctive and other relief in relation to an alleged infringement of copyright. … Before us counsel for the appellant put the case in two alternate ways. He submitted, first, that Mr Jain was in breach of s 36 of the Act because Mr Jain had, without the licence of the owner of the copyright, authorised the doing in Australia of an act comprised in the copyright. Counsel secondly submitted that Mr Jain was jointly or concurrently liable along with Valamo as a tortfeasor. [6.190]

241

Intellectual Property: Commentary and Materials

APRA v Jain cont. … So the question is whether the appellant has established that Mr Jain authorised the public performance of the musical works in question without the appellant’s licence. His Honour thought that that question should be answered in the negative. He relied upon the decision of the Court of Appeal in England in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1. That is a relevant authority, but, in so far as it deals with authorisation as distinct from the question of liability as a joint or concurrent tortfeasor, it has been overtaken by later authorities to many of [667] which his Honour was not referred. The history of the development of the law in relation to authorisation is recounted by Gummow J in WEA International Inc v Hanimex Corp Ltd (1987) 10 IPR 349 at 358-363. His Honour, after referring to Ciryl’s Case, said (at 359) that it was clear after Ash v Hutchinson & Co (Publishers) Ltd [1936] Ch 489 that the Copyright Act 1911 (UK) (in force in Australia by virtue of the Copyright Act 1912) gave, for example, the owner of copyright in a literary work both the sole right of reproducing it and the sole right of authorising such reproduction and that those rights were separate and distinct so that infringement of each was a distinct tort. His Honour said (at 359) that the same was true of authorisation in respect of the current Act. So much was accepted by the High Court in University of New South Wales v Moorhouse (1975) 133 CLR 1. The relevant requirements of the 1968 Act were the provisions of s 13(2) and ss 31 and 36 to which reference has been made. Gummow J went on to say (at 359) that the circumstance that the concept of “authorisation” in the legislation had its own independent operation from what might be called primary infringement did not exclude the general law principles relating to joint tortfeasors from operation upon primary infringement. We indicate our general agreement with Gummow J’s account of the development of the law in relation to authorisation. But we feel it necessary to refer to some of the authorities ourselves. The starting point is the Moorhouse case. That case concerned unauthorised photocopying of copyright material (literary works) in a university library. The plaintiff relied upon a cause of action based on the university’s having authorised the infringement which occurred when a person in the library used the photocopier to copy pages of a book. In the course of his judgment Gibbs J (as he then was) said (at 12-13; at 200): The word “authorise”, in legislation of similar intendment to s 36 of the Act, has been held judicially to have its dictionary meaning of “sanction, approve, countenance”: Falcon v Famous Players Film Co Ltd [1926] 2 KB 474 at 491; Adelaide Corp v Australasian Performing Right Assn Ltd (1928) 40 CLR 481 at 489, 497. It can also mean “permit”, and in Adelaide Corp v Australasian Performing Right Assn Ltd “authorise” and “permit” appear to have been treated as synonymous. A person cannot be said to authorise an infringement of copyright unless he has some power to prevent it: Adelaide Corp v Australasian Performing Right Assn Ltd at 497-498, 503. Express or formal permission or sanction, or active conduct indicating approval, is not essential to constitute an authorisation. “Inactivity or ‘indifference, exhibited by act of commission or omission, may reach a degree from which an authorisation or permission may be inferred’”: Adelaide Corp v Australasian Performing Right Assn Ltd at 504. However, the word “authorise” connotes a mental element and it could not be inferred that a person had, by mere inactivity, authorised something to be done if he neither knew nor had reason to suspect that the act might be done. Knox CJ and Isaacs J referred to this mental element in their dissenting judgments in Adelaide Corp v Australasian Performing Right Assn Ltd. Knox CJ (at 487) held that indifference or omission is “permission” where the party charged (amongst other things) “knows or has reason to anticipate or suspect that the particular act is to be or is likely to be done”. Isaacs J apparently considered [668] that it is enough if the person sought to be made liable “knows or has reason to know or believe” that the particular act of infringement “will or may” be done (at 490-491). This latter statement may be too widely expressed: cf Sweet v Parsley [1970] AC 132 at 165. Later his Honour said (at 13-14; at 201): In the present case the university made available to a section of the public the books in its library at least those in the open shelves and provided in the library the machines by which 242 [6.190]

Copyright Infringement, Defences and Remedies

CHAPTER 6

APRA v Jain cont. copies of those books could be made. It seems to me that the university must have known that it was likely that a person entitled to use the library might make a copy of a substantial part of any of those books. It is true that the machines were not used exclusively for the purpose of copying books; they were extensively used to copy lecture notes and other private documents. Moreover, not all of the books which might be copied were subject to copyright. However, in the nature of things it was likely that some of the books which were subject to copyright and which were in the open shelves might be copied by use of the machines in a manner that would constitute an infringement of copyright unless some means were adopted to prevent that from being done. It could not be assumed that persons making copies of works in which copyright existed would do so only in circumstances which amounted to a fair dealing for the purpose of research or private study, at least in the absence of any effective measures to ensure that any other copying of copyright works was forbidden. The university was aware of the assertions of the Australian Copyright Council that “unlawful and undesirable practices are commonplace within the universities” and although it may have regarded these claims as exaggerated, it had been given enough information to raise the suspicion that some infringing copies were likely to be made. Jacobs J (in whose judgment McTiernan ACJ agreed (at 7)) said (at 207-208): It is established that the word [“authorise”] is not limited to the authorising of an agent by a principal. Where there is such an authority the act of the agent is the act of the principal and thus the principal himself may be said to do the act comprised in the copyright. But authorisation is wider than authority. It has, in relation to a similar use in previous copyright legislation, been given the meaning, taken from the Oxford Dictionary, of “sanction, approve, countenance”: see Falcon v Famous Players Film Co Ltd [1926] 2 KB 474 which was approved in Adelaide Corp v Australasian Performing Right Assn Ltd (1928) 40 CLR 481. I have no doubt that the word is used in the same sense in s 36(1). It is a wide meaning which in cases of permission or invitation is apt to apply both where an express permission or invitation is extended to do the act comprised in the copyright and where such a permission or invitation may be implied. Where a general permission or invitation may be implied it is clearly unnecessary that the authorising party have knowledge that a particular act comprised in the copyright will be done. The acts and omissions of the alleged authorising party must be looked at in the circumstances in which the act comprised in the copyright is done. The circumstances will include the likelihood that such an act will be done … “the court may infer an authorisation or permission from acts which fall short of being direct and positive; … indifference, exhibited by acts of commission or omission, may reach a degree from which authorisation or [669] permission may be inferred. It is a question of fact in each case what is the true inference to be drawn from the conduct of the person who is said to have authorised”: per Bankes LJ in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 at 9. In the course of his judgment in the Moorhouse case, Gibbs J referred to Winstone v Wurlitzer Automatic Phonograph Co of Australia Pty Ltd [1946] VLR 338. It was there held by Herring CJ that the owner of a gramophone installed in a shop authorised the public performance of musical works played on it. Herring CJ said (at 345): It is, of course, a question of fact in each case what is the true inference to be drawn from the conduct of the person said to have authorised the act complained of. And as the acts that may be complained of as infringements of copyright are multifarious, so, too, the conduct that may justify an inference of authorisation may take on an infinite variety of differing forms. In these circumstances any attempt to prescribe beforehand ready-made tests for determining on which side of the line a particular case will fall, would seem doomed to failure. So, too, will it be impossible to determine any particular case by reference merely to the relationship that may exist between the person said to have authorised the act complained of and the actual infringer, though no doubt in the case of principal and agent an authorisation may be more [6.190]

243

Intellectual Property: Commentary and Materials

APRA v Jain cont. readily inferred than in the case of vendor and purchaser. In the end the matter must in each case depend on a careful examination of all the relevant facts. In his judgment in the Hanimex case, Gummow J, having said that “sanction, approve, countenance” was the meaning ascribed by members of the High Court in the Moorhouse case to the word “authorisation”, said (at 362): This meant that express or formal permission or active conduct indicating approval was not essential to constitute an authorisation. That view has not always been accepted in England in recent times. In Amstrad Consumer Electronics Plc v British Phonographic Industry Ltd [1986] FSR 159 at 207, Lawton LJ, speaking of the current UK legislation (Copyright Act 1956), said that the concept of granting or purporting to grant to a third person the right to do the act complained of came much nearer to the meaning of the word “authorise” than the synonyms approved by the High Court of Australia in University of New South Wales v Moorhouse. Be that as it may, the position in Australia with respect to the 1968 Act is presently settled by Moorhouse’s case. … [670] … None of the authorities to which we have made reference deal with situations in which directors or employees of a company are themselves said to have authorised an infringement. There have been, however, some cases in which reference has been made to the position of directors or employees. In Australasian Performing Right Assn v Tolbush Pty Ltd (1985) 62 ALR 521, a decision of de Jersey J of the Supreme Court of Queensland, his Honour said (at 523-524; at 55): If I enjoin the first defendant, I consider that I should also enjoin the second and third defendants, who are directors of the first defendant. The third defendant is also its secretary. Under s 36(1), those who “authorise” infringements of copyright are liable for the infringement. The material before me suggests that the second and third defendants control and operate the first defendant. I consider that I should infer that they effectively run it. That being so, I consider that I should take the view that they, as the natural operatives of the first defendant, have authorised any infringement of copyright of which the first defendant has been guilty. My approach is similar to that of Thomas J in Kalamazoo … His Honour’s reference to Kalamazoo is a reference to the decision of Thomas J of the Supreme Court of Queensland in Kalamazoo (Aust) Pty Ltd v Compact Business Systems Pty Ltd (1985) 84 FLR 101. It is necessary, in light of these authorities, to consider the circumstances of this case to see whether, upon the findings made by his Honour and upon inferences that may be drawn, the appellant has established its case. [671] It is unnecessary to repeat the detail of the account of the evidence given earlier in these reasons. Mr Jain was effectively the chief executive officer of the company. But, as so often happens, he entrusted the running and day to day management of the tavern to Mr Morgan. He knew, however, that music would be played by live bands albeit he did not concern himself with the actual items of music which would be played by them. In this respect he was in a position similar to that of the university in the Moorhouse case. It may be that some of what the bands would play would not be the subject of copyright (although this seems unlikely) and it may have been that despite the extensive repertoire which it has, the appellant did not have the public performance right in some of the music which would be played. But the likelihood was that music would be played which would be part of the appellant’s repertoire. The matter was brought to Mr Jain’s attention by the appellant’s solicitors’ letter of 12 July 1989. The evidence of his reaction to that letter may be sketchy, but it may clearly be inferred that he read it. His solicitors said in their letter of 2 August 1989 that he had taken “note of APRA’s claims”. He did not claim to have procured a licence from the appellant to play the music and there is, in any event, the positive evidence of both Mr O’Neill and Ms Callaghan that no such licence existed. Plainly Mr Jain had the power to control what music was played at the tavern and also to determine whether a licence from the appellant would be applied for. He did nothing about the 244 [6.190]

Copyright Infringement, Defences and Remedies

CHAPTER 6

APRA v Jain cont. matter at all. He allowed a situation to develop in which bands went on playing the appellant’s music night after night. Despite assurances that his solicitors would consider the matter and get in touch either with the appellant itself or its solicitors, nothing of this kind occurred. The judgment of the members of the High Court in the Moorhouse case establishes that one of the meanings of the word “authorise” in the context in which it is here used is “countenance”. It may be that not every act which amounts to the countenancing of something is an authorisation. Every case will depend upon its own facts. Matters of degree are involved. But the evidence in the present case reveals, in our opinion, a studied and deliberate course of action in which Mr Jain decided to ignore the appellant’s rights and to allow a situation to develop and to continue in which he must have known that it was likely that the appellant’s music would be played without any licence from it. It was within his power to control what was occurring but he did nothing at all. In those circumstances we have reached the conclusion that the appellant established that Mr Jain authorised the infringement of copyright in question contrary to s 36 of the Act. Our conclusion in this respect makes it unnecessary for us to consider the alternative argument based on the submission that Mr Jain was a joint tortfeasor. It does not arise for consideration and we express no view about it. It follows that we allow the appeal and set aside his Honour’s order dismissing the application brought against Mr Jain.

APRA v Tolbush [6.200] Australasian Performing Right Association v Tolbush (1985) 7 IPR 160 Supreme Court of Queensland [A representative of the Australasian Performing Right Association (APRA) heard songs (for which APRA held performing rights) being played over car radios that were displayed for sale in the first defendant’s car accessory shops. The second defendant, a director of the shops, refused to apply for a licence from APRA, arguing (inter alia) that the works were not being “performed”.] DE JERSEY J: [522] On 3 April 1984 a representative of the plaintiff wrote to the second defendant asserting that the playing of radios and tapes in his retail outlets involved breach of the plaintiff’s copyright, and seeking payment of a licence fee. The second defendant did not apply for a licence, and on 12 June 1984 confirmed that he did not intend to do so. The next day, the plaintiff’s representative visited the first defendant’s shop at the Brookside Shopping Centre. A car radio was playing from a display stand. The songs “I’ve Been to Bali Too” and “Rain” were heard. The plaintiff has copyright in those songs. On the same day, the representative visited the first defendant’s Margate store, where he heard the song “Cry” playing from a car radio in similar circumstances. The plaintiff also owns the copyright in that. On 11 September 1984 the plaintiff’s solicitors wrote to the directors of the first defendant complaining about breaches of copyright, and again raising the matter of a licence. The defendant’s solicitors replied on 18 September 1984 denying any breach. By letter dated 26 November 1984 the plaintiff’s solicitors threatened court proceedings. No proceedings were then instituted. Some months later, on 28 March 1985, the same representative visited the first defendant’s Chermside store and heard “Baby Don’t Speak No Evil” playing in similar circumstances again, one of the songs in which the plaintiff has copyright. On 12 September 1985 the plaintiff’s solicitors wrote to the solicitors for the defendants, again threatening court proceedings. A writ was issued on 18 September 1985. On 4 October 1985 there was discussion between the solicitors about the legal basis for the plaintiff’s claim, and the plaintiff’s claims were confirmed by letter on 10 October. On [6.200]

245

Intellectual Property: Commentary and Materials

APRA v Tolbush cont. 4 October 1985 the plaintiff’s representative had heard “A Beat for You” playing in similar circumstances in the first defendant’s Chermside store. The plaintiff has copyright in that song as well. … [523] An additional, perhaps rather subsidiary, submission made for the defendants was that any breach to date has been trivial, and should not therefore attract the court’s intervention. I was referred to Canterbury Park Racecourse Co Ltd v Hopkins (1931) 49 WN (NSW) 27 at 29, citing Copinger. If a plaintiff’s copyright has been breached, and that is likely to recur, I would ordinarily hesitate to describe the position as trivial. Especially so here where the plaintiff apparently provides a substantial service to local composers and publishers of music in the protection of copyright. As a matter of fact, I would not describe the situation here as “trivial”. … [524] The defendant’s major submission was that by having its radio sets, on display for sale in its shops, play songs copyright in which vested in the plaintiff, the first defendant could not be said to “perform” the songs (in public). To perform the works in public would amount to infringement of copyright: cf s 31(1)(a)(iii). Counsel for the defendants did not argue that those shops were not public places. The evidence was that the public had free access to them, and that some members of the public (although few) were within them at the times of the alleged offences. I have little hesitation concluding as a matter of fact, that any performance has taken place “in public”. In my view, the character of the audience is the decisive factor. Consistently with the decision in Performing Right Society Ltd v Harlequin Record Shop Ltd [1979] 1 WLR 851, “a performance given to an audience consisting of the persons present in a shop which the public at large were permitted, indeed encouraged, to enter without payment or invitation with a view to increasing the shop owner’s profit, could only be described as a performance in public”: cf Copinger (12th ed), para 573. The term “perform” is not comprehensively defined in the Act. Section 27(1) does however say that a reference to performance should be read as including a reference to “any mode of … aural presentation, whether the presentation is by the operation of wireless telegraphy apparatus … or by any other means”. Now read literally, that would of course be amply wide to include what has occurred here. The decision of the Court of Appeal in Performing Right Society Ltd v Hammonds Bradford Brewery Co [1934] Ch 121 is strong authority if authority be needed that there has here been a performance within s 27(1), taken alone, in that the first defendant has utilised a “mode of … aural presentation”. But counsel for the defendants contends, in effect, that it is unlikely that copyright would have been intended to cover these situations, which he would describe as relatively innocuous. Of course, some situations are specifically excepted from the prohibition on performance other than by the copyright owner. There is, for example, an exception in relation to educational situations (s 28), covering amenities provided within hotels and the like (s 46), and of course domestic situations are excluded because of the reference in s 31(1)(a)(iii) to performance “in public”. Counsel nevertheless would contend that unless read down, the extremely wide words of s 27(1) would give the copyright a scope which could never have been intended. He argued most forcefully that these situations could not amount to a “performance” by contrasting, in s 27, the references to “performance” with the references to “causing … sounds to be heard”. He submitted that in this case, there has been no performance merely a causing of sounds to be heard by means of the radio sets. Of course, s 27(1) cannot be read alone, and the real question is whether the prima facie wide ambit of the reference to “any mode of … aural presentation” should be restricted by the subsequent references in the section, arguably by way of contrast with the concept of “performance”, to the situation of “causing … sounds to be heard”. [525] The authorities offer no definitive assistance in resolving the point. I was referred to Australian Performing Right Assn Ltd v Canterbury-Bankstown League Club Ltd (1964) 5 FLR 415, but it concerned 246 [6.200]

Copyright Infringement, Defences and Remedies

CHAPTER 6

APRA v Tolbush cont. other points. I do note with some interest that in Ernest Turner Electrical Instruments Ltd v Performing Right Society Ltd [1943] 1 Ch 167, playing music over public address systems to a workforce in a factory, as “background music”, was held to constitute a public performance of the relevant works, although it seems not to have been suggested in that case that there was not a “performance”. In Performing Right Society Ltd v Hammonds Bradford Brewery Co, Romer LJ said that (at 137) “a man performs a musical composition when he causes it to be heard”. That of course is precisely what happened here. I note that Copinger (12th ed), para 597 suggests that the 1934 decision of the Court of Appeal in that case remains good authority, notwithstanding the subsequent inclusion in the 1956 English Copyright Act of similar separate references to “performance” and “causing sounds to be heard”: cf the English s 48(5) and (6). Indeed, Copinger suggests a clear view, based on the English legislation comparable with the Australian legislation, that this sort of situation involves a “performance”: cf for example para 584. [526] … On the material before me, the plaintiff owns copyright in “practically all copyright musical works in current use throughout Australia”. At present, according to its records, the plaintiff has copyright in some two million individual musical compositions. In these circumstances, I am prepared to infer that there is a risk sufficient to warrant the granting of an injunction that ordinary radio broadcasts, over the radios on display in the stores, would result in the playing of songs in which the plaintiff owns copyright. There will therefore be an injunction.

Subject matter other than works [6.210] Direct infringement of the Copyright Act 1968 (Cth) Part IV in respect of subject-matter other than works is much more restricted than that in relation to Part III works, being confined to a reproduction of the article embodying the subject matter, causing the content to be broadcast or seen or heard in public, or importing for sale or hire (ss 101 – 103). In CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 9 IPR 440, the respondents had made a record entitled Chart Sounds 16 Hit Songs No 1 using artists to re-record “cover versions” of popular songs. One of the issues between the parties was whether a “sound alike” (ie, a later sound recording by other performers that is an imitation of the original) was within the description of a “copy of a sound recording” referred to in the Copyright Act 1968 (Cth) s 10(3)(c). Bowen CJ held (at 444) that only “an actual embodiment of the very sounds on the original record” falls within the definition. Bowen CJ stated (at 446): In the present case the question is whether, having regard to the terms of the statutory provisions including the definitions, the imitation sounds produced by different performers at a later point of time embody the sounds in the original sound recording in the sense used in the Act.

Substantial part and Part IV copyright (television broadcasts) [6.220] The question of “substantial part” in respect of television broadcasts and broadcasted

material was examined at length in a series of cases between Channel Nine and Network Ten in both the Federal Court and the High Court. The cases involved an ongoing dispute between the two networks over the alleged infringing use by Network Ten in its weekly program The Panel of material from programs previously broadcast by Channel Nine. A central issue in TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) (2005) 65 IPR 571, in the Full [6.220]

247

Intellectual Property: Commentary and Materials

Federal Court, was the application of the established principle in copyright of “substantial part” to broadcast material copied and re-broadcast in separate segments. A key consideration in this regard was the meaning of a television broadcast and its elements, although these issues were addressed by the High Court in the earlier but related case of Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 59 IPR 1. The Copyright Act 1968 (Cth) s 91 provides that copyright subsists in a “television broadcast” made from a place in Australia by the holder of a licence under the Broadcasting Services Act 1992 (Cth). In Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 59 IPR 1, the High Court (by majority) pointed out (at 599) that the interest to be protected by this particular form of copyright (being copyright in non-original subject matter) was the cost and skill in assembling or preparing and transmitting the programme to the public. The nature of this interest, as well as the enacting history of the Copyright Act 1968 (Cth) s 91, led the High Court (at 593) to the conclusion that “broadcast” means “programme”. In reaching this conclusion the High Court said (at 593) that the contrary view “fixed upon the medium of transmission, not the message conveyed by its use”.

TCN Channel Nine v Network Ten (No 2) [6.230] TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) (2005) 65 IPR 571 Federal Court of Australia FINKELSTEIN J: [572] … The High Court did not resolve the entire dispute between the appellants (“Nine”) and the respondent (“Ten”). Ten’s weekly television programme, The Panel, used 20 short extracts (between eight and 42 seconds) from programmes previously broadcast by Nine, extracts which had previously been recorded on video tapes. Nine alleges that those extracts infringe its copyright in the programmes. At trial ((2001) 108 FCR 235) and on appeal [573] ((2002) 118 FCR 417) Ten made out a fair dealing defence in respect of nine extracts. The dispute still to be resolved is whether the remaining 11 extracts that were copied and re-broadcast were “substantial” parts of the programmes from which they were taken. Only if they were “substantial” parts of those programmes will Nine’s copyright be infringed. The first thing to be done is to resolve a different dispute. When deciding whether a part of a programme is a substantial part of that programme for copyright purposes it is necessary to compare what has been taken with the copyright work. In the case of broadcast copyright it is necessary to identify with precision the particular programme in which it is alleged the copyright has been infringed. This task is not as easy as it seems. Nine says that each programme identified in its statement of claim (the programmes ranged in duration from approximately 30 minutes to approximately five hours) is a separate television broadcast. Both Nine and Ten say that any advertisement shown during the course of a programme should be treated as a separate and discrete broadcast. According to the High Court those propositions are correct. On the other hand, and this is where a dispute has arisen, Nine claims that if a particular programme can be divided into separate and distinct parts in terms of theme, story and impact each segment should be treated as a separate broadcast. This is an important point. If a copyright owner is able to confine a programme in terms of length and subject matter, it will be easier for the owner to establish that the part that is taken is “substantial”. The parties are at odds as to whether the High Court has determined that the programmes in this case are those described in Nine’s statement of claim (where they are not broken into segments) or whether, for the purposes of determining infringement, the High Court left open the possibility that they may be segmented. On this aspect the High Court first said ((2004) 78 ALJR 585, 600) that “a television broadcast” cannot be defined with “precision”. Nevertheless it said the programmes that Nine identified in its 248 [6.230]

Copyright Infringement, Defences and Remedies

CHAPTER 6

TCN Channel Nine v Network Ten (No 2) cont. pleading do answer that description, subject to the qualification that advertisements should be treated as discrete and separate programmes. The High Court referred to the judge’s view that in an appropriate case it may be possible to treat a segment of a programme as the measure of a television broadcast. The majority (at 600) said as to this: “We would reserve consideration of that proposition for a particular case where the point arises.” They added, no doubt by way of caution, that even if the judge’s proposition is correct, a news broadcast made up of various segments, items or stories did not “necessarily render each of [them] a television broadcast in which copyright subsists”. For a similar view see Television New Zealand Ltd v Newsmonitor Services Ltd [1994] 2 NZLR 91, 108. … [574] The principal issue that confronted the judge on the issue of substantiality was whether he should adopt the approach that applied to original works or whether a different test was required for non-original subject matter. Copyright in an original work will be infringed if there is an unauthorised reproduction of the work or if a person purports to be the author of the work by illegally appropriating the fruits of the author’s labour by reproducing his work with colourable alterations. In Dicks v Yates (1881) 18 Ch D 76, 90, James LJ referred to the first kind of infringement as “open piracy” and to the second as “literary larceny”. There is no fixed rule for determining how much of a copyright work must be taken for it to be a substantial part of the work. The area of substantial similarity is at the heart of copyright law, yet it remains one of its most elusive aspects. The general rule is that substantiality depends on quality not quantity: Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, 293. Often it will be obvious whether or not a substantial part of the copyright work has been taken from a visual or, if appropriate, an oral comparison between the copyright work and the allegedly infringing work: see Hanfstaengl v Empire Palace [1894] 3 Ch 109, 129 per Lindley LJ: (“the degree of resemblance is all important”). In the United States the visual comparison that is required is referred to as the “ordinary observer test” and is derived from Daly v Palmer 6 Fed Cas 1132, 1138 (2nd Circ, 1868). Following the decision in Arnstein v Porter 154 F 2d 462, 473 (2nd Circ, 1946) the approach is sometimes referred to as the “audience test”. The test invites that a comparison be conducted between the two works for the purpose of deciding substantial similarity: see by way of example Henry Holt & Co Inc v Liggett & Myers Tobacco Co 23 F Supp 302, 304 (3rd Circ, 1938); Concord Fabrics Inc v Marcus Brothers Textile Corp 409 F 2d 1315, 1316-1317 (2nd Circ, 1969); Miller Brewing Company v Carling O’Keefe Breweries of Canada Ltd 452 F Supp 429, 440 (2nd Circ, 1978); [575] American Greeting Corporation v Easter Unlimited Inc 579 F Supp 607, 615-616 (2nd Circ, 1983). There will be cases where a visual or oral comparison will not enable the tribunal to decide whether the part taken is indeed substantial. This is especially so when the amount copied is small. There will be an infringement if the defendant has reproduced something that is of aesthetic significance. Sometimes, however, “[w]hen it comes down to a question of quantity [the answer] must be very vague”: Bramwell v Halcomb (1836) 3 My & Cr 732, 738 [40 ER 1110] per Lord Cottenham LC. In a doubtful case other factors must be considered. One factor is the economic significance of that which has been taken. In Bramwell v Halcomb (1836) 3 My & Cr 732, 738 [40 ER 1110] Lord Cottenham said that it is the “value [to the plaintiff of what has been taken] that is always looked to.” See also Bell v Whitehead (1839) 8 LJ Ch 141, 142 per Lord Cottenham LJ: (“Here, the value of the extract is very minute and trifling, and if there were nothing else in the case, the extreme minuteness of the value in the extract, and of the injury sustained by the plaintiff, would be sufficient to induce the Court not to interfere”); Scott v Stanford (1867) LR 3 Eq 718, 723 per Sir W Page Wood VC: (“But if, in effect, the great bulk of the Plaintiff’s publication – a large and vital portion of his work and labour – has been appropriated and published in a form which will materially injure his copyright, mere honest intention on the part of the appropriator will not suffice as the Court can only look at the result, and not at the intention in the man’s mind at the time [6.230]

249

Intellectual Property: Commentary and Materials

TCN Channel Nine v Network Ten (No 2) cont. of doing the act complained of, and he must be presumed to intend all that the publication of his work effects.”); Bradbury v Hotten (1872) 8 LR Ex 1, 6 per Kelly CB: (“The principle of [the authorities] is, that where one man for his own profit puts into his work an essential part of another man’s work, from which that other may still derive profit, or from which, but for the act of the first, he might have derived profit, there is evidence of a piracy upon which a jury should act”); Weatherby & Sons v International Horse and Agency and Exchange Limited [1910] 2 Ch 297, 305 per Parker J: (“[In utilising the plaintiff’s labour and industry] they have appropriated the result of [his] labour and expense to their own use, and even if they have injured the plaintiffs in no other way, they have at any rate deprived them of the advantage, which their copyright conferred on them, of being able to publish such a book as the defendant’s book at much less labour and expense than any one else.”). See also Cambridge University Press v University Tutorial Press (1928) 75 RPC 335, 343-344. It should be noted, however, that if there is no damage to the plaintiff he will not necessarily fail in this action, for the right protected by the Copyright Act is not dependent upon proof of damage: see Kipling v Genatosan Ltd (1920) Mac Cop Cas 203, 205 per Peterson J: (“It was said that there was no competition or damage. But the judgment of Lord Parker in Weatherby v International Horse Agency … showed that there might be infringement without either of these elements in the case”); Hawkes and Son (London) Limited v Paramount Film Service Limited [1934] 1 Ch 593, 603 per Lord Hanworth: (“[T]he right of the owner of a copyright is not determined or measured by the amount of actual damage to him by reason of the infringement; copyright is a right of property, and he is entitled to come to the Court for the protection of that property even though he does not show or prove actual damage”). [576] Another factor is the use which the defendant makes of the copied portion of the plaintiff’s work. An unfair use, as when the defendant intends to go into competition with the plaintiff, may be a determining factor: Bradbury v Hotten (1872) 8 LR Ex 1, 6 per Kelly CB: (“Is [the defendant] by so doing applying to his own use and for his own profit what otherwise the plaintiffs might have turned, and possibly may turn, to a ‘profitable account’? The pictures are of great merit, and no doubt were largely paid for, and by inserting these copies the defendant has unquestionably added to the value of his publication. Why should this not be an infringement?”); Chatterton v Cave (1878) 3 App Cas 483, 498 per Lord O’Hagan: (“In all, quantity and value are both the subjects of consideration, and in none of them has an infringement been established without satisfactory evidence of an appropriation, possibly involving a substantial loss to one person and a substantial gain to another; although as was observed by Lord Chief Justice Tindal in Planche v Braham, ‘the damage to the Plaintiff is not the test of the Defendant’s liability,’ and the penalty is to be paid ‘even if there is no actual damage’”); Cooper v Stephens [1895] 1 Ch 567, 572 per Romer J: (“But, in considering a question of infringement like this, it is important to consider the intent of the copyist and the nature of his work as was observed by Lord Chief Baron Kelly in Bradbury v Hotten. In the present case I observe that the Defendants are using the five drawings complained of for the very purpose for which the originals were made by the Plaintiffs, and so as to escape making any payment to the Plaintiffs in respect of their right in the drawings. And I cannot help seeing that, if the Defendants are allowed to do with impunity what they have done, the Plaintiff’s copyright will be rendered practically valueless, and, in fact, destroyed”). Once again, as several of these passages indicate, the defendant’s intention to profit from competition with the plaintiff is not necessarily decisive. See also Football League Ltd v Littlewoods Pools Ltd [1959] Ch 637, 656. The effect of the authorities seems to be this. The test of substantiality – that is the notion of quality – is not confined to an examination of the intrinsic elements of the plaintiff’s work. The test of substantiality may involve a broader enquiry, an enquiry which encompasses the context of the taking. The key ideas here are first that copyright is granted to protect the owner’s financial interest in his property. The second idea links financial harm to the rationale of unfair use or the injurious 250

[6.230]

Copyright Infringement, Defences and Remedies

CHAPTER 6

TCN Channel Nine v Network Ten (No 2) cont. appropriation of the plaintiff’s skill and labour. The level of financial harm may indicate that the use of that labour is unfair. In Blackie & Sons Limited v The Lothian Book Publishing Company Proprietary Limited (1921) 29 CLR 396 Starke J (at 402-403) said that the question was “[whether] the defendant, to use the words of [577] the statute, reproduced a substantial part of the plaintiff’s book … or … has an unfair or undue use been made of the work protected by copyright?” One of the factors upon which Starke J relied to conclude (at 403) that the defendant “[appropriated] a substantial and valuable portion” of the plaintiff’s work was that the defendant’s books were intended to be, and were, in direct competition with the plaintiff’s. The third idea draws on the paradigm of piracy. The “clear case” of copyright infringement is where the defendant sells a cheaper version of the plaintiff’s work, causing the plaintiff financial harm. The fourth idea is the concept of “value”, which denotes more fully than the word “quality” a financial dimension as well as the notion of originality or artistic merit. Evidence of the harm caused by the defendant’s conduct is potentially relevant in a number of ways. First, and most importantly, it might indicate that the financial interest protected by copyright has been interfered with. Its absence might indicate the contrary. Second, it may indicate that the extent of the taking has been unfair, for example when it causes the plaintiff injury by reducing his profits. Third, it may be evidence of a straightforward piracy, being an intentional “stealing” for profit of the author’s skill or labour. Last, it might highlight that the part taken is important, vital or material in the sense that the part gives the work its financial value. As Lord Herschell LC said in Leslie v J Young & Sons [1894] AC 335, 342: “[i]t may be the very thing that the presence or absence of which would most largely promote or retard the sale of the work.” When the judge came to decide the issue of substantiality it was by no means clear how the principles applicable to original works should be applied to broadcast copyright. There were only two decisions that had considered substantiality in the case of copyright in non-original subject matter, Nationwide News Pty Ltd v Copyright Agency Limited (1996) 65 FCR 399, a decision of the Full Federal Court, and Newspaper Licensing Agency Ltd v Marks and Spencer plc [2001] Ch 257, a decision of the English Court of Appeal. Each case concerned copyright in a published edition. In Nationwide News Pty Ltd v Copyright Agency Limited it was held that published edition copyright was in the typographical arrangement or composition of the whole published edition. The leading judgment was delivered by Sackville J. On the question of substantiality he said that it was necessary to apply the test derived from cases on infringement of original works, where substantiality refers to the quality of what is taken. Applying that test to published edition copyright he said (at 418): In relation to a published edition, the quality of what is taken must be assessed by reference to the interest protected by the copyright. That interest … is in protecting the presentation and layout of the edition, as distinct from the particular words or images published in the edition. He further went on to say (at 419) that “since [the key issue is to determine] the quality of the material taken … the quantity is not the only nor necessarily the principal criterion”. He then referred with obvious approval to a passage in Copinger and Skone James on Copyright (13th ed, 1991) where the authors said (at 8-27) that “[i]n deciding [the quality or importance of the part taken] regard must be had to the nature and objects of the selection made, the quantity and value of the materials used, and the degree to which the use may prejudice the sale, or diminish the profits, direct or indirect, or supersede the object of the original work.” [578] A different view of substantiality in relation to published edition copyright was taken in Newspaper Licensing Agency Ltd v Marks and Spencer plc [2001] Ch 257. The Court of Appeal decided that substantiality could be determined quantitatively. … The quantitative test has not, however, survived. It was rejected when Newspaper Licensing Agency Ltd v Marks & Spencer plc [2003] 1 AC 551 was taken to the House of Lords. The leading speech was given by Lord Hoffman. He said (at 560) that, as with original works, substantiality is to be tested by quality rather than quantity. “But”, asked Lord Hoffman (at 559), “what quality is one looking for?” In [6.230]

251

Intellectual Property: Commentary and Materials

TCN Channel Nine v Network Ten (No 2) cont. the case of original works it is in the originality of the skill or labour in producing the work. In the case of a published edition it is in the skill of designing the arrangement and the labour and cost of setting it up and keeping it running. As regards quantity, Lord Hoffman said (at 561) that [t]he test is quantitative in the sense that as there can be infringement only by making a facsimile copy, the question will always be whether one has made a facsimile copy of enough of the published edition to amount to a substantial part. But the question of what counts as enough seems to be qualitative, depending not upon the proportion which the parts taken bears to the whole but on whether the copy can be said to have appropriated the presentation and layout of the edition. In Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 78 ALJR 585 the High Court decided that this approach is to be followed in Australia. The court said (at 595) that: “Questions of quality … as well as quantity arise both in respect of [non-original subject matter copyrights] and … copyrights in original works”. … [580] … It is now clear that the starting point for any enquiry into substantiality is not, as the judge (in Panel No 1) would have it, “primarily quantitative”. Nor is the principal enquiry whether harm has been caused to the plaintiff’s commercial interests. The first thing that must be done is to look at the part taken, compare it with the copyright work and ask whether it is possible to conclude from that comparison whether that part is a “substantial part” of the plaintiff’s programme. The question will often boil down to one of the following (dependent on the type of programme): Does what has been taken amount to “essentially the heart” of the copyrighted work?: New Era Publications International v ApS Carol Publishing Group 904 F 2d 152, 158 (2nd Circ, 1987). Is what has been taken “the essential part of the copyright work?”: Cable/Home Communications Corporation v Network Productions Inc (902) F 2d 829, 844 (11th Circ, 1990). Is what has been taken “at least an important ingredient” of the copyright work?: Salinger v Random House 881 F 2d 90, 99 (2nd Circ, 1987). Have the best scenes been taken from the programme?: Hi-Tech Video Productions Inc v Capitol Cities/ABC 804 F Supp 950, 956 (W D Mich, 1992). Are the excerpts “highlights” from the programme?: New Boston Television Inc v Entertainment Sports Programming Network Inc 215 US PQ 755, 757 (D Mass, 1981). Are the excerpts central to the programme in which it appeared?: Roy Expert Company Establishment of Vaduz Liechtenstein, Black Inc v Columbia Broadcasting System Inc 503 F Supp 1137, 1145 (2nd Circ, 1980). Does the portion used “constitute [581] the ‘heart’ – the most valuable and pertinent portion – of the copyright material?”: Los Angeles News Service v CBS Broadcasting, Inc 305 F 3d 924, 940 (9th Circ, 2002). If what has been taken does not meet any of those descriptions that will often be the end of the enquiry. There will, however, be borderline cases where an enquiry based on a visual comparison will not yield a result. Take as an example a programme that has no “core” or “heart”. Here I have in mind two cinematograph films by the 1960s icon Andy Warhol. The films are “Sleep” and “Empire”, films that few people have seen. “Sleep” has been described as “one of the most famous of unseen films”: F Camper, “The Lover’s Gaze”, Chicago Reader Movie Review, section 1, 28 April, 2000. It is a six-hour (some say longer) film taken by a stationary 16 mm camera of a man sleeping. The reviewer Jonas Mekas writing in the Village Voice (September, 1963) queried whether the film was: “An exercise in hypnosis? Test of patience? A Zen joke?” “Empire” is a single shot from late dusk to early morning of the Empire State Building taken from the 44th floor of the Time-Life Building. Mr Koch described “Empire” as “the most profoundly mute motion picture ever filmed”: S Koch, Stargazer: Andy Warhol’s World and His Films (2nd ed, M Boyars, New York, 1985) at 60. The film has no plot and only two things happen. The sun moves through the sky and, at dusk, floodlights are turned on to illuminate the upper floors of the Empire State Building. If part of “Sleep” or “Empire” is taken, no amount of visual 252 [6.230]

Copyright Infringement, Defences and Remedies

CHAPTER 6

TCN Channel Nine v Network Ten (No 2) cont. comparison would enable a tribunal to determine whether that part is a substantial part of the film. It would be necessary to consider factors such as the plaintiff’s financial interest as well as the defendant’s purpose to resolve the issue. There is one other aspect of the judge’s test for substantiality which, with respect, I think is wrong. It is the judge’s acceptance of Ten’s submission that “matters of technical significance … to the broadcast may also be relevant”. According to the judge (at 273) those matters encompass the “technical considerations associated with the infrastructure of production”. If by accepting Ten’s submission the judge meant that it is either necessary or permissible to enquire into the means by which a programme is created and broadcast then in my view he is in error. It cannot make any difference to the test of substantiality if, say, there is a live broadcast of a sporting event using several television cameras and microphones near the scene that send their signals to a control room where they are combined and then transmitted to television sets or whether the broadcast is of a video recording of the event. At any rate “matters of technical significance” is not the interest protected by the copyright. … HELY J: [585] … Substantiality The term “substantial” is imprecise and ambiguous. It takes its meaning from the context. Ten submits that in the present context, “substantial” is a reference to taking “the substance of” the source television broadcast. That submission pays insufficient regard to the statutory language, which is expressed in terms of “a substantial part” of a television broadcast, which is a different thing. There may be many parts of a television broadcast which qualify as a substantial part of that broadcast. … [586] … Whether the part taken is a substantial part of the source broadcast thus involves an assessment of the importance of the part taken to the source broadcast. In some cases the issue has been expressed in terms of whether what is taken is an “essential” or “material” part of the total work: Autodesk (No 2) at 305; Nationwide News Pty Ltd v Copyright Agency Ltd (1996) 65 FCR 399 (“Nationwide News”) at 418. In other cases the issue has been expressed in terms of whether the part taken is recognisable as part of the original work (see Hawkes & Son (London) Ltd v Paramount Film Services Ltd [1934] Ch 593 at 604), or distinctive of it (see Nationwide News at 420). Whether a substantial part has been taken of subject matter in which copyright subsists is to be assessed by reference to the interest protected by the copyright: Nationwide News at 418. It is settled in the case of Part III works, that the quality or importance of what has been taken must be understood in terms of the features of the work which made it an original work: [587] Copinger & Skone James on Copyright (K Garnett, J James et al, 14th ed, Sweet & Maxwell, London, 1999 at [7-30]). Originality goes to the heart of the interest that the copyright protects, namely authorship. Thus, in the case of Part III copyright, reproduction of non-original matter will not ordinarily involve a reproduction of a substantial part of the work in which copyright subsists: Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465 at 481. Broadcast copyright protects the sounds and images embodied in a television broadcast or programme. It protects the cost to, and the skill of, broadcasters in transmitting their programmes: 78 ALJR 585 at [29]. There is no requirement for originality in the case of Part IV copyright, a fact which leads Ten to submit that it is wrong to look to the originality of content as a touchstone for assessing substantiality in relation to Part IV subject matter. Nine’s focus on whether the Panel Segments were “distinctive” of, or were “recognisable” as having come from Nine’s broadcasts is, in Ten’s submission, to do just that. [6.230]

253

Intellectual Property: Commentary and Materials

TCN Channel Nine v Network Ten (No 2) cont. In the case of Part IV copyright, “originality” is not a touchstone for the assessment of substantiality as originality forms no part of the identification of the interest protected by the copyright. For that reason, the notion that reproduction of non-original matter will not ordinarily involve a reproduction of a substantial part of a copyright work can have no application in the case of Part IV copyright. Nonetheless, the High Court’s observation that the element of “quality” bears on the substantiality question, and may involve consideration of the “potency of particular images or sounds, or both”, invites an assessment of the relative significance in terms of story, impact and theme conveyed by the taken sounds and images relative to the source broadcast as a whole. Whether the part taken represents one of the highlights of the source broadcast has a bearing on that assessment as does whether the Panel Segments were “distinctive of” or were “recognisable” as having come from Nine’s broadcast. Ten’s submission to the contrary should be rejected. Whether the part taken is a substantial part of the source work is to be determined objectively. Infringement of copyright does not have a mental element of purpose or intention. However, there are statements in the cases (see, for example, Nationwide News at 419) which indicate that in deciding the quality or importance of the part taken, regard must be had (inter alia) to the nature and objects of the selection made. In some cases and in some circumstances evidentiary assistance favourable to the copyright owner may be gained from a consideration of the alleged infringer’s conduct. One of the considerations sometimes put forward as helping to decide whether a substantial part has been taken was described by the authors of Copinger & Skone James (supra), at [7.31], as follows: Are the two works in competition? Has the value of the plaintiff’s work been diminished? Is the market for the plaintiff’s work likely, or unlikely to be affected? Tests of these kind are sometimes applied but it is suggested that today they need to be used with caution. Obviously, if it can be seen that the market for lawful reproductions of the plaintiff’s work has been adversely affected, this may be because a substantial part has been taken, particularly if the reason for this is that the public regard the defendant’s work as an adequate substitute for the plaintiff’s. Care needs to be taken, however, since this decline may simply be the result of lawful (ie non-infringing) competition. Conversely, it is possible to imagine many cases where the businesses of the plaintiff and the defendant do not compete but unfair advantage of the plaintiff’s skill and labour may yet have been taken. In such a case it is difficult to see why the absence of competition should help answer the question in favour of the defendant. Where, however, the two works are clearly in the same market and compete, and the plaintiff’s work would be expected to suffer if a substantial part had been taken, the absence of any injury may be a helpful indication. In the present case, TEN submitted that the evaluation of what constitutes a material part of a television broadcast is a classic jury question. One takes into account all the circumstances. Accepting that to be so, the fact that the Panel Segments were used by Ten for the purpose of satire or light entertainment strikes me, with respect, as throwing little, if any, light on whether the parts taken were a substantial part of the source broadcasts. No doubt Ten used the Panel Segments because it considered that the Panel Segments would contribute to Ten’s programme, even though the contribution made to that programme may be quite different from the contribution made by the Panel Segments to the source broadcast. But that says little, if anything, about whether those segments are a material part of the source broadcast. [589] Individual consideration of the Panel Segments It remains for me to consider whether individual Panel Segments represent a substantial part of the source programmes. Subject to the foregoing discussion, this is largely a matter of impression as the text of “substantial part” under the Act imparts criteria of “fact and degree”: 78 ALJR 585 at [100] (Kirby J). As is apparent from the table set out above, quantitatively each of the Panel Segments is but a small proportion of the source programme. 254 [6.230]

Copyright Infringement, Defences and Remedies

CHAPTER 6

TCN Channel Nine v Network Ten (No 2) cont. Nonetheless, in my opinion, three of the Panel Segments are a substantial part of the television broadcast from which they have been taken.

[6.240] Following TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) (2005) 65 IPR 571 above, the High Court refused special leave to appeal. In response to the complaint that what amounts to the taking of a substantial part of the Copyright Act 1968 (Cth) Part IV subject matter still remains undetermined, the following comments by Kirby and McHugh JJ in Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2005] HCA Trans 842 are of relevance. Per Kirby J: That might be because it cannot be determined any more than the statutory words. It is a matter of fact and degree. It is just a matter of fact and degree and that is what the judges in the majority in the Full Court said.

Per McHugh J: That is what copyright lawyers have to learn, just as income tax lawyers have to learn. They think every question under a statute is a question of law. It is not, it is a question of fact. It is a question of applying the statutory formula to the facts of the case.

Indirect infringement – “knowing, or having reason to know” [6.250] Indirect infringement refers to dealing with unauthorised reproductions of works by

others, rather than actually reproducing the material itself or authorising others to do so. The main forms of indirect infringement involve infringing copies being imported without the licence of the copyright owner (Copyright Act 1968 (Cth) ss 37, 102), or sold, hired out or otherwise made the subject of trade (ss 38, 103). Sections 37 and 38 (works), and ss 102 and 103 (other subject matter), refer to the infringing party knowing, or having reason to know, that the articles they were dealing with were infringing copies. In this regard, it is necessary to establish that a defendant “knew or ought reasonably to have known” this. Note the policy questions that arise where copies have been made lawfully abroad and the copyright owner in Australia seeks to prevent their importation. This raises the issue of “parallel importation”. See Interstate Parcel Express Company Pty Ltd v Time-Life International (Nederlands) BV (1977) 1b IPR 253, and the Copyright Act 1968 (Cth) s 44A (1991 amendment). Section 44A is a complex provision dealing with the importation of books only. The effect of the section is to provide a mechanism for the importation of foreign published books, without the permission of the copyright owner, in limited circumstances – primarily where a foreign published book is not available in Australia within 30 days of its first publication. The result of this is that foreign publishers can continue to maintain their effective monopoly as long as they meet the demands of Australian readers. If a book is not made available within 30 days, the person wishing to it import must place a written order for the book with the copyright owner: if this order is not fulfilled within 90 days, copies of the book may be imported for sale. A work may be reproduced by copying a copy. Dolls and brooches were held to be reproductions in a material form of drawings of “that glaucomatous salt ‘Popeye’ … and not the less so because they were not copied directly from any sketch of the plaintiffs, but from a reproduction in material form derived directly or indirectly from the original work”: King [6.250]

255

Intellectual Property: Commentary and Materials

Features Syndicate Inc v O & M Keeman Ltd [1941] AC 417 at 419. (Note that breach of copyright would no longer be relevant on the facts of this case due to the operation of the Copyright Act 1968 (Cth) s 77.) Thus, a dress copied from another dress may infringe copyright in a sketch of the garment even if the infringer has never seen the artistic work allegedly infringed: see Burke & Margot Burke Ltd v Spicers Dress Design [1936] Ch 400; Shanton Apparel Ltd v Thornton Hall Manufacturing Ltd (1989) 17 IPR 311. Similarly, building a boat copied from a model which is a reproduction of plans for the boat will infringe copyright in those plans: Dorling v Honnor Marine [1965] Ch 1.

Authorisation of educational copying [6.260] The Copyright Amendment (Digital Agenda Act) Act 2000 (Cth) inserted into the

Copyright Act 1968 (Cth) s 36(1A), which specifies a list of matters to be taken into account in determining whether or not a person has authorised the doing in Australia of any act comprised in a “work” copyright. The Explanatory Memorandum to the Copyright Amendment (Digital Agenda Act) Act 2000 (Cth) states that the legislation essentially codifies the principles drawn from the main Australian case on authorisation, namely University of New South Wales v Moorhouse (1975) 133 CLR 1. As a result of this case, the Copyright Act 1968 (Cth) s 39A was inserted by the Copyright Amendment Act 1980 (Cth). The effect of s 39A is that a library providing photocopying services will not be taken as having authorised the making of infringing copies if a notice bringing the provisions of the Copyright Act 1968 (Cth) to the attention of users of the machine is displayed near the machine. This has the effect of making it very easy for universities to avoid “authorising” copyright infringements perpetrated by students and staff. Note that libraries also have other special exceptions in relation to circumventing technological protection measures. See also the Copyright Act 1968 (Cth) Part III Division 5.

Copying for personal use [6.270] Since the 1970s, attempts have been made to make the suppliers of blank media or

copying equipment liable to copyright owners for the illegal home taping of sound recordings that such equipment is inevitably used for, but these attempts had been unsuccessful. In CBS Songs Ltd v Amstrad Consumer Electronics Plc (1988) 11 IPR 1, the first respondents manufactured twin-deck tape-recording machines that were sold by the second respondent. These machines had a double tape-deck that allowed recorded tapes to be reproduced directly onto another blank tape. The appellants were three record companies who were suing on behalf of themselves and other copyright owners in the music recording business. It was argued that the sale of twin-deck tape-recording machines capable of reproducing recorded tapes directly onto blank tapes was an authorisation of the practice, and therefore an infringement of copyright by manufacturers and sellers of such equipment. The appellants also alleged that the machinery was advertised in such a manner as to encourage home taping and copying of copyright material, although the advertising warned that recording and playback of certain material would require approval of the copyright owner. Lord Templeman characterised the conflict as one between the electronic equipment industry and the entertainment industry, each one being interdependent on the other (at 3): Without the public demand for entertainment, the electronic industry would not be able to sell its machines to the public. Without the facilities provided by the electronic equipment industry the entertainment industry could not provide entertainment in the home, and could not, for 256 [6.260]

Copyright Infringement, Defences and Remedies

CHAPTER 6

example, maintain orchestras which fill the air with 20th century cacophony or make gratifying profit from a recording of a group without a voice singing a song without a tune.

In discussing the meaning of authorisation, Lord Templeman (with whom the other Lords agreed) applied the definition adopted in previous cases (Falcon v Famous Players Film Co [1926] 2 KB 474; Monckton v Pathe Freres Pathephone Ltd [1914] 1 KB 395; Evans v Hutton (1924) 131 LT 534; University of New South Wales v Moorhouse (1975) 133 CLR 1) that “authorise” means “sanction, approve or countenance”, and stated that this was not the situation since there was no control over the use to which machines were put once sold. Furthermore, there was no incitement to commit a tort, namely procuring copyright infringement (see Amstrad Consumer Electronics Plc v British Phonographic Industry Ltd [1986] FSR 159), nor was Amstrad negligent since there was no duty to prevent or discourage infringement by others. This relatively relaxed attitude that arose in the context of analogue recording has not carried over to the digital environment. The legitimacy of home recording is also acknowledged in the Copyright Act 1968 (Cth) s 111, which permits filming or recording broadcasts for private and domestic use. However, new encryption and technological protection measures (TPMs) are designed to restrict such copying. TPM protection assists in managing technologies that otherwise might be taken to authorise infringement. These extensions of the rights of owners may be balanced with new time and format shifting rights, which are currently being considered in relation to reform of the fair dealing provisions and may include a new right to make some personal uses of digital files.

Technological protection measures and rights management information [6.280] Whereas most infringement involves actions related to the copyright owner’s

exclusive rights, the Copyright Amendment (Digital Agenda) Act 2000 (Cth) introduced (by the Copyright Act 1968 (Cth) ss 116A – 116D) a range of measures to regulate and protect against accessing copyright protected material. The provisions reflect requirements and standards enshrined in the World Intellectual Property Organization’s WIPO Copyright Treaty (1996). A technological protection measure is a device or product, or component of a process designed to prevent or inhibit copyright infringement either by requiring a code or process (eg, decryption, unscrambling or decoding) to gain access to the copyrighted material, or by imposing a copy control/prohibition mechanism. Rights management information (RMI) is information attached to or embodied in digital material that identifies the material and its author or copyright owner, or which relates to the terms or conditions of use of the material. Protection of RMI is governed by the Copyright Act 1968 (Cth) ss 132AQ – 132AT. Civil remedies and criminal offences in relation to the manufacture and supply of, and other dealings with, broadcast decoding devices where their use is for a commercial purpose have been introduced against persons using devices and services designed to circumvent the technological protection measures used by copyright owners to protect their material. Hence it is illegal to manufacture, supply, commercially deal, import, make available online, advertise or promote activities for the purpose of circumventing technological protection measures for copyright material: see Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] [6.280]

257

Intellectual Property: Commentary and Materials

HCA 58. Similarly, the intentional removal and alteration of electronic rights management information or commercial dealing in material where a person knows or is reckless as to whether rights management information has been removed, attracts new criminal and civil remedies. See further discussion on TPMs and RMIs and circumvention devices generally in Chapter 7 at [7.80].

Copyright on the internet [6.320] Copyright protected material potentially includes text, graphics, photographs,

animations, film, music compositions, sound recordings, software and database material. Works which are copyright protected in a normal or conventional environment do not lose their right of protection simply because they are in a digital or internet environment. See A & M Records Inc v Napster (2000) 50 IPR 232. Copyright in the digital environment is discussed in greater detail in Chapter 7. The sharing of digital files is proving to be one of the biggest challenges for copyright law, particularly in respect of liability for authorising infringement by website operators and peer-to-peer technology makers who allegedly facilitate unauthorised file sharing. See Copyright Act 1968 (Cth) ss 39B and 112E. The Australia–US Free Trade Agreement provided for further amendments to this area. See Copyright Act 1968 (Cth) Part V Division 2AA (Limitation on remedies available against carriage service providers) (ss 116AA – 116AI). These “safe harbour” provisions, which came into force 1 January 2005, apply to “carriage service providers” as defined in the Telecommunications Act 1997 (Cth) s 87. Comparable provisions overseas are drafted more broadly to include “online service providers”, which may include others who also facilitate online communications, such as libraries, educational institutions or search engine providers.

DEFENCES AND EXCEPTIONS TO INFRINGEMENT Restrictions on the exercise of rights: defences and remedies for infringement [6.330] There are a number of provisions allowing the free or paid use of copyright materials.

These include fair dealing, educational uses, uses by libraries and archives, judicial proceedings, and various uses related to public performance and display of works. See De Garis v Neville Jeffress Pidler Pty Ltd (1990) 18 IPR 292, and the factors in the Copyright Act 1968 (Cth) s 40(2) that need to be considered when determining whether a use for research or study is fair: (a) the purpose and character of the dealing; (b) the nature of the work or adaptation; (c) the possibility of obtaining the work or adaptation within a reasonable time at an ordinary commercial price; (d) the effect of the dealing upon the potential market for, or value of, the work or adaptation; (e) in the case where part only of the work or adaptation is copied: the amount and substantiality of the part copied in relation to the whole work or adaptation. 258 [6.320]

Copyright Infringement, Defences and Remedies

CHAPTER 6

There is an overriding requirement for the dealing be “fair”. According to Lord Denning in Hubbard v Vosper [1972] 1 All ER 1023 at 1028, the meaning of “fair” is “a question of degree”: You must consider first the number and extent of the quotations and extracts. Are they altogether too many and too long to be fair? Then, you must consider the use made of them. If they are used as a basis for comment, criticism or review, that may be fair dealing. If they are used to convey the same information as the author, for a rival purpose, that may be unfair. Next, you must consider the proportions. To take long extracts and attach short comments may be unfair. But, short extracts and long comments may be fair.

Under the Copyright Act 1968 (Cth) ss 41 – 42 there must still be “sufficient acknowledgement” of the work. This is defined in s 10(1) to mean “an acknowledgement identifying the work by its title or other description and, unless the work is anonymous or pseudonymous, or the author has previously agreed or directed that an acknowledgement of his name is not to be made, also identifying the author”. Currently, a non-statutory defence of “public interest” also appears to exist, which entitles a person to publish copyright material where it is in the “public interest” to do so. There are doubts about whether such a defence is desirable in principle, and perhaps whether it even exists in Australia. The defence was, however, held to exist in Commonwealth v John Fairfax Pty Ltd (1980) 32 ALR 485. It was held that, in Australia, the defence was confined “to allowing the publication of material so as to protect the community from destruction, damage or harm”. Mason J said that “[i]t has been acknowledged that the defence applies to all disclosures of things done in breach of national security, in breach of all law (including fraud) and to disclosure of matters which involve danger to the public”. See A-One Accessory Imports Pty Ltd v Off Road Imports Pty Ltd (No 2) (1996) 34 IPR 332. See also Attorney-General v Guardian Newspapers Ltd (No 2) (English Spycatcher Case) [1988] 3 All ER 545 and Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (Australian Spycatcher Case) (1988) 10 IPR 385.

Fair dealing and other non-infringing use [6.340] Copyright is usually discussed in terms of balancing owner and user interests. This is

borne out in the “fair dealing” infringement exception provisions, which indicate particular social interests that are awarded preferential treatment in copyright: for example, research and study, criticism and review, and reporting news. The fair dealing exceptions are contained in the Copyright Act 1968 (Cth) Part III ss 40 – 43 (in respect of original literary, dramatic, musical and other artistic works) and Part IV ss 103A – 103C and 104 – 104AL (in respect of subject matter other than works, such as recordings, films and broadcasts). The Part III provisions are mirrored in the Part IV provisions. A person can make use of copyright material under fair dealing provisions, without the owner’s permission, for any of the following purposes: • research or study; • criticism or review; • parody or satire; or • reporting news. [6.340]

259

Intellectual Property: Commentary and Materials

In addition to the fair dealing provisions, a person can also use copyright material without infringing for the purposes of: • judicial proceeding or reporting a judicial proceeding; • legal professional advice; • temporary reproductions in the course of communication or as part of a technical process of use; • reproduction for private use; • inclusion of works in collections for use by education institutions; • reproduction of approved labels for containers for chemical products; and • importing non-infringing articles or material. In this context, “dealing” with copyright material means using the material in any of the ways reserved to the copyright owner. Whether a person’s use of copyright material is “fair” depends on the circumstances of the case. Courts will look both at whether an objective viewer would consider that the person is genuinely using the material for one of the purposes set out in the Copyright Act 1968 (Cth), and whether their use of it is fair in that context. Factors that may be taken into account in working out whether a use is “fair” include whether the person is using the material for commercial purposes, and whether the copyright owner may suffer loss from the use (eg, copying a whole book rather than purchasing a copy if the work is available for sale). In general, a person or organisation can only rely on a fair dealing defence when the use of the copyright material is direct and personal. For example, it would not be regarded as a fair dealing for criticism or review to reproduce a collection of photographs and invite other people to critique the photographs. Rather, the persons making the reproduction must themselves be making the criticism or review. Research and study [6.350] As a result of special provisions in the Copyright Act 1968 ss 40 and 103C, the use of copyright material for research or study does not infringe copyright provided the use is “fair”. Whether or not the use is fair will depend on all the circumstances. The Act states that if less than a specified amount of a copyright item is used for research or study, the use is deemed to be fair. If the amount used exceeds this limit, the Act sets out a number of factors to be taken into account to work out whether the use of the material is “fair”. With regard to research or study, s 40(5) of the Act sets out limits for what is deemed fair use of the following two types of material, namely:

• a “reasonable portion” of text or notated music – if reproducing 10 or more pages of text or printed music from a hard copy edition, the Act deems that it is fair to copy 10% of the number of pages or one chapter, if the work is divided into chapters. For text material published in electronic form, it is fair to copy 10% of the number of words or one chapter, if the work is divided into chapters; • an article from a periodical publication – it is fair to reproduce an article from a periodical publication (eg, a newspaper, magazine or journal) or more than one article if each article is for the same research or course of study. 260 [6.350]

Copyright Infringement, Defences and Remedies

CHAPTER 6

For other works (s 40(2)), such as drawings, photographs, unpublished material etc, or audio-visual items (s 103C(2)), the Act does not state how much may be used without permission. However, it does set out some factors to be considered in respect of fair use: • purpose and character of the dealing (eg, copying in connection with a course is more likely to be fair than copying for research, which may be used commercially); • nature of the work (eg, it may be less fair to copy a work resulting from a high degree of skill than a mundane work); • possibility of obtaining the work within a reasonable time at an ordinary commercial price (generally, it is unlikely to be fair to photocopy all or most of a work that can be bought); • effect of the dealing on the potential market for, or value of, the work (making a copy is unlikely to be fair if the publisher sells or licenses copies; eg, from its website); and • where part only of the work is copied, the amount and substantiality of the part copied in relation to the whole work (it is less fair to copy a large or important part of the work than to copy a small or unimportant part). It is likely that a court would also refer to these types of factors with regard to other dealings with copyright material that are not reproductions.

Copyright Act 1986 (Cth) [6.360] Copyright Act 1968 (Cth) s 40(3) – (7) 40 Fair dealing for purpose of research or study … (3)

Despite subsection (2), a reproduction, for the purpose of research or study, of all or part of a literary, dramatic or musical work, or of an adaptation of such a work, contained in an article in a periodical publication is taken to be a fair dealing with the work or adaptation for the purpose of research or study.

(4)

Subsection (3) does not apply if another article in the publication is also reproduced for the purpose of different research or a different course of study.

(5)

Despite subsection (2), a reproduction, for the purpose of research or study, of not more than a reasonable portion of a work or adaptation that is described in an item of the table and is not contained in an article in a periodical publication is taken to be a fair dealing with the work or adaptation for the purpose of research or study. For this purpose, reasonable portion means the amount described in the item.

Works, adaptations and reasonable portions Item Work or adaptation 1

A literary, dramatic or musical work (except a computer program), or an adaptation of such a work, that is contained in a published edition of at least 10 pages

Amount that is reasonable portion (a) 10% of the number of pages in the edition; or (b) if the work or adaptation is divided into chapters – a single chapter

[6.360]

261

Intellectual Property: Commentary and Materials

Copyright Act 1986 (Cth) cont. Works, adaptations and reasonable portions Item Work or adaptation 2

A published literary work in electronic form (except a computer program or an electronic compilation, such as a database), a published dramatic work in electronic form or an adaptation published in electronic form of such a literary or dramatic work

Amount that is reasonable portion (a) 10% of the number of words in the work or adaptation; or (b) if – the work or adaptation is divided into chapters – a single chapter

(6)

Subsection (5) applies to a reproduction of a work or adaptation described in both items of the table in that subsection even if the amount of the work or adaptation reproduced is not more than a reasonable portion (as defined in that subsection) on the basis of only one of those items.

(7)

If: (a)

a person makes a reproduction of a part of a published literary or dramatic work or published adaptation of a literary or dramatic work; and

(b)

the reproduction is of not more than a reasonable portion (as defined in subsection (5)) of the work or adaptation; subsection (5) does not apply in relation to any subsequent reproduction made by the person of any other part of the same work or adaptation.

Criticism and review [6.370] Copyright material can be used for the purpose of criticism or review without

infringing copyright, provided the author and title of the work is acknowledged, and provided the dealing is “fair”. See the Copyright Act 1968 (Cth) ss 41 and 103A. The criticism or review may relate to the work being used or to other material. For example, television film reviewers, in making a criticism or review, may show clips from other films as well as the one they are reviewing. The courts have stated that “criticism and review” involves making a judgment of the material concerned, or of the underlying ideas. Criticism and review may be strongly expressed, and humorous, and need not be balanced. The defence can apply where the criticism or review takes place in a commercial context, such as in published books or newspapers or on commercial television. However, the courts have emphasised that the purpose of criticism or review must be genuine. If the use of the material is driven by other motives – especially if these motives involve using the material to make a profit, or using a competitor’s material to divert customers from the competitor – the fact that a form of criticism or review has also been used is not sufficient to prevent the use from infringing copyright. See De Garis v Neville Jeffress Pidler Pty Ltd (1990) 18 IPR 292 and TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (2001) 50 IPR 335. The following extract is from Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 in the High Court of Australia. 262 [6.370]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Commonwealth v John Fairfax & Sons [6.380] Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 High Court of Australia MASON J: [44] … This is a motion to continue ex parte injunctions which I granted at about 12.45 am on Saturday, 8 November 1980, restraining the defendants from publishing (a) a book entitled Documents on Australian Defence and Foreign Policy 1968-1975 or the contents thereof or excerpts or extracts therefrom; and (b) documents entitled The Strategic Basis of Australian Defence Policy written by the Department of Defence in 1968 and The Regional Outlook in Southeast Asia produced by the Department of Foreign Affairs in 1975 or the contents of either of them or any excerpts or extracts therefrom. … [46] … As its title suggests, the book sets out a large number of government documents. The book does not contain technical information of military significance; it does not deal with weaponry, armaments, military technology, logistical information or dispositions of forces. It is not affected by the “D” Notice procedures. Even the two documents referred to in the ex parte injunction contain no material of value to a hostile power. The appreciations made of Australia’s strategic situation and of the outlook in Southeast Asia are based on information which is generally known. The judgments made are fairly elementary and they are now quite out of date. The official documents contain comments on leaders and representatives of foreign countries to which I shall refer later. The book also contains general information taken from official documents relating to intelligence services. … The plaintiff’s case is that it is the owner of the copyright in most of the documents in the book, that they are classified documents which contain confidential information the disclosure of which will in a number of instances prejudice Australia’s relations with other countries, especially Indonesia, and that it has not authorised or consented to publication. The plaintiff also claims that publication will involve the commission [49] of an offence against s 79 of the Crimes Act 1914 (Cth). The defendants do not dispute that the plaintiff has copyright in most of the documents; nor do they allege that the plaintiff has consented to publication. They do, however, contest the view that the documents contain confidential information and that disclosure will be prejudicial to the national interest. They also contend that there is no point in preventing further disclosure when limited publication has taken place and the book has fallen into the hands of those foreign countries which are most likely to react adversely to its contents. They rely on the answer given by Mr Henderson, the Secretary of the Department of Foreign Affairs, that “It is much more likely to facilitate our future relations if the government has been seen to try its utmost to prevent that [disclosure] happening”. The suggestion is that the plaintiff is maintaining the proceeding merely to demonstrate its bona fides to foreign governments. … The plaintiff is the owner of the copyright in those documents which have been brought into existence by the relevant departments and by public servants. Publication of the three instalments by the defendant will infringe the plaintiff’s copyright unless the defendants can establish defences under ss 41 and 42 of the Copyright Act 1968 (Cth), as amended, or the so-called common law defence of “public interest” … [54] To bring themselves within s 41 the defendants must show that what they proposed to publish is “a fair dealing” with the plaintiff’s documents “for the purpose of criticism or review” and that “a sufficient acknowledgment of the work” was made. It has been suggested that s 41 does not provide a defence in the case of unpublished literary works, as distinct from unpublished dramatic or musical work, on the ground that criticism or review of an unpublished literary work could never amount to “a fair dealing”: Copinger and Skone James on Copyright (11th ed, 1971), para 463. This suggestion is based on the remarks of Romer J in British Oxygen Co Ltd v Liquid Air Ltd [1925] Ch 383 at 393, where [6.380]

263

Intellectual Property: Commentary and Materials

Commonwealth v John Fairfax & Sons cont. his Lordship said that it would be unfair that an unpublished literary work should, without the consent of the author, be the subject of public criticism or review. In Hubbard v Vosper [1972] 2 QB 84 at 94-95 Lord Denning MR qualified these remarks by observing that a literary work not published to the world at large might be circulated to such a wide circle, for example, a circular sent by a company to its shareholders, as to make it “a fair dealing” to criticise or review it. With this qualification I agree. To my mind the absence of consent, express or implied, or such circulation by the author of an unpublished literary work as to justify criticism or review is ordinarily at least an important factor in deciding whether there has been “a fair dealing” under s 41. There has been no such consent or conduct on the part of the plaintiff here. As I have said, the defendants knew on the Friday evening that the plaintiff objected to any publication at all and knew or ought to have known that the documents had been “leaked” without the plaintiff’s authority. There is a difficulty in saying that a publication of leaked documents, which could not without the leak have been published at all, is “a fair dealing” with unpublished works in the circumstances to which I have referred: see Beloff v Pressdram Ltd [1973] 1 All ER 241 at 264. However, there is another possible approach to the concept of “fair dealing” as applied to copyright in government documents, an approach which was not spelled out in argument by the defendants. It is to say that a dealing with unpublished works which would be unfair as against an author who is a private individual may nevertheless be considered fair as against a government merely because that dealing promotes public knowledge and public discussion of government action. This would be to adopt a new approach to the construction of ss 41 and 42 and it would not be appropriate for me on an interlocutory application to proceed on the footing that it is a construction that will ultimately prevail. Situations such as the present case would scarcely have been within the contemplation of the draftsman when the two sections and their ancestors were introduced. There is another obstacle in the way of a s 41 defence. The presentation to readers which the newspapers planned to publish was a presentation of hitherto unpublished documents from the secret files of the government. The attraction offered to the [56] reader was that, by courtesy of the newspapers, he was able to read for the first time documents which were so important that the government had maintained a secrecy blackout on them. The accompanying comment, which was significant only in the case of the first instalment, appears to have been designed to place the documents in their appropriate setting, to enable them to be understood and to highlight the more dramatic features. To speak of the publication of the three instalments as having been undertaken for the purpose of criticism or review is to add a new dimension to criticism and review. If there was criticism or review of the documents by the newspapers it was merely a veneer, setting off what is essentially a publication of the plaintiff’s documents. The defendants did not propose to make any reference at all to the question raised on pp 2 and 3 of the Introduction to the book. I put to one side the plaintiff’s objection that there was not a “sufficient acknowledgment” of the work as defined by s 10. Certainly there was no express acknowledgment of the Commonwealth’s copyright in the documents. There was an acknowledgment of the copyright of Messrs Walsh and Munster in the book which was the only acknowledgment of copyright which the defendants published or proposed to publish. But the defendants identified the documents as government documents and described them. In reality the plaintiff’s complaint is that there has been an excessive acknowledgment of the work. Similar problems surround the defendants’ endeavour to mount a defence under s 42. The defendants seek to show that there has been “a fair dealing” with a literary work “for the purpose of, or … associated with, the reporting of news in a newspaper … and a sufficient acknowledgment of the 264 [6.380]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Commonwealth v John Fairfax & Sons cont. work is made”. The arguments advanced scarcely went beyond a bold assertion, and an equally stern denial, that what the defendants proposed to publish was “for the purpose of … the reporting of news”. I am inclined to allow that “news”, despite its context of “the reporting of news” “in a newspaper, magazine or similar periodical” is not restricted to “current events”. Even so, the concept of “a fair dealing” with a literary work in the circumstances mentioned in s 42(1)(a) again presents a difficulty for the defendants. As things presently stand, it will not be easy for the defendants to bring their use of the plaintiff’s documents, particularly in the two unpublished instalments, within the subsection. I refer to the East Timor cables and the “profiles”. It has been accepted that the so-called common law defence of public interest applies to disclosure of confidential information. [57] Although copyright is regulated by statute, public interest may also be a defence to infringement of copyright. Lord Denning MR considered that it is: see Fraser v Evans [1969] 1 QB 349 at 362-363, as did Ungoed-Thomas J in Beloff v Pressdram Ltd at 260; cf Hubbard v Vosper at 96-97. Assuming the defence to be available in copyright cases, it is limited in scope. It makes legitimate the publication of confidential information or material in which copyright subsists so as to protect the community from destruction, damage or harm. It has been acknowledged that the defence applies to disclosures of things done in breach of national security, in breach of the law (including fraud) and to disclosure of matters which involve danger to the public. So far there is no recorded instance of the defence having been raised in a case such as this where the suggestion is that the advice given by Australia’s public servants, particularly its diplomats, should be ventilated, with a view to exposing what is alleged to have been the cynical pursuit of expedient goals, especially in relation to East Timor. To apply the defence to such a situation would break new ground. Action remitted to Supreme Court of New South Wales.

Parody and satire [6.390] The terms “parody” and “satire” are not defined in the Copyright Act 1968 (Cth),

and have yet to be considered at length by Australian courts, having been introduced as defences in their own right in the Copyright Amendment Act 2006 (Cth). It is likely that a court would look closely at dictionary definitions. The Macquarie Dictionary defines “parody” as: 1. a humorous or satirical imitation of a serious piece of literature or writing. 2. the kind of literary composition represented by such imitations. 3. a burlesque imitation of a musical composition. 4. a poor imitation; a travesty.

(The dictionary defines “burlesque” (when used as an adjective) as “involving ludicrous or debasing treatment of a serious subject”.) “Satire” is defined as: 1. the use of irony, sarcasm, ridicule, etc in exposing, denouncing, or deriding vice, folly etc. 2. a literary composition, in verse or prose, in which vices, abuses, follies etc are held up to scorn, derision, or ridicule. 3. the species of literature constituted by such composition.

A parody is an imitation of a work, and may include parts of the original. In some cases, a parody may not be effective unless parts of the original are included. It seems that the purpose of a true parody is to make some comment on the imitated work or on its creator. The purpose of satire, on the other hand, is to draw attention to characteristics or actions – such as vice or folly – by using certain forms of expression – such as irony, sarcasm and [6.390]

265

Intellectual Property: Commentary and Materials

ridicule. It seems that both elements are required: the object to which attention is drawn (vice, folly etc) and the manner in which it is done (irony, ridicule etc). It is not clear, for example, that a work which uses irony or ridicule about something other than vice, folly or the like would be satire. Under the Copyright Act 1968 (Cth) ss 41A and 103AA, the provisions do not directly affect a creator’s right to take legal action if his or her work is treated in a derogatory way. However, the use of a copyright work for parody may be defensible as “reasonable” under the moral rights provisions. It is not so clear that use of a copyright work for satirical purposes would be as likely to be “reasonable” in all the circumstances. This is because, unlike parody, the object of satire is generally not the copyright material itself or its creator(s). The copyright material used may enhance a work that has a satirical purpose, but is unlikely to be necessary for that purpose. The use of copyright material for parody or satire must be “fair”. It is unclear how courts will assess “fairness” when it comes to this new exception. However, factors such as the following could be relevant: • how much of the copyright material is used; • the context in which the parody or satire is used; and • whether or not the copyright owner generally licenses such uses. Conti J at first instance in TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (2001) 50 IPR 335, considered the nature of both satire and parody but within the context of whether they might come within the bounds of criticism and review. However, it should be noted that his consideration, in 2005 predates their introduction into Copyright Amendment Act 2006 (Cth).

TCN Channel Nine v Network Ten [6.400] TCN Channel Nine v Network Ten (2001) 50 IPR 335 Federal Court of Australia CONTI J: [17] It is appropriate that I should interpolate at this point to say something about the words “parody” and “burlesque”, and what I consider to be their distinctiveness of meaning from the word “satire”, and I do so in the particular context of my discussion of authorities in [16] above. The Macquarie Dictionary definitions of the three notions indicate that the essence of parody is imitation, consistently with the observation made in AGL as above extracted, and that burlesque is in the nature of vulgarising parody by way, for instance, of a vulgarising or debasing caricature, whereas satire is described as being a form of ironic, sarcastic, scornful, derisive or ridiculing criticism of vice, folly or abuses, but not by way of an imitation or take-off. Nevertheless that Dictionary’s attribution of “... satirical imitation” has caused me to research further into the true or essential meaning of satire. In the work of a highly respected Australian academic, Professor Margaret Rose, published by the Cambridge University Press in 1993 and titled Parody: Ancient, Modern, and Post Modern, the author distinguishes between both the Aristotle originated word parody, and the conceptually similar Italian originated word burlesque, on the one hand, and the Latin originated word satire on the other hand. Such distinction referrable essentially to imitation, though sometimes blurred at the edges by every day usage, assists an understanding as why parody (and burlesque) will not avoid copyright infringement, since imitation is in the nature of copying, in contrast to satire which involves the drawing of a distinction between the satirist and the author, composer etc. The distinction is of importance for the purposes of this litigation, to the extent that Ten may rightly be said to have used Nine footage for mainly satirical purposes or purposes similarly to satire, and to have done so in way that made it obvious that what has been taken originated from Nine and not from Ten. I observe incidentally that 266 [6.400]

Copyright Infringement, Defences and Remedies

CHAPTER 6

TCN Channel Nine v Network Ten cont. Copinger, supra at paras 7-34 and 7.44 use parody and burlesque implicitly as carrying similar connotations, though at para 9.18, the authors include “satire” in the heading “Parody, burlesque and satire”, though without explicitly discussing satire otherwise than in note 92 thereto, where the following distinction is made, in my opinion correctly: In some cases a distinction has been drawn between cases where a work itself is parodied and cases of satire, where part of a work is used to provide a critique of individuals or institutions or society in general. And after listing those cases, the authors proceed as follows: The broad definition of criticism which has been adopted in the United Kingdom which allows the reviewer to look “behind” a work...would seem to make it more likely that some cases of satire would also fall within the fair dealing defence. Such para 9.18 of Copinger does however refer to parody as possibly relevant to fair dealing for purposes of criticism and review, which of course involves different considerations to those of substantiality. [and later …] [63] Nine then submitted that not only is parody unavailable as a defence to infringement of copyright, but further that “The fair dealing defences are relevantly available only for the purposes of criticism or review or the reporting of news”, the implication being that criticism or review will be disqualified if made in a parodying manner. Nine referred me in the context of that submission to Compagnie Generale Des Establissements Michelin-Michelin & Cie v National Automobile Aerospace Transportation and General Workers Union of Canada (Federal Court of Canada, unreported, 19 December 1996 - Teitelbaum J) where the following appears at page 19 thereof: Under the Copyright Act, criticism is not synonymous with parody. Criticism requires analysis and judgment of a work that sheds light on the original. Parody is defined in the Collins dictionary (2nd ed) as “a musical, literary or other composition that mimics the style of another composer, author etc in a humorous and satirical way”... In the Canadian and Commonwealth courts, parody has never been held to figure as criticism although the term criticism is not confined to “literary criticism”... . The Defendants fall short because American case law permitting parody as criticism under the American doctrine of “fair use” is not applicable nor terribly persuasive in the Canadian context of a different legal regime and a longstanding trend to deny parody as an exception. (p 16-17) It is not enough that because it is a parody, there is no need to mention the source. Now the Defendants would have the Court rule that by the mere fact of the parody label, the Defendants are permitted to forego treating the Plaintiff’s copyright in a fair manner, a requirements for all the existing exceptions like criticism, review and summary. To accept the Defendants’ submissions on parody would be akin to making the parody label the last refuge of the scoundrel since the Court would have to do away with two of the usual structures of Section 27(2)(a.1): mentioning the source and fair treatment. The term “fair dealing” is not defined in the Copyright Act but I accept the Plaintiff’s submission that the overall use of the copyright must be “fair” or treat the copyright in a good faith manner. The Collins Dictionary defines “fair” as “free from discrimination, dishonesty, etc. just; impartial”. The two secondary elements of mentioning the source and fair treatment are linked since the requirement that the critic mention the source and author’s name is in some ways a testament to fair treatment. Whether the treatment of the original is in good faith is a question of degree and impression looking to the quality and quantity of the original work used: see Hubbard v Vosper [1972] 1 Q.B. 84 (C.A.). Once again, as was the case in determining whether there has been reproduction of a substantial part, it is question of impression. However one important word in the above passage is “mimics”, which is akin to imitate, and I would refer again to the distinction between parody (and burlesque) on the one hand, and satire on the other, parody and burlesque involving imitation and thus copying (see again [16-17] above). An [6.400]

267

Intellectual Property: Commentary and Materials

TCN Channel Nine v Network Ten cont. obvious characteristic of Ten’s use of Nine’s footage has been clearly to fully identify the same mainly for purposes of satire, light entertainment etc, and not for the purpose of copying by way of imitation, and thus dissembling copyright material as its own. In looking at whether a person’s use of copyright material comes within the exceptions of fair dealing for reporting news, there needs to be more than simply a connection with a newsworthy topic. The crucial element in determining whether the exceptions apply seems to be whether the primary purpose is to report or comment on news. See De Garis v Neville Jeffress Pidler Pty Ltd (1990) 95 ALR 625, which was examined in TCN Channel Nine v Network Ten (2001) 50 IPR 335 (see [6.400] above). Although reporting news may involve the use of humour, where the purpose of using the material is primarily to entertain, the presence of newsworthy issues is not sufficient to make the use a fair dealing news reporting provisions. This principle was again examined in Nine Network Australia Pty Ltd v Australian Broadcasting Corporation (1999) 48 IPR 333.

Nine Network Australia v ABC [6.420] Nine Network Australia Pty Ltd v Australian Broadcasting Corporation (1999) 48 IPR 333 Federal Court of Australia [See [4.210] for the facts of the case.] HILL J: … [339] … The proposed defences of Channel Two if copyright subsists By its defence filed in court Channel Two relies on ss 65 and 67 and s 42 of the Copyright Act 1968. These sections provide a more likely defence for Channel Two than [340] the other one to which I have already referred. I shall deal first with s 42. That section provides relevantly in subpara (1): A fair dealing with a literary, dramatic, musical or artistic work or with an adaptation … does not constitute an infringement of the copyright in the work if … (b) it is for the purpose of, or is associated with, the reporting of news by means of broadcasting or in a cinematograph film. Two issues arise if s 42 is to be relied upon by Channel Two. First is the question whether the extent of its coverage could be said to be in the context of the section a fair dealing of any work in which copyright subsists, and second whether what it proposes to show can be said to be for the purpose of or associated with the reporting of news by means of broadcasting. In my view there is a strong argument that what Channel Two proposes to do falls within s 42 although there are questions of degree involved. No doubt the whole event is newsworthy, so much was conceded by Channel Nine. The question is whether the showing of this newsworthy event in the course of a program designed to cover New Year’s Eve celebrations around the world in many cities and countries can be said to be news or at least that part of it which deals with the coverage of what happens on Sydney Harbour. A suggestion was made arising from cross-examination of a witness from Channel Two that because HG Nelson and Roy Slaven (to use their stage names) will be anchors of the ABC coverage but with Mr George Negus as well meant that hyperbole and humour would reign and impliedly negate any possibility of the program being treated as news. I should say that the evidence did not suggest that these two gentlemen were required to treat their anchoring role in quite that way although perhaps given their particular style it might well be the case. For my part I find the distinction between news and entertainment a very difficult one. It is not one I think which can be resolved by looking at the dictionary definition of the word. In some ways it may 268 [6.420]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Nine Network Australia v ABC cont. well be as difficult as the issue that has dominated the news press over the last few months of some suggestion of difference between commentary and infotainment or entertainment. In my view the fact that humour is used does not necessarily negate the fact that what is being broadcast may be news. Hopefully the fact that news coverage is interesting or even to some entertaining likewise does not negate the fact that it could be news. As I have already said the celebrations of the City of Sydney this New Year’s Eve are of both national and international significance. The reporting and showing of a part of them on TV by Channel Two as national broadcaster could well fall within s 42. One difficulty of course in deciding this at the present stage lies in not really knowing the extent of the coverage or indeed what actually will happen apart from the confidential schedule to which I have referred. It suffices merely to say at the moment that the argument of Channel Two on this point is not a weak one. Defences based on ss 65 and 67 of the Copyright Act 1968, again involve issues that may be of substance depending ultimately on what happens. Those sections provide relevantly– s 65 which bears the heading “Sculptures, and certain other works in public places”: (1) The section applies to sculptures and to works of artistic craftsmanship of the kind referred to in paragraph (c) of the definition of artistic work in section 10. [341] (2) The copyright in a work to which this section applies that is situated … in a public place … is not infringed by the making of a … photograph of the work or by the inclusion of the work in a cinematographic film or in a television broadcast. Section 66 is concerned with buildings or models of buildings and I have some difficulty in seeing any building necessarily involved, though perhaps it is said that the structures erected on the Sydney Harbour Bridge could be a building. Section 67 provides without prejudice to the last two preceding sections, that copyright in an artistic work is not infringed by the inclusion of the work in a cinematographic film or in a television broadcast if its inclusion in the film or broadcast is only incidental to the principal matters represented in the film or broadcast. As I have already indicated some of the so called works are capable of being referred to as works of artistic craftsmanship to which s 65 could apply if they are included in a television broadcast. Section 67 has more difficulties factually because of the requirement that the inclusion in the broadcast be only incidental to the principal matters represented in the broadcast. As I have said there are matters of degree involved in this which clearly at the moment could not be resolved. However, these sections demonstrate I suppose that it does not follow that the filming or inclusion of the filming in a television broadcast is necessarily an infringement. It may or may not be depending on whether the defences in those sections can be ultimately availed of … Balance of convenience There is also in my view in this case a public interest. True it is not as strong as it would have been had Channel Nine maintained its position that it could stop Channel Two filming and providing to overseas countries, footage of what might show much to the world Australia’s ability to celebrate an important occasion and indeed promote the country. However, the public interest is there in ensuring that the nation’s public broadcaster be able to show segments of the celebration to those who choose to watch it. As I have said it has made a financial commitment which in real terms is not recouped merely by providing film for showing by others around the world leaving Australian screens blank. For Channel Nine it is submitted that good will with sponsors will be lost and that this is not compensable by way of damages. I accept that there can be difficulties in proving loss of good will. Such difficulties arise in many cases but there is no reason why such a loss cannot be proved at least [6.420]

269

Intellectual Property: Commentary and Materials

Nine Network Australia v ABC cont. sufficiently to demonstrate damage which is capable of being compensated. It is commonplace that proof of damages is controversial and Judges regularly have to do the best they can in trying to assess damages that are suffered if any are. That does not mean to say that in such a case injunctive relief should be not granted nor does it mean that injunctive relief should be refused just because of difficulties with proving damage. It is necessary to weigh up all relevant factors in coming to that conclusion. It is further submitted on behalf of Channel Nine that it has a strong prima facie case. If that is true of course it is relevant to the question of balance of convenience. As the above discussion indicates I think that the case of Channel Nine ranges from strong to weak depending upon which particular copyright is said to be infringed. It is also true I think that to some extent again depending on the facts that Channel Two may have a strong defence to any infringement claim. These matters do not persuade me that the balance of convenience favours Channel Nine particularly as injunctive relief could frustrate as well the preparations which Channel Two has put in place for its broadcast at some expense. Discretionary matters Finally there is the question of whether I should take into account the delay of Channel Nine in commencing the proceedings. It was I think at the end [343] conceded by Senior Counsel for Channel Nine that the ultimate action could be brought for infringement of copyright in works not yet completed, subject of course to the facts of a particular case. However I think that there has been delay in the present case and that it is a factor that I should take into account particularly where the issues in the present case both as to infringement and balance of convenience are quite difficult. The fact is that the drawings and the so-called script, whether or not the subject of any adjustment which occurs thereafter and may continue to occur before New Year, were all in existence by August of this year. That Channel Two intended to broadcast was a fact well known to Channel Nine yet no action was taken until just a couple of weeks before Christmas Day. The only explanation for the delay that is given through counsel is the suggestion that there may be a difficulty of copyright not yet being in existence. A suggestion made by counsel for Channel Nine that Channel Nine thought Channel Two would film for the international consortium but not broadcast the program in Australia was to say the least, fanciful. It is for these reasons that I propose to refuse interim injunctive relief. I am fortified also by the fact that framing an injunction so as to ensure that Channel Two has the advantage of s 42 of the Copyright Act presents difficulties. To issue an injunction restraining in terms conduct other than that which falls within s 42 would lead the respondent to that injunction liable to a charge of contempt of court if it gets wrong its interpretation of s 42, a section which appears to have had very little judicial attention and on which it seeks to rely for its defence against infringement.

Fairfax Media Publications v Reed International Books Australia [6.430] Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd (2010) 88 IPR 11 Federal Court of Australia [See also [4.130] for further extracts from this case.] BENNETT J: … [42] … Defence of fair dealing 130. As I have found that Reed’s conduct does not involve the reproduction and communication of a substantial part of any literary work in which copyright is owned by Fairfax, it is not necessary to 270 [6.430]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Fairfax Media Publications v Reed International Books Australia cont. decide whether Reed is entitled to rely on the defence in s 42 of the Act for fair dealing for the reporting of news. However, I will deal with this defence briefly. 131. Section 42 of the Act relevantly provides that: (1) A fair dealing with a literary, dramatic, musical or artistic work, or with an adaptation of a literary, dramatic or musical work, does not constitute an infringement of the copyright in the work if: (a) it is for the purpose of, or is associated with, the reporting of news in a newspaper, magazine or similar periodical and a sufficient acknowledgement of the work is made; or (b) it is for the purpose of, or is associated with, the reporting of news by means of a communication or in a cinematograph film. 132. Reed relies primarily on s 42(1)(b) in that its provision of the ABIX service involves a “communication” within the meaning of the Act, although it also submits that the ABIX service may be viewed as a “similar periodical” to a newspaper or magazine within s 42(1)(a). Fairfax disputes that Reed’s conduct is: 1.

“fair dealing”; or

2. “for the purpose of, or is associated with, the reporting of news”. Reporting of news 133. In De Garis v Neville Jeffress Pider (1990) 37 FCR 99 at 109, Beaumont J considered that the “reporting of news” in s 42(1) is intended to comprehend the following matters in the definition of “news” from the Macquarie Dictionary: 1. A report of any recent event, situation [43] 2. The report of events published in a newspaper, journal, radio, television, or any other medium 3. Information, events considered as suitable for reporting 4. Information not previously known 134. I consider that Reed’s reproduction of AFR headlines in the provision of the ABIX service is for the purpose of, or is associated with, the reporting of news. The Abstracts provided to subscribers of the ABIX service are, in effect, news summaries. The evidence is that the ABIX service is updated on a daily basis with abstracts of news articles which are published in a wide range of publications. Articles are selected for abstraction according, in part, to their character as news and Reed typically does not abstract certain parts of the AFR, such as the back page, letters to the editor and financial charts, primarily because they are less likely to contain news. The abstracts in the ABIX service identify the source news publication for each news article abstracted. 135. Fairfax points out that Reed provides to its subscribers an online database containing a vast number of abstracts, not only of the current day’s articles but also abstracts of articles published historically, going back some years. Fairfax submits that, so far as the database is concerned, Reed is not reporting anything but rather giving its subscribers access to a library of information through which they can search, on a commercial basis. Fairfax points to the evidence that, in the past, the ABIX service consisted of the provision of a hard copy index or digest of headlines taken from publications, provided on a monthly basis and without summaries or other content. This demonstrates, Fairfax submits, that there was no purpose of reporting news or any activity associated with the reporting of news. Fairfax says that Reed’s purpose remains the same, even if the technology has recently allowed the service to be provided more frequently and in different forms. 136. The authorities are clear that the reporting of news can go beyond a report of events which are current (Commonwealth v John Fairfax & Sons Ltd [1980] HCA 44; (1980) 147 CLR 39 at 56 per Mason J; [6.430]

271

Intellectual Property: Commentary and Materials

Fairfax Media Publications v Reed International Books Australia cont. De Garis at 107; TCN Channel Nine v Network Ten [2001] FCA 108; (2001) 108 FCR 235 at [66] per Conti J). In any event, the ABIX service provides subscribers, on a daily basis, with abstracts of news articles which are published in daily news publications. The fact that subscribers can access historical abstracts on the ABIX database does not mean that the ABIX service is not for the purpose of reporting news. In my view, Fairfax’s description of the ABIX service as “an entire history of material” does not alter the nature, effect and content of the Abstracts. Whether or not subscribers may choose to utilise the Reed database to search for information does not preclude the purpose of the Abstracts, which is the reporting of news by means of a communication, being an online communication. People may also utilise back issues of the AFR or other newspapers to search for information. That may be done using hard copies or an online service. Further, Fairfax’s submission that the ABIX service competes commercially with the AFR and that Abstracts in the ABIX service are provided as a “substitute” for the AFR supports the proposition that the Abstracts in the ABIX service are, like the AFR, for the purpose of reporting news. 137. While Reed does not rely on s 42(1)(a), I do not accept Fairfax’s submission that the ABIX service is not a “similar periodical” for the purposes of s 42(1)(a). The format is not determinative. The fact that the statute does not limit [44] the reporting of news to reporting in a newspaper recognises that such reporting can be in other forms. The ABIX service reports news daily. Its format is, in part, governed by the means of its delivery. It is, in my view, a periodical similar to a newspaper or magazine. In the context of the citation of the author of the article abstracted and the absence of information in the AFR of the author of the headline, I am satisfied that sufficient acknowledgement was made. Finally, I do not consider that the way the ABIX service was provided in the past necessarily means that it was not for the reporting of news or determines whether the ABIX service as currently provided involves the reporting of news. Fair dealing 138. In TCN Channel Nine at [66], Conti J formulated principles from the authorities involving the defence of fair dealing, which include: • Fair dealing involves questions of degree and impression; it is to be judged by the criterion of a fair minded and honest person and is an abstract concept. • Fairness is to be judged objectively in relation to the relevant purpose, that is, relevantly, the purpose of reporting news; in short, it must be fair and genuine for the relevant purpose. 139. Fairfax submits that Reed’s provision of the ABIX service cannot be fair dealing because Reed’s objective purpose is a commercially competing one: to substitute for, and save its subscribers from, reading the AFR (and other publications). Fairfax points to the evidence of Ms Lee, a senior editor employed by Reed, who accepted that a key benefit of the ABIX service is that it allows busy subscribers to be alerted instantly to the matters in the newspapers without needing to read through the many news publications. Fairfax contrasts the amount of work and the number of employees involved in the preparation of an AFR edition with the relatively small team of people employed by Reed to copy its headlines and write summaries based on AFR articles. Fairfax says that those summaries are intended to substitute for AFR content. 140. For the purposes of s 42, the question is whether Reed’s reproduction and communication of headlines from the AFR as part of the Abstracts constitute fair dealing. It has not been established that the ABIX service is a “substitute” for the reading of Fairfax’s newspaper. It may be the case that some subscribers use the ABIX service as a substitute for reading the AFR. However, it is also the case, as Reed says is its intention, that the ABIX service enables users to scan in a comprehensive and efficient manner across a wide range of publications for news items of interest and then to go to the original publication to read those items in full. This is consistent with the evidence of Ms Lee in cross-examination. The Abstracts contain all the necessary information to enable users of the ABIX 272 [6.430]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Fairfax Media Publications v Reed International Books Australia cont. service to locate the original source article. Reed also points to the evidence that, while it remained technologically possible to do so in circumstances where the article was publicly available online, it provided a hyperlink from abstracts of AFR articles to Fairfax’s own website. 141. Fairfax emphasises that Reed typically reproduces the headline without alteration and says that it is irrelevant that Reed also provides a summary of the article. Fairfax relies on De Garis, in which a media monitoring company unsuccessfully argued a defence of fair dealing for the reporting of news in relation to its conduct of providing photocopies of newspaper articles requested by its subscribers in return for a fee. Justice Beaumont rejected the defence, finding it relevant that the defendant took the whole of the relevant work and supplied it to [45] its customers for its own reward in the course of a trading activity, without commenting on the material or attempting any analysis of its content (at 110). 142. Whether a reproduction of the headlines constitutes a fair dealing depends on the context in which the headlines are used. Reed’s reproduction of the AFR headlines should not be considered in isolation. The headlines accompany Abstracts, in the preparation of which Reed invests a substantial amount of skill, labour and effort. The headlines form a part of the Abstract as a citation to the original source article, together with other bibliographic details. A proper citation of the source article requires a reproduction of the headline in full. In the present case, the preparation of the Abstracts involves significantly more than just the mere copying of headlines from news publications. The contribution of the abstracted article makes the use of the headline a “transformative use” by “adding something new, with a further purpose or character” (American Geophysical Union v Texaco [1995] USCA2 843; 60 F3d 913 (2d Cir, 1994); (1994) 29 IPR 381). The commercial nature of Reed’s activities in providing a subscription based service does not preclude a finding that its use of the AFR headlines in the ABIX service is a fair dealing (see, for example, TCN Channel Nine). 143. I accept that Reed’s use of the AFR headlines in the Abstracts comes within the category of a citation to the source newspaper article. The Abstract contains a citation to the original source article, including the headline, the author’s name, the source publication and the page number on which the article appears. The use of titles of articles and books for the purposes of identification is well-known and routine, even more so today for the purposes of internet searches. For example, a Google search frequently elicits what could be described as a headline of the article. 144. As observed by Conti J in TCN Channel Nine, the relevant dealing, which here is Reed’s reproduction and communication of headlines from the AFR as part of the Abstracts, must be fair and genuine for the purpose of reporting news. I have accepted that the provision of the Abstracts through the ABIX service is for the purpose of, or is associated with, the reporting of news. Fairfax accepts for the present case that Reed is entitled to provide summaries of the contents of the AFR articles as part of the ABIX service. The fact that these summaries may act as a substitute for the reading of the AFR articles is not particularly relevant, as it is not contended that the summaries infringe Fairfax’s copyright. The inclusion of the headline in the Abstract operates as a citation to the source article to which the summary relates. In this context, I would have found that, even if the headlines constitute a substantial part of works in which copyright subsists, Reed’s conduct in reproducing and communicating the AFR headlines as part of the Abstracts is a fair dealing for the purpose of reporting news such that Reed’s conduct would not constitute an infringement of such copyright by reason of s 42(1)(b) of the Act.

Judicial reporting and professional legal advice [6.440] The Copyright Act 1968 (Cth) s 43 provides that the copyright in a literary, dramatic,

musical or artistic work is not infringed by anything done for the purposes of a judicial [6.440]

273

Intellectual Property: Commentary and Materials

proceeding or a report of a judicial proceeding. Section 104 makes a similar provision in respect of subject matter other than works, such that it is not an infringement of copyright to use copyright material for the purpose of giving professional advice by a lawyer, patent attorney or trade marks attorney. Again, the use of the material must genuinely be for the purpose of giving such advice, and must be “fair”. For example, if an item is available for sale, it is unlikely that this provision would allow a person to copy the entire item for the purposes of legal advice. Private and domestic use [6.450] The Copyright Amendment Act 2006 (Cth) introduced five new defences into the

Copyright Act 1968 (Cth) to allow very limited time and format shifting of limited copyright material for private and domestic use, namely: • time shifting of broadcasts (Copyright Act 1968 (Cth) s 111); • format shifting of works in books, newspapers and periodicals (s 43C); • format shifting of photographs (s 47J); • format shifting of sound recordings (other than internet downloads) (s 109A); • format shifting of analogue videos to digital form (s 110AA). Timeshifting. Section 111 is amended to allow a person to record a radio or television broadcast

for the purpose of private and domestic viewing at a more convenient time. Format shifting. Sections 43C, 47J, 109A and 110AA permit particular kinds of format shifting by the owner of an original article for private and domestic use. For example, transferring video home system (VHS) videotapes on to digital video disks (DVDs), or copying music files to an MP3 player. Interestingly, VHS tapes and VHS machines are no longer manufactured, the lone Japanese manufacturer ceasing production in early 2016. Other exceptions and non-infringing acts [6.460] There are certain other uses of copyright material that will be excused from

constituting infringement although such use would, prima facie, be caught. These include making a backup copy of a computer program for use should the original copy be lost, destroyed or rendered unusable (Copyright Act 1968 (Cth) s 43C). Amendments to the Copyright Act 1968 (Cth) introduced by the Copyright Amendment (Computer Programs) Act 1999 (Cth) allow an exception to the copyright reproduction right. Under the Copyright Act 1968 (Cth) s 47D, where interface information about other computer programs is not readily available to a software producer, the producer is allowed to decompile another program to the extent necessary to get the required interface information to make the interoperable product. Decompilation for the correction of errors in a computer program (s 47E) and to test the security of a program (s 47F) is also allowed. These amendments make Australian law similar to the legislation of the United States and the European Union, which allow interoperability, error correction and security testing of computer programs. An authorised officer of a parliamentary library may use Part IV material to assist members of Parliament in the performance of their official duties (s 104A). Making a record embodying a sound recording for the purpose of broadcasting is permissible (s 107) and so is the public performance (s 108) or broadcast (ss 105, 109) of sound recordings in certain circumstances. Further non-infringing acts may include the following: 274 [6.450]

Copyright Infringement, Defences and Remedies

CHAPTER 6

• the reading or recitation in public, or the inclusion in a sound or television broadcast, of a reading of an extract of reasonable length from a published literary or dramatic work, provided sufficient acknowledgement of the work is made; • performances or broadcasts where people normally reside or sleep (ss 46, 106); • reproduction of a work for simulcast (s 47AA); • sound broadcasts by holders of print disability radio licences (s 47A); • painting, drawing, photographing, or including in a film or television broadcast a sculpture or work on public display (s 65); • painting, drawing, photographing, or including in a film or television broadcast a building or model of a building (s 66); • incidental filming or television broadcast of artistic works (s 67); • reproduction of a work for inclusion in a television broadcast (s 70); • reproduction of part of a work in a later work (s 72); • reconstruction of a building (s 73) Playing music at a guesthouse or club will not infringe unless admission is charged (s 106). Some of these uses overlap with compulsory licensing provisions. These exceptions largely continue in the digital environment: the Copyright Amendment (Digital Agenda) Act 2000 (Cth) provides for digital copies to be made without infringing copyright under the library exceptions for document supply, and archives exceptions allow for preservation and administration. The Copyright Act 1968 (Cth) s 200AB allows for flexible fair dealing by permitting some non-commercial uses by libraries, archives and educational institutions; uses by or on behalf of a person with a disability; and for purposes of parody or satire. Fair Dealing v Fair Usage [6.465] In July 2013, the Australian Law Reform Commission (ALRC) issued its report,

Copyright and the digital economy, as part of its public consultation process on its review of copyright law. The Terms of Reference to the ALRC directed it to consider whether existing exceptions in the Copyright Act 1968 (Cth), such as the fair dealing exceptions, were adequate and appropriate and also whether further exceptions should recognise the United States’ approach of using the broader “fair use” principle as not only a defence to copyright infringement but arguably also an authorised right as an exception to the author’s or creator’s rights. In its report, the ALRC described fair use as follows: 4.2 Fair use is a defence to copyright infringement that essentially asks of any particular use: Is this fair? In deciding whether a use is fair, a number of principles, or ‘fairness factors’, must be considered. These include the purpose and character of the use and any harm that might be done to a rights holder’s interests by the use. 4.3 Importantly, fair use differs from most current exceptions to copyright in Australia in that it is a broad standard that incorporates principles, rather than detailed prescriptive rules. Law that incorporates principles or standards is generally more flexible and adaptive than prescriptive rules. Fair use can therefore be applied to new technologies and new uses, without having to wait for consideration by the legislature. 4.4 The factors in the fair use exception ask the right questions of particular uses of copyright material. Does this use unfairly harm a market the rights holder alone should be able to exploit, and so undermine the incentive to create? If so, it is unlikely to be fair. Is this use for [6.465]

275

Intellectual Property: Commentary and Materials

an important public purpose, or perhaps for a different purpose than that for which the creator or rights holder intended? If so, the use is unlikely to harm the rights holder and should be permitted, facilitating the public interest in accessing material, encouraging new productive uses, and stimulating competition and innovation. 4.5 Fair use is not a radical exception. It largely codifies the common law, and may be seen as an extension of Australia’s fair dealing exceptions. Guidance on its meaning and application can be found in the case law on fair dealing in Australia, the United Kingdom and other countries with fair dealing exceptions. Arguably more helpful will be case law applying the very similar fair use provision in the United States, and industry guidelines and codes that would be prepared if fair use were enacted.

The ALRC concluded that fair use: • is suitable for the digital economy and will assist innovation; • provides a flexible standard; • is coherent and predictable; • is suitable for the Australian environment; and • is consistent with the three-step test. 1

REMEDIES AND PENALTIES FOR INFRINGEMENT OF COPYRIGHT Locus standi [6.470] Actions for infringement of copyright may be brought by an owner (Copyright Act

1968 (Cth) s 115) without the need to join other owners of copyright: Prior v Lansdowne Press Pty Ltd [1977] VR 65. Exclusive licensees have the same rights of action (except against the owner) as they would have if the licence had been an assignment (s 119), but the owner or exclusive licensee may be required to join the other party as plaintiff or defendant in an action where they have concurrent rights (s 120(1)), except in an application for an interlocutory injunction (s 120(2)). Equitable owners may also apparently obtain relief without joining the legal owner: Acorn Computers Ltd v MCS Microcomputer Systems Pty Ltd (1984) 4 IPR 214 at 220 per Smithers J. Action can be initiated in either the Federal Court or the Federal Circuit Court (except in respect of s 115A infringements in respect of carriage service providers providing access to online locations outside Australia). Action can also be taken in State and Territory Supreme courts, and sometimes other State courts, depending on whether or not they have the power to grant the remedies that the copyright owner seeks.

Civil remedies [6.480] Remedies awarded may include injunctions, account of profits and ex parte relief,

including Anton Piller orders (by which delivery up is usually effected). The plaintiff may elect between an account of profits (see [6.580]) or damages (Copyright Act 1968 (Cth) s 115(2)). However, damages are not appropriate for an infringement of which the defendant is unaware (s 115(3)). In addition to damages awarded on the usual basis, the plaintiff asking for conversion damages under s 116 is entitled to the value of an entire article of which an infringing copy is only a part; for example, a computer containing an infringing 1

Australian Reform Commission, Copyright and the digital economy, (AGP, Canberra, July 2013), [4.92], Ch 4.

276 [6.470]

Copyright Infringement, Defences and Remedies

CHAPTER 6

literary work in the form of a chip. On the other hand, where infringing items might be the only assets the defendant has, an award of damages will be of no benefit if the plaintiff cannot apply the infringing goods to their own purposes. The copyright owner is entitled to commence an action in court where an alleged infringement of his or her rights has occurred, and various remedies may be awarded. Action must be taken within six years of the date the infringement took place. Major remedies may be interlocutory or final and include the following (these are generally common to all intellectual property areas): interlocutory relief, injunctions and ex parte orders. Interlocutory relief [6.490] Interlocutory orders are orders that are made by a court after a case has been started

but before it is finalised. Interlocutory orders are directed at preserving the status quo, obtaining evidence, or preventing further damage to the claimant. Interlocutory relief may be obtained on an ex parte basis prior to the issuance and service of a writ, but the invariable condition of such an order will be that the continuation of that relief is dependent upon notice being given to the defendant who will then have the opportunity of contesting the grant of interlocutory injunctive relief up until the time of the trial. Injunction [6.500] Injunction is an equitable remedy that usually requires the defendant to refrain from a

particular course of conduct. On rare occasions, it may require the defendant to carry out a particular act. In copyright infringement cases, an injunction will usually be an order that prohibits the infringer from continuing to infringe. The source of the court’s power to award an injunction is the Copyright Act 1968 (Cth) s 115(2). The same equitable considerations that apply to the grant of an injunction in equity apply to an injunction in copyright infringement. An injunction may be interlocutory or final. A court will grant an interlocutory injunction where there is a “serious question to be tried”. Note that it is an invariable condition of the grant of an interlocutory injunction that the plaintiff should give an undertaking to pay damages to the defendant in the event that a final injunction is not granted at trial. Ex parte orders [6.510] Ex parte orders are orders that result from an application made by one of the parties,

generally without the knowledge of the other party or parties. In the context of copyright infringement, the most usual ex parte orders are Anton Piller orders, John Doe orders, Mareva injunctions, and final orders.

Anton Piller orders: inspection and seizure of evidence [6.520] An Anton Piller order is an ex parte order entitling the plaintiff and their legal

representatives to enter the defendant’s premises in order to inspect documents or papers. Note Lord Denning MR’s comments in Anton Piller KG v Manufacturing Processes Ltd (1976) 1 Ch 55 at 61: [S]uch an order can be made by a judge ex parte, but it should only be made where it is essential that the plaintiff should have inspection so that justice can be done between the parties: and when, if the defendant were forewarned, there is a grave danger that vital evidence will be destroyed, that papers will be burnt or lost or hidden, or taken beyond the jurisdiction, and so the ends of justice be defeated: and when the inspection would do no real harm to the defendant or his case. [6.520]

277

Intellectual Property: Commentary and Materials

Further, he stated, the plaintiffs cannot simply break in with such an order: they must act “with due circumspection” (at 61), and serve the order on the defendant attended by their (the plaintiff’s) legal representatives: they must also give the defendants an opportunity to consider the order and seek legal advice. “If the defendants wish to apply to discharge the order as having been improperly obtained, they must be allowed to do so. If the defendants refuse permission to enter or to inspect, the plaintiffs must not force their way in” (at 61), although such a refusal by the defendants may be found to be in contempt of court. It is also possible that the defendant may argue that access by the plaintiff should be denied because of the defendant’s privilege against self-incrimination. This, however, would only arise where there was an appreciable risk that compliance with court orders would lead to criminal proceedings against the defendant. Courts will require undertakings from a plaintiff as to damages in the event that there is improper execution or disregard of the defendant’s rights. Plaintiffs must advise the defendants of their rights to seek legal advice before complying with the order, and also serve the defendant with a statement of claim.

John Doe orders [6.530] John Doe orders are orders against an identifiable class of people – such as T-shirt

sellers – rather than named persons, which allows goods to be seized.

Mareva injunctions [6.540] Mareva injunctions restrain the defendant from disposing of, or removing from the

jurisdiction, assets that would otherwise be available to satisfy any subsequently obtained judgment for damages. See Mareva Naviera SA of Panama v International Bulk Carriers SA [1980] 1 All ER 213 (a shipping case, but the principle of the orders is applicable to intellectual property).

Final orders [6.550] Final orders are granted after a case has been heard, and put the court’s decision

about the issues in dispute into effect. In deciding what remedies to grant where infringement takes place online, a court can take likely infringements into account as well as proved infringements if, taken together, the infringements were on a commercial scale. Final orders may include injunctions (see above) and damages. Damages. The purpose of damages is to compensate the plaintiff for the loss which he or she has sustained as a consequence of the defendant’s infringement of their right. Damages are often based on the amount that the copyright owner would have been able to charge for the use of the material. A court may award additional damages if the infringer’s conduct has been “flagrant”. See Milpurrurru v Indofurn (1994) 30 IPR 209 (see also extract on this case at [6.80]).

The common law remedy of damages is also provided for in the Copyright Act 1968 (Cth) s 115(2). Note also the provision for aggravated damages in s 115(4) and conversion damages in s 116.

Milpurrurru v Indofurn [6.560] Milpurrurru v Indofurn (1994) 30 nIPR 209 Federal Court of Australia VON DOUSSA J: [244] … There is in the circumstances of this case another avenue by which damages over and above the depreciation in the commercial value of the copyright can be awarded, namely as additional damages 278 [6.530]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Milpurrurru v Indofurn cont. for flagrant infringement under s.115(4). That avenue may not be available in other cases, but I am satisfied that this is an appropriate case to make an order of additional damages having regard to [245] the matters referred to in s 115(4)(b). In Williams v Settle the Court of Appeal upheld a substantial award of “vindictive” damages under the English equivalent provision in a case where purely commercial considerations dictated only a minimal level of loss. A commercial photographer had been commissioned to take photographs of the plaintiff’s wedding. Two years later when the plaintiff’s wife was expecting a child, her father was murdered in circumstances which attracted publicity. The defendant, without authority, sold certain of the wedding photographs to a publisher who subsequently published one prominently in two national newspapers. The trial judge awarded $1,000 damages. The Court of Appeal upheld the verdict. Sellers LJ at 1082 observed: It seems that this is not a case where there is any effective relief which could be given. The benefit which can be shown to have accrued to the defendant is meagre, so much so that the judge made some references to the $15 to which exception was taken by the defendant. It is the flagrancy of the infringement which calls for heavy damages, because this was a scandalous matter in the circumstances, which I do not propose to elaborate and about which I do not propose to express a view. It is sufficient to say that it was a flagrant infringement of the right of the plaintiff, and it was scandalous conduct and in total disregard not only of the legal rights of the plaintiff regarding copyright but of his feelings and his sense of family dignity and pride. It was an intrusion into his life, deeper and graver than an intrusion into a man’s property. In Ravenscroft v Herbert and New English Library Ltd at 208, Brightman J described “flagrancy” as implying “the existence of scandalous conduct, deceit and such like; it includes deliberate and calculated copyright infringements”. Wilcox J applied this description in Autodesk Australia Pty Ltd v Cheung at 17 IPR 76, 94 ALR 478. In the present case the copyright infringement was plainly deliberate and calculated by Beechrow and Mr Bethune. From the outset the source of the imagery on the carpets was known. Even if that were not sufficient in itself to cause Mr Bethune to have actual knowledge of the likelihood of infringement, he gained that knowledge upon his return to Australia after ordering the samples when first his friends and later Mr Horrocks brought the true situation to this attention. With that knowledge it was a calculated decision on his part to proceed with the manufacture and import of the carpets in the hopeful expectation that copyright permission would be granted. Without any reason to suspect that permission had been granted the exhibition was held at the Guildford Hotel. On the day of the exhibition the seriousness of the infringement was stressed by Mr Horrocks. Nevertheless the promotion, distribution and sale of carpets continued for the obvious economic benefit of Beechrow. Then, when copyright permission was not immediately forthcoming through AAMA, Beechrow through Mr and Mrs Bethune, instead of complying with the law, and apologising to the copyright owners, sought to question the authority of AAMA and to accuse it of acting otherwise than in the interests of the artists. Thereafter they continued importing and distributing the snake, the green centre and the waterholes carpets, even after service of the proceedings. I cannot accept their assertion that they did not realise these carpets were alleged to be infringements. In my opinion they realised the scope of the allegations but chose to rely on the argument that the carpets did not reproduce a substantial part of the artworks. The degree of flagrancy involved is a matter to be assessed having regard to the circumstances of the case, and it will vary from case to case. Beechrow and Mr Bethune point out that they did not seek to hide the activities of Beechrow from AAMA, on the contrary they first instructed Mr Horrocks to seek permission, and then in November 1992 Mrs Bethune forwarded photographs of [246] the carpets and certain of the reproductions of the artwork from which the design had been taken. Moreover offers to enter into licence agreements were repeated thereafter. Beechrow and Mr Bethune also draw attention to the fact that an apology was offered to Ms Marika through officers of AAMA at a [6.560]

279

Intellectual Property: Commentary and Materials

Milpurrurru v Indofurn cont. conference with them in September 1993 (some months after the proceedings were issued), and oral apologies were also extended to both Ms Marika and Mr Milpurrurru during the trial. (The latter apologies were offered after attention had been drawn by the Court to the apparent absence of contrition on the part of the respondents, and had the appearance of being motivated rather by desire to mitigate the assessment of damages than for any other reason.) These matters are to be taken into account, and the early attempts to obtain permission render the flagrancy of the conduct less serious than it would otherwise have been. There are however other factors to be taken into account. The acquisition of the carpets was, according to Mr Bethune’s evidence, initially undertaken to curry favour with a potential customer in Vietnam with complete disregard for the potential copyright issues. Then, when the marketing of the carpets commenced they were promoted as Aboriginal artworks, and that promotion implied endorsement or approval of prominent artists of the carpet venture. That representation became more obvious as the business developed and a swing tag printed with the Beela Art business name was attached to each carpet (see below). Whilst benefits initially flowed to Beechrow and Mr Bethune, I consider they should now be treated as extinguished by the proposed orders under s 116. The Court is also directed by s 115(4)(b) to have regard to “all other relevant matters”. It is upon this consideration that the cultural issues which are so important to the artists and their communities assume great importance. If an award of additional damages under s 115(4) is made to reflect culturally based harm, the particular losses of the artists who were alive at the time of the infringement which might otherwise be assessed under s 115(2) can be subsumed within the additional damages. Upon an assessment of the cultural aspects of the harm as additional damages a position of equality between the artists can more easily be rationalised. Nevertheless there is a plain distinction between the living artists and those who are deceased. In the case of the latter some died before the infringement and some after, but those that died after the infringement did so only shortly after they became aware of the infringement and probably before their communities did so. In these circumstances I see force in the applicants’ submission that all the deceased artists should be treated equally but that there must be some differential between them and the first three applicants. The Court has not been invited to draw any distinction between each of the first three applicants, even though the evidence would suggest that the losses of Ms Marika exceed those of the others. If damages were assessed on the footing that the losses of Ms Marika are not greater than those of Mr Milpurrurru and Mr Payunka (between whom I see no reason for distinction), that is a significant concession from the applicants’ side in favour of the respondents. If the damages, apart from the depreciation in the value of the copyright, are assessed under s 115(4) the award must be against Beechrow and Mr Bethune. The infringements by Mr King and Mr Rylands arose because of indifference and neglect of duty, not by reason of a deliberate and calculated action. In these circumstances it would not be appropriate to characterise their conduct as “flagrant”. In any event the cultural damage for the most part at least had been caused before the proceedings were served on Mr King and Mr Rylands. [247] The applicants have contended that there should be an overall assessment of “damages” under s115 of $100,000. Counsel submitted that this could be justified as an award of $50,000 “general damages” under s 115(2) and a further sum of $50,000 as additional damages under s 115(4). Counsel stressed that there are eight separate artworks involved, that the infringements were very serious, and made worse by the cultural considerations. If damages were to be assessed under s 115(2) allowance would have to be made first for the depreciation in the commercial value of the copyright, and then there would be additional amounts in 280 [6.560]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Milpurrurru v Indofurn cont. respect of each of the artists who were alive when the infringement occurred, the awards being relatively low in the cases of Ngaritj, Gamarang and Wamut, more substantially in the case of Mr Milpurrurru, and Mr Payunka, and higher again in the case of Ms Marika. However, for the reasons given, I propose to award under s 115(2) only the damages attributable to the depreciation in commercial value of the copyright, that is $1,500 per artwork, in all $12,000. All other aspects of the harm I propose to incorporate into the award of additional damages. In my opinion the aggregate assessment of additional damages should be $70,000. The sum would be much higher were it not for the fact that relief has been granted under s 116 which goes well beyond merely removing the profit element from the sales of infringing articles. In part the additional damages are in the nature of exemplary or punitive damages to mark the seriousness of the infringement. To this extent the damages should in my view be apportioned equally between the owners of the copyright. In part the damages reflect the harm suffered by the first three applicants in their cultural environment. Those damages should be shared equally between them. In my opinion the appropriate apportionment of damages between the applicants would be the sum of $15,000 to each of the first three applicants and $5,000 in respect of the estates of each of the other artists. The applicants have strenuously contended that the additional damages should be inflated by the conduct of the respondents in the course of the litigation, in particular the persistent refusal to recognise that the proceedings had been brought on instructions of the artists, the refusal to acknowledge copyright ownership, and a refusal during the course of trial to consent to an injunction restraining the continued sale of the snake, the green centre and the waterhole carpets. I have already commented that the tactical decisions involved in the first two of these matters are extraordinary, and on several occasions both in pre-trial directions hearings, and during the trial, it was pointed out to the respondents and their advisers that the course they were adopting could be viewed as a matter of aggravation. However, and with some hesitation, I have decided that these matters should not be so treated. Having observed Mr Bethune in the witness box, I am left with the impression that his approach to the predicament in which he and Beechrow found themselves was largely dictated by wrong-headed emotions and at times inappropriate advice. I am not satisfied that the conduct of the litigation was wilfully contemptuous. The tactical decisions are likely to lead to orders for costs compensating the applicants for the additional expense to which they have been put, and in the circumstances I think that is the appropriate way in which the conduct of the proceedings should be reflected.

[6.570] As the following case demonstrates, an appeals court has discretion to vary original

orders, including those for damages, on appeal or cross-appeal.

Urban Ventures v Solitaire Homes [6.580] Urban Ventures Pty Ltd v Solitaire Homes Pty Ltd (2010) 90 IPR 289 [At first instance in the Federal Magistrates Court, the court found that Urban Ventures had infringed the copyright of Solitaire Homes in the plans for the dwelling known as the Solitaire house, and ordered Urban Design to pay to Solitaire compensatory damages of $10,000 and additional damages of $2500 under Copyright Act 1968 (Cth) s 115(2) and (4) respectively. On appeal, the appellant, Urban Ventures, challenged the Federal Magistrate’s award of compensatory and additional damages for infringement of copyright. On cross-appeal, Solitaire also challenged the awards of damages as inadequate. In addition, Solitaire contended that the second respondent (in both the proceeding before the Federal Magistrate [6.580]

281

Intellectual Property: Commentary and Materials

Urban Ventures v Solitaire Homes cont. and in the cross-appeal), Jaime Farrelly, should have been found to be personally liable for the infringements of copyright and thus also ordered to pay damages to Solitaire.] JAGOT J: [306] … It is against this background that the significance of the Federal Magistrate’s reference at [322] to Mr Farrelly’s conduct as a reason for making an order for additional damages must be understood. It is true that the Federal Magistrate did not expressly find that the infringement was flagrant. Nevertheless, the facts found and the reference at [322] to Mr Farrelly’s conduct as warranting an award of additional damages disclose that the Federal Magistrate was satisfied that Mr Farrelly deliberately copied the plans of the Solitaire house in order to fix the problem caused by the fundamental drafting error originally made. While by no means at the worst end of the scale of flagrancy the infringement was flagrant in the sense at least of being deliberate. In other words, the infringement was not the result of mere inadvertence or anything like it. Moreover, when infringing Solitaire’s copyright Mr Farrelly must be taken to have known or, at the least, not cared about the fact that Mr Martins, a competitor to Solitaire, intended to construct the Dunlop house. There was no prospect that the plans would remain unused. The very reason for Mr Martins’ ire and Mr Farrelly’s desire to appease him was that construction was ready to commence but the original plans for the Dunlop house were wrong. [307] Although the pecuniary reward was small ($1,100) the real gain to Mr Farrelly and Urban Design (had the infringement not been discovered) was that the copying of the plan for the Solitaire house both:–(i) placated an irate client who had been a repeat customer over many years, and (ii) it must be inferred, protected the professional reputation of Mr Farrelly and Urban Design in the market for design and drafting services (a market in which Mr Farrelly and Urban Design were also in competition with Solitaire). As things have turned out, Mr Farrelly and Urban Design happened not to obtain that non-pecuniary benefit. However, they did not obtain the non-pecuniary benefit only because Solitaire discovered the infringement and took the proceeding to enforce its copyright. This non-pecuniary benefit is a relevant matter under s 115(4)(b)(iv) if not under s 115(4)(b)(iii) (the benefit not in fact having accrued due to this proceeding and the findings against Mr Farrelly). … [308] … The Federal Magistrate considered specific deterrence, finding that there had not been and was unlikely to be any future infringements. This finding was open on the evidence. Despite largely being the cause of the burden of the proceedings, it would be difficult to infer that Mr Farrelly did not now understand that what appeared to be an expedient course at the time was in fact imprudent and fraught (as the Federal Magistrate observed at [172]). Further, and contrary to Solitaire’s submission, I do not see that Mr Farrelly’s answers in cross-examination to questions about his understanding of copyright added [309] anything material. Mr Farrelly’s answers disclose that, unsurprisingly, he did not know when the permissible borrowing of ideas crossed the line to become impermissible copyright infringement. The more important consideration on the facts of this case, however, was the need for general deterrence. There is no reference to that need in the Federal Magistrate’s reasons. It must be inferred that the Federal Magistrate did not consider this matter. By s 115(4)(b)(ia) the deterrence of others from committing similar infringements of copyright had to be considered in determining whether and in what amount to make an award of additional damages. General deterrence, moreover, was a consideration of substantial weight in the present case. The infringing act was committed by an architectural draftsman in the course of preparing design plans for a project home. Project homes exhibit a degree of similarity that makes the obtaining and protection of copyright in them of particular importance to participants in that industry. Further, the very fact that the act of copying was understandable (which it is) makes the need for general deterrence more, not less, important. 282 [6.580]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Urban Ventures v Solitaire Homes cont. Mr Farrelly was confronted by what must be a common problem in the industry. His response of copying was understandable because that is a temptation that also must commonly occur to people in that industry. Mr Farrelly did not want to profiteer from Solitaire’s work. He just wanted to solve the problem he had caused. But his response of copying was wrong. The award of additional damages must be sufficient to act as a real deterrent to other people in the same industry so as to ensure that they are not tempted to act expediently as Mr Farrelly did. At the same time it would be unjust to impose on Mr Farrelly a burden disproportionate to his actual culpability. Having regard to all of the facts I consider that the award of $2,500 is insufficient to act as a real deterrent to others and does not reflect Mr Farrelly’s culpability. None of the factors on which the Federal Magistrate relied (at [322] and [323] in particular) should have resulted in such a low award of additional damages. The matters identified at [322] and [323] are not irrelevant. Thus, I do not accept Solitaire’s submission to that effect. But they are insufficient, when weighed with all other relevant circumstances, to result in an award of additional damages of $2,500. I consider that the award of additional damages under s 115(4) should not have been less than $10,000.

Account of profits [6.590] Again, this is provided for in the Copyright Act 1968 (Cth) s 115(2). This is an

equitable remedy which requires the defendant to give up the profits he or she has made from the unauthorised use of the plaintiff’s work. The plaintiff’s loss (the basis for damages) may be either less or more than the defendant’s gain (basis for account of profits). A copyright owner cannot be awarded both damages and an account of profits. Note that the estimation by the court of an account of profits may be a difficult exercise, particularly when the defendant legitimately seeks to offset its general overheads and other expenses related to making the profit, against its direct profit. Orders for delivery up [6.600] Courts with equitable jurisdiction have an inherent power to order a defendant to

deliver (give up) any infringing articles, or “device” used to make the infringing articles, to the copyright owner. If the infringer is not able to do this (eg, because the articles have been sold), he or she may be ordered to pay “conversion damages”. These damages relate to the value of the infringing articles, but may be reduced by taking into account costs incurred by the infringer, such as manufacturing costs. However, in a rather different approach in Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Ltd (No 2) (2010) 87 IPR 357, the Federal Court, having found that the song “Down Under” infringed copyright in the 1930s song “Kookaburra Sits in the Old Gumtree”, delivered its judgment concerning the percentage of royalties payable by the record company and composers of “Down Under”. Note, however, that these damages were not for copyright infringement but for misrepresentations made in contravention of the Trade Practices Act 1974 (Cth), to the effect that “Down Under” did not infringe the copyright in any other work and that the parties were entitled to the relevant share of the income from “Down Under”. Larrikin had initially sought a percentage of between 25–50 percent, dating back to 1981 when the song was first recorded, on the grounds that “Kookaburra” was an essential and integrated part of the flute riff in the 1981 recording and that the flute riff was an important and significant part of that song. However, the court considered the demands excessive. The [6.600]

283

Intellectual Property: Commentary and Materials

amount ordered to be paid was 5 percent of the income earned from the collecting societies – Australasian Performing Right Association (APRA) and the Australasian Mechanical Copyright Owners Society (AMCOS) – since 2002, and on royalties from future earnings. The following factors were considered as being relevant and appropriate in determining the nature and rate of royalty payable in this case: • musical significance of the bars of “Kookaburra” as they appeared in “Down Under”; • thematic significance of the works; • consideration of “comparable” arrangements negotiated in the music industry for the “sampling” of works; • time at which the bargain was taken to have been reached.

Larrikin Music Publishing v EMI Songs Australia [6.610] Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Ltd (No 2) (2010) 87 IPR 357 Federal Court of Australia JACOBSON J: [371] 122. Implicit in this is that the musical and thematic elements upon which Mr Lancaster relies would point toward a figure of 25% as the royalty to be achieved in a hypothetical bargain. 123. Mr Lancaster took what he described as a “4 pronged” approach to the significance of the flute riff. The four prongs are, the musical significance, the thematic significance, the role of Kookaburra in some of Mr Hay’s public performances, and the visual associations linked with the music video to which I referred at [104] of my February Reasons. 124. I will deal with the determination of the hypothetical bargain by considering each of the elements relied upon by Mr Lancaster as well as the weight to be given to the “comparable” samples relied upon by the parties. … Conclusion [378] … 214. Whether the hypothetical bargain is assessed at 1982 or 2002, the percentage interest payable is at the lowest end of the spectrum. 215. Upon a proper consideration of all the relevant factors there is nothing to suggest that the owner of the copyright in Kookaburra would have had substantial bargaining power. 216. Although the quotation from Kookaburra in the 1981 recording is, in my view, sufficient to constitute an infringement of copyright, other factors are to be taken into account in assessing the percentage interest payable in a hypothetical licensing bargain. 217. The most obvious factor is the difficulty in detecting the similarity between the flute riff and the bars from Kookaburra. A further strong indicator of a low percentage is to be found in a qualitative and quantitative consideration of Kookaburra’s contribution to Down Under, looked at a whole. [379] 218. The qualitative and quantitative comparison which I am required to undertake in this part of the case is different from that which was the subject of the February Reasons. There, the enquiry was limited to the bars of Kookaburra that are reproduced in the flute riff. Here, the comparison involves a weighing of the significance of the bars of Kookaburra to the overall musical qualities of Down Under. 219. Whilst it is true that the commercial success of Down Under in 2002 may have given the copyright owner of Kookaburra an opportunity to capitalise upon its statutory monopoly, that is outweighed by the other factors to which I have referred. 284 [6.610]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Larrikin Music Publishing v EMI Songs Australia cont. 220. The process of determining the percentage figure to be paid is one of judicial estimation. Taking the most generous approach that is open to me having regard to the figures put to me by the parties, I estimate the figure at 5% whether the percentage is determined in 1982 or 2002. 221. That is the figure which is to be applied in determining past damages under s 82 of the Act. Whilst each payment is referable to a separate contravention, the same percentage interest is applicable to each payment made by APRA and AMCOS during the period from 20 May 2002. 222. The 5% figure is the total percentage payable to Larrikin of the APRA/AMCOS income.

Criminal offences and penalties Criminal offences involving copyright infringement [6.620] Part V of the Copyright Act 1968 (Cth)), is entitled “Remedies and Offences”, although the Part still deals with infringing acts, exceptions that may apply, and remedies. However, Pt 5, Div 5 – “Offences and summary proceedings” details a wide range of copyright infringing acts that constitute offences. Significant changes were introduced to the Copyright Act 1968 (Cth) following the completion of the Australia–United States Free Trade Agreement (AUSFTA), which provided for a greater degree of criminalisation of infringing acts that were wilful and/or on a commercial scale, and to establish a range of sanctions aimed to have deterrence effect. To combat digital piracy, the number and types of criminal offences in copyright have increased. The main provisions relate to the Copyright Act 1968 (Cth) ss 132AD – s 132AJ, which generally provides that selling, offering for trade, importing, exhibiting, or distributing infringing copies, or copies that a person ought to know are infringing, are offences. There are also offences relating to circumvention devices and services (ss 132APA – 132APE), interfering with electronic rights management information (ss 132AQ – 132AT), and converting a work or other subject matter from hardcopy or analog form into digital or other machine-readable form (as an aggravated offence) (ss 132AK). Subdivision B – Substantial infringement on a commercial scale, addresses commercial scale infringement prejudicing the copyright owner. The Copyright Act 1968 (Cth) Section 132AC recognises three categories of criminal offences that apply to certain copyright infringement cases, namely indictable, summary and “strict liability” offences. Indictable offences are the most serious, and can be tried before a jury. Whether an offence is an indictable or summary one depends on the state of mind of the alleged offender. For the third category of offences, “strict liability” offences, the state of mind of the alleged offender is irrelevant – it is enough if they do the acts that constitute the offence. Section 132AC(1) provides that a person commits an indictable offence if: (a) the person engages in conduct; and (b) the conduct results in one or more infringements of the copyright in a work or other subject matter; and (c) the infringement or infringements have a substantial prejudicial impact on the owner of the copyright; and [6.620]

285

Intellectual Property: Commentary and Materials

(d) the infringement or infringements occur on a commercial scale.

Such an offence is punishable on conviction by a fine of not more than 550 penalty units or imprisonment for not more than 5 years, or both. Section 132AC(3) provides that a person commits a summary offence if: (a) the person engages in conduct; and (b) the conduct results in one or more infringements of the copyright in a work or other subject matter; and (c) the infringement or infringements have a substantial prejudicial impact on the owner of the copyright and the person is negligent as to that fact; and (d) the infringement or infringements occur on a commercial scale and the person is negligent as to that fact.

Penalty on conviction in this instance is a fine of 120 penalty units or imprisonment for 2 years, or both. Generally, infringements of copyright that involve commercial dealings or infringements that are on a commercial scale may be criminal offences in certain circumstances. For example, it is an offence to: • make an article that infringes copyright for sale or hire or to obtain a commercial advantage or profit, or to sell or otherwise deal with cause infringement on a commercial scale, even where the infringer does not actually make any financial gain but otherwise obtains a financial advantage (s 132AC); • make an article that infringes copyright for sale or hire or to obtain a commercial advantage or profit, or to sell or otherwise deal with such an article, sometimes with the intention of obtaining a commercial advantage or profit, in specified ways (s 132AD); • sell or hire out, or offering to do so, an article where the article is an infringing copy of a work or other subject matter and copyright subsists in the work or other subject matter at the time of the sale or hiring out (ss 132AE & Copyright Act 1968 (Cth)132AF); • by way of trade exhibit an article in public and the article is an infringing copy of a copyrighted work or other subject matter (s 132AG); • import an article that infringes copyright for trade purposes, or to obtain a commercial advantage or profit (s 132AH); • distribute an article that infringes copyright for trade purposes, or to obtain a commercial advantage or profit, or for any other purpose that prejudicially affects the copyright owner (s 132AI); or • possess an article that infringes copyright, for specified commercial purposes, including for distribution to obtain a commercial advantage or profit or in a way that prejudicially affects the copyright owner (s 132AJ). It may also be a criminal offence to: • make, possess or otherwise deal with a “device” used to make infringing copies of a copyright work (s 132AL); • advertise the supply of infringing copies of copyright material (s 132AM); or • cause the public performance of some copyright material at a place of public entertainment, so that the copyright in the material is infringed (s 132AM); • cause a literary, dramatic or musical work to be performed publicly (s 132AN); 286 [6.620]

Copyright Infringement, Defences and Remedies

CHAPTER 6

• cause a sound recording or film to be heard or seen in public (s 132AO); • circumventing an access control technological protection measure (s 132APC); • manufacturing etc, a circumvention device or providing a circumvention service for a technological protection measure (ss 132APD & Copyright Act 1968 (Cth) 132APE); • removing or altering electronic rights management information (s 132AQ); • distributing, importing or communicating copies after removal or alteration of electronic rights management information (s 132AR); • distributing or importing electronic rights management information (s 132AS). In almost all of the above-listed offences, the Act draws a distinction between the three levels of gravity of the offending, namely at the indictable, summary or strict liability level. For example, s 132AD makes the following distinctions between the three levels: 132AD Making infringing copy commercially Indictable offence (1) A person commits an offence if: (a) the person makes an article, with the intention of: (i) selling it; or (ii) letting it for hire; or (iii) obtaining a commercial advantage or profit; and (b) the article is an infringing copy of a work or other subject matter; and (c) copyright subsists in the work or other subject matter when the article is made. (2) An offence against subsection (1) is punishable on conviction by a fine of not more than 550 penalty units or imprisonment for not more than 5 years, or both. Note 1: A corporation may be fined up to 5 times the amount of the maximum fine (see subsection 4B(3) of the Crimes Act 1914). Note 2: If the infringing copy was made by converting the work or other subject matter from a hard copy or analog form into a digital or other electronic machine readable form, there is an aggravated offence with a higher maximum penalty under section 132AK. Summary offence (3) A person commits an offence if: (a) the person makes an article, with the intention of: (i) selling it; or (ii) letting it for hire; or (iii) obtaining a commercial advantage or profit; and (b) the article is an infringing copy of a work or other subject matter and the person is negligent as to that fact; and (c) copyright subsists in the work or other subject matter when the article is made and the person is negligent as to that fact. Penalty: 120 penalty units or imprisonment for 2 years, or both. (4) An offence against subsection (3) is a summary offence, despite section 4G of the Crimes Act 1914. Strict liability offence (5) A person commits an offence if: (a) the person makes an article in preparation for, or in the course of: (i) selling it; or (ii) letting it for hire; or [6.620]

287

Intellectual Property: Commentary and Materials

(iii) obtaining a commercial advantage or profit; and (b) the article is an infringing copy of a work or other subject matter; and (c) copyright subsists in the work or other subject matter when the article is made. Penalty: 60 penalty units. (6) Subsection (5) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code.

The Criminal Code (Cth) Chapter 9A applies to all offences under the Copyright Act 1968 (Cth). (See Crimes Act 1914 (Cth) s 4AA, where a “penalty unit” is equal to $110.) Hence financial penalties are described in terms of penalty points, rather than specific monetary values. Generally, penalties are not more than 550 penalty points and/or up to five years’ imprisonment (indictable offences). A summary offence attracts up to 120 penalty points and/or imprisonment for two years, whereas a strict liability offence attracts a penalty in the region of 60 penalty points. But see the Copyright Act 1968 (Cth) s 132AK(2), where an aggravated offence attracts not more than 850 penalty points and/or up to five years’ imprisonment. Penalties vary depending on whether it is an individual or a corporation that has been convicted, and whether offences fall into the indictable, summary or strict liability category. For some indictable offences, an individual who is found guilty may be fined penalty points amounting to up to $93,500 or imprisoned for up to five years, or both. For importation of material that infringes copyright, fines of up to $71,500 and/or imprisonment for five years may be imposed on an individual. Penalties can be much higher where the infringement involves the digitisation of copyright material from hardcopy (eg, from a cassette tape to CD, or from videotape to DVD). An individual who is found guilty of a summary offence may be fined up to $13,200 or imprisoned for up to two years, or both. However, a corporation may be fined up to five times the maximum individual fine. Criminal penalties may apply where infringements have a substantial prejudicial impact on the owner of the copyright, or occur on a commercial scale. Liability can arise without the need for money to change hands or for commercial gain actually having been achieved. While offences only relate to infringements within Australia, in Griffiths v United States of America [2005] FCAFC 34, the Federal Court found that Mr Griffith, an Australian citizen associated with an American-based file-trading network, could be extradited to face criminal charges relating to alleged copyright infringements in the United States.

Groundless threats [6.630] The Copyright Act 1968 (Cth) s 202 provides that a person shall not threaten another with an action for infringement. Where such threats are made, the aggrieved person may bring an action against the threatening party seeking a declaration to the effect that the threats are unjustifiable and an injunction against the continuance of the threats. The aggrieved person may also recover any damages sustained unless the threatening party satisfies the court that the acts in respect of which the threats were made constituted, or would have constituted, an infringement of copyright. Section 202A makes similar provision in respect of technological measures. In Bell v Steele (No 2) [2012] FCA 62, the applicant sought restitution on the basis threats of legal action made by the defendant. The applicant, an artist based in Australia, had engaged the respondent to assist him in the United States to make film footage for a film trailer. 288 [6.630]

Copyright Infringement, Defences and Remedies

CHAPTER 6

Through New York based counsel the respondent claimed copyright in the footage and demanded the trailer be removed from public exhibitions in both Australia and the United States, which was carried out, and which caused the applicant financial loss and loss of reputation. The applicant contended that, as a result of the respondent’s unjustifiable threats, actions were taken by the applicant’s agent, which in turn resulted in the applicant losing the opportunity to promote and sell his artworks at an opportunistic time (namely, in conjunction with an exhibition in Brisbane where two of the applicant’s works were headlined). The applicant also suffered damage in the US market due to the respondent’s threats, although the applicant was not seeking damages in relation to any losses suffered in the United States. Further, the applicant’s artistic credibility and integrity was very important in maintaining his reputation and the marketability of his art works. The Court noted, pursuant to s 202(1) of the Copyright Act 1968 (Cth), that: 17 In Ricketson S and Creswell C, The Law of Intellectual Property: Copyright, Designs & Confidential Information (2nd ed, Lawbook Co) paragraph 2.195 the learned authors summarise damages a copyright owner may claim in respect of groundless threats in the following terms: Where a person, by means of circulars, advertisement or otherwise, threatens a person with an action or proceeding for infringement of a patent, copyright, circuit layout or design, a person aggrieved may bring an action against the person making the threats for a declaration to the effect that the threats are unjustified, as well as an injunction against the continuance of the threats. Such an action may be brought, even if the threats were made in good faith, albeit ultimately found to be unjustified. It is also possible to obtain relief by way of damages to compensate for any damage that the person threatened has sustained as a result of these threats but such damage must flow from the making of the threats, not from any legal proceedings that may be subsequently commenced by the copyright owner. (Footnotes omitted.) (Emphasis added.) 18 In my view this comment accurately states the law. That the applicant can only make a claim in respect of damages arising from the threats was clearly explained by Lord Esher MR in Ungar v Sugg (1892) 9 RPC 113 at 118, cf von Doussa J in Townsend Controls Pty Ltd v Gilead, G & Ors [1990] FCA 250 at [16]. (I note that, although both cases concerned threats in respect of infringement of a patent, identical principles in respect of damages apply as in the case before me.) So, for example: • impacts upon the readiness of third parties to do business with the applicant (World of Technologies (Aust) Pty Ltd v Tempo (Aust) Pty Ltd [2007] FCA 114 at [124]); • losses arising from threats to the applicant’s customers (Avel Pty Ltd v Intercontinental Grain Exports Pty Ltd (1996) 143 ALR 533 at 542); • lost sales or lost potential sales (Cowan, B S & Anor v Avel Pty Ltd [1995] FCA 546 [1995] FCA 546 at [25]); and • the cost to the applicant of instituting relief – such as a declaration – following receipt of the threat (Nine Network Australia Pty Ltd v IceTV Pty Ltd [2007] FCA 1172 at [234]). may all be compensable in damages. Conversely, losses arising from such events as rumours which may spring up but are not attributable to the party making the threat, or damage to the threatened party flowing from the actual commencement of legal action by the party who made the threats, are not compensable as damages sustained from groundless threats.

The court awarded damages to the applicant of $147,000, plus costs.

[6.630]

289

CHAPTER 7 Copyright in the Digital Environment [7.10] [7.10] [7.20]

INTRODUCTION .................................................................................................... 291 Copyright and the digital environment .............................................................. 291 Copyright and change .......................................................................................... 292

[7.60] [7.70] [7.80]

Copyright legislation and change ........................................................................ 298 Copyright Amendment (Digital Agenda) Act 2000 ............................................ 298 Circumvention devices and electronic rights management information ............................................................................................................. 299 [7.90] Technological protection measures ................................................... 300 [7.100] What is a circumvention device? ....................................................... 300

[7.120]

The US Free Trade Agreement Implementation Act 2004 ................................. 305 [7.120] Liability of internet service providers ................................................ 305

[7.140] [7.145]

The Copyright Amendment Act 2006 ................................................................. 308 The Copyright Amendment (Online Infringement) Act 2015 .......................... 310

[7.150] [7.150] [7.160] [7.170] [7.180]

INFRINGING INTERNET FILE SHARING ............................................................... 311 Revolving doors – old technologies out and new technologies in ................... 311 The Napster Case ................................................................................................... 311 The Betamax defence ............................................................................................ 312 Universal Music Australia v Cooper ...................................................................... 312

[7.200]

P2P copyright infringement: the Kazaa protocol ............................................... 317

[7.40]

[7.110]

[7.130]

[7.190]

Network Ten v TCN Channel Nine .......................................... 294

Stevens v Sony ...................................................................... 301

Australia–United States Free Trade Agreement ......................... 306

Universal Music v Cooper ....................................................... 313

[7.210] [7.220]

[7.240] [7.250] [7.260]

[7.320] [7.330]

Universal Music Australia v Sharman License Holdings ............. Universal Music v Sharman License Holdings .......................... The Bit-Torrent protocol ....................................................................................... Roadshow Films v iiNet (2010) ............................................................................ Roadshow Films v iiNet (2011) ............................................................................ [7.270] Roadshow Films v iiNet .......................................................... [7.290] Roadshow Films v iiNet .......................................................... [7.310] Dallas Buyers Club v iiNet ...................................................... Changing nature and complexities of online transmission ............................... Roadshow Films Pty Ltd v Telstra Corporation Ltd ............................................. [7.340] Roadshow Films Pty Ltd v Telstra Corporation Ltd ....................

318 321 323 323 325 326 331 336 338 339 340

INTRODUCTION Copyright and the digital environment [7.10] The digital revolution has impacted significantly on every intellectual property regime, and none more so than copyright protection. It has required, and will continue to require, fundamental changes to copyright law to attempt to keep pace with new technologies and communications practice. Digitalisation has exponentially increased the ease of creation, modification, distribution, and particularly access to all information. It has created a new medium in which works of an artistic, literary, dramatic and musical nature can be accessed [7.10]

291

Intellectual Property: Commentary and Materials

and distributed to the public in a virtual, instantaneous and real-time fashion. As this access increases, the capacity to monitor and control copyright protection reduces in an equally dramatic fashion. For example, as demonstrated in the recent upheavals in Syria, Iraq and other Middle East states, the new weapon of the terrorist, dissident or revolutionary is no longer the spy network or inflammatory pamphlet, but information search and dissemination via the internet, the mobile phone and SMS, and satellite reception facilities. Hence protection of copyright can be extremely difficult, if not at times impossible, to enforce in relation to digital communications, particularly over the internet and at the end-user level, since there are so many avenues for, and instances of, alleged infringement. However, what is detected by copyright holders is necessarily the tip of the iceberg. Furthermore, the current copyright legislation, nearly a half-century old in its primary form, is not equipped to adapt easily and smoothly to the digital and internet revolutions. The digital era has created new modes of expression that flawlessly, inexpensively and instantaneously reproduce and distribute creative works through various data bases, websites and programs. Complicating any statutory adaptation is the fact that digitalisation can bring together rather disparate forms of copyrightable material and modes of expression into a uniform digital expression or language, and into a largely uniform access and distribution system. As has been demonstrated in a series of leading cases over the last decade, internet technology is developing faster than the laws that govern it or protect the information it transmits. Some of these cases are covered in this chapter (see Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 65 IPR 513 (High Court); Universal Music Australia Pty Ltd v Cooper (2005) 65 IPR 409 (Federal Court); Universal Music Australia Pty Ltd v Sharman License Holdings (2005) 65 IPR 289; Roadshow Films Pty Ltd v iiNet Ltd (2011) 89 IPR 1 (Full Federal Court); Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16; Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 317; Dallas Buyers Club LLC v iiNet Ltd (No 4) [2015] FCA 838 and Dallas Buyers Club LLC v iiNet Ltd (No 5) [2015] FCA 1437.

Copyright and change [7.20] Throughout its long history, since the Statute of Anne 1710 (ENG), copyright law has

continuously adapted in response to the introduction of emerging industries, technologies and the creation of new materials. As new ways of expressing and exploiting creative materials have developed, the rights listed in the Copyright Act 1968 (Cth) have expanded and been reformulated. In modern society, copyright law is replete with provisions that have evolved around the protection of property and ownership rights. As technology has advanced, the law has become increasingly focused on proprietary interests and financial gain rather than creative artistic development. It is not the author’s rights as such that are being protected under copyright law, but the “stationer’s”. Throughout the recent digital era, the Copyright Act 1968 (Cth) in Australia has evolved and been modified, and continues to attempt to adapt in the face of new creative expressions and technology. But in so doing it has become increasingly complex and, many would argue, unwieldy. The television, music and film industries are the three main areas that, from their perspective, have been presented with dramatic opportunities for growth and promotion of their respective genres because of the explosive expansion of the digital era. At the same time, they face challenges of some significance in terms of the protection and exploitation of their 292 [7.20]

Copyright in the Digital Environment

CHAPTER 7

proprietary interests and copyright assets. The digital environment has on occasion also generated a closer assessment of some long-established conventions commonly taken for granted. Two examples of the closer assessment of long-established copyright conventions by the courts are the litigation between Channel Nine and Network TEN over the nature of a television broadcast (Network Ten Pty Ltd v TCN Channel Nine (2004) 59 IPR 1 and subsequent litigation by Telstra to preserve copyright in computer-generated phonebook compilations (Telstra Corporation Ltd v Phone Directories Co Pty Ltd (2010) 90 IPR 1). The Channel Nine/Network TEN saga has been analysed at some length during chapter 6 (see [6.30], [6.250] and [6.400]); The Telstra preservation campaign was discussed during chapter 4 (see [4.90] – [4.115]). The fundamental difficulty with copyright protection in relation to digital music is that anyone with internet access – whether via computer or mobile phone – can easily and freely upload or download copyright music. Software protocols that facilitate access regularly come and go. Napster, Kazaa, Grokster, LimeWire and Bit-Torrent have been, or are examples of services that have allowed, and currently do allow, the free downloading of music files. Accessing, distributing and reproducing music via the internet have become increasingly popular amongst internet users of all ages. This raises the key issue of whether the law of copyright in its current guise is sufficiently adequate to protect the rights of the creative songwriter and/or performer author, or whether the time may have come for sui generis legislation to be enacted. The film industry experiences issues akin to those facing the music industry. Under the Copyright Act 1968 (Cth), “cinematographic films” include feature films, television programs, documentaries, short films, home videos, animated films, television commercials and some multimedia products, such as computer games. The production and dissemination of pirated movies and the infringement of copyright laws represent the greatest difficulties faced by the film industry. The change in technology has increasingly caused problems for the industry as a perfect copy of the original image can now be duplicated and the increased bandwidth in broadband internet allows individuals to quickly download full-length feature films. [7.30] The issue of what might constitute a television broadcast was considered by the High Court in Network Ten Pty Ltd v TCN Channel Nine (2004) 59 IPR 1. The case thus raised fundamental issues on the interpretation and treatment of alleged infringing acts in the digital environment. A key element in the case was the question of the status of re-broadcast material in the context of infringing copyright, and thereby the extent to which an unauthorised re-broadcast of only certain elements or segments of an original broadcast would constitute an infringement. See also [6.30] for an extract from this case in respect of the issue of “substantial part”. During 1999 and 2000, Network Ten recorded on videotape a variety of Channel Nine television programs, and later used brief excerpts from them in their own television program, The Panel. The excerpts ranged in duration from eight to 42 seconds. Channel Nine had originally sought interlocutory relief and a declaration of infringement of broadcast copyright. The trial judge held there was no infringement of copyright, since Network Ten had not taken the whole or a substantial part of any of the Channel Nine’s broadcasts. That decision was reversed on appeal. The Full Court of the Federal Court held, inter alia, that Network Ten had infringed Channel Nine’s copyright under s 87(a) and (c) of the Copyright Act 1968 (Cth). [7.30]

293

Intellectual Property: Commentary and Materials

Network Ten was granted leave by the High Court to appeal the decision of the Full Court of the Federal Court. Channel Nine submitted that the Full Court decision in its favour that each visual image capable of being observed as a separate image on a television screen and accompanying sounds is “a television broadcast” in which copyright subsists, should be upheld. Channel Ten argued that the term “a television broadcast” as it appears in the Act was misread by the Full Court, with the result that the content of that expression was so reduced that questions of substantiality had no practical operation and that the ambit of the copyright monopoly was expanded beyond the interests the legislation sought to protect [at 8]. The High Court by a majority (McHugh ACJ, Gummow and Hayne JJ, with Kirby and Callinan JJ dissenting) accepted Channel Ten’s submission and allowed the appeal. It directed that the orders of the Full Court entered on 19 July 2002 be set aside, and remitted the matter back to the Full Court to determine the remaining issues in the appeal and to make the appropriate orders consistent with the High Court’s judgment. An extract from the High Court judgment follows.

Network Ten v TCN Channel Nine [7.40] Network Ten Pty Ltd v TCN Channel Nine [2004] HCA 14; (2004) 59 IPR 1 High Court of Australia MCHUGH ACJ, GUMMOW AND HAYNE JJ. The medium of communication 38. Where the “subject-matter” of copyright protection is of an incorporeal and transient nature, such as that involved in the technology of broadcasting, it is to be expected that the legislative identification of the monopoly (eg, by s 87) and its infringement (eg, by s 101) of necessity will involve reference to that technology. But that does not mean that the phrase “a television broadcast” comprehends no more than any use, however fleeting, of a medium of communication. Rather, as the Gregory Report indicated, protection was given to that which had the attribute of commercial significance to the broadcaster, identified by the use of the term “a broadcast” in its sense of “a programme”. In the same way, the words, figures and symbols which constitute a “literary work”, such as a novel, are protected not for their intrinsic character as the means of communication to readers but because of what, taken together, they convey to the comprehension of the reader. 39. In fixing upon that which was capable of perception as a separate image upon a television screen and what were said to be accompanying sounds as the subject-matter comprehended by the phrase “a television broadcast”, the Full Court appears to have fixed upon the medium of transmission, not the message conveyed by its use. 40. Because the medium is ephemeral, it is necessary to capture what a television broadcaster transmits if any practical use is to be made of the signal that is broadcast. For many purposes, it is necessary not only to capture the signal, but also to translate it so that the images and sounds which the signal conveys can be seen and heard. The most common method of doing that is, of course, the television set, but other devices, such as various forms of video recorder, may be used. According to the device that is used, what is captured and translated may be only so much of a signal broadcast as has previously been, or can at the time of transmission of the signal be, translated into a single image or moment of sound. But in the ordinary course, what is captured and translated can, and will, be a faithful reproduction of all, or substantially all, that the broadcaster’s signal permits. 41. Section 87 of the Act, in pars (a) and (b), identifies the nature of copyright in a television broadcast by reference to two methods by which what is transmitted can be captured and recorded in permanent or semi-permanent form. One method (s 87(a)) is to take a still visual image of what otherwise appears on a television set as part of a continuous visual transmission. In that context it may 294 [7.40]

Copyright in the Digital Environment

CHAPTER 7

Network Ten v TCN Channel Nine cont. be sensible to speak of a single visual image that is broadcast. However, it by no means follows that it is sensible to confine the understanding of “a television broadcast” by basing the meaning that is given to the expression upon the capacity to capture and record singular visual images. Especially is that so when it makes little sense to speak of a single “moment” of sound accompanying that image. The instantaneous fixing of single visual images is familiar, but the instantaneous fixing of single sounds is not. When it is further observed that s 87(c), with its reference to re-broadcasting, at least encompasses the capture and simultaneous retransmission of a television broadcaster’s signal, it is apparent that to understand “a television broadcast” as a singular and very small portion of the signal which a broadcaster transmits virtually continuously, and a person receiving is intended to receive continuously, is to give the expression a very artificial meaning. Yet that is what the Full Court did. The reasoning of the Full Court 42. The conclusion of the Full Court with respect to s 87(a) rested largely upon a view taken of the significance of s 25(4). That sub-section treats the reference in s 87(a) to the making of “a cinematograph film” of “a television broadcast” as “including a reference to a cinematograph film … of any of the visual images comprised in the broadcast”. In that regard, Hely J held[37] that “the expression ’any of the visual images’ encompasses any one or more of those images, without any requirement that the images should amount to a substantial part of the broadcast”. His Honour concluded[38]: “As the videotapes of the Panel Segments made by Ten are cinematograph films of the visual images comprised in the source television broadcasts in terms of s 25(4), it follows that, subject to the fair dealing defences, Nine has established contravention of its s 87(a) copyright in the source broadcasts. That conclusion follows from the application of s 25(4) to the facts, without the need to determine what constitutes a television broadcast. However, that issue has to be confronted in relation to s 87(c).” (emphasis added) However, the primary task had been to identify that television broadcast in which copyright subsisted in Nine under s 91. This was a matter of visual images and sounds and the primary task was not performed, and could not properly be avoided, by reasoning from a provision concerned with fixation in a cinematograph film. 81. KIRBY J. In this appeal, there is a division of opinion in the Court concerning the extent of copyright protection of a television broadcast within Pt IV of the Copyright Act 1968 (Cth) (“the Act”). As explained elsewhere, the case concerns the Act in the form in which it appeared before amendments introduced by the Copyright Amendment (Digital Agenda) Act 2000 (Cth). The enactment of copyright protection in a television broadcast is a relatively recent development. It was provided in the United Kingdom in 1956[59] following a 1952 report of the Gregory Committee[60]. In Australia, legislation to introduce such protection, substantially copying the United Kingdom Act, was first enacted in 1968[61]. A difference over copyright infringement 82. The point over which this Court has divided concerns a question of statutory construction. That point was first exposed in a difference of opinion between the primary judge in the Federal Court of Australia (Conti J)[62] and the Full Court of that Court[63]. The latter reversed the primary judge’s orders. 83. Upon the matter in issue, I agree in the conclusion reached by Callinan J. In my view, the approach adopted by the Full Court was correct. The reasoning of Hely J in the Full Court is compelling. Sundberg J agreed with it[64]. So, substantially, did Finkelstein J[65]. So do I. 84. The foundation for the difference between the competing judicial opinions is a conclusion, expressed by the Full Court, and repeated by Callinan J, that the contrary result involves distorting, if not ignoring, the language of the Act. That language must be given effect because it has the special [7.40]

295

Intellectual Property: Commentary and Materials

Network Ten v TCN Channel Nine cont. legitimacy of the written law endorsed by the Parliament within a head of power granted by the Constitution[66]. The judicial function demands obedience to the provisions of valid enacted law[67]. 85. Upon the clear language of s 87(a) of the Act, the appellant (which never denied copying the respondents’ television broadcasts) infringed that provision. It was common ground that the videotapes made by the appellant, including the segments used in The Panel programme later broadcast by the appellant, were cinematograph films, as defined[68]. Similarly, upon the clear language of s 87(c) of the Act, the appellant infringed copyright under that provision. It would require an artificially narrow construction of the phrase “a television broadcast” in par (c) of s 87 of the Act to hold that the appellant’s undoubted broadcast of excerpts, extracted from the copies it had made of the respondents’ broadcasts, did not constitute a “re-broadcast[ing]” of “a television broadcast”. Given the terms of the Act, and the purpose of the Parliament in introducing copyright protection in the case of “a television broadcast”, it would be surprising indeed if the only infringement for which the Act provided was constituted by a rebroadcast of an entire television “programme” or of some particular segment of such a programme to an extent yet to be specified with acceptable precision. The language of the Act, set out and explained in the reasons of Callinan J, indicates why this interpretation is wrong. It should not be accepted. CALLINAN J. [142] The Act falls to be read therefore against the background of these indisputable facts. The parties compete with each other. The production of any programme, indeed each and every frame and segment of it, comes at a cost. It is produced in order to make money by inducing advertisers to pay to have their activities advertised in association with its broadcast one or more times. Further value may arise from the isolation, reproduction and broadcasting of an image or images, with or without sound, from it, and the licensing of it or an isolated image or images from it, whether by and in a photograph, a film or a video film. What is clear in this case is that value did lie in the copying, reproduction and rebroadcasting of segments, albeit generally fairly brief segments, of the respondents’ programmes. That value had two aspects: it enabled the appellant to gain revenue from advertising associated with The Panel; and it relieved the appellant of the cost of buying or producing other matter to occupy the time taken by the rebroadcasting, during The Panel, of the copied and reproduced segments. The intention of Pt IV Div 2 of the Act was, as the Attorney-General said, broadly not only to place television footage on at least the same basis as other original work, particularly moving films, protected by the Act, but as appears from the language used in it, with necessary adaptations to suit the medium and the means available to competitors to exploit it, and in consequence to create new rights. Why should, it is reasonable to ask, the appellant, save to the extent that it deals fairly with any of the respondents’ valuable broadcasted matter, get it and rebroadcast it for its own commercial benefit, for nothing? The question in this case is whether the Act prevents it from doing that. 143. The use by the appellant of excerpts from the respondents’ broadcasts was blatant. And although blatant appropriation of the kind which has occurred here might not be such as to warrant an evangelical fervour[120] in responding to it, in the nakedly commercial context of television broadcasting in Australia, the test of “what is worth copying is prima facie worth protecting” posed by Peterson J in University of London Press Ltd v University Tutorial Press Ltd[121] has much to commend it, and provides at least a reasonable starting point. After all, in recognising the validity of the respondents’ copyright in excerpts from their programmes, the Court would not be denying access to the general public of the golden words of a new Shakespeare. This is a case of blatant commercial exploitation, neither more nor less. 144. It has always been the respondents’ case that the appellant has infringed both ss 87(a) and 87(c) of the Act. The appellant has never denied that it copied by reproducing in full the respondents’ programmes. It has therefore infringed, on any view, s 87(a) of the Act. 296 [7.40]

Copyright in the Digital Environment

CHAPTER 7

Network Ten v TCN Channel Nine cont. 145. As to s 87(c) however, the appellant argues that because it did not rebroadcast other than an excerpt from, that is to say, less, indeed much less than, the whole of any of the programmes of the respondents, it did not rebroadcast “a television broadcast” of the respondents. In short the appellant submits that a television broadcast within s 87 of the Act cannot be less than the whole or a substantial part of a television programme, notwithstanding that the relevant sections do not anywhere use that term, and the Act attempts no definition of it. The appellant’s proposition, it further argues, is correct because otherwise there is no, or little work for s 14 of the Act to do. 146. I am unable to agree. The definition of cinematograph film does not assist the appellant. The aggregate of a few seconds of visual images is, as occurred in this case, capable of being embodied in a video tape, or electronically otherwise, by the use of which it can be shown. In those few seconds, there were, and there always will be, except perhaps when a “still” is shown, certainly more than one, and almost certainly a multiplicity of images and sounds. The test cannot be simply whether the images and sounds captured and fixated last a millisecond or half an hour. In aggregate they still constitute a “broadcast”.

[7.50] The issue of “originality” and “the sweat of the brow” as requirements for copyright protection was discussed in Chapter 4 at [4.90] – [4.115] (see Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 55 IPR 1). In particular, the issue of the degree of originality in compilations, such as racing coupons or phone directories, has been examined at length. In 2002, Telstra sued Desktop for infringement of copyright and was successful at first instance (Telstra Corporation Ltd v Desktop Marketing Systems Pty Ltd (2002) 51 IPR 257). The primary judge held that the telephone directories were original compilations in which copyright subsisted and that Desktop had reproduced a substantial part of the directories, thereby infringing Telstra’s copyright. Desktop appealed the findings in relation to originality of the listing data and the absence of sufficient objective or visual similarity between Telstra’s directories and Desktop’s products. The Full Federal Court dismissed Desktop’s appeal. Eight years after Desktop Marketing, in 2010, Telstra again brought an action for copyright infringement of its White and Yellow Pages directories. At first instance Gordon J determined, as a separate question, that copyright did not subsist in Telstra’s telephone directories: see Telstra Corporation Ltd v Phone Directories Co Pty Ltd (2010) 85 IPR 571. While the circumstances were substantially very similar between the 2002 actions and the 2010 actions, a crucial factor was that, since October 2003, the telephone directories had been produced through the use of the Genesis computer system. On appeal, the Full Federal Court rejected Telstra’s appeal (Telstra Corporation Ltd v Phone Directories Company Pty Ltd (2010) 90 IPR 1). Crucial in the judgments at first instance and on appeal was the fact that creation of the material form of the directories was carried out by a computer program overseen by persons who had no substantive input into that form. The questions that arose, therefore, were, first, could the independent intellectual effort or sufficient effort of a literary nature be directed at the creation of the material form of the work (the directories) or just some anterior activity (the collection of information presented in the directories)? And, secondly, if the intellectual effort must be directed at the creation of the material form of the directories, was there sufficient human effort involved so that the directories were reduced to a material form by an author or authors? [7.50]

297

Intellectual Property: Commentary and Materials

The Full Federal Court held that this was not the case since the directories were brought into the form in which they were published by computerised and automated processes. As Keane CJ stated (with whom Perran and Yates JJ generally agreed): 89. The compilation of the directories was overwhelmingly the work of the Genesis Computer System or its predecessors. The selection of data and its arrangement in the form presented in each directory occurred only at “the book extract” or “book production” process. The compilations which emerged from the operation of the computer system do not originate from an individual or group of individuals. Indeed, none of the individuals who contributed to the production of the directories had any conception of the actual form in which they were finally expressed. 90. In my respectful opinion, the decision of the trial judge must be upheld on the basis that the findings of primary fact made by her Honour establish that the WPDs and YPDs are not compiled by individuals but by the automated processes of the Genesis Computer System or its predecessors. That being so, it is neither necessary nor relevant to seek to come to a conclusion as to the sufficiency of the intellectual effort deployed by those individuals who provide data input to the computerised database. Their activities are not part of the activity of compilation: they do not select, arrange and present that data in the form in which it is published. JOINT AUTHORSHIP 91. I respectfully agree with the trial judge that the directories cannot be regarded as a work of joint authorship. 92. The contributions of individuals discussed in her Honour’s findings may have been precursors to the compilation of the directories but they were not part of the actual compilation. Moreover, the work of these individuals was not collaborative. It was, no doubt, organised to facilitate the production of the directories but this organisation was not collaboration of the kind contemplated by the definition of joint authorship, and the contribution of each of the groups of individuals referred to earlier was made quite separately.

Copyright legislation and change [7.60] Copyright legislation has been subject to ongoing review and amendment since it was

first introduced, but this has occurred with greater frequency over the last decade. Four amending Acts which have been of particular relevance to the digital communication revolution and which have endeavoured to upgrade the Copyright Act 1968 (Cth) to effectively meet the current requirements are the: • Copyright Amendment (Digital Agenda) Act 2000 (Cth); • US Free Trade Agreement Implementation Act 2004 (Cth); • Copyright Amendment Act 2006 (Cth); and • Copyright Amendment (Online Infringement) Act 2015 (Cth). While these Acts collectively introduced a broad and comprehensive portfolio of amendments and enhancements to the Copyright Act 1968 (Cth), they each focused on the key related issues of technological protection measures (TPMs) and devices to circumvent them, and electronic rights management information (ERMI).

Copyright Amendment (Digital Agenda) Act 2000 [7.70] The Copyright Amendment (Digital Agenda) Act 2000 (Cth), which came into effect in

March 2001, made significant amendments to the Copyright Act 1968 (Cth). The Copyright Amendment (Digital Agenda) Act 2000 (Cth) gave effect to the 1996 World Intellectual Property Organization WIPO Copyright Treaty (WCT) and certain recommendations of the 298 [7.60]

Copyright in the Digital Environment

CHAPTER 7

Copyright Law Review Committee in its 1998 and 1999 reports on the acknowledgement of the digital revolution and simplification of the Copyright Act 1968 (Cth). The Copyright Amendment (Digital Agenda Act) Act 2000 (Cth) s 3 detailed the objectives of the amendments and emphasised a focus on the digital environment, namely to: (a) ensure the efficient operation of relevant industries in the online environment by: (i) promoting the creation of copyright material and the exploitation of new online technologies by allowing financial rewards for creators and investors; and (ii)

providing a practical enforcement regime for copyright owners; and

(iii)

promoting access to copyright material online; and

(b)

promote certainty for communication and information technology industries that are investing in and providing online access to copyright material; and

(c)

provide reasonable access and certainty for end users of copyright material online; and

(d)

ensure that cultural and educational institutions can access, and promote access to, copyright material in the online environment on reasonable terms, including having regard to the benefits of public access to the material and the provision of adequate remuneration to creators and investors; and

(e)

ensure that the relevant global technical standards which form the basis of new communication and information technologies, such as the Internet, are not jeopardised. Accordingly, the key provisions of the amending Act included: • the new right of communication to the public, encompassing the former broadcast and cable transmission rights; • fair dealing and library exceptions adapted to the digital environment and the above public communication right; • exception provisions for temporary reproductions in respect of ordinary internet use; • criminal sanctions and civil actions in respect of circumvention devices and electronic rights management information; • limitations on internet service provider (ISP) liability for copyright infringement.

Circumvention devices and electronic rights management information [7.80] The Copyright Amendment (Digital Agenda) Act 2000 (Cth) introduced a range of

measures to strengthen protection against the unauthorised access to copyright protected material in the digital environment. Two key provisions were those dealing with circumvention devices and services, and those dealing with rights management information. The amending Act introduced a new Part V Division 2A – Actions in relation to circumvention devices and electronic rights management information (ss 116A – 116D) into the Copyright Act 1968 (Cth). Sections 116A – 116D introduced provisions addressing: • importation, manufacture etc of a circumvention device and provision etc of a circumvention service (s 116A); • removal or alteration of electronic rights management information (s 116B); • commercial dealings etc with works whose electronic rights management information is removed or altered (s 116C); • remedies in actions under ss 116A, 116B and 116C (s 116D). [7.80]

299

Intellectual Property: Commentary and Materials

The amending Act further introduced new definitions into s 10 of the Copyright Act 1968 (Cth). An addition to s 10(1) defined a circumvention device as a device that had only a limited commercial application or use other than circumvention. A technological protection measure (TPM), which could be either hardware or software, was defined as “a device or product or component incorporated into a process that is designed in the ordinary course of its operation to prevent or inhibit the infringement of copyright …”. Similarly, electronic rights management information (ERMI) was defined in s 10(1) as “information in electronic form associated with works or subject matter which identifies it and its author, and indicates the terms of use of such works or subject matter”. The amending Act’s additions to the offence provisions contained in Division 5 (ss 132 – 133A) created new offences for contravention of the new Division 2A. Civil remedies and criminal offences in relation to the manufacture and supply of, and other dealings with, broadcast decoding devices where the use is for a commercial purpose were introduced against persons using devices and services designed to circumvent the TPMs used by copyright owners to protect their material. It is illegal to manufacture, supply, commercially deal, import, make available online, advertise or promote activities for the purpose of circumventing TPMs for copyright material. Similarly, the intentional removal and alteration of ERMI, or commercial dealing in material where a person knew, or was reckless as to whether, ERMI had been removed, attracted new criminal and civil remedies. Technological protection measures [7.90] Technological protection measures (TPMs) and electronic rights management information (ERMI) (also called digital rights management, see [6.270]), can provide effective “self-help” mechanisms for copyright owners keen to restrict access to works in the digital environment. However, as was demonstrated in Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 65 IPR 513, allowing owners to use technology to determine the practical scope of rights has the potential to upset the legislative copyright balance and interfere with the (otherwise) legitimate rights of users to access works. The policy reasoning and politics behind them is discussed in Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58 at [7.110].

What is a circumvention device? [7.100] Sony produced and sold computer games on CD ROMs for use with PlayStation

consoles. The PlayStation software contained access restrictions that could not be reproduced by conventional CD-copying devices. The access code was stored on an encrypted portion of the CD ROM and was read by the boot RAM within the console if a game was to be played. Stevens sold and installed “mod chips” into PlayStation consoles, which bypassed the access code requirement and allowed unauthorised games to be played on the consoles Stevens had modified. By proceedings instituted in the Federal Court (Kabushiki Kaisha Sony Computer Entertainment v Stevens (2002) 55 IPR 497), Sony sued Stevens, alleging that he had contravened the Copyright Act 1968 (Cth) s 116A (as introduced by the Copyright Amendment (Digital Agenda) Act 2000 (Cth)) by supplying and installing circumvention devices that were intended to facilitate the use of pirated copies of Sony’s PlayStation computer games. In rejecting Sony’s claim, the trial judge, Sackville J, held that Sony’s protection device did not constitute a “technological protection measure” on the grounds that: 300 [7.90]

Copyright in the Digital Environment

CHAPTER 7

• the device did not fit with the definition of a TPM, since it was not designed “… to prevent or inhibit” copyright infringement (as per Copyright Act 1968 (Cth) s 10(1)); • the device was not designed to prevent the reproduction of the computer game in a “material form”, because the console’s RAM during the playing of the game was not a form of storage; and • the device was not designed to prevent the copying of the computer game as a “cinematograph film”, because the portion of the PlayStation game that was stored in the console’s RAM during the playing of the game was not a “substantial part”. The Full Court of the Federal Court (Kabushiki Kaisha Sony Computer Entertainment v Stevens (2003) 57 IPR 161) allowed Sony’s appeal against the first holding of Sackville J in respect of the definition of “technological protection measure”. However, a majority upheld the other two holdings of Sackville J, above. Stevens was granted special leave to appeal to the High Court against the decision and orders of the Full Court. Sony in return filed a notice of contention challenging the two holdings of Sackville J upheld by a majority of the Full Court.

Stevens v Sony [7.110] Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 65 IPR 513 High Court of Australia GLEESON CJ, GUMMOW, HAYNE AND HEYDON JJ: … [515] … 5. This litigation turns upon the construction of provisions in the Amendment Act which expand neither the existing categories of copyright works and other subject-matter protected by the Act nor the categories of infringement. Rather, the legislation in question deals with “anti-spoiler devices” which would allow the side-stepping of technical barriers to copying. … [520] … 29. What was in issue was the existence of the “technological protection measure” identified in the concluding words of the definition of “circumvention device”. It is upon the following definition of “technological protection measure” that the appeal by Mr Stevens turns. The definition states: technological protection measure means a device or product, or a component incorporated into a process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work or other subject-matter by either or both of the following means: (a) by ensuring that access to the work or other subject matter is available solely by use of an access code or process (including decryption, unscrambling or other transformation of the work or other subject-matter) with the authority of the owner or exclusive licensee of the copyright; (b) through a copy control mechanism.… … [522] … 34. The result is that in the present case to fix upon one “purpose” and then bend the terms of the definition to that end risks “picking a winner” where the legislature has stayed its hand from doing so. In the selection of a sole or dominant “purpose”, there is a risk of unintended consequences, particularly where, as here, the substratum of the legislation is constantly changing technologies. “Technological protection measure” 35. These considerations indicate the approach to construction evident in the reasoning of Sackville J, with its close attention to text and structure. Of the expression “technological protection measure”, his Honour said (at 80): [7.110]

301

Intellectual Property: Commentary and Materials

Stevens v Sony cont. The definition has a number of elements, as follows: • a device or product, or a component incorporated into a process • that is designed • in the ordinary course of its operation • to prevent or inhibit the infringement of copyright in a work [or other subject-matter] by either or both of two particular means. The two particular means of preventing or inhibiting the infringement of copyright are these: • ensuring that access to the work is available solely by use of an access code or process with the authority of the owner or licensee; • or a copy control mechanism. 36. Sackville J did not accept the construction advanced by Sony which was to be accepted in the Full Court and which is urged again on this appeal. His Honour rejected the proposition that: (at 81): the definition is concerned with devices or products that do not, by their operations, prevent or curtail specific acts infringing or facilitating the infringement of copyright in a work [or other subject-matter], but merely have a general deterrent or discouraging effect on those who might be contemplating infringing copyright in a class of works, for example by making unlawful copies of a CD-ROM. Rather, Sackville J said (at 80): It can be seen that the focus of the definition, as the expression “technological protection measure” itself implies, is on a technological device or product that is designed to bring about a specified result (preventing or inhibiting the infringement of copyright in a work) by particular means. Each of the specified means involves a technological process or mechanism. The means identified in par (a) is an access code or process that must be used to gain access to the work. The means identified in par (b) is a “copy control mechanism”. [523] 37. That latter expression is not defined in the legislation. However, the distinction between devices or means designed to prevent any copying at all and those designed to impair the quality of copies that are made has a provenance in s 296 of the 1988 UK Act … Consistently with this and with reference to the Australian legislative history, Sackville J concluded that the phrase “copy control mechanism” encompassed a mechanism restricting the extent (and, one might add, the effectiveness) of copying of a work that otherwise could be undertaken by someone with “access” to the copyright material: (at 80). 38. Sackville J concluded that (at 81): a “technological protection measure”, as defined, must be a device or product which utilises technological means to deny a person access to a copyright work [or other subject-matter], or which limits a person’s capacity to make copies of a work [or other subject-matter] to which access has been gained, and thereby “physically” prevents or inhibits the person from undertaking acts which, if carried out, would or might infringe copyright in the work [or other subject-matter]. That construction should be accepted. 39. It is important to understand that the reference to the undertaking of acts which, if carried out, would or might infringe, is consistent with the fundamental notion that copyright comprises the exclusive right to do any one or more of “acts” primarily identified in ss 31 and 85 – 88 of the Act. The definition of “technological protection measure” proceeds on the footing that, but for the operation of the device or product or component incorporated into a process, there would be no technological or mechanical barrier to “access” the copyright material or to make copies of the work after “access” has been gained. The term “access” as used in the definition is not further explained in the legislation. 302 [7.110]

Copyright in the Digital Environment

CHAPTER 7

Stevens v Sony cont. It may be taken to identify placement of the addressee in a position where, but for the “technological protection measure”, the addressee would be in a position to infringe. 40. This construction of the definition is assisted by a consideration of the “permitted purpose” qualifications to the prohibitions imposed by s 116A(1). First, s 116A(3) provides that, in certain circumstances, the section does not apply in relation to the supply of a circumvention device “to a person for use for a permitted purpose”. The term “supply” means selling the circumvention device, letting it for hire, distributing it or making it available online (s 116A(8)). Secondly, s 116A(4) states that the section in certain circumstances does not apply in relation to the making or importing of a circumvention device “for use only for a permitted purpose”. … [524] … 44. There are three other considerations which support Sackville J’s construction of the definition. 45. The first is that, in choosing between a relatively broad and a relatively narrow construction of legislation, it is desirable to take into account its penal character. The present litigation does not arise from the institution of criminal proceedings under the offence provisions now contained particularly in s 132 of the Act. However, a person who makes or sells a circumvention device (s 132(5B)) is liable to imprisonment for not more than five years (s 132(6A)). An appreciation of the heavy hand that may be brought down by the criminal law suggests the need for caution in accepting any loose, albeit “practical”, construction of Div 2A itself. 46. The second consideration is that the true construction of the definition of “technological protection measure” must be one which catches devices which prevent infringement. The Sony device does not prevent infringement. Nor do many of the devices falling within the definition advanced by Sony. The Sony device and devices like it prevent access only after any infringement has taken place. 47. The third consideration is that in construing a definition which focuses on a device designed to prevent or inhibit the infringement of copyright, it is important to avoid an overbroad construction which would extend the copyright monopoly rather than match it. A defect in the construction rejected by Sackville J is that its effect is to extend the copyright monopoly by including within the definition not only technological protection measures which stop the infringement of copyright, but also devices which prevent the carrying out of conduct which does not infringe copyright and is not otherwise unlawful. One example of that conduct is playing in Australia a program lawfully acquired in the United States. It was common ground in the courts below and in argument in this Court that this act would not of itself have been an infringement (55 IPR 497 at 518, 522-3). [525] MCHUGH J: … [540] … Construing the legislation 126. Much modern legislation regulating an industry reflects a compromise reached between, or forced upon, powerful and competing groups in the industry whose interests are likely to be enhanced or impaired by the legislation. In such cases, what emerges from the legislative process is frequently not a law motivated solely by the public interest. It reflects wholly or partly a compromise that is the product of intensive lobbying, directly or indirectly, of Ministers and parliamentarians by groups in the industry seeking to achieve the maximum protection or advancement of their respective interests. The only purpose of the legislation or its particular provisions is to give effect to the compromise. To attempt to construe the meaning of particular provisions of such legislation not solely by reference to its text but by reference to some supposed purpose of the legislation invites error. … … [544] … 139. In my opinion, for the purpose of s 10(1), a device is a device that is “designed … to … inhibit” copyright if the device functions, “in the ordinary course of its operation”, so as to make the doing of an act of copyright infringement – not impossible – but more difficult than it would be if the device did not operate. [7.110]

303

Intellectual Property: Commentary and Materials

Stevens v Sony cont. 140. This interpretation does not render the term “inhibit” redundant because it applies to at least two categories of devices that do not have an absolute preventative effect on copyright infringement. Thus, there are protective devices that regulate a user’s access, not to the work itself, but to the appliance through which works are accessed. For example, “device binding” is a measure through which the decryption key of a work is linked to the “unique identifier” of the computer of a person who is licensed to download and copy a work: Kerr, Maurushat and Tacit, “Technical Protection Measures: Tilting at Copyright’s Windmill” (2002-2003) 34 Ottawa Law Review 7 at 16. The work may only be downloaded and saved (and thus, copied) onto a computer with this identifier. The fact that access to the work is available solely by use of a decryption key that is linked to the computer’s identifier does not make it impossible for another user of the same computer – who has not been licensed to reproduce the material – to download and save the work. Nonetheless, in [545] disenabling the access of all other computers to the work, “device binding” mechanisms function to make it more difficult for users – who are not licensed to download the work – to have access to an appliance that will enable the copying and infringement of copyright in the work. In this way, “device binding” inhibits, but does not prevent, copyright infringement. KIRBY J: …[550] … 170. … Although I agree in the conclusion stated in the reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ (“the joint reasons”) and of McHugh J as to the issues in, and outcome of, this appeal, it is to clarify and elaborate the range of considerations that affect my reasoning that I write separately. … … 217. In Wilson v Anderson (2002) 213 CLR 401 at 457 [139] I said, in words to which I adhere, that fundamental rights will persist in the face of legislation said to be inconsistent with them “‘unless there be a clear and plain intention’ to extinguish such rights”. These remarks were made in the context of a suggested extinguishment of rights ordinary to the ownership and possession of property. I added (at 457-458 [140]): It is an old, wise and beneficial presumption, long obeyed, that to take away people’s rights, Parliament must use clear language. The basic human right to own property and to be immune from arbitrary dispossession of property is one generally respected by Australian lawmakers. This fundamental rule attributes to the legislatures of Australia a respect for the rights of the people which those legislatures have normally observed, being themselves regularly accountable to the electors as envisaged by the [564] Constitution. In some circumstances, at least in respect of federal legislation depriving people of established property rights, the presumption to which I have referred is reinforced by constitutional imperatives. 218. To the extent that attempts are made to push the provisions of Australian copyright legislation beyond the legitimate purposes traditional to copyright protection at law, the Parliament risks losing its nexus to the constitutional source of power. That source postulates a balance of interests such as have traditionally been observed by copyright statutes, including the Copyright Act. 219. In the present case, it is legitimate to say that, had it been the purpose of the Parliament to push the provisions of the Copyright Act attaching offences and sanctions to circumvention of TPMs in a way that deprived chattel owners of ordinary rights of ownership, such a provision would have been spelt out in unmistakable terms. In the definition of TPM in s 10(1) of the Copyright Act, such unmistakable language does not appear. This fact affords a further reason for preferring the more restricted interpretation that is compatible with the ordinary incidents of ownership of lawfully acquired chattels. … 224. In these circumstances, it is preferable for this Court to say with some strictness what s 10(1) of the Copyright Act means in its definition of TPM, understood according to the words enacted by the 304 [7.110]

Copyright in the Digital Environment

CHAPTER 7

Stevens v Sony cont. Parliament. If it should transpire that this is different from the purpose that the Parliament was seeking to attain (or if it should appear that later events now make a different balance appropriate) it will be open to the Parliament, subject to the Constitution, to enact provisions clarifying its purpose for the future. Moreover, the submissions in the present case, as it progressed through the courts, called to attention a number of considerations that may need to be given weight in any clarification of the definition of TPM in the Copyright Act. Such considerations included the proper protection of fair dealing in works or other subject matters entitled to protection against infringement of copyright; proper protection of the rights of owners of chattels in the use and reasonable enjoyment of such chattels; the preservation of fair copying by purchasers for personal purposes; and the need to protect and uphold technological innovation which an over rigid definition of TPMs might discourage. These considerations are essential attributes of copyright law as it applies in Australia. They are integrated in the protection which that law offers to the copyright owner’s interest in its intellectual property.

The US Free Trade Agreement Implementation Act 2004 Liability of internet service providers [7.120] The US Free Trade Agreement Implementation Act 2004 (Cth), which came into

effect on 1 January 2005, inserted Part V Division 2AA – Limitations on remedies available against carriage service providers (ss 116AA – 116AJ) into the Copyright Act 1968 (Cth), and thereby implemented provisions agreed on in the Australia–US Free Trade Agreement (AUSFTA). The effect of these amendments is, broadly speaking, to provide substantial encouragement to internet service providers (ISPs) to co-operate with copyright owners and holders, and enforcement agencies, in monitoring and taking action against online copyright infringers. The amendments provide “safe harbour” provisions for ISPs – in other words, a defence for ISPs that excludes liability for damages for copyright infringement upon certain conditions. The AUSFTA identified two separate but complementary descriptors of an ISP, recognising the potential for both direct and arm’s length or notional relationships between the ISP and internet users/subscribers (AUSFTA Article 17.11.29(xii)): • as a provider of transmission, routing, or connections for digital online communications without modification of their content between or among points specified by the user of material of the user’s choosing; and • as a provider or operator of facilities for online services or network access. The provisions in respect of limitations on the liability of internet service providers in the above new Copyright Act 1968 (Cth) Division 2AA are enshrined in AUSFTA Article 17.11.29 Enforcement of Intellectual Property Rights. In similar vein, AUSFTA Article 17.4.7 also required parties to the Agreement to create a civil and criminal liability scheme for acts constituting the circumvention of any TPMs, and for manufacturing or dealing in devices primarily designed to enable, or promoted as enabling, the circumvention of TPMs or which have limited commercial purpose other than the circumvention of TPMs. Article 17.4.8 establishes similar requirements in respect of ERMI.

[7.120]

305

Intellectual Property: Commentary and Materials

Australia–United States Free Trade Agreement [7.130] Australia–United States Free Trade Agreement Chapter 17 Article 17.11 Chapter 17–Intellectual Property Rights Article 17.11: Enforcement of Intellectual Property Rights Limitations on liability for service providers 29. Consistent with Article 41 of the TRIPS Agreement, for the purposes of providing enforcement procedures that permit effective action against any act of copyright infringement covered under this Chapter, including expeditious remedies to prevent infringements and criminal and civil remedies, each Party shall provide, consistent with the framework specified in this Article: (a)

legal incentives for service providers to cooperate with copyright owners in deterring the unauthorised storage and transmission of copyrighted materials; and

(b)

limitations in its law regarding the scope of remedies available against service providers for copyright infringements that they do not control, initiate, or direct, and that take place through systems or networks controlled or operated by them or on their behalf, as set forth in this sub-paragraph. (i)

These limitations shall preclude monetary relief and provide reasonable restrictions on court-ordered relief to compel or restrain certain actions for the following functions, and shall be confined to those functions: (A) transmitting, routing, or providing connections for material without modification of its content, or the intermediate and transient storage of such material in the course thereof; (B)

caching carried out through an automatic process;

(C)

storage at the direction of a user of material residing on a system or network controlled or operated by or for the service provider; and

(D)

referring or linking users to an online location by using information location tools, including hyperlinks and directories.

(ii)

These limitations shall apply only where the service provider does not initiate the chain of transmission of the material and does not select the material or its recipients (except to the extent that a function described in clause (i)(D) in itself entails some form of selection).

(iii)

Qualification by a service provider for the limitations as to each function in clause (i)(A) through (D) shall be considered separately from qualification for the limitations as to each other function, in accordance with the conditions for qualification set forth in clauses (iv) through (vii).

(iv)

With respect to function referred to in clause (i)(B), the limitations shall be conditioned on the service provider:

306 [7.130]

(A)

permitting access to cached material in significant part only to users of its system or network who have met conditions on user access to that material;

(B)

complying with rules concerning the refreshing, reloading, or other updating of the cached material when specified by the person making the material available online in accordance with a relevant industry standard data communications protocol for the system or network through which that person makes the material available that is generally accepted in the Party’s territory;

Copyright in the Digital Environment

CHAPTER 7

Australia–United States Free Trade Agreement cont.

(v)

(vi)

(C)

not interfering with technology used at the originating site consistent with industry standards generally accepted in the Party’s territory to obtain information about the use of the material, and not modifying its content in transmission to subsequent users; and

(D)

expeditiously removing or disabling access, on receipt of an effective notification of claimed infringement, to cached material that has been removed or access to which has been disabled at the originating site.

With respect to functions referred to in clause (i)(C) and (D), the limitations shall be conditioned on the service provider: (A)

not receiving a financial benefit directly attributable to the infringing activity, in circumstances where it has the right and ability to control such activity;

(B)

expeditiously removing or disabling access to the material residing on its system or network on obtaining actual knowledge of the infringement or becoming aware of facts or circumstances from which the infringement was apparent, such as through effective notifications of claimed infringement in accordance with clause (ix); and

(C)

publicly designating a representative to receive such notifications.

Eligibility for the limitations in this sub-paragraph shall be conditioned on the service provider: (A)

adopting and reasonably implementing a policy that provides for termination in appropriate circumstances of the accounts of repeat infringers; and

(B)

accommodating and not interfering with standard technical measures accepted in the Party’s territory that protect and identify copyrighted material, that are developed through an open, voluntary process by a broad consensus of copyright owners and service providers, that are available on reasonable and non-discriminatory terms, and that do not impose substantial costs on service providers or substantial burdens on their systems or networks.

(vii)

Eligibility for the limitations in this subparagraph may not be conditioned on the service provider monitoring its service, or affirmatively seeking facts indicating infringing activity, except to the extent consistent with such technical measures.

(viii)

If the service provider qualifies for the limitations with respect to the function referred to in clause (i)(A), court-ordered relief to compel or restrain certain actions shall be limited to terminating specified accounts, or to taking reasonable steps to block access to a specific, non-domestic online location. If the service provider qualifies for the limitations with respect to any other function in clause (i), court-ordered relief to compel or restrain certain actions shall be limited to removing or disabling access to the infringing material, terminating specified accounts, and other remedies that a court may find necessary provided that such other remedies are the least burdensome to the service provider among comparably effective forms of relief. Each Party shall provide that any such relief shall be issued with due regard for the relative burden to the service provider and harm to the copyright owner, the technical feasibility and effectiveness of the remedy, and whether less burdensome, comparably effective enforcement methods are available. Except for orders ensuring the preservation of evidence, or other orders having no material adverse effect on the operation of the service provider’s

[7.130]

307

Intellectual Property: Commentary and Materials

Australia–United States Free Trade Agreement cont. communications network, each Party shall provide that such relief shall be available only where the service provider has received notice and an opportunity to appear before the judicial authority. (ix)

For the purposes of the notice and take down process for the functions referred to in clause (i)(C) and (D), each Party shall establish appropriate procedures for effective notifications of claimed infringement, and effective counter-notifications by those whose material is the subject of a notice for removal or disabling, on the basis of a good faith belief that it was issued by mistake or misidentification in accordance with clause (v)(B). Each Party shall also provide for monetary remedies against any person who makes a knowing material misrepresentation in a notification or counternotification that causes injury to any interested party as a result of a service provider relying on the misrepresentation.

(x)

If the service provider removes or disables access to material in good faith based on claimed or apparent infringement, each Party shall provide that the service provider shall be exempted from liability for any resulting claims, provided that, in the case of material residing on its system or network, it takes reasonable steps promptly to notify the person making the material available on its system or network that it has done so and, if such person makes an effective counter-notification and is subject to jurisdiction in an infringement suit, to restore the material online unless the person giving the original effective notification seeks judicial relief within a reasonable time.

The Copyright Amendment Act 2006 [7.140] Following the settlement of the Australia–US Free Trade Agreement (AUSFTA) in

2004, the Australian Government undertook extensive amendments to the Copyright Act 1968 (Cth). These amendments were encompassed in the Copyright Amendment Act 2006 (Cth). This new legislation extensively amended the Copyright Amendment (Digital Agenda) Act 2000 (Cth), in part to meet Australia’s obligations under Article 17.4.7 of the AUSFTA. In addition to extensive provisions relating to TPMs, circumvention devices and ERMI, the amending Act of 2006 also included amendments in respect of: • time-shifting, format-shifting and space-shifting; • certain non-commercial activities of libraries, educational institutions and cultural institutions; • use of copyright material by people with a disability; • parody and satire; • the Copyright Tribunal; • criminal penalties; • presumptions; and • unauthorised reception of encoded broadcasts. The time-shifting, format-shifting and space-shifting provisions of the new s 111, headed “Recording broadcasts for replaying at more convenient time” permit an individual to make a copy of a broadcast, or other work or subject matter included in the broadcast, for watching at a more convenient time, without infringing copyright. The previous exception only covered 308 [7.140]

Copyright in the Digital Environment

CHAPTER 7

copyright in the television broadcast or sound broadcast – not the works comprised in the broadcast, such as a film. The copy must be for the person’s own private and domestic use (which can include other family or household members), but can be watched outside the household. The Act does not make any specification in respect of the copy being deleted after it has been watched or how long the copy can be kept. Similarly, the owner of certain articles embodying copyright material may make a copy or reproduce that copyright material in a different format – for example, to transfer from DVD to mp3 player format. The person must own the original copy of the sound recording and the device on which the copy is made. The exception does not apply to recordings downloaded from an internet radio broadcast or similar program. In respect of TPMs and ERMI, these 2006 amendments provide new definitions for: • access control technological protection measure; • circumvention device and circumvention service; and • technological protection measure. The Copyright Amendment Act 2006 (Cth) revised, repealed and inserted new provisions to broaden the scope of the original Act and to eliminate or at least minimise interpretative disputation. The amending Act added a new form of TPM, namely one that was concerned with “access control”, and not just preventing or prohibiting copyright infringement, as was previously the case. It inserted definitions for “access control technological protection measures” and “controls access” in the Copyright Act 1968 (Cth) s 10(1), and repealed and substituted definitions for “circumvention device”, “circumvention service” and “technological protection measure”. The heading to the Copyright Act 1968 (Cth) Part V Division 2A was also changed to “Actions in relation to technological protection measures and electronic rights management information”, broadening its scope and removing the former limiting reference to circumvention devices only. Importantly, the Copyright Act 1968 (Cth) s 116A, inserted by the Copyright Amendment (Digital Agenda) Act 2000 (Cth) and found wanting in Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 65 IPR 513 HCA 58, was repealed and substituted with completely different provisions, including the exceptions to liability under the new TPM scheme. These include provisions relating to permissions, interoperability, encryption research, computer security testing, online privacy, law enforcement and national security, libraries and prescribed acts (Copyright Act 1968 (Cth) ss 116AK – 116D). The amendments also provide for sanctions against the use, manufacture and supply of devices designed to circumvent TPMs that control access (whether or not that access control is for the purposes of inhibiting or preventing infringement), as well as sanctions against the use of a circumvention device or service to get access to copyright material. There are considerably restricted exceptions, rather than “permitted purposes”, relating to the supply or use of a circumvention device or service. Legislative and administrative proceedings have been introduced to enable greater control of the conditions under which a person may be allowed to circumvent a TPM in order to make non-infringing uses of copyright material. TPMs that are solely designed for other purposes, such as market segmentation (ie, region coding) or the protection against competition in aftermarket goods (ie, spare parts) where the TPM does not have a connection with copyright, are not covered. There are limited exceptions included for: [7.140]

309

Intellectual Property: Commentary and Materials

• interoperability between computer programs; • encryption research; • computer security testing; • online privacy; • law enforcement and national security; and • acquisitions by libraries and other related institutions.

The Copyright Amendment (Online Infringement) Act 2015 [7.145] On 26 June 2015, the Copyright Amendment (Online Infringement) Act 2015 (Cth)

came into effect. The Act introduces new provisions into the Copyright Act 1968 (Cth) to enable copyright owners and rights holders to require carriage service providers to take action against (individual or multiple) websites that infringe the owners’ and holders’ rights in respect of copyright material. The primary provision introduces a new s 115A into the Copyright Act 1968 (Cth), enabling copyright owners to apply for a Court injunction requiring carriage service providers to take reasonable steps block access to an online location if that location has the primary purpose of infringing copyright, or facilitating the infringement of copyright. The amending legislation does not prescribe what constitutes “reasonable steps” or an “online location.” The Federal Court may grant the injunction if it is satisfied that a carriage service provider gives access to an online location outside Australia, the online location infringes, or facilitates an infringement of, the copyright, and the primary purpose of the online location is to infringe, or to facilitate the infringement of, copyright (whether or not in Australia). In deciding whether or not to grant the injunction, the Court may take into account the flagrancy of the infringement or the facilitation of such infringement, and whether; • the online location makes available or contains directories, indexes or categories of the means to infringe, or to facilitate an infringement of, copyright; • the owner or operator of the online location demonstrates a disregard for copyright generally; • access to the online location has been disabled by orders from any court of another country or territory on the grounds of or related to copyright infringement; • disabling access to the online location is a proportionate response in the circumstances; • the impact on any person, or class of persons, likely to be affected by the grant of an injunction; • it is in the public interest to disable access to the online location; and • the owner has notified the carriage service provider and the person who operates the online location. The Explanatory Memorandum states that carriage service providers will only be liable for the cost of court proceedings where they decide to participate in the process. And since they will be obeying a Federal Court order in providing the account information they will have no liability in relation to claims brought against them in relation to their disclosure of that information. Further, the court may allocate the costs of blocking the website incurred by CSPs to the copyright owners. 310 [7.145]

Copyright in the Digital Environment

CHAPTER 7

The amending Act came into effect after the Dallas Buyers Club instituted action against iiNet in late 2014 for alleged infringing online downloads utilising the Bit-Torrent technology by iiNet’s clients, but before the litigation ceased, perhaps for the time being, in early 2016. See following discussion at [7.310], and Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 17; Dallas Buyers Club LLC v iiNet Ltd (No 4) [2015] FCA 838; and Dallas Buyers Club LLC v iiNet Ltd (No 5) [2015] FCA 1437.

INFRINGING INTERNET FILE SHARING Revolving doors – old technologies out and new technologies in [7.150] While earlier cases (such as Universal Music Australia Pty Ltd v Cooper (2005) 65

IPR 409) of copyright infringement involving internet service providers centred on the issue of direct liability for infringement, more recent cases demonstrate a shift towards the nature of authorisation and indirect liability in the internet context (see for example, the Roadshow Films v iiNet litigation during 2010 and 2011 and the Dallas Buyers Club v iiNet litigation during 2014 and 2015). The shift reflects the changing nature of technology in the digital environment, in which software protocols enable an arm’s length disassociation with the material that is being transmitted by users. As demonstrated in Roadshow Films v iiNet at first instance and on appeal, internet service providers’ liability for the end-user actions under current Australian common law and statute requires a distinction to be drawn between the provision of the “means” of possible infringement and the provision of a precondition to infringement occurring. Simply providing a service from which users “may” infringe copyright is not the same as providing the service and resources to infringe copyright, as was the case in Universal Music Australia v Sharman License Holdings Ltd (Kazaa Case) (2005) 65 IPR 289 (see [7.200] following).

The Napster case [7.160] Litigation over liability for authorisation of infringing activity over the internet first

occurred in the United States, notably in A&M Records Inc v Napster Inc 239 F 3d 1004 (9th Circuit 2001). The Napster software protocol maintained a centralised database of MP3 files designated by users currently online as available for sharing with other Napster users. It also maintained a central search engine and used distributive software for locating files on users’ personal computers or servers. The music files did not exist on a central directory; rather, the desired music files were transferred directly from the computer of one user to that of another. Napster was one of the first peer-to-peer (P2P) networks and became synonymous with file sharing. In 2000, A&M Records Inc brought legal action against Napster for contributory and vicarious copyright infringement under the Digital Millennium Copyright Act (US). A&M Records made three claims against Napster: • Napster’s users were directly infringing copyright; • Napster was liable for contributory infringement of copyright; and • Napster was liable for vicarious infringement of copyright. The first issue was not contested as it was accepted that users were illegally copying music files and therefore infringing copyright. On the second issue of contributory infringement of copyright, Napster was found liable on the following grounds: [7.160]

311

Intellectual Property: Commentary and Materials

• some of Napster’s users were direct infringers of copyright as they reproduced and distributed music without permission; • Napster had direct knowledge that this infringing was occurring, since there was evidence that Napster’s own executives were downloading material; and • Napster’s oversight of the website contributed to the direct infringement by users. On the third issue of vicarious infringement, the claim was upheld on the following grounds: • some users directly infringed copyright; • Napster had the capacity to block users, thereby enabling Napster to control direct infringements; and • Napster benefited financially from the infringements because its value increased in proportion with the increase in its user base and rates.

The Betamax defence [7.170] Napster relied on the “Betamax” defence to argue that, as the creators of new

technology, they were not responsible for the burden of copyright infringement, when the technology can be used for substantial non-infringing purposes. The “Betamax” defence was used in the United States by Sony in Sony Corporation of America v Universal City Studios Inc 464 US 417 (1984). In this case, the US court accepted that, as the product was capable of substantial non-infringing uses, it did not matter that some users were actually using the product to infringe copyright. The court was mindful of supporting technological innovation and not allowing the protection of copyright to cripple innovation. However, in A&M Records Inc v Napster Inc 239 F 3d 1004 (9th Circuit 2001), the court considered that the “Betamax” defence was spurious because Napster had actual knowledge of the direct infringement. Therefore, the test for contributory infringement of copyright requires an element of control. Sony provided the means that could contribute to the infringement of copyright but they had no control over the possible infringement; whereas Napster provided the means and also had the ability to control it, and to stop the infringement. Napster was ordered to block access to infringing materials. However, it was unable to do this and determined to close its operations. Napster was declared bankrupt in 2002.

Universal Music Australia v Cooper [7.180] In Universal Music Australia Pty Ltd v Cooper (2005) 65 IPR 409, the applicants, a

number of Australian and overseas record companies, alleged that by means of, or via, or in the course of, operating the website MP3s4FREE, Cooper and the other respondents infringed the applicants’ copyright in music sound recordings by: • authorising internet users E-Talk Communications and Com-Cen to make copies of music sound recordings, including those uploaded or downloaded MP3s to or from the website, and communicating them to the public; • entering into a common design with internet users to make copies of the music sound recordings or to communicate them to the public; • committing secondary infringement pursuant to the Copyright Act 1968 (Cth) s 103 arising from their alleged exhibition and distribution of infringing digital music files. 312 [7.170]

Copyright in the Digital Environment

CHAPTER 7

Cooper was the registered owner of the domain name “mp3s4free.net” and the originator, owner and operator of the MP3s4FREE website. The second and third respondents, E-Talk Communications and Com-Cen, conducted an ISP business which hosted the website. The fourth and fifth respondents, Bal and Takoushis, were the principal and an employee respectively of E-Talk/Com-Cen.

Universal Music v Cooper [7.190] Universal Music Australia Pty Ltd v Cooper (2005) 65 IPR 409 Federal Court of Australia TAMBERLIN J: … [416] … The Cooper website and hyperlinking 19. Linking is a central feature of the World Wide Web. One way in which links are used is to direct internet users to another web page, whether that page is located on the same website or is part of a totally different website. Moving between web pages by activating hyperlinks on the website is a process typically known as “browsing”. These other web pages may themselves contain hyperlinks to further web pages or to specific files or documents. The hyperlinks on the Cooper website are used to direct internet users to other pages of the website or to the remote websites from which the music files are downloaded. A further way in which hyperlinks are used is to enable internet users to download a specific file or document of interest. This type of hyperlink is used to activate a download of a discrete data file, such as a document or a music file, to the internet user’s computer. The hyperlink sends a command to the remote computer on which the file is stored to release the file to the person who has activated [418] the hyperlink on the website. Without this command to release the file, and the communication from the website’s software, the file would not be available to the user who has requested it. 20. The above principles apply in the case of digital music files, with each file being a discrete set of data, usually with associated information such as file size, file title and other information, often described as metadata. This data can be transmitted to other computers and reproduced on the user’s computer as an identical discrete set of data, usually with the same or virtually identical metadata. Therefore, when a link to a music file is activated, the remote computer on which the file is stored is directed to, and does automatically, transfer a copy of the file from the host server directly to the computer of the user activating the link. In the present case, the music file is not sent to, downloaded on or saved to the Cooper website or the host server of the Cooper website. The digital music files are stored on remote computers which are linked to the website and are accessed in the above way. 21. The ultimate location of the data file from which the download occurs is often arbitrary and frequently unknown to the internet user. It is possible that the file could be stored on the same computer server on which the webpage files are stored. But it could equally be stored on another computer with no physical proximity to the computer on which the webpage files are stored. The physical location of a data file can be, and often is, entirely independent from the location of the web pages visible to the internet user. … Professor Sterling gave evidence that in his opinion, in the case of the Cooper website, the presence of Java script code meant that an internet user is unlikely to know where a digital music file that is listed on the website, and capable of being directly downloaded by an activating hyperlink, was located. For example, Professor Sterling said that there were no messages or signs to inform internet users that they were leaving one website and going to another. 22. In broad terms, there are two ways in which a hyperlink can be established on a website. They can be created by the operator of a website or, alternatively, the link can be created by software tools which are made available by the website to internet users to enable them to create hyperlinks that are visible on the website. The latter is what occurred in the case of the Cooper website. Professor Sterling gave evidence that a person cannot create a hyperlink between a file and website without the [7.190]

313

Intellectual Property: Commentary and Materials

Universal Music v Cooper cont. permission of the operator of the website, because access to the code required to create the link must occur at the website. In order for Cooper to enable files to be automatically linked to his website by internet users, he must have given permission for that access to occur. This process of adding hyperlinks to the website could not have occurred without Cooper’s permission. 23. In the case of hyperlinking, it is not the physical location of the computer that is relevant but rather the network address, internet provider address and the URL address associated with the computers. If Cooper did not know this information, he could have obtained it by relatively standard technical measures which are available to any operator of a website. This information must be [419] incorporated into the website because without that information it would not have been possible for the links to work and internet users enabled to access the files. Cooper could, if he wanted to, have asked contributors of the hyperlinks to disclose their identity by adding an extra field in the form he used without any additional complex coding being required. … 25. In the present case, the hyperlinks on the website function in a variety of ways. There are hyperlinks which transfer the user to a web page on a remote website that contains information of various types. In such a case, the hyperlinks take the internet user directly, or via a series of other web pages, to another page on the same remote website that posts the software. It is up to the user to follow the hyperlink, or series of hyperlinks, on the remote site in order to arrive at the page that contains the hyperlink to the music recording and commence the download of the software. The download of the software takes place directly to the user. Other hyperlinks take the user to a page on a remote website on which there appears a direct link to the software, which may or may not contain links in addition to the music file. The user has only then to click on the link to the music file to commence the download. Finally, the hyperlinks may transfer the user to a music file on the remote website such that the download automatically commences without further user information being required. … Authorisation of copyright infringement [428] …81. Subsection 101(1A) was introduced into the Act by the 2000 Amendment. This provision states that in deciding whether a person has authorised the doing in Australia of any act comprised in the copyright, the matters that must be taken into account by the Court include: (a)

the extent (if any) of the person’s power to prevent the doing of the act concerned;

(b)

the nature of any relationship existing between the person and the person who did the act concerned;

(c)

whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

These factors are not exhaustive and do not prevent the Court from taking into account other factors, such as the respondent’s knowledge of the nature of the copyright infringement. 82. Among the objectives expressed in s 3 of the 2000 Amendment are to provide a practical enforcement regime for copyright owners and to promote access to copyright material online. These broadly expressed objectives conflict to some extent, however, in the present case, I consider that the reference to a practical enforcement regime is of some significance. 83. Item 39 of the Explanatory Memorandum to the 2000 Amendment explains that the object of the Amendment was to “essentially codif[y] the principles in relation to authorisation that currently exist at common law”. However, the applicants submit that the 2000 Amendment has strengthened and broadened the concept of infringement by authorisation. For example, the applicants refer to s 101(1A)(a), which they say contemplates that even a person with no power to “prevent” the doing of the act may nevertheless authorise infringement, and s 101(1A)(c), which requires that the Court take into account whether the person “took any other reasonable steps”. 314 [7.190]

Copyright in the Digital Environment

CHAPTER 7

Universal Music v Cooper cont. 84. The Cooper website is carefully structured and highly organised and many of its pages contain numerous references to linking and downloading. The website also provides the hyperlinks that enable the user to directly access the files on, and activate the downloading from, the remote websites. The website is clearly designed to, and does, facilitate and enable this infringing downloading. I am of the view that there is a reasonable inference available that Cooper, who sought advice as to the establishment and operation of his website, knowingly permitted or approved the use of his website in this manner and designed and organised it to achieve this result. In view of the absence of Cooper from the witness box, without any reasonable explanation apart from a tactical forensic suggestion that he was not a necessary or appropriate witness to be called in his own case, I am satisfied that the available inference of permission or approval by Cooper can more safely and confidently be drawn. Accordingly, I infer that Cooper has permitted or approved, and thereby authorized, the copyright [429] infringement by internet users who access his website and also by the owners or operators of the remote websites from which the infringing recordings were downloaded. 85. The words “sanction” and “approve” are expressions of wide import. Cooper, in my view, could have prevented the infringements by removing the hyperlinks from his website or by structuring the website in such a way that the operators of the remote websites from which MP3 files were downloaded could not automatically add hyperlinks to the website without some supervision or control by Cooper. The evidence of Professor Sterling, who was called on behalf of the applicants, is unchallenged to the effect that a website operator is always able to control the hyperlinks on his or her website, either by removal of the links or by requiring measures to be taken by the remote website operator prior to adding a hyperlink. A person cannot create a hyperlink between a music file and a website without the permission of the operator of the website because access to the code that is required to create the link must occur at level of the website. The Cooper website employed a “CGI-BIN” script to accept hyperlink suggestions from visitors to the website. By virtue of this script, such suggestions were automatically added to the website without the intervention of Cooper. The evidence is that alternative software was in existence that would have enabled a third party to add a hyperlink to a website but which required the consent or approval of the website operator before such hyperlinks were added. … 87. The Cooper website included a number of disclaimers indicating that MP3s could be both legal and illegal and that the downloading of MP3s would be legal only when the song’s copyright owner had granted permission for the internet user to download and play the music sound recording. It is acknowledged by counsel for the first respondent that the disclaimers on the website inaccurately reflected copyright law in Australia. In my view, these statements do not, in the terms of s 101(1A)(c) of the Act, amount to reasonable steps to prevent or avoid the doing of the act. The disclaimers in fact indicate Cooper’s knowledge of the existence of illegal MP3s on the internet and the likelihood that at least some of the MP3s to which the website provided hyperlinks constituted infringing copies of copyright music sound recordings. However, no attempt was made by Cooper, when hyperlinks were submitted to the website, to take any steps to ascertain the legality of the MP3s to which the hyperlinks related or the identity of the persons submitting the MP3s. In the words of Knox CJ in Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481 at 488, as approved by Gibbs CJ in Moorhouse at 13, Cooper “abstained from action which under the circumstances then existing it would have been reasonable to take, or … exhibited a degree of indifference from which permission ought to be inferred.” 88. Accordingly, I find that Cooper has authorised the infringement of copyright in the music sound recordings, both by the internet users who downloaded the recordings and the operators of the remote websites. [430] … Section 112E defences [7.190]

315

Intellectual Property: Commentary and Materials

Universal Music v Cooper cont. 97. The 2000 Amendment provided for the protection of persons who make, or facilitate the making of, a communication. Section 39B applies to infringement of copyright in works and s 112E, which is in substantially similar terms, applies to infringement of copyright in subject matter other than works. Section 112E provides that a person, including a carrier or carriage service provider, who provides facilities for making, or facilitating the making of, a communication is not taken to have authorised any infringement of copyright in an audio-visual item merely because another person uses the facilities so provided to do something the right to do which is included in the copyright. 98. … The defence under s 112E applies only to infringement by authorisation. 99. … In my opinion, the circumstances of this case are taken outside the protection afforded by s 112E of the Act because Cooper has offered encouragement to users to download offending material, as evidenced by the numerous references to downloading material on the website, and has specifically structured and arranged the website so as to facilitate this downloading. … [432] … The US Free Trade Agreement Implementation Act 2004 (Cth) 103. The second to fifth respondents seek to rely on the amendments to the Act effected by the US Free Trade Agreement Implementation Act 2004 (Cth) (“the FTA Act”), which came into effect on 1 January 2005 after the initial hearing of this matter had taken place. 104. The FTA Act inserted Div 2AA into Part V of the Act. The effect of these amendments was, broadly speaking, to provide a defence for internet service providers which excluded liability for damages for copyright infringement upon certain conditions. 105. The applicants submit that these amendments constitute substantive amendments to the law, as opposed to procedural amendments, and therefore the Act should not, unless clearly indicated otherwise, be read to operate retrospectively. The applicants refer to the statement of Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261 at 267: The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events. 106. I agree with the applicants’ submission. In the present case, the amendments are substantive and accordingly the provisions do not apply to the present case. 107. However, independently of that consideration, in order for the respondents to avail themselves of the protection, it is necessary under s 116AG(1) of the FTA Act for the respondents to satisfy the Court of the conditions set out in s 116AH, including that the carriage service provider has adopted and reasonably implemented a policy that provides for termination, in appropriate circumstances, of the accounts of repeated infringers. The evidence indicates that despite the respondents’ awareness that copyright material was likely to be infringed, they have not taken any steps to implement such a policy. As counsel for the applicants points out, Bal and Takoushis emphasised that they were indifferent to the use that Cooper made of the facilities provided by E-Talk/Com-Cen. This falls far short of demonstrating that they had adopted a policy to sanction infringers. 108. Section 116AH imposes further conditions depending on the specific category of activity that was engaged in by the carriage service provider. The category of activity engaged in by E-Talk/ComCen was what is referred to in [435] s 116AF as a “Category D activity”, that is, “referring users to an online location using information location tools or technology.” In the present case, the second to fifth respondents have not satisfied the particular conditions that apply to Category D activities under s 116AH. These conditions include that the provider must not have received a financial benefit directly attributable to the infringing activity if the service provider has the right and ability to control the 316 [7.190]

Copyright in the Digital Environment

CHAPTER 7

Universal Music v Cooper cont. activity. As I have found that the infringing activity is the triggering, and consequential downloading, of the music files from the website, I am satisfied that E-Talk/Com-Cen received a financial benefit from the infringing activity on the website because it obtained free advertising on the website. Further, the second to fifth respondents did not act expeditiously to remove or disable access from the hyperlinks and facilities hosted on its network notwithstanding that the circumstances made it apparent that copyright material was likely to be infringed. 109. Accordingly, I do not accept the submissions of the second to fifth respondents that their liability for damages is excluded pursuant to the FTA Act …

P2P copyright infringement: the Kazaa protocol [7.200] In the Australian jurisdiction, P2P copyright infringement of sound recordings was

considered in the case of Universal Music Australia v Sharman License Holdings Ltd (Kazaa Case) (2005) 65 IPR 289. The Kazaa Case involved over 30 applicants associated with the ownership of music and sound recording rights, and liability arising from use of the Kazaa website and FastTrack file sharing technology. Kazaa was a file sharing website owned by Sharman Industries. The Kazaa system was a graphical user interface that permitted access to two separate networks of computers connected to the internet by FastTrack and Joltid PeerEnabler search software, which allowed digital files, including audio files, to be transferred. The search software allowed Kazaa users to access “gold files”, which were files made available under licence from copyright owners, and “blue files”, which allowed them to download files from other Kazaa users. Most of this “blue file” material included infringing files. By means of the FastTrack software, Kazaa users could: • make available to other users files on their own computers stored in the software-created “My Shared Folder”; • search for files from other Kazaa users in their “My Shared Folder”; • download such files from other users; and • save such files in their “My Shared Folder”, in turn making them available to other Kazaa users. According to Sharman, the Kazaa system was an example of P2P technology, in that it enabled the transfer of computer files directly between peers or individual computer users in a network. According to Universal Music, however, while Kazaa had many P2P characteristics, it was essentially a client–server system with centrally indexed systems. The court considered that the Kazaa system network was a “distributed system”, which took advantage of the resources of the computers owned or used by the individual Kazaa users. The court held that Sharman was in breach of the Copyright Act 1968 (Cth) s 101(1) since the application of the Kazaa program, in effect, authorised copyright infringement of the sound recordings. The court found against Sharman on three main grounds: • while the Kazaa website displayed warnings against breaching copyright and provided end-user license agreements by which users agreed not to infringe copyright, the warnings and end-user agreements were not effective in preventing, or even substantially curtailing, copyright infringement by users, and Sharman was aware of this; [7.200]

317

Intellectual Property: Commentary and Materials

• Sharman did not take any action to implement technical measures to curtail the sharing of copyright files, since it would be counter to their financial interests based on maximizing usage rates; and • the Kazaa website exhorted users to “Join the Revolution” and increase their file sharing while criticising the music industry for opposing the practice.

Universal Music Australia v Sharman License Holdings [7.210] Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 65 IPR 289 Federal Court of Australia [The reasoning in relation to Copyright Act 1968 (Cth) s 101(1A) in respect of authorised acts or otherwise is extracted below.] WILCOX J: The application of s 101 to LEF and Ms Hemming 421. LEF is wholly owned and controlled by Ms Hemming. It is a “one-woman” company, Ms Hemming’s alter ego. Consequently, no distinction should be made between the position of these two respondents. 422. Counsel for the Sharman respondents disputed that any of their clients authorised copyright infringement by Kazaa users. However, they also argued that, in any event, Ms Hemming should not be made liable for any authorisation by Sharman. They referred to an observation by Gummow J in Hanimex at 283: Where the infringer is a corporation questions frequently arise as to the degree of involvement on the part of directors necessary for them to be rendered personally liable. Those questions are not immediately answered by principles dealing with “authorisation” or joint tortfeasance. Rather, recourse is to be had to the body of authority which explains the circumstances in which an officer of a corporation is personally liable for the torts of the corporation. 423. Gummow J went on to cite several cases. I need not deal with those cases. There is more recent authority on the point. 424. In King v Milpurrurra (1996) 66 FCR 474 at 494, Beazley J said: It will be recalled that in [Hanimex], Gummow J stated that the principles dealing, inter alia, with joint tortfeasance, did not directly apply when determining whether a director was liable for a company’s infringement of copyright. This must be so. The essence of joint tortfeasance is “concerted action to a common end”: The Koursk [1924] P 140 at 156. This notion does not fit easily with the liability of a director for the company’s wrongs. This is because, as Lord Reid said in Tesco Supermarkets Ltd v Nattrass [1972] AC 153] at 170-171, the person who is the directing mind and will of the company: is an embodiment of the company … and his mind is the mind of the company … Normally, [a] board of directors … carry out the functions of management and speak and act as the company. … 426. Beazley J identified two competing lines of authority: cases that held “a director is personally liable for a tortious act committed by the company which the director has ordered or procured to be done” (“the Performing Right Society test”) and cases that applied a higher test (“the Mentmore test”), whether the director (or officer) made “the tortious act his own”. Although Beazley J acknowledged that the test usually applied in Australian intellectual property cases was the Performing Right Society test, she thought that test was unsatisfactory; it failed to “pay sufficient regard, either to the separate legal existence of the company, or to the fact that the company acts through its directors”. Her Honour preferred the Mentmore test. 318 [7.210]

Copyright in the Digital Environment

CHAPTER 7

Universal Music Australia v Sharman License Holdings cont. 427. In Microsoft Corporation v Auschina Polaris Pty Ltd (1996) 71 FCR 231 (“Auschina Polaris”) at 239, Lindgren J also accepted the statement of principle of Gummow J in Hanimex. He went on to refer to the conflict of authority discussed by Beazley J, but he preferred the Performing Right Society test. 428. The same issue was discussed, in the context of a claimed patent infringement, by Finkelstein J in Root Quality Pty Ltd v Root Control Technologies Pty Ltd [2000] FCA 980 (“Root Quality”). 429. Finkelstein J rejected the Performing Right Society test. He thought it presented a number of difficulties. At [125], his Honour said: The first arises from the nature of corporate personality and the liability of a corporation for the acts of its agents. A corporation is an abstraction; a creature of statute. It can carry out acts only because the law attributes to the corporation certain actions of its directors and officers. Thus a corporation can interfere with the rights of a third party only when the acts constituting the unlawful interference are attributed to the corporation. There is a reason why, in that circumstance, the law should not impose liability both on the corporation for unlawful interference and separate liability on the director or officer for procuring that interference. 430. On the other hand, Finkelstein J was uncomfortable with the Mentmore line of cases under which, he thought, “it would not always be easy to identify the circumstances under which a director could ‘make that tort his own’”. He concluded, at [146]: All that can be said confidently is that if a director decides that his company should carry out an act that results in an infringement of the rights of a third party, the director does not, without more, render himself personally liable at the suit of the third party … The director’s conduct must be such that it can be said of him that he was so personally involved in the commission of the unlawful act that it is just that he should be rendered liable. If a director deliberately takes steps to procure the commission of an act which the director knows is unlawful and procures that act for the purpose of causing injury to a third party, then plainly it is just that liability should be imposed upon him. Lesser conduct may suffice. For example, if the director is recklessly indifferent as regards whether his company’s act was unlawful and would cause harm, that may also suffice. In the end it will depend upon the facts of each particular case. Where the boundary lies, between the non-tortious conduct of a director who acts bona fide within the course of his authority and the tortious conduct of a director who acts deliberately and maliciously to cause harm, cannot be stated with any precision. 431. The issue of the proper test was inconclusively noted in two recent Full Court judgments. In Allen Manufacturing Co Pty Ltd v McCallum & Co Pty Ltd [2001] FCA 1838; 53 IPR 400, at [43]-[44], the Court said: The difference between the two tests may be more apparent than real. We are not aware of any case in which it has been held that a director or officer of a company directed or procured the company’s infringing act, yet that person escaped liability because he or she did not deliberately, wilfully or knowingly pursue a course of conduct that was likely to constitute infringement or that reflected indifference to the risk of infringement. This may be because, in practice, an act of direction or procurement will generally meet the Mentmore test. It is notable that, in Mentmore itself, the Canadian Federal Court of Appeal declined (at 204) to “go so far as to hold that the director or officer must know or have reason to know that the acts which he directs or procures constitute infringement”. The Court declined to do this because that “would be to impose a condition of liability that does not exist for patent infringement generally”. To the extent there is a real difference between the tests, each has eloquent supporters. One day it may be necessary, in a practical sense, to choose between them. But it is not necessary to do so in this case.

[7.210]

319

Intellectual Property: Commentary and Materials

Universal Music Australia v Sharman License Holdings cont. 432. In Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 at [160]-[161], Weinberg and Dowsett JJ mentioned the two lines of authority. However, the issue went off on a pleading point. 433. It will be apparent that the authorities are in some disarray. There are numerous cases, some of them recent, that would support a decision to adopt the Performing Right Society test and ask whether Ms Hemming procured and directed the acts and omissions of Sharman that constituted authorisation of users’ infringements of the applicants’ copyrights. There could be only an affirmative answer to that question. 434. However, in recent years, several members of this Court have expressed dissatisfaction with the Performing Right Society test and have argued for the adoption of something more rigorous. Some judges have favoured the Mentmore test and asked whether the person “made the tort his own”. My difficulty is that, like Lindgren J in Auschina Polaris and Finkelstein J in Root Quality, I am not sure what that test means. Like their Honours, I prefer to eschew any catchphrase and consider the justice of the case. In Root Quality, Finkelstein J said: “The director’s conduct must be such that it can be said of him that he was so personally involved in the commission of the unlawful act that it is just that he should be rendered liable”. I am happy to adopt that test, with the qualification that the person need not be a director of the company. I adopt that approach the more readily because I believe it encapsulates the approach which has in fact been taken, although perhaps not articulated in those words, in many intellectual property cases in this Court. See, for example, Jain at 53; Auschina Polaris at 246; Metro at 593; and Cooper at [130]. 435. Jain is particularly interesting. In that case the Full Court imposed personal liability for “a studied and deliberate course of action in which Mr Jain decided to ignore the appellant’s right and to allow a situation to develop and to continue in which he must have known that it was likely that the appellants’ music would be played without any licence from it. It was within his power to control what was occurring be [sic] he did nothing at all”… 445. In the present case, it may be open to the Court to do more than find that Ms Hemming, having the power to control what was happening, did nothing at all. A combination of the two possible inferences suggested above would lead to a conclusion that Ms Hemming (alone or with others) purchased the Kazaa system from Kazaa BV and then caused, or allowed, its structure to be changed away from the use of a Kazaa server; presumably, to enable Sharman to argue (as it has done in this case) that it has no control over the copyright infringing conduct of Kazaa users. 446. In the absence of rebutting evidence on either of the points, I am inclined to the view that I should reach that conclusion. However, it is not necessary to determine that matter. At the very least, the case is on all fours with Jain. See also Auschina Polaris at 246 and Metro at 593. 447. LEF and Ms Hemming should be held to have authorised the Kazaa users’ infringements of copyright in the applicants’ sound recordings … (x) Conclusions on authorisation 489. I have found that three of the Sharman parties (Sharman, LEF and Ms Hemming) and three of the Altnet parties (Altnet, BDE and Mr Bermeister) authorised infringement of the applicants’ copyright by Kazaa users. They did this both individually and as joint tortfeasors pursuant to a common design. There is no doubt as to the close collaboration of Sharman and Altnet in developing and operating the system, and the involvement in that collaboration of Ms Hemming and Mr Bermeister on behalf of LEF and BDE respectively.

320 [7.210]

Copyright in the Digital Environment

CHAPTER 7

Universal Music Australia v Sharman License Holdings cont. [Wilcox J also commented on the potential of the applicants to reduce piracy by broader licensing of works to make them available legitimately online, and by recourse to technological protection measures. This discussion, his orders requiring reprogramming of Kazaa to deter infringement and a summary of the reasoning supporting the orders follow at [7.220].]

Universal Music v Sharman License Holdings [7.220] Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 65 IPR 289 Federal Court of Australia (Summary) [In recognition of the “public interest” aspects of this case, and in response to the amicus brief of the Australian Consumers’ Association Pty Ltd, Electronic Frontiers Australia Inc and the New South Wales Council for Civil Liberties Inc, Wilcox J provided a summary of the case in addition to his decision. This is extracted below.] Summary WILCOX J: … I return to the true issue in the case: the applicants’ copyright claim. Here again, the applicants overstated their case. It cannot be concluded, as the applicants claimed in their pleadings, that the respondents themselves engaged in communicating the applicants’ copyright works. They did not do so. The more realistic claim is that the respondents authorised users to infringe the applicants’ copyright in their sound recordings. Section 101 of the Australian Copyright Act provides that copyright is infringed by a person who, not being the owner of the copyright and without the licence of the copyright owner, authorises another person to do in Australia an infringing act. I have concluded that this more limited claim is established against six of the ten respondents. My reasons may be summarised in this way: (i)

despite the fact that the Kazaa website contains warnings against the sharing of copyright files, and an end user licence agreement under which users are made to agree not to infringe copyright, it has long been obvious that those measures are ineffective to prevent, or even substantially to curtail, copyright infringements by users. The respondents have long known that the Kazaa system is widely used for the sharing of copyright files;

(ii)

there are technical measures (keyword filtering and gold file flood filtering) that would enable the respondents to curtail – although probably not totally to prevent – the sharing of copyright files. The respondents have not taken any action to implement those measures. It would be against their financial interest to do so. It is in the respondents’ financial interest to maximise, not to minimise, music file-sharing. Advertising provides the bulk of the revenue earned by the Kazaa system, which revenue is shared between Sharman Networks and Altnet.

(iii)

far from taking steps that are likely effectively to curtail copyright file-sharing, Sharman Networks and Altnet have included on the Kazaa website exhortations to users to increase their file-sharing and a webpage headed “Join the Revolution” that criticises record companies for opposing peer-to-peer file-sharing. They also sponsored a “Kazaa Revolution” campaign attacking the record companies. The revolutionary material does not expressly advocate the sharing of copyright files. However, to a young audience, and it seems that Kazaa users are predominantly young people, the effect of this webpage would be to encourage visitors to think it “cool” to defy the record companies by ignoring copyright constraints.

A question arose as to the form of relief that might be made against the six respondents that I hold to have authorised infringement of the applicants’ copyright. The applicants are entitled to declarations as to past violations of their rights and the threat of future violations. They are also entitled to an order [7.220]

321

Intellectual Property: Commentary and Materials

Universal Music v Sharman License Holdings cont. restraining future violations. However, I have had to bear in mind the possibility that, even with the best will in the world, the respondents probably cannot totally prevent copyright infringement by users. I am anxious not to make an order which the respondents are not able to obey, except at the unacceptable cost of preventing the sharing even of files which do not infringe the applicants’ copyright. There needs to be an opportunity for the relevant respondents to modify the Kazaa system in a targeted way, so as to protect the applicants’ copyright interests (as far as possible) but without unnecessarily intruding on others’ freedom of speech and communication. The evidence about keyword filtering and gold file flood filtering, indicates how this might be done. It should be provided that the injunctive order will be satisfied if the respondents take either of these steps. The steps, in my judgment, are available to the respondents and likely significantly, though perhaps not totally, to protect the applicants’ copyrights. [His Honour’s orders included:] … 4. The infringing respondents be restrained, by themselves, their servants or agents, from authorising Kazaa users to do in Australia any of the infringing acts, in relation to any sound recording of which any of the applicants is the copyright owner, without the licence of the relevant copyright owner. 5. Continuation of the Kazaa Internet file-sharing system (including the provision of software programs to new users) shall not be regarded as a contravention of order 4 if that system is first modified pursuant to a protocol, to be agreed between the infringing respondents and the applicants or to be approved by the Court, that ensures either of the following situations: (i) that: (a) the software program received by all new users of the Kazaa file-sharing system contains non-optional key-word filter technology that excludes from the displayed blue file search results all works identified (by titles, composers’ or performers’ names or otherwise) in such lists of their copyright works as may be provided, and periodically updated, by any of the applicants; and

(ii)

(b)

all future versions of the Kazaa file-sharing system contain the said non-optional key-word filter technology; and

(c)

maximum pressure is placed on existing users, by the use of dialogue boxes on the Kazaa website, to upgrade their existing Kazaa software program to a new version of the program containing the said non-optional key-word filter technology; or

that the TopSearch component of the Kazaa system will provide, in answer to a request for a work identified in any such list, search results that are limited to licensed works and warnings against copyright infringement and that will exclude provision of a copy of any such identified work.

[7.230] While the outcome in Universal Music Australia Pty Ltd v Sharman License Holdings

Ltd (2005) 65 IPR 289 was a victory for copyright owners in principle and limited practice, advances on communication technologies continue to make the regulation and enforcement against such infringing activity difficult to sustain – as evidenced by the emerging Bit-Torrent protocol at the time Sharman was being heard. A similar case emerged in the United States in MGM Studios, Inc v Grokster, Ltd 545 US 913 (2005), which re-visited the issues in A&M Records Inc v Napster Inc 239 F 3d 1004 (9th Circuit 2001). Grokster created P2P services that attempted to create a program similar to 322 [7.230]

Copyright in the Digital Environment

CHAPTER 7

Napster, but avoided Napster’s two flaws of generating no revenue and utilising a centralised indexing server. Grokster’s service allowed individuals to share files directly with each other and not through a central server, and had an advertisement for software protection that generated revenue. The court found that Grokster provided a service with the object of promoting its use to foster infringement, and was liable for the resulting acts of infringement by third parties. The service was shut down. However, after Grokster was shut down, consumers found more websites and services to access music online, such as LimeWire or Bit-Torrent programs.

The Bit-Torrent protocol [7.240] By the time the decision in Universal Music Australia Pty Ltd v Sharman License

Holdings Ltd (2005) 65 IPR 289 was handed down, Australian P2P users had already moved on to the more advanced P2P technology known as Bit-Torrent, a communications protocol that does not use a central server, and permits downloading and uploading files at much faster speeds. Bit-Torrent allows users to transfer information by using an alternative method to that of normal internet hosting, which can be slowed by the strain of large amounts of data flow. In other words, the speed of transferring files is not slowed by high-volume activity, which is something that would often occur in other P2P processes, such as the Kazaa system. When multiple persons are downloading a file from a computer (peers), the technology allows each peer to download a separate portion of the file from the person uploading the file (the “seed”). This avoids, or at least reduces, a high volume of people downloading and uploading the same part of the file at the same time, which would otherwise slow the rate at which the file can be transferred. As each peer downloads a part of a file from a seed, they in turn become a seed and commence uploading to other peers. This strategy virtually eliminates the possibility of a long queue of peers because of the increasing number of peers acting as a seeds once they have downloaded any portion of a file. The challenge that this technology creates for copyright holders in endeavouring to enforce their rights against Bit-Torrent providers under the same principle as that applied in Sharman, is that of distinguishing between infringing and legitimate activity in the upload/download exchanges. Certain providers of Bit-Torrent technology may be infringing authorised copyright infringement, while others might not. This situation arises because Bit-Torrent software providers (clients) are often different to Bit-Torrent indexing sites that list the available torrent downloads online. A further challenge is that the Bit-Torrent protocol is recognised as a legitimate source of copyright material. Hence, some Bit-Torrent clients no doubt take reasonable steps, such as filtering technologies, to minimise copyright infringement. Once it can be demonstrated that reasonable steps have been taken, a defence against allegations of infringement becomes available.

Roadshow Films v iiNet (2010) [7.250] The Bit-Torrent technology and its arm’s-length relationship to internet service

providers was examined at some length in Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 83 IPR 430 in the first instance and Roadshow Films Pty Ltd v iiNet Ltd (2011) 89 IPR 1 on appeal. In 2008, an alliance of 34 Australian and Hollywood film studios commenced proceedings in the Federal Court, claiming that iiNet was authorising copyright infringement [7.250]

323

Intellectual Property: Commentary and Materials

by its users pursuant to Copyright Act 1968 (Cth) s 101. The studios had monitored the downloading and sharing of films and television programs through the iiNet site using the Bit-Torrent protocol. However, iiNet argued that it had no control over, and was not responsible for, the Bit-Torrent system, unlike Sharman Industries and Napster that had controlled the programs that allowed users to file share. Thus the case was fundamentally different from those involving Kazaa and Napster. In addition, iiNet argued that the infringement notices were “mere allegations” of copyright infringement and that its customers had not infringed as alleged until a court determined otherwise. The critical issue in Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 83 IPR 430 was whether iiNet, by failing to take any action to prevent infringing conduct, had authorised copyright infringement by its subscribers. While the evidence established that copyright infringement of the applicants’ films was occurring on a large scale, and that iiNet was aware of this situation, Cowdroy J considered that that fact did not necessitate or compel, and could never necessitate or compel, a finding of authorisation. An ISP, such as iiNet, provided a legitimate communication facility that was neither intended nor designed to infringe copyright. It was only by means of the application of the Bit-Torrent system that copyright infringements were enabled. While it had to be recognised that the Bit-Torrent system could be used for legitimate purposes, iiNet was not responsible if an iiNet user chose to make use of that system to bring about copyright infringement. The law recognised no positive obligation on any person to protect the copyright of another. The law only recognised a prohibition on the doing of copyright acts without the licence of the copyright owner or exclusive licensee, or the authorisation of those acts. In those circumstances, it was impossible to conclude that iiNet had authorised copyright infringement. The failure of iiNet to take any action to stop or discourage infringements occurring was not encouragement of infringement. iiNet took the middle ground, namely remaining neutral. His Honour found that iiNet had not authorised copyright infringement, and dismissed Roadshow’s application on the following grounds: • iiNet did not provide the means of infringement, namely the Bit-Torrent system. iiNet’s users needed to seek out the Bit-Torrent system for themselves and received no assistance from iiNet in doing so; • Although it was technically feasible for iiNet to suspend or to terminate an internet user’s account for actual or suspected copyright infringement, given the complexity of determining an infringement and the fact that it was not iiNet’s internet service but the Bit-Torrent system which provided the means of infringement, iiNet did not have a relevant power to prevent copyright infringements where it had not been established that such facilities had been used predominantly, substantially or even significantly for copyright infringement; • Although there was clearly a relationship between iiNet and its internet users, this was insufficient to support a finding that iiNet authorised copyright infringements by its internet users; • iiNet’s failure to act to stop copyright infringement by its internet users did not, singly or cumulatively, constitute encouragement of copyright infringement, so as to support a finding that iiNet authorised such infringements; 324 [7.250]

Copyright in the Digital Environment

CHAPTER 7

• As iiNet did not provide the means of infringement, its inactivity or indifference to its internet users’ copyright infringement was insufficient to support a finding that iiNet authorised such infringements; • iiNet did not approve, sanction or countenance the copyright infringements committed by its internet users; • As iiNet had knowledge of its internet users’ copyright infringements, s 112E of the Copyright Act 1968 (Cth) would not have operated to protect it from a finding of authorising those infringements.

Roadshow Films v iiNet (2011) [7.260] Roadshow and the 33 other film studios represented by the Australian Federation

Against Copyright Theft (AFACT), appealed the decision in Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 83 IPR 430 at first instance (above at [7.240]) to the Full Court of the Federal Court. It was common ground that there had been primary infringements of copyrights by users of services provided by iiNet. However, there was disputation as to whether iiNet users electronically transmitted the films by using the Bit-Torrent system. There was also disputation as to whether, through the use of the Bit-Torrent system, any particular iiNet user made films available online more than once, again, by using Bit-Torrent system. The number of infringements impacted on iiNet’s capacity to rely on the “safe harbour” provisions of the Copyright Act 1968 (Cth), ss 116AG – 116AI, available to complying internet service providers (or carriage service providers, being the term used in the Act) and on the steps that would have been deemed reasonable for iiNet to take to prevent infringement by iiNet users. The principal question in the appeal was whether, within the meaning of Copyright Act 1968 (Cth) s 101(1), iiNet authorised the alleged acts of infringement by iiNet users. A number of issues followed from this question, namely: • the extent of iiNet’s power to prevent its iiNet users committing infringing acts; • the nature of any relationship between iiNet and its customers, and between iiNet and its users who were not customers; • whether iiNet took any reasonable steps to prevent or avoid the infringing acts; • the extent of iiNet’s knowledge of the relevant infringement acts; • whether, in the circumstances, iiNet sanctioned, approved or countenanced the infringing acts. On 24 February 2011, in Roadshow Films Pty Ltd v iiNet (2011) 89 IPR 1, the Full Federal Court dismissed the appeal by Roadshow Films and the other film studios represented by AFACT against iiNet. Emmett and Nicholas JJ (Jagot J dissenting) held that the issue largely turned on whether iiNet had taken reasonable steps to prevent the infringements occurring. iiNet’s failure to take steps to issue warnings or to terminate or suspend user accounts in response to the notice allegations was not unreasonable given the evidentiary deficiencies in the AFACT notices, and that hence iiNet had not authorised the infringements. In considering the knowledge of the ISP in providing services for the purpose of an infringing act, Nicholas J stated (at 175) “it cannot be inferred that a person authorises copyright infringement merely because he or she provides another person with communication facilities used by the other person to infringe copyright”. [7.260]

325

Intellectual Property: Commentary and Materials

However, Jagot J (dissenting) found that iiNet had, at the very least, “countenanced” the infringements and had thereby given its tacit approval of the acts. As iiNet had not taken reasonable steps to prevent the infringements, iiNet had authorised the infringement. Notwithstanding the majority decision, all judges agreed that iiNet would have been unable to rely on the “safe harbour” provisions of ss 116AG – 116AI as it had not adopted and reasonably implemented a policy providing for termination of service of the accounts of repeat copyright infringers.

Roadshow Films v iiNet [7.270] Roadshow Films Pty Ltd v iiNet Ltd (2011) 89 IPR 1 Federal Court of Australia (Full Court) EMMETT J: … Conclusion as to Authorisation [57] … while the evidence supports a conclusion that iiNet demonstrated a dismissive and, indeed, contumelious, attitude to the complaints of infringement by the use of its services, its conduct did not amount to authorisation of the primary acts of infringement on the part of iiNet users. Before the failure by iiNet to suspend or terminate its customers’ accounts would constitute authorisation of future acts of infringement, the Copyright Owners would be required to show that at least the following circumstances exist: • iiNet has been provided with unequivocal and cogent evidence of the alleged primary acts of infringement by use of the iiNet service in question. Mere assertion by an entity such as AFACT, with whatever particulars of the assertion may be provided, would not, of itself, constitute unequivocal and cogent evidence of the doing of acts of infringement. Information as to the way in which the material [58] supporting the allegations was derived, that was adequate to enable iiNet to verify the accuracy of the allegations, may suffice. Verification on oath as to the precise steps that were adopted in order to obtain or discern the relevant information may suffice but may not be necessary. • The Copyright Owners have undertaken: – to reimburse iiNet for the reasonable cost of verifying the particulars of the primary acts of infringement alleged and of establishing and maintaining a regime to monitor the use of the iiNet service to determine whether further acts of infringements occur, and – to indemnify iiNet in respect of any liability reasonably incurred by iiNet as a consequence of mistakenly suspending or terminating a service on the basis of allegations made by the Copyright Owner. They do not exist in the present case. … JAGOT J: [dissenting] … [108] C.6 Authorisation determination … it is also apparent that “express or formal permission or approval is not essential to constitute an authorisation” (Nationwide News at 422 referring to WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274 at 286). Insofar as the trial judge’s reasons might suggest to the contrary at [501] by the reference to the need for a “sense of official approval or favour”, a different view must be taken. Further, and as Jacobs J recorded in Moorhouse at 21 (quoting Bankes LJ in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 at 9): 326 [7.270]

Copyright in the Digital Environment

CHAPTER 7

Roadshow Films v iiNet cont. … indifference, exhibited by acts of commission or omission, may reach a degree from which authorization or permission may be inferred. It is a question of fact in each case what is the true inference to be drawn from the conduct of the person who is said to have authorized …[109] In my opinion the circumstances of this case are not equivalent to the indifference exhibited by the lessor of the hall in Adelaide Corporation. In that case the lessor had no control over the performance at all. The only control or power it had was to grant, not grant or terminate the lease. iiNet, through its CRA, has vested in itself control over the use of its service in accordance with the terms of the CRA. Given the continuing or ongoing nature of its service, iiNet has powers not available to the lessor of the hall in Adelaide Corporation. iiNet can give customers warnings, can shape their accounts, can suspend their service and can terminate their service. It can do so as it sees appropriate, without incurring liability, on the basis of even a “reasonable suspicion” of illegal conduct by a customer or any other person in connection with the use of the service (cl 14.2(j) of the CRA). Further, this is not a case of mere indifference. By its responses to AFACT iiNet made its position that it would not take action clear. By the evidence of Mr Malone and Mr Dalby it was apparent that iiNet had no interest in the credibility or reliability of the information about copyright infringements with which AFACT provided it, because it had already determined its position of taking no action. By its press release of 20 November 2008 iiNet ensured that its customers knew that iiNet would not be disconnecting any services unless copyright infringement had been proven in court proceedings. By its communications with Westnet and other members of its industry organisation iiNet sought to have its position adopted by other internet service providers. Various iiNet internal communications (as discussed above) also disclosed an apparent tone and content difficult to reconcile with its stated position to AFACT that it was “very concerned” about AFACT’s allegations. Assessment of the matters specified in s 101(1A) of the Copyright Act (see above) weighs in favour of a determination of authorisation. So too do the other aspects of iiNet’s conduct (discussed above) in the particular circumstances presented by the AFACT notices and the information they contained. The factors on which iiNet relied to defend against a finding of authorisation, in contrast, either lack weight or, assessed in the context of the overall circumstances, are unpersuasive (both in isolation and when assessed cumulatively). In summary, in this case: (1)

There was a contractual relationship between iiNet and its customers by which iiNet obtained income in return for the provision of internet services.

(2)

iiNet knew that the internet was used by customers to download legitimate and copyright infringing content. iiNet also knew (through Mr Malone) that peer to peer software, including BitTorrent, was frequently used for file sharing of films and television shows in a manner that infringed copyright. Indeed, Mr Malone knew that half of all of the traffic on iiNet’s service (in terms of quota or megabytes) is via BitTorrent and a substantial proportion of BitTorrent traffic involves the infringement of copyright.

(3)

Through its CRA, iiNet had available to it control over its customers’ use of the iiNet internet service as specified in the CRA’s terms. iiNet also had a range of powers available to it to prevent or avoid copyright infringements including issuing warnings, recording the issuing of warnings against customer accounts, as well as shaping, suspending or terminating accounts. [110]

(4)

iiNet received the AFACT notices over a lengthy period, in the same form from the third week. The AFACT notices contained prima facie credible evidence of widespread and repeated infringements of the appellant’s copyright by iiNet customers and users. [7.270]

327

Intellectual Property: Commentary and Materials

Roadshow Films v iiNet cont. (5)

iiNet adopted a position almost immediately after receipt of the AFACT notices that it had no obligation to do anything in response. Despite this, it asserted to AFACT that AFACT’s information did not identify customers. While this was technically accurate, it was inconsistent with iiNet’s knowledge that IP addresses were sufficient for it to identify customers and its treatment of customers as responsible for all use on their account in other contexts. It was also inconsistent with iiNet’s position that the reliability of the evidence was immaterial to its position.

(6)

iiNet, by its press release, ensured its customers knew that their accounts would not be terminated, irrespective of the terms of the CRA, unless AFACT could prove in court the alleged copyright infringements.

(7)

iiNet asked Westnet to change its position on allegations of copyright infringement to be less proactive on the basis that being proactive would harm the interests of internet service providers.

These circumstances support my conclusion that iiNet authorised the primary infringements of copyright. In terms of the meaning of “sanction, approve, countenance”, iiNet at least countenanced the primary infringements. It tolerated, indeed permitted, those primary infringements. More than that, by its conduct in all of the circumstances identified, it moved beyond mere indifference to at least tacit approval of those primary infringements. … … [119] … For the reasons set out above I am satisfied that the appeal should be allowed. … NICHOLAS J: [117] … It follows from the findings of the primary judge that the position of the respondent did not reflect any intention or desire to see the appellants’ copyright infringed. Rather, it reflected a view, strongly held it would seem, that it was not the business of the respondent to be taking action against subscribers on the basis of allegations of copyright infringement contained in the AFACT notices. None of that is to say that the respondent’s view on the matter was necessarily correct. But it cannot be dismissed or discounted on the basis that it was either not genuinely held or not reasonably open. Did the respondent sanction, approve or countenance copyright infringement? This brings me to the critical question which is whether it should be inferred that the respondent sanctioned, approved or countenanced any of the primary acts of copyright infringement which have been found to have occurred. I do not infer from the evidence that the respondent sanctioned or approved any such acts. I doubt that it is even open to me to do so in light of unchallenged findings of the primary judge. In my view, the appellants’ case comes down to whether it can be inferred from the evidence that the respondent countenanced copyright infringement by iiNet users. In Jain, it was the respondent’s decision to ignore the copyright owner’s rights that was central to the Full Court’s finding of authorisation. I do not think it is correct to say that the respondent in the present case ignored the appellants’ rights. The respondent was of the view that it was not required to act on the AFACT notices because they were based upon allegations that required further investigation which the respondent did not believe it was required to undertake. I do not infer from this that it was in the respondent’s mind to consent to or to permit copyright infringement by iiNet users using the respondent’s facilities. I accept that a refusal by an ISP to act on infringement allegations made by or on behalf of a copyright owner may be evidence from which authorisation might be inferred. But that will only be so 328 [7.270]

Copyright in the Digital Environment

CHAPTER 7

Roadshow Films v iiNet cont. if the refusal is unreasonable. Whether or not a refusal is unreasonable must depend upon the circumstances in which it occurs including the nature and quality of the information upon which the ISP is requested to act by the copyright owner. … [173] My conclusion is that the respondent’s failure to take steps to issue warning notices or to terminate or suspend subscribers’ accounts in response to the allegations made in the AFACT notices was not unreasonable given the lack of information in the AFACT notices which I have previously discussed. The fact that the respondent may not have acted on the AFACT notices even if they had contained additional information is beside the point. Nor does the fact that the respondent was provided with additional information during the course of the proceeding affect my conclusion given the circumstances in which this occurred. Section 112E … Difficulties can arise in relation to the interpretation of s 112E if it is approached as though it is there to protect a person from liability for authorisation which might otherwise arise under s 101(1). First, it can encourage an overly expansive interpretation of s 101(1) which is inconsistent with basic concepts established in Moorhouse. Secondly, it tends to give rise to a variety of complicated questions as to what a person must do, know or suspect before he or she is deprived of the protection of s 112E. I can illustrate the latter point in this way. Clearly, a provider of communication facilities who actively encourages their use for the purpose of copyright infringement will have done something more than merely provide the [175] communication facilities used to infringe copyright. The same is true of a person who not only makes the communication facilities available, but who also supplies the copyright material which is infringed through the use of those facilities. It is clear from the Full Court’s decision in Cooper that s 112E would not apply to either of those situations. However, the real problem arises in relation to knowledge. If a person makes communication facilities available knowing that they are to be used for the purpose of infringing copyright, can it be said that he or she has done something more than merely make communication facilities available? The Full Court’s decision in Cooper suggests so though in that case there was other conduct on the part of the ISP which contributed to the finding of authorisation made against the ISP. But what if the person makes communication facilities available not knowing, but merely suspecting, that they will at some stage be used in a manner that involves the infringement of copyright? That is likely to be true of most ISPs and many other persons in the business of providing communication facilities of various kinds. How is s 112E to operate in those circumstances assuming, of course, that the communication facilities made available by the ISP are later used in that manner? There are no easy answers to these questions but they do not arise if s 112E is simply understood as making clear what I understand to be the true position under s 101(1) in any event, namely, it cannot be inferred that a person authorises copyright infringement merely because he or she provides another person with communication facilities used by the other person to infringe copyright. Leaving aside the particular difficulties I have discussed, I agree with the analysis of s 112E adopted by the Full Court in Cooper. If I had been satisfied that the respondent had approved, sanctioned or countenanced the acts of copyright infringement which have been found to have occurred, then I would have found the respondent liable for authorisation in spite of s 112E.

[7.270]

329

Intellectual Property: Commentary and Materials

Roadshow Films v iiNet cont. Conclusion on authorisation While I disagree with the primary judge’s reasoning in significant respects, I am nevertheless of the opinion that his Honour’s decision to dismiss the proceeding was correct. In my opinion the appeal should be dismissed. I agree with the order which Emmett J has proposed in relation to costs.

[7.280]

Note

Notwithstanding the majority decision that iiNet was not liable for authorisation of the infringements by its subscribers, all judges in Roadshow Films Pty Ltd v iiNet [2011] FCAFC 23 were critical of iiNet’s conduct in respect of its response to AFACT’s complaints and failure to take steps to address the claims of infringements. Emmett J foreshadowed that if copyright owners provided more detailed information concerning allegations of infringement and offered to bear some of the ISP’s costs in taking action against offenders, iiNet and other ISPs might well be found liable for authorising copyright infringement if they fail to ignore take-down notices from copyright owners or their agents. It has been suggested that the Federal Court appears to have provided a road map for ISPs as to how they could succeed in the future. As Emmett J concluded in dismissing the appeal (at [274]): Even though the Copyright Owners are not entitled to the relief claimed in this proceeding, it does not follow that that is an end of the matter. It is clear that the questions raised in the proceeding are ongoing. It does not necessarily follow that there would never be authorisation within the meaning of s 101 of the Copyright Act by a carriage service provider, where a user of the services provided by the carriage service provider engages in acts of infringement such as those about which complaint is made in this proceeding. It does not necessarily follow from the failure of the present proceeding that circumstances could not exist whereby iiNet might in the future be held to have authorised primary acts of infringement on the part of users of the services provided to its customers under its customer service agreements.

On 12 August 2011 the High Court granted special leave to Roadshow and 33 other applicants to appeal the judgment of the Full Federal Court in Roadshow Films Limited v iiNet Limited (2011) 89 IPR 1. Their Honours, French CJ and Crennan J, agreed that there were matters of principle that warranted examination in respect of the requisite levels of knowledge – referred to as the “mental test” – by an ISP to establish liability for authorising infringing activity. On 20 April 2012, the High Court handed down its decision in Roadshow Films v iiNet Ltd [2012] HCA 16, holding that iiNet was not liable for authorising the copyright infringements of its users. In examining the authorisation liability of iiNet, the High Court considered the three factual matters in subs 101(1A) of the Copyright Act 1968 (Cth), namely: • the extent (if any) of the person’s power to prevent the infringing act; • the nature of the relationship between the person and the primary infringer; and • whether the person took any other reasonable steps to prevent or avoid infringing act. French CJ, Crennan and Kiefel JJ agreed that the ultimate question was to determine whether an inference of authorisation arises from the answers to these factual questions. The Court observed that iiNet had no direct technical power to prevent its customers from using the BitTorrent system to infringe copyright in the appellants’ films. Rather, the extent of 330 [7.280]

Copyright in the Digital Environment

CHAPTER 7

iiNet’s power to prevent its customers from infringing the appellants’ copyright was limited to an indirect power to terminate its contractual relationship with its customers. Further, the information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers’ accounts. iiNet had no direct technical power to prevent its customer from using the Bit-Torrent system. iiNet’s only power was indirect, insofar as under its customer agreement, it could terminate accounts if the internet service had been used to infringe another person’s rights or for illegal purposes. AFACT argued that iiNet should have taken the step of sending warning notices to its customers. The Court observed that, even if iiNet had exercised its power to terminate accounts, the ISP’s power to prevent copyright infringement was limited because of the ease with which a customer could migrate to another service provider. Furthermore, AFACT’s notices to iiNet did not fully disclose its methodology in detecting infringements. The Court noted that reliance on these incomplete notices must be balanced against iiNet’s legal risk if it wrongfully terminated a customer’s internet service. Consequently, the Court held that it was not unreasonable for iiNet not to act on AFACT’s allegations. It could not be inferred from iiNet’s inactivity after receiving the AFACT notices that iiNet had authorised any act of infringement of copyright in the appellants’ films by its customers. Accordingly, the appeal was dismissed.

Roadshow Films v iiNet [7.290] Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16 FRENCH CJ, CRENNAN AND KIEFEL JJ. Questions 63. The appeal can be determined by asking interrelated questions informed by s 101(1A). Did iiNet have a power to prevent the primary infringements and, if so, what was the extent of that power (s 101(1A)(a))? Did reasonable steps to prevent those infringements (after receipt of the AFACT notices) include warnings and subsequent suspension or termination of the accounts of all customers identified as infringing the appellants’ copyrights (s 101(1A)(c)), if such customers failed to cease communicating infringing material using the BitTorrent system? How does the relationship between iiNet and its customers (s 101(1A)(b)) bear on each of those questions? It will be observed that these are largely questions of fact and the ultimate question of whether iiNet authorised the infringements will be an inference to be drawn from those facts [71]. 64. Before turning to those questions, some general observations as to matters of fact need to be reiterated. Access to the internet can be used for diverse purposes, including viewing websites, downloading or streaming non-infringing content, sending and receiving emails, social networking, accessing online media and games, and making voice over IP telephone calls. The BitTorrent system is also capable of being used for non-infringing purposes. iiNet’s power to prevent primary infringements Technical power 65. It is important to note that iiNet has no involvement with any part of the BitTorrent system and therefore has no power to control or alter any aspect of the BitTorrent system, including the BitTorrent client. Further, iiNet is not a host of infringing material, or of websites which make available .torrent files relating to infringing material [72]. iiNet does not assist its customers to locate BitTorrent clients or .torrent files by any indexing service or database entries [73]. It cannot monitor the steps taken by users of its internet services under the BitTorrent system, it cannot directly prevent users of its internet [7.290]

331

Intellectual Property: Commentary and Materials

Roadshow Films v iiNet cont. services from downloading a BitTorrent client or .torrent files, and it cannot identify specific films to which users of its internet services seek access. Once infringing material is stored on a customer’s computer iiNet cannot take down or remove that material, and cannot filter or block the communication of that material over its internet service. Nor has iiNet any power to prevent its customers from using other internet services – and, as noted earlier, several users of an internet service may share an IP address. Whilst the relationship between iiNet and its customers involves the provision of technology, iiNet had no direct technical power at its disposal to prevent a customer from using the BitTorrent system to download the appellants’ films on that customer’s computer with the result that the appellants’ films were made available online in breach of s 86(c). Contractual power 66. Under the CRA, iiNet contracted to give its customers access to the internet (which carried with it power to use the internet for infringing or non-infringing purposes) on the basis (set out in cll 4.2(a) and (e) of the CRA) that iiNet was not thereby purporting to grant to the customer any right to use the internet to infringe another person’s rights, or for illegal purposes. 67. Because the CRA, in its terms, indicated iiNet’s express, formal and positive disapproval of using access to the internet for infringing or illegal purposes, the appellants were driven to rely on the notion that iiNet’s inactivity (after receipt of the AFACT notices) amounted at least to “countenancing” acts of primary infringement. 68. “Countenance” is a long-established English word [74] which, unsurprisingly, has numerous forms and a number of meanings which encompass expressing support, including moral support or encouragement [75]. In both the United Kingdom and Canada, it has been observed that some of the meanings of “countenance” are not co-extensive with “authorise” [76]. Such meanings are remote from the reality of authorisation which the statute contemplates. The argument highlights the danger in placing reliance on one of the synonyms for “authorise” to be found in a dictionary. Whilst resort to such meanings may have been necessary in the past, attention is now directed in the first place to s 101(1A). That provision is intended to inform the drawing of an inference of authorisation by reference to the facts and circumstances there identified, and recourse must be had to it. That is an express requirement. 69. Even it if were possible to be satisfied that iiNet’s inactivity after receipt of the AFACT notices, and its subsequent media releases, “supported” or “encouraged” its customers to continue to make certain films available online, s 101(1A) (construed with both s 22(6) and s 112E) makes it plain that that would not be enough to make iiNet a secondary infringer. An alleged authoriser must have a power to prevent the primary infringements [77]. Australasian Performing Right Association Ltd v Jain [78], Tape Manufacturers [79], Kazaa [80] and Cooper [81] all confirm that there must be such a power to prevent. So much had been recognised earlier, in any event, in Adelaide Corporation [82] and Moorhouse [83]. 70. As explained, the extent of iiNet’s power was limited. It had no direct power to prevent the primary infringements and could only ensure that result indirectly by terminating the contractual relationship it had with its customers. Reasonable steps 71. The nature of the internet, the BitTorrent system, and the absence of any industry code of practice adhered to by all ISPs are all factors which are relevant to the statutory task of assessing whether iiNet took reasonable steps to prevent or avoid the primary infringements, given its indirect power to do so. 72. Conventionally, the efficacy of warnings to infringers from owners (or licensees) of copyright derives from, and is reinforced by, the potential for successful injunctive proceedings, including interim relief, coupled with an award of damages or an account of profits, and an order for costs 332 [7.290]

Copyright in the Digital Environment

CHAPTER 7

Roadshow Films v iiNet cont. against a proven infringer. Whether a non-responsive infringer is continuing to infringe after receipt of a warning notice from a copyright owner may often be checked with relative ease if infringing material is in the public market place. 73. Termination of an iiNet account with a customer who has infringed will assuredly prevent the continuation of a specific act of communicating a film online using a particular .torrent file on a particular computer. Regrettably, however, on receiving a threat of such termination, it is possible for a customer to engage another ISP for access to the internet on that computer or access the internet on another computer using a different ISP. Whilst any new infringement would be just as serious as the specific primary infringements about which the appellants complain, this circumstance shows the limitations on iiNet’s power to command a response from its customers, or to prevent continuing infringements by them. 74. Whatever responses iiNet received to warnings, iiNet would be obliged to update the investigative exercise underlying the AFACT notices either itself or by reference to subsequent AFACT notices (allowing an appropriate interval for compliance with a request to cease infringement) before proceeding further. 75. Updating the investigative exercise in the AFACT notices would require iiNet to understand and apply DtecNet’s methodology – which, among other things, involved a permission to DtecNet from AFACT to use the BitTorrent system to download the appellants’ films. Before the filing of experts’ reports in the proceedings, the information in the AFACT notices did not approximate the evidence which would be expected to be filed in civil proceedings in which interlocutory relief was sought by a copyright owner in respect of an allegation of copyright infringement. Also, any wrongful termination of a customer’s account could expose iiNet to risk of liability. These considerations highlight the danger to an ISP, which is neither a copyright owner nor a licensee, which terminates (or threatens to terminate) a customer’s internet service in the absence of any industry protocol binding on all ISPs, or any, even interim, curial assessment of relevant matters. 76. iiNet’s inactivity after receipt of the AFACT notices was described by the appellants as demonstrating a sufficient degree of indifference to their rights to give rise to authorisation. However, the evidence showed that the inactivity was not the indifference of a company unconcerned with infringements of the appellants’ rights. Rather, the true inference to be drawn is that iiNet was unwilling to act because of its assessment of the risks of taking steps based only on the information in the AFACT notices. Moreover, iiNet’s customers could not possibly infer from iiNet’s inactivity (if they knew about it), and the subsequent media releases (if they saw them), that iiNet was in a position to grant those customers rights to make the appellants’ films available online. Conclusions 77. The appellants’ submission, that iiNet should be taken to have authorised the infringements unless it took measures with respect to its customers, assumes obligations on the part of an ISP which the Copyright Act does not impose. A consideration of the factors listed in s 101(1A) does not permit a conclusion that iiNet is to be held liable as having authorised the infringements. 78. The extent of iiNet’s power was limited to an indirect power to prevent a customer’s primary infringement of the appellants’ films by terminating the contractual relationship between them. The information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers’ accounts. For these reasons, iiNet’s inactivity after receipt of the AFACT notices did not give rise to an inference of authorisation (by “countenancing” or otherwise) of any act of primary infringement by its customers. 79. This final conclusion shows that the concept and the principles of the statutory tort of authorisation of copyright infringement are not readily suited to enforcing the rights of copyright [7.290]

333

Intellectual Property: Commentary and Materials

Roadshow Films v iiNet cont. owners in respect of widespread infringements occasioned by peer-to-peer file sharing, as occurs with the BitTorrent system. The difficulties of enforcement which such infringements pose for copyright owners have been addressed elsewhere, in constitutional settings different from our own, by specially targeted legislative schemes, some of which incorporate co-operative industry protocols [84], some of which require judicial involvement in the termination of internet accounts, and some of which provide for the sharing of enforcement costs between ISPs and copyright owners. 80. The appeal should be dismissed with costs. This result renders it unnecessary to consider the issues raised in iiNet’s notice of contention.

[7.300] The High Court decision in Roadshow Films v iiNet was a victory for the ISPs and

strengthened their bargaining position in respect of their ongoing relationship with copyright owners and rights holders, and the online entertainment industry generally. While the decision made it generally more difficult for owners and rights holders to successfully establish claims concerning ISP’s liabilities, it did throw some light on the application and operation of the Copyright Act 1968 (Cth) in respect of s 101 (infringing copyright by authorising another’s copyright infringement) and s 112E (use by another party of an ISPs facilities does not necessarily mean ISP authorisation of copyright infringement). However, the ISPs still came in for some criticism, strongly in the case before of the Full Federal Court, concerning its “indifference” to the allegations of infringement. The High Court said mere indifference to its customers’ infringing activities does not mean an ISP is authorising it: The extent of iiNet’s power was limited to an indirect power to prevent a customer’s primary infringement of the appellants’ films by terminating the contractual relationship between them. The information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers’ accounts.

In respect of an ISP’s liability for its client’s alleged, the High Court judgment still leaves unanswered questions and unclear areas as to the bounds of an ISP’s obligation to prevent copyright infringement by its clients. The High Court judgment also illustrates that the lawmakers and the courts are still playing “catch-up” in respect of the application As French CJ and Crennan and Kiefel JJ observed, the Act’s authorisation provisions were introduced before P2P software was available, and as a result: the concept and the principles of the statutory tort of authorisation of copyright infringement are not readily suited to enforcing the rights of copyright owners in respect of widespread infringements occasioned by peer-to-peer file sharing, as occurs with the Bit-Torrent system.

This sentiment has been subsequently reflected in numerous commentaries on the case following its decision being handed down, to the effect that the significance of the iiNet case in the medium to long term would be to serve as an impetus towards an appropriate legislative or industry-based response to online copyright infringement. As French CJ, Crennan and Kiefel JJ noted, the existing doctrine of authorisation liability is “not readily suited to enforcing the rights of copyright owners in respect of widespread infringements occasioned by peer-to-peer file sharing”. A legislative–based response in part that subsequently emerged is demonstrated by the introduction of the Copyright Amendment (Online Infringement Act 2015 (Cth), enabling copyright owners to apply for a Court injunction requiring ISPs to take reasonable steps block 334 [7.300]

Copyright in the Digital Environment

CHAPTER 7

access to an online location if that location has the primary purpose of infringing, or facilitating the infringement of, copyright. See [7.145] earlier for commentary on the Act. Just prior to the introduction of the Copyright Amendment (Online Infringement Act 2015 (Cth), iiNet was again before the Federal Court, along with five other ISPs, in an action brought by the Dallas Buyers Club LLC, and Voltage Pictures as the owners/rights holders of the 2013 movie “Dallas Buyers Club”. See Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 317. This was an application for preliminary discovery of the identities of persons behind 4,726 unique IP addresses which the applicants identified as sharing without their permission the Dallas Buyers Club movie on-line on the iiNet platform using the Bit-Torrent file sharing network, contrary to the Copyright Act 1968 (Cth). The applicants had evidence that each of the IP addresses from which the sharing occurred was supplied by the respondent ISPs and they considered that the ISPs could identify the relevant account holder associated with each IP address. The ISPs resisted the application on the grounds that: • the evidence which the applicants put forward to identify the infringing IP addresses was not sufficient; • the claim against any putative respondent was speculative and that the pre-conditions which must exist before the Court may order preliminary discovery had not been satisfied; • the applicants had not proven that either of them was the owner of the copyright in the film; • the monetary claims which the applicants had against each infringer were so small that no such case could or would be maintained by the applicants; • the ISPs were subject to statutory obligations of privacy which, given what they said was the paucity of the case against the customers, were not lightly to be cast aside by Court orders. On 7 April 2015 (Dallas Buyers Club v iiNet Ltd [2015] FCA 317) Justice Perram initially ordered the ISPs to divulge the names and physical addresses of the customers associated in their records with each of the 4,726 IP addresses. He subsequently put a stay on the order, to be lifted when the applicants submitted to him a draft of any letter they proposed to send to account holders associated with the identified IP addresses, this step being taken to satisfy himself that the applicants would not engage in “speculative invoicing”. The applicants were also ordered to pay the costs of the proceedings (Dallas Buyers Club LLC v iiNet Limited (No 3) [2015] FCA 422). On 14 August Perram J refused the applicants’ request to lift the stay (Dallas Buyers Club LLC v iiNet Ltd (No 4) [2015] FCA 838, and imposed new conditions. He also ordered a security deposit of $600,000 be lodged by the applicants, in view of the fact that the applicants were domiciled outside of Australia and Perram J remained unconvinced of their motives. In another application in September, the applicants again sought a lifting of the stay, offered to lodge a bond of just $60,000 in September, and sought further approval from the Court to demand additional damages (after they had already been rejected by Perram J in his August judgment) from account holders. On 16 December 2015 (Dallas Buyers Club v iiNet (No 5), Perram J again rejected a request to lift the stay and instead determined that: “What I will do is make a self-executing order which will terminate the proceedings on Thursday 11 February 2016 at noon, unless DBC takes some step before then,” On 16 February the rights holders acknowledged that they would not make any further applications. [7.300]

335

Intellectual Property: Commentary and Materials

An interesting aspect of the series of cases, however, is that it reveals another stage in the ongoing development of new online technology – in this case used in identifying the 4,726 IP addresses using Bit-Torrent at issue. The technology was named as Maverik Monitor 1.47 (Maverik Monitor).

Dallas Buyers Club v iiNet [7.310] Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 317 BitTorrent and Maverik Monitor 25. As I have mentioned, Dr Richter’s report is 27 pages in length and makes for a solid read. At section 5 of her report she provided a summary of her evidence. She used the expression “the System” to refer to the computers running the Maverik Monitor software. The summary was as follows: 5. Summary of Findings 5.1 In my examination of the System, I found that: (a) it is capable of monitoring traffic on the BitTorrent network; (b) it identifies the IP addresses of users and records the time of the data transfer accurately. This information enables ISPs to identify the Subscriber whose internet connection was used to conduct the alleged copyright infringement; (c) The System implements mechanisms to ensure that no erroneous IP addresses are collected by the System. (d) The System establishes connections with remote computers and receives and stores pieces of data from those computers which make content available across the BitTorrent network. (e) The received pieces of data are compared to a control copy using hash value comparison. If the hash value of the piece of data downloaded from the source is the same as the control copy, then the received pieces of data and the control copy are considered to be identical. (f) Dynamic IP addresses have no influence on the accuracy of the System logging and recording IP addresses and associated time stamp of infringement. (g) If the source computer’s IP address changes during capture of a data transfer, no data is saved by the System, and therefore not used by Maverickeye UG. 26. Save for one matter, this evidence is sufficient for present purposes to allow me to accept that Maverik Monitor does what is claimed for it. That one matter is an explanation of how BitTorrent works, in order to assess the ISPs’ submission that the end-users were only shown to have shared a very small sliver of the film. 27. In that regard, paras 6.2 to 6.9 of Dr Richter’s report emphasised the mechanism by which the file sharing process worked. I accept this evidence. Paragraphs 6.2 to 6.9 were as follows: 6.2 The BitTorrent network is a type of peer-to-peer network. Peer-to-peer networks are a conglomerate of computers that link together to share information, files or data with one another through the use of specialised software (P2P Network). The users or computers on a P2P Network can either receive or send information, files or data to other computers (or undertake both functions simultaneously). 6.3 On P2P Networks, a connection is established between the users of the network who are online at the time. Each participating computer can perform both the function of a “client” (i.e. the receiving or downloading computer) and that of a “server” (i.e. the sending or host computer). The computers can then both send data to, and receive it from, each other’s computers. The data is exchanged directly between the participating computers and is never 336 [7.310]

Copyright in the Digital Environment

CHAPTER 7

Dallas Buyers Club v iiNet cont. stored in a centralised place. The data distributed may have various origins, but data exchange takes place exclusively between two individual computer systems. 6.4 Users need to take active steps to set up and install software to enable participation in the P2P Network. These steps cannot be “accidently” or inadvertently undertaken by a user. Any user wishing to participate in file sharing needs to install or actively start specialised software known as a BitTorrent client (BitTorrent Client). In order to do so, a user will need to download a BitTorrent Client from a website that distributes BitTorrent clients. As part of the installation process, a user may configure the BitTorrent Client in accordance with his or her preferences, or adopt standard settings. A BitTorrent Client enables users to access a given P2P Network, such as eDonkey or BitTorrent. Some examples of BitTorrent Clients for the BitTorrent network include Azureus, BitComet and UT. 6.5 Once a user has installed the BitTorrent Client, the user may have an option to specify what is called the user’s “shared files” folder (Shared Folder) in which the user may place any files. Files placed in the Shared Folder are made available and may be distributed to other users requesting that file. 6.6 A user will then need to conduct a search of torrent files related to the data he or she wishes to acquire. Such data often includes copyrighted works such as films, television shows and music. Websites such as “The Pirate Bay” may be used to search for and obtain the relevant torrent files, as they offer torrent files and magnet links for download. The user then needs to download those torrent files and open them in their BitTorrent Client. 6.7 The BitTorrent network splits or separates a complete file, being for example, a movie or song (Complete Data Set) into pieces to enable efficient distribution to participants. Those pieces may be further broken down into sub pieces. When those pieces are reassembled, they constitute the Complete Data Set. 6.8 Once a user opens the torrent file in their BitTorrent Client, the BitTorrent Client queries the peers to which it is connected in order to ascertain which pieces of the Complete Data Set those peers have available to download. Some peers will have the Complete Data set, and are known as “seeders” (Seeders). Other peers may have less that [sic] the whole file because they are still in the process of downloading it, but they will still be able to share the pieces that they have. 6.9 Over the time of downloading the Complete Data Set, pieces are requested and received by the BitTorrent Client from various other peers and are ultimately assembled together like a large jigsaw into the Complete Data Set. If, for example, the Complete Data Set is a film file, the film file will at this stage be in a state in which a user can view it. 28. This certainly makes good the ISPs’ submission that a film is distributed by an individual computer downloading slivers of a film from other multiple computers. The size of these slivers is very small, sometimes only a few hundred bytes. I therefore accept the submission made by the ISPs that the individual ISP addresses which Maverik Monitor detected making the film available for downloading from the identified IP addresses reveal only a download of a very small sliver of the film. I reject the ISPs’ argument that it is not sufficiently shown that the end-users infringed the film’s copyright because no “substantial” copying occurred. I do so, in short, because that is not the question to be asked, which is instead whether the end-user has made the film available on the internet. 29. This follows from the prohibition in s 86 of the Copyright Act on communicating the film to the public and the definition of “communicate” in s 10 as including “make available online”. The issue is whether, having been detected sharing a sliver of a film, it follows that the end-user might be involved in making the film “available online” within the meaning of s 10. That a single sliver has been downloaded is consistent with a number of different factual scenarios: (a)

the end-user has a whole copy of the film on his computer and has made it available to other BitTorrent users; [7.310]

337

Intellectual Property: Commentary and Materials

Dallas Buyers Club v iiNet cont. (b)

the end-user is in the process of downloading the film and the sliver is being shared from the portion thus far downloaded;

(c)

the end-user has partially downloaded the film and then stopped the process and the sliver comes from the part which has been downloaded; or

(d)

the end-user has managed to download a single sliver and is sharing it.

30. However, I do not think any of these scenarios assist the ISPs in their ambitious contention that the applicants have failed to show that the end-users have been involved in copyright infringement. Scenarios (a) and (b) could both be correctly described as instances in which the end-user was making the film available on-line (and hence within the definition of “communicate” in s 10). As to (c), whilst I accept that there may well be individual instances where BitTorrent users have cancelled the sharing process mid-stream, on the whole I do not accept that the number of instances in which this might have occurred is plausibly likely to represent what most BitTorrent end-users are doing. I regard (d) as being relevant only to a very small category of specialists such as Dr Richter. Accordingly, I am comfortably satisfied that the downloading of a sliver of the film from a single IP address provides strong circumstantial evidence that the end-user was infringing the copyright in the film. It certainly provides enough evidence on a preliminary discovery application. The applicants do not need to establish even a prima facie case of infringement for that purpose. It is sufficient that the contemplated suit has some prospect of succeeding, that is to say, it is a real case which is not fanciful: Allphones Retail Pty Ltd v Australian Competition and Consumer Commission (2009) 259 ALR 354 at 367 [54] per Foster J. I do not regard as fanciful the proposition that end-users sharing movies on-line using BitTorrent are infringing the copyright in those movies. Indeed, if there is anything fanciful about this, it is the proposition that they are not. 31. For those reasons, I am satisfied that there is a real possibility that the IP addresses identified by Maverik Monitor were being utilised by end-users who were breaching copyright in the film by making it available for sharing on-line using BitTorrent.

Changing nature and complexities of online transmission [7.320] A recent case, Federal Commissioner of Taxation v Seven Network Ltd [2016]

FCAFC 70, further demonstrates the changing nature and complexities of online transmission and the accompanying issue of whether their utilisation can involve copyright protection and the Copyright Act 1968 (Cth), and the Act’s capacity and flexibility to deal with such developments. In August 2016, the Full Court of the Federal Court handed down its decision on an appeal from the Commissioner of Taxation concerning the Seven Network’s liability for royalty withholding tax on payments it made to the International Olympic Committee for exclusive access to the data signal that communicated Olympic Games coverage to the Seven Network. While this was essentially a taxation matter, a crucial issue in the case was whether the payments were a form of royalty for usage of material, namely the data signal, that would be protected by copyright law. The key copyright issue was whether the images and sounds communicated in the data signal from the Olympic Games events were protected by copyright as a cinematograph film. The Commissioner argued the images comprising the Games footage were “embodied in an article or thing so as to be capable by the use of the article or thing, of being shown as a moving picture” as required by the Copyright Act 1968 (Cth) and they were thus a cinematograph film. An embodiment did not need to be permanent or semi-permanent. The 338 [7.320]

Copyright in the Digital Environment

CHAPTER 7

Commissioner further argued that the payment was taxable as it was for future copyright, which would subsist once the Seven Network received the data signal and converted it into a broadcast. The Full Federal Court agreed that a cinematograph film in which copyright subsisted is not made until the first copy is made. Further, having regard to the definitions of “cinematograph film”, “soundtrack” and “copy” in s 24 and s 10(1) of the act, they considered that the concept of embodiment relevant to “cinematograph film” means some “material embodiment”, which did not occur in this case. The Court held that: [7 5] …. the primary judge correctly rejected the Commissioner’s contention that the Disputed Payment was a royalty because it was for copyright in a cinematograph film. Although, as her Honour accepted (PJ, [40]), Seven and the host broadcaster could simultaneously record and store the signal as it was being transmitted, the ITVR Signal received by Seven was not taken from any previously recorded version. Rather, the ITVR Signal was a digital signal produced by the host broadcaster and transmitted by electromagnetic forces virtually instantaneously to Seven at the IBC. As Mr Catterns QC put it, the ITVR Signal was “zooming along at not much short of the speed of light, directly for a live broadcast to Seven”. At any one moment, the ITVR Signal was transmitting only a very tiny fraction of the sounds and images of the field of play. There was no picture, image or sound recorded or permanently stored in the copper coaxial cable that transmitted the signal. No picture, image or sound could be recorded or permanently stored in the ITVR Signal. The ITVR Signal was not tangible and did not give physical form to an image or sound. There was therefore no fixation or material embodiment of an aggregation of visual images capable of being shown as a moving picture and of an aggregation of sounds. No cinematograph film was made because no first copy was made. It appears unlikely that the requisite territorial nexus for the subsistence of copyright was ever relevantly met. There was no technology that allowed the information transmitted by the ITVR Signal to be reproduced; rather images and sounds could only be produced from the ITVR Signal by using a receiving device.

Accordingly, the Full Federal Court rejected the Commissioner’s argument that the payment was for the use, or right to use, copyright. The Court also rejected the Commissioner’s other arguments that the payment was taxable under the double taxation treaty. The court concluded that it could not find any errors in the Federal Court’s judgment and dismissed the appeal. At the time of this writing, the Commissioner of Taxation has filed a special leave application to the High Court of Australia, appealing the decision of the Full Federal Court in Commissioner of Taxation v Seven Network Ltd [2016] FCAFC 70.

Roadshow Films Pty Ltd v Telstra Corporation Ltd [7.330] In February 2016 Roadshow Films and seven other applicants (Village Roadshow,

Disney, Paramount, Columbia, Universal, Warner Brothers, and 20th Century Fox) initiated proceedings in the Federal Court against Telstra and 51 other carriage service providers (including iiNet Telstra, Optus, and TPG), requiring them to block access to a number of websites which enable downloading of copyright material which infringe the rights of the copyright holder. Separately Foxtel initiated similar action against virtually the same group of respondents. Both proceedings sought relief under s 115A of the Copyright Act 1968 (Cth) requiring the carriage service providers to take reasonable steps to block access to the websites. The applicants alleged that the websites were situated outside Australia and that they infringed, or facilitated the infringement of, copyright in large numbers of films and television [7.330]

339

Intellectual Property: Commentary and Materials

programmes, the copyright in which is owned by the various applicants. The websites cited included a number operated by Pirate Bay, Torrentz, TorrentHound, IsoHunt and streaming service SolarMovie. On 15 December 2016, in Roadshow Films Pty Ltd v Telstra Corporation Ltd [2016] FCA 1503, Nicholas J issued orders on both applications. The orders require that Pirate Bay, Torrentz, TorrentHound, IsoHunt and streaming service SolarMovie and a number of their affiliated and mirror all be rendered inaccessible in Australia. In so ordering His Honour noted infringement of copyright, on a widespread scale, in flagrant disregard of the rights of copyright owners generally. He also noted that the operators of the Pirate Bay, Torrentz, TorrentHound, IsoHunt and SolarMovie were not represented, and did not appear at the Federal Court hearing. Respondent were given four options in disabling access, namely: (a)

DNS Blocking in respect of the Target Domain Names;

(b)

IP Address blocking or re-routing in respect of the Target IP Addresses;

(c)

URL blocking in respect of the Target URLs and the Target Domain Names; or

(d)

any alternative technical means for disabling access to a Target Online Location as agreed in writing between the applicants and a respondent, but were given just 15 business days to comply with the access blocking orders. However, Nicholas J declined a request for a “rolling injunction”, which would allow new infringing websites to be added to the orders without further court reference, thereby rewiring such alleged sites to be the subject of further proceedings. Section 115A, upon which the applicants relied in the proceedings, was introduced into the Copyright Act 1968 (Cth) by the Copyright Amendment (Online Infringement) Act 2015 (Cth) in June 2015. Hence, Roadshow Films Pty Ltd v Telstra Corporation Ltd [2016] FCA 1503 constitutes the first test of the provisions of s 115A, a test which was concluded in favour of the copyright holders. It is most likely that the this case will be the catalyst for further actions by rights holders against infringing websites and perceived uncooperative carriage service providers (or internet service providers). Roadshow Films Pty Ltd v Telstra Corporation Ltd [2016] FCA 1503 will no doubt serve as a foundation for the further interpretation and application of s 115A. It is worth noting that it falls somewhat short of the nature and dimension of relief sought in the iiNet cases in respect of ISP liability and accountability, and Dallas Buyers Club, particularly in respect of costs and damages. As an illustration of the evolving technologies and “catch up” nature of copyright protection over the internet, some commentators have suggested that Australians will continue to easily access such sites via virtual private networks (VPNs) and other technologies already in use. 1

Roadshow Films Pty Ltd v Telstra Corporation Ltd [7.340] Roadshow Films Pty Ltd v Telstra Corporation Ltd [2016] FCA 1503 THE COURT ORDERS THAT: 1

See, for example, “Blocking Pirate Bay will not stop VPN-savvy Australians”, Sydney Morning Herald, 16 December 2016.

340 [7.340]

Copyright in the Digital Environment

CHAPTER 7

Roadshow Films Pty Ltd v Telstra Corporation Ltd cont. 2.

Each respondent must, within 15 business days of these orders, take reasonable steps to disable access to the Target Online Locations.

3.

Order 2 is taken to have been complied with by a respondent if that respondent implements any one or more of the following steps: (a)

DNS Blocking in respect of the Target Domain Names;

(b)

IP Address blocking or re-routing in respect of the Target IP Addresses;

(c)

URL blocking in respect of the Target URLs and the Target Domain Names; or

(d)

any alternative technical means for disabling access to the Target Online Locations as agreed in writing between the applicant and a respondent.

4.

If a respondent in complying with order 2 does not implement one of the steps referred to in order 3, that respondent must, within 15 business days of these orders, notify the applicant of the step or steps it has implemented.

5.

Each respondent must redirect any communication by a user of its service seeking access to a Target Online Location which has been disabled pursuant to order 2 to a webpage established, maintained and hosted by either: (a)

the applicant, or its nominee, pursuant to order 6;

(b)

that respondent or its nominee.

The applicant’s obligations pursuant to orders 6 and 7 only arise if a respondent notifies the applicant that the respondent will redirect a communication pursuant to order 5(a) and for so long as at least one respondent redirects communications to that webpage. 6.

The applicant, or its nominee, must establish, maintain and host a webpage which informs users of a respondent’s service who have been redirected to the webpage pursuant to order 5 that access to the website has been disabled because this Court has determined that it infringes or facilitates the infringement of copyright.

7.

Within 5 business days of these orders, the applicant will notify each of the respondents in writing of the URL of the webpage established, maintained and hosted under order 6 and, if the webpage ceases to operate for any reason, will notify each of the respondents in writing of a different URL that complies with order 6.

8.

If, in complying with order 5, a respondent redirects any communication by a user of its service to a webpage established, maintained and hosted by it, that respondent or its nominee must ensure that the webpage informs the user of that respondent’s service that access to that the website has been disabled because this Court has determined that it infringes or facilitates the infringement of copyright.

12.

The parties have liberty to apply on 3 days’ written notice, including, without limitation, for the purpose of any application:

13.

(a)

for further orders to give effect to the terms of these orders;

(b)

for further orders in the event of any material change of circumstances including, without limitation, in respect of the consequences for the parties and effectiveness of the technical methods under order 2; and/or

(c)

for orders relating to other means of accessing the Target Online Locations not already covered by these orders.

If a website the subject of any of the Target Online Locations is at any time during the operation of these orders provided from a different Domain Name, IP Address or URL: (a)

the applicant may file and serve: [7.340]

341

Intellectual Property: Commentary and Materials

Roadshow Films Pty Ltd v Telstra Corporation Ltd cont. (i)

(ii)

an affidavit which: (A)

identifies the different Domain Name, IP Address or URL;

(B)

states that, in the good faith belief of the deponent, the website operated from the different Domain Name, IP Address or URL is a new location outside Australia for the Target Online Locations the subject of these orders and brief reasons therefor; and

proposed short minutes of order to the effect that: (A)

the definition of Target Online Locations in these orders is amended to include the different Domain Name, IP Address or URL; and

(B)

the time period in order 2 of these orders starts to run in relation to the different Domain Name, IP Address or URL upon service in accordance with order 17(d) of the orders as made.

14.

These orders are to operate for a period of 3 years from the dates of these orders.

15.

Six months prior to the expiry of these orders: (a)

(b)

the applicant may file and serve: (i)

an affidavit which states that, in the good faith belief of the deponent, that some or all of the Target Online Locations continue to have the primary purpose of infringing or facilitating the infringement of copyright; and

(ii)

short minutes of order extending the operation of these orders in relation to the relevant Target Online Locations for a further 3 year period; and

the process contained in order 17 shall apply.

18.

The applicant pay Optus’ compliance costs in the amount of $1,500.

19.

The applicant pay Telstra’s and TPG’s compliance costs calculated at the rate of $50 per Domain Name the subject of DNS Blocking undertaken for the purposes of complying with order 2 hereof.

20.

The applicant pay the respondents’ costs as agreed or taxed of and incidental to the preparation of evidence and written submissions, and the making of oral submissions, in relation to the applicant’s proposed order 12 and the issue of compliance costs (but excluding set-up costs referred to in [142] of the reasons for judgment).

21.

There be no other order as to costs.

342 [7.340]

PATENTS

PART3

CHAPTER 8 Context of Patent Law [8.10]

HISTORICAL BACKGROUND TO THE AUSTRALIAN PATENTS SYSTEM ............. 346 [8.20]

[8.40]

Attorney-General (Cth) v Adelaide Steamship Co ..................... 348

PATENT PROTECTION – EVALUATION ................................................................. 349 [8.50] [8.70]

Review of Intellectual Property Legislation under the Competition Principles Agreement .......................................... 349 Intellectual Property Arrangements ......................................... 351

[8.80]

INTERNATIONAL PATENT AGREEMENTS ............................................................. 353

[8.90] [8.90] [8.100]

OVERVIEW OF THE AUSTRALIAN SYSTEM ........................................................... Legislative history .................................................................................................. Patent legislation in Australia ................................................................................ [8.100] Colonial Acts ........................................................................................ [8.110] Commonwealth Acts .......................................................................... Features of the patent system ..............................................................................

[8.150] [8.160] [8.170]

[8.190] [8.200] [8.210] [8.220] [8.240] [8.260] [8.270] [8.280] [8.290] [8.300] [8.310] [8.320] [8.330] [8.340] [8.350] [8.360] [8.370]

354 354 354 354 354 356

PROCEDURE FOR OBTAINING AND MAINTAINING A PATENT ......................... 357 Types of patent ...................................................................................................... 357 [8.170] Standard patent .................................................................................. 357 [8.180] Innovation patent ............................................................................... 358 Role of the patent attorney .................................................................................. 358 Priority date ............................................................................................................ 359 Who may apply for a patent? ............................................................................... 359 Application ............................................................................................................. 360 [8.230] Applications for international patent protection ............................. 360 Specification ........................................................................................................... 361 [8.250] Inventions involving micro-organisms .............................................. 361 Examination of an application for a standard patent ........................................ 361 Divisional applications ........................................................................................... 362 Formalities check and acceptance of innovation patents .................................. 362 Publication .............................................................................................................. 363 Examination of innovation patents ...................................................................... 363 Opposition ............................................................................................................. 363 Grant of patent ...................................................................................................... 364 Re-examination of a patent .................................................................................. 364 Term of a patent .................................................................................................... 364 Improvements ........................................................................................................ 365 Revocation .............................................................................................................. 365 Amendment ........................................................................................................... 365

345

Intellectual Property: Commentary and Materials

HISTORICAL BACKGROUND TO THE AUSTRALIAN PATENTS SYSTEM [8.10] Although the origins of a system of monopoly rights granted in respect of inventions

have been traced back to classical times, 1 the modern system of patent protection was developed in Venice in the mid-15th century. A 1474 Venetian statute provided: Be it enacted that, by the authority of this Council, every person who shall build any new and ingenious device in this City, not previously made in our Commonwealth, shall give notice of it to the office of our General Welfare Board when it has been reduced to perfection so that it can be used and operated. It is forbidden to every other person in any of our territories and towns to make any further device conforming with and similar to said one, without the consent and licence of the author, for the term of 10 years. And if anybody builds it in violation hereof, the aforesaid author and inventor shall be entitled to have him summoned before any magistrate of this City, by which magistrate the said infringer shall be constrained to pay him hundred ducats; and the device shall be destroyed at once. It being, however, within the power and discretion of the Government, in its activities, to take and use any such device and instrument, with this condition however that no-one but the author shall operate it. We have among us men of great genius, apt to invent and discover ingenious devices; and in view of the grandeur and virtue of our City, more such men come to us every day from diverse parts. Now, if provision were made for the works and devices discovered by such persons, so that others who may see them could not build them and take the inventor’s honor away, more men would then apply their genius, would discover, and would build devices of great utility and benefit to our Commonwealth. 2

This statute exhibits many features found in modern patents legislation. Familiar features include the requirement of newness (novelty) and ingenuity (inventiveness), registration with the state, exclusive rights to make and use that are limited to a definite term, alleged infringements heard by a judicial officer, remedies for infringement including payment to the right holder and destruction of the infringing device, and a system of compulsory licence to the state. The objective of this patent system was as much to encourage the inflow of technology as to stimulate indigenous invention. England’s monarchs extended protection to foreign craftsmen from as early as the 14th century, but this protection consisted of protection against interference by local guilds, rather than the recognition of inventors’ rights. 3 However, recipients of these privileges were expected to live in England and teach local craftsmen the relevant art. The policy appears to have been intended as a form of incentive to “technology transfer” to assist in the development of English skills and crafts. 4 A system of Crown grant of monopoly privilege to inventors and importers of new technology commenced in England during the reign of Mary I as an exercise of Royal Prerogative enforced by petition to the Star Chamber. The system involved an initial lump sum and then annual payments to the Crown known as “Royalties”. Elizabeth I and James I both utilised the sale of patents as a valuable source of revenue, occasioning strong parliamentary 1 2 3

4

For example, see H G Fox, Monopolies and Patents (University of Toronto Press, Toronto, 1947), Ch 1. Quoted in G Mandich, “Venetian Patents (1450-1550)” (1948) 30 Journal of the Patent Office Society 166 at 176-77. For example, see E R Foster, The Procedure of the House of Commons against Patents and Monopolies, 1621-1624 in W A Aiken and B D Henning, Conflict in Stuart England (New York University Press, 1960), pp 59-85. For example, see E R Foster, The Procedure of the House of Commons against Patents and Monopolies, 1621-1624 in W A Aiken and B D Henning, Conflict in Stuart England (New York University Press, 1960), pp 59-85.

346 [8.10]

Context of Patent Law

CHAPTER 8

protest. 5 In Elizabeth’s last Parliament (1601), the protests were strong enough to move the Queen to issue a proclamation against the most offensive monopolies and, more importantly, to give jurisdiction to the common law courts to determine the validity of the remaining monopolies. The first case concerning the validity of a monopoly to be heard by a common law court was Darcy v Allen (Case of Monopolies) (1602) 11 Co Rep 84. Edward Darcy, a groom of the Privy Chamber to Elizabeth I, had been granted letters patent in 1598 to “enjoy the whole traffic and merchandising of all playing cards” in England for which he paid one hundred marks per annum. One Thomas Allen, a haberdasher of London, had ordered a large number of playing cards to be manufactured and sold. Darcy sued for damages. The court found the monopoly was invalid and, in doing so, expressed its view of the proper basis for grant: [W]here any man by his own charge and industry, or by his own wit or invention, doth bring any new trade into the realm, or any engine tending to the furtherance of a trade that never was used before – and that for the good of the realm – that in such cases the King may grant to him a monopoly patent for some reasonable time until the subjects may learn the same, in consideration of the good that he doth bring by his invention to the commonwealth: otherwise not.

James I continued to use the monopoly system as part of his revenue struggle with the House of Commons, and faced opposition from both the courts and the Commons. In the King’s Book of Bounty, published in 1610, James I declared his rights to reserve certain things for his pleasure and privilege, including the right to grant monopolies. Sir Edmund Coke regarded his own judgment in Darcy v Allen (1602) 11 Co Rep 84 (see [8.20]) as “the principal motive of the publishing of the King’s Book”. 6 Eventually, the House of Commons moved to abolish monopolies except for the grant of “Patents for Inventions” for a limited term subject to the public interest. The Statute of Monopolies 1623 (21 Jac 1 c 3) was introduced in the 1623-1624 session of Parliament “to reassert the law which was being neglected, evaded, and defied”. 7 It was passed by both Houses in May 1624. The Statute of Monopolies 1623 made a general abolition of the grant or continuance of monopolies but created a special limited exception in s 6: Provided also, and be it declared and enacted, that any declaration before mentioned shall not extend to any letters patent and grants of privilege, for the term of 14 years or under, hereafter to be made, of the sole working or making of any manner of new manufacture within this realm, to the true and first inventor and inventors of such manufactures, which others at the time of making such letters patent or grant shall not use, so as also they be not contrary to the law, nor mischievous to the state, by raising prices of commodities at home, or hurt of trade or generally inconvenient ….

This section continues to be of great importance in the question of patentability: see the Patents Act 1990 (Cth) definition of “invention” in Schedule 1, and also Patents Act 1990 s 18(1)(a) and (1A)(a). 5

6 7

For example, see E R Foster, The Procedure of the House of Commons against Patents and Monopolies, 1621-1624 in W A Aiken and B D Henning, Conflict in Stuart England (New York University Press, 1960), pp 59-85. See S Davies, “Further Light on the Statute of Monopolies” (1932) 48 Law Quarterly Review 394. S Davies, “Further Light on the Statute of Monopolies” (1932) 48 Law Quarterly Review 394 at 395, quoting Price, “The English Patents of Monopoly” (1913) 1 Harvard Economic Series 24. [8.10]

347

Intellectual Property: Commentary and Materials

The Statute of Monopolies 1623 established what could be the subject of a valid grant but did not address procedure for grant or patent administration. Grant was a particularly convoluted process. 8 Furthermore, the grant, when made, was usually in very vague terms. From 1700 onwards, attempts were made to require a clear definition of the invention itself and the scope of the monopoly granted. With the growth of British industry in the 17th and 18th centuries, conflicts between patents led to the development of written documents “giving the fullest and most sufficient description of all the particulars on which the effect depends”. 9 The development of these documents, which included a clear description of the subject matter of the patent and the method of its production and which are now referred to as patent specifications, changed the patent system to one in which new and useful information was “taught” to the public in exchange for the grant of the temporary monopoly. During the 18th century, judges began to express the idea that the object of patent law was to secure the revelation of beneficial secrets that could be generally exploited when the inventor’s monopoly expired. This kind of thinking can be found in this extract from an early 20th century case.

Attorney-General (Cth) v Adelaide Steamship Co [8.20] Attorney-General (Cth) v Adelaide Steamship Co (1913) 18 CLR 30 House of Lords LORD PARKER: [31] At common law every member of the community is entitled to carry on any trade or business he chooses and in such manner as he thinks most desirable in his own interests, and inasmuch as [32] every right connotes an obligation no-one can lawfully interfere with another in the free exercise of his trade or business unless there exists some just cause or excuse for such interference. Just cause or excuse for interference with another’s trade or business may sometimes be found in the fact that the acts complained of as an interference have all been done in the bonafide exercise of the doer’s own trade or business and with a single view to his own interests: Mogul Steamship Co v McGregor Gow & Co [1892] AC 25. But it may also be found in the existence of some additional or substantive right conferred by letters patent from the Crown or by contract between individuals. In the case of letters patent from the Crown this additional or substantive right is generally described as a monopoly. In the latter case the contract on which the additional or substantive right is founded is generally described as a contract in restraint of trade. Monopolies and contracts in restraint of trade have this in common, that they both, if enforced, involve a derogation from the common law right in virtue of which any member of the community may exercise any trade or business he pleases and in such manner as he thinks best in his own interests. The right of the Crown to grant monopolies is now regulated by the Statute of Monopolies but it was always strictly limited at common law. A monopoly being a derogation from the common right of freedom of trade could not be granted without consideration moving to the public, just as a toll being a derogation from the public right of passage could not be granted without the like consideration. In the case of new inventions the consideration was found either in the interest of the public to 8

9

See K Boehm and A Silberston, The British Patent System. 1. Administration (Cambridge University Press, 1967) pp 18-19; O W Hulme, “On the History of Patent Law in the Seventeenth and Eighteenth Centuries” (1901) 18 Law Quarterly Review 280; C Dickens, “A Poor Man’s Tale of a Patent” (1850) 11(70) Household Words 1; also in D Pascoe (ed), Selected Journalism 1850-1870 (Penguin Modern Classics, USA, 1997). Dickens’ article is also available online from the National Library of Australia http://www.trove.nla.gov.au/ newspaper/article/12925782. Liardet v Johnson Hil V 1778, cited in T Webster Reports and Notes of Cases on Letters Patent for Inventions (Thomas Blenkarn, London, 1844) p 54; see footnote (e).

348 [8.20]

Context of Patent Law

CHAPTER 8

Attorney-General (Cth) v Adelaide Steamship Co cont. encourage inventive ingenuity or more probably in the disclosure made to the public of a new and useful article or process. In the case of sole rights of trading with foreign parts it might be found in the interest of the public in new countries being opened to trade. But for the validity of every monopoly some consideration moving to the public was necessary. Many of the monopolies purported to be granted by the Tudor or Stuart Sovereigns were bad for want of such consideration, and it was the vexatious interference with trade under cover of these invalid grants that led to the passing [33] of the Statute of Monopolies. Further, monopolies were in the eyes of the lawyers of that time attended with the following evils: first, increase in the price of the wares, and secondly, deterioration of the wares themselves, both evils being due to the want of healthy competition.

[8.30] The “consideration moving to the public” Lord Parker refers to is revealed in the patent specification. Much patent litigation revolves around issues of whether the invention is of a kind that complies with the restrictions of the Statute of Monopolies 1623, and whether it is novel, inventive, useful and not previously secretly used. These are all aspects of the consideration moving to the public; they are discussed in Chapter 9. Further questions concern whether the specification adequately describes the nature of the invention and the method of implementing it, and whether the monopoly claimed is commensurate with the disclosure: see Chapter 10. These issues pertain to the desired balance between encouraging invention and, at the same time, not inhibiting areas of industry and technology by indiscriminately granting exclusive monopoly rights.

PATENT PROTECTION – EVALUATION [8.40] From the commencement of the Industrial Revolution, opponents of the patent system have questioned the rationale of patent protection. In 1979, the Senate Standing Committee on Science and the Environment, in its report on industrial research and development in Australia, expressed the view that “Australia’s present patent system may well be acting against the country’s best interests”. Pursuant to that report, the Industrial Property Advisory Committee (IPAC) was commissioned to examine how patent protection could be made to serve the national interest. IPAC’s report, Patents, Innovation and Competition in Australia, was released in late 1984 and recommended that the patent system continue to operate in Australia, including Australia’s participation in the international patent scheme. A number of changes and improvements were suggested, many of which were made by the Patents Act 1990 (Cth). In 1999, the Commonwealth Government commissioned a further wide-ranging review of the effects on competition of Australia’s IP legislation generally. The Intellectual Property Competition Review Committee published its final report in September 2000. Several of the recommendations in this report were included in the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth).

Review of Intellectual Property Legislation under the Competition Principles Agreement [8.50] Intellectual Property Competition Review Committee, Review of Intellectual Property Legislation under the Competition Principles Agreement, Final Report (September 2000) (Ergas Report) (references omitted; accessible through http://www.trove.nla.gov.au/work/33030681?q) [8.50]

349

Intellectual Property: Commentary and Materials

Review of Intellectual Property Legislation under the Competition Principles Agreement cont. Problems patent rights attempt to address As with other types of intellectual property, the principal problem which patents attempt to address is the threat of free riding on investment of intellectual effort. Unless kept secret, inventions and ideas can often be cheaply copied or imitated by competitors. Without patent protection it would be impossible to prevent free riding by persons who did not contribute to the original investment. This makes it impossible for the investor to recoup the cost of the investment required to secure the advance. Market incentives for investment in invention would consequently be deficient. As discussed in more detail under the section on Alternatives, the patent system attempts to solve these market failures through an essentially market-oriented mechanism, unlike possible alternatives such as direct government subsidy. As with patents, contracts and trade secret laws can be used to reduce free riding by making it a breach to disclose confidential knowledge. Trade secret laws can also reduce transaction costs by reducing the protective measures which knowledge owners must expend to maintain control over an invention. However, trade secret law cannot reduce transaction costs to zero, for at least two reasons. Firstly, there is still the cost to both parties of acquiring information about the current state of knowledge before entering the contract. (The lack of disclosure making this cost all the greater). Secondly, trade secret law can only be used where the bargainers (producers and users of the knowledge) are well-defined. In addition, such contractual arrangements are in many situations very difficult and/or costly to make and enforce – for example, where the population of potential users is widely dispersed (for example, as between possible cancer patients and cancer researchers). In these situations, transactions and bargaining costs are likely to be high, and private negotiations cannot solve the problems free riding creates for efficient resource allocation. Patent laws try to solve these problems by assigning the first producer exclusive rights for a limited period. By making patent law similar to real property law, the rights may be traded (sold or licensed) so that the knowledge can be transferred to its most efficient users. Bargaining issues are reduced and transaction costs are likely lower than with pre-production contracts or trade secrets. This is because the cost of identifying owners of knowledge and negotiating agreements with these owners is likely to be reduced and also because the cost of detecting violations is likely to be smaller (since all unauthorised users are violators). ….. Nature of the restrictions on competition A patent excludes others from the area of technology defined by the scope of the claims for the duration of the grant. This exclusivity may enable the patentee to charge higher prices and make greater profits than would be possible if the ideas were freely available. Also, efficiencies gained as a result of the invention will be temporarily less widely available in society. Granting patents can therefore lead to losses in allocative and productive efficiency – the extent of these losses depends on the market power of the patentee and on the patentee’s ability to price discriminate. In practice, however, a patent holder can rarely act as a pure monopoly, because of the availability of alternative and substitute products and processes, and also because some scope for imitation almost always exists. Another effect of the temporary exclusive patent right is that it may inhibit innovation based on the ideas involved – this is because these ideas are not freely available for others to use. Kauffer suggests that these “dynamic” costs are potentially greater than the “static” deadweight costs, though they are likely to occur only when the scope of the patent is broad. Similarly, Scotchmer states that until recently “economic theories of IP have assumed that innovations are isolated events with no bearing on future innovations”. That view limits how well the 350 [8.50]

Context of Patent Law

CHAPTER 8

Review of Intellectual Property Legislation under the Competition Principles Agreement cont. theory can be applied to modern controversies, especially those involving biotechnology and computing hardware and software. These technologies have a high degree of “cumulativeness”. This has implications for the social value of innovations and the ease with which firms can be given incentives to create them. Scotchmer continues by saying that cumulativeness “makes it especially difficult to turn social value into private value as must be done if firms are to have incentives to innovate. Later products can supplant the earlier ones, reducing their profitability. A solution is to give broad protection so that licensing is necessary. However, this may stifle the second-generation products.” To some extent dynamic losses are counteracted by the disclosure of ideas as part of the quid pro quo of granting a patent and by the fact that the patent system itself (by defining an assignable and enforceable property right) facilitates the use of licensing (in this case the use of cross-licensing between the original inventor and those that improve upon the invention).

[8.60] In 2015, the Australian Government initiated a new review by the Productivity Commission of Australia’s intellectual property arrangements, including their effect on innovation, competition, investment and access to goods and services. The Productivity Commission released its draft report in April 2016 for public comment and the final inquiry report was handed to the Australian Government on 23 September 2016 and publicly released 20 December 2016. Its view of the status of the Australian patent system was summarised thus: The Commission’s overall judgment is that the community is not getting a reasonable return from the protection granted to patent holders. There is a strong case for reforming the patent system to better promote community interests. 10

The evidence on which this conclusion was based is discussed in pt 7.1 of the Commission’s report.

Intellectual Property Arrangements [8.70] Productivity Commission of Australia Intellectual Property Arrangements (23 September 2016) (tables, footnotes and references omitted; accessible at http://www.pc.gov.au/completed/current/ intellectual-property/report) 7.1 How well is the patent system performing? Allocating patent rights: is the system effective? In keeping with the broad principles that underpin a well–functioning IP system (chapter 2), the patent system should only grant protection to inventions that are: • socially valuable – innovations are of greater social value where they result in new goods and services (in the case of product innovations) or production methods (process innovations) that improve the allocation of society’s limited resources. Social value is higher where innovations make a greater contribution to human knowledge and create knowledge spillovers into other areas of the economy • additional – innovations are additional where they would not have been developed or commercialised absent patent protection (or would have been developed or commercialised at a later date). Patents for innovations that are not additional impose net costs on the community 10

Productivity Commission of Australia, Intellectual Property Arrangements (23 September 2016) p 215. [8.70]

351

Intellectual Property: Commentary and Materials

Intellectual Property Arrangements cont. regardless of whether the innovation is socially valuable. Some inquiry participants recognised additionality as an important principle for granting IP protection. Targeting socially valuable and additional innovations avoids the two potential problems in allocating patents — “false positives” (cases where patents are granted where it is not in the public interest) and “false negatives” (cases where patents are not granted, when to do so would be in the public interest). ... By encouraging socially valuable innovations that would not have otherwise occurred, the patent system plays an important role in advancing human knowledge. This is especially the case for technologies where the costs of innovation are high, but the costs of imitation are low. However, while the system captures the above sorts of innovations, there is evidence that it also admits a multitude of patents that are against the public interest; the system captures not just the “innovative wheat”, but also the “low-quality chaff”. The system fails to exclusively target socially valuable and additional inventions While there are no “bright lines” when it comes to identifying whether an invention provides sufficient social value to justify patent protection, a range of proxy measures are available. The Commission constructed a number of such proxies (appendix D). Collectively, they suggest a significant percentage of Australian patents are of relatively low value (figure 7.1). This evidence is consistent with examples of patents accepted or granted in Australia (box 7.1). While some of the innovations in box 7.1 may be successful in the marketplace, this alone is unlikely to justify patent protection. To ensure the benefits of patent protection outweigh the costs, patented innovations must at least embody some advance in human knowledge, and ideally go further and create spillovers into other areas of the economy. The need to advance human knowledge is reflected in the TRIPS objectives, which are focused on advancing technology, rather than products per se. Further, from a practical viewpoint it is difficult to predict commercial success at the time an application is made. On the other hand, advances in human knowledge can, to some extent, be identified at the time an application is made by comparing the innovation with the prior art. Evidence on low-value patents is also consistent with the findings of Moir, who assessed 72 business method patents granted in Australia and concluded that many of the factors integral to a patent being granted were trivial in nature, and that it was difficult to discern any new knowledge in any of the patented innovations (appendix D). While business method patents can no longer be patented in Australia (chapter 9), these findings are indicative of a system that admits patents of low social value. Australia is not alone in granting low-value patents. Proxies for the social value of innovations for the United States and Europe indicate a significant share of patents in these jurisdictions are of relatively low value (figure 7.2). This is consistent with the views of a number of researchers in other countries, who have concluded that the quality of patents is low, and in some cases getting lower. The OECD, for example, has estimated similar patent quality indicators across countries and over time, and found evidence that average patent quality has been steadily declining. Nor does the system effectively target additional innovations An abundance of survey evidence shows patents are often not important for promoting innovation (appendix D). This evidence is supported by the results from empirical models of the relationship between patenting and R&D (a proxy for innovation). Collectively the evidence suggests that, at best, patents are only important for promoting innovation in products that entail large sunk R costs and are relatively easy to imitate, such as pharmaceuticals, biotechnology and machinery. It is impossible to directly incorporate an additionality test in the Patents Act, since additionality also depends on contextual factors (box 7.2). It is unsurprising therefore that the patent system fails to target innovations that would not have otherwise occurred in its absence. An innovation that passes 352 [8.70]

Context of Patent Law

CHAPTER 8

Intellectual Property Arrangements cont. the usefulness test, or is found to involve an inventive step, may still have been developed and commercialised in the absence of patent protection. A poorly targeted patent system imposes substantial costs A multitude of low value patents imposes substantial costs on the community. Low value patents impede innovation by frustrating the efforts of follow–on innovators and researchers, who may be forced to invest in costly workarounds. In some cases, low value patents are deliberately used as a strategic tool for stalling or excluding market entry. Consumers incur much of the costs from a multitude of low value patents, either because new products and services are not developed, or because the higher costs of innovation are passed on. IPTA disputed many of the costs associated with low value patents, arguing that innovators can simply innovate around them. IPTA’s view is at odds however with the evidence that patents inhibit follow-on innovation, especially in industries where innovation builds on previous innovations (box 7.3). In this context, low value patents are not always necessarily found to be invalid, and even if they would be found invalid if challenged, there are weak incentives to challenge a patent. ... There are other costs from low-value patents that are incurred regardless of whether it is possible to ultimately innovate around them. First, low–value patents can impede innovation by contributing to ‘noise’ in the system. With more patents, it is more difficult for a follow–on innovator to be sure it is not infringing a patent, and to identify and build on true advances in human knowledge. The noise from low–value patents can also weaken the credibility signal in patents, increasing the rate of return required by financiers and making it harder for firms to leverage their patents to acquire capital at lowest cost. This information problem can hinder access to finance for those innovators who have valuable patents. An accurate signal value in patents can be particularly important for start-ups and SMEs. Atal and Bar put it thus: If a patent system allows many bad patents, the perceived quality of patents is low and so is the value of holding patents. This limits the ability of the patent system to reward true inventors. Second, a poorly targeted patent system imposes costs at the system level, a view shared by the ACCC. The increased number of patents results in more inadvertent infringement, infringement studies, validity investigations and consultations with patent attorneys. With more spurious patents, disputes may be harder and more costly to resolve because courts have more difficulty determining which patents are justified.

INTERNATIONAL PATENT AGREEMENTS [8.80] The constantly increasing tendency for Australian companies to face competition from

overseas, and to seek to broaden their markets by means of exports implies that many Australian innovators, to the extent that they obtain competitive advantage by the existence of a patent system, will require access to such systems in their export markets. Conversely, innovators overseas will expect to obtain the benefit of patent protection in this country. As a result of these forces, Australia has entered into a number of international agreements that impose obligations in relation to patents. These agreements largely render moot any residual question that there may be about the appropriateness or otherwise of retaining a patent system in this country. [8.80]

353

Intellectual Property: Commentary and Materials

In relation to patents, under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (see [2.20] – [2.80]), Australia’s membership of the World Trade Organisation is conditional on the existence in Australia of a patent system having certain minimum characteristics. The Paris Convention (see [1.30]) then obliges Australia to confer on the nationals of countries that are signatories to that Convention, the same rights in respect of patents that it confers on Australian nationals. Other aspects of Australia’s patent system are impacted by the Australia-United States Free Trade Agreement, and they would also be affected by the Trans-Pacific Partnership Agreement, should it eventually come into force.

OVERVIEW OF THE AUSTRALIAN SYSTEM Legislative history [8.90] In the United Kingdom, the Patents Law Amendment Act 1852 (15 & 16 Vict c 65) (UK) had established many of the features of the modern patent system. It had; established the British Patent Office; appointed Commissioners of Patents to administer the system; established a uniform and single patent for the whole United Kingdom; established provisional protection from the date of filing a provisional application; simplified the system of grant; and greatly reduced costs through the establishment of standard fees. However, the model for the Australian patents system is regarded as the Patents, Designs & Trademarks Act 1883 (46 & 47 Vict c 57) (UK). This Act was an initial response to the (then) newly created international treaty, the Paris Convention for the Protection of Industrial Property (1883). Some of the features of the Act were the introduction of an examination system; the requirement for “a distinct statement of the invention claimed” and for a description of the invention as a condition of grant rather than a ground for invalidity; the establishment of a pre-grant opposition procedure; the requirement that an application be for one invention only; the introduction of a compulsory licence system to prevent abuse of monopoly by non-working of the patent; and setting the term of monopoly at 14 years.

Patent legislation in Australia Colonial Acts [8.100] Most Australian colonies had a Patents Act (for example, Patents Act 1852-95 (NSW), Patents Act 1890 (Vic)) based on the Patents, Designs and Trademarks Act 1883 (UK). The colonial Acts continued in force until the Commonwealth Parliament exercised its power under the Commonwealth of Australia Constitution Act (63 & 64 Vict c 12) (Cth) s 51(xviii) and enacted the Patents Act 1903 (Cth). The definition of patent under the Patents Act 1903 (Cth) included patents granted under the State Acts.

Commonwealth Acts

Patents Act 1903 (Cth) [8.110] The Patents Act 1903 (Cth) was in force for nearly 50 years but was amended from

time to time. It created the Australian Patent Office and the position of Commissioner of Patents, among others. The Patents Act 1903 was reviewed by the Knowles Committee (appointed in 1935), and the Dean Committee (appointed in 1950). Following recommendations in both reports, the Act was replaced in 1952. 354 [8.90]

Context of Patent Law

CHAPTER 8

Patents Act 1952 (Cth) [8.120] The Patents Act 1952 (Cth) was strongly influenced by reforms of the Patents Act 1949 (UK). It was amended by 23 Acts during its currency. Important amendments included the Patents Act 1969 (Cth) that introduced a system of deferred and modified examinations, the Patents Amendment Act 1978 (Cth) that provided for early publication of complete specifications, and the Patents Amendment Act 1979 (Cth) that introduced a petty patent system. Petty patents were an Australian version of the German or Japanese “utility model”. The object of the system was to provide protection for smaller-scale inventions with a shorter potential market life that did not require or justify full patent term protection. Compared to standard patents, petty patents were easier to obtain, cheaper, and limited to an initial one year of protection (calculated from the date of grant) renewable for a maximum of six years calculated from the date when the application was filed. The novelty of petty patents was tested only against information that had been published in Australia. However, the standard of inventiveness was the same for petty patents and standard patents.

Patents Act 1990 (Cth) [8.130] The Industrial Property Advisory Committee produced a report in 1984, Patents, Innovation and Competition in Australia, in which reform of the patent system was recommended. The recommendations can be found in Hansard for 28 November 1986, as tabled by Barry Jones as Minister for Science. In response to the recommendations, the government introduced the Patents Bill 1989 (Cth) and then, with some changes, the Patents Bill 1990 (Cth). The Bill was a “plain English” Bill with a more systematic ordering of provisions. The major differences comprehended by the Bill are to be found in the second reading speech in the House of Representatives, Hansard, 1 June 1989, p 3479. The Patents Act 1990 (Cth) came into force on 30 April 1991. The Patents Regulations 1991 (Cth) were notified in the Gazette on 26 April 1991 and also came into force on 30 April 1991. Important amendments that have been made to the Patents Act 1990 include the following:

• Patents (World Trade Organization Amendments) Act 1994 (Cth) – extended the term of a standard patent from 16 to 20 years in accordance with Australia’s obligations under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS); • Patents Amendment (Innovation Patents) Act 2000 (Cth) – ceased to allow new applications for petty patents and introduced a system of innovation patents (see [8.180]); • Patents Amendment Act 2001 (Cth) – raised threshold requirements of novelty and inventive step and made amendments responding to recommendations in the final report of the Review of Intellectual Property Legislation under the Competition Principles Agreement (Ergas Report) (see [8.50]). • US Free Trade Agreement Implementation Act 2004 (Cth) – made a number of amendments to meet the requirements of the Australia–United States Free Trade Agreement, which came into force on 1 January 2005. • Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) – effected the most significant changes to the Australian patents legislation since the commencement of the Patents Act 1990 (Cth). Some of the more important of the changes introduced by this [8.130]

355

Intellectual Property: Commentary and Materials

legislation are described elsewhere in this Chapter and in Chapters 9 and 10 (see [8.240], [8.270], [9.640], [9.800], [9.820], [10.10], [10.40], [10.90], [10.100], [10.300] and [10.340]).

Trans-Pacific Partnership Agreement [8.140] The Trans-Pacific Partnership Agreement (TPP) was concluded on 4 February 2016.

It does not come into force until certain minimum conditions pertaining to its ratification by the original signatories are satisfied, and in view of the political climate in the United States of America at the time of writing this appears unlikely to happen. Intellectual property matters are dealt with in chapter 18 of the TPP. 11 If it came into force, the TPP would appear to require only a small number of changes in the Australian patents legislation. Specifically, there would need to be a broadening of the provisions that provide for extension of the term of a standard patent so as to allow for extensions where there have been unreasonable delays in the grant of the patent by the Patent Office (although current practices of the Patent Office would appear to fall outside the meaning of “unreasonable delay” in the TPP) and, in the case of pharmaceuticals, where there has been unreasonable delay in processing an application for marketing approval. The Act would also require amendment to provide for a prima facie presumption of validity of a granted patent.

Features of the patent system [8.150] Patents in Australia are available for innovations in a wide range of fields in relation

to products (including micro-organisms, plants and non-human animals), processes, methods of use of known things, and methods of treatment of plants, animals or humans. See further, [9.30] – [9.450]. There are two forms of patent in Australia. A standard patent is a grant of exclusive rights to commercially exploit a novel, inventive and industrially applicable 12 advance in forms or uses of technology for a limited time. An innovation patent is a second-level form of patent by which the same exclusive rights are granted for a shorter term. A person who wishes to obtain a patent in Australia must file a patent application. A patent cannot be granted unless the applicant has filed a complete specification that fully describes the nature of what has been invented, explains the best method of performing the invention known to the applicant and ends with one or more claims: definitions of those embodiments or uses of the invention for which the applicant/patentee claims the exclusive rights. The novelty and inventiveness (or innovativeness) of a claim in an Australian patent are determined as at a date known as the priority date of the claim (see [8.200]). A complete application for a standard patent is subject to examination by the Commissioner of Patents for validity before a patent can be granted on it; an application for an innovation patent is not. Additionally, a standard patent application (but not an innovation patent) is subject to pre-grant opposition. That is, third parties may oppose the grant of a standard patent on an application that has completed the examination stage. The Australian patent system includes a feature of publication of patent applications in order to make useful information publicly known. As a general rule, specifications of standard 11 12

The text of the TPP is available on http://www.dfat.gov.au/trade/agreements/tpp/official-documents/Pages/ official-documents.aspx. The term used in the Patents Act 1990 (Cth) is “manner of manufacture”. See [9.30]–[9.450] for the meaning of this term.

356 [8.140]

Context of Patent Law

CHAPTER 8

patent applications are published no later than 18 months after the earliest priority date (although there are some exceptions). Inventions concerning “associated technology” (broadly, nuclear technology) may be subject to restrictions on publication. An innovation patent specification will be published as soon as practicable after an application in a proper format is filed and accepted for grant by the Commissioner of Patents. A patent specification is a teaching document that must be written in a way that can be understood by a person skilled in the technology to which the invention relates. The public should be able to discover from the publicly available specification what has been invented, how to make or carry out what has been invented, and which embodiments or uses of this invention have been reserved to the patentee. Furthermore, patent specifications are classified and identified according to a system established by a multilateral international treaty (the Strasbourg Agreement Concerning International Patent Classification 1971). Patent documentation constitutes an important publicly available collection of technological information. The documentation also contains information of potential commercial value about the owners and licensees of patents. The classification system makes it possible to make a systematic search of domestic and international patent documents.

PROCEDURE FOR OBTAINING AND MAINTAINING A PATENT [8.160] The Patents Regulations 1991 (Cth) and Schedules contain detailed prescriptions of

the format and presentation of the documentation required by the Patent Office. The requirements for the patent specification are also the subject of statutory and case law, and are discussed in Chapter 9 of this casebook. The formalities of pre-grant and post-grant procedures are briefly described below in order to help students understand the legal obstacles to obtaining and enforcing a patent. Statutory references throughout Chapters 8-11 of this casebook are, unless otherwise indicated, references to the Patents Act 1990 (Cth) and Patents Regulations 1991 (Cth).

Types of patent Standard patent [8.170] According to Schedule 1 to the Patents Act 1990 (Cth), “patent” means a standard

patent or an innovation patent. A standard patent is a form of personal property in which exclusive rights to exploit an invention in ways claimed by the patentee are granted after a successful application process. The subject matter must be an invention which is a manner of manufacture within the meaning of Statute of Monopolies 1623 (ENG) s 6, and it must be novel, involve an inventive step, be useful and must not have been secretly used in Australia by or with the consent of the patentee before the priority date. The invention must be fully described in a patent specification and the claims of monopoly must be clear, succinct and “supported” by the description given in the specification. There are no limitations on the number of claims of monopoly that may be included in a standard patent. It is typical for a patent to include one or more series of claims that are progressively more narrowly expressed. In this way, the patentee seeks to provide for the possibility that one or more of the broadest claims may be found to be invalid at some future time: in that event, it would be hoped that some of the narrower claims would escape invalidity but still provide commercially useful protection for some forms of the invention. [8.170]

357

Intellectual Property: Commentary and Materials

The normal maximum term of a standard patent is 20 years calculated from the date of application, but in the case of certain patents relating to pharmaceutical inventions, there may be an extension of term for up to an additional five years. The patent term may be different for divisional patents (see [8.270]) and in certain other rare situations. The Patents Act 1990 (Cth) also makes reference to a “patent of addition”. This is not a separate type of patent but a way of extending protection in an existing standard patent to modifications or improvements on the invention it discloses. See “Improvements” at [8.350]. Innovation patent [8.180] The Patents Amendment (Innovation Patents) Act 2000 (Cth) introduced the

innovation patent. The Advisory Council on Industrial Property (ACIP) and the Australian Law Reform Commission (ALRC) had noted that the petty patent system, which the innovation patent replaced, did not protect “functional innovations that are not sufficiently inventive under the present standard or petty patent system to warrant protection and are not protectable under the designs system which protects the appearance of articles but not the way they work”. The innovation patent system was intended to be suitable for small and medium business entities to obtain relatively simple, quick and cheap patent-style protection for minor inventions or incremental variations for a maximum term of eight years, which was considered sufficient to encourage research and development of the innovation. Innovation patents are available for most forms of invention patentable under a standard patent, including inventions involving micro-organism products or processes, but not for inventions that are plants, animals or essentially biological processes for the generation of plants and animals. The requirements for an innovation patent are the same as for a standard patent except that the subject matter is required to exhibit an innovative step compared to the prior art, rather than an inventive step. An innovation patent is granted without first being subjected to substantive examination, although the Commissioner of Patents, the patentee or a third party may initiate examination after grant. An innovation patent can only be enforced once it has been “certified”, before which it must be examined. An innovation patent can contain no more than five claims. In 2015, following an indecisive review of the innovation patent system by ACIP and subsequent economic analysis of the system by IP Australia, ACIP released a statement in which it advised the Minister that it was likely that the innovation patent is not achieving its objective of effectively stimulating innovation among small to medium enterprises. The Productivity Commission, in its report of September 2016, expressed the view that the innovation patent system should be abolished. 13

Role of the patent attorney [8.190] See Patents Act 1990 (Cth), Chapter 20, Part 1 (Registration, privileges and professional conduct) ss 198, 200; Part 2 (Offences) ss 201 – 204. Patent attorneys (who may be individuals or companies) are given a statutory entitlement to prepare applications, specifications, claims and other documents relating to patent applications and amendment. Solicitors (but not patent attorneys) may have the carriage of patent litigation (see s 200(3)), but are not to engage in the highly technical business of drafting 13

Productivity Commission of Australia, Intellectual Property Arrangements (23 September 2016) pp 258-262 and Recommendation 8.1.

358 [8.180]

Context of Patent Law

CHAPTER 8

patent applications unless they are acting under the instruction of a registered patent attorney. Although it is not unusual for a solicitor also to be qualified as a patent attorney, a patent attorney is primarily someone with a scientific or engineering background who has obtained passes or exemptions in a set of topics concerned with IP theory and practice. A company that is a patent attorney must have at least one director who is a patent attorney. Patent Regulations 1991 (Cth) Chapter 20 Pt 2 prescribes the required academic qualifications and Schedule 5 lists the prescribed topics. A registered patent attorney may make certain applications and sign documents on behalf of the person required by the legislation to make the application or sign the document.

Priority date [8.200] Every claim of a patent has a priority date (Patents Act 1990 (Cth) s 43) which, according to s 18(1) and (1A), is the date at which the novelty and inventiveness or innovativeness of the claim is to be determined. A priority date may be established in a number of ways:

• by filing one or more provisional applications (see [8.220] and [8.240]) and, within 12 months of the first of them, filing a complete application; • by filing one or more applications in a foreign country (termed “basic applications” in the Patents Act 1990 (Cth); see the definition in Sch 1) that is prescribed as a Convention country (Patents Act 1990 (Cth) s 29B(5) and Patents Regulations 1991 (Cth) reg 1.4) and, within 12 months of the first of them, filing a complete Australian application; • by a combination of the above; • if none of the above applies, by filing a complete Australian application. In the last of the above cases, the priority date of a claim of the application is the filing date of the application; otherwise, it is the date of filing the earliest application (viz the provisional application or the basic application, as the case may be) in which the claim is clearly disclosed (see Patents Act 1990 (Cth), s 43(2) and 42(2A); Patents Regulations 1991 (Cth) ch 3, Pt 1, div 2). A complete Australian application that bases its priority date on an application filed in a Convention country is referred to as a Convention application (“Convention” being the Paris Convention for the Protection of Industrial Property (Stockholm 1967 version)).

Who may apply for a patent? [8.210] Any person, including a body of persons whether incorporated or not, may apply for

a patent (Patents Act 1990 (Cth) s 29(1)). However, a patent can only be granted to an “eligible person”, defined in Schedule 1 as a person to whom a patent may be granted under s 15. Section 15 refers to the inventor and persons deriving title to the invention from the inventor. For applications that were filed on or after 24 May 2001, the applicant is taken to be the person nominated as the “eligible person” to whom the patent is to be granted (Patents Regulations 1991 (Cth) reg 3.1A). Two or more persons may make a joint application (Patents Act 1990 (Cth) s 31) and the Commissioner of Patents has some powers to resolve disputes between joint applicants (s 32; see also ss 33, 34, 35 and 36) and to issue directions to co-owners (s 17).

[8.210]

359

Intellectual Property: Commentary and Materials

Application [8.220] A patent application must be made by filing the prescribed documents (Patents Act

1990 (Cth) s 29(1); Patents Regulations 1991 (Cth) reg 3.1). An application may be a provisional or a complete application (Patents Act 1990 (Cth) s 29(2)). A provisional application must be accompanied by a provisional specification, and a complete application must be accompanied by a complete specification and an abstract that summarises the invention to be claimed (Patents Regulations 1991 (Cth) reg 3.1). Each type of application must also be accompanied by a form identifying the applicant(s) and including other relevant information about the application. An application for a patent can be withdrawn (Patents Act 1990 (Cth) s 141). If a patent application is withdrawn prior to its publication, publication does not occur. Provisional applications are not published unless they are associated with a subsequently-filed complete application. Soon after it is filed, an application for a standard patent is examined for compliance with formalities of drawings and specification (Patents Regulations 1991 (Cth) Schedule 3) and, if compliant, is given a filing date. The application is classified according to the International Patent Classification system and allocated a filing number. In accordance with Australia’s obligations under the Patent Law Treaty 2000, the minimum requirements to establish a filing date (Patents Act 1990 (Cth) s 30; Patents Regulations 1991 (Cth) regs 3.5, 3.5A) are: (i)

information in English that indicates that what is filed is intended to be an application for a patent;

(ii)

a document which appears to be a description of an invention; and

(iii)

information that allows the applicant to be identified or that allows the applicant to be contacted by the Commissioner of Patents. If an applicant does not meet these minimum requirements, additional time is available in which to rectify the defects, but there may be a deferral of the filing date. Applications for international patent protection [8.230] One of the aims of the Patents Act 1990 (Cth) is to enable Australia to participate

fully in international developments in the field of patenting and technology transfer. Sections 29B and 29A of the Act, respectively, provide for applications under the Paris Convention for the Protection of Industrial Property (Stockholm 1967 version) (see [8.200]) and for applications made pursuant to the Patent Cooperation Treaty (1970) (PCT) to be treated as Australian patent applications. Under the PCT, a single patent application can be made, designating all countries that are members of the PCT. The World Intellectual Property Organization (WIPO), which administers the PCT, searches existing literature and publishes its findings as an international search report. At the applicant’s request, an examination of the specification and claims may also be carried out, followed by the generation of an international preliminary examination report (IPER). WIPO does not grant patents, however, and within a fixed time after filing a PCT application, the applicant must file requests for national processing of the application to proceed in any country in which it is desired eventually to obtain a patent. If generated by WIPO, the IPER is not binding on national patent offices, but it may guide them as well as assist the applicant to submit a valid set of claims for national processing. A PCT application 360 [8.220]

Context of Patent Law

CHAPTER 8

may claim priority from an earlier provisional application or an earlier application in a Convention country. Under Patents Act 1990 (Cth) s 29A(1), a PCT application that designates Australia is to be treated as a complete application for a standard patent. This applies even if national processing of the PCT application in Australia is not requested by the applicant. The majority of patents applied for or granted in Australia are based upon Convention or PCT applications.

Specification [8.240] A patent application must be in approved form and accompanied by a specification

(Patents Act 1990 (Cth) s 29). The specification is the document that reveals the consideration moving to the public that Lord Parker required in Attorney-General (Cth) v Adelaide Steamship Co (1913) 18 CLR 30 ([8.20]). The function of a specification is to describe the invention and delineate the monopoly being claimed. Much of patent law concerns issues surrounding the adequacy of the specification to fulfil the tasks it is called upon to perform. Specifications may be provisional or complete. As prescribed by Patents Act 1990 (Cth) s 40, each type of specification must describe the invention clearly and completely, and additionally a complete specification must describe the best method known to the applicant of performing the invention. 14 A complete specification (but not a provisional) must end with at least one claim defining the invention, and the claim or claims must be clear, succinct, supported by the matter described in the specification and relate to a single invention only. 15 Inventions involving micro-organisms [8.250] Patents Act 1990 (Cth) ss 41 and 42 provide for special procedures to fulfil the requirement of full disclosure in s 40(2)(a) for inventions based on micro-organisms. Where the invention is a new micro-organism, the applicant may attempt a written description or may deposit a sample of the micro-organism with a specialised depository institution recognised under the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977) (Budapest Treaty). Where the invention involves the use, modification or cultivation of a micro-organism, and the micro-organism is not reasonably available to a person skilled in the relevant art and a sample is required for the performance of the invention, the applicant must deposit a sample with the deposit institution. The Patents Act 1990 (Cth) ss 6, 41 and 42 provide for the fulfilment of Australia’s obligations under the Budapest Treaty.

Examination of an application for a standard patent [8.260] An application for a standard patent will be examined prior to grant to see if it

complies with the requirements set out in Patents Act 1990 (Cth) s 45, which include adequacy of the description, novelty, inventiveness and whether the field of the invention is inherently unpatentable. If the application complies, it is accepted for grant. Otherwise, an examiner’s report will be prepared (under delegation from the Commissioner of Patents) and sent to the 14

15

Before the commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) on 15 April 2013, it was not strictly necessary for a provisional application to describe the invention as completely as it is now. Before the commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) on 15 April 2013, the “support” requirement was instead a requirement that the claims be “fairly based” on the description. [8.260]

361

Intellectual Property: Commentary and Materials

applicant, who may reply by submitting argument that the examiner is mistaken, or by amending the specification, or both. Applications for innovation patents are not examined prior to grant. Many patent applications do not proceed. Inventors may change their ideas, withdraw the current application and file afresh, or they may fail to obtain commercial backing or simply lose interest. Examination will therefore not be done automatically and must be requested in the “approved form” within five years from the filing date of a complete application (Patents Regulations 1991 (Cth) reg 3.15). The Commissioner may (and almost invariably does) direct that a request for examination be made (Patents Act 1990 (Cth) s 44(2); Patents Regulations 1991 (Cth) reg 3.16), in which case examination must be requested within two months of the date of the Commissioner’s direction (Patents Act 1990 (Cth) s 142; Patents Regulations 1991 (Cth) reg 3.16(2)). Once an examination report has been issued by the Commissioner, the applicant has 12 months in which to overcome all of the objections, or the application will lapse: Patents Act 1990 (Cth) s 142(2)(e) with Patents Regulations 1991 (Cth) reg 13.4. 16 Otherwise, under Patents Act 1990 (Cth) ss 49 and 50, the Commissioner must either accept or refuse a patent request. Where an application is refused, the applicant must be informed in writing of the reasons. A notice of the acceptance or refusal must be published in the Australian Official Journal of Patents.

Divisional applications [8.270] Because Patents Act 1990 (Cth) s 40 requires the claims of a specification to relate to a single invention only, the Act provides for the situation where an application is found to relate to more than one invention. Thus, an applicant may, within a limited time, file a new application that is a “divisional” of the first-filed (“parent”) application. For any claim of the divisional that was clearly disclosed in the “parent”, its priority date is the same as it would have been if the claim had been included in the parent application. The parent may be an innovation patent or it may be an application for a standard patent, provided that, in each case, the parent has not lapsed or ceased, and has not been refused or withdrawn at the time of filing the divisional. If the parent is an innovation patent, a divisional cannot be filed more than one month after the Commissioner of Patents advertises that examination of the parent has occurred. If the parent is an application for a standard patent, a divisional cannot be filed more than three months after the acceptance of the application following its examination has been advertised. 17

Formalities check and acceptance of innovation patents [8.280] A “formalities check” is defined in Patents Act 1990 (Cth) Schedule 1. The formalities

required are set out in Patents Regulations 1991 (Cth) reg 3.2B. The formalities check is the only assessment of an application for an innovation patent prior to grant. If the application complies with the Regulations, the innovation patent must be granted.

16 17

If examination was requested after 14 April 2013. In other cases, the applicant has 21 months. Before the commencement of Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) it was possible to file a divisional application of a standard patent application up to the date of grant of the patent.

362 [8.270]

Context of Patent Law

CHAPTER 8

Publication [8.290] Publication of a complete specification for a standard patent occurs on or very shortly

after 18 months from the earliest priority date for that application (Patents Act 1990 (Cth) s 54(3); Patents Regulations 1991 (Cth) reg 4.2(3)) unless the applicant has requested that it occur earlier. Divisional applications are published as soon as practicable after their filing date, or when their parent is published, whichever occurs later. Notice of availability for public inspection will be advertised in the Official Journal of Patents (for a standard patent: Patents Act 1990 (Cth) s 54; Patents Regulations 1991 (Cth) reg 4.2; for an innovation patent: Patents Act 1990 (Cth) s 62). Section 55 and Patents Regulations 1991 (Cth) reg 4.3 set out the documents to be made available for public inspection. Once a complete specification for a standard patent is open to public inspection, “the applicant has the same rights as he or she would have had if a patent for the invention had been granted on the day when the specification became open to public inspection” (Patents Act 1990 (Cth) s 57(1)), but may not commence infringement proceedings until the patent is in fact granted (s 57(3)). Publication of an innovation patent occurs essentially at the time of its grant (Patents Act 1990 (Cth) s 62(2)). Documents are not to be published or made available for public inspection, nor are they normally to be produced in legal proceedings (s 56) until notification in the Official Journal of Patents provided for in s 54. Patents Act 1990 (Cth) Chapter 15 provides that certain material is not to be made available to the public even after examination and acceptance by the Patent Office (s 152). The prohibition on publishing information in specifications concerning “associated technology” is to prevent the dissemination to the public of documents concerning the enrichment, processing or production of nuclear material. A similar prohibition on publication in s 173 concerns information that might be contrary to the defence of Australia.

Examination of innovation patents [8.300] No action can be taken to enforce an innovation patent (Patents Act 1990 (Cth)

s 120), and revocation proceedings for an innovation patent cannot occur (s 138), before the patent has been “certified”. In order for an innovation patent to be certified, it must be examined by the Commissioner of Patents. Under s 101A, the Commissioner may decide to examine an innovation patent, or must do so if requested to by any person (including the patentee). Matters considered by the Commissioner are the same as for examination of a standard patent application (see [8.260]) together with some matters that are peculiar to innovation patents (see s 101B). If the Commissioner finds that the patent does not comply with s 101B, he or she may revoke the patent but only after giving the patentee an opportunity to rectify the defects. Otherwise, a certificate of examination is issued.

Opposition [8.310] The Minister, or any person, may oppose the grant of a standard patent on the

grounds exhaustively set out in Patents Act 1990 (Cth) s 59. These are: that the nominated person is not entitled to the grant, or only entitled with another; that the invention is not a patentable invention; and that the specification does not comply with s 40(2) or (3). Notice of opposition must be filed within three months of publication of acceptance of the application (Patents Regulations 1991 (Cth) reg 5.4). Opportunities are then provided for the opponent and the applicant to file any evidence on which they wish to rely in the opposition [8.310]

363

Intellectual Property: Commentary and Materials

procedure. A detailed description of the opposition procedure is found in regs 5.4 – 5.9. The Commissioner of Patents must hear and decide the opposition in accordance with the Regulations (Patents Act 1990 (Cth) s 60). See Patents Regulations 1991 (Cth) Chapter 5. Opposition to an innovation patent is a similar (although somewhat more curtailed) procedure (see Patents Act 1990 (Cth) s 101M; Patents Regulations 1991 (Cth) regs 5.6 and 5.8), but applies only after an innovation patent has been “certified”. A notice of opposition to an innovation patent may be filed at any time after the patent has been certified.

Grant of patent [8.320] If there is no successful opposition to an application for a standard patent that has

been examined and accepted, the Commissioner of Patents grants the patent by registering certain particulars of the patent in the Register of patents (Patents Act 1990 (Cth) s 61). In the absence of any opposition, the time for grant of a standard patent is usually not more than six months from the date of advertisement of acceptance of the application (Patents Regulations 1991 (Cth) reg 6.2). If the Commissioner accepts an application for an innovation patent and there is no prohibition order under Patents Act 1990 (Cth) s 152(1) or s 173(3), the Commissioner grants the innovation patent (s 62). After a patent is granted, the patentee has the exclusive rights set out in s 13.

Re-examination of a patent [8.330] The Commissioner of Patents may decide to re-examine a standard patent that has

been granted, or an innovation patent that has been certified, and must do so if asked to by any person. The Commissioner may also decide to re-examine a standard patent application that has been accepted. This most commonly occurs when a person has notified the Commissioner of information relevant to the novelty or inventiveness of the invention, under Patents Act 1990 (Cth) s 27. Re-examination may cover any of the matters that can be considered during examination and may result in refusal to grant a patent or revocation of the patent (as the case may be) by the Commissioner if the applicant or patentee cannot overcome any defects found by the Commissioner.

Term of a patent [8.340] The maximum term of a standard patent is normally 20 years from the date of the

patent (Patents Act 1990 (Cth) s 67). The maximum term of an innovation patent is eight years from the date of the patent (s 68). The date of the patent is usually the date of filing of the complete specification (s 65). Completion of the full term of a patent is dependent, however, on annual maintenance fees being paid within the applicable time limit. For standard patents, these fees become payable from the fourth anniversary of the date of the patent (whether or not a patent has been granted on the application by that time); for innovation patents, they are payable from the second anniversary. There have been several regimes to allow for extension of the term of a patent. The current regime is set out in ss 70 – 79A. These were introduced by the Intellectual Property Laws Amendment Act 1998 (Cth) to allow for extensions of term of up to five years for “pharmaceutical substances”. To be eligible for extension, the standard patent must satisfy the conditions of Patents Act 1990 (Cth) s 70. During the period of extension, the patentee’s rights are limited: see [11.350]. 364 [8.320]

Context of Patent Law

CHAPTER 8

Improvements [8.350] Where an invention is protected by a standard patent, a modification of or

improvement to the invention may be protected by a “patent of addition” (Patents Act 1990 (Cth) s 81). The improvement or modification need not be inventive in the light of the disclosure of the main invention (s 25). The patent of addition will generally remain in force for as long as the patent for the main invention (s 83(1)), although there can be exceptions where either the patent for the main invention or the patent of addition is extended independently of the other (s 81(2), (3), (4)). If the patent for the main invention is revoked, the improvement may still be protected independently (s 85). No annual maintenance fees are payable after the grant of a patent of addition, in order to keep it in force, unless its term is extended. Patents of addition are not available for innovation patents (s 80).

Revocation [8.360] There is no presumption of validity of a patent (Patents Act 1990 (Cth) s 20) and

there is always the risk of a successful revocation action. A patentee claiming infringement will usually be challenged by the defendant counterclaiming for revocation under Patents Act 1990 (Cth) s 121. Infringement proceedings are not a necessary precondition to commencement of proceedings for revocation, however: any person may apply to a prescribed court for an order revoking a patent (Patents Act 1990 (Cth) s 138). Additionally, revocation may be ordered if a patent is not being worked after a compulsory licence has been granted (s 134) or if a patentee surrenders a patent (s 137). The grounds for refusing or revoking a patent, while derived from the common law, were eventually codified in legislation: see Lord Guest’s discussion of the Patents and Designs Act 1932 (UK) in American Cyanamid Co v Upjohn Co [1970] 1 WLR 1507. The grounds for revocation of either a standard patent or an innovation patent are found in s 138. Following amendments to the section made by the US Free Trade Agreement Implementation Act 2004 (Cth) Schedule 8 item 5, the grounds for revocation are: (a)

that the patentee is not entitled to the patent;

(b)

that the invention is not a patentable invention;

(c)

that the patent was obtained by fraud, false suggestion or misrepresentation;

(d)

that an amendment … was made or obtained by fraud, false suggestion or misrepresentation;

(e)

that the specification does not comply with subsection 40(2) or (3).

Amendment [8.370] A patent specification or any other document that has been filed at the Patent Office

in connection with a patent or a patent application may be amended for any purpose: Patents Act 1990 (Cth) s 104. In the case of an amendment to a complete specification this may be done at essentially any time, though the nature of permissible amendments differs depending on when it is requested. The allowability of amendments is governed by Patents Act 1990 (Cth) s 102 from which the overriding requirement in relation to amendment of a complete specification, is that no amendment is allowable which would result in the specification claiming or disclosing matter that extends beyond that disclosed in the complete specification [8.370]

365

Intellectual Property: Commentary and Materials

as originally filed together with the abstract (and certain other documents that may have been filed in some rare circumstances): Patents Act 1990 (Cth) s 102(1) and Patents Regulations 1991 (Cth) reg 10.2A. An amendment to a complete specification of an application for a standard patent that is requested after the application has been accepted for grant is subject to the additional limitation that the claims may not then be broadened in scope: Patents Act 1990 (Cth) s 102(2) and (2A). The same applies to an amendment to an innovation patent after the Commissioner has concluded examination of it prior to certification. An amendment to correct a clerical error or obvious mistake is allowable at any time, however, even if the claims or disclosure are broadened as a result: Patents Act 1990 (Cth) s 102(3). Certain additional limitations on what can be amended, and when, are set out in Patents Act 1990 (Cth) s 102(2A) and (2B) and in Patents Regulations 1991 (Cth) regs 10.2B, 10.2C and 10.3. The procedures for requesting amendment by the Commissioner and how the Commissioner is to deal with such requests are set out in Patents Regulations 1991 (Cth) Chapter 10. If an amendment is allowable according to the statutory requirements, the Commissioner must allow it. The Commissioner also has the power to direct a patentee or an applicant to request amendment in some circumstances: see Patents Act 1990 (Cth) ss 106 and 107. Amendments may also be requested in court proceedings, and the conditions for allowability set out in s 102 still apply but the court has an additional discretion whether or not to direct that a specification or other document be amended, and may impose such terms as the court thinks fit: Patents Act 1990 (Cth) s 105. An amendment that is allowed by the Commissioner after a standard patent application has been accepted, or after the Commissioner has decided to certify an innovation patent, must be advertised in the Australian Official Journal of Patents, and such amendment may be opposed by the Minister or any other person: Patents Regulations 1991 (Cth) reg 10.5(2).

366 [8.370]

CHAPTER 9 Requirements of Validity [9.10]

INTERNATIONAL CONTEXT OF PATENT VALIDITY ............................................. 369 [9.10]

[9.30]

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) .......................................................... 369

INVENTIONS – MANNER OF MANUFACTURE ................................................... 370 [9.40]

[9.70]

National Research Development Corporation v Commissioner of Patents ....................................................... 370 [9.60] CCOM v Jiejing ..................................................................... 374 Public policy considerations ................................................................................. 375 [9.80] Generally inconvenient ....................................................................... 376

[9.90]

Contrary to law ................................................................................... 376 [9.100] [9.110]

[9.120]

[9.180] [9.200] [9.210]

Patent Manual of Practice & Procedure ................................... 376 Re Woo-Suk Hwang ............................................................... 377 New uses of known things: the threshold requirement of newness ................ 378 [9.130] National Research Development Corporation v Commissioner of Patents ....................................................... 378 [9.150] Bristol-Myers Squibb Co v FH Faulding .................................... 380 Discoveries of principles ........................................................................................ 383 [9.190] National Research Development Corporation v Commissioner of Patents ....................................................... 383 Agricultural and horticultural processes .............................................................. 385 Biotechnological inventions .................................................................................. 385

[9.220] [9.230]

Plants .................................................................................................... 385 Micro-organisms, cells, nucleic acids and proteins .......................... 385 [9.250]

[9.270] [9.280]

[9.290]

[9.310]

Fertilitescentrum AB and Luminis ............................................ 387

Methods of treatment of the human body ...................................... 389 [9.320]

[9.340]

D’Arcy v Myriad Genetics Inc ................................................. 386

Higher order life forms not including humans ................................. 387 Higher order life forms: humans and processes for their generation ........................................................................................... 387

Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd ..................... 389

[9.330] Swiss style claims ................................................................................. 390 Collocations, mixtures, kits and packages .......................................................... 390 [9.350] [9.370]

[9.390]

Advanced Building Systems v Ramset Fasteners ....................... 391 Wellcome Foundation v Commissioner of Patents .................... 391 Schemes, programs and business arrangements ............................................... 392 [9.400] Computer program inventions .......................................................... 393 [9.400] CCOM Pty Ltd v Jiejing .......................................................... 393 [9.410] Manual of Practice and Procedure .......................................... 395

[9.420]

Patents for Business Methods ............................................................ 396

[9.450]

[9.430] Welcome Real-Time SA v Catuity ............................................ 396 [9.440] Research Affiliates LLC v Commissioner of Patents .................... 398 Improvements ........................................................................................................ 401

[9.460]

NOVELTY ................................................................................................................. 401 367

Intellectual Property: Commentary and Materials

[9.460]

Introduction ........................................................................................................... 401 [9.470] [9.480]

[9.500] [9.530]

Patents Act 1990 (Cth) ......................................................... Acts Interpretation Act 1901 (Cth) ......................................... Making information publicly available ................................................................ [9.510] Merck v Arrow Pharmaceuticals .............................................. Whole contents ......................................................................................................

[9.530]

402 403 404 404 405

Origin of the concept ......................................................................... 405 [9.540]

[9.590] [9.600]

E I Du Pont de Nemours and Company v ICI Chemicals & Polymers Limited [2005] FCA 892 ....................................... Making information publicly available by doing an act .................................... Test of want of novelty .......................................................................................... [9.580] AstraZeneca AB v Apotex Pty Ltd ............................................ Grace periods ......................................................................................................... Selection patents ...................................................................................................

[9.610]

INVENTIVE STEP ..................................................................................................... 412

[9.640]

Prior art for determining inventive step .............................................................. 413

[9.670]

Person skilled in the art and the common general knowledge ........................ 414

[9.690]

The inventive step requirement ........................................................................... 416

[9.720]

Identifying the invention ...................................................................................... 420

[9.560] [9.570]

[9.620] [9.650] [9.680] [9.700] [9.730]

[9.740]

406 407 407 408 410 411

Patents Act 1990 (Cth) ......................................................... 412 Lockwood Security Products v Doric Products .......................... 413 Ranbaxy Australia v Warner-Lambert ...................................... 415 Aktiebolaget Hässle v Alphapharm ......................................... 417 AstraZeneca AB v Apotex Pty Ltd ............................................ 420

INNOVATIVE STEP .................................................................................................. 421 [9.740] [9.760]

Patents Act 1990 (Cth) ......................................................... 421 Product Management Group Pty Ltd v Blue Gentian LLC ...................................................................................... 422

[9.770]

SECRET USE ............................................................................................................ 423

[9.800]

Defences to secret use ........................................................................................... 425

[9.780] [9.810]

[9.820]

Patents Act 1990 (Cth) ......................................................... 426

UTILITY .................................................................................................................... 426 [9.830] [9.840] [9.850] [9.860]

368

Azuko v Old Digger ............................................................... 424

Patents Act 1990 (Cth) ......................................................... In the Matter of Alsop’s Patent ............................................... Rescare v Anaesthetic Supplies ............................................... Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd ...............................................................

427 428 429 430

Requirements of Validity

CHAPTER 9

INTERNATIONAL CONTEXT OF PATENT VALIDITY Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) [9.10] Marrakesh Agreement Establishing the World Trade Organization, Annex 1C: Agreement on Trade-Related Aspects of Intellectual Property Rights Article 27 Article 27 Patentable Subject Matter 1.

Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

2.

Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect order public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law. Members may also exclude from patentability: (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals;

3.

(b)

plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement.

[9.20] Consistent with TRIPS Article 27, the requirements for an invention to be patentable

are set out in Patents Act 1990 (Cth) s 18(1) and (1A). For a standard patent (s 18(1)) they are that the invention is a “manner of manufacture”, is “novel”, involves an “inventive step”, is “useful” and has not been “secretly used”. The requirements for an innovation patent (s 18(1A)) differ only in that the invention must involve an “innovative step” rather than an inventive step. It is noteworthy that despite the reference in TRIPS to a requirement of industrial applicability, the Australian legislation retains the “manner of manufacture” requirement that pre-dated Australia’s membership of the World Trade Organisation. As discussed below at [9.170] the meaning of the two expressions is not necessarily the same. In accordance with TRIPS, some inventions in Australia are expressly excluded from being patented. Human beings and biological processes for their generation (which includes human cloning) are not patentable in either standard or innovation patents (s 18(2)). Plants and animals, and biological processes for their generation, are not patentable in an innovation patent (s 18(3)), although this does not prohibit an innovation patent for a microbiological process, or a product of such a process (s 18(4)). [9.20]

369

Intellectual Property: Commentary and Materials

INVENTIONS – MANNER OF MANUFACTURE [9.30] Patents are granted for inventions. Patents Act 1990 (Cth) Schedule 1 defines invention: “invention” means any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention.

In addition to the limitation that this definition places on what is patentable, the Commissioner of Patents has discretion to refuse to grant a standard patent for inventions that are contrary to law, or for a food or medicine consisting only of a mixture of known ingredients, or where a claim includes the name of a person as the name of the invention (see s 50). An innovation patent may be revoked after examination for certification on similar grounds (see s 101B(2)(d) – (g)). Patents Act 1990 (Cth) s 18(1) and (1A) require that a patent application be made only in respect of a “manner of new manufacture” within the Statute of Monopolies 1623 (21 Jac 1 c 3) (ENG). An application for a standard patent may be opposed under Patents Act 1990 (Cth) s 59(b), or a granted standard patent may be revoked under s 138(3)(b) on the ground that it claims an invention that is not a “manner of manufacture”. An innovation patent may be revoked by the Commissioner in the course of an examination for certification on the ground that it claims an invention that is not a “manner of manufacture” (s 101B(2)(b)) and it may be revoked by a court under s 138(3)(b) on the same ground. In the almost four centuries that have passed since the Statute of Monopolies it has been left to the courts to determine the boundaries of the term “manner of manufacture”, and thus the dividing line between what kinds of innovations are, and are not, patentable. Developments in this area of the law have occurred in response to the establishment of new fields of technology and, to some extent, to legislative changes in respect of other aspects of patentability. For example, for many years there was no statutory requirement for a patentable invention to be non-obvious and as a result it is possible to discern in some early cases on “manner of manufacture” a reluctance by courts to allow patents to proceed that had no recognisable inventiveness. Vestiges of this thinking may still persist in modern Australian cases, as will be seen at [9.120] – [9.160]. It is at the boundaries of the concept of manner of manufacture, as it becomes necessary to delineate them in the light of technological developments, that controversial matters primarily lie. They relate currently principally to inventions in human health, biotechnology, computer software and methods of doing business. The patentability of invention in these fields is considered at [9.210] – [9.330] and [9.390] – [9.440]. A seminal case that forms part of the process of gradual expansion of the accepted meaning of the term “manner of manufacture” was the judgment of the High Court of Australia in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252.

National Research Development Corporation v Commissioner of Patents [9.40] National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 High Court of Australia [This case was an appeal from a direction by the Commissioner of Patents that three claims be deleted from an application for a patent. The complete specification included six claims. Three of them 370 [9.30]

Requirements of Validity

CHAPTER 9

National Research Development Corporation v Commissioner of Patents cont. were “product” claims to selective herbicidal compositions and were not in dispute. The three disputed claims were “method” claims involving the use of the selective herbicidal compositions to chemically weed certain kinds of legume crop. Claim 1, for example, read: 1. A method for eradicating weeds from crop areas containing a growing crop selected from leguminous fodder crops of the genera Trifolium and Medicago, celery and parsnip, which comprises applying to the crop areas a herbicide of the class consisting of the ω-(2:4-dichlorophenoxy) butyric and caproic acids, their salts, esters, nitriles and amides. Claims 2 and 3 were in similar terms but specified different weeds and crop plants. Although the herbicides were known, it was not previously known that they would interact with the enzymes of non-leguminous plants, causing those weeds to wither and die while not affecting a legume crop plant.] DIXON CJ, KITTO AND WINDEYER JJ: [268] The central question in the case remains. It is whether that process that is claimed falls within the category of inventions to which, by definition, the application of the Patents Act 1990 is confined. The definition, it will be remembered, is exclusive: invention means any manner of new manufacture the subject of letters patent and grant of privilege within s 6 of the Statute of Monopolies. The Commissioner, adopting certain judicial pronouncements to which reference will be made, emphasises the word “manufacture” and contends for an interpretation of it which, though not narrow, is restricted to vendible products and processes for their production, and excludes all agricultural and horticultural processes. On the grounds both of the suggested restriction and of the suggested exclusion he denies that a process for killing weeds can be within the relevant concept of invention. The appellant, on the other hand, urges upon us a wider view: that there is a “manufacture” such as might properly have been the subject of letters patent and grant of privilege under s 6 of the Statute of Monopolies whenever a process produces, either immediately or ultimately, a useful physical result in relation to a material or tangible entity. Section 6 of the Statute of Monopolies provides that the declarations of invalidity contained in the preceding provisions of the Act “shall not extend to any letters patents and graunts of privilege … [269] hereafter to be made of the sole working or makinge of any manner of new manufacture within this realme, to the true and first inventor and inventors of such manufactures, which others at the tyme of makinge such letters patents and graunts shall not use, soe as alsoe they be not contrary to the lawe or mischievous to the state by raisinge prices of comodities at home, or hurt of trade, or generallie inconvenient”: Halsbury’s Statutes of England (2nd ed), Vol 17 (1950), p 619. It is of the first importance to remember always that the Patents Act 1952-1955 (Cth), like its predecessor the Patents Act 1903 (Cth) and corresponding statutes of the UK (see the Patents, Designs & Trade Marks Act 1883, s 46; the Patents Act 1907, s 93; and the Patents Act 1949, s 101), defines the word “invention”, not by direct explication and in the language of its own day, nor yet by carrying forward the usage of the period in which the Statute of Monopolies was passed, but by reference to the established ambit of s 6 of that statute. The inquiry which the definition demands is an inquiry into the scope of the permissible subject matter of letters patent and grants of privilege protected by the section. It is an inquiry not into the meaning of the word so much as into the breadth of the concept which the law has developed by its consideration of the text and purpose of the Statute of Monopolies. One may remark that although the statute spoke of the inventor it nowhere spoke of the invention; all that is nowadays understood by the latter word as used in patent law is comprehended in “new manufactures”. The word “manufacture” finds a place in the present Act, not as a word intended to reduce a question of patentability to a question of verbal interpretation, but simply as the general title found in the Statute of Monopolies for the whole category under which all grants of patents which may be made in accordance with the developed principles of patent law are to be subsumed. It is therefore a mistake, [9.40]

371

Intellectual Property: Commentary and Materials

National Research Development Corporation v Commissioner of Patents cont. and a mistake likely to lead to an incorrect conclusion, to treat the question whether a given process or product is within the definition as if that question could be restated in the form: “Is this a manner (or kind) of manufacture?” It is a mistake which tends to limit one’s thinking by reference to the idea of making tangible goods by hand or by machine, because “manufacture” as a word of everyday speech generally conveys that idea. The right question is: “Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?” It is a very different question. A perusal of the definitions and quotations appearing in the Oxford English Dictionary under “manufacture” will show that the word has always admitted of applications beyond the limits which a strict observance of its etymology would suggest, and, as the present Chief Justice said [270] in Maeder v Busch (1938) 59 CLR 684 and 706, a widening conception of the notion has been a characteristic of the growth of patent law. As early as 1795 it was possible for Eyre CJ to say that “the exposition of the statute as far as usage will expound it, has gone much beyond the letter” (Boulton v Bull (1795) 1 H Bl 463; 126 ER 651 at 492 (H Bl), 666 (ER)), and the width of the meaning that had already been accepted may be gauged from the statement of the same learned judge that “manufacture” extended “to any new results of principles carried into practice … new processes in any art producing effects useful to the public”: Boulton v Bull (1795) 1 H Bl 463; 126 ER 651 at 492 (H Bl), 666 (ER). By 1842 it was finally settled that “manufacture” was used in the Statute of Monopolies in a dual sense which comprehends both a process and a product: Crane v Price (1842) 1 Web PC 393; 4 Man & G 580; 134 ER 239. But a question which appears still to await final decision is whether it is enough that a process produces a useful result or whether it is necessary that some physical thing is either brought into existence or so affected as the better to serve man’s purpose. In some of the cases it is suggested that the process must issue in some “vendible matter” or a “vendible product”. The former expression was used by Heath J in Boulton v Bull (1795) 1 H Bl 463; 126 ER 651 at 482 (H Bl), 661 (ER) in the course of maintaining the opinion, which must now be considered heretical, that there could not be a patent for a method; but no such expression appears in the powerful judgment in which Eyre CJ maintained the opposite view and reached the conclusion in the particular case which was ultimately upheld in Hornblower v Boulton (1799) 8 TR 95; 101 ER 1258. Abbott CJ in R v Wheeler (1819) 2 B & Ald 345; 106 ER 392 at 349 (B & Ald), having spoken of a “thing made, which is useful for its own sake, and vendible as such”, went on to show that he did not find in such expressions as those any absolute test. He said: “Something of a corporeal and substantial nature, something that can be made by man from the matters subjected to his art and skill, or at the least some new mode of employing practically his art and skill is requisite to satisfy this word.”: (1819) 2 B & Ald 345; 106 ER 392 at 350 (B & Ald), 395 (ER). It is of course not possible to treat such a statement as conclusive of the question. The need for qualification must be confessed, even if only in order to put aside, as they apparently must be put aside, processes for treating diseases of the human body: see Re C & W’s Application (1914) 31 RPC 235; Maeder v Busch (1938) 59 CLR 684. When appearing as counsel in the case [271] last cited, Sir George Ligertwood (at 696) made a helpful suggestion which in effect amended the statement of Abbott CJ to read “or at least some new method of employing practically the art and skill of the workman in a manual art”. But even so comprehensive a statement needs to be given a somewhat flexible meaning to allow for longstanding authorities such as Forsyth v Riviere (1819) 1 Web PC 95 (where the patent was for a method of discharging firearms), and The Electric Telegraph Co v Brett (1851) 10 CB 838; 138 ER 331 (where the patent was for a method of giving duplicate electric signals). The truth is that any attempt to state the ambit of s 6 of the Statute of Monopolies by precisely defining “manufacture” is bound to fail. The purpose of s 6, it must be remembered, was to allow the use of the prerogative to encourage national development in a field which already, in 1623, was seen to be excitingly unpredictable. To attempt to place upon the idea the fetters of an exact verbal formula could never have been sound. It would be unsound to the point of folly to attempt to do so now, when science has made such advances that the concrete applications of 372 [9.40]

Requirements of Validity

CHAPTER 9

National Research Development Corporation v Commissioner of Patents cont. the notion which were familiar in 1623 can be seen to provide only the more obvious, not to say the more primitive, illustrations of the broad sweep of the concept. In a case which has been much cited in recent times, Re GEC’s Application (1942) 60 RPC 1 at 4, Morton J, as he then was, while disclaiming the intention of laying down any hard and fast rule applicable to all cases, put forward a proposition which, if literally applied, would have a narrowing effect on the law and indeed has already been found to stand as much in need as the statute itself of a generous interpretation. The proposition was that “a method or process is a manner of manufacture if it (a) results in the production of some vendible product or (b) improves or restores to its former condition a vendible product or (c) has the effect of preserving from deterioration some vendible product to which it is applied”. Any criticism to which this is open, as Lord Jenkins remarked in Samuel Reitzman v Grahame-Chapman & Derusuit Ltd (1950) 68 RPC 25 at 32, is certainly not on the score of its being too wide. It is valuable for its insistence that in patent law at the present day a process may be within the concept of “manufacture” notwithstanding that it merely improves, restores, or preserves some antecedently existing thing; but in so far as it may appear to restrict the concept by its use of the expression “vendible product”, it must be considered now as substantially qualified by the comments made upon it by Evershed J (as he then [272] was) in Re Cementation Co Ltd’s Application (1945) 62 RPC 151 and in Re Rantzen’s Application (1946) 64 RPC 63 at 65, and by Lloyd-Jacob J in Re Elton and Leda Chemicals Ltd’s Application [1957] RPC 267. [Their Honours then discussed and drew upon each of the last named cases, and continued:] [275] The point is that a process, to fall within the limits of patentability which the context of the Statute of Monopolies has supplied, must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art (see Re Virginia-Carolina Chemical Corp’s Application [1958] RPC 35 at 36) that its value to the country is in the field of economic endeavour. (The exclusion of methods of surgery and other processes for treating the human body may well lie outside the concept of invention because the whole subject is conceived as essentially non-economic: see Maeder v Busch (1938) 59 CLR 684 at 706.) [276] But the judgment in the Elton and Leda Chemicals case [1957] RPC 267 is also valuable for present purposes by reason of a suggestion which it contains as to the true office of the word “product” in such contexts as that of Morton J’s “rule”. The learned judge said (at 268, 269): There has been no question, at any rate since before the year 1800, that the expression “manner of manufacture” in the statute of James I must be construed in the sense of including a practice of making as well as the means of making and the product of making. It has thus been appreciated that, although an inventor may use no newly devised mechanism, nor produce a new substance, none the less he may, by providing some new and useful effect, appropriate for himself a patent monopoly in such improved result by covering the mode or manner by means of which his result is secured. Seeing that the promise which he offers is some new and useful effect, there must of necessity be some product whereby the validity of his promise can be tested. [277] Notwithstanding the use of the word “making”, which but for the context might have been taken to indicate the narrow view that an article or material must result if a process is to be a “manufacture”, the tenor of the passage seems to be that what is meant by a “product” in relation to a process is only something in which the new and useful effect may be observed. Sufficient authority has been cited to show that the “something” need not be a “thing” in the sense of an article; it may be any physical phenomenon in which the effect, be it creation or merely alteration, may be observed: a building (for example), a tract or stratum of land, an explosion, an electrical oscillation. It is, we think, only by understanding the word “product” as covering every end produced, and treating the word “vendible” as pointing only to the requirement of utility in practical affairs, that the language of [9.40]

373

Intellectual Property: Commentary and Materials

National Research Development Corporation v Commissioner of Patents cont. Morton J’s “rule” may be accepted as wide enough to convey the broad idea which the long line of decisions on the subject has shown to be comprehended by the statute. … [T]he view which we think is correct in the present case is that the method the subject of the relevant claims has as its end result an artificial effect falling squarely within the true concept of what must be produced by a process if it is to be held patentable. This view is, we think, required by a sound understanding of the lines along which patent law has developed and necessarily must develop in a modern society. The effect produced by the appellant’s method exhibits the two essential qualities upon which “product” and “vendible” seem designed to insist. It is a “product” because it consists in an artificially created state of affairs, discernible by observing over a period the growth of weeds and crops respectively on sown land on which the method has been put into practice. And the significance of the product is economic; for it provides a remarkable advantage, indeed to the lay mind a sensational advantage, for one of the most elemental activities by which man has served his material needs, the cultivation of the soil for the production of its fruits. Recognition that the relevance of the process is to this economic activity old as it is, need not be inhibited by any fear of inconsistency with the claim to novelty which the specification plainly makes. The method cannot be classed as a variant of ancient procedure. It is additional to the cultivation. It achieves a separate result, and the result possesses its own economic utility consisting in an important improvement in the conditions in which the crop is to grow, whereby it is afforded a better opportunity to flourish and yield a good harvest.

Note

[9.50]

When the “Morton Rules” (as devised by Morton J in Re GEC’s Application (1942) 60 RPC 1, discussed in the extract above) were first enunciated, they were regarded as widening the area of patentable subject matter. As National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 shows (see extract at [9.40]), however, the range has been widened further. The extract also hints at the tendency of courts in the past to import considerations of inventiveness and newness into the concept of “manner of manufacture” (doubtless in part because of the occurrence of the expression “manner of new manufactures” in the Statute of Monopolies 1623). This practice was perhaps understandable when the legislation at the time did not explicitly provide for invalidating a claim on the basis of it lacking an inventive step, but, as the following extract makes plain, it is not appropriate under the present legislative regime. Nevertheless, as will be seen below (see [9.120]–[9.170]), the extent to which matters of novelty and inventiveness remain pertinent to the manner of manufacture requirement is still not a settled question.

CCOM v Jiejing [9.60] CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 Federal Court of Australia SPENDER, GUMMOW AND HEEREY JJ: [290] [Their Honours reviewed National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 (NRDC) ([9.40]) and the evolution of the concept of “manner of manufacture” in Australia.] Accordingly, the phrase “any manner of new manufactures” has been interpreted over time in such a way as to contain within it distinct principles or doctrines concerned with patentability: Advanced Building Systems Pty Limited v Ramset Fasteners (Australia) Pty Limited (1993) 26 IPR 171, AIPC 91-017 at 374 [9.50]

Requirements of Validity

CHAPTER 9

CCOM v Jiejing cont. 39, 548, per Hill J. They include the necessity for a manner of manufacture itself, for novelty, and for inventiveness. Objections such as lack of utility may have been derived from the prohibition upon manufactures which are “generally inconvenient”. Others, such as obtaining by false suggestion, derived from the general law attending the writ of scire facias to recall Crown grants and the Chancery jurisdiction in respect of fraudulent grants: Prestige Group (Australia) Pty Limited v Dart Industries Inc. (1990) 26 FCR 197 at 213-219. The essential point is that the grounds of revocation were capable of development by the common law and did so develop: American Cyanamid Company (Dann’s) Patent (1971) RPC 425 at 435-6 (Lord Reid), 448-9 (Lord Wilberforce). Particular grounds of invalidity, derived from the case law, were added to the modern statutes. Lack of inventiveness, as distinguished from anticipation, obtained a distinct statutory recognition only in this century and, in Australia, in the 1952 Act: RD Werner and Co Inc v Bailey Aluminium Products Pty Limited (1989) 25 FCR 565 at 573-584, 591-602. As this development continued, the phrase “manner of new manufactures” came to represent the residuum of the central concept with which NRDC was concerned, namely what the High Court called the relevant concept of invention. It should be noted that in NRDC (102 CLR at 262) the High Court, which was dealing with the 1952 Act, spoke of the concept of patent law ultimately traceable to the use in 1623 of the words “manner of manufacture” and spoke of novelty and inventive step as distinct matters. This distinction is now made clear by the use of the expression “manner of manufacture” in s 18 of the 1990 Act. The structure of sub-s 18(1) emphasises that the grounds of novelty, inventive step, utility and secret use are each excised from any general body of case law which previously developed the phrase from 1623 “manner of new manufactures”. The point is made particularly clear by the reference in para (a) of the subsection to “manner of manufacture” rather than to “manner of new manufactures”. In any event, it must be highly doubtful whether any recasting of the law was intended by the particular form taken by s 18. When construing the 1952 Act in NRDC, the High Court dealt (pp 261-8) first with obviousness, an aspect of which is the doctrine of analogous user, before returning to what it described as the “central question in the case”. This was (at 268) whether a process for killing weeds could be within the relevant concept of invention in s 6 because it produced a useful physical result in relation to a material or tangible entity; cf NV Philips Gloeilampenfabrieken v Mirabella International Pty Limited (1993) 44 FCR 239 at 261-262, 264-5, 282-3. The pre-1949 British legislation defined “invention” in virtually identical terms to those in [291] s 6 of the 1952 Act and referred to “manner of new manufacture”. In an appeal to him as Law Officer against the refusal of acceptance, Sir Stafford Cripps S-G, said that there were, in reality, two distinct questions, “Is there a manner of manufacture?” and “Is the manufacture a new manufacture?”; the first was capable of solution upon a study of the specification itself: In the Matter of an Application for a Patent by Compagnies Reunies des Glaces et Verres Speciaux du Nord de la France (1931) 48 RPC 185 at 188. The immediate significance of this is that in the 1990 Act, manner of manufacture, novelty, inventiveness and utility are stated as distinct requirements of a patentable invention. Thus, whilst a claim for the ball point pen now would fail for anticipation and obviousness, it would still be a claim for a manner of manufacture.

Public policy considerations [9.70] The Statute of Monopolies 1623, while allowing patents for new manufactures, would not allow a grant for manufactures “contrary to the law nor mischievous to the State … or hurt of trade, or generally inconvenient”. [9.70]

375

Intellectual Property: Commentary and Materials

“Generally inconvenient” [9.80] The term “generally inconvenient” is undefined, but an invention may be regarded as generally inconvenient where it presents some danger to the public, or where it would preclude the undertaking of normal activities: see Rolls Royce Ltd’s Application [1963] RPC 251; Re Application by Beecham Group Ltd (1984) 3 IPR 26. Where a claimed invention would preclude the undertaking of normal activities, considerations of novelty and inventive step are now likely to provide a firmer basis for invalidity than the “generally inconvenient” ground, since the question of what are “normal activities” inevitably arises. In the Full Federal Court in Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 28 IPR 383, Sheppard J (in dissent) considered that it was generally inconvenient to allow a patent for a method of treatment of a disease of the human body. The “generally inconvenient” ground forms the basis for non-allowability of claims to methods for the medical treatment of humans in New Zealand (Pfizer Inc v Commissioner of Patents [2004] NZCA 104; (2004) 60 IPR 624). However, it has now been decided by the High Court of Australia that such inventions are patentable in this country; see further [9.320].

“Contrary to law” [9.90] Although it is strongly arguable that any invention which is “contrary to law” is implicitly not a manner of manufacture because of the words in the Statute of Monopolies 1623 that are referred to in [9.70], the Patents Act 1990 (Cth) explicitly confers on the Commissioner of Patents the discretion to refuse to accept a specification for an invention that would be contrary to law (s 50(1)(a)). This has been interpreted as allowing rejections of inventions which have no lawful use. For a discussion of the phrase “contrary to law”, see Dow Chemical v Ishihara Sangyo Kaisha Ltd (1986) 5 IPR 415. An invention that can be used unlawfully but which has a lawful use may be accepted: Pessers and Moody v Haydon & Co (1909) 26 RPC 58. Where a patent claims a product that is capable of being exported, the fact that use of the product may not be illegal outside the jurisdiction may save the claim, even if use of the product is illegal in Australia: Carpmael’s Application (1928) 45 RPC 411. It is rare for a patent application to be refused on the ground that it claims an invention that is contrary to law. The following extracts of the Australian patent examiners’ manual, and an Australian Patent Office decision illustrate the relevant considerations.

Patent Manual of Practice & Procedure [9.100] IP Australia, Patent Manual of Practice & Procedure, Volume 2 (National) [2.9.3.1], available at http://manuals.ipaustralia.gov.au/patents/Patent_Examiners_Manual.htm. 2.9.3.1 Contrary to Law Under sec 50(1)(a), the Commissioner may refuse to accept a patent request and specification relating to a standard patent, or to grant a standard patent, for an invention the use of which would be contrary to law. The section is to be understood as covering broadly statute law, including regulations and ordinances, and case law. Examiners should note that refusal under sec 50(1)(a) is a discretionary power and should only be applied in the clearest of circumstances. Case Law Some guidance as to the meaning of “contrary to law” is provided in Official Rulings 1923 C (1923) 40 RPC Appendix iv, where it was stated: 376 [9.80]

Requirements of Validity

CHAPTER 9

Patent Manual of Practice & Procedure cont. An invention ’contrary to law’ may be either (1), one the primary use of which would be a criminal act, punishable as a crime or misdemeanour, or, (2), one the use of which would be an offence by reason of its being prohibited under by-laws or regulations made for police and administrative purposes. Inventions belonging to the former class would always be refused protection. As regards the latter class, the nature and possible uses of the invention and the exact terms of the prohibition would have to be considered in each case. In Pessers and Moody v Haydon & Co. (1909) 26 RPC 58, the invention could be used both for lawful and unlawful purposes (gambling). Eve J considered whether a game was: so illegal in its nature as to constitute improper subject-matter for a Patent. In the circumstances, Eve J stated: …I do not feel myself at liberty to say off-hand that this an illegal subject matter for a Patent. Examination Practice Objections under sec 50(1)(a) should only be taken where an unlawful use, but no lawful use, of an invention has been disclosed. In particular, regard must be had to whether the invention is primarily devised or intended for a lawful, or for an unlawful, use. For example, in the UK an invention which was refused on this basis was an explosive safe designed to kill or injure a burglar.

Re Woo-Suk Hwang [9.110] Woo-Suk Hwang’s Application [2004] AIPC 92-031 Australian Patent Office [The applicant had applied for a patent for a method of producing a hybrid embryo created by transferring the nucleus of a human cell into a bovine ovum and then activating the ovum. The application was found to contravene Patents Act 1990 (Cth) s 18(2) as a biological process for the generation of a human being (see [9.320] below) but was also found to be an application where the invention was “contrary to law” and should be refused on that ground as well.] HERALD (DEPUTY COMMISSIONER): [38,182] The relevant legislation that is said to render the claims contrary to law is the Prohibition of Human Cloning Act 2002. Section 20 of that Act provides: [38,183] 20 Offence – creating a chimeric or hybrid embryo (1) A person commits an offence if the person intentionally creates a chimeric embryo. Maximum penalty: Imprisonment for 10 years. (2) A person commits an offence if the person intentionally creates a hybrid embryo. Maximum penalty: Imprisonment for 10 years. The Act includes the following definition of a hybrid embryo: (d) an animal egg into which the nucleus of a human cell has been introduced; or … Prima facie, the product of the present method is a hybrid embryo within the meaning of this Act. Furthermore, a person performing the claimed method in Australia is prima facie liable to the penalty provided by that Act – of imprisonment for up to 10 years. Clearly this fits within the first category of laws contemplated by the aforementioned Official Rulings 1923 C. … The Manual suggests that a relevant consideration is whether there are any uses of the invention that would not be contrary to law. While it might be thought that the method might have application in mammals other than humans, both the description and claims are specific in the application of the invention to humans only. [9.110]

377

Intellectual Property: Commentary and Materials

Re Woo-Suk Hwang cont. Finally, the provision is a discretionary provision. It is noteworthy that the grounds for refusal to accept such an application are not available as a ground of opposition or of revocation. In my view, this suggests that refusal should only occur in the clearest of circumstances. Furthermore, it seems to me that a relevant consideration is whether the relevant law is of an ephemeral nature – that is, whether it is reasonable to expect that what is illegal today will be illegal throughout the term of the patent. The invention claimed in the present case is very clearly contrary to the Prohibition of Human Cloning Act 2002. Furthermore, in my view the prohibitions in s 20 of that Act are of a nature such that the prohibition is unlikely to be ephemeral. Accordingly I am satisfied that this application should be refused under s 50(1)(a) of the Patents Act 1990 by reason of it being contrary to law.

New uses of known things: the threshold requirement of newness [9.120] The meaning of the word “invention” as it appears in the opening words of Patents

Act 1990 (Cth) s 18(1) and in Sch 1 to the Act (see [9.30]) has been considered in a number of cases. One line of cases has considered the implication of the word “new” that appears in the term “manner of new manufacture” in the Sch 1 definition of invention. A line of cases, considered by the High Court in Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232, 1A IPR 52, stands for the principle that an alleged invention that is in fact merely a new use of a known thing is not a manner of new manufacture and is thus unpatentable, without the need to refer to considerations of novelty as a separate ground. This line of cases is, it is submitted, a remnant of earlier times when novelty and inventive step were either not explicit requirements set out in the legislation, or were determined by reference to more limited categories of prior art than is now the case. These cases raise the question of how closely it is appropriate to consider this “newness” requirement in the context of manner of manufacture, and against what body of information that newness requirement is to assessed. This issue was adverted to, with reference to Commissioner of Patents v Microcell, in the NRDC case, the facts of which are set out at [9.40]. As is seen from the extract below, the High Court in NRDC took it as established that questions of inventiveness, at least, may form part of the “manner of manufacture” requirement.

National Research Development Corporation v Commissioner of Patents [9.130] National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 High Court of Australia DIXON CJ, KITTO AND WINDEYER JJ: [261] The principles which govern the power to refuse a patent have been discussed recently in the case of Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232. It is shown in that case that in the portion of the definition of invention which includes in the meaning of the word an alleged invention, the word “alleged” goes only to the epithet “new” in the expression “a manner of new manufacture”, and that accordingly the Commissioner may properly reject a claim for [262] a process which is not within the concept of a “manufacture”. But the case cited shows also that even if the process is within the concept the Commissioner is not bound to accept the allegation of the applicant that it is new, if it is apparent on the face of the specification, when properly construed, that the allegation is unfounded: see also Re Johnson’s Patent (1937) 55 RPC 4 at 19. It is therefore open to the Commissioner in a proper case to direct the deletion of a claim for a process which may be seen from the specification, 378 [9.120]

Requirements of Validity

CHAPTER 9

National Research Development Corporation v Commissioner of Patents cont. considered as a whole, to be “outside the whole scope of what is known as invention” because, in the words of Lord Buckmaster, when Solicitor-General, in Re BA’s Application (1915) 32 RPC 348 at 349 it is “nothing but a claim for a new use of an old substance”. But, as the Microcell case (1959) 102 CLR 232 emphasises, it must always be remembered how much is wrapped up in the “nothing but”. Lord Buckmaster did not use the words without explanation: “when once a substance is known,” he said, “its methods of production ascertained, its characteristics and its constituents well-defined, you cannot patent the use of that for a purpose which was hitherto unknown”: Re BA’s Application (1915) 32 RPC 348 at 349. And why? Because in the postulated state of knowledge the new purpose is no more than analogous to the purposes for which the utility of the substance is already known, and therefore your suggestion of the new purpose lacks the quality of inventiveness: see per Bowen LJ in Elias v Grovesend Tinplate Co (1890) 7 RPC 455 at 468. Unless invention is found in some new method of using the material or some new adaptation of it so as to serve the new purpose, no valid patent can be granted: see Moser v Marsden (1893) 10 RPC 350 at 358; Pirrie v York Street Flax Spinning Co Ltd (1894) 11 RPC 429 at 452. If, however, the new use that is proposed consists in taking advantage of a hitherto unknown or unsuspected property of the material, the situation is not that to which Lord Buckmaster’s language refers. In that case there may be invention in the suggestion that the substance may be used to serve the new purpose; and then, provided that a practical method of so using it is disclosed and that the process comes within the concept of patent law ultimately traceable to the use in the Statute of Monopolies of the words “manner of manufacture”, all the elements of a patentable invention are present: see the Microcell case (1959) 102 CLR 232 at 248, 249. [264] No-one reading the specification in the present case can fail to see that what it claims is a new process for ridding crop areas of certain kinds of weeds, not by applying chemicals the properties of which were formerly well understood so that the idea of using them for this purpose involved no inventive step, but by applying chemicals which formerly were supposed not to be useful for this kind of purpose at all. There is a clear assertion of a discovery that a useful result can be attained by doing something which the applicant’s research has shown for the first time to be capable of producing that result. This is not a claim which can be put aside as a claim for a new use of an old substance, true though it be that the chemicals themselves were known to science before the applicant’s investigations began. It is a claim which denies that the chemicals are old substances in the sense in which the expression has been used in such cases as Re AF’s Application (1913) 31 RPC 58; Re BA’s Application (1915) 32 RPC 348 and Re CGR’s Application (1924) 42 RPC 320. It treats them as substances which in the relevant sense are new, that is to say as substances which formerly were known only partially and, so far as weed-killing potentialities are concerned, were unknown … [An analysis of the claims followed, and the judgment continued:] [268] The purpose of going thus fully into the contents of the specification is to show that it is out of the question to hold that on the face of the document, properly construed, the process the subject of the first three claims appears as nothing but a new use of an old substance.

[9.140] In NV Philips Gloeilampenfabricken v Mirabella International Pty Ltd (1995) 183 CLR 655; 32 IPR 449 the High Court, by a majority, considered that the opening words of Patents Act 1990 (Cth) s 18 introduced a threshold test of general inventiveness or newness that was independent of the separate requirements imposed by the specific paragraphs of s 18. In Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171, 40 IPR 243, however, the majority in a differently constituted High Court reasoned that the modern law of obviousness has arisen out of the law applicable to patentable subject [9.140]

379

Intellectual Property: Commentary and Materials

matter more generally, and its separate codification in the statute had left no residue in the ground of “not an invention”, at least if a lack of inventive step was not apparent on the face of the specification. In Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524 (extract following at [9.150]), the Federal Court considered the implications of these cases in relation to the manner of manufacture issue.

Bristol-Myers Squibb Co v FH Faulding [9.150] Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524 Federal Court of Australia, Full Court [Bristol-Myers Squibb Co, the appellant, was the proprietor of two patents that claimed a method for administration of a substance known as “taxol” to a patient suffering from cancer. At the relevant priority date, taxol was a substance known to be useful for the treatment of cancer; the specifications stated that it was an object of the invention to provide a method of administering taxol over a shorter period of time than known methods, while minimising toxic effects induced by the administration of taxol.] BLACK CJ, LEHANE J: [532] It is important also to remember that the effect of the decision of the High Court in Philips was to affirm the decision of the Full Court (NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 44 FCR 239). [533] There is no doubt that the majority of the Full Court (Lockhart J, with whom Northrop J agreed) drew what they perceived to be a clear distinction between obviousness or want of inventive step (s 18(1)(b)(ii)) and want of inventiveness sufficient to characterise the subject matter of a patent as a manner of new manufacture. So, at 263, Lockhart J said: Although grounds of objection in patent law sometimes overlap, objections of want of novelty and obviousness are nevertheless essentially distinct from each other. Likewise, the requirement that a patentable invention be a manner of new manufacture is inherently distinct from the requirements of novelty, lack of obviousness, involving an inventive step and utility as required by s 18 of the 1990 Act. And the point emerges clearly from the following observation of Lockhart J at 265: Many of the submissions made by counsel for the appellants on this point blurred the distinction between the requirement that the invention be a manner of new manufacture and obviousness. The respondent did not press its case at the trial (nor therefore on appeal) on obviousness, no doubt, at least in part, because the respondent could not establish that what is described in the evidence as the Vrenken Article was common general knowledge in Australia. In other words, what cannot be established not to involve an inventive step, by reference to common general knowledge in Australia at the priority date, may nevertheless exhibit a want of the quality of inventiveness which is part of the concept of manner of new manufacture. Four comments may be made. First, the proposition that “inventiveness” means in one context something quite distinct from the connotation, in the other, of “inventive step” (or lack of obviousness) is not easy to reconcile with the analysis of Gummow J, with whom Jenkinson J agreed, in RD Werner Inc v Bailey Aluminium Products Pty Ltd (1989) 25 FCR 565 at 593, 599-601. Secondly, so far as the reasoning of Lockhart J depended (see at 263) upon regarding the 1990 Act as having made no relevant change in the law (a view with which it is easy to sympathise, given s 100(d) of the 1952 Act), the distinction between the two aspects of inventiveness having existed under the 1952 Act, that foundation appears to have been removed by Ramset. Thirdly, Lockhart J (upholding the primary judge) appeared to have looked solely at the specification in order to ascertain what was “known”, for the purposes of the Microcell principle, though his Honour appears to have relied on other evidence as to aspects of the quality of inventiveness. Fourthly, and perhaps most importantly, little guidance is 380 [9.150]

Requirements of Validity

CHAPTER 9

Bristol-Myers Squibb Co v FH Faulding cont. offered as to how one ascertains whether a claimed invention has the quality of inventiveness necessary to characterise it as a manner of new manufacture. Just as it is not easy to see how one can describe something as new or novel except by reference to what has previously been made, done or published, we cannot see how inventiveness can be judged except by reference to a body of prior knowledge and from the standpoint of someone who has that knowledge. The question, then, is what knowledge, in whose possession, is relevant to the question whether the “inventiveness” component of “manner of new manufacture” is present? … [534] Philips, as we read it, does not provide a comprehensive answer to the question, by reference to what body of knowledge is that inventiveness judged? It holds, clearly, that the requirement of inventiveness is not satisfied in a case where the claims are for nothing more than the use of a known material in the manufacture of known articles for a purpose for which that material’s known properties make it suitable. The majority judgment of the High Court in Ramset points out, at 192, two aspects of that proposition which are, we think, relevant to the present case. One is that the principle that “a claim for ‘nothing but’ a new use of an old substance lacked the quality of inventiveness” had emerged in the course of the development, during the nineteenth century, of “the doctrine with respect to obviousness and lack of inventive step”; the other is that, if an application for a patent claiming nothing but a new use of an old substance (to adopt the majority’s shorthand) proceeded to grant, the grant – under the 1952 Act – would have been liable to revocation under s 100(e) (obviousness) not s 100(d) (not an invention: that is, not a manner of new manufacture). … Microcell was an appeal from a refusal by the Commissioner of Patents to accept an application and complete a specification. The Court held, at 246, that [535] “[it] must be enough to warrant rejection that it should be clear on its face that the specification discloses no inventive step”. Their Honours proceeded to hold that the specification in suit disclosed no such step. It is interesting to note, in passing, that their Honours used the phrase “inventive step”, the terminology both of s 100(e) of the 1952 Act (which did not apply to the application before the Court: it was required to be considered under the Patents Act 1903 (Cth)) and s 18(1)(b)(ii) of the 1990 Act. The claims were for the manufacture of self-propelled rocket projectors, using synthetic resinous plastic material reinforced with mineral fibre. The Court’s conclusion was expressed at 251 as follows: We have in truth nothing but a claim for the use of a known material in the manufacture of known articles for the purpose of which its known properties make that material suitable. A claim for nothing more than that cannot be subject matter for a patent, and the position cannot be affected either by the fact that nobody thought of doing the thing before, or by the fact that, when somebody did think of doing it, it was found to be a good thing to do. The foundation of that conclusion, however, appears in the following paragraph, at 250: Here the specification does not on its face disclose more than a new use of a particular known product. To use Lord Buckmaster’s words, no new product is obtained, and there is no new method of manufacture suggested or an old one improved. Tubular self-propelled rocket projectors were at the relevant time well-known articles of manufacture. Synthetic resinous plastics reinforced with mineral fibres, and in particular polyester plastics reinforced with glass or asbestos fibres, were well-known material. These things are to be gathered from the specification itself, which contains no suggestion of novelty in relation to the article to be manufactured or the material to be used. It further appears from matter published in Australia as early as 1946 that the reinforced plastic materials referred to in the specification had been used in the manufacture of a wide variety of articles. The properties of those materials were known generally, and in particular it was well-known that they possessed that combination of great strength and lightness wherein, according to the specification itself, lies their virtue for the purpose in hand. The matter published in 1946 refers to their “extraordinary strength in relation to weight” – they are “stronger for their weight than steel” – and to their high tensile [9.150]

381

Intellectual Property: Commentary and Materials

Bristol-Myers Squibb Co v FH Faulding cont. strength – another quality which the specification regards as a virtue for the purpose in hand. It was well-known too that they possessed high impact strength and high resistance to heat. In these circumstances we do not think it can be said, merely because it does not seem previously to have occurred to anyone to make a rocket projector out of reinforced plastic, that any inventive idea is disclosed by the specification. That passage makes it quite clear that the lack of inventive step appeared on the face of the specification. It makes it clear also that the conclusion that there was no inventive step was reinforced by a consideration of material earlier published in Australia, information in which was “well-known” and “known generally”. Although the language used by the Court differs somewhat from the formulation adopted by Aickin J in the Minnesota case, the substance of the Court’s finding was that what was apparent on the face of the specification was reinforced by proof that particular information had passed into common general knowledge, in the relevant field, in Australia. [536] The majority of the High Court in Philips explicitly say that their observations about a case where want of the threshold requirement of inventiveness is not apparent on the face of the specification are not necessary to their decision. And, in discussing the commencement point (what is “known”) of the inquiry about inventiveness, their Honours refer only to the Microcell principle. In our view, in the light of the authorities to which we have referred, Philips stands for the proposition (as a matter of construction of the 1990 Act) that if, on the basis of what was known, as revealed on the face of the specification, the invention claimed was obvious or did not involve an inventive step – that is, would be obvious to the hypothetical non-inventive and unimaginative skilled worker in the field (Minnesota at 260 per Barwick CJ) –then the threshold requirement of inventiveness is not met.

[9.160]

Note

Their Honours proceeded to express the opinion that any prior art information which the specification refers to should be taken to be part of the common general knowledge. This is a controversial observation; ordinarily, what was common general knowledge in a given field at a given time is to be established by reference to evidence from persons skilled in the relevant field. Merely because a reference is mentioned in a specification would not necessarily be sufficient for it to be established even as prior art, much less as common general knowledge. The view expressed in Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524 and the cases that followed it could result in the claimed invention not meeting the “threshold” requirement for manner even though it satisfies the requirement for inventive step. [9.170] It has been noted at [9.10] that the requirement of TRIPS is that patents be granted

for inventions that are industrially applicable. While this might mean that clarification via the common law or statutory definition is needed for the words “industrially” and “applicable”, or for the term as a whole, it appears to leave no scope for including consideration of matters of newness or inventiveness: an invention may be industrially applicable whether it is new and inventive or not. That being so, and notwithstanding what was said by the Full Court in Bristol-Myers Squibb v Faulding (see [9.150]) a situation where a claimed invention could be held to fail the “threshold” test of inventiveness as part of the manner of manufacture requirement, while not qualifying as obvious under the inventive step test is inconsistent, it is submitted, with TRIPS and leads to undesirable uncertainty for patentees and the public. 382 [9.160]

Requirements of Validity

CHAPTER 9

One case where this occurred was Merck & Co Inc v Arrow Pharmaceuticals Ltd (2006) 154 FCR 31; 68 IPR 511 in which it was held that the claimed invention was not a manner of new manufacture because the “threshold” requirement was not satisfied. The specification incorporated information in two previous patent specifications “by reference”, and the court considered that in light of this and other information that was admitted in the specification to be known, the specification disclosed no invention. However, there was no evidence referred to by the court that this information was part of the relevant prior art for the purpose of determining if the invention met the inventive step requirement of s 18.

Discoveries of principles [9.180] The general proposition that the public requires consideration in return for the grant

of letters patent means that “mere discoveries” will not be patentable, since even an original idea will not “add to the sum of human art” without some practical means of carrying out the idea (Neilson v Minister of Public Works (NSW) (1914) 18 CLR 423 at 429 per Isaacs J). In Lane-Fox v Kensington & Knightsbridge Electric Lighting Co (1892) 9 RPC 413 at 416, Lindley LJ pointed out that the Statute of Monopolies 1623 was concerned with promoting “useful arts” in the national economic interest. Despite the expansion in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 of the meaning of “manner of new manufacture” beyond a vendible product (see [9.40]), there must still be practical economic application of the subject matter of a patent application before a discovery can be an invention – discovery only discloses something, but invention necessarily involves also the suggestion of something to be done: see Reynolds v Herbert Smith (1902) 20 RPC 123 at 126 per Buckley J, and also Otto v Linford (1882) 46 LT 35.

National Research Development Corporation v Commissioner of Patents [9.190] National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 High Court of Australia [See [9.40] for the facts of this case.] DIXON CJ, KITTO AND WINDEYER JJ: [263] This, we consider, differs not at all from the view which Lindley LJ expressed in the passage in his judgment in the case of Lane Fox v Kensington & Knightsbridge Electric Lighting Co [1892] 3 Ch 424; (1892) 9 RPC 413 at 428, 429 (Ch), 416 (RPC) which is often cited and was referred to more than once in the argument of the present case, namely that a man who discovers that a known machine (his Lordship might equally have said a known substance) can produce effects which no-one before him knew could be produced by it has made a discovery, but has not made a patentable invention unless he so uses his knowledge and ingenuity as to produce either a new and useful thing or result, or a new and useful method of producing an old thing or result. His Lordship went on to say that the discovery how to use a known thing for a new purpose will be a patentable invention if there is novelty in the mode of using it as distinguished from novelty of purpose, or if any new modification of the thing or any new appliance is necessary for using it for its new purpose, and if such mode of user, or modification, or appliance involves any appreciable merit. But the whole passage is directed to the case of a thing which is known – not only the existence of which is known – as a scientific fact, but the characteristics and properties of which are understood, so that the “appreciable merit” (at 429; at 416), which is requisite for a patentable invention must be found, if it is to be found at all, exclusively [9.190]

383

Intellectual Property: Commentary and Materials

National Research Development Corporation v Commissioner of Patents cont. in something which the alleged invention has superadded to the existing knowledge concerning the thing. There is nothing in the judgment of Lindley LJ to justify a denial that, in respect of a process for achieving a useful result by the employment of a substance to produce effects which antecedently it was not understood to be capable of producing, the inventiveness which is essential for a valid grant of a patent may be found in the step which consists of suggesting the use of the thing for the new purpose, notwithstanding that there is no novelty or “appreciable merit” in any suggested mode of using the thing, or any modification of the thing or of an appliance necessary for using it for the new purpose. It is not decisive – it is not even helpful – to point out in such a case that beyond discovery of a scientific fact nothing has been added except the suggestion that nature, in its newly ascertained aspect, be allowed to work in its own way. Arguments of this kind may be answered as Frankfurter J answered them in Funk Bros Seed Co v Kalo Inoculant Co 333 US 127 (1948) at 134, 135 (US) [92 Law Ed 588 at 589]: “It only confuses the issue”, the learned Justice said, “to introduce such terms as ‘the work of nature’ and ‘the laws of [264] nature’. For these are vague and malleable terms infected with too much ambiguity and equivocation. Everything that happens may be deemed ‘the work of nature’, and any patentable composite exemplifies in its properties ‘the laws of nature’. Arguments drawn from such terms for ascertaining patentability could fairly be employed to challenge almost any patent”. The truth is that the distinction between discovery and invention is not precise enough to be other than misleading in this area of discussion. There may indeed be a discovery without invention either because the discovery is of some piece of abstract information without any suggestion of a practical application of it to a useful end, or because its application lies outside the realm of “manufacture”. But where a person finds out that a useful result may be produced by doing something which has not been done by that procedure before, his claim for a patent is not validly answered by telling him that although there was ingenuity in his discovery that the materials used in the process would produce the useful result no ingenuity was involved in showing how the discovery, once it had been made, might be applied. The fallacy lies in dividing up the process that he puts forward as his invention. It is the whole process that must be considered; and he need not show more than one inventive step in the advance which he has made beyond the prior limits of the relevant art. This is perhaps nowhere more clearly put than it was by Fletcher Moulton LJ in Hickton’s Patent Syndicate v Patents & Machine Improvements Co Ltd (1909) 26 RPC 339 at 347–348 when he said of Watt’s invention for the condensation of steam, out of which the steam engine grew: Now can it be suggested that it required any invention whatever to carry out that idea when once you had got it? It could be done in a thousand ways and by any competent engineer, but the invention was in the idea, and when he had once got that idea, the carrying out of it was perfectly easy. To say that the conception may be meritorious and may involve invention and may be new and original, and simply because when you have once got the idea it is easy to carry it out, that that deprives it of the title of being a new invention according to our patent law, is, I think, an extremely dangerous principle and justified neither by reason nor authority.

384 [9.190]

Requirements of Validity

CHAPTER 9

Agricultural and horticultural processes [9.200] It is clear from NRDC that agricultural and horticultural processes or methods can be the subject of valid patents in Australia provided at least that there is some form of technical intervention in the process. It follows that earlier English cases referred to in NRDC in which patentability was denied, such as Lenard’s Application (1954) 71 RPC 190 and NV Philips’ Gloeilampenfabrieken Application (1954) 71 RPC 192, might have been decided differently if they had arisen in Australia after NRDC.

Biotechnological inventions [9.210] Biotechnology involves the production of new and useful products using living

organisms, or parts of living organisms. Living things are not unpatentable per se: see Ranks Hovis McDougall Ltd’s Application (1976) 46 AOJP 3915; Re Chakrabarty 571 F 2d 40; 197 USPQ 73 (1978); Diamond v Chakrabarty 447 US 303 (1980). Standard patents may be available for new plants and animals except human beings and the biological processes for their generation, which are excluded by Patents Act 1990 (Cth) s 18(2). Innovation patents are not available for plants, animals or the biological processes for their generation (s 18(3)). Plants [9.220] In Australia, the Plant Breeder’s Rights Act 1994 (Cth) is designed to protect plant “inventions” and also new varieties that originate through traditional breeding techniques (see Chapter 16). Dual protection of plants under the Patents Act 1990 (Cth) and the Plant Breeder’s Rights Act 1994 (Cth) is possible. Patent protection may be more suitable for new plants produced by high technology, while plant breeders’ rights protection will be more suitable for plants that are derived from traditional techniques. The Plant Breeder’s Rights Act 1994 (Cth) protects new varieties of trees, shrubs, vines, fruit, vegetables, flowers and ornamental plants, algae and fungi, but not bacteria.

Micro-organisms, cells, nucleic acids and proteins [9.230] Micro-organisms have been employed by humans at least since yeast was first used in

the baking of bread. Processes using micro-organisms (eg, to produce antibiotics) are patentable if the usual requirements of the patent legislation are fulfilled: see American Cyanamid Co (Dann’s) Patent [1971] RPC 425; American Cyanamid Co v Berk Pharmaceuticals Ltd [1976] RPC 231. In Ranks Hovis McDougall’s Application (1976) 46 AOJP 3915 in Australia, the Commissioner of Patents allowed the patenting of a process for isolating a micro-organism and the variations in the organism induced by the inventor. However, the organism itself could not be protected because it occurred naturally and lacked novelty. The practice of IP Australia in relation to what might be termed “biotechnology inventions” is set out in the Patent Manual of Practice & Procedure, Volume 2 (National) 1. From this it is seen that the practice of IP Australia is to regard micro-organisms (and other life forms except humans) as potentially patentable: see the Manual at [2.9.2.14]. Life forms are taken to include whole living organisms (including transgenic forms, varieties and strains) and cells and reproductive material derived from them, and encompass plants, animals, viruses, vectors, micro-organisms, plasmids and plant and animal cells and cell lines: Manual at [2.7.1]. The term “micro-organism” is taken to include “bacteria and other procaryotes, fungi 1

Available at http://manuals.ipaustralia.gov.au/patents/Patent_Examiners_Manual.htm. [9.230]

385

Intellectual Property: Commentary and Materials

including yeast, mushrooms, algae, protozoa, eucaryotic cells, cell lines, hybridomas, viruses, plant tissue cells, spores, seeds and hosts containing materials such as vectors, cell organelles, plasmids, DNA, RNA, genes and chromosomes” (Manual at [2.7.1]). It should be noted, however, that there has been no consideration to date by an Australian court of the patentability of any invention claiming such a life form. Patents Act 1990 (Cth) ss 41 and 42 set out the requirements of disclosure of an invention in compliance with the Patents Act 1990 (Cth) s 40 where the invention is a micro-organism: see [10.130]. Proteins, nucleic acids and other cellular molecular constituents or products are also potentially patentable if they are not naturally occurring, but, since the judgment of the High Court in D’Arcy v Myriad Genetics Inc (2015) 325 ALR 100, [2015] HCA 35, it is necessary to give special consideration to claims to nucleic acid molecules. [9.240] D’Arcy v Myriad Genetics Inc (2015) 325 ALR 100, [2015] HCA 35 concerned a patent relating to certain genetic mutations that the patentee had discovered were correlated with an increased likelihood of the occurrence of cancer in women. The patent in suit included 30 claims directed to various aspects of the application of this discovery but the only ones in dispute were the three claims directed to isolated nucleic acids derived from naturally occurring sequences of nucleotides and containing one or more of 54 specified mutations or variations from an identified nucleic acid sequence. The Federal Court at first instance and the Full Court on appeal construed these claims as being directed to artificially-created molecules and hance held them to be patentable. The High Court unanimously upheld an appeal from the judgment of the Full Court. All of the justices of the High Court considered that the claims were too broad, in that a potential infringer could not know whether they had infringed the claims until they had isolated nucleic acid from a patient and sequenced it. Infringement would depend on whether the patient whose DNA was tested had any of the specified mutations or not. Other aspects of their Honour’s judgments differed in emphasis, but that of the plurality, who characterised the claims as being directed to genetic information and not molecules, is particularly instructive.

D’Arcy v Myriad Genetics Inc [9.250] D’Arcy v Myriad Genetics Inc (2015) 325 ALR 100, [2015] HCA 35 High Court of Australia FRENCH CJ, KIEFEL, BELL AND KEANE JJ [92] There are perhaps two ways of looking at the role of genetic information in characterising the subject matter of the claims. One way is to say that the chemical formula of any given isolated nucleic acid is defined, in part, by the sequence of nucleotides which it reproduces and, in that sense, is defined by the information embodied in that sequence. Another way is to say that the particular chemical compound embodies and conveys the information. The latter approach gives the priority to the informational aspect which its importance to the utility of the claimed invention warrants. [93] When proper regard is paid to their emphasis on genetic information, the subject matter of the claims lies at the boundaries of the concept of “manner of manufacture”. That it does lie at the boundaries is further evidenced by the odd consequence that if the claims are properly the subject of a patent, the patent could be infringed without the infringer being aware of that fact. That consequence coupled with the very large, indeed unquantified size of the relevant class of isolated nucleic acids, all of which bear the requisite information, raises the risk of a chilling effect upon legitimate innovative activity outside the formal boundaries of the monopoly and risks creating a penumbral de facto monopoly impeding the activities of legitimate improvers and inventors. 386 [9.240]

Requirements of Validity

CHAPTER 9

D’Arcy v Myriad Genetics Inc cont. [94] Although it may be said in a formal sense that the invention as claimed, referring to isolated nucleic acids, embodies a product created by human action, that is not sufficient to support its characterisation as a manner of manufacture. The substance of the invention as claimed and the considerations flowing from its substance militate against that characterisation. To include it within the scope of a “manner of manufacture” involves an extension of that concept, which is not appropriate for judicial determination.

[9.260] The judgment in D’Arcy v Myriad Genetics was controversial because of the refusal of the High Court to construe a claim, which was plainly drafted as a product claim, as in fact being directed to a product. Claims in the patent which were not in dispute were directed to nucleic acid probes, so it is not the case that all nucleic acid molecules are unpatentable for the reasons expressed by the High Court. This raises the question of where the dividing line is to be drawn between nucleic acid claims that are to be construed as being directed to genetic information and those that are not. The answer appears to lie in whether or not a potential infringer can tell, prior to obtaining a particular sample of nucleic acid, whether if they do so they will be infringing the claim.

Higher order life forms not including humans [9.270] In 1987, the US Patent Office announced that it would allow non-naturally-

occurring, non-human, multicellular living organisms (including animals) to be patentable subject matter. The first patent applied for under the new rule was for the “Harvard Mouse” or “oncomouse”, a rodent with a modified gene that made it very susceptible to carcinogens, This made it both a valuable research tool and lucrative source of revenue for the patent owner who had a monopoly on the supply of the mouse. In 1988, the Australian Patent Office received its first patent application from a German company, Transgene, for a new method of producing animals through recombinant DNA technology. Despite controversy in Europe and the United Kingdom about the patentability of such inventions, the Australian attitude has been to allow patents for animals. 2 No claim directed to a higher life form has come before an Australian court for consideration. Higher order life forms: humans and processes for their generation [9.280] Patents Act 1990 (Cth) s 18(2) expressly prohibits the patenting of human beings and

processes for their generation. Claims to mammals, mammalian foetuses, embryos or fertilised ova should therefore disclaim human application.

Fertilitescentrum AB and Luminis [9.290] Fertilitescentrum AB and Luminis Pty Ltd (2004) 62 IPR 420; [2004] APO 19 Australian Patent Office [A patent application included claims for a method of growing pre-blastocyst human embryos in a specified medium. The medium was called “granulocyte-macrophage colony-stimulating factor” 2

See K Ludlow, “Genetically Modified Organisms and their Products as Patentable Subject Matter in Australia” [1999] European Intellectual Property Review 298; Current Topics, “The Patenting of Animal Forms with New Traits” (1987) 61 “Australian Law Journal” 324. [9.290]

387

Intellectual Property: Commentary and Materials

Fertilitescentrum AB and Luminis cont. (referred to as GM-CSF) and is naturally present in a human fallopian tube. The invention involved using GM-CSF during in-vitro fertilisation techniques in order better to simulate the natural environment and reduce the decay or death of cells in the developing blastocyst, leading to more successful implantation and babies of greater body weight and with fewer complications than IVF processes that did not use the method. The examiner objected to the claims relating to the process of growing.] HERALD (DEPUTY COMMISSIONER): [430] [The Deputy Commissioner considered possible approaches to the construction of s 18(2)] Accordingly, in my view the correct interpretation of s 18(2) is ascertained by recognising a human being as being in the process of generation (in either of the two ways I refer to in paragraph 31) from the time of the processes that create a fertilised ovum (or other processes that give rise to an equivalent entity) up until the time of birth. The prohibition of “human beings” in my view is a prohibition of patenting of any entity that might reasonably claim the status of a human being. Clearly a person that has been born is covered by this exclusion. But to the extent that there is a process of generation of a human being that lasts from fertilisation to birth, I consider that a fertilised ovum and all its subsequent manifestations are covered by this exclusion. The prohibition of “biological processes for (the generation of human beings)” clearly covers all biological processes applied from fertilisation to birth – so long as the process is indeed one that directly relates to the generation of the human being. I also consider the exclusion of biological processes includes the processes of generating the entity that can first claim a status of human being. For example, processes for fertilising an ovum; processes for cloning at the 4-cell stage by division; processes for cloning by replacing nuclear DNA. Decision Having considered the scope of the exclusion proscribed by s 18(2), I can now proceed to determine whether there is a lawful ground of objection to the present application such that the proposed direction under s 117 should be made. Claims 10 to 23 are directed to a method of growing preblastocyst human embryos. It is a method applied to a human embryo. The method has clear advantages in better simulating the natural environment, and reducing apoptosis of cells in the blastocyst, resulting in greater success in implantation, and babies of greater body mass and having fewer complications compared to IVF babies born without the benefit of the method – all of which demonstrates that the process is one that directly relates to the generation of a human being. The process is a biological process – it is a process involving the presence of a chemical such that the in vitro environment better simulates the natural fallopian tube environment. I am satisfied that these claims fall within the ambit of “biological processes for (the generation of human beings)” as proscribed by s 18(2).

[9.300] For patent applications that relate to methods of using stem cells, consideration

should be given to the legality of the method. Patents Act 1990 (Cth) s 50(1)(a) allows the refusal of an application for a standard patent on the basis that the invention is contrary to law. Some stem cell technology applications may fall within this category. Relevant legislation includes the Prohibition of Human Cloning Act 2002 (Cth) and Research Involving Human Embryos Act 2002 (Cth). 388 [9.300]

Requirements of Validity

CHAPTER 9

Methods of treatment of the human body [9.310] Although it has long been established that pharmaceutical substances may be the

subject of valid patents, until recently there has been some doubt about whether the same applies to methods of medical treatment of humans. Some, at least, of that doubt has now been dispelled by the High Court in Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 253 CLR 284, 103 IPR 217, [2013] HCA 50.

Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd [9.320] Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd (2013) 253 CLR 284, 103 IPR 217, [2013] HCA 50 High Court of Australia CRENNAN AND KIEFEL JJ: [276] Claim 1, for a method of preventing or treating psoriasis, claims a hitherto unknown therapeutic use of a pharmaceutical substance which was first disclosed, together with prior therapeutic uses, in Patent 341 (now expired). [277] Apotex’s submissions, derived from obiter dicta in the NRDC Case, that the subject matter of claim 1 is “essentially non economic” must be rejected. [278] First, in the context of patent law, the expression “essentially non economic” takes its meaning from the long understood requirement that the subject matter of a patent (whether a product, or a method or process) must have some useful application, that is, must be capable of being practically applied in commerce or industry. A requirement that an invention have ″economic utility″ raises the same considerations as the requirement in the Patents Act 1977 (UK) and the European Patent Convention that an invention must be susceptible or capable of industrial application. So much is apparent from the definition of “exploit” in the 1990 Act, referring to products and to methods or processes, and the case law developed and applied for a very long time in respect of the requirement of utility, now found in ss 18(1)(c) and 18(1A)(c). [279] Secondly, the 1990 Act contains no specific exclusion from patentability of methods of medical treatment of the human body, nor can any be implied. Section 133, which provides for compulsory licensing, is in general terms and covers both patented articles and patented methods or processes. Section 70, providing for extensions of term in respect of pharmaceutical substances that are defined in terms of effects on the human body, infers that patents which claim a method of treatment of the human body can be granted, but not extended. Section 119A, the operation of which has been explained above, defines a “pharmaceutical patent” to include method patents for using or administering a pharmaceutical substance. [280] Parliament accepted the IPAC’s recommendation that the 1990 Act should not include a codification of requirements for patentability. Section 119A, described above, was introduced in 2006. It can be noted that Parliament has amended the 1990 Act 24 times since its enactment, including 20 times since the TRIPs Agreement entered into force on 1 January 1995. Relevantly, amendments to the 1990 Act following the TRIPs Agreement did not enact Art 27(3) into Australian domestic law. That Article gives contracting States the option to exclude methods of medical treatment of the human body from patent protection. However, to construe s 18(1)(a) of the 1990 Act as excluding methods of medical treatment of the human body would be to introduce a lack of harmony between Australia and its major trading partners, where none exists at present. [281] Thirdly, as noted by the primary judge in Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205, 25 IPR 119, there is no normative distinction to be drawn from the provisions of the 1990 Act between methods of treatment of the human body which are cosmetic and those which are medical. [282] Fourthly, and critically, the subject matter of a claim for a new product suitable for therapeutic use, claimed alone (a product claim) or coupled with method claims (combined [9.320]

389

Intellectual Property: Commentary and Materials

Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd cont. product/method claims), and the subject matter of a claim for a hitherto unknown method of treatment using a (known) product having prior therapeutic uses (a method claim), cannot be distinguished in terms of economics or ethics. In each case the subject matter in respect of which a monopoly is sought effects an artificially created improvement in human health, having economic utility. It could not be said that a product claim which includes a therapeutic use has an economic utility which a method or process claim for a therapeutic use does not have. It could not be contended that a patient free of psoriasis is of less value as a subject matter of inventive endeavour than a crop free of weeds. Patent monopolies are as much an appropriate reward for research into hitherto unknown therapeutic uses of (known) compounds, which uses benefit mankind, as they are for research directed to novel substances or compounds for therapeutic use in humans. It is not possible to erect a distinction between such research based on public policy considerations. [283] Fifthly, leaving aside, for the moment, the relevant obiter dicta in the NRDC Case, a method claim in respect of a hitherto unknown therapeutic use of a (known) substance or compound satisfies the general principle laid down in the NRDC Case. Such a method belongs to a useful art, effects an artificially created improvement in something, and can have economic utility. The economic utility of novel products and novel methods and processes in the pharmaceutical industry is underscored by s 119A of the 1990 Act and by their strict regulation in the Therapeutic Goods Act 1989 (Cth) (“the TGA”). [French CJ and Gageler J (Hayne J dissenting) expressed similar reasons to those of Crennan and Kiefel JJ. Crennan and Kiefel JJ went on to express (at [287]) the tentative view that the activities or procedures of doctors (and other medical staff) when physically treating patients are, in the language of NRDC, “essentially non economic” and are unlikely to be able to satisfy the NRDC test for the patentability of processes.]

“Swiss style” claims [9.330] Claims known as “Swiss style” claims that take the form “The use of substance X in

the manufacture of a medicament for the treatment of Y” (or similar wording, where Y is a new therapeutic use) will be accepted: see Australian Patent Office, Manual of Practice and Procedure, Vol 2 (National), 2.11.2.3.10. 3 Swiss-style claims are explained in Bristol Myers Squibb Co v Baker Norton Pharmaceuticals Inc [1999] RPC 253 at 271 per Jacob J. They are employed to provide a form of claiming methods of use of therapeutic substances in jurisdictions where methods of treatment are unpatentable, or where there is doubt about their patentability.

Collocations, mixtures, kits and packages [9.340] Where what is claimed includes a number of features, such as a process that involves

a number of steps or an article that consists of a number of parts, a distinction needs to be drawn between a “combination” of the features, in which they interact to produce a new or unexpected result, and a mere “collocation” of them, in which the features each separately perform their known function. While a combination of features may be patentable, a mere collocation is not. It is not entirely clear from judicial dicta, however, whether the basis for this unpatentability stems from an inherent lack of inventive step or because a collocation is not a “manner of new manufacture”. 3

Available at http://manuals.ipaustralia.gov.au/patents/Patent_Examiners_Manual.htm

390 [9.330]

Requirements of Validity

CHAPTER 9

Advanced Building Systems v Ramset Fasteners [9.350] Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 High Court of Australia BRENNAN CJ, GAUDRON, MCHUGH AND GUMMOW JJ: [182] Combination claims Each of the claims in the Patent is for an apparatus which comprises a combination of elements or integers. In Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588, this Court (Dixon CJ, Kitto and Windeyer JJ) considered the validity of a patent for an invention for a mechanical hay rake. Referring to the specification, their Honours said (at 611): It was not seriously disputed that it is for a combination, in the sense that word bears in patent law. That is to say, what is described is a machine, the elements of which are all well known and simple mechanical integers, but combined so that they are not a mere collocation of separate parts, but interact to make up a new thing. This notion of a “new thing” includes a new result, “that is, a new way of achieving an old purpose or the fulfilment of a new purpose” (Palmer v Dunlop Perdriau Rubber Co Ltd (1937) 59 CLR 30 at 67; see also at 71-75), and “a new combination of features to obtain an improved result” (Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228; 1A IPR 181 at 249 (CLR)). The significance of the exclusion of a “mere collocation of separate parts” appears from the statement by Aickin J in Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253, 1A IPR 231 at 266 (CLR) that it is “the interaction” between the integers which is “the essential requirement”. It is this which supplies the inventive step and denies an allegation of lack of subject-matter in the case of a valid combination patent.

[9.360] It follows that claims to kits or packages in which one or more of the components is

new may be directed to a “manner of new manufacture”. It is much more unusual for claims to kits or packages of known things to meet the requirement of “manner of manufacture”. In Wellcome Foundation Ltd v Commissioner of Patents (1980) 145 CLR 520; 1A IPR 261, the High Court recognised the validity of claims for a process of treatment of cattle by the administration of low doses of a chemical but rejected the package claims, which were needed to make the patent more readily enforceable (see the extract at [9.370] below). The package claims may also have been included because of doubts at the time about the patentability of methods of treatment of animals or humans.

Wellcome Foundation v Commissioner of Patents [9.370] Wellcome Foundation Ltd v Commissioner of Patents (1980) 145 CLR 520 High Court of Australia GIBBS, STEPHEN, MASON, MURPHY AND WILSON JJ: [526] The problems raised by claims to an old substance in a container, frequently accompanied by directions for use, have been examined in a number of cases in England, notably Ciba-Geigy AG (Durr’s) Applications [1977] RPC 83; Organon Laboratories Ltd’s Application [1970] RPC 574; L’Oreal’s Application [1970] RPC 565. In the Ciba-Geigy case, Russell LJ, who delivered the opinion of the Court of Appeal, upheld the decision of Graham J that the package claim there under consideration was not valid. After reviewing earlier authorities, his Lordship stated (at 89): There seems to us to be nothing inventive about parcelling up the known material in any and every convenient package or container having written thereon the information that it can be [9.370]

391

Intellectual Property: Commentary and Materials

Wellcome Foundation v Commissioner of Patents cont. used for the stated purpose in the stated loci. There is no interaction between the container with its contents and [527] the writing thereon. The mere writing cannot make the contents in the container a manner of new manufacture. There is nothing novel in the mere presentation of information by ordinary writing or printing on a container. For there to be novelty in a package claim there must be an interaction between the container with its contents and the writing so that the instructions or directions are novel by virtue of their link with the process. Needless to say, novelty is not often found in a package claim. Organon provides a striking illustration of a successful claim. There, the directions consisted of a card with the pills so arranged on it that it indicated that the pills were to be taken in a certain sequence, the sequence being part of the applicant’s inventive improvement. Graham J said (at 578): The discovery of a new method of treatment, which may itself be very meritorious even though not patentable, may it seems to me give subject matter to a pack or card of pills suitable for the carrying out of that method if, first, there is something novel in the constitution of the pack or card itself. On the other hand, the L’Oreal case provides a more typical example, though the claims did not rest on the existence of instructions. There, the claim for a package of two components for use in a process for treatment of hair was refused. Graham and Whitford JJ said (at 572): In substance the present applicants are really seeking to secure an extension of the protection they have already got or may get for their process. Here, counsel conceded that the essence of the invention is the dosage (which is much lower than previously administered dosages of the chemicals) resulting in its suitability for a new use. An examination of the specification discloses that the instructions are merely directions as to use. They do not interact with the container and its contents. There is admittedly nothing novel about the container, nor its contents. The placement and design of the instructions are not novel.

[9.380] Under Patents Act 1990 (Cth) s 50(1)(b), the Commissioner of Patents has discretion

to refuse to grant a standard patent on the ground that it claims as an invention either a substance that is capable of being used as food or medicine for humans or animals and is a mere mixture of known ingredients, or that it is a process producing such a substance by mere admixture. A similar discretion to revoke an innovation patent is given to the Commissioner under s 101B(2)(e), but there is no corresponding ground of revocation of a patent provided under s 138. It is not clear why these provisions have been included in the Patents Act 1990 (Cth), since any such claimed invention is presumably unpatentable on the ground that it does not meet the requirement of s 18(1)(a). Patent Office guidelines may be found at Australian Patent Office, Manual of Practice and Procedure, Vol 2 (National), 2.9.3.2.

Schemes, programs and business arrangements [9.390] There is old authority for the proposition that an alleged invention that claims “mere

working directions” is not patentable (Commissioner of Patents v Lee (1913) 16 CLR 138), but this tends to raise the question of what constitute “mere” working directions. An example of a method that was refused on this basis was a method of coordinating the operation of two or more furnaces in a steel-making process, which was considered to amount to a roster or schedule so as to employ the production crew more effectively: see Quigley & Co Inc’s Application (1973) 43 AOJP 3375; [1977] FSR 373. By contrast, a claim directed to a variation to a known process was held to be patentable in Saccharin Corp Ltd v Chemicals & 392 [9.380]

Requirements of Validity

CHAPTER 9

Drugs Co Ltd (1900) 17 RPC 28. In more recent times, the spread of the application of computers to commerce has resulted in a burgeoning of patent applications directed to schemes or arrangements for organising information or some aspect of the activities of a business. Computer program inventions

CCOM Pty Ltd v Jiejing [9.400] CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 Federal Court of Australia, Full Court SPENDER, GUMMOW AND HEEREY JJ: [286] Manner of manufacture As we have indicated, the primary Judge found against the appellants on this issue. His holding appears in the following passage (27 IPR at 594): The material feature of the claimed combination is the means by which Chinese characters are categorised by stroke-type category and stroke order as defined in the specification of the petty patent in suit and the use of such criteria to retrieve and display Chinese characters. That is, the procedures used to organise and process the data. The other integers of programming and computer hardware are merely a conventional means to produce the desired result. Taking the claim as a whole, that which is sought to be made the subject matter of a monopoly is the use of stroke-type categories and stroke order as defined in the specification to organise and process data relevant to Chinese characters in a database and to retrieve and display Chinese characters on a computer screen. The formulation of such criteria and their use as rules to organise and process data stored in a database in a conventional computer are the product of human intellectual activity lying in the fine arts and not the useful arts. The claim discloses no method of manufacture within the meaning of s 6 of the Statute of Monopolies and therefore discloses no patentable invention. The appellants challenge that holding. …. [292] The last case relating to computer programs decided in the UK before the commencement of the 1977 Act was that of the two Patent Judges, Graham and Whitford JJ, sitting as the Patents Appeal Tribunal in International Business Machines Corp’s Application (1980) FSR 564. This was an appeal on an unsuccessful revocation application. The software was a program designed to calculate automatically the selling price of stock or shares by comparing a set of buying and selling orders. It was accepted that the scheme was not itself novel, and that a completely standard computer could be programmed to perform it. Nevertheless, their Lordships, speaking as specialist judges of long experience in the field, held that the patent was good. They said (at 572) that what the inventor sought to claim was a method involving the operation or control of a computer, such that it was programmed in a particular way to operate in accordance with the inventor’s method. More than “intellectual information” was involved because the method was involved in the program and in the apparatus in physical form. What had been happening elsewhere in the meantime is described as follows by Mr Colin Tapper in his work Computer Law (4th ed, 1989), p 9: It is somewhat ironic that the original impetus behind a strong movement to limit, or even to eliminate, the patenting of computer programs came from the US in the report of President’s Commission (“To Promote The Useful Arts”) in 1966. This view, largely inspired by practical considerations, was speedily echoed in France where it was implemented in new legislation explicitly excluding computer programs from patentable subject matter, a provision widely construed by the Court. This same approach seeped into international [293] provisions by way of the Patent Co-operation Treaty 1970 which provided in rules 39 and 67 that computer programs were not required to be the subject of search by the appropriate international [9.400]

393

Intellectual Property: Commentary and Materials

CCOM Pty Ltd v Jiejing cont. searching agency to the extent that such bodies were not equipped to search the prior art. These definitions were then repeated in a slightly modified form as Art 52 of the European Patent Convention, a form in all relevant respects to that enacted (in the UK as the 1977 Act, subs 1(2)).…. However, as we have pointed out, in Australia the legislature made no such provision when enacting the 1990 Act. Thus, in our view there is significant guidance to be obtained from the course of decisions in Britain before the new legislation with the application in this field of the principles expounded in the NRDC case. Moreover, in this Court, in International Business Machines Corp v Commissioner of Patents (1991) 33 FCR 218, Burchett J followed the earlier decision of the Patents Appeal Tribunal in Burroughs Corp (Perkin’s) Application (1974) RPC 147 at 161. There, Graham J, delivering the decision of himself and Whitford J, had expressed the view that computer programs which have the effect of controlling computers to operate in a particular way, where such programs are embodied in physical form, are proper subject matter for letters patent. His Lordship had also pointed out (at 158): [I]t is not enough to take a narrow and confined look at the “product” produced by a method. Of course, if a method is regarded purely as the conception of an idea, it can always be said that the product of such a method is merely intellectual information. If, however, in practice the method results in a new machine or process or an old machine giving a new and improved result, that fact should in our view be regarded as the “product” or the result of using the method, and cannot be disregarded in considering whether the method is patentable or not. Burchett J held that the application of a mathematical formula to achieve an end, namely the production of an improved curve image, was a method entitled to the protection of the patent law. His Honour cited the statement of Rehnquist J in Diamond, Commissioner of Patents & Trade Marks v Diehr & Lutton 209 USPQ 1 (1981) that “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection” (at 8). …. [295] Once full weight is given to the reasoning in the NRDC case and to other decisions, including those of the Patents Appeal Tribunal in England before the commencement of the 1977 Act, it follows that the petty patent should not have been held invalid on the footing that the claim was not for a manner of manufacture within the meaning of para 18(1)(a) of the 1990 Act. The NRDC case (102 CLR at 275-277) requires a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour. In the present case, a relevant field of economic endeavour is the use of word processing to assemble text in Chinese language characters. The end result achieved is the retrieval of graphic representations of desired characters, for assembly of text. The mode or manner of obtaining this, which provides particular utility in achieving the end result, is the storage of data as to Chinese characters analysed by stroke-type categories, for search including “flagging” (and “unflagging”) and selection by reference thereto. Conclusion

394 [9.400]

Requirements of Validity

CHAPTER 9

CCOM Pty Ltd v Jiejing cont. The appellants have succeeded in their challenge to the finding of invalidity based on noncompliance with s 18(1)(a) of the 1990 Act (“manner of manufacture”).

Manual of Practice and Procedure [9.410] Australian Patent Office, Manual of Practice and Procedure, Vol 2 (National), 2.9.2.10 (available at http://manuals.ipaustralia.gov.au/patents/Patent_Examiners_Manual.htm) 2.9.2.10 Mathematical Algorithms A mathematical algorithm is a procedure for solving a given mathematical problem, commonly applied in the field of computer software related inventions. In Grant v Commissioner of Patents [2006] FCAFC 120 the Full Court stated that: It has long been accepted that “intellectual information”, a mathematical algorithm, mere working directions and a scheme without effect are not patentable. However, while a mathematical algorithm per se may not be a manner of manufacture, the presence of such an algorithm within the steps in an otherwise patentable method does not exclude a claim from patentability. For example, in Re International Business Machines Corporation v Commissioner of Patents [1991] FCA 625 the Court, in considering a method for producing a visual representation of a curve, found (at [16]) that: In the present case, it seems to me that the use of the algorithm is not different conceptually from the use of the compounds involved in National Research and Development Council. Just as those compounds were previously known, so here, it is not suggested there is anything new about the mathematics of the invention. What is new is the application of the selected mathematical methods to computers, and in particular, to the production of the desired curve by computer. This is said to involve steps which are foreign to the normal use of computers and, for that reason, to be inventive. The production of an improved curve image is a commercially useful effect in computer graphics. The distinction to be drawn is between a claim to an algorithm (or scientific principle or natural phenomenon) in the abstract sense and the application of the formula to a process such that it produces “some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art”. Examples of inventions involving mathematical algorithms that would be patentable are: • any otherwise-patentable process which uses a specific algorithm or mathematical formula, eg a claim to a method of annealing a tungsten alloy where: the heating time (seconds) = 6.78 mass of ingot/ temperature (c) • a method of operating a computer which makes the computer faster or requires less hardware resources by using a mathematical algorithm, eg a claim to a computer that calculates frequency spectrum values using a new fast Fourier transform.

[9.410]

395

Intellectual Property: Commentary and Materials

Manual of Practice and Procedure cont. An example of an invention involving a mathematical algorithm that would not be patentable is: • a pure mathematical formula (unapplied), eg a claim to a method of calculating a value c, where: c = ex sin (t) c, x, and t are pure variables with no defined significance to the real world.

Patents for Business Methods [9.420] Claims to what have been termed “business methods”, namely methods for

conducting some aspect of commercial dealings, are somewhat related to claims to computer programs in that neither computer programs nor “business methods” necessarily result in any modified apparatus or any “product” in the usual sense of the word. They concern outcomes that may be intangible and are characterised by apparently abstract ideas applied to some useful end. Typically they involve the manipulation of numbers or information, almost always with the aid of a computer. It is not, however, helpful to allocate claims to artificially created categories. Currently, 4 claims to so-called “business methods” or “methods of doing business” are subject to the same legal requirements for patentability as apply to any other process or method (see Welcome Real-Time SA v Catuity Inc (2001) 113 FCR 110; 51 IPR 327; [2001] FCA 445 at [127]-[128].) In 2014 and 2015, the Full Court of the Federal Court of Australia considered the patentability of method claims of this sort.

Welcome Real-Time SA v Catuity [9.430] Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327 Federal Court of Australia HEEREY J: [330] I Introduction The applicant Welcome Real-Time SA is the proprietor of Australian Patent No 712925 (the Patent). The invention disclosed is for a process and device for the operation of smart cards in connection with traders’ loyalty programs. Smart cards are cards which contain a microprocessor or chip with the capacity for receiving and storing information. With loyalty programs a trader promotes goods or services by offering rewards based on prior transactions, for example according to the value of goods or services previously acquired or the frequency of such transactions. Rewards may take the form of a price discount or a free supply of goods or service. ….. [349] V Manner of manufacture 1. The respondents’ case The respondents argued that the alleged invention the subject of the Patent covered material that had never been previously held to be within the concept of “manner of manufacture” for the purposes of s 6 of the Statute of Monopolies 1623, which is adopted as part of the definition of “patentable invention” by s 18(1)(a) of the Act. 4

The Productivity Commission made an extensive review of business method and software patents, which resulted in it falling short of recommending that such patents should be excluded from patentability: see Productivity Commission of Australia Intellectual Property Arrangements (23 September 2016), Ch 9, though exclusion had been a draft recommendation in its draft report issued in April of the same year. The change arose as a result of the judgments of the Full Federal Court in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (see [9.440]) and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177, as a result of which the patentability of business methods in Australia was greatly circumscribed.

396 [9.420]

Requirements of Validity

CHAPTER 9

Welcome Real-Time SA v Catuity cont. … 2. Principles The leading authority in this area is the decision of the High Court in National Research Development Corp v Commissioner of Patents (1959) 102 CLR 252 which has been described as a “watershed” (Joos v Commissioner of Patents (1972) 126 CLR 611 at 616 per Barwick CJ) and a decision which “changed the direction of the case law not only in Australia but also in the UK” (CCOM at 287) … [His Honour closely discussed the meaning of the term “manner of manufacture” as explained in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252. See the extract above at [9.40]. His Honour then considered the application of that reasoning to computer program inventions and the reasoning in CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260. See the extract above at [9.400].] ….. [353] An issue analogous to that in the present case was considered by the US Court of Appeals for the Federal Circuit in State Street Bank & Trust Co v Signature Financial Group 149 F 3d 1368 (1998). The relevant US statute (35 USCA s 101) refers to four categories of statutory subject matter for patentability: “Any new and useful process, machine, manufacture or composition of matter”. The case concerned a patent for a data processing system for implementing an investment structure. Mutual funds (“Spokes”) pooled their assets in an investment portfolio (“Hub”) organised as a partnership. This system allowed for consolidation of costs of administering the funds combined with the tax advantages of a partnership In particular, it provided means for a daily allocation of assets for two or more Spokes that were invested in the same Hub. The system determined the percentage share that each Spoke maintained in the Hub, while taking into consideration daily changes both in value of the Hub’s investment securities and the concomitant amount of each Spoke’s asset. Previous decisions of the US Supreme Court had held that mathematical algorithms are not patentable subject matter to the extent that they are merely abstract ideas. However, in State Street the Court of Appeals held (at 1373) that the transformation of data representing discrete dollar amounts by a machine through a series of mathematical calculations into a final share price constituted a practical application of a mathematical algorithm formula and calculation because it produced “a useful, concrete and tangible result” in the form of a final share price momentarily fixed for recording and reporting purpose. Reliance had been placed on the judicially created “business method” exception to statutory subject matter. The Court’s response (at 1375) was terse, to the point of brutality: We take this opportunity to lay this ill-conceived exception to rest. Their Honours considered that business methods should be subject to the same legal requirements for patentability as applied to any other process or method. 3. Conclusion In my opinion the Patent does produce an artificial state of affairs in that cards can be issued making available to consumers many different loyalty programs of different traders as well as different programs offered by the same trader. All this can be done instantaneously at each retail outlet. So what is involved here is not just an abstract idea or method of calculation. Moreover this result is beneficial in a field of economic endeavour – namely retail trading – because it enables many traders (including small traders) to use loyalty programs and thereby compete more effectively for business. Such competition is in turn beneficial to consumers, both in the general sense that competition is good and in the sense that they can obtain benefits in the form of discounts and free goods and service. What is disclosed by the Patent is not a business method, in the sense of a particular method or scheme for carrying on a business – for example a manufacturer appointing wholesalers to deal with particular categories of retailers rather than all retailers in particular geographical areas, or Henry [9.430]

397

Intellectual Property: Commentary and Materials

Welcome Real-Time SA v Catuity cont. Ford’s idea of stipulating that suppliers deliver goods in packing cases with timbers of particular dimensions which could then be used for floorboards in the Model T. [354] Rather, the Patent is for a method and a device, involving components such as smart cards and POS terminals, in a business; and not just one business but an infinite range of retail businesses. CCOM and the English decisions referred to therein are in my opinion indistinguishable. The respondents’ argument for distinguishing CCOM – the supposed lack of “physically observable effect” – turns on an expression not found in CCOM itself. Nor does such a concept form part of the Full Court’s reasoning. In any event, to the extent that “physically observable effect” is required (and I do not accept that this is necessarily so) it is to be found in the writing of new information to the Behaviour file and the printing of the coupon. The State Street decision is persuasive. It may be true, as the respondents argue, that US patent law has a different historical source owing little or nothing to the Statute of Monopolies. The Constitution of the US, Art 1, s 8, cl 8 confers power on Congress “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”. But the social needs the law has to serve in that country are the same as in ours. In both countries, in similar commercial and technological environments, the law has to strike a balance between, on the one hand, the encouragement of true innovation by the grant of monopoly and, on the other, freedom of competition.

Research Affiliates LLC v Commissioner of Patents [9.440] Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 Federal Court of Australia, Full Court [Claim 1 of the patent in suit claimed: A computer-implemented method for generating an index, the method including steps of: (a) accessing data relating to a plurality of assets; (b) processing the data thereby to identify a selection of the assets for inclusion in the index based on an objective measure of scale other than share price, market capitalization and any combination thereof; (c) accessing a weighting function configured to weight the selected assets; (d) applying the weighting function, thereby to assign to each of the selected assets a respective weighting, wherein the weighting: (i) is based on an objective measure of scale other than share price, market capitalization and any combination thereof; and (ii) is not based on market capitalization weighting, equal weighting, share price weighting and any combination thereof; thereby to generate the index.] [101] If a process is to be patentable, it must offer some advantage which is material, in the sense that the process belongs to a useful art. The characterisation of patentability by reference only to the description in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 (“NRDC”) of a product which consists of an artificially created state of affairs of economic significance was part of the High Court’s reasoning but did not represent a sufficient or exhaustive statement of the circumstances in which a claimed invention is patentable. [102] Research Affiliates submits that the inexorable conclusion is that the present claim is to a patentable invention. It points to the steps of transformation of data occurring in the computer at each stage of the process, of accessing data, processing data, accessing the weighting function and 398 [9.440]

Requirements of Validity

CHAPTER 9

Research Affiliates LLC v Commissioner of Patents cont. applying the weighting function, culminating in the creation of an index. We do not agree. Rather, the inexorable conclusion applying the principles of patentability, is that the present claim is not to a patentable method. [103] As Thomas J said in Alice Corporation Pty Ltd v CLS Bank International 134 S Ct 2347 (2014), there is a distinction, between mere implementation of an abstract idea in a computer and implementation of an abstract idea in a computer that creates an improvement in the computer. There is also a distinction between, on the one hand, a method involving components of a computer or machine and an application of an inventive method where part of the invention is the application and operation of the method in a physical device and, on the other, an abstract, intangible situation which is a mere scheme, an abstract idea and mere intellectual information. [104] A useful description of the distinction to be drawn was set out by Lourie J in Bancorp Services LLC v Sun Life Assurance Co of Canada (US) 687 F. 3d 1266 (2012), 1277, 1278 (citations omitted): Modern computer technology offers immense capabilities and a broad range of utilities, much of which embodies significant advances that reside firmly in the category of patent-eligible subject matter. At its most basic, however, a “computer” is “an automatic electronic device for performing mathematical or logical operations”. As the Supreme Court has explained, “[a] digital computer…operates on data expressed in digits, solving a problem by doing arithmetic as a person would do it by head and hand”. Indeed, prior to the information age, a “computer was not a machine at all”; rather, it was a job title: “a person employed to make calculations”. Those meanings conveniently illustrate the interchangeability of certain mental processes and basic digital computation, and help explain why the use of a computer in an otherwise patent-ineligible process for no more than its most basic function - making calculations or computations - fails to circumvent the prohibition against patenting abstract ideas and mental processes. As we have explained, “[s]imply adding a ‘computer aided’ limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible”. To salvage an otherwise patent-ineligible process, a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not. (Emphasis added by the Full Court) [105] The use of a computer necessarily involves the writing of information into the computer’s memory. This means that there are a number of “physical effects” in the sense of transformed data and memory storage during the claimed process. The claimed index in this case is data that exist in computer-readable form. The question is whether this is sufficient to make the claimed method properly the subject of letters patent. Research Affiliates contends that the information, once entered into or produced by means of the computer, becomes “an artificially created state of affairs” which is of economic significance. It submits that the primary Judge erred in importing “extraneous requirements” on computer implemented schemes that “have no basis in the Australian authorities” which required there to be “a specific effect being generated by the computer” or that the invention must “improve the operation of or effect of the use of the computer”. Research Affiliates challenges the primary Judge’s description of the claimed invention as one which, absent computer implementation, could be simply written on paper. It says that the fact of computer implementation simply cannot be ignored or dismissed as a modern equivalent of writing down on a piece of paper, thus ignoring the artificially created state of affairs. This, it submits, ignores an essential integer of the claim. [106] The determination whether the claimed invention is truly “an artificially created state of affairs” in satisfaction of NRDC is made not by some mechanistic application of the criterion of artificiality or physical effect, but by an understanding of the claimed invention itself. The invention is to be understood as a matter of substance and not merely as a matter of form. [107] It is apparent from the description in the specification that the computer is simply the means whereby the analyst accesses data to generate an index. The work in generating the index and [9.440]

399

Intellectual Property: Commentary and Materials

Research Affiliates LLC v Commissioner of Patents cont. weighting is described in terms of the work of the analyst rather than as some technical generation by the computer. Indeed, while the specification states that the invention may be used for investment management or investment portfolio benchmarking, the exemplary embodiment makes it clear that it may be, but is not necessarily, implemented on a computer. [108] The computer that may be utilised is described in general terms, without an indication that any unusual technical effect is utilised. Although the specification states that “[t]hese computer program products may provide software to computer systems” and that “[t]he invention may be directed to such computer program products”, little further specificity is provided. …. [111] With great respect to the primary Judge, we do not see that the question of patentability can be answered by the observation that the method is simply the writing down of the information – a modern equivalent of writing the schemes on a piece of paper. This ignores the utilisation of the power of a computer to generate information. It would also render unpatentable many methods that are inventive uses of a computer that utilise previously unknown abilities of software and hardware. [112] However, as well as this analogy drawn upon by the primary Judge, his Honour drew a distinction between “mere” use of a computer and a method involving a specific effect being generated by the computer or an improvement in the operation of, or effect of the use of, the computer. [113] The effect of Research Affiliates’ submissions is that the mere implementation of any abstract idea or scheme in a well-known machine is sufficient to render that unpatentable subject matter patentable because it gives rise to an “artificial effect”. This approach is inconsistent with NRDC and is one of form not substance. [114] The invention set out in the specification is directed to the index itself. The method of the invention is not one that has any artificial or patentable effect other than the implementation of a scheme, which happens to use a computer to effect that implementation. There is no technical contribution to the invention or artificial effect of the invention by reason of the intervention of the inventors. To take the words of NRDC at 268, the process does not produce “either immediately or ultimately, a useful physical result in relation to a material or tangible entity.” The claimed method, the result of the ingenuity of the inventors, does not produce such a result; the ingenuity is in the scheme. Again, drawing from NRDC at 270, there is a useful result of the claimed process but there is no physical thing “brought into existence or so affected as the better to serve man’s purposes”. There is no “physical phenomenon in which the effect, be it creation or merely alteration, may be observed” (NRDC at 276). [115] The High Court (in NRDC at 277) spoke in terms of a separate result achieved by the claimed method that has its own economic utility consisting in the improvement. By this reasoning, the High Court directed attention to the subject matter to which the claimed method was directed, which needed to exhibit the required characteristics of a manner of manufacture to be patentable. Here, that subject matter is truly the scheme, the idea, the index. As set out in the specification it may be, and in the claimed method it is, implemented in a computer, but the ingenuity of the inventors, the end result of which is the invention, is directed to the idea, which is not patentable. That method does not have an artificial effect falling squarely within the true concept of what must be produced by a process if it is to be held patentable (NRDC at 277).

400 [9.440]

Requirements of Validity

CHAPTER 9

Research Affiliates LLC v Commissioner of Patents cont. [The law as expressed by the Court was also applied by the Full Court in Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177.]

Improvements [9.450] Improvements to part of a patented item may be protected but the claims must be

limited to the improvement, otherwise the effect would be the grant of another patent for a known article or combination. Note the provisions for obtaining a patent of addition in respect of modification of, or improvement to, an invention for which a patent has been applied for or granted (Patents Act 1990 (Cth) Chapter 7; see [8.350]). Mere variations from a known device without any inventive step will not be patentable: see Fallshaw Holdings Pty Ltd v Flexello Castors & Wheels Plc (1993) 26 IPR 565; Griffin v Isaacs (1938) 12 AOJP 739; Dennison Manufacturing Co v Monarch Marking Systems Inc (1983) 1 IPR 431. New uses of known articles or substances are not necessarily unpatentable, but the new use must exploit some previously unknown property of the article or substance. A classic example of this situation is National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 where known chemicals were put to a new use, and a patent was allowed for the hitherto unsuspected properties (see [9.40]). This is to be distinguished, however, from claims to a monopoly in a known substance when used as an ingredient in a process that exploits the known properties of the substance. Finding a new use for an existing substance or article may be patentable if it goes beyond a mere “analogous use”. 5 In Re Application by Shell Internationale Research Maatschappij BV (1985) 4 IPR 439, an application was lodged in respect of a dispenser of pyrethroid insecticide. The device claimed was similar to a felt-tip pen. Since both the dispenser and the insecticidal properties of pyrethroids were known, this could not be a “new” manner of manufacture; neither was the method of controlling insects (by depositing a line of insecticide) novel. The Statute of Monopolies 1623 (ENG) s 6 refers to a “manner of new manufacture”, and most of the issues in regard to “newness” of combination, selection, method and process patents also concern the requirements that the invention be novel and involve an inventive step (Patents Act 1990 (Cth) s 18(1)(b)(i), (ii)) discussed below.

NOVELTY Introduction [9.460] To be patentable, an invention must be something new. If it is not new, the patent

applicant will not have provided sufficient consideration to justify the grant of a monopoly. No patent system allows monopolies for inventions that are already known to the public, except in certain limited circumstances that, in Australia, are referred to in Patents Act 1990 (Cth) s 24 (see [9.590]). The invention must be novel when compared with the prior art base (standard patent, s 18(1)(b)(i); innovation patent, s 18(1A)(b)(i)). How “novelty” is to be 5

The term “analogous use” derives from the early House of Lords cases Harwood v Great Northern Railway (1863) 11 HLC 654 and Morgan & Co v Windover & Co (1890) 7 RPC 131. [9.460]

401

Intellectual Property: Commentary and Materials

judged is set out in s 7(1) together with the definitions of “prior art base” and “prior art information” in Schedule 1 and the definition of “document” in the Acts Interpretation Act 1901 (Cth).

Patents Act 1990 (Cth) [9.470] Patents Act 1990 (Cth) s 7(1) and Schedule 1 7 Novelty (1)

For the purposes of this Act, an invention is to be taken to be novel when compared with the prior art base unless it is not novel in the light of any one of the following kinds of information, each of which must be considered separately: (a) prior art information (other than that mentioned in paragraph (c)) made publicly available in a single document or through doing a single act; (b)

prior art information (other than that mentioned in paragraph (c)) made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the relevant art would treat them as a single source of that information;

(c)

prior art information contained in a single specification of the kind mentioned in subparagraph (b)(ii) of the definition of prior art base in Schedule 1.

Schedule 1 Dictionary “prior art information” means: (a) for the purposes of subsection 7(1) – information that is part of the prior art base in relation to deciding whether an invention is or is not novel; “prior art base” means: (a) in relation to deciding whether an invention does or does not involve an inventive step or an innovative step: (i) information in a document that is publicly available, whether in or out of the patent area; and (ii) information made publicly available through doing an act, whether in or out of the patent area. (b) in relation to deciding whether an invention is or is not novel: (i) information of a kind mentioned in paragraph (a); and (ii) information contained in a published specification filed in respect of a complete application where: (A) if the information is, or were to be, the subject of a claim of the specification, the claim has, or would have, a priority date earlier than that of the claim under consideration; and (B) the specification was published after the priority date of the claim under consideration; and (C) the information was contained in the specification on its filing date and when it was published. “Patent area” means: (a) Australia; and (b) the Australian continental shelf; (c) the waters above the Australian continental shelf; and 402 [9.470]

Requirements of Validity

CHAPTER 9

Patents Act 1990 (Cth) cont. (d) the airspace above Australia and the Australian continental shelf.

Acts Interpretation Act 1901 (Cth) [9.480] Acts Interpretation Act 1901 (Cth) s 2B 2B Definitions In any Act……. “document” means any record of information, and includes: (a)

anything on which there is writing;

(b)

anything on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them; and

(c)

anything from which sounds, images or writings can be reproduced with or without the aid of anything else; and

(d)

a map, plan, drawing or photograph.

[9.490] The prior art base for novelty has been progressively expanded since the Patents Act

1952 (Cth), when only information made publicly available in Australia before the priority date was able to be relied on. The commencement of the 1990 Act saw the definition broadened to include information made publicly available in a document anywhere in the world, and the Patents Amendment Act 2001 (Cth) enlarged it further to include information made publicly available by doing an act anywhere in the world also. A standard patent application must be examined before grant and the examiner is to report whether the invention is novel at the priority date of each claim (Patents Act 1990 (Cth) s 45(1)(b)). An allegation of lack of novelty can also be raised at the opposition stage (s 59(b)) and at the revocation stage (s 138(3)(b)). When re-examining a standard patent under s 97, the Commissioner of Patents must report on whether the invention is novel (s 98(b)). An innovation patent is granted without prior examination as to its substance and without being subject to pre-grant opposition proceedings, but if the patentee or another person requests examination for certification of the patent, or if the Commissioner decides to examine the patent (s 101A), the Commissioner must determine if the patent is invalid and should be revoked for, amongst other grounds, lack of novelty (s 101B(2)(b)). If the innovation patent has been certified, any person may oppose the patent and seek revocation of it. One ground of opposition is that the innovation patent lacks novelty (s 101M(c)). An innovation patent may be re-examined (s 101G) and grounds for revocation include lack of novelty (s 101G(3)(b)). The Minister or any other person may apply to a court to have an innovation patent revoked on the ground that it is not novel (s 138(3)(b)).

[9.490]

403

Intellectual Property: Commentary and Materials

Making information publicly available [9.500] For the purposes of novelty, publication means adding to the “stock of knowledge

that the public either has, or can acquire” (Gadd & Mason v Manchester Corp (1892) 9 RPC 516 at 527). According to the Patents Act 1990 (Cth) s 7(1) and the definitions of “prior art information” and “prior art base” (see [9.470] above), the following are relevant to lack of novelty: • information made publicly available in a document anywhere in the world; • information made publicly available through doing an act anywhere in the world; and • certain information in a specification filed but not published at the time of the priority date of the claim being considered for want of novelty. The third of these categories is often referred to as “whole of contents information” (see further [9.530]). “Document” is defined in the Acts Interpretation Act 1901 (Cth) s 2B (see [9.480]), and includes information stored in computer databases. In C Van der Lely NV v Bamfords Ltd [1963] RPC 61, a photograph was the document disclosing an invention. Novelty may be assessed against information that is made publicly available in a combination of documents, or through doing a combination of acts, but not by a combination of documents and acts. Combining documents or acts is only permitted if the relationship between the documents or the acts “is such that a person skilled in the relevant art would regard them as a single source” of information (Patents Act 1990 (Cth) s 7(1)(b)).This is a question of fact to be assessed on a case-by-case basis: Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 at 538–539 per Gummow J and at 549 per Lockhart J. See ICI Chemicals & Polymers Ltd v Lubrizol Corp Inc (1999) 45 IPR 577 for a case in which the disclosures of two documents were allowed to be considered together. The Patents Act 1952 (Cth) had no express statutory provision for combination of documents, but in Warner (George) Laboratories Pty Ltd v Chemspray Pty Ltd (1967) 41 ALJR 75, a combination of the disclosures of two documents was permitted where at least one of the documents referred to the other. Whether information is alleged to have been made publicly available in a document or by doing an act, the considerations as to what constitutes “public availability” are the same. The case law indicates that information becomes public knowledge when it has been revealed even to only one person (provided the person is under no obligation to keep the information confidential), or is merely available for inspection by members of the public: see Humpherson v Syer (1887) 4 RPC 407 at 413; Bristol-Myers and Co’s Application [1969] RPC 146 at 155..

Merck v Arrow Pharmaceuticals [9.510] Merck & Co Inc v Arrow Pharmaceuticals Ltd (2006) 154 FCR 31 Federal Court of Australia, Full Court [It was alleged, inter alia, that the invention claimed in the patent in suit lacked novelty in the light of information contained in certain issues of a journal called Lunar News. The evidence was that copies of Lunar News were distributed to persons who were selected for commercial reasons by its publisher, Lunar Corporation. A question that arose in the case was whether the issues of Lunar News were publicly available.] HEEREY, KIEFEL AND DOWSETT JJ: [58] Were the Lunar News articles “publicly available”? 404 [9.500]

Requirements of Validity

CHAPTER 9

Merck v Arrow Pharmaceuticals cont. The previous legislation, the Patents Act 1952 (Cth), provided as a ground of revocation by s 100(1)(g) that: The invention, so far as claimed in any claim of the complete specification … was not novel in Australia on the priority date of that claim. It was well established that a description in an obscure publication would suffice to destroy novelty, provided that it was a publication, that is to say that the document, whether or not it was read generally by the public, had been available to the public: Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd (1961) 180 CLR 98 at 111-112. It was sufficient that the document or thing alleged to be the anticipation came into the hands of a person in circumstances which left him or her free at law and in equity to do whatever they liked with it: Fomento Industrial SA v Mentmore Manufacturing Co Ltd (1956) RPC 87 at 100; Re Bristol Myers and Co’s Application (1969) RPC 146 at 155; Stanway Oyster Cylinders Pty Ltd v Marks (1996) 35 IPR 71 at 74-75. However, senior counsel for Merck contended that the 1990 Act had changed the law. It was now not enough that the anticipation had been disclosed to a person free to use it. The law, he said, looks at the position of somebody who [59] wants to find the alleged anticipation. Thus although there was evidence that Lunar News had been sent to hospitals and universities, there was no evidence that it had been catalogued and identified in a way that would enable anybody to find it. We do not accept this argument. It finds no support in the text of the 1990 Act. Section 7(1)(a) contemplates that prior art information may be made “publicly available” in a single document, that is to say, literally, one document…… Novelty is a rule which at times may operate with seeming harshness, particularly now that the relevant prior art is that existing in the whole world. An Australian patent may now be defeated by reason of some publication which in reality nobody in Australia had the remotest possibility of being aware of before the priority date. Nevertheless, since the Statute of Monopolies almost 400 years ago, a fundamental element of the bargain for which the patentee gets the valuable advantage of monopoly is that the invention is one “which others at the time of making such letters, patents and grants shall not use”.

[9.520] For patents claiming a combination of features, a mere cross-reference in one

specification, which discloses some of the features, to another specification which discloses the other features, is not sufficient to disclose the combination: the entire combination must be disclosed as a combination in a single publication unless s 7(1)(b) applies.

Whole contents Origin of the concept [9.530] Paragraph (b)(ii) of the definition of prior art base was introduced for the first time by

the Patents Act 1990 (Cth), to replace what had been known previously as the ground of “prior claiming”. That is, the corresponding ground under the Patents Act 1952 (Cth) was that the invention as claimed was the subject of a claim of another Australian patent having an earlier priority date. This ground of prior claiming gave rise to a body of case law that tended to be inconsistent and difficult to apply to new situations that arose. It was subject to the criticism that something which had in fact been disclosed in a specification with an earlier priority date than the claim in question would only deprive that claim of novelty if it happened to be the subject of a claim itself. [9.530]

405

Intellectual Property: Commentary and Materials

E I Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd [9.540] E I Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd (2005) 66 IPR 462, [2005] FCA 892 Federal Court of Australia [In the extract below, the reference to the “Daikin patent” is a reference to an Australian patent application whose disclosure, it was said, fell within the terms of para (b)(ii) of the definition of “prior art base” (see [9.470]). The references to s 43 and reg 3.12 are references to those provisions as they stood at the relevant time.] EMMETT J: [80] In order to satisfy the pre-requisite of paragraph (b)(ii)(A) of the definition of prior art for the purposes of novelty, it is necessary first to identify information contained in the Daikin Patent. Secondly, it is necessary to demonstrate that that information either is the subject of a claim of the Daikin Patent or could be the subject of a claim of the Daikin Patent. The latter alternative is the consequence of the requirement that, if the information were to be the subject of a claim, that claim would have a priority date earlier than that of the Claims of the Binary Application and the Ternary Application. [81] There are at least two possible interpretations of paragraph (b)(ii)(A). They are as follows: • having identified a relevant piece of information, consideration is then given to whether that information was present in a document that would take priority over the claims under consideration; or • having identified a relevant piece of information, consideration is then given to whether that information is the subject of an actual claim. If the information is the subject of an actual claim, consideration is then given to whether the claim would take priority over the claims under consideration. If the information is not the subject of an actual claim, consideration is then given to whether the information could be the subject of a claim. If the information could be the subject of such a notional claim, consideration is then given as to whether that notional claim would take priority over the claims under consideration. One aspect of the second construction is whether any such notional claim needs to be capable of being characterised as a valid claim. That is to say, the question is whether such a notional claim would satisfy the requirements of s 40 in relation to the complete specification of the patent said to contain the relevant information. [82] Paragraph (b)(ii)(A) speaks in terms of “a priority date”. That directs attention to s 43 of the Act, which relevantly provides that: • each claim of a complete specification must have a priority date; and • the priority date of a claim is the date determined under the Regulations. Regulation 3.12 relevantly provides that the priority date of a claim of a specification is the earliest of: • the date of filing of the specification; and • if the claim is fairly based on matter disclosed in one or more relevant applications, the date of making the relevant application in which the matter was first disclosed. [83] There is no mechanism under which information can be compared between documents for the purpose of giving that information a priority date. Only a claim can have a priority date. That consideration suggests that the second interpretation is to be preferred. If the first interpretation were to be adopted, it would be necessary to consider the relevant nexus between the information in a specification as filed and the information in the relevant priority document. The Act recognises no such process. 406 [9.540]

Requirements of Validity

CHAPTER 9

E I Du Pont de Nemours and Company v ICI Chemicals & Polymers Ltd cont. [84] Further, there must be some relationship between the notional claims and the specification in which information is said to have been disclosed. That relationship is provided by the requirement that the notional claim must be a valid claim of the specification in question. To be a valid claim, the notional claim must be fairly based on the specification in question.

Note

[9.550]

In the extract above, it appears that the reference by Emmett J to a “valid claim” was a reference to one that is fairly based on the disclosure. There is no suggestion that a notional claim that is to be relied on for the “whole of contents” part of the prior art base needs to satisfy all the requirements validity including novelty and inventive step. For the meaning of “fairly based” see [10.310]–[10.330].

Making information publicly available by doing an act [9.560] An act which makes an invention publicly available may involve using a product or

working a process in public, giving an oral description of the invention or selling, displaying or giving something to a member of the public. It does not include experimenting or dealing with an invention in a confidential, non-commercial way: see [9.590] below. Furthermore, since 1 April 2002, there has been a general one-year “grace period” for disclosures made prior to filing a complete application where the disclosure was made by, or with the consent of, the patentee: see [9.590] below. As with making information publicly available in a document, the number of persons to whom the information is made available is irrelevant. In Griffin v Isaacs (1938) 12 ALJ 169; 12 AOJP 739, disclosure to six people working for the opponent was public use. Acme Bedstead Co Ltd v Newland Bros Ltd (1937) 58 CLR 689 concerned anticipation of an invention consisting of a hospital bed that could be raised or lowered with a lever, which had been revealed to persons in a hospital. In Fomento v Mentmore [1956] RPC 87, a few ballpoint pens embodying the plaintiff’s invention were given to a member of a government department to distribute to colleagues. This was held to be publication, in the absence of an obligation to preserve confidentiality. These revelations, confined though they were, amounted to the invention becoming “public knowledge”. Insta Image Pty Ltd v KD Kanopy Australasia Pty Ltd [2008] FCAFC 139 provides a further example of an Australian case in which anticipation by public use was found, whereas in Jupiters Ltd v Neurizon Pty Ltd (2005) 222 ALR 155; 65 IPR 86 a prior use occurred but was held not to have made sufficient information available to the public as to constitute an anticipation: see Jupiters Ltd v Neurizon Pty Ltd (2005) 222 ALR 155; 65 IPR 86 at [125]-[147].

Test of want of novelty [9.570] The classic statement of the test for novelty is that of Lord Westbury in the 19th

century English case of Hill v Evans (1862) 4 De GF and J 288, 45 ER 1195, 1A IPR 1, where his Lordship said: [t]he antecedent statement must be such that a person of ordinary knowledge of the subject would at once perceive, understand, and be able practically to apply the discovery without the necessity of making further experiments and gaining further information before the invention [9.570]

407

Intellectual Property: Commentary and Materials

can be made useful … the information as to the alleged invention given by the prior publication must, for the purposes of practical utility, be equal to that given by the subsequent patent. … The invention must be shewn to have been before made known. Whatever, therefore, is essential to the invention must be read out of the prior publication. If specific details are necessary for the practical working and real utility of the alleged invention, they must be found substantially in the prior publication.

The “further experiments” referred to by Lord Westbury in Hill v Evans do not include ordinary processes of trial and error or those that would have formed part of standard procedure or common general knowledge. They are experiments with a view to discovering something not disclosed (C Van der Lely NV v Bamfords Ltd [1963] RPC 61, 1A IPR 86; H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151, 81 IPR 228, [2009] FCAFC 70). Another way of putting the test of novelty, and the one that is most usually cited in current Australian cases, is the reverse infringement test: would something that is disclosed in a prior art publication (or by a prior public use) be an infringement of a claim of the patent if it were valid? (Meyers Taylor Pty Ltd v Vicarr Industries Ltd (1977) 137 CLR 228, 1A IPR 181). As Hill v Evans shows, the information in the prior publication must be a clear disclosure of something claimed, and must be sufficient for a person of ordinary skill in the relevant technical field to be able make or do something as claimed in the patent in question. What the prior publication discloses is to be determined having regard to what a reader skilled in the art to which the invention relates would understand and having regard to the relevant state of knowledge at the relevant date (Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1993) 26 IPR 171 at 180.) A mere suggestion in the prior art to do something within the boundaries of the patent claim is insufficient to deprive the claim of novelty: the prior art must contain “clear and unmistakeable” instructions to do what is claimed (General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1972] RPC 457, 1A IPR 121).Where the patent claims something which is a combination of features, all of them must be described, as a combination, in the prior publication, except that a feature in the prior art may be replaced by another that a skilled person would regard as equivalent (Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 16 IPR 545.) The following observations by an enlarged Full Court of the Federal Court of Australia refer in more detail to the criteria for lack of novelty.

AstraZeneca AB v Apotex Pty Ltd [9.580] AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324, 107 IPR 177, [2014] FCAFC 99 Federal Court of Australia, Full Court [The case concerned two patents, but the extract below concerns the novelty of one of them, referred to as the “051 patent”, in the light of prior art referred to as the “471 patent”. The 051 patent claimed the use of a the known substance rosuvastatin for the treatment of high cholesterol in what was said in the 051 patent to be a lower dose than had been known previously.] BESANKO, FOSTER, NICHOLAS AND YATES JJ [293] The touchstone for determining whether a prior publication, such as the 471 patent, anticipates a claimed invention, is stated in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1972] RPC 457, 1A IPR 121 at 485 to 486: When the prior inventor’s publication and the patentee’s claim have respectively been construed by the Court in the light of all properly admissible evidence … the question whether the patentee’s claim is new … falls to be decided as a question of fact. If the prior 408 [9.580]

Requirements of Validity

CHAPTER 9

AstraZeneca AB v Apotex Pty Ltd cont. inventor’s publication contains a clear description of, or clear instructions to do or make, something that would infringe the patentee’s claim if carried out after the grant of the patentee’s patent, the patentee’s claim will have been shown to lack the necessary novelty, that is to say, it will have been anticipated. The prior inventor, however, and the patentee may have approached the same device from different starting points and may for this reason, or it may be for other reasons, have so described their devices that it cannot be immediately discerned from a reading of the language which they have respectively used that they have discovered in truth the same device; but if carrying out the directions contained in the prior inventor’s publications will inevitably result in something being made or done which, if the patentee’s patent were valid, would constitute an infringement of the patentee’s claim, this circumstance demonstrates that the patentee’s claim has in fact been anticipated. If, on the other hand, the prior publication contains a direction which is capable of being carried out in a manner which would infringe the patentee’s claim, but would be at least as likely to be carried out in a way which would not do so, the patentee’s claim will not have been anticipated, although it may fail on the ground of obviousness. To anticipate the patentee’s claim the prior publication must contain clear and unmistakable directions to do what the patentee claims to have invented … a signpost, however clear, upon the road to the patentee’s invention will not suffice. The prior inventor must be clearly shown to have planted his flag at the precise destination before the patentee. [294] The metaphor of planting the flag has been taken up in this Court. For example, in ICI Chemicals & Polymers Ltd v The Lubrizol Corporation Inc (2000) 106 FCR 214, the Full Court at [51], after noting the metaphor, remarked that, in that case, the appellant’s argument involved the skilled addressee rummaging through a “flag locker” to find a flag which the prior art document possessed and could have planted. In Apotex Pty Ltd v Sanofi-Aventis (2008) 78 IPR 485, Gyles J at [91] adopted a different metaphor, remarking that “anticipation is deadly but requires the accuracy of a sniper, not the firing of a 12 gauge shotgun”. Each metaphor underlines the importance of the specificity required in order for a prior art document to anticipate an invention as claimed. …. [298] Here, relying only on the disclosures of the 471 patent, and not imputed common general knowledge concerning the administration of prior art statins, the person skilled in the art might seek to use one or any number of different dosages and dosage regimens for administering a pharmaceutical composition containing either the sodium salt or the calcium salt of rosuvastatin to treat hypercholesterolemia. It is possible that, out of a very large number of possibilities, the person skilled in the art might, based only on the disclosures of the 471 patent, use the dosage and dosage regimen of claim 1 or claim 2 of the 051 or low dose patent. But it is at least equally possible that such a dosage and dosage regimen might not be used. It cannot be said, therefore, that, by following the directions – such as they are – in the 471 patent, the person skilled in the art would inevitably do something that would inevitably infringe either claim 1 or claim 2 of the 051 or low dose patent. [299] It is here that the true setting for using the notion of reverse infringement in assessing anticipatory disclosure must be recognised. In Meyers Taylor Pty Limited v Vicarr Industries Limited (1977) 137 CLR 228 Aickin J (at 235) said: The basic test for anticipation or want of novelty is the same as that for infringement and generally one can properly ask oneself whether the alleged anticipation would, if the patent were valid, constitute an infringement. [300] But it is important to note that the reverse infringement test is not applied by simply asking whether something within the prior art document would, if carried out after the grant of the patent, infringe the invention as claimed. In Flour Oxidizing Company Ltd v Carr & Co. Ltd [1908] 25 RPC 428, Parker J (at 457) observed: [9.580]

409

Intellectual Property: Commentary and Materials

AstraZeneca AB v Apotex Pty Ltd cont. … where the question is solely a question of prior publication, it is not, in my opinion, enough to prove that an apparatus described in an earlier Specification could have been used to produce this or that result. It must also be shown that the Specification contains clear and unmistakable directions so to use it. [301] These observations are the wellspring of a long line of cases that recognise that, in order for a prior art document to be anticipatory, there must be (to adopt the language in General Tire) a clear description of, or clear instructions to do or make, something that would infringe the patentee’s claim if carried out after the grant of the patentee’s patent. In Bristol-Myers Squibb Company v F H Faulding & Co Limited (2000) 97 FCR 524, Black CJ and Lehane J reviewed the relevant authorities and concluded (at [67]): What all of those authorities contemplate, in our view, is that a prior publication, if it is to destroy novelty, must give a direction or make a recommendation or suggestion which will result, if the skilled reader follows it, in the claimed invention. A direction, recommendation or suggestion may often, of course, be implicit in what is described and commonly the only question may be whether the publication describes with sufficient clarity the claimed invention or, in the case of a combination, each integer of it. But in this case medical practitioners hardly needed to be told that it was possible to infuse a particular dose of taxol over three hours, or how to do it. Nor, equally obviously, is that the point of the claims. The claims of the earlier of the petty patents are for a method for administration of taxol to a patient suffering from cancer; the claims of the later one are for a method of treating cancer. In each case the method involves a particular regimen for the infusion of taxol. The context was that great difficulties had been encountered in using taxol, despite its known anti-carcinogenic properties, in the treatment of cancer, because of the drug’s side effects. Each of the trials reported in the articles referred to was an investigation directed towards finding a solution of the difficulties: directed, particularly, to ascertaining safe dosage levels. But, though methods falling within the claims of the patents were used in each trial, none of the reports can be said to teach (a word which in this context encompasses direct, recommend and suggest) that which the petty patents claim. [302] Sufficiency of disclosure is a cardinal anterior requirement in the analysis of whether a prior art document anticipates a claimed invention. It is only after the stage of assessing the sufficiency of disclosure – which involves a determination about whether a prior document has “planted the flag” as opposed to having provided merely “a signpost, however clear, upon the road” or, perhaps, something less – that the notion of reverse infringement comes into play as the final and resolving step of the required analysis. It is not the first step of the required analysis; nor is it the only step.

Grace periods [9.590] The Patents Act 1990 (Cth) provides that certain uses of an invention will not

constitute prior use amounting to anticipation of the patent. No use or publication on or after the priority date will render it invalid (s 23). Even before the priority date, publication of the invention without the consent of the patentee (s 24(1)(b)), or in the “prescribed circumstances” with the consent of the patentee (s 24(1)(a)), will not affect validity if a patent application is made within the prescribed period. The circumstances where there may be a publication of the invention with the consent of the patentee are set out in Patents Regulations 1991 (Cth) regs 2.2 to 2.2C, and include: disclosure at a recognised exhibition; disclosure in a paper written by the inventor and read before or published by a learned society; public working of the invention for the purposes of reasonable trial if it is reasonably necessary for the working to be in public; and disclosure with the consent of the patentee in any other circumstances. The 410 [9.590]

Requirements of Validity

CHAPTER 9

prescribed period in which a complete patent application must be filed following any of these events depends on the kind of public disclosure: see regs 2.2 to 2.2C. Where there has been a publication of the invention without the consent of the patentee, a complete application must be filed within 12 months of the first publication in order for its novelty to be preserved (Patents Regulations 1991 (Cth) reg 2.2D.) The benefit to patent applicants provided by these grace periods is balanced by Patents Act 1990 (Cth) s 119(3), which permits a person who makes use of information disclosed prior to filing a complete specification in circumstances where a grace period under s 24(1)(a) applies, to rely upon a “prior use” defence to a claim of infringement. Any experimental public use of an invention before the priority date must be limited to a reasonable trial of the invention in order for the grace period provided by s 24(1) to apply. In Longworth v Emerton (1951) 83 CLR 539, the High Court referred to Re Newall & Elliot (1858) 4 CB (NS) 269; 140 ER 1087 and noted that the essential conditions of fact that led to finding that there had been experimental use were: (1) the experiment in an open area was necessary to determine the utility of the invention; (2) the performance of the experiment involved unavoidable disclosure; (3) the profit or advantage of the working was accidental; (4) the use was genuinely experimental. In Longworth v Emerton (1951) 83 CLR 539, the court did not consider that the public use was in fact experimental. In other cases, commercial advantages derived from the use or sale of the test product have been found to defeat a claim of experimental use exemption, though a commercial advantage will not always do so: see Grove Hill Pty Ltd v Great Western Corp Pty Ltd (2002) 55 IPR 257 at [229]. For further observations on reasonable experiment and trial, see [9.800].

Selection patents [9.600] Sometimes a patentable invention results from applying skill and knowledge to

identify substances or products that possess particular advantages from a larger group of known substances or products. An invention that selects out a group of members from a previously known class is called a “selection invention”. The main field in which selection patents occur is in relation to chemical compounds. The leading authority on selection patents is IG Farbenindustrie AG’s Patent (1930) 47 RPC 289, a case concerning chemical selection patents, which claimed a specific class of related compounds which was a subset of a broader class that had been described in general terms in a previous patent. The members of the claimed subset were said to exhibit unexpected properties in comparison to the members of the broader class that had been disclosed previously. Maugham J held (at 322-323) that to be valid, a selection patent must be based on some substantial advantage to be secured by the use of the selected members (or a substantial disadvantage avoided); the whole of the selected class must exhibit the advantage; and the selection must be in respect of a special quality which can fairly be said to be peculiar to the selected group. See also Re Shell Refining Co’s Patent [1960] RPC 35 at 47 and 55. A selection patent does not differ in nature from any other patent and is open to attack on the usual grounds, including lack of inventive step, inutility and lack of novelty. Whether a selection invention is novel in light of the prior disclosure of the broader class from which it was selected (that is, whether any member of the selected class was actually sufficiently disclosed in the prior art) is a question of fact to be determined by reference to evidence: H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 at [191] per Bennett J, with whom Middleton J agreed. [9.600]

411

Intellectual Property: Commentary and Materials

If the selection embraces selected members that do not possess the alleged advantages, the selection is defective; the patent could be misleading and also fail for insufficiency and inutility.

INVENTIVE STEP [9.610] Where the applicant is seeking a standard patent, the alleged invention must include

an inventive step in order to provide sufficient consideration for the grant of a monopoly. The nature of the requirement of an inventive step is set out in Patents Act 1990 (Cth) s 7(2) and (3), and in the definitions of “prior art base” and “prior art information” in Schedule 1.

Patents Act 1990 (Cth) [9.620] Patents Act 1990 (Cth) s 7(2) and Schedule 1 7 Novelty, inventive step and innovative step Inventive step (2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed (whether in or out of the patent area) before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3). (3) The information for the purposes of subsection (2) is: (a) any single piece of prior art information; or (b) a combination of any 2 or more pieces of prior art information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have combined. Schedule 1 Dictionary “prior art information” means: (b)

for the purposes of subsection 7(3) – information that is part of the prior art base in relation to deciding whether an invention does or does not involve an inventive step;

“prior art base” means: (a)

in relation to deciding whether an invention does or does not involve an inventive step or an innovative step: (i) information in a document that is publicly available, whether in or out of the patent area; and (ii)

information made publicly available through doing an act, whether in or out of the patent area.

[9.630] An innovation patent does not require an inventive step. Instead the requirement is

for an innovative step (s 7(4)), see [9.740]ff). At examination of a standard patent application, the Examiner is to report whether the invention involves an inventive step at the priority date of each claim (s 45(1)(b)). An allegation of obviousness or lack of inventive step can also be raised at the opposition stage (s 59(b)) and at the revocation stage (s 138(3)(b)). When re-examining a standard patent under s 97, the Commissioner of Patents must report on whether the invention involves an inventive step (s 98(b)). 412 [9.610]

Requirements of Validity

CHAPTER 9

Prior art for determining inventive step [9.640] In the past, the test for inventive step in Australia has tended to be less stringent than

that in many other developed economies. To rectify this, the “prior art base” for determining inventive step has undergone successive expansions since the 1952 Act. Before the commencement of the Patents Act 1990 (Cth), it consisted only of “common general knowledge” in Australia. The 1990 Act added to that the disclosure of any one published document, or information made public by an act done in Australia before the relevant priority date (or a combination of documents or acts that would have been treated as a single source of information), provided that the information could have been reasonably expected to be “ascertained, understood and regarded as relevant” to work in the relevant field by a person skilled in the art. The Patents Amendment Act 2001 (Cth) expanded the prior art base further to permit the common general knowledge to be considered together with more than one piece of prior art information provided a person skilled in the art could reasonably have been expected to combine them. The “ascertained, understood and regarded as relevant” requirement was retained until the Intellectual Property Laws Amendment (Raising The Bar) Act 2012 (Cth) dispensed with it and also expanded the common general knowledge to that anywhere in the world. The current provisions of the Patents Act 1990 (Cth) s 7(2) and (3) (see [9.620]) apply only to patent applications filed on or after 15 April 2013, and to other applications for which examination had not been requested before that date. For other applications filed on or after 1 April 2002 and patents granted on them the previous provisions apply, and for still earlier filings the original provisions of the Patents Act 1990 (Cth) are applicable.

Lockwood Security Products v Doric Products [9.650] Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 235 CLR 173 High Court of Australia [The Court referred to s 7 as it stood in its original form in the 1990 Act.] GUMMOW, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ: [222] Construction of ss 7(2) and 7(3) The proper construction of ss 7(2) and 7(3) has been considered in Firebelt Pty Ltd v Brambles Australia Ltd (2002) 76 ALJR 816; 188 ALR 280 at 821-823 (ALJR) [31]-[36], 287-289 (ALR). In recognising that s 7(3) relaxes the previous rule under the 1952 Act which forbade the use of prior disclosures not proved to be part of the common general knowledge at the priority date, this Court approved a statement by Burchett J in the Federal Court where he noted that s 7(3) in its pre-2001 version is limited (Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 at 414): by the words “being information that the skilled person … could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood and regarded as relevant to work in the relevant art in the patent area”. And if a prior [disclosure] passes those tests, it must still be able to be said that, if that [disclosure] had been considered by the hypothetical skilled person together with the common general knowledge at the relevant time, “the invention would have been obvious”. That passage, noting the words of limitation in s 7(3), reflects the two statutory tests which have already been mentioned: the s 7(2) test of whether an invention is obvious when compared with the prior art base, and the s 7(3) test of whether information is to be included in the prior art base, each test to be determined objectively by the standard of “a person skilled in the relevant art”. [9.650]

413

Intellectual Property: Commentary and Materials

Lockwood Security Products v Doric Products cont. Given the history, context, purpose and specific words of limitation in s 7(3), all of which were addressed by this Court in Firebelt (2002) 76 ALJR 816; 188 ALR 280 at 823 (ALJR) [36], 289 (ALR), the phrase “relevant to work in the relevant art” should not be construed as meaning relevant to any work in the relevant art, including work irrelevant to the particular problem or long-felt want or need, in respect of which the invention constitutes an advance in the art. The phrase can only be construed as being directed to prior disclosures, that is publicly available information (not part of common general knowledge) which a person skilled in the relevant art could be expected to have regarded as relevant to solving a particular problem or meeting a long-felt want or need as the patentee claims to have [223] done. Otherwise the words of limitation in the last 40 words of s 7(3) would have no role to play. Any piece of public information in the relevant art would be included, as is the case with the much broader and quite different formulation in the cognate provisions in the United Kingdom (Patents Act 1977 (UK), s 2(2)), which do not depend on the standard of a skilled person’s opinion of the relevance of the information. The question of what a person skilled in the relevant art would regard as relevant, when faced with the same problem as the patentee, is to be determined on the evidence. The starting point is the subject matter of the invention to be considered together with evidence in respect of prior art, common general knowledge, the way in which the invention is an advance in the art, and any related matters. It should be mentioned that the starting point is not necessarily the inventive step as claimed, or even agreed between parties, because the evidence, particularly in respect of a combination of integers, may support a different inventive step.

[9.660] The implication of the “ascertained, understood and regarded as relevant”

requirement that applies to all but the most recent patent applications is that it must be established by evidence that any piece of information that had been published before the relevant priority date but was not common general knowledge in fact forms part of the relevant “prior art base”. In particular, information in fields unrelated to that of the patent in question is unlikely to qualify, as is obscure or difficult to access information, or information only found in patent literature where the person of ordinary skill in the technical field to which the patent relates would not routinely consult or search among patents (Commissioner of Patents v Emperor Sports Pty Ltd (2006) 149 FCR 386; JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2006) 154 FCR 348, 70 IPR 77, [2006] FCAFC 141 at [74]-[81]; KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd (2007) 71 IPR 615, [2007] FCA 481).

Person skilled in the art and the common general knowledge [9.670] The concept of the person skilled in the art arises in connection with a number of

aspects of patent law: prior art and claims are construed by considering how they would be understood by the person skilled in the art, and, according to Patents Act 1990 (Cth) s 7(2), inventive step is determined by reference to what would have been obvious to such a person at the relevant priority date. The person skilled in the art, sometimes alternatively referred to as the “skilled addressee” is a person to whom the specification is deemed to be addressed: General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1972] RPC 457; (1971) 1A IPR 121 at 485 (RPC), 134 (IPR).

414 [9.660]

Requirements of Validity

CHAPTER 9

Ranbaxy Australia v Warner-Lambert [9.680] Ranbaxy Australia Pty Ltd v Warner-Lambert Company LLC (No 2) (2006) 71 IPR 46 Federal Court of Australia YOUNG J: [63] The skilled addressee As patent specifications and claims must be construed in light of the common general knowledge of a person skilled in the art before the priority date, it is necessary to ask: who is the skilled addressee? Various descriptions have been given to the skilled addressee, including the “notional skilled addressee”, the “uninventive skilled worker in the particular field”, the “non-inventive worker in the field”, the “person skilled in the art”, the “non-inventive hypothetical skilled addressee”, and “those likely to have a particular interest in the subject matter of the invention”: Root Quality Pty Ltd v Root Control (2000) 49 IPR 225 at 241 [70]-[71] per Finkelstein J. The person skilled in the art is a “relative expression which does not identify any specific person” and may consist of a team of persons with combined skills: Root Quality at 242 [71]; see also General Tire & Rubber Company v Firestone Tyre and Rubber Company Limited [1972] RPC 457 at 485. In NSI Dental Pty Ltd v University of Melbourne (2006) 69 IPR 542 Tamberlin J said at 570 [151]: At the outset, it is necessary to describe the attributes of the skilled addressee and the relevant patent area. The skilled addressee is a legal construct and is assumed to be a person, or team, who is “not ‘particularly imaginative or inventive’”: Pfizer Overseas Pharmaceuticals v Eli Lilly and Co [2005] FCAFC 224 at [288] per French and Lindgren JJ. This does not mean that the addressee is a technician or person with only practical and non-academic qualifications. In fields such as chemistry, the addressee can be a person or group with high level qualifications and a capacity for original research: Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411 at [30]. Axiomatically, the identity of the person who is skilled in the art will vary with the nature of the invention and the field with which it is concerned. The level of skill which can properly be attributed to the skilled addressee will be an important determinant of his or her common general knowledge. The qualifications of the skilled addressee, the setting in which and the resources with which he or she operates, and the practices and techniques that he or she regards as commonplace and known will also be important considerations: see Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411 at 465 [153] per Kirby J. In Minnesota Mining & Manufacturing Co v Beiersdorf (Aust) Ltd (1980) 144 CLR 253 at 292, Aickin J described “common general knowledge” as: … that which is known or used by those in the relevant trade. It forms the background knowledge and experience which is available to all in the trade in considering the making of new products, or the making of improvements in old, and it must be treated as being used by an individual as a general body of knowledge. Aickin J went on to add that those working or studying in some fields of endeavour may make themselves familiar with all patent specifications as they become available for inspection, in one or in many countries, so that their contents become common general knowledge in that particular trade or field of manufacture in the country in question. But that is not so in all fields or in all countries. There must be evidence that the content of a patent specification has become part of the common general knowledge of those working in the relevant field before it can be regarded as part of the background knowledge [64] and experience of the skilled addressee: at 294-295. The High Court confirmed this analysis in Alphapharm at 426-427 [31], 430-431 [44]-[45] and 434 [55]. There is, accordingly, an important distinction between common general knowledge and public knowledge. In General Tire at 482, the Court of Appeal illustrated the distinction by saying that each and every patent specification of the last 50 years would form part of relevant public knowledge if it is [9.680]

415

Intellectual Property: Commentary and Materials

Ranbaxy Australia v Warner-Lambert cont. resting anywhere in the shelves of the patent office, whereas common general knowledge is a different concept derived from a commonsense approach to the practical question of what would in fact be known to an appropriately skilled addressee–the sort of person good at his or her job that could be found in real life. The Court then observed at 482 that: … individual patent specifications and their contents do not normally form part of the relevant common general knowledge, though there may be specifications which are so well known amongst those versed in the art that upon evidence of that state of affairs they form part of such knowledge, and also there may occasionally be particular industries (such as that of colour photography) in which the evidence may show that all specifications form part of the relevant knowledge. The Full Federal Court referred to this distinction, with approval, in W R Grace & Co v Asahi Kasei Kogyo Kabushiki Kaisha (1993) 25 IPR 481 at 492; see also Heerey J at first instance: Asahi Kasei Kogyo Kabushiki Kaisha v W R Grace & Co (1991) 22 IPR 491 at 523. In PhotoCure ASA v Queen’s University at Kingston (2005) 216 ALR 41 at 52 [31], Merkel J said: The common general knowledge will encompass not only information that is retained in the memory of the skilled person, but also information that the person knows of, and to which he or she might refer as a matter of course, or habitually consult: see ICI Chemicals & Polymers Ltd v Lubrizol Corp Inc (1999) 45 IPR 577 at [112] and Aktiebolaget Hässle v Alphapharm Pty Ltd (2000) 51 IPR 375 at [73]. However, common general knowledge does not include information merely because it would have been able to be found if a routine literature search was conducted: see Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411 at [31], [44]-[45] and [55]. Nor does it follow from the fact that a publication “may have been held in a library readily accessible to a particular formulator” that such a publication formed part of the common general knowledge: see Aktiebolaget Hässle v Alphapharm Pty Ltd (1999) 44 IPR 593 at [105] per Lehane J. In Root Quality at 241-242 [71], Finkelstein J observed that, generally speaking, the skilled addressee is the person who works in the art or science with which the invention is connected. He or she is a person, or team, likely to have a practical interest in the subject matter of the invention: at 241-242 [71]. In an international field such as drug discovery and development, the Court may have regard to evidence given by experts from outside Australia in assessing the state of common general knowledge of a skilled addressee or a skilled team working in Australia at the priority date: Pfizer Overseas Pharmaceuticals v Ely Lilly & Co (2005) 68 IPR 1 at 63 [293]-[295]. Evidence from such witnesses may support the inference of a global pool of common general knowledge on issues relevant to the invention which would have been known to the skilled addressee in Australia: Pfizer at 63 [294]; see also NutraSweet Australia Pty Ltd v Ajinomoto Co Inc (2005) 67 IPR 381 at 387-388 [29]-[32] per Finkelstein J.

The inventive step requirement [9.690] As is seen from s 7(2), the presence or absence of an inventive step depends on

whether the claimed invention would have been obvious to a person skilled in the relevant art in the light of the information that formed the relevant prior art base. This requirement of non-obviousness does not lend itself to being expressed as a test that can be set out in concise terms. As Hely J noted in Flexible Steel Lacing Co v Beltreco Ltd (2000) 49 IPR 331 at 366-367, judges at various times have formulated the requirement in various ways: the difference between the simple idea which really breaks new ground and an unimaginative 416 [9.690]

Requirements of Validity

CHAPTER 9

extension of well-known techniques into a closely similar area (Elconnex Pty Ltd v Gerard Industries Pty Ltd (1991) 32 FCR 491 at 507); whether the subject of the patent “was so obvious that it would at once occur to anyone acquainted with the subject, and desirous of accomplishing the end, or whether it required some invention to devise it” (Vickers, Sons Ltd v Siddell (1890) 15 AC 496 at 502); whether there is some difficulty overcome, some barrier crossed: RD Werner v Bailey Aluminium Products Pty Ltd (1989) 85 ALR 679 at 689; whether there is “such an addition to the stock of human knowledge as to entitle the patentee to a monopoly”: Blakey v Latham (1889) 6 RPC 184 at 189, cited with approval by Cooper J in Winner v Ammar Holdings Pty Ltd (1993) 25 IPR 273 at 293; whether the invention was “beyond the skill of the calling”: Allsop Inc v Bintang Ltd (1989) 15 IPR 686 at 701. In Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 ([9.700]), the High Court of Australia provided helpful clarification of the meaning of “obvious” in the patent context.

Aktiebolaget Hässle v Alphapharm [9.700] Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 212 CLR 411 High Court of Australia [This was an appeal by the patentee and its exclusive licensee (collectively referred to as “Astra”) from a decision of the Full Court of the Federal Court, which had upheld the finding of the primary judge (Lehane J) that the patent was invalid for lack of inventive step. The respondent (Alphapharm) had cross-claimed for revocation of the patent in infringement proceedings brought against it by the patentee. The patent in suit claimed a tablet or pellet that comprised a “core material” containing the pharmaceutical substance omeprazole as the active ingredient and an alkaline-reacting compound; one or more inertly reacting subcoating layer(s) on the core material; and an outer layer that was an enteric coating. An enteric-coated tablet or pellet is one that assists the active ingredient to pass through the stomach unaltered and to be then released in the intestine. The issue of obviousness was required to be determined under the inventive step provisions of the Patents Act 1952 (Cth), according to which obviousness was to be determined by reference to what was “known or used” in Australia at the relevant priority date, which has been held to mean the “common general knowledge” in Australia at that time: Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253.] GLEESON CJ, GAUDRON, GUMMOW AND HAYNE JJ: [428] [432] “Matter of routine” In Wellcome Foundation, Aickin J referred to the taking of a series of routine steps and the making of a series of routine experiments and continued ((1981) 148 CLR 262 at 286): The test is whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not. (emphasis added by Gleeson CJ, Gaudron, Gummow and Hayne JJ) Lehane J, in critical passages in his reasoning ((1999) 44 IPR 593 at 626, 629); referred to and applied what he understood to follow from this passage. Was that understanding correct? Alphapharm submits that his Honour was correct, and Astra the opposite. Both sides accept that Wellcome Foundation is binding; they differ as to its meaning. What Aickin J had in mind as “routine” appears from an earlier passage in his judgment in which he was discussing the question whether evidence of the steps taken by the patentee was relevant and therefore admissible in a revocation action. His Honour said ((1981) 148 CLR 262 at 280-281): Evidence of what he did by way of experiment may be another matter. It might show that the experiments devised for the purpose were part of an inventive step. Alternatively it might [9.700]

417

Intellectual Property: Commentary and Materials

Aktiebolaget Hässle v Alphapharm cont. show that the experiments were of a routine character which the uninventive worker in the field would try as a matter of course. The latter could be relevant though not decisive in every case. It may be that the perception of the true nature of the problem was the inventive step which, once taken, revealed that straightforward experiments will provide the solution. It will always be necessary to distinguish between experiments leading to an invention and subsequent experiments for checking and testing the product or process the subject of the invention. The latter would not be material to obviousness [433] but might be material to the question of utility. (emphasis added by Gleeson CJ, Gaudron, Gummow and Hayne JJ) There are distinct strands of thought in this passage which may now be considered in terms applicable to the issues in this litigation. First, the working trials of which Dr Cederberg gave evidence may be (it is not necessary to determine the point) an example of the “subsequent experiments for checking and testing”, to which Aickin J referred at the end of the above passage. Secondly, the invention claimed in the Patent lay not in perceiving “the true nature of the problem” to which “straightforward experiments” then would provide the solution; the invention was in the interaction between the integers of the compound, to answer the known problem. Thirdly, in a case such as the present, the relevant question was that posed in the first part of the passage. Were the experiments “part of” that inventive step claimed in the Patent or were they “of a routine character” to be tried “as a matter of course”? If the latter be attributable to the hypothetical addressee of the Patent, such a finding would support a holding of obviousness. That way of approaching the matter has an affinity with the reformulation of the “Cripps question” by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157 at 187-188. This court had been referred to Olin in the argument in Wellcome Foundation ((1981) 148 CLR 262 at 267; see also Washex Machinery Corporation v Roy Burton & Co Pty Ltd (1974) 49 ALJR 12 at 16). Graham J had posed the question: Would the notional research group at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of chlorpromazine, directly be led as a matter of course to try the -CF3 substitution in the “2” position in place of the -C1 atom in chlorpromazine or in any other body which, apart from the -CF3 substitution, has the other characteristics of the formula of claim 1, in the expectation that it might well produce a useful alternative to or better drug than chlorpromazine or a body useful for any other purpose? (emphasis added) That approach should be accepted. The reasoning of the primary judge Lehane J did not treat “routine” in that way. He erred by giving it an operation more favourable to Alphapharm’s case. What his Honour [434] did was in line with the position which now apparently obtains in England, that “all of the courses of action which present themselves without the exercise of invention are obvious” (Pharmacia Corp v Merck & Co Inc [2002] RPC 775 at 818). His Honour did not assess what was said by the expert witnesses concerning the procedures they would have followed by making findings whether they would have been led directly as a matter of course to pursue one avenue in the expectation that it might well produce the claimed compound. [Their Honours next considered other aspects of the judgment of Lehane J] … [436] There follows the further conclusion ((1999) 44 IPR 593 at 627, later endorsed by the Full Court (2000) 51 IPR 375 at 406): I accept also that the process which would then have followed would have been a complex, detailed and laborious one, involving a good deal of trial and error, dead ends and the 418 [9.700]

Requirements of Validity

CHAPTER 9

Aktiebolaget Hässle v Alphapharm cont. retracing of steps; and it is easy to fall into the twin traps of hindsight and over simplification. But there is no reason to doubt that the hypothetical formulator would, having tried the first simple formulation, have done substantially what Astra did: submitted it to appropriate tests, including tests for stability on manufacture and on storage and for acid resistance. The tracing of a course of action which was complex and detailed, as well as laborious, with a good deal of trial and error, with dead ends and the retracing of steps is not the taking of routine steps to which the hypothetical formulator was taken as a matter of course. In In re Farbenindustrie AG’s Patents (1930) 47 RPC 289 at 322, Maugham J had said that while “mere verification is not invention”, what he likened to the citadel of invention: may be captured either by a brilliant coup-de-main or by a slow and laborious approach by sap and mine according to the rules of the art; the reward is the same. Further, the routine, which Lehane J accepted, took as its starting point that which was attributed from the reading of information which he had not found to be part of the common general knowledge. The result is that the reasoning by which the trial judge concluded that the Patent was to be revoked was flawed by errors of law.

Note

[9.710]

The courts have consistently warned against the use of hindsight in determining obviousness. That which may appear to have been obvious in hindsight was not necessary uninventive when viewed from the point of view of the person skilled in the art at the priority date and seeking to solve a particular problem. In the High Court in Hassle v Alphapharm, following the part of their judgment extracted at [9.700], Gleeson CJ and Gaudron, Gummow and Hayne JJ proceeded to consider aspects of the reasons given by the Full Court for dismissing an appeal from the judgment of Lehane J and considered that they were tainted by hindsight. The Full Court had expressed the view that for a step or process to be obvious, it will suffice if it is shown that it would appear to a person skilled in the relevant art that it would be worthwhile to try the step or process in solving the problem concerned in the patent in question. While this might be a test which is applied in assessing obviousness in England, Gleeson CJ, and Gaudron, Gummow and Hayne JJ noted a divergence between recent English cases and those in Australia and considered that the Full Court had fallen into error in applying this as a relevant criterion. Their Honours thus criticised the Full Court’s conclusion that the patentee’s development of the claimed formulation “was essentially an exercise in trying out various known possibilities until the correct solution emerged” and commented “[T]hat view of the matter wrongly takes as the starting point the assumed result. It succumbs immediately to the seduction of hindsight.” In its report of 23 September 2016, 6 the Productivity Commission recommended further raising the threshold for inventive step beyond the test of “directly be led as a matter of course” (see [9.700]) and aligning it with that applied in Europe. In its recommendation 7.2, it recommended amending Patents Act 1990 (Cth) s 7(2) and (3) such that an invention would be taken to involve an inventive step if, having regard to the prior art base, it is not obvious to 6

Productivity Commission of Australia Intellectual Property Arrangements (23 September 2016) part 7.4 and recommendation 7.2. [9.710]

419

Intellectual Property: Commentary and Materials

a person skilled in the relevant art; and it recommended including certain statements in the associated Explanatory Memorandum including that a scenario where the skilled person would not “directly be led as a matter of course” is an insufficient threshold for meeting the inventive step requirement.

Identifying the invention [9.720] There has been some difference of opinion apparent in recent cases as to what is to be

understood by the word “invention” as it appears in s 7(2). In some cases, it has been treated as being a reference to the advance over the prior art revealed by the specification as a whole, and in others as simply what is defined by the claim in question. In the Australian Patent Office, examiners are encouraged to analyse the question of whether a claim involves an inventive step by the so-called “problem-solution” approach which requires the examiner first to construe the specification under examination and determine the problem that the claimed invention solves (IP Australia, Patent Manual of Practice & Procedure, Vol 2 (National), [2.5.1.6] and [2.5.1.6A]). The following extract from a judgment of an enlarged Full Court of the Federal Court explains the error in seeking to identify a “starting point” from the disclosure of the specification, and implies that the approach commonly adopted in the Patent Office is at best a useful guide to the question of inventive step.

AstraZeneca AB v Apotex Pty Ltd [9.730] AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324, 107 IPR 177, [2014] FCAFC 99 Federal Court of Australia, Full Court BESANKO, FOSTER, NICHOLAS AND YATES JJ [202] Accordingly, whether a claim of a patent is invalid for lack of inventive step is to be determined by comparing the invention, so far as claimed, against the common general knowledge and any s 7(3) information. The question is then whether the invention would have been obvious to the hypothetical person skilled in the art in light of that knowledge considered separately from, or together with, the s 7(3) information. So understood, it is apparent that the relevant provisions of the Act do not expressly or impliedly contemplate that the body of knowledge and information against which the question whether or not an invention, so far as claimed, involves an inventive step is to be determined may be enlarged by reference to the inventor’s (or patent applicant’s) description in the complete specification of the invention including, in particular, any problem that the invention is explicitly or implicitly directed at solving. [203] If the problem addressed by a patent specification is itself common general knowledge, or if knowledge of the problem is s 7(3) information, then such knowledge or information will be attributed to the hypothetical person skilled in the art for the purpose of assessing obviousness. But if the problem cannot be attributed to the hypothetical person skilled in the art in either of these ways then it is not permissible to attribute a knowledge of the problem on the basis of the inventor’s “starting point” such as might be gleaned from a reading of the complete specification as a whole. There are a number of reasons why this should be so. [204] First, the inventor’s “starting point” as ascertained from the complete specification might not be one that would suggest itself to the hypothetical person skilled in the art who, for the purpose of assessing inventiveness, is taken to be in possession of the common general knowledge and any s 7(3) information but who lacks the capacity for invention. It is true the contents of the complete specification may have an evidentiary significance, for example, as an admission (see Lockwood Security Products Pty Ltd v Doric Products Pty Ltd [No 2] (2007) 235 CLR 173 at [105] to [111]), which might lead to a finding that a piece of information referred to is common general knowledge or s 7(3) 420 [9.720]

Requirements of Validity

CHAPTER 9

AstraZeneca AB v Apotex Pty Ltd cont. information. But that is quite different to supplementing the knowledge and information available for the purposes of s 7(2) with any knowledge or information that is, ex hypothesi, not common general knowledge and not s 7(3) information. [205] Secondly, although the complete specification must describe the invention fully, including the best method known to the inventor of performing the invention, it does not follow that the inventor must explain how he or she arrived at the invention. It is the invention itself that must be fully described, not the route that was travelled by the inventor to arrive at it. Again, the way in which the inventor came to the invention described and claimed may also have an evidentiary significance. However, an invention may be the result of chance or luck as much as long experiment and the question whether an invention, or an alleged invention, involves an inventive step is an objective one: The Wellcome Foundation Limited v V.R. Laboratories (Aust.) Proprietary Limited (1981) 148 CLR 262 at 279 per Aickin J. [206] Thirdly, there are still many standard patents in force (including those in suit in this case) in which the prior art base for the purpose of assessing obviousness is, in relation to information made publicly available by doing an act, confined to acts done in the patent area. The inventor’s starting point may consist of information that was made publicly available by an act that took place outside Australia. It would be inconsistent with the statutory scheme to treat such information as knowledge which must be attributed to the hypothetical person skilled in the art for the purpose of assessing obviousness in such a case. Not only is such knowledge not common general knowledge or s 7(3) information, it does not form part of the prior art base (as that expression was defined at the relevant time) to which s 18(1)(b)(ii) refers. [207] Fourthly, if inventiveness may be assessed by reference to a piece of information that is not common general knowledge or s 7(3) information on the basis that it constitutes the inventor’s starting point, then there does not appear to be any logical reason why that information must be publicly available. And yet the notion that the question of inventive step can be answered by reference to knowledge or information that has not been made publicly available is antithetical to patent law. The definition of prior art base, through all its previous iterations, ensures that information that is not or was not publicly available must be disregarded when deciding whether or not the invention, so far as claimed, involves an inventive step. [208] Fifthly, there is a difficulty with the starting point approach in that it will often give rise to a debate as to where the inventor’s “inventive journey” began.

INNOVATIVE STEP Patents Act 1990 (Cth) [9.740] Patents Act 1990 (Cth) s 7(2) and Schedule 1 7 Novelty, inventive step and innovative step Innovative step (4) For the purposes of this Act, an invention is to be taken to involve an innovative step when compared with the prior art base unless the invention would, to a person skilled in the relevant art, in the light of the common general knowledge as it existed (whether in or out of the patent area) before the priority date of the relevant claim, only vary from the kinds of information set out in subsection (5) in ways that make no substantial contribution to the working of the invention. [9.740]

421

Intellectual Property: Commentary and Materials

Patents Act 1990 (Cth) cont. (5) For the purposes of subsection (4), the information is of the following kinds: (a) prior art information made publicly available in a single document or through doing a single act; (b) prior art information made publicly available in 2 or more related documents, or through doing 2 or more related acts, if the relationship between the documents or acts is such that a person skilled in the relevant art would treat them as a single source of that information. (6) For the purposes of subsection (4), each kind of information set out in subsection (5) must be considered separately.

[9.750] The requirement for an innovative step only applies to innovation patents. It is a

ground for revocation of an innovation patent that it claims an invention that does not involve an innovative step, which can be invoked at the examination of an innovation patent (s 101B), in opposition to the certification of an innovation patent (s 101M) and in revocation proceedings in a court (s 138). The prior art base in respect of innovative step is similar to that in respect of inventive step, but not the same; compare s 7(5) ([9.740]) with s 7(3) ([9.620]). It has undergone similar changes since the introduction of the innovation patent by the Patents Amendment (Innovation Patents) Act 2000 (Cth), that the prior art base in respect of inventive step has undergone (see [9.640]). It is seen from an examination of s 7(4) that the meaning of the term “innovative step” essentially depends on the meaning of the phrase “make no substantial contribution to the working of the invention” as it appears in s 7(4). The following extract demonstrates how the test implied by s 7(4) is to be applied in practice.

Product Management Group Pty Ltd v Blue Gentian LLC [9.760] Product Management Group Pty Ltd v Blue Gentian LLC [2015] FCAFC 179 Federal Court of Australia, Full Court [In this extract, the reference to “PMG” is to the appellant, Product Management Group Pty Ltd.] KENNY AND BEACH JJ: [171] There is a presumption that an invention involves an innovative step. Accordingly, the onus is on PMG to establish otherwise in terms of establishing the “no substantial contribution” aspect. [172] Before proceeding further, a number of general observations should be made. [173] First, the “innovative step” requirement is a different and lower threshold requirement than the “inventive step” requirement; one is considering lower level inventions, with the trade-off being the lower patent term of eight years rather than twenty years. [174] Second, the task to be undertaken is to: (a)

identify the invention as claimed in the particular claim; this is not to be confused with loose concepts such as the “key idea”;

(b)

identify the relevant common general knowledge;

(c)

identify the relevant prior art information against which the invention as claimed is to be compared;

(d)

identify the person skilled in the relevant art; and

422 [9.750]

Requirements of Validity

CHAPTER 9

Product Management Group Pty Ltd v Blue Gentian LLC cont. (e)

then pose and answer the question as to whether the claimed invention only varies from the particular single prior art in a way that makes no substantial contribution to its working.

[175] But what is meant by “substantial” in the phrase “no substantial contribution to the working of the invention”? It does not mean “great” or “weighty”, but rather means “real” or “of substance” (Dura-Post (Aust) Pty Ltd v Delnorth Pty Ltd (2009) 177 FCR 239 at [74] per Kenny, Stone and Perram JJ). So, not only is the “innovative step” a lower threshold than the “inventive step”, the latter of which only requires a “scintilla” of inventiveness in any event (Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 235 CLR 173 at [52]), but for the “innovative step” one only requires a real or of substance contribution to the working of the invention. Moreover, this is in effect deemed to be the case unless PMG proves otherwise. [176] What is meant by the concept of “working of the invention”? Assume that the invention as claimed varies in a particular respect from the relevant prior art information and the question is whether this variation does or does not make a substantial contribution to the working of the invention. The question is not whether, absent the variation, the invention could still work effectively or whether, by other means, it could be adapted to so work. The question is whether the variation makes a substantial contribution to the working of the invention as claimed (Vehicle Monitoring Systems Pty Ltd v Sarb Management Group Pty Ltd (No 2) (2013) 101 IPR 496 (Vehicle Monitoring Systems) at [226] and [227] per Yates J). Moreover, the substantial contribution to the working of the invention must be across the full scope of the claim (see Multisteps Pty Ltd v Source and Sell Pty Ltd (2013) 214 FCR 323 at [285] per Yates J). [177] Further, the specification does not need to expressly identify or set out the substantial contribution that any particular integer of a claim might make to the working of the invention. That is to be ascertained by the Court with or without expert assistance. [178] Further, it is erroneous to assert that the test for “substantial contribution” requires establishing a difference between the prior art and the claim such that it could be characterised as an “advantage”. That is not the language of the Act. One may still have a “substantial contribution” even if the overall effect could be characterised in evaluative terms such as neutral from a particular perspective; any issue arising under s 18(1A)(c) as to utility is a separate question (see Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (2014) 110 IPR 82 at [234] per Beach J). [179] Further, the assessment requires consideration of the contribution the feature would make to the working of the invention as claimed, not the contribution it would make to the prior art (Streetworx at [237]). [180] Further, it is irrelevant whether the patentee has identified advantages not specifically described in the Patents or does not expressly refer to an advantage which is described in the Patents. The analysis required is whether the features in question make a substantial contribution to the working of the claimed invention, not whether the evidence as to that contribution matches the text of the patent specification (Streetworx at [238]). [181] Further, a feature does not need to provide an economic benefit in order to meet the test for innovative step.

SECRET USE [9.770] For an invention to be patentable, it must not have been “secretly used” in the patent

area before the priority date by, on behalf of, or with the authority of, the patentee or the nominated person, or the patentee’s or nominated person’s predecessor in title to the [9.770]

423

Intellectual Property: Commentary and Materials

invention (Patents Act 1990 (Cth) s 18(1)(d)). “Secret use” is an available ground for opposition to the grant of a standard patent, and for the revocation of a patent. With regard to the meaning of the word “secret”, it appears that some element of deliberate concealment is necessary: see Bristol-Myers Co (Johnson’s) Application [1975] RPC 127. As to the meaning of “use”, the leading Australian case is Azuko Pty Ltd v Old Digger Pty Ltd (2001) 52 IPR 75 (see [9.780] below) in which, in the Full Court of the Federal Court on appeal from a judgment of Von Doussa J at first instance, Gyles J (with whom Beaumont J agreed) considered that a relevant “use” must have a commercial aspect, with the key question being whether or not it led to a de facto extension of the patent term (see also DSI Australia (Holdings) Pty Ltd v Garford Pty Ltd (2013) 100 IPR 19; [2013] FCA 132 at [141]-[175]).

Azuko v Old Digger [9.780] Azuko Pty Ltd v Old Digger Pty Ltd (2001) 52 IPR 75, [2001] FCA 1079 Federal Court of Australia, Full Court [The respondent had alleged that the appellants had infringed two patents related to percussive hammers used in drilling equipment in the mining industry. The appellants cross-claimed for revocation of the patents alleging, amongst other things, secret use by the inventor, Mr Giehl, before the priority date. At first instance, the appellant’s cross-claim for revocation was dismissed.] GYLES J: [133] The pleadings raise issues of both “use” as anticipation and “secret use”. The trial judge sensibly looked at them together. The first issue on the pleadings is whether the acts in question are “use” under either limb: public or secret. In my opinion, the trial judge was plainly right to reject the argument reflected in pars 2(10)(b) and 3A(b) of the particulars of objection, namely, that the receipt of an unsolicited order from the person who had been involved in testing of the prototype was use by Mr Giehl of the invention in any sense. It did not involve Mr Giehl in any relevant activity at all. There is no challenge to this finding. The question left is as to the significance of the facts alleged in pars 2(10)(a) and 3A(a) of the Particulars of Objection which amount to manufacture simpliciter but with a view to eventual sale after application was made for the patent. There was, and could be, no finding that the appellants had proved that what was done was public. The evidence does not disclose any third party being involved in the manufacture. Even if employees were involved, it could be assumed that they would be bound by confidence. It can also be taken that, leaving aside consideration of uses within s 9 of the 1990 Act, what was done was intended to be, and was, secret, in the sense of being confidential. Indeed, it is plain enough that Mr Giehl had received advice as to patent law and practice and was concerned to ensure that there was no public disclosure before the priority date. Counsel for both parties have made comprehensive written and oral submissions as to whether what occurred was “use” of the invention. Having considered these submissions, I have come to the conclusion that making the items in question was not “use” of the invention for relevant purposes. In my opinion, this follows from an understanding of the principle involved. The trial judge drew attention to the relevant historical basis for the secret use ground of revocation, namely, to prevent a patentee from gaining a longer monopoly than the statutory period by enjoying a period of de facto monopoly through the secret use before the priority date, without meeting the corresponding obligation attaching to such a monopoly, namely, the public disclosure of the invention. This can be traced back (at least) to the informative case of Morgan v Seaward (1837) 2 M & W 544, 150 ER 874 (“Seaward”), where Parke B said (at 559): … if the inventor could sell his invention, keeping the secret to himself, and, when it was likely to be discovered by another, take out a patent, he might have, practically, a monopoly for a much longer period than fourteen years. 424 [9.780]

Requirements of Validity

CHAPTER 9

Azuko v Old Digger cont. In Bristol-Myers Co v Beecham Group Ltd [1974] AC 646 (“Bristol-Myers”) Lord Diplock said (at 680-681): … For the other mischief against which that statute was directed was that even monopolies of new manufactures should not extend beyond 14 years. If the inventor had already reaped commercial benefit from a de facto monopoly in his discovery owing to his concealment from all other traders of the way in which the new substance could be made, he was not to be permitted to prolong his monopoly for an additional 14 years. [134] So “public use” in the sense of commercial dealing in a product claimed as an invention, by any trader even though it were by the inventor himself, rendered invalid any patent for the product claimed. In the case of use by traders, at any rate, the expression “public use” was not employed to mark the contrast between public and secret use but to distinguish commercial from experimental use in the course of discovering, perfecting and trying out the invention so as to test its suitability for commercial use. As the expression “manufactures” in the Statute of Monopolies indicates, it was the commercial usefulness of the new inventions that provided the reason for encouraging them by grants of temporary monopolies to their inventors, and this object of the statute would be defeated if mere experimental uses of this kind either by the applicant for the patent or by others who had worked privily on the same discovery were to be a bar to the grant of a patent to him who first publicly disclosed the way in which the invention could be carried out. (emphasis added) This passage suggests a practical test: has what occurred amounted to a de facto extension of the patent term? The answer to this will usually depend upon whether the patentee reaped commercial benefit from what was done before the priority date. In the present case, in my opinion, there has been no de facto extension of the term of the patent by making the articles in question. The test of illegitimate extension of the patent term yields satisfactory results in differing circumstances. If the invention is a process or method, to secretly use the process or method to make goods for sale can readily be seen as a secret commercial use of the invention which would extend the patent if done prior to the priority date. Another example of secret commercial use of that character is if the product which is manufactured according to a product claim is then secretly used as part of a manufacturing process to make other goods before the priority date. Another example would be the use of a device made according to the SDS patent as part of a drill rig engaged in commercial drilling, but in conditions of secrecy, prior to the priority date. To make an article for ultimate [135] sale has, no doubt, a commercial aspect, but it does not amount to use of the product made and does not involve any de facto extension of the term of a patent claiming the product. The manufacturing of goods is not, in my opinion, commercial use of those goods.

Note

[9.790]

For a discussion of the burden of proof in cases where secret use is relied upon as a ground of revocation, see the discussion by Dowsett J in Grove Hill Pty Ltd v Great Western Corporation Pty Ltd (2002) 55 IPR 257 at 313–316.

Defences to secret use [9.800] Patents Act 1990 (Cth) s 9 (see [9.810]) gives examples of what is not secret use of an

invention in the patent area and so provides a number of possible defences against an allegation of secret use. [9.800]

425

Intellectual Property: Commentary and Materials

For what constitutes “reasonable trial or experiment” (Patents Act 1990 (Cth) s 9(a)), see Longworth v Emerton (1954) 82 CLR 539, Innovative Agriculture Products v Cranshaw (1996) 35 IPR 643 and Grove Hill Pty Ltd v Great Western Corp Pty Ltd (2002) 55 IPR 257. For a use to be for “reasonable trial and experiment” it must have been truly for the purpose of a trial, and it must also have been reasonably necessary for the trial to have been carried out. Additionally, trial must have been the only purpose of the use; any immediate commercial aspect to the use is inconsistent with a defence under s 9(a) being valid. See also [9.590]. For observations regarding s 9(b), see Azuko Pty Ltd v Old Digger Pty Ltd (2001) 52 IPR 75, [2001] FCA 1079 per Heerey J. Paragraph (e) was added to s 9 by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) and only applies to uses that occurred on or after 15 April 2013.

Patents Act 1990 (Cth) [9.810] Patents Act 1990 (Cth) s 9 9 Secret use For the purposes of this Act, the following acts are not to be taken to be secret use of an invention in the patent area: (a)

any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for the purpose of reasonable trial or experiment only;

(b)

any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, being use occurring solely in the course of a confidential disclosure of the invention by or on behalf of, or with the authority of, the patentee, nominated person, or predecessor in title;

(c)

any other use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for any purpose other than the purpose of trade or commerce;

(d)

any use of the invention by or on behalf of the Commonwealth, a State, or a Territory where the patentee or nominated person, or his or her predecessor in title to the invention, has disclosed the invention, so far as claimed, to the Commonwealth, State or Territory;

(e)

any use of the invention by or on behalf of, or with the authority of, the patentee or nominated person, or his or her predecessor in title to the invention, for any purpose, if a complete application is made for the invention within the prescribed period.

UTILITY [9.820] A patentable invention must be “useful” (Patents Act 1990 (Cth) s 18(c)). This term

refers to a requirement that the patent must actually produce the results which are promised, either expressly or by implication, on a fair reading of the specification. Lack of utility, as the objection is put, has long been a matter that can be raised in revocation proceedings (see now ss 18(c) and 138(3)(b)). Since 16 August 2004, as a result of the US Free Trade Agreement Implementation Act 2004 (Cth), it has also been available as a ground of opposition, and since 426 [9.810]

Requirements of Validity

CHAPTER 9

the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) it is available as a ground an examiner may rely on in examination or re-examination of a standard patent or an innovation patent. Until 2013, the meaning of “useful” in the context of Australian patent law was to be understood by reference only to the case law, but the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) inserted s 7A into the Patents Act 1990 (see [9.820]). The changes to the legislation in relation to inutility brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) apply to complete patent applications filed on or after 15 April 2013 and patents granted on them; standard patent applications filed before 15 April 2013 for which examination had not been requested before that date, and patents granted on them; innovation patents granted on or after 15 April 2013 and complete applications for them, regardless of their filing date; and innovation patents granted before 15 April 2013 for which there had been no request for examination, and which the Commissioner had not decided to examine, before that date. Section 7A(3) makes it clear that the requirement for a “specific, substantial and credible use” does not replace the meaning of “useful” that derives from the case law. Rather, it may be seen as providing a threshold requirement to be satisfied before any other consideration is given to the utility of a claimed invention. This requirement for a “specific, substantial and credible use” is the same as the criterion that is applied in the examination of patent applications in the United States, and in US courts. The Explanatory Memorandum to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) states that the United States courts interpret the three elements of the utility requirement as follows (references omitted): “specific” means a use specific to the subject matter claimed so as to “provide a well-defined and particular benefit to the public”; “substantial” means the claimed invention does not require further research to identify or reasonably confirm a “real world use”; “an application must show that an invention is useful to the public as disclosed in its current form, not that it prove useful at some future date after further research”; an asserted use will be “credible”“unless there is evidence that the invention is inoperative (ie does not operate to produce the results claimed by the patent application) or there is reason to doubt the objective truth of the statements in the specification”.

The date for assessing utility has been said to be at the date of the invention (Patent Gesellschaft AG v Saudi Livestock Transport and Trading Co (1996) 33 IPR 426 at 458), but it is not clear whether this means the priority date, the date on which the relevant complete patent application was filed, or some other date. The concept of utility in patent law is closely related to issues of sufficiency and construction discussed in [10.30]ff and [10.210]ff. The distinction between insufficiency and inutility was adverted to in Rescare v Anaesthetic Supplies, see [9.850] below.

Patents Act 1990 (Cth) [9.830] Patents Act 1990 (Cth) s 7A 7A Meaning of useful (1) For the purposes of this Act, an invention is taken not to be useful unless a specific, substantial and credible use for the invention (so far as claimed) is disclosed in the complete specification. [9.830]

427

Intellectual Property: Commentary and Materials

Patents Act 1990 (Cth) cont. (2) The disclosure in the complete specification must be sufficient for that specific, substantial and credible use to be appreciated by a person skilled in the relevant art. (3) Subsection (1) does not otherwise affect the meaning of the word useful in this Act.

In the Matter of Alsop’s Patent [9.840] In the Matter of Alsop’s Patent (1907) 24 RPC 733 High Court of Justice, Chancery Division (England and Wales) PARKER J: [752] The letters patent granted to JN Alsop in 1903 which are attacked in these proceedings are for a process only. That processes are good subject matter of letters patent was finally decided in 1842 in the case of Crane v Price (1842) 134 ER 239; 1 Web PC 393. … But a process to be patentable must be a process which leads to some result and the result arrived at must be useful, though it need not be an article at all; for example, a new process for chemically cleaning dirty linen would be good subject matter, but a process of treating material, of which no result at all could be predicated, would not be patentable. In considering the validity of a patent for a process, it is therefore material to ascertain precisely what the patentee claims to be the result of the process for which the patent has been granted; the real consideration which he gives for the grant is the disclosure of a process which produces a result, and not the disclosure of a process which may or may not produce any result at all. If the [753] patentee claims protection for a process for producing a result, and that result cannot be produced by the process, in my opinion the consideration fails. Similarly if the patentee claims for a process producing two results combined and only one of these results is in fact produced by the process, there is a partial failure of consideration, just as there is in the case of a patent containing one valid and one invalid claim; and such partial failure of consideration is sufficient to avoid the patent. “If” said Buller J in Turner v Winter (1787) 1 Web PC 82; 99 ER 1274 “the Patentee says that by one process he can produce three things and he fails in any one, the consideration of his merit, and for which the patent was granted, fails, and the Crown has been deceived in the grant”. An analogous principle applies to patents for improvement. Of course the patentee must in such a case state the nature of the improvement, or in other words, the result which he claims to have secured by his invention. If no such result is in fact secured by following the directions given in the specification there is a failure of consideration and the patent is void. Objections to patents on the grounds above referred to are sometimes treated as objections for want of utility, and when so treated the well-known rule is that the utility of an invention depends upon whether, by following the directions of the patentee, the result which the patentee professed to produce can in fact be produced: see Lindley LJ in Lane Fox v Kensington (1892) 9 RPC 413 at 417. Want of utility in this sense must however, in my opinion, be distinguished from want of utility in the sense of the invention being useless for any purpose whatever. In the case of an invention not serving any useful purpose at all, the patent would no doubt be void, but not entirely for the same reason. It would be probably void at common law on the ground that the king’s prerogative could not be properly exercised unless there were some consideration moving to the public, and the public could not be benefited by the disclosure of something absolutely useless. It would certainly be avoided as mischievous to the state and generally inconvenient within the meaning of the Statute of Monopolies. But it may well be that an invention, which is void because it does not produce the result, or one of the results claimed, may nevertheless be useful as producing other results. Further, there may be cases in which the result which the patentee claims to have produced can in fact be produced, but the patentee has gone on to detail the useful purposes to which such result can be applied, and that in fact 428 [9.840]

Requirements of Validity

CHAPTER 9

In the Matter of Alsop’s Patent cont. the result produced cannot be applied to one or more of such purpose. In such a case I do not think the patent is necessarily void, provided there are purposes for which the result is useful. If it be avoided it can only be because it contains a misrepresentation so material that it can be said the Crown has been deceived. The importance of drawing a distinction between what the patentee claims to have effected by the invention for which he claims protection, and a statement of the additional purposes to which the invention can be applied, is well illustrated by the case of Lyon v Goddard (1893) 10 RPC 121; 11 RPC 354 at 334 (RPC).

Rescare v Anaesthetic Supplies [9.850] Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119 Federal Court of Australia [The applicant was the registered proprietor of a standard patent for an invention entitled “device for treating snoring sickness” or obstructive sleep apnoea, and alleged infringement of each of claims 1, 3, 6, 7, 8, 9 and 11. The inventor was Professor Sullivan, Professor of Medicine at the University of Sydney. Obstructive sleep apnoea (OSA) is a syndrome associated with an extreme form of snoring in which the sufferer chokes on his or her tongue and soft palate repeatedly while asleep. The invention consisted of a combination of integers that permitted air at slightly above a normal atmospheric pressure to be introduced into the patient’s upper respiratory passage. In this case and in subsequent litigation, there was dispute about the precise form of the device, but broadly it consisted of a source of pressurised air, tubes and an attachment (either nasal tubes or a mask) to the patient’s nose.] GUMMOW J: [142] Utility I have referred already to the concept embodied in s 40 of insufficiency. The distinction between insufficiency and ambiguity on the one hand, and inutility on the other, is said to be that insufficiency occurs when the apparatus cannot be made, and inutility occurs when the apparatus can be made but, when made, does not work. However, as has been pointed out, the distinction is often less clear in practice: Blanco White, supra para 4-404. The result in this case is that there has been some overlapping in the submissions on these topics. It is also important to bear in mind two related propositions. The first is that a claim may have utility even though the promised advantage is not achieved in all cases and the second is that there may be infringement of an apparatus claim if the machine can be used in a manner which infringes even though it can also be used in a manner which does not infringe: Martin Engineering Co v Nicaro Holdings Pty Ltd (1991) AIPC 90-799 at 37,582-3, per Burchett J. Section 100(1) provides that a standard patent may be revoked either wholly or insofar as it relates to any claim of the complete specification on the ground that: [143] (h) that the invention, so far as claimed in any claim of the complete specification … is not useful; … The ground of inutility is not concerned with the question of whether, in the present case, the apparatus to be used by following the directions in the Patent would not be commercially viable; rather, the question is whether the invention as claimed does not attain the result promised for it by the patentee: Decor Corp Pty Ltd v Dart Industries Inc (1989) AIPC 90-549 at 38,829 per Lockhart J. A distinction is to be drawn between cases where the invention claimed is not useful unless an additional integer or integers be added (such claims being invalid) and those cases where qualifications and expedients necessary to make work the article which has been claimed can be, and on a proper [9.850]

429

Intellectual Property: Commentary and Materials

Rescare v Anaesthetic Supplies cont. construction of the claim are, left to the skilled reader to supply for himself; Welch Perrin Pty Ltd v Worrel supra at 601, 2, Blanco White, supra para 4-409. See also Washex Machinery Corp v Roy Burton Pty Ltd (1974) 49 ALJR 12 at 18-19. Thus, in the present case, whilst claim 1 and some of the dependent claims do not claim an apparatus including a blower (an absence relied upon by the respondent) this does not mean that there is a lack of utility. The need for a particular air source would be apparent to the skilled addressee. If it be necessary, resort to the body of the specification shows that the air supply in a preferred form consists of a high volume air pump and one particular proprietary product is described as having been found to be ideal (p 3, ll 16-20). The respondent also complains that claim 1 does not specify the appropriate weight, size or degree of comfort in the apparatus nor the appropriate means by which the nose piece is to be sealingly attached to the face of the patient in an airtight manner. However, it must borne in mind that it is not the task of the claims to teach the application of the invention; the task of the claims is to define the invention and mark out the area of the monopoly. Claims should not be construed in a way which the skilled addressee would appreciate would lead to unworkability. The Court should be reluctant to place a construction upon a claim so as to include embodiments which to the qualified reader would appear useless. A different result may obtain where the terms of a claim positively point to some useless construction, as in Cincinnati Grinders (Inc) v BSA Tools Ltd (1931) 48 RPC 33 at 73. Claim 1 and the dependent apparatus claims are not within this category. [His Honour considered a number of other allegations of inutility against the evidence and concluded that the allegations of inutility had not been made out.]

Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd [9.860] Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd (2010) 85 IPR 525; [2010] FCA 108 Federal Court of Australia BENNETT J: [116] One test of utility is whether the claimed invention fulfils the promises of the specification, in that it does what was intended and claimed by the patentee, and whether the end obtained is itself useful (Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1998) 194 CLR 171 at 187 for the first limb, Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC (2008) 77 IPR 449 at [144] for both limbs). MDS [the Respondent] contends that both these limbs must be satisfied for an invention to be useful. Inverness [the Applicant] contends that the only practical way to test utility is to determine whether the invention as claimed attains the result promised by the patentee, rather than to seek to assess general usefulness in a vacuum. [117] A principle has been expressed that all within the scope of a claim must be useful if the claim is not to fail for want of utility, so that a claim is bad if it covers something that will not produce the desired result, even if a skilled person would know which means to avoid it (WM Wrigley Jr Co v Cadbury Schweppes Pty Ltd (2006) 66 IPR 298 at [138] per Heerey J and authorities there cited). This was the test applied by the primary judge in H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 and the parties did not dispute this test in the appeal in that case (Lundbeck at [217]). However, this principle does not mean that a specification should be construed in a way that any sensible person would appreciate would lead to unworkability when by construction it could be given a more limited meaning (Welch Perrin and Co Pty Ltd v Worrell (1961) 106 CLR 588 at 602 per Menzies J). The claims should be construed as they would be by the person skilled in the art desirous of making use of the invention (Martin Engineering Co v Trison Holdings Pty Ltd (1989) 14 IPR 330 at 338 per Burchett J; see 430 [9.860]

Requirements of Validity

CHAPTER 9

Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd cont. also Austal Ships Pty Ltd v Stena Rederi Aktiebolag (2006) 66 IPR 420 at [227]-[239]). It has also been said that a claim does not need to specify a limitation that was common knowledge in the art for that limitation to apply in construing a claim to avoid want of utility (Austal Ships at [236] per Bennett J, citing Washex Machinery Corporation v Roy Burton & Co Pty Ltd (1974) 49 ALJR 12 at 18 per Stephen J). In Lundbeck (at [217]), Bennett J, with whom Middleton J agreed, affirmed the test as set out in Ranbaxy and Austal Ships. [118] The claims of the patents allow the reader to select which specific binding reagents to use in the device, although the specifications express preference for reagents such as highly specific antibodies and monoclonal antibodies. Where a claim omits a feature which, on a proper construction of the claim, is left for the reader to supply, the claim will not be invalid for want of utility if the feature is one that the skilled addressee could reasonably be expected to supply and the claimed invention is useful after the feature is supplied (Bodkin C, Patent Law in Australia (Lawbook Co, 2008) at [6080]; Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119 at 143 per Gummow J; appeal allowed but the Full Court did not consider utility). A similar approach should be adopted where a claim leaves a choice to the skilled reader to select features to include in the invention. In such circumstances, the fact that it is possible to make a purposeful selection of inappropriate features with the intention of making something useless does not imply that the claim lacks utility (Bodkin at [6070]; Martin Engineering Co v Trison Holdings Pty Ltd (1989) 14 IPR 330 at 338 per Burchett J).

[9.870]

Notes

It may be seen from the cases extracted above that there is some doubt about the position where a patent specification promises more than one result. Most recent authority is to the effect that a patent is invalid on the ground of inutility if not all of the results promised are provided by the invention as claimed: Ronneby Road Pty Ltd v ESCO Corporation [2016] FCA 588. What a patent specification promises is determined by construing the patent. The patent’s promise may be expressly set out, or it may be inferred from the description of the invention that is given. Some other cases in which the requirement of utility has been adjudicated, in addition to those mentioned under the heading “Utility” (at [9.820]ff) above, include Searle (GD) v Commissioner of Patents (1987) 8 IPR 376; Townsend Controls Pty Ltd v Gilead (1989) 16 IPR 469; Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 11 IPR 299; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 26 IPR 513 at 540; Wimmera Industrial Minerals Pty Ltd v RGC Mineral Sands Ltd (1996) 34 IPR 367; Pracdes Pty Ltd v Stanilite Electronics Pty Ltd (1995) 35 IPR 259; Nesbit Evans Group Australia Pty Ltd v Impro Ltd (1997) 39 IPR 56; Old Digger Pty Ltd v Azuko Pty Ltd (2000) 51 IPR 43; Abbott Laboratories v Corbridge Group Pty (2003) 57 IPR 432; WM Wrigley Jr Co v Cadbury Schweppes Pty Ltd (2006) 66 IPR 298; Austal Ships Pty Ltd v Stena Rederi Aktiebolag (2006) 66 IPR 420; Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC (2008) 77 IPR 449; Streetworx Pty Ltd v Artcraft Urban Group Pty Ltd (2014) 110 IPR 82, [2014] FCA 1366, appeal dismissed: Artcraft Urban Group Pty Ltd v Streetworx Pty Ltd [2016] FCAFC 29; Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd [2016] FCA 236.

[9.870]

431

CHAPTER 10 Specifications – The Internal Requirements [10.10]

FUNCTIONS OF THE SPECIFICATION .................................................................. 434 [10.20]

[10.30] [10.30]

Lockwood Security v Doric ..................................................... 434

SUFFICIENCY OF DESCRIPTION ........................................................................... 436 Full description and enablement .......................................................................... 436 [10.30]

[10.50]

[10.60] [10.70] [10.80]

[10.90]

Patents Act 1990 (Cth) ......................................................... 436

Full description .................................................................................... 436 Edison & Swan Electric Light Co v Holland .............................. 437 Stack v Brisbane City Council ................................................. 437 Kimberly-Clark v Arico ........................................................... 438

Enablement .......................................................................................... 438 [10.100] [10.110]

Raising the Bar Bill Explanatory Memorandum ........................ 439 Biogen Inc v Medeva Plc ........................................................ 440

[10.130] SECTION 41 AND MICRO-ORGANISM INVENTIONS ....................................... 441 [10.140] BEST METHOD OF PERFORMANCE ..................................................................... 442 [10.140] [10.150]

Firebelt v Brambles Australia .................................................. 442 Pfizer v Eli Lilly ...................................................................... 443

[10.170] CLAIMS ................................................................................................................... 445 [10.180]

Patents Act 1990 (Cth) ......................................................... 445

[10.190] DEFINING THE INVENTION – THE FUNCTION OF THE CLAIMS: S 40(2)(B) AND (C) ........................................................................................................................... 445 [10.200]

Electric & Musical Industries v Lissen ...................................... 445

[10.210] Clear – lack of ambiguity: s 40(3) ........................................................................ 446 [10.220] [10.240] [10.250]

[10.270] [10.300]

GlaxoSmithKline v Apotex ...................................................... Flexible Steel Lacing v Beltreco ............................................... Lundbeck v Alphapharm ........................................................ Succinct: Patents Act 1990 (Cth) s 40(3) ............................................................ [10.280] Manual of Practice and Procedure: Succinctness ...................... Support and fair basis: Patents Act 1990 (Cth) s 40(3) .....................................

446 447 449 450 450 451

[10.310] Fair basis ............................................................................................... 452 [10.320] [10.330]

Leonardis v Sartas ................................................................. 452 Lockwood Security v Doric ..................................................... 454

[10.340] Support for the claims ........................................................................ 456 [10.350]

MedImmune Ltd v Novartis Pharmaceuticals UK Ltd ................ 457

433

Intellectual Property: Commentary and Materials

FUNCTIONS OF THE SPECIFICATION [10.10] Because the consideration for the grant of a patent monopoly is the information

about the invention that is revealed by the applicant, the patent specification must include three parts. First, it must fully describe the nature of what has been invented; secondly, it must describe the best method known to the inventor of making or performing that which has been invented; and thirdly, having taught what has been invented and how to achieve that invention, it must set out clearly in the claims the bounds of the invention which the patentee seeks to reserve for his or her exclusive use. The claims must not seek to monopolise more than is described or taught. These requirements were originally demanded by the common law and are now found in the Patents Act 1990 (Cth) s 40. Failure to comply with any of these requirements is a ground for refusal of a standard patent application and for revocation of a patent. The requirements are sometimes referred to as the “internal requirements”, to distinguish them from grounds of invalidity that depend primarily on the state of published knowledge surrounding the invention. The internal requirements are known as “sufficiency” – referring to the sufficiency of the description of the invention or best method of its performance; clarity or ambiguity – having to do with clarity of the claims; and support (previously, “fair basis”) – being a matter of comparing the monopoly claimed with the invention described. Each of these requirements gives rise to a distinct ground of invalidity, and each is strictly distinct from the grounds of lack of novelty and lack of inventive step (obviousness). The amendments to the patents legislation made by the Intellectual Property Laws Amendment (Raising The Bar) Act 2012 (Cth) altered the requirements of s 40 somewhat by making the sufficiency requirement more stringent (see [10.30] – [10.160]) and by changing the way in which the support requirement is expressed (see [10.300] and following).

Lockwood Security v Doric [10.20] Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274; 62 IPR 461 High Court of Australia GLEESON CJ, MCHUGH, GUMMOW, HAYNE AND HEYDON JJ: [290] The construction of s 40(3): separate consideration of each ground of invalidity The language of the legislation suggests that it is wrong to employ reasoning relevant to one ground of invalidity in considering another. Section 18 compared with s 40. Section 18 of the Act is in Ch 2, headed “Patent rights, ownership and validity”. Section 18 sets out requirements which go to the nature and subject-matter of patents. In contrast, s 40 appears in Ch 3, which is headed “From application to acceptance”, and which deals with the filing, examination and acceptance of patent applications. Section 40 sets out requirements that are certainly important: in the specification, patentees give the public directions about how the advantages of the invention may be obtained after the patent expires, while in the claims, patentees warn their rivals what they must not do before the patent expires: Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 94-95 per Gummow J; CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 277 per Spender, Gummow and Heerey JJ. The requirements of s 40, however, unlike those of s 18, say nothing about the nature or subject-matter of patents, and go more to the form that specifications must take. Both the differences in the requirements which ss 18 and 40 impose, and their respective locations in the Act, suggest that s 18 issues have no relevance to s 40. So far as s 18 refers to “patentable 434 [10.10]

Specifications – The Internal Requirements

CHAPTER 10

Lockwood Security v Doric cont. inventions” and s 40 to “inventions”, that conclusion is also supported by the definition in Sched 1 of the Act of “invention” as including an “alleged invention”. Separation of matters going to and grounds of invalidity. That conclusion is also supported by the fact that the s 45(1) matters which an applicant can ask the Commissioner to conduct an examination into, the s 59 grounds on which a patent application may be opposed and the s 138(3) grounds for revoking a patent are separately stated in the paragraphs of each section. The distinctness of the grounds of invalidity. It is common in patent infringement litigation for invalidity to be alleged, and for more than one ground of invalidity to be relied on. Certain matters of fact and construction may be relevant to more than one issue. Thus common general knowledge is relevant not only to issues of construction by the skilled addressee, which underlie the infringement inquiry and interact [291] with issues of validity: Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 610 per Dixon CJ, Kitto and Windeyer JJ, but also to obviousness: Section 7(2) of the Act and Firebelt Pty Ltd v Brambles Australia Ltd (2002) 76 ALJR 816 at 821-823 [31]-[36] per Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ; 188 ALR 280 at 287-289. Other factual matters may be relevant to more than one ground of invalidity: Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd (1961) 180 CLR 98 at 111-112 per Windeyer J. The issues may “intersect and overlap”: Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 19 [34]. However, as Doric conceded in this Court, the grounds of invalidity themselves are, and must be kept, conceptually distinct. In particular, as Doric also conceded, a lack of fair basing is a distinct ground for revocation. Hence the “inventiveness” or “meritoriousness” of, or the technical contribution made by, the specification are issues to be examined if there is an objection under s 18(1)(b) of the Act for want of novelty or absence of an inventive step (ie obviousness). There is no reason to introduce them into the fair basing question. … [292] Section 40 grounds analysed. The distinctness of the grounds of invalidity can also be illustrated by comparing the fair basing objection with those most closely connected with it, namely the failure to describe the invention fully, and the failure to claim clearly and succinctly. Section 59(c) of the Act creates as grounds for opposition, and s 138(3)(f) creates as grounds for invalidity, non-compliance with s 40(2) or (3). They are commonly called “s 40 points”, and they do form a genus in that it is not necessary to look at common general knowledge at the priority date, except in construing the patent: Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 610 per Dixon CJ, Kitto and Windeyer JJ. But the genus contains several distinct grounds. Section 40(2) deals with the “complete specification”, that is, with a document which concludes with the claims defining the invention (s 40(2)(b)), and in which the material preceding the claims is commonly called the “body of the specification”, or the “specification” for short. In assessing whether a patent complies with the requirement of s 40(2)(a) that the complete specification must describe the invention fully, it is necessary to take into account the whole of the complete specification – both the body of the specification and the claims: Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 12-13 [14] and [16]. On the other hand, when assessing whether there is fair basing within the meaning of s 40(3), it is necessary to split the patent into the claims and the [293] body of the specification, in order to see whether the former are fairly based on the matter described in the latter: Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 12 [15]. These statutorily compelled differences in the mode of analysis point against any overlap in the provisions when considered as grounds of opposition or invalidity. [10.20]

435

Intellectual Property: Commentary and Materials

Lockwood Security v Doric cont. [The High Court also made a number of important observations concerning the requirement of “fair basis”, some of which are reproduced at [10.300].]

SUFFICIENCY OF DESCRIPTION Full description and enablement Patents Act 1990 (Cth) [10.30] Patents Act 1990 (Cth) s 40(1) and (2) 40 Specifications Requirements relating to provisional specifications (1) A provisional specification must disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art. (2) A complete specification must: (a) disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art; and (aa) disclose the best method known to the applicant of performing the invention; ….

[10.40] The requirements in s 40(1) and s 40(2(a), for a description that is “clear enough and

complete enough for the invention to be performed by a person skilled in the relevant art” may be referred to as a requirement for “enablement” of the invention by the description given in the specification. Before the Intellectual Property Laws Amendment (Raising The Bar) Act 2012 (Cth), the Patents Act 1990 (Cth) s 40(2)(a) required the complete specification to “describe the invention fully”, which may be termed a “full description” requirement. Section 40(1) simply required a provisional specification to “describe the invention”. The former sufficiency requirements continue to apply to patent applications and patents filed before 15 April 2013, except for standard patent applications for which examination had not been requested before 15 April 2013 (and patents granted on such applications) and innovation patents granted before 15 April 2013 for which no request for examination had been filed before that date and which the Commissioner had not, before that date, decided to examine. Otherwise, the amended form of s 40 applies. There has been little or no judicial consideration in Australia to date of the “enablement” requirement or of the distinction between the two forms of s 40. Below, the “full description” requirement is discussed, and then source material to the “enablement” requirement is considered. Full description [10.50] Under the “full description” requirement of the previous form of s 40, a specification

will contain a sufficient description if a person skilled in the relevant art, on reading that specification as a whole, and in the light of the general common knowledge of those skilled in the relevant art, can understand the nature of what has been invented and can produce 436 [10.30]

Specifications – The Internal Requirements

CHAPTER 10

something within each of the claims of the patent. The amount of detail to be provided to meet this requirement depends on the nature of the invention and the technical field to which it relates.

Edison & Swan Electric Light Co v Holland [10.60] Edison & Swan Electric Light Co v Holland (1889) 6 RPC 243 Court of Appeal LINDLEY LJ: … [280] On the one hand, the Patentee must make the nature of his invention, and how to perform it, clear and intelligible; on the other hand, it is not necessary for him to instruct persons wholly ignorant of the subject matter to which his invention relates, in all that they must know before they can understand what he is talking about. The Patentee is adding something to what was known before, and he does all that is necessary as regards the language he uses, if he makes the nature of his invention, and how to perform it, clear and intelligible to persons having a reasonably competent knowledge of what was known before on the subject to which his patent relates, and having reasonably competent skill in the practical mode of doing what was then known. In complying with the first condition, ie, in describing the nature of his invention, the Patentee does all that is necessary, if he makes the nature of his invention plain to persons having a reasonably competent knowledge of the subject, although from want of skill they could not themselves practically carry out the invention. In complying with the second condition ie, in describing in what manner the invention is to be performed, the Patentee does all that is necessary, if he makes it plain to persons having reasonable skill in doing such things as have to be done in order to work the patent, what they are to do in order to perform his invention. If, as may happen, they are to do something the like of which has never been done before, he must tell them how to do it, if a reasonably competent workman would not himself see how to do it on reading the Specification, or on having it read to him. The principle to be applied to the language used to comply with the two conditions is the same for both; but one class of persons may understand only one part of the Specification and another class only the other, and yet the patent may be valid. In a well-drawn Specification, the two conditions that have to be complied with are kept distinct; but in many Specifications this course is not pursued. The nature of the invention and the manner of performing it are often described together.

Stack v Brisbane City Council [10.70] Stack v Brisbane City Council (1999) 47 IPR 525 Federal Court of Australia COOPER J: [548] The patentee is not required to describe in detail how the invention is performed. He or she is entitled to assume that the addressee is a person normally skilled in the art and possessed of the common general knowledge pertaining to that art. In Henriksen v Tallon Limited [1965] RPC 434 (HL), Lord Reid said (at 441): The patentee is representing to the Crown in seeking the patent and telling the skilled addressee after its publication that if the skilled addressee follows his directions he will produce an instrument that is useful at least in the sense that it will work. He is entitled within fairly wide limits to leave it to the addressee to choose appropriate material from a class which he specifies if he makes it plain that the choice is left to the addressee. … Further, errors or omissions will not automatically render a patent void for insufficiency. In No-Fume Ld v Frank Pitchford & Co Ld (1935) 52 RPC 231 (CA), Romer LJ said (at 243): … The test to be applied for the purpose of ascertaining whether a man skilled in the art can readily correct the mistakes or readily supply the omissions, has been stated to be this: Can he [10.70]

437

Intellectual Property: Commentary and Materials

Stack v Brisbane City Council cont. rectify the mistakes and supply the omissions without the exercise of any inventive faculty? If he can, then the description of the specification is sufficient. If he cannot, the patent will be void for insufficiency. The effect of the authorities was summarised by the English Court of Appeal in Valensi v British Radio Corporation [1973] RPC 337 at 377 in a joint judgment of the Court: We think that the effect of these cases as a whole is to show that the hypothetical addressee is not a person of exceptional skill and knowledge, that he is not to be expected to exercise any invention nor any prolonged research, inquiry or experiment. He must, however, be prepared to display a reasonable degree of skill and common knowledge of the art in making trials and to correct obvious errors in the specification if a means of correcting them can readily be found.

Kimberly-Clark v Arico [10.80] Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 High Court of Australia [16] Section 25(2)(h) of the Patents and Designs Act 1907 (UK) (“the 1907 Act”), as amended by s 3 of the Patents and Designs Act 1932 (UK), made it a ground of revocation that the complete specification did not “sufficiently and fairly describe and ascertain the nature of the invention and the manner in which the invention [was] to be performed”. The resemblance to s 40(2)(a) of the 1990 Act will be apparent. Speaking of the 1907 Act in No-Fume Ltd v Frank Pitchford & Co Ltd (1935) 52 RPC 231 at 243, Romer LJ repeated par (h) of s 25(2) and continued: [I]n other words, [it is essential] that the patentee should disclose his invention sufficiently to enable those who are skilled in the relevant art to utilise the invention after the patentee’s monopoly has come to an end. Such disclosure is, indeed, the consideration that the patentee gives for the grant to him of a monopoly during the period that the patent would run. … It is not necessary that he should describe in his specification the manner in which the invention is to be performed, with that wealth of detail with which the specification of the manufacturer of [17] something is usually put before the workman who is engaged to manufacture it. The question is, will the disclosure enable the addressee of the specification to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty? (Blanco White, Patents for Inventions, 5th ed (1983), § 4-502).

Enablement [10.90]

Note

The observation by the High Court in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 (see [10.80]) that a specification will be sufficient if it enables “the addressee of the specification to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty” has been interpreted to mean that a specification only needs to enable the skilled addressee to produce just a single example of the invention as claimed, as opposed to everything covered by 438 [10.80]

Specifications – The Internal Requirements

CHAPTER 10

the claims. This interpretation was regarded as problematic by the Federal Government, and as a result the current form of s 40 was introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth).

Raising the Bar Bill Explanatory Memorandum [10.100] Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) Explanatory Memorandum, pp 46-47 (footnotes omitted). Item 8: Requirement to describe the invention fully [s 40] This item amends paragraph 40(2)(a) by imposing the requirement that a patent specification must disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art. This is intended to align the disclosure requirement with that applying in other jurisdictions with the effect that sufficient information must be provided to enable the whole width of the claimed invention to be performed by the skilled person without undue burden, or the need for further invention. This more clearly reflects a fundamental principle of the patent system: in exchange for the exclusive rights given to the patentee, the patentee must share with the public the information necessary to make and use the invention. An application for a standard patent must be accompanied by a complete specification, which fully describes the invention for which patent protection is sought - s 40(2)(a). There are two aspects to this requirement: • the specification must make the nature of the invention plain; and • the specification must make it plain how to make or perform the invention. The person reading the specification is assumed to have reasonably competent knowledge of and skill in the relevant technical field. Recent case law has clarified the extent of the current description requirement. It is met if the applicant discloses enough to enable the person reading the specification to produce something within each claim without new inventions or additions or prolonged study of matters presenting initial difficulty. Despite the fact that multiple examples or embodiments of the invention may be claimed, enabling only one is sufficient. There are two problems with this: • a patentee may gain protection over something which they have not sufficiently disclosed: the monopoly extends beyond the knowledge that the patentee has shared with the public; and • other innovators do not have the information necessary to allow them to improve on embodiments that have not been disclosed: this hinders follow-on innovation and denies to the public the benefits of subsequent improvements on the invention. An alternative to the existing Australian description requirement is the more stringent requirement that the skilled person reading the specification must be able to perform the invention across the whole width of the claims, not merely in relation to one among other embodiments within their scope. This requirement is consistent with the principle that the description accords with the scope of the monopoly granted. The item is intended to modify the wording of paragraph 40(2)(a) of the Act so as to require enablement across the full width of the claims, while adopting language that is consistent with that used in other jurisdictions. The wording in the amendment is similar to s 14(3) of the UK patents legislation, which has been interpreted as imposing this requirement. The wording is also similar to art 83 of the European Patent Convention, which has been interpreted with similar effect. The intention is that paragraph 40(2)(a) be given, as close as is practicable, the same effect as the corresponding provisions of UK legislation and the European Patent Convention. [10.100]

439

Intellectual Property: Commentary and Materials

Raising the Bar Bill Explanatory Memorandum cont. A specification that provides a single example of the invention may satisfy the requirements, but only where the skilled person can extend the teaching of the specification to produce the invention across the full width of the claims, without undue burden, or the need for further invention.

Biogen Inc v Medeva Plc [10.110] Biogen Inc v Medeva Plc [1997] RPC 1 (House of Lords) (footnote omitted) [In the extract below, Lord Hoffmann refers, among other statutory provisions, to s 14 of the Patents Act 1977 (UK), paragraph (3) of which reads “The specification of an application shall disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art.” This wording is virtually identical to the present form of s 40(2)(a) in Australia: see [10.30]. LORD HOFFMANN (Lords Goff, Browne-Wilkinson, Mustill and Slynn agreeing) [47] The need for an enabling disclosure to satisfy the requirements of support under section 5(2)(a), valid application under section 14 and sufficiency under section 72(1)(c) has, I think, been plain and undisputed since the decision in [48] Asahi Kasei Kogyo KK’s Application [1991] RPC 485. What has been less clear is what the concept of an enabling disclosure means. Part of the difficulty has been caused by a misinterpretation of what the Technical Board of Appeal of the E.P.O. said in Genentech I/Polypeptide expression (T 292/85) [1989] O.J. E.P.O. 275. This was a patent for a plasmid suitable for transforming a bacterial host which included an expression control sequence or ″regulon″ which could enable the expression of foreign DNA as a recoverable polypeptide. The Examining Division was willing to grant a patent only in respect of the plasmids, bacteria and polypeptides known at the date of application. The Technical Board of Appeal allowed the appeal, saying that the Examining Division had taken too narrow a view of the requirement of enabling disclosure: What is also important in the present case is the irrelevancy of the particular choice of a variant within the functional terms “bacteria”, “regulon” or “plasmid”. It is not just that some result within the range of polypeptides is obtained in each case but it is the same polypeptide which is expressed, independent of the choice of these means…. Unless variants of components are also embraced in the claims, which are, now or later on, equally suitable to achieve the same effect in a manner which could not have been envisaged without the invention, the protection provided by the patent would be ineffectual … The character of the invention this time is one of general methodology which is fully applicable with any starting material, and is, as it was already stated, also independent from the known, trivial, or inventive character of the end-products. In other words, the applicants had invented a general principle for enabling plasmids to control the expression of polypeptides in bacteria and there was no reason to believe that it would not work equally well with any plasmid, bacterium or polypeptide. The patent was therefore granted in general terms. In Mölnlycke AB v Procter & Gamble Ltd [1992] FSR 549, however, Morritt J interpreted this decision to mean that it was a general rule of European patent law that an invention was sufficiently disclosed if the skilled man could make a single embodiment. This interpretation was followed by Aldous J in Chiron Corporation v Organon Teknika Ltd [1994] FSR 202, although I think I detect in his judgment some surprise that the E.P.O. should have adopted such a mechanistic and impoverished approach to the concept of enabling disclosure. As we shall see, he applied the same rule in the present case. In fact the Board in Genentech I/Polypeptide expression was doing no more than apply a principle of patent law which has long been established in the United Kingdom, namely, that the specification 440 [10.110]

Specifications – The Internal Requirements

CHAPTER 10

Biogen Inc v Medeva Plc cont. must enable the invention to be performed to the full extent of the monopoly claimed. If the invention discloses a principle capable of general application, the claims may be in correspondingly general terms. The patentee need not show that he has proved its application in every individual instance. On the other hand, if the claims include a number of discrete methods or products, the patentee must enable the invention to be performed in respect of each of them.

[10.120]

Note

It may be expected that the current form of s 40(2) will be interpreted by the courts in Australia in accordance with the dicta of Lord Hoffmann. Patent Office practice conforms to this statement of the law also: see IP Australia, Patent Manual of Practice & Procedure, Vol 2 (National), para 2.11.3A, available at http://manuals.ipaustralia.gov.au/patents/Patent_ Examiners_Manual.htm.

SECTION 41 AND MICRO-ORGANISM INVENTIONS [10.130] It is often difficult and sometimes impossible to provide accurate and complete descriptions of micro-organisms, which means that it would be difficult or impossible to comply with the requirements of the Patents Act 1990 (Cth) s 40(2)(a) for inventions that are (or involve the use of) micro-organisms by using conventional descriptive techniques. However, biotechnology involving micro-organisms is an important area of technological research and development and there are special provisions applying to micro-organism inventions: these are now ss 41 and 42. Previously, these provisions were s 40(3) – (7) of the Patents Act 1952 (Cth) as amended. The provisions were introduced in 1984 to give effect to ways of allowing sufficiency of description when the claimed invention is a micro-organism, or involves the use, modification or cultivation of a micro-organism. Prior to the introduction of the provisions, written descriptions of micro-organisms were required. In many instances, these proved ineffective or useless. Sections 41 and 42 of the Patents Act 1990 (Cth) allow the operation of the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure (Budapest Treaty) (1977), by which an international deposit system of micro-organisms is established. An inventor or applicant may deposit a sample of a micro-organism with a recognised depository institution under the treaty and will receive an international deposit receipt. If this is done, the full description requirement in respect of the deposited micro-organism is deemed to be met, provided that the deposit meets the “deposit requirements” set out in Patents Act 1990 (Cth) s 6 and Patents Regulations 1991 (Cth) reg 1.5 for the duration of the patent. The deposit requirements include that the specification, at least from its publication date, included the name of the institution where the deposit was made and the identification number given to the deposit by the institution. See also Part 2 of Chapter 3 of the Patents Regulations 1991 (Cth) for additional provisions concerned with deposited micro-organisms, and Australian Patent Office Manual of Practice and Procedure Volume 2 (National) at 2.7.

[10.130]

441

Intellectual Property: Commentary and Materials

BEST METHOD OF PERFORMANCE Firebelt v Brambles Australia [10.140] Firebelt Pty Ltd v Brambles Australia Ltd (2000) 51 IPR 531; [2000] FCA 1689 Federal Court of Australia, Full Court SPENDER, DRUMMOND AND MANSFIELD JJ: [543] Non-disclosure of best method of performing the invention Section 40(2)(a) provides that a complete specification must: describe the invention fully, including the best method known to the applicant of performing the invention. Of this requirement, his Honour’s findings were particularly terse: There is no indication of which of the contemplated lid-opening devices was considered to be the best at the relevant time, nor of the preferred timing. The specification indicates that different methods had been considered and that, at least in some embodiments, timing was thought to be of importance in determining the quality of outcome, that is the degree of maintenance of separation of waste. In view of the importance of this matter, it cannot be said, in the absence of such information, that the best method of performing the invention as a whole has been disclosed. (Emphasis added.) This holding by the primary judge involves, in our respectful view, a misunderstanding of what is required by s 40(2)(a) of the Act concerning a description of the best method known to the applicant of performing the invention. In Vidal Dyes Syndicate Ltd v Levenstein Ltd (1912) 29 RPC 245 in the Court of Appeal, Fletcher Moulton LJ said at 269: It is settled law that a patentee must act towards the public uberrima fide, and must give the best information in his power as to how to carry out the invention. He is [544] therefore bound to tell the public all the steps that can advantageously be taken in carrying out the invention. But he is not limited to claiming only the best way of carrying it out. This requirement is to ensure good faith on the part of the patentee, and to protect the public against a patentee who deliberately keeps to himself something novel and not previously published which he knows of or has found out gives the best results, with a view to getting the benefit of monopoly without giving to the public the corresponding consideration of knowledge of the best method of performing the invention. Blanco White in Patents for Inventions (4th ed) at para 4-502 notes: To be proper and sufficient, the complete specification as a whole (that is, read together with the claims [Evans v Hoskins & Sewell (1907) 24 RPC 517 at 522 (CA)], and in the light of the drawings, if any [Bloxam v Elsee (1827) 1 C & P 558 at 564]) must in the first place contain such instructions as will enable all [Knight v Argylls (1913) 30 RPC 321 at 348 (CA)] those to whom the specification is addressed to produce something within each claim “by following the directions of the specification, without any new inventions or additions of their own” [R v Arkwright (1785) 1 WPC 64 at 66; Otto v Linford (1882) 46 LT 35 at 41 (CA); No-Fume v Pitchford (1935) 52 RPC 231 at 243 (CA)] and without “prolonged study of matters which present some initial difficulty”. [Valensi v BRC [1972] FSR 273 at 311 (CA)]. Of the objection based on the provisions of the UK legislation, Blanco White says at para 4-516: There would seem to be no obligation under this provision to include information not strictly relating to “the invention”, however necessary to anyone needing to work the invention. The learned author continues: Thus it would seem unnecessary to disclose how starting materials for a process are to be obtained [American Cyanamid’s (Dann’s) Patent [1971] RPC 425, ante, § 4-507]; whilst it has been held that the patentee of a new article need not disclose the best method of making it, 442 [10.140]

Specifications – The Internal Requirements

CHAPTER 10

Firebelt v Brambles Australia cont. “performing” here going only to the design of the article and not to techniques for manufacturing it. [Illinois Tool Works v Autobars [1972] FSR 67 at 71-72. But cf ante, §4-502] It is relevant in this case to recognise that the statutory obligation is an obligation to disclose the best method of performing the invention known to the applicant. The invention claimed is not of a particular type of lid-opening device operating at any particular time. There is therefore no statutory obligation to describe which of the contemplated lid-opening devices was considered to be the best, nor the preferred timing, contrary to his Honour’s understanding of the section. The requirement of s 40(2) of the Act is that the patentee is required to give the best information in his power as to how to carry out the invention. That requirement is ordinarily satisfied by including in the specification a detailed description of one or more preferred embodiments of the invention offered, with reference to drawings of specific mechanisms or structures or examples of specific process conditions or chemical formulations, depending on the field of the invention and the nature of the instruction to be conveyed.

Pfizer v Eli Lilly [10.150] Pfizer Overseas Pharmaceuticals v Eli Lilly & Co (2005) 68 IPR 1 Federal Court of Australia, Full Court FRENCH AND LINDGREN JJ, with whom CRENNAN J agreed on this issue: [77] Disclosure of the “best method known to the applicant of performing the invention” (a subjective notion) is a part of describing the invention “fully”: s 40(2)(a) provides that a complete specification must “describe the invention fully, including the best method known to the applicant of performing the invention” (our emphasis). The best method known to the applicant need not be identified as such in the specification: Eli Lilly & Co v Pfizer Overseas Pharmaceuticals (2005) 218 ALR 408 at [206], approving C Van Der Lely NV v Ruston’s Engineering Co Ltd [1993] RPC 45 at 56. The requirement that an applicant disclose the best method known to the applicant of performing the invention safeguards against an applicant’s holding back with a view to getting the benefit of the patent monopoly without conferring on the public the full consideration for the grant of that monopoly: cf Firebelt Pty Ltd v Brambles Australia Ltd (2002) 188 ALR 280 at 544. The date as at which the best method known to the applicant is to be identified is conceptually distinct from the date by which the specification’s full description of the invention must include a disclosure of it. The parties correctly proceeded on the basis that it is the best method known to the applicant as at the filing date that must be disclosed. In Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205, Gummow J expressed the opinion (at 223) that this was so under s 40 of the 1952 Act, and s 40(2)(a) is to the same effect as s 40(1)(a) of the 1952 Act. The facts of Rescare call for careful consideration. In that case, a “one tube” apparatus provided a better method than a “two tube” apparatus for performing the invention (a device for treating “snoring sickness” or “obstructive sleep apnoea”). The one tube apparatus was not known to the applicant on the international filing date, 23 April 1982. The respondent contended that the relevant date was the date of publication, 4 November 1982, and that the patentee knew of the one tube method by that date but failed to disclose it. Gummow J found that it had not been established that by the date of publication, the best method known to the applicant was the one tube method. This finding made it unnecessary for his Honour to determine the question of law whether it was the best method known to the applicant as at the earlier international filing date, 23 April 1982, which was required to be disclosed. His Honour went on, however, to express his opinion on the point. [10.150]

443

Intellectual Property: Commentary and Materials

Pfizer v Eli Lilly cont. Gummow J traced the history of the requirement of disclosure of best method, and concluded (at 223): sections 67 and 68 of the 1952 Act provided for a term of a standard patent of 16 years, reckoned from the date of the patent, this being the date on which the complete specification was lodged. The adequacy of the disclosure should be judged by reference to the time from which dated the monopoly granted the applicant in exchange for the disclosure. In the present case that is the international filing date, 23 April 1982. This is the date from which the term of the patent runs. [78] In Rescare his Honour was concerned with the date as at which the best method known to the applicant for the patent is to be identified. This is shown by the genesis of the issue described above: was the specification deficient for disclosing only the two tube method and not the better one tube method? Once it is accepted, however, that an applicant for a patent must disclose the best method known to the applicant at the date of filing, it is also not difficult to think, as Gummow J appears to have done and as we do, that disclosure must be made in the complete specification when it is filed. Lest there be any doubt, we would make it clear that s 40(2)(a) requires an applicant for a patent to disclose in the complete specification at the time of filing it the best method of performing it known to the applicant at that time: cf C Van Der Lely NV v Ruston’s Engineering Co Ltd [1993] RPC 45 at 56 and Rediffusion Simulation Ltd v Link-Miles Ltd [1993] FSR 369 at 405, which were decided on ss 4(3)(b) and 32(1)(h) of the Patents Act 1949 (UK)

[10.160]

Note

It is not necessary for a specification to identify what embodiment of the invention is the “best”, so long as the best method known to the applicant at the filing date is in fact disclosed: Aktiebolaget Hässle v Alphapharm Pty Ltd (1999) 44 IPR 593; [1999] AIPC 91-474; [1999] FCA 628 at [209]. The requirement is that a best method of performance must be disclosed in the specification, not that the patentee has actually used it: New England Biolabs, Inc v H Hoffmann-La Roche AG (2005) 63 IPR 524; [2004] FCA 1651 at [33] per Emmett J; Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27 at [129]. Failure of a patentee to disclose a “best method” of which it had knowledge at the filing date renders the patent liable to be held invalid: Photocure ASA v Queen’s University of Kingston (2005) 64 IPR 314; 216 ALR 41 at [116], but this probably strictly only applies to cases to which the amendments made to the Patents Act 1990 (Cth) by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) are not applicable. The reason is that for such cases dicta of French and Lindgren JJ in Pfizer Overseas Pharmaceuticals v Eli Lilly & Co (2005) 68 IPR 1 imply that a failure to disclose the best method at the filing date is, in principle, capable of being remedied by amendment at least up until the date of grant. That possibility has probably been closed off for other cases by an amendment made to s 102 by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth), which now renders unallowable any amendment which would result in the specification disclosing matter that extends beyond that disclosed in the specification as filed together with certain other related documents. The Explanatory Memorandum to the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) states that “where a specification did not meet the full description requirement (noting that this requirement is being strengthened by item 8), the applicant would not be able 444 [10.160]

Specifications – The Internal Requirements

CHAPTER 10

to expand their disclosure: rather they would have to reduce the scope of the monopoly sought to accord with what they had originally disclosed” (see Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth), Explanatory Memorandum, pp 60-61).

CLAIMS [10.170] The requirements in the Patents Act 1990 (Cth) s 40(2)(b) and (c), (3) and (4) relate

to the claims.

Patents Act 1990 (Cth) [10.180] Patents Act 1990 (Cth) s 40(2) and (3) 40 Specifications …. (2) A complete specification must: …. (b) where it relates to an application for a standard patent - end with a claim or claims defining the invention; and (c) where it relates to an application for an innovation patent - end with at least one and no more than 5 claims defining the invention. (3) The claim or claims must be clear and succinct and supported by matter disclosed in the specification. (3A) The claim or claims must not rely on references to descriptions or drawings unless absolutely necessary to define the invention. (4) The claim or claims must relate to one invention only.

DEFINING THE INVENTION – THE FUNCTION OF THE CLAIMS: S 40(2)(B) AND (C) [10.190] While the specification as a whole must describe the invention, under the Patents Act

1990 (Cth) s 40(2)(b) and (c) the claims must define the invention. It appears that the purpose of s 40(2)(b) and (c) is simply to spell out what the function of the claims is, rather than to set out a ground on which the validity of a patent may be challenged which is separate from that set out in s 40(3).

Electric & Musical Industries v Lissen [10.200] Electric & Musical Industries Ltd v Lissen Ltd (1938) 56 RPC 23 House of Lords LORD RUSSELL OF KILLOWEN: [39] … The function of the claims is to define clearly and with precision the monopoly claimed so that others may know the exact boundaries of the area within which they will be trespassers. Their primary object is to limit and not to extend the monopoly. What is not claimed is disclaimed. The claims must undoubtedly be read as part of an entire document, and not as a separate document; but the forbidden field must be found in the language of the claims and not elsewhere. It is not permissible, in my opinion, by reference to some language used in an earlier part of the specification to change a claim which by its own language is a claim for one subject matter [10.200]

445

Intellectual Property: Commentary and Materials

Electric & Musical Industries v Lissen cont. into a claim for another and different subject matter, which is what you do when you alter the boundaries of the forbidden territory. A patentee who describes an invention in the body of a specification obtains no monopoly unless it is claimed in the claim. As Lord Cairns said there is no such thing as infringement of the equity of a patent ….

Clear – lack of ambiguity: s 40(3) [10.210] Under the Patents Act 1990 (Cth) s 40(3) one requirement of the claims is that they

be “clear”. This implies a lack of ambiguity or obscurity. An ambiguity or obscurity in a claim incapable of resolution by a skilled addressee by the application of common sense and common knowledge to what the specification as a whole describes will invalidate the claim. However, cases where an irresolvable ambiguity has been found to exist are relatively uncommon.

GlaxoSmithKline v Apotex [10.220] GlaxoSmithKline Consumer Healthcare Investments (Ireland) (No. 2) Limited v Apotex Pty Ltd [2016] FCA 608 Federal Court of Australia BEACH J [721] A valid claim is required to define with sufficient certainty the scope of the monopoly being claimed (s 40(3)). Given that a patent is a public instrument, it must define the claimed monopoly with sufficient precision and in such a way that it is not reasonably capable of being misunderstood. Members of the public must be able to know the “exact boundaries of the area within which they will be trespassers”: Electric & Musical Industries Ld v Lissen Ltd (1939) 56 RPC 23 at 39 per Lord Russell of Killowen. [722] Now lack of precise definition will not be fatal to the validity of a claim as long as it provides a workable standard suitable to the intended use. But as stated in Kauzal v Lee (1936) 58 CLR 670 at 685 per Dixon and McTiernan JJ: [v]agueness of description, want of particularity and evident indistinctiveness of thought may be the source of so much uncertainty as to the scope of the monopoly that the claim fails to fulfil the requirement of stating with definiteness to what the patentee is exclusively entitled. [723] A claim is clear if either there is no ambiguity therein or the ambiguity can be resolved by properly construing the claim applying the principles that I have set out earlier. [724] But I accept the proposition that a claim is bad if no reasonably certain construction can be given to it or it is fairly and equally open to diverse meanings. I also accept that a court is not bound to find a meaning for a claim nor to approach a claim with the conviction that its language is capable of a reasonable construction when carefully examined. A claim may be bad for uncertainty, even though a court could find its true meaning, if it is so obscure that its construction remains a matter of doubt.

[10.230] The questions “Is this claim clear?” and “Is this claim ambiguous?” raise issues of construction of the claims and of the specification as a whole. Such issues arise most naturally in the context of s 40(3) and in the closely related context of claim infringement, but, to some degree at least, determination of compliance with any of the requirements of Patents Act 1990 (Cth) s 40 requires the meaning and scope of the specification as a whole to be properly understood. See also [11.10]–[11.90]. Authorities concerned with the construction of claims 446 [10.210]

Specifications – The Internal Requirements

CHAPTER 10

were summarised by Sheppard J in Decor Corp Pty Ltd v Dart Industries Inc (1988) 13 IPR 385 at 400, in a passage that has been cited frequently since. In other cases since the Decor case, judges have presented alternative statements of the relevant principles.

Flexible Steel Lacing v Beltreco [10.240] Flexible Steel Lacing Co v Beltreco Ltd (2000) 49 IPR 331 Federal Court of Australia HELY J: [347] When determining the nature and extent of the monopoly claimed, the specification must be read as a whole. But as a whole it is made up of several parts, and those parts have different functions: Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 610, Decor Corp Pty Ltd v Dart Industries Inc (1988) 13 IPR 385 at 391, 398. The claim, cast in precise language, marks out the legal limits of the monopoly granted by the patent. What is not claimed is disclaimed: Walker v Alemite Corp (1933) 49 CLR 643 at 656, Electric & Musical Industries Ltd v Lissen Ltd (1939) 56 RPC 23 at 35 and 39. The specification describes how to carry out the process claimed and the best method known to the patentee of doing that. Hence, although the claims are construed in the context of the specification as a whole, it is not legitimate to narrow or expand the boundaries of monopoly as fixed by the words of a claim, by adding to those words glosses drawn from other parts of the specification: Welch Perrin at 610, Decor at 391, 398, Braas GmbH v Humes Ltd (1993) 26 IPR 273 at 284. If a claim is clear and unambiguous, it is not to be varied, qualified or made obscure by statements found in other parts of the document: Welch Perrin at 610, Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 at 478-479, Electric & Musical Industries at 41, Rosedale Associated Manufacturers Ltd v Carlton Tyre Saving Co Ltd [1960] RPC 59 at 69, Cooper Industries Inc v Metal Manufactures Ltd (1994) 29 IPR 106 at 113, Lantech Inc v First Green Park Pty Ltd (1995) 31 IPR 327 at 333. It is legitimate, however, to refer to the rest of the specification to explain the background to the claims, to ascertain the meaning of technical terms and resolve ambiguities in the construction of the claim. Where the language of the claim is “obscure or doubtful” (Martin v Scribal Pty Ltd (1954) 92 CLR 17 at 97 per Taylor J) the doubt was sometimes resolved by referring to words in the body of the document to explain it: see Welch Perrin at 610-611; Electric & Musical Industries at 41-42, Interlego at 478-479, Decor at 400, Melbourne v Terry Fluid Controls Pty Ltd (1994) 28 IPR 302 at 308, Freeman v TJ & FL Pohlner Pty Ltd (1994-1995) 30 IPR 377 at 383-384, Sartas No 1 Pty Ltd v Koukourou & Partners Pty Ltd (1994-1995) 30 IPR 479 at 486. In Decor at 410, Sheppard J rejected the notion that the claims are first to be construed without reference to the body of the specification, and it is only if [348] ambiguity is exposed by that process that reference to the body of the patent is permissible. In his Honour’s view, that approach ignores the “fundamental rule of construction” that the specification must be read as a whole, and the modern approach to interpretation, which requires that the context be considered in the first instance, and not merely at some later stage when ambiguity might be thought to arise. In addition, Sheppard J enunciates that “if there is disclosed in the specification an intention on the part of the draftsman that words used elsewhere are to have a particular meaning, that meaning must be given those words because the draftsman has used his own dictionary” (Sheppard J at 410-411). …. [349] Other principles of construction which may be of assistance in the resolution of the present matter include: • A patent specification should be given a purposive construction rather than a purely literal one: Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183, per Diplock LJ at 243, cited in various Australian cases including Decor at 400 – Rule (6); although it is noted by Gummow J in Nicaro [10.240]

447

Intellectual Property: Commentary and Materials

Flexible Steel Lacing v Beltreco cont.

•

•

•

•

•

•

•

Holdings Pty Ltd v Martin Engineering Co (1989-1990) 16 IPR 545 at 560-561, that a purposive approach was adopted in the pre-Catnic decision of Commonwealth Industrial Gases Ltd v MWA Holdings Pty Ltd (1970) 44 ALJR 385 at 388. The hypothetical addressee of the patent specification is the non-inventive person skilled in the art before the priority date (Welch Perrin at 610, Populin v HB Nominees Pty Ltd (1982) 41 ALR 471 at 476, Fisher & Paykel Healthcare Pty Ltd v Avion Engineering Pty Ltd (1991) 103 ALR 239 at 254, 260, Decor at 397, Stanway Oyster Cylinders Pty Ltd v Marks (1996) 66 FCR 577 at 582-583). The words used in a specification are to be given the meaning which the hypothetical addressee would attach to them, both in the light of his own general knowledge and in the light of what is disclosed in the body of the specification: Decor at 391 per Lockhart J. There is a fine line between, on the one hand, reading down the words of a patent claim to reflect how a person skilled in the art would understand it in a practical and commonsense way, and, on the other hand, impermissibly limiting the clear words of a claim because a reader skilled in the art would be likely to apply those wide words only in a limited range of all the situations they describe: Stanway Oyster Cylinders at 585 per Drummond J. It is permissible for an invention to be described in a way which involves matters of degree. Lack of precise definition in claims is not fatal to their validity, so long as they provide a workable standard suitable to the intended use: Stanway Oyster Cylinders at 585; Minnesota Mining at 274. The consideration is whether, on any reasonable view, the claim has meaning (Elconnex Pty Ltd v Gerard Industries Pty Ltd (1991) 32 FCR 491 at 512-513, Tye-Sil Corp Ltd v Diversified Products Corp (1991) 20 IPR 574 at 585). In determining this, the expressions in question must be understood in a practical, commonsense manner (Nesbit Evans Group Australia Pty Ltd v Impro Ltd (1997) 39 IPR 56 at 95, Martin Engineering Co v Trison Holdings Pty Ltd (1989) 14 IPR 330 at 338) [350]. Absurd constructions should be avoided (Stanway Oyster Cylinders at 582-583) and mere technicalities should not defeat the grant of protection: Tye-Sil at 585. As a general rule, the terms of a specification should be accorded their ordinary English meaning: Electric & Musical Industries at 41, Elconnex (1991) 32 FCR 491 at 512-513, Interlego at 478, Minnesota Mining at 270. Evidence can be given by experts on the meaning which those skilled in the art would give to technical or scientific terms and phrases and on unusual or special meanings given by such persons to words which might otherwise bear their ordinary meaning: Sartas No 1 v Koukourou at 485-486, NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1993) 26 IPR 513 at 531-532, Leonardis v Sartas No 1 Pty Ltd (1996) 67 FCR 126 at 137-138, Patent Gesellschaft AG v Saudi Livestock Transport & Trading Co (1996) 33 IPR 426 at 455. However, the construction of the specification is for the Court, not for the expert witness. Insofar as a view expressed by an expert depends upon a reading of the patent, it cannot carry the day unless the Court reads the patent in the same way: Allsop Inc v Bintang Ltd (1989) 15 IPR 686, 697. See also Glaverbel SA v British Coal Corp [1994] RPC 443 at 486, Sartas No 1 v Koukourou at 485-486, Patent Gesellschaft at 455. Section 116 of the 1990 Act provides that the Court may, in interpreting a complete specification, refer to the specification without amendment. However, it is neither useful nor legitimate to do so where the amended specification is clear: Martin & Biro Swan Ltd v H Millwood Ltd [1956] RPC 125 at 135.

448 [10.240]

Specifications – The Internal Requirements

CHAPTER 10

Lundbeck v Alphapharm [10.250] H Lundbeck A/S v Alphapharm Pty Ltd (2009) 177 FCR 151 Federal Court of Australia, Full Court EMMETT J: [166] The primary judge summarised the approach that he took to the construction question as follows: • The construction of a specification is a question of law and is a matter for the Court, although the Court must construe a specification as it would be understood by the notional skilled addressee as at the relevant date. Evidence from a skilled addressee in the field of the invention as to how he or she would have understood the specification at the relevant date is admissible evidence. • The claims of a specification must be construed in the context of the complete specification as a whole: the rest of the specification may explain the background to the claims, assist in ascertaining the meaning of technical terms or aid in the resolving of ambiguities in the construction of the claims. • A specification must be given a purposive rather than a purely literal construction and must be construed in a practical commonsense manner, avoiding a too technical or narrow construction in favour of a construction under which the invention will work, as against one according to which it may not work. [167] • The hypothetical addressee of a patent is the non-inventive person, with the common general knowledge of a person, skilled in the relevant art at the priority date. • The words used in the specification and the claims of a patent are to be given the meanings that that skilled addressee would give them, both in the light of his or her own general knowledge and what is disclosed in the body of the specification. While the last proposition is correct, and evidence as to how the hypothetical addressee would have understood a specification at the relevant date may strictly be admissible, the underlying principle is that contained in the first proposition stated above, namely, that the construction of a specification, including the claims, is a question of law for the Court. However, the Court may be informed, for example, as to the way in which particular terms were, as a general rule, used by relevant addressee at the relevant time or what the use of a particular term or expression disclosed or conveyed to a relevant addressee at the relevant time, so long as it is shown that an understanding different from the ordinary usage of English was generally accepted by relevant addressees. In that regard, there should be no difference in the approach to the construction of a patent from the approach to the construction of any other commercial instrument. That is to say, neither a patent nor any other commercial instrument should be construed in a vacuum but must be construed in the context in which the patent or instrument is being considered. Thus, the claims and specification of a patent must be construed in the way in which they would be understood by the relevant addressee. In the same way, a commercial instrument would be construed in the light of facts that might reasonably be expected to be known to the parties to the commercial instrument.

[10.250]

449

Intellectual Property: Commentary and Materials

Note

[10.260]

Although Bennett and Middleton JJ reached a different conclusion than Emmett J about the disposition of the appeal, there was no apparent disagreement about the applicable principles of claim construction.

Succinct: Patents Act 1990 (Cth) s 40(3) [10.270] In addition to requiring the claim or claims of a patent to be clear, the Patents Act

1990 (Cth) s 40(3) also requires them to be “succinct”.

Manual of Practice and Procedure: Succinctness [10.280] Australian Patent Office, Manual of Practice and Procedure, Volume 2 (National), para 2.11.6, available at http://manuals.ipaustralia.gov.au/patents/Patent_Examiners_Manual.htm 2.11.6 Claims are Succinct s 40(3) Lack of succinctness arises if: • A claim considered by itself is unnecessarily lengthy; or • The statement of claims as a whole is considered unnecessarily lengthy due to the repetitious nature of the claims. The number of claims is irrelevant to the question of succinctness. In considering a lack of succinctness objection, examiners should have regard to the fact that drafters will have different drafting styles. In particular, there can be significant differences arising from the various jurisdictions in which the applicant may be seeking protection. For example, in the US, multiply-dependant claims are not allowed to be dependant upon other multiply-dependant claims, and this can result in an increase in the number of claims. Objections of lack of succinctness should not be based on such issues. Case Law The principle [sic] judicial authority on succinctness is Bancroft’s Application (1906) 23 RPC 89. In that case there were 23 claims, all independent, claiming various combinations of features. We by no means desire to lay it down that the mere number of claims amounts to {lack of succinctness}, for a specification may be such that there are a great many claims, separate in their nature, which are justifiably made …. So long as the statement of each claim is in itself clear and succinct, and so long as there is an absence of repetition in the separate claims, we do not think that {a great many claims gives rise to lack of succinctness}. The only Australian judicial precedent that elaborates on the meaning or scope of the term “succinct” as used in s 40 is in the lower court judgement in Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2001] FCA 1877: I accept that it takes patience, time and effort to unravel all of the claims of the Patent. Subject to the expenditure of that time and effort, there is no alleged ambiguity in the claims. The problem is not with prolixity, but with attempted compression, and the multitude of claims. That, however, falls short of establishing that the claim or claims are not clear and succinct. The issue has arisen in hearings before the Commissioner, as follows: • “The application suffers from ‘an overdose of claims’. The statement of claims is ‘eminently perplexing to the public’” – Nomad v Heyring [1992] APO 15

450 [10.260]

Specifications – The Internal Requirements

CHAPTER 10

Manual of Practice and Procedure: Succinctness cont. • “Inclusion of an inessential feature does not make a claim ‘non-succinct’” – Tropical Export Nursery v Shade Span Industry [1994] APO 62 • “It is the right of an applicant to draft his claims so as to protect every aspect of the invention that he has disclosed. This can lead to a large number of claims, and potentially even a large number of independent claims. Whether such a drafting style results in claims that are not clear and succinct is a question of degree, that can only be decided by having regard to the specific claims and the specific description, rather than simply counting the number of claims.” – American National Can v Trigon [1996] APO 23 • “… it has long been accepted that claims will not be clear and succinct if their repetitious nature is such the difference in scope between two or more claims is not readily apparent, (see Bancroft’s Application (1906) 23 RPC 89). This situation rarely arises in practice but I think the present application is one such case because of the large number of different combinations of features claimed and the wide variety and ambiguity of the different terminology in the claims that is said to define the same key features. … Consequently I find, in addition to the matters of clarity discussed above, that the claims as a whole are not clear and succinct.” – Sabre v Amadeus Global Travel [2004] APO 21 It is noteworthy that decisions almost always refer to succinctness together with clarity – indicating that succinctness may best be considered as a particular form of clarity.

[10.290]

Note

The observations of the High Court in Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274; 62 IPR 461 on the independence and distinctness of each of the grounds of invalidity provided by Patents Act 1990 (Cth) s 40 (see the extract at [10.20]) render the comment made in the last paragraph of para 2.11.6 of the Manual of Practice and Procedure somewhat unreliable.

Support and fair basis: Patents Act 1990 (Cth) s 40(3) [10.300] As is the case with the sufficiency requirement imposed by s 40(2)(a), the present form of s 40(3) does not apply to all patents and patent applications. The Intellectual Property Laws Amendment (Raising The Bar) Act 2012 (Cth) substituted the present provision for the previous version of s 40(3) in which the corresponding ground to the “support” requirement was that the claims be “fairly based on the matter described in the specification”. These statutory provisions go to the relationship between what is claimed by the patentee as the extent of the monopoly, and what is disclosed by the specification about the invention; they are intended to ensure that the one is commensurate with the other so that the monopoly enjoyed is matched by the consideration which the patentee gives in return. The former requirement of fair basis continues to apply to standard patents granted before 15 April 2013 and standard patent applications (and patents granted on them) for which examination was requested before that date, and also to innovation patents for which examination had been requested, or which the Commissioner had decided to examine, before 15 April 2013. There is considerable similarity between the two requirements of “fair basis” and “support”. It is convenient to consider fair basis first. [10.300]

451

Intellectual Property: Commentary and Materials

Fair basis [10.310] For the cases alluded to in [10.300] to which the former version of s 40(3) applies, the concept of fair basis arises not only in the context of the enquiry whether the claims are fairly based on the description but also in the context of the determination of priority dates. In the latter case, the relevant question is whether a claim is fairly based on the disclosure of a provisional specification or a basic application with which the complete specification containing the claim is associated (see [8.200]). These two situations are sometimes referred to as “internal” fair basis and “external” fair basis, respectively. It is unclear whether the test of fair basis is precisely the same in each situation but, at the very least, it can be said that cases dealing with the one situation provide very helpful guidance for the other.

Leonardis v Sartas [10.320] Leonardis v Sartas No 1 Pty Ltd (1996) 35 IPR 23 Federal Court of Australia, Full Court [In the course of judgment, the court provided detailed discussion of the principles applicable to “fair basis” for the purposes of determining priority dates for claims based on provisional applications, and the related requirement in Patents Act 1990 (Cth) s 40(3) that the claims in a specification be fairly based on the description of the specification.] BURCHETT, HILL AND TAMBERLIN JJ: [38] In interpreting the expression “fair basis”, one should not understand the word “fair” as connoting any idea of equity. “What is required to be fair is not the applicant’s claim to priority but the basis which one document affords for a claim in the other”: Re Stauffer Chemical Company’s Application (1977) RPC 33 at 52, per Buckley LJ. Later in his judgment, Buckley LJ said (at 54): If a new feature were a development along the same line of thought which constitutes or underlies the invention described in the earlier document, it might be that that development could properly be regarded as fairly based on the matter disclosed in the earlier document, and that the new process described in the later document which incorporates that development could as a whole be regarded as fairly based upon the matter disclosed in the earlier document. If, on the other hand, the additional feature involves a new inventive step or brings something new into the combination which represents a departure from the idea of the invention described in the earlier document, it could not, I think, be properly described as fairly based upon the earlier document. Roskill LJ (as Lord Roskill then was), who said (at 63) that he agreed “entirely” with the reasons of Buckley LJ, also said (at 61) … We were referred by both learned counsel to a number of authorities on “fairly based”, all decisions at first instance but, having regard to the experience of the judges respectively concerned, of high persuasive authority. Nonetheless, what matters is whether the particular claim before the court is fairly based on the particular priority document. I respectfully question the use of paraphrases, synonyms and the like where Parliament has used a single and simple phrase in a statute with which alone the court is concerned. One does not answer the question whether a claim is fairly based by substituting another phrase such as “plainly foreshadowed”. I respectfully agree with the comment made by Gibbs J in the High Court of Australia in Hoffmann-La Roche (sic) v The Commissioner of Patents (1973) RPC 34 at 42, that other phrases are no substitute for the statutory test though they may well and often do point to factors to be considered in the application of that test. See also Vax Appliances Ltd v Hoover plc [1991] FSR 307 at 311. The remark made in the judgment of Gibbs J in F Hoffman-La Roche & Co Aktiengesellschaft v Commissioner of Patents is reported in (1971) 123 CLR 529 at 539. The passage actually commences at 538, as follows: 452 [10.310]

Specifications – The Internal Requirements

CHAPTER 10

Leonardis v Sartas cont. The question whether a claim in a complete specification is fairly based on matter disclosed in the provisional specification was considered by the Patents Appeal Tribunal, [39] constituted by Lloyd-Jacob J, in Re Mond Nickel Company Ltd’s Application (1956) RPC 189 at 194 and Imperial Chemical Industries Ltd’s Application (1960) RPC 223 at 228. The test to be applied is expressed in the Act in identical language in relation to provisional specifications and basic applications and what was said in those cases is applicable to the question that arises under ss 141 and 142 of the Act. Lloyd-Jacob J did not attempt to define all that is meant by the phrase “fairly based” but he gave a guide to the approach that should be made in deciding a question of this kind. In his opinion it is necessary to investigate three questions which, if one substitutes a reference to the basic application for a reference to the provisional specification, he finally formulated as follows: (1) Is the alleged invention as claimed broadly (ie, in a general sense) described in the basic application? (2) Is there anything in the basic application which is inconsistent with the alleged invention as claimed? (3) Does the claim include as a characteristic of the invention a feature as to which the basic application is wholly silent? It is needless to say that these questions are intended to assist the court in applying the test laid down by the Act itself, viz whether the claim in the complete specification is fairly based on matter disclosed in the basic application, but are not a substitute for that test. In Societe des Usines Chimiques Rhone-Poulenc v Commissioner of Patents (1958) 100 CLR 5 at 11, Fullagar J held that s 45(5) of the Act cannot be limited to cases where the subject matter of the later application has been made the subject of a specific claim in the earlier application, and further expressed the view that there must be “a real and reasonably clear disclosure”. Having regard to the comment made by Roskill LJ questioning the substitution for the statutory test of the phrase “plainly foreshadowed”, it is interesting to note that in Hoffman-La Roche (at 540) the expression used by Gibbs J, who was summarising the submission of the then Mr KR Handley, is “fairly within, or fairly foreshadowed by” the first basic application. In CCOM v Jiejing ((1994) 51 FCR 260 at 275 et seq per Spender, Gummow and Heerey JJ), the full court provided what, with respect, must be seen as a valuable survey of the law in this area. The judgment (at 281) refers to the statement of Fox J in Coopers Animal Health Australia Ltd v Western Stock Distributors Pty Ltd (1987) 15 FCR 382 at 389: Where the holder of the provisional specification proceeds with a complete specification with a view to the grant of a patent, it is recognised that greater definition, as a result of further experimentation or otherwise, may be achieved before the later step is taken and the result expressed therein. Some generality of expression in the provisional specification is accepted. In his judgment, Fox J (with whom Spender J agreed) went on to refer to the statement of Lloyd-Jacob J in Imperial Chemical Industries Ltd (Clark’s) Application [1969] RPC 574 at 583 that the function of a provisional specification is “a description of the general nature of the invention, its field of application and the anticipated result”, and to the statement in Blanco White, Patents for Inventions (4th ed, 1974) at 44: Thus the provisional specification should contain as clear a statement as possible of the principles upon which the success of the invention depends (foreshadowing as far as possible the broader claims) together with discussion of its field of application and some indication of what results the inventor hopes it will achieve. In the same case (at 399), Beaumont J adopted expressions (to some of which reference has already been made) appearing in Hoffman-La Roche when, having noted that judicial tests “are not a substitute for the test laid down by the Act itself”, he said: [40] [10.320]

453

Intellectual Property: Commentary and Materials

Leonardis v Sartas cont. It is convenient to proceed, as Gibbs J did in Hoffman-La Roche (at 539) by stages: (1) Was the claim based on matter disclosed in the provisional? (2) If so, was it “fairly” so based, in the sense of something “fairly within” or “fairly foreshadowed” by the provisional (see F Hoffman-La Roche and Co AG v Commissioner of Patents at 540), that is, something appearing on a “fair reading” of that specification (at 541)? To return to CCOM v Jiejing, the court concluded its survey of the law in this area by saying (at 281-282): In Rhone-Poulenc (supra) at 11 Fullagar J emphasised that disclosure without claim is enough. Hence, it is wrong to proceed as if testing for infringement and to seek to isolate in the body of the complete specification, or in the provisional specification, “essential integers” or “essential features” of an invention disclosed therein and to ask whether they correspond with the essential integers in the claim in question: cf Coopers Animal Health Australia Ltd v Western Stock Distributors Pty Ltd (1986) 6 IPR 545 at 560-561, the decision at first instance. Nor would it be applying the statute to ask whether the earlier specifications fairly described the essential features of the invention disclosed in the later specification: cf Interact Machine Tools (NSW) Pty Ltd v Yamazaki Mazak Corp (1993) 27 IPR 83 at 93, 97. Fullagar J also pointed out that the requirement of “fair basing” on matter disclosed in an earlier specification would be senseless if what was required was that the subject matter of the claim must have been actually claimed in the earlier specification; rather, there must be “a real and reasonably clear disclosure”. This passage was adopted and applied by Gibbs J in Hoffman-La Roche at 537-539, where the claims were for chemical compounds forming part of a very large class disclosed in the basic application. … [41] This proposition is consistent with the language used by Gummow J in Rehm Pty Ltd v Webster’s Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 95, where he said that: [T]he question is whether there is a real and reasonably clear disclosure in the body of the specification of what is then claimed, so that the alleged invention as claimed is broadly, that is to say in a general sense, described in the body of the specification. See also the same judgment at 93-94.

Lockwood Security v Doric [10.330] Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274; 62 IPR 461 High Court of Australia [Lockwood, the appellant, was the owner of a patent for a key-controlled latch. Doric, the respondent, was a manufacturer and supplier of door locks. In the course of an action alleging infringement in which the defendant raised many differing grounds of invalidity, the trial judge concluded that the claims were not fairly based and that while Doric’s activities infringed some of the claims, they did not infringe others. The issue in this appeal to the High Court was whether the claims defining the scope of the patentee’s exclusive rights under the patent were “fairly based” on the matter described in the specification or were wider than the matter described. Lockwood argued that the invention was described in a general consistory clause that included some words identical to those found in Claim 1, with various other preferable or illustrative embodiments or examples. Doric argued that the invention was described by reference to the drawings.]

454 [10.330]

Specifications – The Internal Requirements

CHAPTER 10

Lockwood Security v Doric cont. GLEESON CJ, MCHUGH, GUMMOW, HAYNE AND HEYDON JJ: [300] The approach required by s 40(3) Erroneous principles. The comparison which s 40(3) calls for is not analogous to that between a claim and an alleged anticipation or infringement. It is wrong to employ “an over meticulous verbal analysis” (CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 281 per Spender, Gummow and Heerey JJ). It is wrong to seek to isolate in the body of the specification “essential integers” or “essential features” of an alleged invention and to ask whether they correspond with the essential integers of the claim in question: CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 281 per Spender, Gummow and Heerey JJ. “Real and reasonably clear disclosure”. Section 40(3) requires, in Fullagar J’s words, “a real and reasonably clear disclosure”. But those words, when used in connection with s 40(3), do not limit disclosures to preferred embodiments. The circumstance that something is a requirement for the best method of performing an invention does not make it necessarily a requirement for all claims; likewise, the circumstance that material is part of the description of the invention does not mean that it must be included as an integer of each claim. Rather, the question is whether there is a real and reasonably clear disclosure in the body of the specification of what is then claimed, so that the alleged invention as claimed is broadly, that is to say in a general sense, described in the body of the specification (Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 95 per Gummow J). Fullagar J’s phrase serves the function of compelling attention to the construction of the specification as a whole, putting aside particular parts [301] which, although in isolation they might appear to point against the “real” disclosure, are in truth only loose or stray remarks. … [302] In assessing whether the invention claimed by a patentee is fully described or fairly based, it is necessary to take into account, apart from common general knowledge so far as it casts light on questions of construction, only what is said about it in the specification, independently of whether it is a “patentable invention”, and, in particular, independently of whether it is a patentable invention on the ground that it is not obvious. … [310] Doric submitted that Olin Corporation v Super Cartridge Co Pty Ltd ((1975) 49 ALJR 135 (Jacobs J); Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 (FC)) decided that a claim based on a consistory clause cannot be fairly based. It did not. Rather, as the Patentee submitted, the correct position is that a claim based on what has been cast in the form of a consistory clause is not fairly based if other parts of the matter in the specification show that the invention is narrower than that consistory clause. The inquiry is into what the body of the specification read as a whole discloses as the invention (Welch Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 612-613). An assertion by the inventor in a consistory clause of that of which the invention consists does not compel the conclusion by the court that the claims are fairly based nor is the assertion determinative of the identity of the invention. The consistory clause is to be considered by the court with the rest of the specification. These points are reflected in the statements in an Australian text (Lahore, Patents, Trade Marks and Related Rights, (2001), vol 1 at ¶15,345 (footnote omitted)): Claims found to be inconsistent with the general description of the invention may be invalid as being not fairly based on the matter described in the specification. In order to avoid this possibility a well drawn specification will usually include in the body of the specification one or more formal “consistory statements” setting forth what the patentee considers to be the scope of the invention, such statements often quoting the exact wording of the broadest claims in the specifications. … Such statements will generally [311] follow an introductory portion of the specification, which may describe the technical field of the invention and the problems with the prior art which are to be addressed by the invention. It is important that [10.330]

455

Intellectual Property: Commentary and Materials

Lockwood Security v Doric cont. the introductory part of the specification be worded so as to be consistent with the scope of the invention as defined in the claims and any formal consistory statements. A statement implying that the invention has a limited field of application or requires as an essential feature something which is not required by the claims may result in a finding that the claims are wider than the invention disclosed in the specification, and are accordingly invalid for lack of fair basis on the matter described in the specification.

Support for the claims [10.340] The Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) not only replaced the “fair basis” requirement in former s 40(3) of the Patents Act with the requirement that the claims be supported by matter disclosed in the specification, but it also be made changes to the parts of the Patents Act 1990 (Cth) that formerly dealt with “external” fair basis (see [10.310]). However, in that case the change made uses the language of s 40(2)(a) rather than requiring a claim to be “supported by” the disclosure of a basic document in order for its priority date to be the filing date of that document. Thus for cases to which these changes apply, a claim is entitled to a priority date earlier than the filing date of the specification containing the claim only if the invention it defines was sufficiently described in the purported priority document. The amendment to s 40(3) makes essentially the same change to the Australian patents legislation as was made in the UK with the commencement of the Patents Act 1977 (UK). In England, Aldous J (as he then was) thought it was not right to rely on cases pertaining to “fair basis” when determining whether a claim was “supported” by a description of the invention. Nevertheless, his Honour went on the observe that the word “support” requires “the description to be the base which can fairly entitle the patentee to a monopoly of the width claimed”: Schering Biotech Corp’s Application [1993] RPC 249 at 252-253 (English Patents Ct). Similarly, in relation to Article 84 of the European Patent Convention which is expressed identically to the corresponding UK provision, the Technical Board of Appeals of the European Patent Office has said that the “requirement under Article 84 EPC is concerned with the permissible width of the claims having regard to the disclosure of the patent in its description …. the scope of the protection sought in the claims must be fair having regard to the way in which the invention has been described…”: Alpha-interferons/BIOGEN [1990] OJEPO 335 at [3.3].

These observations tend to suggest that a requirement for claims to be “supported” by the description is not, in fact, significantly different to the requirement in Australia for a “real and reasonably clear disclosure” (see [10.330]) to provide fair basis. However, subsequent cases in England and the European Patent Office, which reflect the construction that is likely to be placed by the courts in Australia on the “support” requirement, reveal that what might be thought of as the “fair basis” criterion forms only part of the requirement that a claim be supported by matter disclosed in the specification.

456 [10.340]

Specifications – The Internal Requirements

CHAPTER 10

MedImmune Ltd v Novartis Pharmaceuticals UK Ltd [10.350] MedImmune Ltd v Novartis Pharmaceuticals UK Ltd [2013] RPC 27 England and Wales Court of Appeal KITCHIN LJ (with whom Lords Justice Moore-Bick and Lewison agreed) [151] Section 5(2)(a) of the Patents Act 1977 provides that an invention is entitled to priority if it is supported by matter disclosed in the priority document. By section 130(7) of the Act, section 5 is to be interpreted as having the same effect as the corresponding provisions of Article 87(1) of the European Patent Convention. Article 87(1) says that priority may be derived from an earlier application in respect of the “same invention”. [152] The requirement that the earlier application must be in respect of the same invention was explained by the enlarged Board of Appeal of the EPO in G02/98 Same Invention, [2001] OJ EPO 413; [2002] EPOR 167: The requirement for claiming priority of ’the same invention’, referred to in Article 87(1) EPC, means that priority of a previous application in respect of a claim in a European patent application in accordance with Article 88 EPC is to be acknowledged only if the skilled person can derive the subject-matter of the claim directly and unambiguously, using common general knowledge, from the previous application as a whole. [153] The approach to be adopted was elaborated by this court in Unilin Beheer v Berry Floor [2004] EWCA (Civ) 1021; [2005] FSR 6 at [48]: …….The approach is not formulaic: priority is a question about technical disclosure, explicit or implicit. Is there enough in the priority document to give the skilled man essentially the same information as forms the subject of the claim and enables him to work the invention in accordance with that claim. [154] In Abbott Laboratories Ltd v Evysio Medical Devices plc [2008] EWHC 800 (Pat), I added this: 228.So the important thing is not the consistory clause or the claims of the priority document but whether the disclosure as a whole is enabling and effectively gives the skilled person what is in the claim whose priority is in question. I would add that it must “give” it directly and unambiguously. It is not sufficient that it may be an obvious development of what is disclosed.

[10.360] In the European Patent Office, the Technical Board of Appeal has expressed the opinion that the requirement for a claims to be supported by the disclosure of a specification “reflects the general legal principle that the extent of the patent monopoly, as defined by the claims, should correspond to the technical contribution to the art”: Exxon/Fuel Oils (T 409/91) [1994] OJEPO 653 at [3.3]. This, it appears, forms the basis for the approach taken in the Australian Patent Office to determining whether the “support” requirement is met for a given claim: see IPAustralia, Manual of Patent Practice & Procedure, Volume 2 (National) para 2.11.7.1A (available at http://manuals.ipaustralia.gov.au/patents/Patent_Examiners_ Manual.htm). Practice in the Patent Office is to require (a) the claims to be supported by an enabling disclosure in the specification as a whole, and (b) the claims to be no broader than the contribution to the art disclosed in the specification. For the first of these requirements, the level of disclosure needed is the same as that for s 40(2)(a) (see [10.110] - [10.130]). The “contribution to the art” is closely related to the inventive step or the inventive concept disclosed by the specification: Exxon/Fuel Oils (T 409/91) [1994] OJEPO 653 at [3.3]; Biogen Inc v Medeva plc [1997] RPC 1 at 43-52; H Lundbeck A/S v Generics (UK) Ltd [2009] RPC 13 at [30], [95]. The requirement that the claims be no wider than the contribution to the art [10.360]

457

Intellectual Property: Commentary and Materials

disclosed in the specification can be seen to be conceptually similar to the need for a “real and reasonably clear” disclosure to satisfy the former fair basis requirement; the “enabling disclosure” element of the current support requirement had no counterpart under the former ground.

458 [10.360]

CHAPTER 11 Infringement and Exploitation [11.10] [11.10] [11.20]

INFRINGEMENT ..................................................................................................... 460 Introduction ........................................................................................................... 460 Test for infringement ............................................................................................. 461 [11.30]

[11.40]

[11.50]

[11.60]

Catnic Components v Hill & Smith ......................................... 463

Development of the law after Catnic ................................................ 465 [11.70] [11.80]

[11.100] [11.110] [11.120] [11.130] [11.140]

Populin v HB Nominees ......................................................... 461

Principles of claim construction in infringement proceedings ....... 463

Sachtler v Miller .................................................................... 466 KD Kanopy v Insta Image ...................................................... 469

EXCLUSIVE RIGHTS OF THE PATENTEE ................................................................ Make ....................................................................................................................... Sell etc .................................................................................................................... Use .......................................................................................................................... Importation ............................................................................................................

470

[11.170]

471 471 472 473 [11.150] Pinefair v Bedford Industries Rehabilitation Assoc ..................... 473 Authorise ................................................................................................................ 475

[11.180]

CONTRIBUTORY INFRINGEMENT ........................................................................ 476 [11.190] [11.200]

[11.220] [11.230] [11.250] [11.250] [11.260]

Patents Act 1990 (Cth) ......................................................... 476 Northern Territory v Collins .................................................... 476 Contributory infringement more generally ......................................................... 480 Liability under Competition and Consumer Act 2010 (Cth) ............................. 481 [11.240] Ramset Fasteners (Aust) v Advanced Building Systems ............. 481

DEFENCES AGAINST INFRINGEMENT ................................................................. 482 Onus of proof of infringement of a process claim ............................................. 482 Gillette defence ...................................................................................................... 483 [11.260]

[11.280] [11.320]

[11.350]

Woodbridge Foam v AFCO Automotive Foam Components ......................................................................... Prior use of invention by defendant .................................................................... [11.280] Patents Act 1990 (Cth) ......................................................... [11.300] Welcome Real-Time v Catuity ................................................. Experimental use ................................................................................................... [11.320] Patents Act 1990 (Cth) ......................................................... [11.340] Raising the Bar Bill 2011 (Cth) Explanatory Memorandum ...................................................................... Other defences under Patents Act 1990 (Cth) ...................................................

[11.350] [11.360] [11.370] [11.380] [11.390] [11.400]

483 484 484 485 487 487 488 488

Patents relating to pharmaceuticals and other inventions requiring regulatory approval ............................................................................. 488

Lapse ....................................................................................................................... Crown use .............................................................................................................. Use on ships, aircraft and vehicles temporarily in Australia ............................... Innocent infringement .......................................................................................... Action for unjustified threats of infringement proceedings .............................. [11.410]

489 489 489 490 490

Occupational and Medical Innovations v Retractable Technologies ......................................................................... 490 459

Intellectual Property: Commentary and Materials

[11.430]

Exemplary damages in patent infringement ...................................................... 493

[11.440] [11.440] [11.450] [11.460] [11.470]

EXPLOITATION ....................................................................................................... Ownership .............................................................................................................. Inventorship ........................................................................................................... Assignment ............................................................................................................. Licences .................................................................................................................. [11.480] Exclusive licence .................................................................................. [11.490] Tying arrangements in licences ......................................................... [11.500] Compulsory licences ...........................................................................

493 493 494 494 495 495 495 495

INFRINGEMENT Introduction [11.10] The Patents Act 1990 (Cth) does not define infringement, but the patentee is granted

“exclusive rights” by s 13, which provides: (1) Subject to this Act, a patent gives the patentee the exclusive rights, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention. (2) The exclusive rights are personal property and are capable of assignment and of devolution by law. (3) A patent has effect throughout the patent area.

The word “exploit” is defined, in a non-exclusive manner, in Patents Act 1990 (Cth) Schedule 1: “exploit”, in relation to an invention, includes: a) where the invention is a product – make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or b) where the invention is a method or process – use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use;

The patentee’s rights commence on the day when the relevant patent application is published, but enforcement of those rights cannot begin unless and until a patent is eventually granted on the application: Patents Act 1990 (Cth) s 57. Additionally, infringement proceedings cannot be commenced in respect of an innovation patent unless the patent has been certified (s 120(1A)). The patentee may commence an action for infringement under s 120(1) in the Federal Court or in the Supreme Court of a State or Territory. An exclusive licensee may commence infringement proceedings, but if the patentee is not joined as a plaintiff he or she must be joined as a defendant (s 120(2)). However, in that event, the patentee will not incur costs unless entering an appearance and taking part in the proceedings (s 120(3)). Infringement proceedings must be commenced within three years of the date of grant of the relevant patent, or within six years of the act alleged to be an infringement, whichever is the later (s 120(4)). In proceedings for infringement, the court must carefully interpret the claims according to the principles of construction (see [10.210]–[10.260] and below). The defendant’s product or actions must then be compared with the invention defined in the claims. If the defendant is acting with a product, process or method that falls within the proper construction of the patentee’s claims, and is doing so in relation to one (or more) of the activities given to the 460 [11.10]

Infringement and Exploitation

CHAPTER 11

patentee as an exclusive right to “exploit”, there is prima facie infringement. There are several statutory defences to infringement (ss 118 – 119C: see below [11.280]–[11.380]) and relief is available from certain remedies in cases of innocent infringement (s 123): see [11.390]. A very common form of defence to an infringement action is for the defendant to allege that the patent is invalid and counterclaim under s 121, seeking revocation of the patent on any of the grounds set out in s 138(3).

Test for infringement [11.20] It has not always been necessary for a patent specification to include any claims. When claims were not included, the courts determined infringement by ascertaining from the specification the nature of the invention, and penalising or restraining attempts by others to utilise that invention themselves. With the advent of patent claims, some cases still exhibited a desire by the courts to ensure that unauthorised persons did not obtain benefit from the disclosure of the invention, even though what they had done was arguably not within the definition of the invention set out in the claims. Such cases exhibit the use of terms such as the “pith and marrow” of the invention, “non-literal” infringement, “essential and inessential integers” of an invention, and so forth. Such controversy as there has been in relation to the test for infringement concerns how far, if at all, and if so in what circumstances, it is permissible to extend the scope of the monopoly enjoyed by the patentee beyond what is set out in the express words of the claims. The following extract refers to principles that apply to this area of the law and illustrates the tension between what may be termed “literal” and “purposive” claim construction.

Populin v HB Nominees [11.30] Populin v HB Nominees Pty Ltd (1982) 41 ALR 471; 59 FLR 37 Federal Court of Australia, Full Court BOWEN CJ, DEANE AND ELLICOTT JJ: … [41] It has often been said that the claims operate as a disclaimer of what is not specifically claimed: eg, Walker v Alemite Corp (1933) 49 CLR 643 at 656 per Dixon J. They therefore determine the extent of the patentee’s monopoly. The patentee must be vigilant to claim only the essence of the invention. This is particularly so in relation to a combination patent. It is important to claim only the essential integers in the combination or to distinguish what is essential from what is inessential. For to establish infringement of a combination patent, the patentee must show that the defendant has taken each and every one of the essential integers of the patentee’s claim. Therefore if, on its true construction, the claim in a patent claims a particular combination of integers and the alleged infringer of it omits one of them he will escape liability. At the same time, however, the courts have avoided too technical or narrow a construction of claims. In Radiation Ltd v Galliers & Klaerr Pty Ltd (1938) 60 CLR 36 at 51 Dixon J said: But, on a question of infringement, the issue is not whether the words of the claim can be applied with verbal accuracy or felicity to the article or device alleged to infringe, it is whether the substantial idea disclosed by the specification and made the subject of a definite claim has been taken and embodied in the infringing thing. It is in reliance on this approach that the courts have held that a defendant will not escape infringement by adopting what are immaterial variations, eg, by omitting an inessential part or step and substituting another part or step as its equivalent: see Marconi v British Radio Telegraph & Telephone Co Ltd (1911) 28 RPC 181 at 217 per Parker J. It was considerations such as this that led early in the [11.30]

461

Intellectual Property: Commentary and Materials

Populin v HB Nominees cont. history of patent law to the development of what has been termed the [42] “pith and marrow” or “pith and substance” test. The classic statement of it is found in the judgment of James LJ in Clark v Adie (1875) LR 10 Ch App 667 at 675, where he said: The patent is in the entire combination, but there is, or may be, an essence or substance of the invention underlying the mere accident of form; and that invention, like every other invention, may be pirated by a theft in a disguised or mutilated form, and it would be in every case a question of fact whether the alleged piracy is the same in substance and effect or is a substantially new or different combination. The existence of this doctrine is still recognised by the High Court. But its limitations must be borne in mind. Thus in Olin Corp v Super Cartridge Co Pty Ltd (1977) 14 ALR 149 at 157, Gibbs J (as he then was) after referring to the above passages said: The statements in these passages are still good law; see C Van der Lely NV v Bamfords Ltd [1963] RPC 61 at 75. However, as was pointed out in Van der Lely at 78 and 80, the principle that there may be infringement by taking the “pith and marrow” or the substance of an invention does not mean that there will be an infringement where the patentee has by the form of his claim left open that which the alleged infringer has done. And it does not affect the fundamental rule that there will be no infringement unless the alleged infringer has taken all of the essential features or integers of the patentee’s claim: see Rodi & Wienenberger AG v Henry Showell Ltd [1969] RPC 367 especially at 383-384. In Minnesota Mining & Manufacturing Co v Beiersdorf (Aust) Ltd (1980) 29 ALR 29 at 52-53, Aickin J with whose judgment Barwick CJ, Stephen, Mason and Wilson JJ all expressed agreement, wrote: Notwithstanding the undoubted fact that the doctrine of Clark v Adie (1875) LR 10 Ch App 667 concerning the taking of the pith and substance of an invention, but none the less staying outside the express words of the claim, is less often applicable at the present time than it was at the time of that decision, it remains the law that a defendant may not take the substance of an invention unless the wording of the claims makes it clear that the relevant area has been deliberately left outside the claim. The authorities which demonstrate this to be so are collected in the judgment of Gibbs J in Olin Corp v Super Cartridge Co Pty Ltd (1977) 51 ALJR 525; 14 ALR 149 at 530 (ALJR), 157 (ALR), and need not be repeated here. See also Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153 at 200. The complete specification must not be read in the abstract but in the light of common knowledge in the art before the priority date, [43] bearing in mind that what is being construed is a public instrument which must, if it is to be valid, define a monopoly in such a way that it is not reasonably capable of being misunderstood: see generally Welch Perrin Pty Ltd v Worrel (1961) 106 CLR 588 at 610. The essential features of the product or process for which it claims a monopoly are to be determined not as a matter of abstract uninformed construction but by a commonsense assessment of what the words used convey in the context of then-existing published knowledge. As Lord Diplock (with whom the other members of the House of Lords agreed) commented in Catnic Components Ltd v Hill & Smith Ltd [1987] FSR 60 at 65-66: [A] patent specification is a unilateral statement by the patentee, in words of his own choosing, addressed to those likely to have a practical interest in the subject matter of his invention (ie, “skilled in the art”), by which he informs them [of] what he claims to be the essential features of the new product or process for which the letters patent grant him a monopoly. It is those novel features only that he claims to be essential that constitute the

462 [11.30]

Infringement and Exploitation

CHAPTER 11

Populin v HB Nominees cont. so-called “pith and marrow” of the claim. A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge.

Principles of claim construction in infringement proceedings [11.40] An Australian case illustrating the application of a “purposive” construction of the claims, and which may lie near the boundary of that approach, was Commonwealth Industrial Gases Ltd v MWA Holdings Pty Ltd (1970) 44 ALJR 385, in which the invention that was the subject of the dispute related to mixer tubes in gas burners (such as oxyacetylene welding torches) and was designed to reduce the danger of “flashback” explosion. One of the features of the invention was a reflector plate described in the claims as being “flat”. The defendant had at first copied the plaintiff’s invention, and on being found to be in infringement, had consulted attorneys and produced a new version of a mixer tube with the reflector plate slightly curved. Menzies J said: Patent rights are not to be set at nought by such a subterfuge which I am satisfied added nothing to the equipment and was made merely in an attempt to take full advantage of the invention while avoiding infringement of the plaintiff’s letters patent by a modification so small as to be insignificant. … The cases do establish that if the alleged infringement differs materially from an essential feature of the plaintiff’s claim there can be no infringement. … In the present case the normality of the reflector is made an essential feature of the plaintiff’s patent. … [H]owever the modified manufacture since 1966 does not avoid that essential feature because the reflector as made thereafter is so close to being flat that the defendant’s manufacture and sale still takes the plaintiff’s invention.

This area of the law is concerned with the question of when a court is entitled to conclude that the way a feature is defined in a claim is not essential to the invention, and in those circumstances how far it is permissible to depart from the apparent meaning of a term used in the claim and still infringe it. The essence of the test for infringement, as is seen from Populin ([11.30] above) is that a person who takes all of the essential features of a claim infringes it even though he or she may omit or alter one or more inessential features. In some of the decided cases, particularly the earlier ones, reference has been made to a doctrine of so-called “pith and marrow” infringement to describe a situation in which the infringer took the essence of an invention but avoided the literal scope of the claims. More recent cases reject “pith and marrow” as a separate basis for infringement and stress that the sole test is whether the infringer has taken all of the essential features of a claim. This being so, emphasis is placed on the correct construction of the claims so as to determine what their properly understood scope is. A very influential English case in this area of the law was the House of Lords judgment in Catnic Components v Hill & Smith, which concerned a claim to a lintel.

Catnic Components v Hill & Smith [11.50] Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 House of Lords LORD DIPLOCK: [242] The complete specification was filed on 29 December 1969 and published on 6 December 1972. Lintels manufactured in accordance with the patent quickly achieved considerable success upon the [11.50]

463

Intellectual Property: Commentary and Materials

Catnic Components v Hill & Smith cont. market. At about the beginning of 1974 the respondents (Hill and Smith) … decided to prepare to enter the market for builders’ products and, in particular, for galvanised steel lintels … [T]hey examined trade brochures issued by various manufacturers of steel lintels, including one published by Catnic. They decided that the Catnic lintel was the best; they were unaware that it was the subject matter of a patent; so they copied it and manufactured it. [His Lordship then explained that Catnic had brought a successful action for infringement and obtained injunctions and damages against Hill & Smith, who subsequently decided to produce a second, but altered, version based upon box girder construction. His Lordship continued:] Hill and Smith then produced a modified design (referred to in the courts below as “DH4”) which became the subject of the second writ. …. [A diagram in the judgment is not reproduced here.] Between this design and that described in claim 1 of the patent the difference which is relied upon by Hill and Smith to save it from being an infringement is that the back plate is not precisely vertical but is inclined at a slight angle to the vertical, 6° in the case of the three-course module and 8° in the case of the two-course module. … Did the substitution of a back plate that was slightly inclined to the true vertical for one that was precisely vertical change what the patentee by his specification had made an essential feature of the invention claimed having regard to the patentee’s description of the back plate in claim 1 as “extending vertically”? The invention is a simple one; to understand what it does and how it works calls for no great technological or scientific expertise. It is designed for use by builders engaged in ordinary building operations; they constitute the readers to whom the specification is addressed. As any knowledgeable builder would know, indeed as would be known even by one of Lord Macaulay’s schoolboys who had reached the triangle of forces in his study of elementary mechanics, a slight inclination from the vertical of an upright support reduces its load bearing capacity proportionately to the cosine of the angle of such inclination. Where that angle is 6° as in the Hill and Smith three-course module DH4 the reduction is 0.6%, where it is 8° as in the two-course module the reduction is still only 1.2%. From the point of view of function a reduction of this order in vertical support provided for the upper horizontal plate is negligible. … My Lords, a patent specification is a unilateral statement by the patentee, in words of his own choosing, addressed to those likely to have a practical interest in the subject matter of his invention (ie, “skilled in the art”), by which he informs them [of] what he claims to be the essential features of the new product or process for [243] which the letters patent grant him a monopoly. It is those novel features only that he claims to be essential that constitute the so-called “pith and marrow” of the claim. A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge. The question in each case is: whether persons with practical knowledge and experience of the kind of work in which the invention was intended to be used, would understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked. The question, of course, does not arise where the variant would in fact have a material effect upon the way the invention worked. Nor does it arise unless at the date of publication of the specification it would be obvious to the informed reader that this was so. Where it is not obvious, in the light of then-existing knowledge, the reader is entitled to assume that the patentee thought at the time of the specification that he had good reason for limiting his monopoly so strictly and had intended to do so, even though subsequent work by him or others in the field of the invention might show the limitation 464 [11.50]

Infringement and Exploitation

CHAPTER 11

Catnic Components v Hill & Smith cont. to have been unnecessary. It is to be answered in the negative only when it would be apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants which, to the knowledge of both him and the readers to whom the patent was addressed, could have no material effect upon the way in which the invention worked. …[245] Put in a nutshell the question to be answered is: Would the specification make it obvious to a builder familiar with ordinary building operations that the description of a lintel in the form of a weightbearing box girder of which the back plate was referred to as “extending vertically” from one of the two horizontal plates to join the other, could not have been intended to exclude lintels in which the back plate although not positioned at precisely 90° to both horizontal plates was close enough to 90° to make no material difference to the way the lintel worked when used in building operations? No plausible reason has been advanced why any rational patentee should want to place so narrow a limitation on his invention. On the contrary, to do so would render his monopoly for practical purposes worthless, since any imitator could avoid it and take all the benefit of the invention by the simple expedient of positioning the back plate a degree or two from the exact vertical. It may be that when used by a geometer addressing himself to fellow geometers, such expressions descriptive of relative position as “horizontal”, “parallel”, “vertical” and “vertically” are to be understood as words of precision only; but when used in a description of a manufactured product intended to perform the practical function of a weightbearing box girder in supporting courses of brickwork over window and door spaces in buildings, it seems to me that the expression “extending vertically” as descriptive of the position of what in use will be the upright member of a trapezoid-shaped box girder, is perfectly capable of meaning positioned near enough to the exact geometrical vertical to enable it in actual use to perform satisfactorily all the functions that it could perform if it were precisely vertical; and having regard to those considerations to which I have just referred that is the sense in which in my opinion “extending vertically” would be understood by a builder familiar with ordinary building operation. Or, putting the same thing in another way, it would be obvious to him that the patentee did not intend to make exact verticality in the positioning of the back plate an essential feature of the invention claimed. It follows that I have reached the same conclusion as the trial judge and Sir David Cairns, although not by the route of drawing a distinction between “textual infringement” and infringement of the “pith and marrow” of the invention. Accordingly I would allow the appeal. [The other members of the House of Lords concurred.]

Development of the law after Catnic [11.60] In Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 16 IPR 545 at 560–561 Gummow J, referring to Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183, said: The appellants sought, somewhat tentatively, to pray in aid the principles of “purposive” construction of patent specifications, described by Lord Diplock in Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 and discussed in several decisions of this court. The House of Lords found infringement. One may observe that such a result in an Australian court would have caused no great surprise to the reader of Commonwealth Industrial Gases Ltd v MWA Holdings Pty Ltd (1970) 44 ALJR 385 at 388. I would not treat the House of Lords as having propounded any novel principle or new category of “non-textual infringement”, and this court has treated the decision in that light: Populin v HB Nominees Pty Ltd (1982) 59 FLR 37 at 42–43; Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 11 IPR 299; 81 ALR 79 at 91–92. [11.60]

465

Intellectual Property: Commentary and Materials

Nevertheless, in cases in Australia and elsewhere after Catnic, differing views have been expressed as to whether the dicta of Lord Diplock in fact changed the law. In particular, it has been a matter of some uncertainty as to whether the “pith and marrow” approach to determining infringement, involving some kind of inquiry as to the “heart” of the invention, was a correct approach. A further, and related, issue was how far it is permissible to take the “purposive” approach to construction referred to by Lord Diplock: do all embodiments that satisfy the evident purpose of the claimed invention fall within the patentee’s monopoly, notwithstanding that they appear to be excluded by the language of the claims? One case, in England, in which this issue arose was Improver Corp v Remington Consumer Products Ltd [1990] FSR 181 in which Hoffmann J (as he then was) separated the issue of whether an apparent variant of a feature set out in a claim was nevertheless encompassed by the claim into three questions (they are set out in the extract at [11.70]). These have come to be known as the “Improver” questions. They have been considered and applied in a number of cases in Australia and elsewhere, some of which were reviewed by Bennett J in Sachtler GMBH & Co KG v RE Miller Pty Ltd (2005) 65 IPR 605 (see [11.70]). That case, and the subsequent KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd (2007) 71 IPR 615 (see [11.80]) confirmed the primacy of the language adopted by the patentee in the claims, subject to the construction of that language by the court in the same way that a person skilled in the art would understand it. In the result, the “purposive” construction referred to by Lord Diplock, and the “variants” referred to in the Improver questions, are to be understood to mean that embodiments of an invention which might be thought to be outside the scope of a claim on a strict interpretation of the words used in it, in fact are encompassed by the claim when the words are given the meaning that they would be understood to have by a person skilled in the relevant art.

Sachtler v Miller [11.70] Sachtler GMBH & Co KG v RE Miller Pty Ltd (2005) 65 IPR 605 Federal Court of Australia BENNETT J: [614] Principles of infringement As with principles of construction of claims, emphasis has been placed on different expressions of the principles that apply in determining whether there has been infringement of the claims of a patent. In particular, some attention in this Court has recently been directed to decisions in the United Kingdom which [615] have developed from Catnic, such as Improver which have, in turn, been marshalled recently for that jurisdiction in Kirin-Amgen v Hoechst Marion Roussel Ltd [2005] RPC 9; (2004) 64 IPR 444. The Improver questions, as put by Hoffman J (as he then was) at 189, designed to give effect to the Catnic principle, are: If the issue was whether a feature embodied in an alleged infringement which fell outside the primary, literal or a contextual meaning of a descriptive word or phrase in the claim (“a variant”) was nevertheless within its language as properly interpreted, the court should ask itself the following three questions: (1) Does the variant have a material effect upon the way the invention works? If yes, the variant is outside the claim. If no – (2) Would this (ie that the variant had no material effect) have been obvious at the date of publication of the patent to a reader skilled in the art? If no, the variant is outside the claim. If yes – 466 [11.70]

Infringement and Exploitation

CHAPTER 11

Sachtler v Miller cont. (3) Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention. If yes, the variant is outside the claim. On the other hand, a negative answer to the last question would lead to the conclusion that the patentee was intending the word or phrase to have not a literal but a figurative meaning (the figure being a form of synecdoche or metonymy) denoting a class of things which included the variant and the literal meaning, the latter being perhaps the most perfect, best-known or striking example of the class. In Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 49 IPR 225 (“Root Quality”), Finkelstein J said at [45]: “when the Improver questions are posed and answered, it is difficult to see what can be achieved by recourse to the ‘pith and marrow’ approach”. Merkel J in Photocure ASA v Queen’s University at Kingston (2005) 216 ALR 41; 64 IPR 314; [2005] FCA 344, in a section of the reasons headed “infringement in substance” said at [207]: [207] However, in a case such as the present the Improver questions are useful guidelines because they can be of assistance in determining whether a reasonable person skilled in the art, reading the claims in context, would think that the patentee was not intending to employ the primary meanings of the relevant phrases used in claims 1 and 9 but, rather, was intending that the meaning of those phrases would include the use of an equivalent. In Baygol Pty Ltd v Foamex Polystyrene Pty Ltd (2005) 66 IPR 1 (at [15]), Tamberlin J considered Catnic and its application in Improver. His Honour also considered the application of the purposive approach in Australian cases and the application of the Improver questions. …. Although in Nicaro Holdings Pty Ltd v Martin Engineering Co (1990) 91 ALR 513 Gummow J (with whom Jenkinson J agreed) was considering anticipation rather than infringement, his Honour traced the application of the Catnic principle in Australia (at 528-529). Nicaro sets out the approach to construction of a claim for a combination for the purposes of infringement and anticipation. Gummow J expressed the view that Catnic and purposive construction did not propound a novel principle. His Honour referred to the Full Court decision in Populin where (at 476) the Court commented that the essential features “are to be determined not as a matter of abstract uninformed construction but by a common-sense assessment of what the words used convey in the context of then-existing published knowledge” and cited Catnic as espousing the same principle. To the extent that recent judgments of this Court have suggested that there may be infringement by taking what is determined to be the substantial idea disclosed by the specification but not the essential integers of the claim, I must respectfully disagree. To the extent that cases such as Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 are relied upon as authority for the proposition that there is infringement by taking the “pith and marrow” or substance of an invention, untrammelled by the form of the claims, in my view those cases stand for the opposite test. An examination of “non-textual” infringement raises the question whether “the substance of the invention as claimed has been taken” (emphasis added by Bennett J) (Rehm Pty Ltd v Websters Security Systems (International) Pty Ltd (1988) 81 ALR 79 at 92). Catnic has not changed the law as applied in Australia. Indeed, it did not purport to change the law in the United Kingdom. In any event, the applicable law is as set out by the High Court and the Full Court of this Court which have made clear the way in which Catnic is to be applied. [Her Honour next considered the context in which the Improver questions were framed, and turned to consideration of the observations of Lord Hoffmann in Kirin-Amgen v Hoechst Marion Roussel Ltd [2005] RPC 9; (2004) 64 IPR 444]. [11.70]

467

Intellectual Property: Commentary and Materials

Sachtler v Miller cont. Lord Hoffman sounded a caution about the “purposive construction” of Lord Diplock in Catnic at [33]: [33] … But there is, I think, a tendency to regard it as a vague description of some kind of divination which mysteriously penetrates beneath the language of the specification. Lord Diplock was in my opinion being much more specific and his intention was to point out that a person may be taken to mean something different when he uses words for one purpose from what he would be taken to mean if he was using them for another … The example in Catnic was the use of the word “vertical” as used in the building trade which was not to be construed in a strictly mathematical sense. Lord Hoffman rejected the suggestion that one construes the patent claims in some way to be “fair to the patentee”. As his Lordship points out at [33] “…There is no presumption about the width of the claims. A patent may, for one reason or another, claim less than it teaches or enables”. His Lordship described the question as what the person skilled in the art would have understood the patentee to be using the language of the claim to mean (at [34]). To that end, one looks to the words and syntax used which, it is assumed, were chosen with skill and care. It would not be often, as pointed out at [34], that it will be obvious to the skilled reader that the patentee has departed from conventional use of language or included in the description of the invention some element which was not meant to be essential. Lord Hoffman then examined the way in which the courts of the United Kingdom and the United States have dealt with the difficulties of applying a literal or textual approach to construction of patent claims. In the United States, the courts have adopted the doctrine of equivalents. That has given rise to its own problems with regard to uncertainty and predictability (Festo Corp v Shoketsu Kinzoku Kogyu Kabushiki Co Ltd (2000) 234 F 3d 558). In the United Kingdom the courts adopted Catnic as a solution which, according to Lord Diplock (at [43]) was “a principle of construction which actually gave effect to what the person skilled in the art would have understood the patentee to be claiming”. It can be seen that the approach of courts in the United Kingdom mirrors that in the Australian cases. In Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at [24], for example, the High Court articulates the familiar principle that the patent specification is to be construed in the light of common general knowledge and the art at the priority date. Article 69 of the European Patent Convention, according to Lord Hoffman in Kirin-Amgen at [44], precludes a doctrine which extends protection outside the claims. At [48], his Lordship concludes that the Catnic principle of construction is precisely in accordance with the Protocol. Such a principle also, in the view of his Lordship, provides fair protection to the patentee (at [48]). As Lord Hoffman pointed in Kirin-Amgen out at [69], there is no point in going through the motions of answering the Improver questions when you cannot sensibly do so until you have construed the claim. In such cases, they simply provide a justification for a conclusion that has already been reached on other grounds, namely on the construction of the claims. “They are not a substitute for trying to understand what the person skilled in the art would have understood the patentee to mean by the language of the claim” (at [71]). [619] I am mindful of what was said in Aktiebolaget Hassle v Alphapharm Pty Ltd (2002) 212 CLR 411 (“Alphapharm”) at [42] by Gleeson CJ and Gaudron, Gummow and Hayne JJ as to the consequence of the divergence between the case law of Australia and that of the United Kingdom, in particular after “the ‘Europeanisation’ of British law” (at [48]). In Alphapharm, the High Court was considering differences in the approach to obviousness but, as can be seen, the European Patent Convention has also affected the approach to claim construction. Taking into account the observations of Lord Hoffman as to the usefulness of the Improver questions, which have been labelled “the Protocol questions”, I do not consider that utilisation of 468 [11.70]

Infringement and Exploitation

CHAPTER 11

Sachtler v Miller cont. those questions is helpful other than, perhaps, as a “check” on the conclusion reached as to the characterisation of essential or inessential integers present in the allegedly infringing article. They are no substitute for construction of the claim to ascertain the essential and inessential integers and a determination regarding the presence of those integers for infringement.

KD Kanopy v Insta Image [11.80] KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd (2007) 71 IPR 615 Federal Court of Australia KIEFEL J: [622] The respondents submit that, in determining the question whether there has been infringement, regard should be had to the words of the claims alone, following the “purposive” approach to the construction of patents suggested by Lord Diplock in Catnic [1982] RPC 183. It is not correct, and contrary to such an approach, to identify the “substance” or the pith and marrow of the invention and determine the issue of infringement on that basis, it is submitted. The respondents view such an approach as non-textual. That approach, drawn from Clarke v Adie (1875) LR 10 Ch App 667 at 675, is not consistent with Catnic [1982] RPC 183, which changed the law in this area, it is submitted. This latter fact was recognised by Finkelstein J in Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231; 49 IPR 225 and more recently by Hoffman LJ in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd (2004) 64 IPR 444 (at [42]), it was submitted. In each case it was considered that a purposive construction, particularly one given effect to by the questions posed in Improver Corporation v Remington Consumer Products Ltd [1990] FSR 181 at 189, leaves no area of operation for a pith and marrow approach (see also PhotoCure ASA v Queen’s University at Kingston (2005) 216 ALR 41; 64 IPR 314). The respondents also point to the recognition by Lindgren J of the “tension” between two ideas in the construction of patent claims: the idea that a person should be able to take the substance of the invention and [623] avoid infringement by side-stepping the language of the claims and the idea that the language of patent claims sets the boundaries of the monopoly and ought not to be extended by the courts to catch that which the patentee has left open: Breville Pty Ltd v Warehouse Group (Australia) Pty Ltd (2005) 67 IPR 576 at [40]. It would follow from the respondents’ submission that the first mentioned idea reflects the “pith and marrow” approach but that the latter is the correct approach. Two recent decisions of this Court confirm that the identification of the substance, or essence, of an invention and its use in connection with allegations of infringement to be an incorrect method: Sachtler GmbH & Co KG v RE Miller Pty Ltd (2005) 65 IPR 605 at [55] per Bennett J; Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd (2005) 67 IPR 230 at [38]-[43] and [92]. As the Full Court explained in Fresenius 67 IPR 230, it is an error of principle to ascertain the “essence” of the invention to determine whether infringement has occurred. Fresenius 67 IPR 230 reiterated that the correct approach is to identify the essential integers and that the form and wording of the claim are determinative. The two decisions also make plain that the incorrect approach reflects a misunderstanding of what was envisaged by the doctrine of pith and marrow. That doctrine has not been regarded by Australian courts as inconsistent with a proper approach to the construction of patent claims. …. The decision in Fresenius Medical Care Australia Pty Ltd v Gambro Pty Ltd (2005) 67 IPR 230 at [91] confirms that both Populin v HB Nominees 41 ALR 471 and Catnic [1982] RPC 183 stand for the proposition that the essential integers of claims are determined by a common sense assessment of what the words of the claims convey in the context of then-existing knowledge. The cases show that [11.80]

469

Intellectual Property: Commentary and Materials

KD Kanopy v Insta Image cont. the principle of the pith and marrow is concerned with the identification of what is essential and inessential. Where the omission or substitution in the alleged infringing article is not of an essential feature, the variation is immaterial and a conclusion of infringement may follow.

[11.90]

Note

In KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd (2007) 71 IPR 615, the question of infringement turned on the meaning of “parallel sidewall portions” in the claims. The corresponding features of the accused infringement were inclined at about eight degrees relative to each other. Analogously to Catnic, Kiefel J found that a person skilled in the art would not have understood “parallel” to mean precisely aligned in a strictly geometrical sense, but to mean “reasonably parallel” and consistent with the claimed structure working as described in the specification. Her Honour held that the difference in the accused infringement had no effect on the function of the sidewall, and found that there was infringement. A counter-example is Baygol Pty Ltd v Foamex Polystyrene Pty Ltd (2005) 66 IPR 1, which concerned a method of forming a building foundation. The claimed method called for the placement of concrete spacers at specified positions, but in the accused infringement plastic spacers were used instead. The evidence was that the plastic spacers were just as effective as concrete ones, but Tamberlin J held that a person skilled in the art would not have understood that the word “concrete” was capable of including “plastic” and hence there was no infringement. A somewhat different example is ITW AFC Pty Ltd v Loi and Tran Pty Ltd [2008] FCA 552, in which infringement was alleged to have occurred in respect of a claim for a fastening screw, which was required by the claim to have a taper from one end to the other. The accused fastener was shown by evidence to have a microscopic taper – in the order of a few hundredths of a millimetre – but was held not to infringe because this microscopic taper did not serve the purpose or function of the taper claimed in the patent in suit.

EXCLUSIVE RIGHTS OF THE PATENTEE [11.100] In Bedford Industries Rehabilitation Association Inc v Pinefair Pty Ltd (1998) 40 IPR 438, von Doussa J said (at 449): The grant of an exclusive right to “exploit” the invention provided by s 13 of the Patents Act 1990 replaced the traditional formulation of the exclusive right granted by a patent “to make, use exercise or vend”. The Explanatory Memorandum to the 1990 Act says in relation to s 13 and the definition of “exploit”: This definition, when read with clause 13, constitutes a codification of the scope of patent rights. It avoids some obscure language in the present Act which refers to the right to “make, use, exercise and vend” the invention. As the author observes in Lahore, Patents, Trade Marks and Related Rights, at para 24,000, the definition attempts to encapsulate the decisions in which these words “make, use, exercise and vend” have been interpreted. It is not necessary in this judgment to explore the full meaning and extent of the total definition. For present purposes it is sufficient to observe that there seems to be no reason to doubt that in the definition the words “make” and “use” carry the same meaning as has been given to those words in the former legislation. 470 [11.90]

Infringement and Exploitation

CHAPTER 11

“Make” [11.110] The extract from Bedford Industries Rehabilitation Association Inc v Pinefair Pty

Ltd (1998) 40 IPR 438 at 449, quoted above (at [11.100]), continues: The word “make” is an ordinary English word with wide meaning. Terrell on The Law of Patents (14th ed, 1994), p 176 observes that for this reason, no difficulty should arise with the word. Where the invention is a product, what must be made is the whole product, not constituent parts, and the “making” is not complete until the final step is carried out which results in the complete infringing article: see Lahore at para 18,205.

This principle may be illustrated by reference to the case of Dunlop Pneumatic Tyre Co v David Moseley & Sons Ltd [1904] 1 Ch 616. The patent in that case was for a combination of integers to make up a bicycle wheel with a tubeless tyre. Broadly speaking, the combination of integers involved (a) a hub, (b) spokes, (c) a wheel rim and (d) a special tubeless tyre which fitted within the rim. The combination was not “made” by a person who manufactured and sold only the tyre (integer (d)). However, the combination would be made by a customer who obtained the tyre and fitted it to a wheel consisting of hub, spoke and rim. (Depending on the circumstances, this might give rise to a case of contributory infringement; see [11.180]ff below for a discussion of that topic.) See also Walker v Alemite Corp (1933) 49 CLR 643 for a similar case. To be an infringement, the “making” should be for a commercial purpose that in some way, whether by sale or otherwise, deprives the patentee of the commercial benefit of the invention: see British Motor Syndicate v John Taylor & Sons (1900) 17 RPC 723. There is apparently an implied licence to a purchaser of patented goods to repair those particular goods without infringement, but such an activity must be a genuine repair to prolong the life of the article and not be so extensive a reconstruction as to amount to the making of a new one. The question is one of fact and must be judged in the light of the nature of the article: see Solar Thompson Engineering Co Ltd v Barton [1977] RPC 537 at 554; Sirdar Rubber Co Ltd v Wallington Weston (1907) 24 RPC 539 at 543; Dunlop v Holborn Tyre Co (1901) 18 RPC 222. In the United Kingdom in United Wire Ltd v Screen Repair Services (Scotland) Ltd [2000] 4 All ER 353, Lord Hoffmann expressed the view that the right of repair is a residual right, being part of the right to do whatever does not constitute making the product. From this it followed, in Lord Hoffmann’s opinion, that the relevant question is not what constitutes “repair” but whether the alleged infringer has “made” the patented product.

“Sell” etc [11.120] The terms “sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it” seem straightforward and were intended to reduce the uncertainty in the old terms “exercise and vend”. Mere possession coupled with an intention to trade with the product protected by patent rights amounts to infringement; possession alone, in the absence of use, or intention to use, does not: Pfizer Corp v Ministry of Health [1965] RPC 261 (see in particular at 320-321 per Lord Wilberforce). Where a patentee places a patented product on the market without any condition that restricts dealing with the product, a purchaser has an implied licence to resell or otherwise deal with the particular items: Betts v Wilmott (1871) 2 Ch LR 6; National Phonograph Co of Australia v Menck [1911] AC 336. The same applies to any subsequent purchaser of the goods. [11.120]

471

Intellectual Property: Commentary and Materials

“Use” [11.130] The term “use” applies to both product and process patents. Again, the use must be

one that interferes with the commercial interest of the patentee. Purely experimental use that is not commercial in character has probably never amounted to infringement, although no court in Australia has been called on to determine the issue. Statements in the Explanatory Memorandum to the Patents Bill 1990 (Cth) (at [25]) are consistent with the proposition that a use of a patented invention for purely experimental or trial purposes is not an infringement: see also New York University v Nissin Molecular Biology Institute Inc (1994) 29 IPR 173 at 177 and the discussion of “experiment principle” cases in Smith Kline & French v Attorney-General (NZ) (1991) 22 IPR 143 at 149 per Hardie Boys J. For further discussion of this issue, see [11.320]. The facts of Bedford Industries Rehabilitation Association Inc v Pinefair Pty Ltd (1998) 40 IPR 438 present an interesting illustration of infringement through use. Bedford was the owner of a patent for a garden edging product. The product was made of cut lengths of half round treated pine logs, arranged side by side into a strip and joined by two strands of what was described in claim 1 as “elongated band means”. In the preferred embodiment sold by Bedford, the “band means” were two strands of wire attached by staples allowing for long sections of continuous edging strip, but the “elongated bands” could have been plastic strips, metal bands or any other material and still have been within the claim. The respondent, Pinefair, had made a product for all practical purposes identical to the patented product. An infringement action was settled and the respondent altered its manufacture to produce a different final result in which there was no elongated banded means of connection in an elongated strip. Pinefair now used long plastic strips stapled to the logs, but these were then severed between the staples at the middle of each post to prevent there being continuous plastic strips. The logs were left connected by what were now separate small plastic hinges. However, Bedford complained that, in the course of this new approach, the respondent was making a product that infringed the patent. Bedford alleged that as an intermediate step in Pinefair’s manufacture, prior to the cutting of the plastic strips, Pinefair made edging material that was connected by “elongated band means”. The allegation was that although the respondent’s final product did not infringe the applicant’s patent, there was an intermediate stage in which there was a product in existence that included every integer of the Bedford patent and this constituted infringement. At trial, von Doussa J considered that Pinefair was exploiting the Bedford patent and found infringement. His Honour found Pinefair’s activities involved a “use” of the Bedford patent because Pinefair was taking commercial advantage of the Bedford product as an intermediate step in the manufacturing process to give itself an advantage in the marketplace even though, by the time of sale, the Pinefair product was sufficiently altered so that it no longer included all of the integers of the Bedford patent. His Honour considered reasoning in Smith Kline & French v Attorney-General (NZ) (1991) 22 IPR 143, Pfizer v Ministry of Health [1965] AC 512, Saccharin Corp Ltd v Anglo Continental Chemical Works Ltd (1900) 17 RPC 307 and Beecham Group Ltd v Bristol Laboratories [1978] RPC 153 to assist him in reaching this conclusion. Pinefair appealed to the Full Federal Court. In Pinefair Pty Ltd v Bedford Industries Rehabilitation Association Inc (1998) 87 FCR 458 (see [11.150] below), Foster and Mansfield JJ agreed with von Doussa J, found infringement and dismissed the appeal. However, Goldberg J concluded that it was significant that the Bedford patent was for a 472

[11.130]

Infringement and Exploitation

CHAPTER 11

product and not a process, and he did not “consider that the appellants have made or ‘used’ the invention in the course of their manufacturing process in the sense in which those terms are used in the dictionary definition of ‘exploit’ in Sch 1 of the 1990 Act”. His Honour said (at 480): In my opinion the appellants’ (Pinefair’s) product was not “made” at the point of time the respondent says its patent was infringed. At the point at which the post elements emerge from the saw the manufacturing process is not complete, further work is to be carried out and at that point I am satisfied that the applicants’ product has not yet been made. … Because the appellants have not “made” the product it follows … that they have not used it.

Importation [11.140] From the definition of “exploit” provided in the Patents Act 1990 (Cth) Schedule 1 (see [11.10]) it is clear that the importation of a product, which has been made overseas by a process that is claimed in an Australian patent, is an infringement of that patent. There is English authority for the proposition that the same applies if the patented process is used overseas at an intermediate stage in the production of the product that is imported into Australia; this is sometimes referred to as the “Saccharin doctrine” on importation after Saccharin Corp v Anglo-Continental Chemical Works Ltd (1900) 17 RPC 307. In that case, the patentee owned a patent in the United Kingdom for a process used in the manufacture of the chemical known commercially as saccharin. The product itself could not be patented because, as an existing and known chemical entity, it was not novel. The defendant imported saccharin that had been manufactured in France. The manufacturing process used in France included a step that fell within the claims of the United Kingdom patent, which, if done in the United Kingdom, would have constituted an infringement. The plaintiff alleged that the defendant had infringed the plaintiff’s patent. The defendant argued that the patent was for a process and that no process had been worked in the jurisdiction; what was imported was a product and not covered by a patent for a process. The court disagreed and found that the importation of a product whose production used a process that would be an infringement if performed within the jurisdiction was an infringement of the process patent. It is unclear whether the same principle applies to the importation of a product that has been produced overseas and whose production process uses a product that is the subject of an Australian patent. What judicial authority there is in relation to this issue is discussed in the following extract.

Pinefair v Bedford Industries Rehabilitation Assoc [11.150] Pinefair Pty Ltd v Bedford Industries Rehabilitation Assoc Inc (1998) 87 FCR 458 Federal Court of Australia, Full Court MANSFIELD J: [466] The “infringing importation” cases are generally concerned with the question of whether that which is done or proposed to be done within the jurisdiction in respect of an imported product constitutes an infringing “use” of the imported product within the jurisdiction: Smith Kline & French Laboratories Ltd v Attorney-General (New Zealand) [1991] 2 NZLR 560; Saccharin Corp v AngloContinental Chemical Works Ltd (1900) 17 RPC 307; Dunlop Pneumatic Tyre Co Ltd v British & Colonial Motor Car Co (1901) 18 RPC 313; Pfizer v Ministry of Health [1965] AC 512. In those cases, the [467] manufacture of the imported product, if effected within the jurisdiction, would itself infringe the patent in suit. [11.150]

473

Intellectual Property: Commentary and Materials

Pinefair v Bedford Industries Rehabilitation Assoc cont. In Saccharin, the Court also addressed whether the manufacture of the product itself, if done within the jurisdiction, would constitute infringement of the patent in suit. Buckley J said (at 319): If the patented process were the last stage in the production of the article sold, the importation and sale of the product would, in my opinion, plainly be an infringement. Does it make it any the less an infringement that the article produced and sold is manufactured by the use of the patented process which is subjected to certain other processes? In my opinion it does not. By the sale of saccharin, in the course of the production of which the patented process is used, the Patentee is deprived of some part of the whole profit and advantage of the invention, and the importer is indirectly making use of the invention. In Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153, similar issues were addressed. In that case, one particular issue was whether the use within the jurisdiction of the imported article infringed a particular product patent because, in the course of manufacture of the imported article, the article which was the subject of the product patent was made as an intermediate product in that manufacture. Russell LJ delivering the judgment of the Court of Appeal (Russell and Stamp LJJ and Brightman J) concluded that the defendants’ production of a certain chemical made use of two patented products of the plaintiff and one patented process of the plaintiff, and so infringed the relevant product patents and process patent. Their Lordships did not regard legislative changes to have altered that conclusion, and said (at 185-186): The truth of the matter, as we see it, is that the law, in applying the language of the grant by letters patent of the monopoly to protect the invention of a new process for producing an article or substance, has found it, and established it as, a commonsense necessity to embrace in that language the product without which the process is a meaningless exercise. In our judgment, the cases relied upon by the plaintiff remain good law, and a claim to the product of a claimed process is not necessary. (We do not, of course, refer to a case in which the product per se is novel but might be produced by a different process: there a product claim would be valuable). That case went on appeal to the House of Lords. The appeal was dismissed. The speech of Lord Diplock, with which Viscount Dilhorne, and Lords Simon of Glaisdale, Salmon and Fraser of Tullybelton agreed, recognised the particular issues in the following terms (at 200): In the instant case Beechams have invited your Lordships to extend it from claims for processes for manufacturing products to claims for new products in themselves; so that if a patented product is used as a starting point in the manufacture of the imported article or formed as an intermediary at any stage in the course of its manufacture, this constitutes an infringement of the claim to the patented product, even though no part of the process of manufacture of the imported article infringed any claim to a new process by the patentee, and even though the imported article is wholly different in composition, characteristics and usefulness from the patented product. His Lordship then affirmed the conclusion of the Court of Appeal (at 203), but with the reservation that the lawful use overseas of a product in the [468] manufacture of a different product, then imported and sold, should not, within the jurisdiction, constitute infringement of a product patent for the first product. Lord Simon addressed that issue in his short additional speech in the following terms (at 204):

474 [11.150]

Infringement and Exploitation

CHAPTER 11

Pinefair v Bedford Industries Rehabilitation Assoc cont. I would have thought that some formula might be devised whereby the Saccharin doctrine could be extended so as to cover, say, 6-APA playing a significant part in the manufacture of a semi-synthetic penicillin, but not of a wholly different product like, say, glue.

[11.160]

Notes

Although the House of Lords dismissed the appeal in Beecham Group Ltd v Bristol Laboratories Ltd [1978] RPC 153, their Lordships did not go so far as to decide that the principle expressed in Saccharin extended to situations in which a patented product had been used overseas in the manufacture of a product that was then imported into the jurisdiction. There is some suggestion in England that the principle expressed in Saccharin Corp v Anglo-Continental Chemical Works Ltd (1900) 17 RPC 307 does not apply if the patented process constitutes only an insignificant or trifling part of the production of the imported product: Wilderman v FW Berk [1924] Ch 116 at 127.

“Authorise” [11.170] While Patents Act 1990 (Cth) s 13 grants the patentee the exclusive right to “authorise” another to exploit the invention, there is no definition of the term in the Act. It appears that “authorise” in this context bears a similar meaning to its meaning in the law of copyright of “sanction, approve or countenance”: see University of New South Wales v Moorhouse (1975) 133 CLR 1; see further [6.180]ff. In Bristol-Myers Squibb Co v FH Faulding & Co Ltd (1998) 41 IPR 467 at 488, Heerey J commented that it should not be assumed that copyright principles applied to patent infringement and that the term should be given a dictionary meaning of “to give authority or legal power to”. However, on appeal in Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524, Black CJ and Lehane J at 585 said: [C]ontrary to the view expressed by the trial judge we agree with the view on which Gummow J proceeded in Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 25 IPR 119 at 155 that the word authorise in s 13(1) of the 1990 Act should be taken by analogy to have the meaning it has in the Copyright Act. The context of s 13(1) is analogous to that of ss 36 and 101 of the Copyright Act, and there is nothing novel in finding similar concepts behind aspects of patents and copyright law: Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 44 IPR 481 at [37] and [38].

See also Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd (2010) 85 IPR 525 at [193]–[203], in which Bennett J rejected submissions that had been made to the court that the meaning of “authorises” in s 101 of the Copyright Act 1968 (Cth) is not analogous to “authorise” in Patents Act 1990 (Cth) s 13(1). It follows from the definition of “exploit” in the Patents Act 1990 (Cth) (see [11.10]) that an act of authorisation to do something that would be an infringement may itself be an infringing act. Two elements – control over the acts of another, and a connection between the authoriser and the infringer – are material to infringement by authorisation: RCA Corp v John Fairfax & Sons Ltd (1981) 52 FLR 71 at 80-81. Authorisation may occur by failure to prevent an infringing act, by a person who had the knowledge and power to prevent it: University of [11.170]

475

Intellectual Property: Commentary and Materials

New South Wales v Moorhouse (1975) 133 CLR 1 at 12-13; Inverness Medical Switzerland GmbH v MDS Diagnostics Pty Ltd (2010) 85 IPR 525 at [203]; Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380.

CONTRIBUTORY INFRINGEMENT [11.180] Under the common law, in some circumstances a person who supplies goods to another to be used for a purpose that infringes a patent may be liable as a joint tortfeasor with the actual user of the goods. Additionally, under Patents Act 1990 (Cth) s 117, the concept of contributory infringement is given statutory recognition. Section 117 had no counterpart in the earlier Australian patents legislation. In the first case to come before the Federal Court that concerned the construction of this provision, Gummow J considered that it had limited application in respect of process or method claims (Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205; 25 IPR 119) but in a later judgment a Full Court of the Federal Court did not agree with the analysis of Gummow J (Bristol-Myers Squibb Co v FH Faulding & Co Ltd (2000) 97 FCR 524; 46 IPR 553). Any doubt about the construction of s 117 was dispelled by the High Court in Northern Territory v Collins (2008) 235 CLR 619 (see [11.200]) which also clarified the meaning of “staple commercial product” as it is used in s 117.

Patents Act 1990 (Cth) [11.190] Patents Act 1990 (Cth) s 117 117 Infringement by supply of products (1) If the use of a product by a person would infringe a patent, the supply of that product by one person to another is an infringement of the patent by the supplier unless the supplier is the patentee or licensee of the patent. (2) A reference in subsection (1) to the use of a product by a person is a reference to: (a) if the product is capable of only one reasonable use, having regard to its nature or design - that use; or (b) if the product is not a staple commercial product - any use of the product, if the supplier had reason to believe that the person would put it to that use; or (c) in any case - the use of the product in accordance with any instructions for the use of the product, or any inducement to use the product, given to the person by the supplier or contained in an advertisement published by or with the authority of the supplier.

Northern Territory v Collins [11.200] Northern Territory v Collins (2008) 235 CLR 619 High Court of Australia [Australian Cypress Oil Company Pty Ltd (ACOC) obtained a licence from the government of the Northern Territory to remove from certain land trees of the species Callitris intratropica from which ACOC obtained an essential oil. The respondents, Mr and Mrs Collins, owned a patent which claimed a process for making the oil and alleged that the process used by ACOC to obtain the oil infringed their patent. They accused the appellant (the Northern Territory) of contributory infringement by supplying the timber to ACOC. In a separate proceeding to determine the contributory infringement question (in which it was assumed, for the purposes of the proceeding, that the relevant patent had been infringed 476 [11.180]

Infringement and Exploitation

CHAPTER 11

Northern Territory v Collins cont. by ACOC) the judge at first instance held that there had been no infringement. However, a majority of the Full Court on appeal found for the patentees. The Northern Territory appealed to the High Court from the judgment of the Full Court.] HAYNE J: [628] Engaging s 117 Section 117(1) is engaged where there is “the supply of [a] product by one person to another”. At the relevant time, the dictionary in Sched 1 to the Act provided that “supply” includes “supply by way of sale, exchange, lease, hire or hire-purchase”. The dictionary did not (and does not) contain any definition of “product” but the dictionary’s treatment of the word “exploit” distinguishes between “where the invention is a product” and “where the invention is a method or process”. Read as a whole, s 117 can be seen to proceed on the footing that the word “product” has its ordinary meaning and is not confined to a patented product or a product that is itself the result of applying a patented method or process. Although s 117(1) is engaged only where there is “the supply of [a] product by one person to another”, s 117 is directed to an identified sub-set of such transactions. That sub-set is identified first by the introductory words of s 117(1) – “[i]f the use of a product [the product that is supplied] by a person would infringe a patent” – and second by the amplification in s 117(2) of what is meant by “the use of a product by a person”. At the risk of undue abbreviation the amplification provided by s 117(2) can be described as inviting attention, in the particular cases identified in each paragraph of the sub-section, to “only use” (s 117(2)(a)), “known use” (s 117(2)(b)) and “instructed use” (s 117(2)(c)). In many, perhaps most, cases a convenient point at which to begin consideration of an issue about the application of s 117(1) will be to examine what is said to be the use of the product that is alleged to engage the provision. It is that use which must be identified as the use which would infringe the patent because the hinge about which s 117 turns is its introductory words: “[i]f the use of a product by a person would infringe a patent”. [629] When the question is approached in that way, it will be observed that to ask whether supply of an input for a patented method or process (or resulting product) is capable of attracting s 117(1) may direct attention away from the relevant statutory questions. Those questions are: is there a supply of a product; what is the use of the product (as use is elucidated in s 117(2)); and does that use infringe the patent? The answer that is to be given to the last of the three questions just identified will, of course, turn upon whether the use in question contravenes the patentee’s exclusive rights under s 13 of the Act, during the term of the patent, to exploit the invention and to authorise another person to exploit the invention. And that requires close attention to what is meant by “exploit”. In particular, it requires close attention to what is said in the dictionary in Sched 1 to the Act about “exploit”, namely that: exploit, in relation to an invention, includes: (a) where the invention is a product – make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or (b) where the invention is a method or process – use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use. The question which the appellant submitted arose in this matter – is the supply of an input for a patented method or process (or resulting product) capable of attracting the operation of s 117(1) of the Act? – was framed as it was in the expectation that it could and should be answered in the negative. When the questions presented by s 117 are identified in the manner set out earlier in these reasons it is apparent that a variety of quite different cases may arise for consideration under s 117. In particular, the different kinds of use that are identified in s 117(2) may present radically different issues [11.200]

477

Intellectual Property: Commentary and Materials

Northern Territory v Collins cont. about the relationship between the relevant use and the patentee’s exclusive rights to exploit the relevant invention. That is reason enough not to attempt some singular answer to a general question about when s 117 may be engaged. It is also reason enough to doubt that differences which may be identified in what was said by Gummow J in Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205 at 242-243 and Black CJ and Lehane J in Bristol-Myers Squibb Co v F H Faulding & Co Ltd (2000) 97 FCR 524 at 556-559 [87]-[97] are usefully expressed in terms of the kind that the appellant’s first question employed. Rather, questions about the application of s 117 must be approached with a close focus upon the relevant statutory language. That will require identification of the relevant use of the product and the relevant exclusive rights of the patentee. It is not useful, and may be [630] misleading, to proceed by first seeking to establish a singular and all-embracing explanation of the operation of s 117 by excluding certain types of patent or certain types of product from any possible operation of the section. For the reasons that have been given, it is convenient to deal next with the third of the questions posed by the appellant – is the timber a “staple commercial product”? That question should be examined now because it bears upon whether there was a relevant “use” within s 117(2) and, as indicated earlier in these reasons, s 117 is hinged about the identification of “the use of a product by a person [which] would infringe a patent”. Staple commercial product I agree with Crennan J that a staple commercial product is one that is supplied commercially for various uses. While I agree with her Honour that this does not mandate an inquiry into whether there is “an established wholesale or retail market” (Collins v Northern Territory (2007) 161 FCR 549 at 595 [156]) I greatly doubt that a product could be described as a “staple commercial product” if there were not some market for its sale for various uses. The doubt lies in the fact that the product must be a commercial product and that, to be a “staple commercial product”, it must be an article of commerce that not only can be used in a variety of ways but also is traded for use in various ways. But no question of that kind arises here. As Crennan J points out, leaving aside any supply to ACOC, timber of the kind at issue in this case was supplied to various licensees for a variety of uses. Those transactions were not so few or infrequent as to deny the existence of a market for the supply of that kind of timber for a variety of different uses. The phrase “staple commercial product” must be read as a whole and it must take its meaning from the context in which it sits. In particular, it is to be recalled (see Walker v Alemite Corporation (1933) 49 CLR 643 at 658 per Dixon J) that s 117 creates a liability in a supplier of a product where the act of supply would otherwise not infringe a patentee’s rights. Section 117 imposes liability on the supplier if use of the product supplied by the person to whom it is supplied would infringe. In this setting “staple commercial product” should not be given a narrow meaning. To do so would expand the classes of supply which are reached by s 117, thus expanding the rights of the patentee where, by hypothesis, the act of supply is not otherwise an infringement of the patentee’s monopoly. Further, the meaning given to “staple commercial product” must recognise that the central focus of s 117 falls upon the use of a product. The construction of the section must be approached with these two matters at the forefront of consideration. … [632] It may be thought that to read “staple commercial product” as identifying a product that is supplied commercially for various uses leaves little effective work to be done by s 117(2)(b). In particular it can be observed that cases of “only one reasonable use” are dealt with in s 117(2)(a), and yet many cases in which a product has various uses will not fall within s 117(2)(b). The resolution of this apparent tension between the two provisions lies in the recognition that s 117(2)(a) is concerned with a product capable of only one reasonable use, whereas “staple commercial product” takes its operation from what is seen to occur in the market-place. The two paragraphs pose radically different 478 [11.200]

Infringement and Exploitation

CHAPTER 11

Northern Territory v Collins cont. questions. The question posed in s 117(2)(a) is: For what can the product be used? By contrast, the question posed in s 117(2)(b) is: To what uses is the product in fact put? If it is in fact supplied commercially for various uses, it is a staple commercial product and [633] the supplier of such a product is not to be held liable as an infringer because the person to whom the product is supplied uses it in a way that infringes, even if the supplier has reason to believe that it may be used in that way. Reading the provision on this basis would bring within the reach of s 117(2)(b) the supply, for example, of a product previously traded for only one use where the supplier has reason to believe that it will be used for a new and infringing use. It would leave beyond the reach of s 117 the supply of a product that has previously been traded for various uses unless the supply falls within s 117(2)(c) – where the supplier instructs or induces a particular use which infringes, or advertises the product for that use. Once the product in question in this case is identified as a staple commercial product, it is evident that none of the three kinds of case identified in s 117(2) is engaged. Identification of the product as a staple commercial product takes the case outside s 117(2)(b) and, because the product has more than “one reasonable use”, s 117(2)(a) is not engaged. It was not suggested that the case of “instructed use”, for which s 117(2)(c) provides, applies in this case. CRENNAN J: [649] Leaving aside practicalities of proof, if a product is in fact used for carrying out the patented process, an infringement occurs. In terms of s 6 of the Statute of Monopolies referred to in the Act’s definition of “invention” in Sched 1, such an act is a “working” of the invention; in terms of the definition of “exploit” in Sched 1 to the Act, the conduct is a “use [of] the method or process”. Although acts in respect of a product resulting from a patented method which infringe the monopoly will commonly be acts of direct infringement, there is no reason to doubt that s 117(1) applies to a product resulting from a use of a patented method. However, equally, a consideration of the complete definition of “exploit” in respect of a method or process indicates that there is no reason to deny the application of s 117 to a product (including, as here, an unpatented product) supplied by the supplier, preparatory to any carrying out of the patented method by a person to whom the product is supplied. The secondary materials referred to above show that the latter type of product was the main target of the legislation. The word “product” in s 117 is not confined to a product resulting from the use of a patented method or process. Furthermore, a consideration of the whole of s 117, including s 117(2), indicates that the expression “the use of a product by a [650] person” in s 117(1) refers to a use of a product by a person to whom the product is supplied; the use of the word “supply” suggests a third party: Thorley, Miller, Burkill, Birss and Campbell, Terrell on the Law of Patents, 16th ed (2006) at 315 [8-32]. The precondition to engagement of s 117 in relation to a patented method is not a use of a product by the supplier of the product, but rather a use of the product by the person to whom the product is supplied (cf Rescare at 242-243 per Gummow J [110]). Section 117(2) follows and qualifies s 117(1). It contains a set of limitations which clarify and limit the availability of remedies for a patentee in respect of an “infringement by supply”. Section 117(2)(a) expressly provides that facts resembling those of Dawson Chemical Co v Rohm & Haas Co 448 US 176 (1980) constitute an infringement by supply. Section 117(2)(b) is a limitation which operates to protect suppliers of “staple commercial products” from liability even if a use of a staple commercial product by a person supplied “would infringe” in terms of s 117(1). Section 117(2)(c) provides that contributory infringement by inducement (considered a separate tort at common law) is an infringement by supply. It is clear from the limitations on “use” in s 117(2) that the product supplied may be unpatented and may include raw materials. The limitations in s 117(2) can be understood as operating to ensure that infringement by supply does not inhibit lawful competition in unpatented products. [11.200]

479

Intellectual Property: Commentary and Materials

Northern Territory v Collins cont. Consideration of the entire definition of “exploit” in respect of a method or process patent and of the whole of s 117 confirms that s 117 can be engaged in respect of a supply of a raw material for carrying out a patented method. That construction applies s 117 according to its terms and promotes the objectives of the legislation which can be gleaned from the secondary materials. Whether a particular use of an input into a method (or an input into a resulting product) “would infringe” in terms of s 117 will turn on the claims. In terms of the claims in this case, and the assumption made by the primary judge that ACOC infringed the patent, the alleged use which ACOC makes of the bark and wood of the trees (the “supplied” product) is making, selling and offering for sale, the oil (the “infringing” product) extracted from the supplied product by steam distillation (the patented method). Nothing more needs to be said in the context of determining separate issues other than that the Northern Territory fails in respect of its submission on the first question that s 117 has no application to the timber supplied to ACOC. [All members of the court agreed that the timber was a “staple commercial product” from which it followed that the appeal should be allowed.]

[11.210]

Notes

The definition of “supply” provided in Patents Act 1990 (Cth) Schedule 1 now reads: “supply” includes: (a) supply by way of sale, exchange, lease, hire or hire-purchase; and (b) offer to supply (including supply by way of sale, exchange, lease, hire or hire-purchase).

With regard to the expression “if the supplier had reason to believe that the person would put it to that use” in s 117(2)(b), the relevant test is an objective one: if, from the point of view of a reasonable person, the supplier of a non-staple commercial product would reasonably be expected to have believed that the supplied product would be put to an infringing use, then supply of that product is an infringement, even if the use for which the supplier actually supplied it is a non-infringing use: Generic Health Pty Ltd v Otsuka Pharmaceutical Co Ltd (2013) 296 ALR 50; 100 IPR 240.

Contributory infringement more generally [11.220] It was noted at [11.110] that the sale of a component part of a patented combination to a person who does not have the right to exploit the combination does not necessarily constitute an infringement of a claim to the combination. Circumstances where infringement could arise, however, are those to which s 117 applies, and those in which the supplier of the component part has made himself a party to the exploitation of the combination. As regards s 117, some differing opinions have been expressed as to whether it applies to the supply of a product for use as part of an infringing product (compare Grove Hill Pty Ltd v Great Western Corp Pty Ltd (2002) 55 IPR 257; [2002] AIPC 91-810; [2002] FCAFC 183 at [336] per Gyles J with Great Western Corp Pty Ltd v Grove Hill Pty Ltd [2001] FCA 423 at [33] – [35]) but such doubts that there may have been about this issue appear now to have been removed. In Fei Yu t/as Jewels 4 Pools v Beadcrete Pty Ltd [2014] FCAFC 117, the supply of certain glass beads with instructions to use them in a pool lining gave rise to infringement under s 117 in respect of a claim to a structure having a surface finish which included the glass 480 [11.210]

Infringement and Exploitation

CHAPTER 11

beads. In Damorgold Pty Ltd v JAI Products Pty Ltd (2014) 105 IPR 60; [2014] FCA 150, the supply of a component part of a roller blind assembly which had no other use was held to give rise to infringement under s 117 of a claim to a mechanism for extending and retracting a roller blind. More generally, aside from the operation of s 117, circumstances can exist where the supplier of a product that is used for an infringing purpose may themselves be an infringer under common law principles. This occurs when a person is a party to an infringing act: Walker v Alemite Corp (1933) 49 CLR 643 at 658. The elements of this form of contributory infringement are (a) one or more actual acts of infringement, and (b) a concurrence between two or more parties in the act or acts of infringement: Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd [2016] FCA 236 at [268]; Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574 at 580-581. The sale of a patented combination as a kit of parts will often amount to an infringement on this basis (Windsurfing International Inc v Petit [1984] 2 NSWLR 196; (1984) 73 FLR 224; 3 IPR 449 at 230-233 (FLR); 457-459 (IPR); Grove Hill Pty Ltd v Great Western Corp Pty Ltd (2002) 55 IPR 257 at [334] – [335]) but it can arise in other circumstances also. Relevant authorities are reviewed in Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 44 IPR 481, in which the Full Court of the Federal Court held that the supplier of articles as described in the patent in suit, together with instructions to use them in a construction method as claimed in the patent, had procured infringement of the patent.

Liability under Competition and Consumer Act 2010 (Cth) [11.230] In some circumstances, actions of a person who infringes the rights of a patentee

under Patents Act 1990 (Cth) may also contravene aspects of Australian competition and consumer protection law. The following extract illustrates circumstances where this may occur. In it, reference is made to Trade Practices Act 1974 (Cth) s 52, which has now been replaced by Australian Consumer Law s 18. The latter is contained in Schedule 2 to Competition and Consumer Act 2010 (Cth).

Ramset Fasteners (Aust) v Advanced Building Systems [11.240] Ramset Fasteners (Aust) Pty Ltd v Advanced Building Systems Pty Ltd (1999) 44 IPR 481 Federal Court of Australia, Full Court BURCHETT, SACKVILLE AND LEHANE JJ: [510] The issue of contravention of s 52 of the Trade Practices Act 1974 Having regard to the conclusions reached earlier in these reasons, it is unnecessary to say much about this issue. Even if damages should have been awarded under s 82 of the Trade Practices Act 1974, in respect of the contravention of s 52, it would have involved a doubling up to have awarded such damages in addition to the larger damages for infringement of the patent. But his Honour did make a finding that s 52 had been contravened, and the appellant challenges that finding. His Honour said: I am of the view that the failure of Ramset to warn its customers that use of clutches or components in a particular way might constitute an infringement of Advanced’s patent, does constitute conduct in trade or commerce which is misleading or deceptive or likely to mislead or deceive users. We agree with the reasons his Honour gave for this conclusion, and accordingly shall confine ourselves to some brief remarks. [11.240]

481

Intellectual Property: Commentary and Materials

Ramset Fasteners (Aust) v Advanced Building Systems cont. Section 52 requires that a “corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”. Attention has been drawn, in a number of cases, to the fact that the section is not limited to “representations”, a word that does not appear in it, although contravening conduct is generally apt to involve representations: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 93; Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553 at 585-586; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32, 40-41. Whether or not Ramset’s conduct should be analysed as conveying an implicit misrepresentation, it acted misleadingly when it promoted and sold face-lift tilt-up equipment in the way that it did, without informing its customers of the liability it was inducing them to incur. This was conduct calculated to cause a mistaken impression about a significant consequence of the transaction proposed to those customers. In our opinion, in such a case, it is unnecessary, and may be artificial, to speak of a representation. The orthodox theory would find one, but it is more realistic to see the conduct as misleading, without resorting to a sophisticated analysis in which no-one would have engaged at the time. It is plain, on the evidence and the findings of the trial judge, that Ramset’s conduct was engaged in for the purpose of persuading customers to purchase the various forms of equipment it supplied for face-lift tilt-up operations. Many persons did so. For example, Mr Nightingale gave evidence, to which reference has been made, of a big change in the source of supply upon which Brambles Cranes drew to obtain ring clutches. In Como Investments Pty Ltd v Yenald Nominees Pty Ltd (1997) ATPR 43,617 at 43,619-43,620, a full court jointly stated: Where a representation is relevant to the decision in question, and in its nature persuasive to induce the making of that decision, it accords with legal notions of causation to hold that it has a causative effect. And where a respondent, who may be taken to know his own business, has thought it was in his interests to misrepresent the situation in a particular respect, the Court may infer that the misrepresentation was persuasive. These inferences arise from the making of the representation followed by the respondent doing the thing it was calculated to induce him to do. Those observations may be applied equally to the effect of the misleading conduct of Ramset upon its customers. See also Gould v Vaggelas (1985) 157 CLR 215 at 236; Commission for the New Towns v Cooper (Great Britain) Ltd [1995] Ch 259 at 282; Sibley v Grosvenor (1916) 21 CLR 469 at 473, [511] 478, 481; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 at 578; Hanave Pty Ltd v LFOT Pty Ltd (1999) FCA 357 at paras 37, 45. In the present case, the inference should be drawn that Ramset’s misleading conduct did cause damage to Advanced, but it is unnecessary to pursue this point further.

DEFENCES AGAINST INFRINGEMENT Onus of proof of infringement of a process claim [11.250] Ordinarily, it is the patentee or the exclusive licensee who carries the onus of proving

infringement of his or her patent. However, in circumstances where it is alleged that a claim to a process for obtaining a product is being infringed, and the defendant asserts that he or she is using a process that is different to the patented process, under the Patents Act 1990 (Cth) s 121A the defendant may acquire the burden of proving that he or she is not using the patented process. Before this occurs, the plaintiff is required to have taken reasonable steps to find out the process actually used by the defendant but been unsuccessful, and the court must be satisfied that it is very likely that the defendant is actually using the patented process. 482 [11.250]

Infringement and Exploitation

CHAPTER 11

Gillette defence Woodbridge Foam v AFCO Automotive Foam Components [11.260] Woodbridge Foam Corporation v AFCO Automotive Foam Components Pty Ltd (2002) 58 IPR 56 Federal Court of Australia FINKELSTEIN J: [57] The applicant is the proprietor of Australian Patent 728093 for methods of producing foamed articles in a mould and for moulds for producing foamed articles. … In this action the applicant claims that its monopoly in the patented methods and products has been infringed. Its statement of claim takes the usual form, describing the parties in paragraphs 1 and 2, claiming proprietorship and asserting the validity of the patent in paragraphs 3 and 4 and alleging infringement in paragraph 5. According to its amended defence, to which detailed reference will be made in a moment, the respondent denies infringement, alleges that the patent is invalid upon the grounds set out in the particulars of invalidity (which were separately delivered), gives notice that it will rely on s 123 of the Patents Act 1990 (Cth) (that is, the defence of innocent infringement) and pleads the equitable defences of estoppel and acquiescence. There is a cross-claim in which the respondent asks for revocation of the patent on the ground of invalidity. [58] I now turn to the applicant’s complaints. The first matter concerns paragraph 4 of the defence. Having denied the applicant’s allegation that the patent is “subsisting and of full force and effect”, paragraph 4.2 of the amended defence provides (with irrelevant portions omitted) “that the alleged infringements … were not novel at the earliest priority date of any claim of the patent”. This is the so called “Gillette Defence” and is based on the observations of Lord Moulton in Gillette Safety Razor Company v Anglo-American Trading Company Ltd (1913) 30 RPC 465. The plea is followed in paragraph 4.3 by the allegation, which is repeated in the cross-claim, that in any event the patent is invalid for the reasons set out in the particulars of invalidity. Reference must be made to those particulars. The grounds of invalidity sought to be established are that the specification does not meet the requirements of ss 40(2) or (3), that the claimed invention is not novel when compared with the prior art, that the claimed invention is obvious and did not involve an inventive step, that the claimed invention is not a manner of manufacture and that it is not useful. Paragraph 4.3 is then followed by a general denial of infringement in paragraph 5. The applicant says that the Gillette Defence is embarrassing because it adds nothing to the respondent’s general denial of infringement and its allegation of invalidity for want of novelty or, if it is intended to add something, that something is not spelt out. It is not without some hesitation that I propose to reject this submission. My reason requires me to state what I understand to be the point of the Gillette Defence. This takes me to Mr Frost’s textbook Patent Law and Practice, the third edition of which was published in 1906. In a passage which appears to anticipate (if I might borrow a word that has a special meaning in this area) the Gillette Defence Mr Frost wrote (vol 1 p. 56): Sometimes in a patent case a conclusion may be arrived at in favour of the defendant by considering the infringement apart from the patent. If it can be shown that the alleged infringement is an act which, having regard to the state of public knowledge prior to the date of the patent, the public actually did or had the right to it (ie, passing from what was actually known or done to the act complained of involved no inventive step), the patentee cannot complain. He is in this dilemma, either the patent includes that which was actually done before or that which the public had the right to do – that is, something which involved no invention – in which the case is bad for want of novelty; or it does not include it, in which case the defendant is not an infringer. What Lord Moulton said in Gillette is to the same effect. He pointed out that it is permissible for a patent case to be decided without regard to the patent in suit. That is really the important point. A plea [11.260]

483

Intellectual Property: Commentary and Materials

Woodbridge Foam v AFCO Automotive Foam Components cont. of invalidity for want of novelty can only be resolved after there has been a close examination of the patent in suit [59] and the claimed invention has been compared with prior disclosures. Issues of infringement begin with a construction of the claims, which may also involve a close examination of the patent, and then the alleged infringing product or process must be compared with the claims. The Gillette Defence avoids these steps and the complexities that usually will result.

[11.270]

Note

Note the relationship between this defence and the concept of the reverse infringement test for anticipation establishing want of novelty. This relationship was noted by Gummow J in RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1989) 13 IPR 513; 25 FCR 565 at [10].

Prior use of invention by defendant Patents Act 1990 (Cth) [11.280] Patents Act 1990 (Cth) s 119(1) and (2) (notes omitted) 119 Infringement exemptions: prior use (1) A person may, without infringing a patent, do an act that exploits a product, method or process and would infringe the patent apart from this subsection, if immediately before the priority date of the relevant claim the person: (a) was exploiting the product, method or process in the patent area; or (b) had taken definite steps (contractually or otherwise) to exploit the product, method or process in the patent area. (2) Subsection (1) does not apply if, before the priority date, the person: (a) had stopped (except temporarily) exploiting the product, method or process in the patent area; or (b) had abandoned (except temporarily) the steps to exploit the product, method or process in the patent area.

[11.290] Section 119 is intended to permit a person who was exploiting a patented invention

in good faith immediately before the relevant priority date, to escape liability as an infringer after the patent has been published. The present form of s 119 (see [11.280]) was inserted into the Patents Act 1990 by the Intellectual Property Laws Amendment Act 2006 (Cth) in part to rectify some shortcomings that had been identified in the provision as it stood previously. Both the previous form of s 119 and the current version include the term “definite steps”, which was considered by Heerey J in Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327. In that case, the original form of s 119 applied.

484 [11.270]

Infringement and Exploitation

CHAPTER 11

Welcome Real-Time v Catuity [11.300] Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327 Federal Court of Australia [See [9.430] for a summary of the invention of the patent in suit.] HEEREY J: [346] … IV Definite steps to make or use 1. The construction of s 119 Section 119 of the Act provides as follows: (1) Where, immediately before the priority date of a claim, a person: (a) was making a product or using a process claimed in that claim; or (b) had taken definite steps (whether by way of contract or otherwise) to make that product or use that process the person may, despite the grant of a patent for the product or process so claimed, make the product, or use the process, (or continue to do so) in the patent area, without infringing the patent. (2) Subsection (1) does not apply if the person: (a) derived the subject-matter of the invention concerned from the patentee or the patentee’s predecessor in title in the invention; or (b) before the relevant priority date, had stopped making the product or using the process (other than temporarily), or had abandoned (other than temporarily) the steps mentioned in paragraph (1)(b). [347] The respondents rely on s 119(1)(b). The product or process referred to in s 119(1) is the product or process claimed in the claim of the patent: CCOM Pty Ltd v Jiejing Pty Ltd (1993) 27 IPR 577 at 627 per Cooper J. For s 119 to be applicable, it must be possible to say that immediately before the priority date the product or process of the patent was being made or used by the infringer or he or she had taken definite steps to make or use that particular product or that particular process. The concept of which s 119 speaks may be illustrated by the following example. Assume a patented product consisting of components A, B and C. Immediately before the priority date an infringer: has drawings depicting the product; has actually made A; has on his premises the raw materials for component B; and has ordered the raw materials for component C. It can then be said that the infringer had taken definite steps to make that product. Conversely, it would not be sufficient that immediately before the priority date, the infringer has made A, has received the raw materials for B but is investigating whether C, D or E would be the preferable final component. And the infringer would be in no better position if, after the priority date, he in fact decided that C was preferable and then proceeded to manufacture a product consisting of A, B and C. Reference was made in the course of argument to s 64 of the Patents Act 1977 (Imp) which provides: Where a patent is granted for an intention, a person who in the United Kingdom before the priority date of the invention (a) does in good faith an act which would constitute an infringement of the patent if it were in force, or (b) makes in good faith effective and serious preparations to do such an act has the right to continue to do the act or, as the case may be, to do the act, notwithstanding the grant of the patent, but this right does not extend to granting a licence to another person to do the act. In Helitune Ltd v Stewart Hughes Ltd [1991] FSR 171 the production of prototypes before the priority date was held not enough to show effective and serious preparation. In Lubrizol Corp v Esso Petroleum [11.300]

485

Intellectual Property: Commentary and Materials

Welcome Real-Time v Catuity cont. Ltd [1998] RPC 727 the patent related to a lubricating oil. The first batch of the defendants’ product was imported into the UK before the priority date and the defendants had given consideration to appropriate pricing. The defendants had also contemplated manufacturing the product in the UK. It was held that the defendants had not undertaken effective and serious preparations. Aldous J said (at 770) that the preparations must be “so advanced as to be about to result in the infringing act being done”. Thus the English courts have adopted a strict interpretation of s 64, a provision which, on its face, seems more favourable to infringers that s 119. Assuming for the moment that doing an act which would constitute infringement in the UK Act can be equated to making a product or using a process claimed in the claim of the patent in the Australian Act …., in the normal course of events making preparations for the making of a product would be something that occurs prior to steps in the actual making. 2. Evidence Mr Garton deposed that in August 1995 the respondents began work developing an upgraded system to make the Wizard/Transcard system suitable [348] for full scale production use. Work continued on the upgrade throughout August and by mid September 1995 the respondents had formulated “the rollout requirements for the upgrade system”. Mr Garton produced a copy of the rollout commencement requirements dated 14 September 1995. He deposed that this was the “first and most critical document developed for the project”. It described the “functionality expected (and finally delivered) by” the respondents’ system. He further deposed that the “technical design of the (respondents’) system was substantially completed by 21 January 1996”. Mr Ben-Meir considered the documents referred to by Mr Garton. In Mr Ben-Meir’s opinion, those documents did not show that the technical design of the respondents’ system was substantially completed by 21 January 1996. From a review of those documents Mr Ben-Meir opined that the development of the respondents’ system had started but was in the early stage of development by that date. Seven of the documents referred to by Mr Garton in his affidavit were not completed by then. Mr Ben-Meir noted that the respondents’ system became operational in August 1996. 3. Conclusion Neither Mr Garton nor Mr Ben-Meir was cross-examined on their evidence on this issue. The onus is on the respondents. I am not satisfied that, within the meaning of s 119(1)(b), the respondents had taken definite steps to use their system by 21 January 1996. Quite apart from questions of onus, I note that in terms of Mr Garton’s evidence the design of the respondents’ system was only “substantially completed” by 21 January 1996. The fact that the respondents’ system did not become operational until seven months later confirms the impression that what the respondents were doing as at the priority date was engaging in the ongoing development of a system.

[11.310]

Notes

Since the decision in Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327, a general “grace period” has been introduced: see [9.590]. Where information about an invention has been disclosed before the priority date and the patentee relies on the “grace period” to avoid that disclosure constituting an anticipation that negates the novelty of the invention, a defendant who learned the information from the disclosure may rely upon a defence to infringement under Patents Act 1990 (Cth) s 119, which provides exemption from infringement to a prior user (see in particular s 119(1) and (3)). 486 [11.310]

Infringement and Exploitation

CHAPTER 11

In Welcome Real-Time SA v Catuity Inc (2001) 51 IPR 327, following the passage extracted at [11.300], Heerey J went on to note some limitations to, and uncertainties about, the effect of s 119 as it then was which his Honour considered existed. The amendments to s 119 by the Intellectual Property Laws Amendment Act 2006 (Cth) clarified this prior use exemption somewhat and expanded its operation. These amendments apply only to patents granted as a result of patent applications filed on or after 28 September 2006. The first significant change made to s 119 by the Intellectual Property Laws Amendment Act 2006 (Cth) was to make the exemption only available in relation to prior use in Australia. This then excludes what has been termed “obscure use overseas” from creating rights in Australia. Secondly, it has been made clear that any use that “exploits a product, method or process and would infringe a patent” (Patents Act 1990 (Cth) s 119(1)) is covered by the exemption. This amendment removes doubt about whether the former version of Patents Act 1990 (Cth) s 119 allowed a prior user not only to continue to make and use a product, but also to deal with it commercially. Thirdly, the amended s 119 provides that the holder of a right to continue to use an invention by virtue of s 119 is able to assign or otherwise transfer that right to another (Patents Act 1990 (Cth) s 119(4)). Licensing of the right is not provided for, however.

Experimental use Patents Act 1990 (Cth) [11.320] Patents Act 1990 (Cth) s 119C 119C Infringement exemptions: acts for experimental purposes (1) A person may, without infringing a patent for an invention, do an act that would infringe the patent apart from this subsection, if the act is done for experimental purposes relating to the subject matter of the invention. (2) For the purposes of this section, experimental purposes relating to the subject matter of the invention include, but are not limited to, the following: (a) determining the properties of the invention; (b) determining the scope of a claim relating to the invention; (c) improving or modifying the invention; (d) determining the validity of the patent or of a claim relating to the invention; (e) determining whether the patent for the invention would be, or has been, infringed by the doing of an act.

[11.330]

Note

Section 119C was inserted into the Patents Act 1990 (Cth) by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) and applies to actions that occurred after 15 April 2012. The list of examples of experimental purposes in s 119C is not exhaustive, and even some ultimate commercial aim is not necessarily inconsistent with an experimental purpose (see also [9.800]).

[11.330]

487

Intellectual Property: Commentary and Materials

Raising the Bar Bill 2011 (Cth) Explanatory Memorandum [11.340] Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) Explanatory Memorandum, p 71 It is intended that “experimental” be given its ordinary English meaning. The exemption should apply to tests, trials and procedures that a researcher or follow-on innovator undertakes as part of discovering new information or testing a principle or supposition. To provide certainty and clarity for researchers, an additional inclusive list of activities that are deemed to be experimental has been included. This list is not intended to be exhaustive and a court may find that other activities also fall within the meaning of “experimental”. The exemption is not intended to apply only to circumstances where activities are undertaken solely for experimental purposes. This would ignore the reality of the current research environment, where research is frequently undertaken for mixed purposes. For example: • a researcher may be contracted and paid to undertake experiments; • research may be conducted with a view to ultimately commercialising the endproducts of the experimentation; and • research may be undertaken with, and partially funded by, a commercial partner. In each of these circumstances the exemption should apply as long as the specific acts are undertaken for the predominant purpose of gaining new knowledge, or testing a principle or supposition about the invention. Thus if an activity is conducted primarily for the purpose of improving a patented invention, the activity would still be exempt, even if the person also had in mind commercialising the improvement in the future. However, the exemption is not intended to apply where the main purpose of the acts is to commercialise the invention, or to manufacture it for the purpose of sale or use for commercial purposes. Additionally, “market research” on a patented invention (eg making and using the invention to test the likely commercial demand for a product) is not intended to be exempt. This too has a predominantly commercial purpose.

Other defences under Patents Act 1990 (Cth) Patents relating to pharmaceuticals and other inventions requiring regulatory approval [11.350] Where the term of a patent for a pharmaceutical substance has been extended under the provisions of Patents Act 1990 (Cth) ss 70 – 79A, it is not an infringement during the period of extension for a person to exploit a pharmaceutical substance claimed in the specification for a purpose other than therapeutic use: s 78(a). It is also not an infringement during the period of extension to exploit any form of the invention that is not a pharmaceutical substance: s 78(b). A further, broader, exemption from infringement in relation to pharmaceuticals was provided through amendments to the Patents Act 1990 (Cth) made by the Intellectual Property Laws Amendment Act 2006 (Cth), whereby it is not an infringement of a pharmaceutical patent at any time during the patent term to exploit a pharmaceutical substance disclosed and claimed in the patent solely for the purpose of obtaining regulatory approval in Australia for goods intended for therapeutic use (other than medical or therapeutic 488 [11.340]

Infringement and Exploitation

CHAPTER 11

devices): Patents Act 1990 (Cth) s 119A(1)(a). This permits the manufacturer of a generic substitute to meet regulatory requirements for marketing approval of the generic pharmaceutical relatively quickly after the patent expires. This system is sometimes called “springboarding”. It is also not an infringement of a pharmaceutical patent where the pharmaceutical substance disclosed in the patent is exploited for the purpose of obtaining regulatory approval in an overseas country: s 119A(1)(b). However, this latter provision only protects the export of goods from Australia for purposes associated with obtaining regulatory approval in another country, if an extension of the term of the relevant patent has been granted: s 119A(2). Further broadening of the “springboarding” provisions occurred through the insertion of s 119B into the Patents Act 1990 (Cth) by the Intellectual Property Laws Amendment (Raising The Bar) Act 2012 (Cth). This now broadens the exemption to infringement that applies to acts done solely for the purposes of obtaining regulatory approval by making it applicable to all kinds of patents, and not just to pharmaceutical patents. This latest provision applies to actions carried out after 15 April 2012.

Lapse [11.360] A patent or patent application may cease or lapse due to a failure to pay a renewal fee or failure to file a prescribed document within the relevant time allowed (Patents Act 1990 (Cth) s 143). If this occurs and any of the circumstances in s 223(1), (2) or (2A) applies, the patentee or applicant may apply for an extension of time for payment of the renewal fee or for filing documents. If the extension of time is granted, the patent or patent application will be restored (s 223(7)). Infringement actions cannot be brought for activities that took place between the date of cessation and restoration (s 223(10)). Additionally, when the extension of time involved is more than 3 months and in certain other circumstances, a person who availed themselves of the invention, exploited it, or took definite steps to exploit it, in the period when the patent or application had ceased or lapsed may apply to the Commissioner for a licence to continue to exploit the invention (s 223(9) and Patents Regulations 1991 (Cth) reg 22.21).

Crown use [11.370] Use of an invention by the Commonwealth or a State, or by a person authorised in

writing by them, where the exploitation is for the service of the Commonwealth or a State is not an infringement (Patents Act 1990 (Cth) s 163). Remuneration must be paid to the patentee and terms for the exploitation must be agreed on or can be set by the court (s 165). See Stack v Brisbane City Council (1995) 32 IPR 69.

Use on ships, aircraft and vehicles temporarily in Australia [11.380] It is not an infringement to use a patented invention in or on a foreign vessel from another member country of the Paris Convention for the Protection of Industrial Property (Paris Convention) or a full member of the World Trade Organisation (WTO), temporarily or accidentally in Australian territorial waters, provided the use is only for the needs of the vessel (Patents Act 1990 (Cth) s 118). Similarly, it is not an infringement to use a patented invention in the construction or working of a foreign aircraft or land vehicle from another Paris Convention country or full member of the WTO where the aircraft or vehicle is temporarily or accidentally in the patent area (s 118). [11.380]

489

Intellectual Property: Commentary and Materials

Innocent infringement [11.390] Where a defendant can satisfy the court that, at the time of the infringement, the defendant was “not aware, and no reason to believe” that there was a patent for the invention, the court has discretion to decide not to award damages or an account of profit (Patents Act 1990 (Cth) s 123(1)). However, the defendant will be taken to be aware of the existence of the patent if products are marked to indicate that they are patented and have been sold or used to a substantial extent in Australia (s 123(2)). A court has discretion to grant an injunction (s 123(3)) restraining further infringement by an “innocent infringer”.

Action for unjustified threats of infringement proceedings [11.400] Although there is no obligation to do so, a patentee will often give a suspected infringer notice that identifies the patent, describes the acts of the defendant that the patentee considers to be infringement, and demands cessation of the activity and payment of a sum to cover the patentee’s losses. However, care must be taken with such a notification because a person aggrieved by unjustifiable threats of infringement proceedings may commence proceedings seeking a declaration that the threats are unjustifiable, an injunction against continued threats and recovery of damages (Patents Act 1990 (Cth) s 128). Mere notification of the existence of a patent is not an unjustifiable threat (s 131), and s 132 protects a legal practitioner or patent attorney in respect of an act done in his or her professional capacity on behalf of a client. A patentee may justify a threat and defend proceedings brought under s 128 by showing that the patent is valid and the threats relate to activities that are an infringement (s 129). A person defending an action under s 128 may counterclaim for infringement (s 130). A threat of infringement proceedings made in respect of an innovation patent that has not been certified is always unjustifiable (s 129A).

Occupational and Medical Innovations v Retractable Technologies [11.410] Occupational and Medical Innovations Ltd v Retractable Technologies Inc (2007) 73 IPR 312 Federal Court of Australia DOWSETT J: [313] Section 128 provides: (1) Where a person, by means of circulars, advertisements or otherwise, threatens a person with infringement proceedings, or other similar proceedings, a person aggrieved may apply to a prescribed court, or to another court having jurisdiction to hear and determine the application for: (a) a declaration that the threats are unjustifiable; and (b) an injunction against the continuance of the threats; and (c) the recovery of any damages sustained by the applicant as a result of the threats. (2) Subsection (1) applies whether or not the person who made the threats is entitled to, or interested in, the patent or a patent application. The term “infringement proceedings” is defined in Sch 1 to mean “proceedings for infringement of a patent”. The term “patent” is defined as “a standard patent or an innovation patent”. Prior to the abolition of petty patents, the definition referred to a “standard patent or a petty patent”. It is accepted that the threatened infringement proceedings mentioned in s 128 must be threatened infringement of a patent held pursuant to the Patents Act. Alleged threats 490 [11.390]

Infringement and Exploitation

CHAPTER 11

Occupational and Medical Innovations v Retractable Technologies cont. The applicant asserts that the respondent has threatened infringement proceedings and seeks relief pursuant to s 128. Those alleged threats appear in two letters from Messrs Locke, Liddell & Sapp, American attorneys acting for the respondent, addressed to officers of the applicant. [His Honour then reproduced the letters from the respondent’s American attorneys.] [316] Requirements of s 128 At [208]-[211] of her reasons for judgment in JMVB Enterprises Pty Ltd v Camoflag Pty Ltd (2005) 67 IPR 68 at [208]-[211] Crennan J identified various propositions emerging from s 128 as follows: 208. The aggrieved party, … must first establish the making of a threat … The threat must be made in Australia, in that it must be received in Australia and relate to an Australian patent or design: … 209. A threat arises where the language, by direct words or implication, conveys to a reasonable person that the author of the letter intends to bring infringement proceedings against the person said to be threatened … A threat may arise without a direct reference to infringement proceedings … However, a communication merely notifying a person of the existence of a patent or a patent application, together with a statement that any suggestion that the recipient is entitled to replicate the invention is not maintainable, or a communication seeking confirmation that no improper or wrongful use or infringement of the patent has come to the recipient’s attention is not a threat … 210. Once a threat has been established it is prima facie unjustifiable unless the person making the threat establishes that it was justified: … The court may grant the relief applied for unless the person threatening infringement proceedings establishes that the relevant conduct infringes or would infringe a valid claim of a patent … Ultimately, the grant of relief is discretionary … 211. A threat can be made by means of a letter from a legal representative … … [317] The conclusion as to whether a document amounts to a threat of infringement proceedings is essentially one of fact. See Brain v Ingledew Brown Bennison and Garrett (A Firm) [1996] FSR 341 at 349. The meaning of an alleged threat is to be decided in accordance with the understanding of an ordinary recipient in the position of the applicant, reading the letter in the normal course of business. See Brain v Ingledew Brown Bennison and Garrett (A Firm) (No 3) [1997] FSR 511 at 521. In that case at 523, and in Prince PLC v Prince Sports Group Inc (1997) 39 IPR 225 at 233, the court appears to have treated the recipient’s understanding of the alleged threat as relevant to its interpretation. However the matter seems to have been, at best, marginally relevant. I turn to the letters. … [318] The respondent submits that … at the relevant times, the applicant did not have a syringe which was commercially available. The respondent submits that it is therefore difficult to construe the letter as a threat. It is said that as the applicant did not have an infringing product, it would not have so construed it. That submission places a narrow construction upon s 128, effectively limiting its operation to cases in which there are already competing products in the market place. Nothing in the section suggests such a limitation. That approach overlooks the wide range of conduct included in the definition of the word “exploit” which lies at the heart of the statutory monopoly conferred by a patent, and the correspondingly wide range of conduct which may constitute infringement of the patentee’s rights, which conduct may be the subject of infringement proceedings. I am not persuaded that the absence of a commercially available product supplied by the applicant undermines the likelihood that the respondent may have made a relevant threat. It may be easier to dissuade a potential competitor from risking further financial involvement in a particular activity if a threat is made earlier, when investment may be minimal, rather than later, when investment may be more substantial. [11.410]

491

Intellectual Property: Commentary and Materials

Occupational and Medical Innovations v Retractable Technologies cont. The respondent also submits that there is no assertion in the letter of relevant infringing conduct in Australia, no mention of proceedings in Australia and no mention of an Australian patent. I will deal with those matters in construing the letter, to which task I now turn. The respondent’s primary argument is that the letter should be understood as focussing upon its exclusive manufacturing agreement with Double Dove. Whilst it is true that the letter is, to some considerable extent, concerned with that [319] matter, … there is also a clear assertion that the respondent’s patent rights may be directly relevant in its attempts to prevent exploitation by the applicant of retractable needle technology. As I have already observed, a patented invention can hardly be described as being confidential or a trade secret. It is, by its nature, public. Thus the respondent, in the letter, refers to confidential matters, trade secret information and patent rights. Although there is no attempt to identify any relevant patent, the letter demonstrates that the applicant and the respondent were operating in the same industry, with potentially competing products. As counsel for the respondent conceded in argument, it is not unlikely that the applicant was as aware of the respondent’s presence in the market as the respondent was of the applicant’s. In any event, receipt of the letter would certainly have prompted inquiries addressing patents and patent applications. Such information is readily available, unlike the content of private agreements. The letter is to an Australian company, in Australia, which company proposes to market a relevant product in Australia. The reference to the respondent’s patent rights clearly raises the possibility of infringement, suggesting that it holds a relevant patent. One would infer that the letter was dealing with conduct or potential conduct by the applicant, at least some of which would occur in Australia. A further available (and probable) inference is that if, as it implied, the respondent had a relevant patent, it was enforceable in Australia, and therefore probably an Australian patent. The respondent’s submissions concerning the alleged lack of particularity in the letter are unconvincing. Firstly, as I have demonstrated, the necessary inferences are fairly available. Secondly, s 128 is, at least in part, designed to discourage allegations of infringement based on construction of a patent which is too wide. Over-generalization will often be an element of an unjustified threat. There can be little doubt that the letter was intended to influence the applicant’s conduct in connection with its involvement in the market for retractable needles. That the letter addressed such a wide class of conduct does not mean that it was not a threat. It rather emphasizes the difficulty which the respondent would face in trying to prove that any threat was justified. … [320] I am satisfied that a recipient in the position of the applicant would have understood the letter to threaten enforcement or similar proceedings in Australia, pursuant to an Australian patent held by the respondent, in connection with the import into Australia and/or other exploitation in Australia of retractable needles manufactured in China. I do not accept that the absence of any reference in the applicant’s letters to such threats detracts significantly from that construction.

[11.420]

Notes

A “person aggrieved” is any person who is adversely affected by a threat (Cowan v Avel Pty Ltd (1998) 58 FCR 157 at 163), and includes any person who has been threatened directly, or by clear implication, or whose commercial interests stand to be damaged as a result of the threat: see Townsend Controls Pty Ltd v Gilead (1989) 16 IPR 469 at 475; Sydney Cellulose Pty Ltd v Ceil Comfort Home Insulation Pty Ltd (2002) 53 IPR 359 at [36]; Meth v Norbert Steinhardt & Son Ltd (1963) 107 CLR 187. The fact that a defendant honestly believed that the actions complained of in a threat amounted to an infringement is not a valid defence. Where a threat has actually been made, the 492 [11.420]

Infringement and Exploitation

CHAPTER 11

defendant must establish infringement unless the applicant can prove invalidity. It appears that any threat made in reference to a patent application, as distinct from a granted patent, is necessarily unjustified: U And I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 32 IPR 494. When unjustified threats have been made, the granting of declaratory and injunctive relief is exercised at the discretion of the court: U And I Global Trading (Australia) Pty Ltd v Tasman-Warajay Pty Ltd (1995) 32 IPR 494.

Exemplary damages in patent infringement [11.430] The Intellectual Property Laws Amendment Act 2006 (Cth) amended Patents Act

1990 (Cth) s 122 to allow exemplary damages to be awarded where the defendant has wilfully committed infringement. This provides for an exemplary damages regime in patent law consistent with the approach found under the Copyright Act 1968 (Cth) s 115(4). In deciding whether to award exemplary damages, a court must consider the flagrancy of the infringement, the need to deter similar infringements of the patent, the infringer’s conduct after the infringement or after being informed that he or she had allegedly infringed the patent, any benefit accruing to the infringer and any other relevant matters.

EXPLOITATION Ownership [11.440] Any natural or legal person may make an application for a patent (Patents Act 1990 (Cth) s 29), but a patent can only be granted to a person who is the inventor, or would be entitled to have the patent assigned to them, or derives title from the inventor, or is the legal representative of a deceased person entitled to the patent (s 15). The person to whom the patent is granted becomes the owner of a patent entered on the Patent Register. Where a patent application is made nominating a person as an eligible person for grant, and that person is not in fact entitled to grant, the Commissioner of Patents has powers to deal with a number of possibilities that may arise in the course of the application, during opposition proceedings, arising from court proceedings or after revocation by the Commissioner, and to grant the patent to the person entitled (see ss 33 – 36). The Commissioner may also make a determination when there is a dispute between co-applicants as to whether, or how, a patent application should proceed (s 32), and such a determination may include a determination as to entitlement. It is a ground of opposition to grant that the nominated eligible person is not entitled to the patent (s 59(a)). Where a patent has been granted to a person who is not eligible for grant, the patent may be revoked under s 138(3)(a). However, a patent is not invalid merely because the patent, or a share in the patent, was granted to a person who was not entitled to it or was not granted to a person who was entitled to it: Patents Act 1990 (Cth) s 22A: see AstraZeneca AB v Apotex Pty Ltd (2014) 226 FCR 324; 107 IPR 177 at [179] for observations about the purpose and effect of s 22A. Because inventions are frequently made by several people working together, there are provisions for co-ownership of patents. Two or more co-owners are each entitled to equal undivided shares of the patent. Each may exploit the patent without accounting to the others, but cannot grant a licence or assign an interest in the patent without the consent of the others (s 16(1)). Where one co-owner sells a product protected by a patent, the purchaser and [11.440]

493

Intellectual Property: Commentary and Materials

successors in title may deal with the product as if it had been sold by all of the patentees (s 16(2)). The Commissioner has limited powers to give directions to co-owners in order to attempt to resolve disputes in relation to dealings with the patent, granting of licences and the exercise of exclusive rights (s 17). A “person entitled to have a patent assigned” to them is most often an employer claiming the right to be granted a patent invented by an employee. In the absence of an agreement to the contrary, where a person is an employee, rather than an independent contractor, and the invention is made within the scope of the employee’s duties, the employer will normally be entitled to the patent: see Aneeta Window Systems (Vic) Pty Ltd v K Shugg Industries Pty Ltd (1996) 34 IPR 95 at 100–102. This is usually explained by reference to an “implied term” in the contract of employment: see, for example, Sterling Engineering Co Ltd v Patchet [1955] AC 534. Another possibility is that the employee owes an obligation of good faith to the employer: cf Worthington Pumping Engine Co v Moore (1902) 20 RPC 41, Fine Industrial Commodities Ltd v Powling (1954) 71 RPC 253 and Charles Selz Ltd’s Application (1954) 71 RPC 158. If, however, the employee’s duties do not involve activities that might involve inventiveness, rights may not belong to the employer; it is necessary to take into account all the circumstances of the person’s employment: Charles Selz Ltd’s Application (1954) 71 RPC 158; British Reinforced Concrete Engineering Co Ltd v Lind (1917) 34 RPC 101. Inventions arrived at by independent contractors in the course of carrying out a contract for services normally belong to the contractor in the absence of any agreement to the contrary: Acohs Pty Ltd v RA Bashford Consulting Pty Ltd (1997) 144 ALR 528; 37 IPR 542 at 539 (ALR); 554 (IPR); Robin Ray v Classic FM plc [1998] FSR 622.

Inventorship [11.450] Central to the issue of entitlement to a patent is the question of “who is the

inventor?” There has been relatively little judicial consideration in Australia of this question, but the relevant overseas authorities were reviewed by a Full Court of the Federal Court of Australia in Polwood Pty Ltd v Foxworth Pty Ltd (2008) 165 FCR 527; 75 IPR 1, and by French J in University of Western Australia v Gray (2008) 246 ALR 603; 76 IPR 222 (his Honour’s approach to the issue was approved by the Full Court: University of Western Australia v Gray (2009) 179 FCR 346; 82 IPR 206). In summary, the determination of who was the inventor of an invention requires, first, an identification of the inventive concept from the patent description and the claims, followed by a determination of whose contribution had a material effect on the final concept of that invention (see also Re Lee and Commissioner of Patents [2011] AATA 818 and Re Wake and Commissioner of Patents [2014] AATA 43). What constitutes a material effect depends on the circumstances and may, or may not, include the step of converting an initial concept into a workable embodiment.

Assignment [11.460] An assignment of a patent must be in writing and signed by or on behalf of the parties to the transaction (Patents Act 1990 (Cth) s 14(1)). The same does not apply to a patent application: University of British Colombia v Conor Medsystems Inc (2006) 155 FCR 391; 70 IPR 248 at [37]. Assignments of patent rights may be limited to a place or part of Australia (s 14(2)). The Act is silent as to “horizontal” dissection of rights (ie, splitting up the modes of exercising a patentee’s rights; cf Copyright Act 1968 (Cth) s 196(2); see [5.200]ff) but there is no reason in principle why this should not be permissible. Assignments should be registered 494 [11.450]

Infringement and Exploitation

CHAPTER 11

(Patents Regulations 1991 (Cth) reg 19.1) or the document is not admissible to prove the assignee’s interest, although exceptions are provided for by Patents Act 1990 (Cth) s 196.

Licences [11.470] A licence may be an exclusive licence, a sole licence or a non-exclusive licence. The Patents Act 1990 (Cth) has no requirements as to formalities for a licence to be granted, but it is advisable for a licensee to register a licence in order to protect against the claims of a bona fide purchaser for value without notice, and to secure admissibility of evidence of the agreement in court proceedings without difficulty (ss 187 – 189, 196).

Exclusive licence [11.480] An exclusive licensee is defined in Patents Act 1990 (Cth) Schedule 1 (Dictionary) to

mean: … a licensee under a licence granted by the patentee and conferring on the licensee, or on the licensee and persons authorised by the licensee, the right to exploit the patented invention throughout the patented area to the exclusion of the patentee and all other persons.

See Bristol-Myers Squibb Company v Apotex Pty Ltd (2015) 228 FCR 1 at [83]-[105]; Blue Gentian LLC v Product Management Group Pty Ltd [2014] FCA 1331 at [221]-[238]; Ex parte British Nylon Spinners Ltd and Imperial Chemical Industries Ltd; In re Imperial Chemical Industries Ltd’s Patent (1963) 109 CLR 336. No licensee other than an exclusive licensee may commence infringement proceedings in relation to the patent under licence. In a sole licence, the patentee agrees to grant a licence to one person only, but reserves the right to exploit the invention themself also. Tying arrangements in licences [11.490] Patents Act 1990 (Cth) s 144 attempts to prevent tying arrangements requiring a licensee to deal exclusively with the licensor. The High Court tended to take a restrictive view of Patents Act 1952 (Cth) s 112 (the equivalent in the Patents Act 1952 (Cth) of the present Patents Act 1990 (Cth) s 144), but licensing arrangements must not fall foul of Competition and Consumer Act 2010 (Cth) Part IV, and must not inhibit Australian manufacturing industry: Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83. Under Patents Act 1990 (Cth) s 144(4), where a contract that relates to an interest in a patent contains a condition which is void because it is as described in s 144(1) or (1A), a person (not necessarily a party to the contract) who would otherwise be an infringer of the patent has a complete defence, provided the condition was inserted into the contract by the patentee. Licensing arrangements that are too restrictive may lead to the application of compulsory licences (Patents Act 1990 (Cth) s 133).

Compulsory licences [11.500] Chapter 12 of the Patents Act 1990 (Cth) provides a regime of compulsory licences

whereby a court may grant a licence to exploit a patent. There are two grounds on which such a compulsory licence may be granted: where the patent has been inadequately exploited, and where the patentee has engaged, or is engaging, in anti-competitive behaviour in relation to the patent. The court has a wide power to specify the terms of a compulsory licence, including the applicable royalty rate. [11.500]

495

Intellectual Property: Commentary and Materials

No application for a compulsory licence may be made less than 3 years after the relevant patent has been granted. For a compulsory licence to be granted on the ground of inadequate exploitation, the patentee must have refused to grant a request for a licence on reasonable terms, and the patentee must be failing to work the invention so as to meet the reasonable requirements of the public without a satisfactory explanation for the failure. As to the meaning of “reasonable requirements of the public”, see s 135. This ground applies to both standard patents and innovation patents that have been certified. The Intellectual Property Laws Amendment Act 2006 (Cth) introduced the second ground on which a person may apply for a compulsory licence. This is based on a “competition test” that allows for the grant of a compulsory licence if the patentee, in connection with the patent, has engaged in or is engaging in anti-competitive conduct prohibited under Competition and Consumer Act 2010 (Cth) Part IV or State or Territory legislation that applies the Competition Code, as defined in Competition and Consumer Act 2010 (Cth), either with or without modifications: Patents Act 1990 (Cth) s 133(1) and (2).

496 [11.500]

TRADE MARKS

PART4

CHAPTER 12 Protection of Business Reputation [12.10]

INTRODUCTION .................................................................................................... 500

[12.20]

NATURE OF THE INTEREST PROTECTED IN PASSING OFF ACTIONS? ............. 503

[12.30]

Reputation may be more than protection for a mark ........................................ 505

[12.20] [12.30] [12.40]

Reddaway v Banham ............................................................ 503 AG Spalding v Gamage ......................................................... 505 Reckitt & Colman Ltd v Borden Inc ......................................... 505

[12.60]

Development of passing off: composition of goods and geographic indication protection ............................................................................................. 511

[12.80]

Not a proprietary right, but misrepresenting ..................................................... 514

[12.60] [12.80]

Erven Warnink v J Townend .................................................... 511 Telstra v Royal & Sun Alliance Insurance ................................. 514

[12.90]

ESTABLISHING REPUTATION AND DECEPTIVE CONDUCT ............................... 520

[12.110]

Mimicking success: can a competitor use a descriptive term? ......................... 527

[12.100] [12.110]

S & I Publishing v Australian Surf Life Saving ........................... 522 Apand v Kettle Chip Company ............................................... 527

[12.120] Conduct of the defendant must be misleading, not merely unfair .................. 531 [12.120]

Parkdale Custom Built Furniture v Puxu ................................... 531

[12.130] Reputation exists among prospective customers or ultimate consumers of goods or services ............................................................................................... 533 [12.140]

Parkdale Custom Built Furniture v Puxu ................................... 533

[12.150] Deceiving how many consumers? ....................................................................... 535 [12.160]

.au Domain Administration v Domain Names Australia ............ 535

[12.170] Source of reputation .............................................................................................. 539 [12.180] Location of reputation ........................................................................................... 539 [12.190] [12.200] [12.210]

[12.220] [12.230] [12.240]

Maxim’s v Dye ...................................................................... Taco Bell v Taco Co of Australia .............................................. ConAgra v McCain Foods (Aust) ............................................. Location of reputation: sales by foreign websites? ............................................ [12.220] Ward Group v Brodie & Stone ................................................ Location of reputation: via indirect advertising? ................................................ [12.230] Hansen Beverage Company v Bickfords (Australia) Pty Ltd ....................................................................................... Proving reputation: admissibility of expert evidence ......................................... [12.250] Henschke v Rosemount Estates ...............................................

541 541 543 552 552 554 554 559 559

[12.270] PROVING REPUTATION: ADMISSIBILITY OF SURVEY EVIDENCE ....................... 562 [12.280]

Federal Court of Australia: Practice Note CM13 ....................... 562

[12.290] TEMPORAL ISSUES ................................................................................................. 563 [12.300] [12.310]

Ad-Lib v Granville .................................................................. 564 Mark Foys v TVSN ................................................................. 565

[12.320] DAMAGE OR LIKELIHOOD OF DAMAGE ............................................................ 569 [12.330]

BM Auto Sales v Budget Rent a Car System ............................. 569

[12.350] Common field of activity: confusion ................................................................... 570 [12.360]

Derek McCulloch v Lewis A May ............................................. 570 499

Intellectual Property: Commentary and Materials

[12.380] [12.390]

[12.400] [12.410]

Henderson v Radio Corp ........................................................ Irvine v Talksport ................................................................... Damages require actual damage ......................................................................... [12.400] Henderson v Radio Corp ........................................................ Establishing damage: trap purchases .................................................................. [12.410] Ward Group v Brodie & Stone ................................................

572 574 576 576 577 577

[12.420] Relief under Australian Consumer Law/former Trade Practices Act: Protecting the Purchasing Public ......................................................................... 579 [12.420]

Mark Foys v TVSN ................................................................. 579

[12.430] Smorgasbord of orders ......................................................................................... 579 [12.440]

Knott Investments Pty Ltd v Winnebago Industries ................... 580

INTRODUCTION [12.10] Business reputation is protected from wrongful appropriation by the tort of passing

off and by the closely related actions that may be brought under the Australian Consumer Law regime – encompassing the Competition and Consumer Act 2010 (Cth) (formerly the Trade Practices Act 1974 (Cth)) and associated State/Territory fair trading statutes – prohibiting misleading or deceptive conduct or false representations. There is an expectation that a corporation (now “person”) shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Emphasis on consumer protection sees injured traders more or less as incidental beneficiaries of regulation designed to ensure that the public does not suffer due to deceptive marketing practices. However, during the early development of the passing of law, the emphasis was on preventing or punishing fraudulent business practices. The classic statement reflecting these concerns may be found in the judgment of Lord Langdale MR in Perry v Truefitt (1842) 6 Beav 66, where, at 73, it was observed: A man is not sell his own goods under the pretence that they are the goods of another man; he cannot be permitted to practice such a deception, nor to use the means which contribute to that end. He cannot therefore be allowed to use names, marks, letters or other indicia, by which he may induce purchasers to believe, that the goods which he is selling are the manufacture of another person.

The fact that passing off benefited merchants whose goodwill was damaged by such practices seems not to have been the dominant concern of Anglo-Australian courts. This goodwill, in any event, came to be recognised as a form of property. Although it is possible to distinguish between a statute with a focus on consumer protection in the form of trade practices and fair trading legislation, and a common law passing off action to protect traders, this section of the casebook will draw on the common threads that have led to development of the notion that traders should be recognised as having some proprietary interest in the goodwill built up by their efforts. This notion has developed from the equity courts analysing the injured trader’s interest as proprietary in nature. But, of course, the interests of traders are not the only interests involved in passing off. Indeed, in Hogan v Pacific Dunlop (1988) 12 IPR 225, 1 Gummow J, at 248, explained the constellation of “competing” interests involved in the modern action for passing off: 1

See also ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302, 355 (Gummow J). For further treatment of Hogan v Pacific Dunlop (1988) 12 IPR 225, see Megan Richardson, “Larger than Life in the Australian Cinema”: Pacific Dunlop v Hogan in Andrew T Kenyon et al, Landmarks in Australian Intellectual Property Law (Cambridge, 2009), 160–170.

500 [12.10]

Protection of Business Reputation

CHAPTER 12

Within the action for passing off as presently understood in Australia, there are accommodated and adjusted inter se three sets of interests. There is the plaintiff’s interest in protecting his skill, effort and investment, the interest of the defendant in freedom to attract purchasers for his goods and services, and the interest of consumers in having available a range of competitive goods and services for selection by consumers without the practice upon them of misrepresentations. Any monopoly right so created is limited in duration to the persistence of the plaintiff’s reputation and goodwill; if that evaporates, the cause of action in passing off goes with it.

Nevertheless, the historical origins of the action in passing off are imprecise. In Magnolia Metal Co v Tandem Smelting Ltd (1900) 17 RPC 477 at 483, Lord Halsbury described the passing off action as “a well recognised cause of action, certainly for the last 250 years”. He traced it back to the reign of Elizabeth I. This Elizabethan genesis is derived from a dictum of Doderidge J in a 1617 case, Southern v How. That case was first reported in Popham’s Reports (1617) Pop 143; 79 ER 1243 published in 1656. The report stated (at Pop 144, ER 1244): Doderidge said, [sic] that 22 Eliz the action upon the case was brought in the Common Pleas by a clothier, that whereas he had gained great reputation for his making of his cloth by reason whereof he had great utterance to his benefit and profit, and that he used to set his mark on his cloth whereby it should be known to be his cloth: and another clothier, observing it, used the same mark to his ill-made cloth on purpose to deceive him, and it was resolved that the action did well lie.

Whatever the origins of passing off, the dimensions of the action became firmly fixed in the late Victorian period in England, contemporaneous with the extensive growth of industry and commerce at that time. Passing off was then one of a number of “economic torts” available to protect business reputation, including the torts of injurious falsehood, defamation, deceit and negligent misstatement. The difficulties of making out the elements of these actions, including the bad motive of the defendant, led to passing off becoming more useful as it centred on the deception of consumers or the likelihood thereof, independent of any malice on the part of the defendant. The emphasis thus shifted, if not entirely away from the wrongful conduct of the deceptive trader, at least towards the concept of rights attaching to the reputation earned by a trader in the marketplace. Originally, this centred on “marks” used by traders to identify their goods. Despite initially rejecting the establishment of a general trade mark registration system in the 1860s, 2 the British Parliament finally responded in 1875 to louder calls for greater protection against imitators by establishing a system for the registration of trade marks: see Trade Mark Registration Act 1875 (UK). 3 The trade mark system, which in some Australian colonies pre-dated the British trade mark registration system, 4 allows the proprietor of a 2

3 4

British Parliament instead passed the ineffective Merchandise Marks Act 1862 (Imp), an Act criminalising false and fraudulent marking of goods. As to the UK experience, see especially House of Commons Select Committee, Parliament of United Kingdom, Report on Trade Marks Bill, and Merchandise Marks Bill (1862); Frank Isaac Schechter, Historical Foundations of the Law Relating to Trade-Marks (Columbia University Press, 1925); and see especially Lionel Bently, “From Communication to Thing” in Graeme B Dinwoodie and Mark D Janis (eds), Trademark Law and Theory: A Handbook of Contemporary Research (Edward Elgar, 2008) p 3. The Trade Mark Registration Act 1875 (UK) came into operation on 13 August 1875, was amended in 1876 and 1877, and was then incorporated into The Patents, Designs, and Trade Marks Act 1883 46 & 47 Vict, c 57. In fact, there were four Australian colonies – South Australia, Queensland, Tasmania and New South Wales – that adopted a basic trade mark registration system some 10 years before the first trade mark registration legislation in the United Kingdom: see Trade Marks Act 1863 (SA) 26 & 27 Vict, No 20; Trade Marks Act 1864 (Qld) 28 Vict, No 5; Merchandise Marks Act 1864 (Tas); Trade Marks Act 1865 (NSW) 28 Vict, No 9. For a detailed treatment of the colonial Australian trade mark registers, see Amanda Scardamaglia, Colonial Australian Trade Mark Law: Narratives in Lawmaking, People, Power & Place (Australian Scholarly, 2015). [12.10]

501

Intellectual Property: Commentary and Materials

distinctive mark to acquire a monopoly over its use and is the next topic covered in this casebook. Passing off confers protection on a wider range of marketing efforts than the protection for signs that is allowed by the Trade Marks Act 1995 (Cth). Although the actions for passing off and for breach of the Australian Consumer Law are the principal ways in Australia by which business reputation is protected, a number of other actions, lying outside the traditional scope of industrial and intellectual property law, are also available to assist in the protection of business reputation. The torts of deceit and negligent misstatement mentioned above are two obvious examples. In a number of cases, pleaded as associated actions under Trade Practices Act 1974 (Cth) s 52 – the precursor of Australian Consumer Law s 18 – defamation and injurious falsehood have also been relied upon to protect a trading reputation. Trade mark legislation is the most obvious form of statutory protection for trading reputation, but from time to time other legislation becomes relevant. For example, the Sydney 2000 Games (Indicia and Images) Protection Act 1996 (Cth) was passed to protect the Sydney Olympics (“the best ever”, as it turned out) from “ambush marketing” that would have undermined the sponsorship income to be derived from licensing the valuable Olympic name, insignia and other symbols associated with the 2000 Olympics. This enactment followed an investigation into untoward marketing practices by a Senate Committee: Cashing in on the Sydney Olympics – Protecting the Sydney Olympic Games from Ambush Marketing, Senate Legal and Constitutional References Committee (March 1995). The Federal Government in April 2001 decided to extend the operation of the 1996 legislation (originally intended to cease effect on 31 December 2000) in respect of the unlicensed commercial use of the words “Olympic”, “Olympic Games” and “Olympiad”, in order to provide extra opportunities for AOC fundraising. Similar legislation exists in other jurisdictions to protect the IOC’s marketing strategies: see NZ Olympic and Commonwealth Games Association v Telecom NZ (1996) 35 IPR 55, and there are now additional protections for major sporting events: see for example Major Sporting Events (Indicia and Images) Protection Act 2014 (Cth). Passing off and legislation have interacted in the last 40 years or so to protect the interests not just of individual traders and corporations, but of groups of producers, particularly those with trade names denoting geographic origins, of which the most obvious example is “champagne”. Where the consumers in a particular jurisdiction have failed to recognise the geographic significance of a name, trade negotiations – both bilateral and under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) – have secured the rights independently. In 1981, the Federal Court found that, in Australia, “champagne” was a generic term for wine made with certain grapes and according to a certain method, and was not distinctive of wine from any particular locality, despite the strenuous arguments from a group of 12 French producers from the Champagne district of France that the name had a distinct geographic connotation: Comite Interprofessionel Du Vin de Champagne v NL Burton (1981) 38 ALR 664. However, by 1991, New Zealand consumers apparently would have been misled by the use of the name “champagne” on sparkling wine made by Penfolds in Australia and imported into New Zealand: Wineworths Group Ltd v Comite Interprofessionel Du Vin De Champagne (1991) 23 IPR 435. The retrieval of “champagne” as a distinctive name has been achieved by litigation around the world, but also by the increased recognition of geographic indications as a form of intellectual property protected under trade mark law. More immediate protection has been achieved by the use of international agreements whereby admission to overseas markets, such 502 [12.10]

Protection of Business Reputation

CHAPTER 12

as the European Community, is made easier for products, particularly wine, where the geographic indicator is not used. See especially the Australian Grape and Wine Authority Act 2013 (Cth) which makes it an offence to sell, export, or import wine with a false description and presentation: s 40C. Misleading descriptions and presentations are defined in s 40F. 5 Having secured wine names for their exclusive use, the Europeans have now moved on to cheese. In October 2001, the European Court of Justice held that “Parmesan” for cheese can only be used by producers resident in Parma, Italy. It is unlikely that Australian consumers regard “Parmesan” as a geographic name, and the reservation of this name for producers in that town may not be readily agreed to during trade negotiations.

NATURE OF THE INTEREST PROTECTED IN PASSING OFF ACTIONS? Reddaway v Banham [12.20] Reddaway v Banham [1896] AC 199 House of Lords (United Kingdom) [From 1879, Reddaway, the appellant manufacturer of machine belting, had described his product as “Camel Hair Belting” to distinguish it from the belting of other manufacturers. Banham, who had been employed by the appellant and a related company, began manufacturing belting (first sold and advertised as “Arabian”) on his own account from 1889, which was then sold from 1891 as “Camel Hair Belting”. Following a jury trial establishing Banham’s passing off, Collins J granted an injunction restraining Banham and related entities from continuing to use the words “Camel Hair” in such as manner as to deceive purchasers into the belief that they were purchasing Reddaway’s belting, thereby passing off their belting as those of Reddaway’s. In exonerating Banham’s conduct, the Court of Appeal had taken the view that all that he and Banham & Co had done was to tell the “simple truth”. Reddaway and Reddaway & Co appealed to the House of Lords.] LORD HERSCHELL: [209] I cannot help saying that, if the defendants are entitled to lead purchasers to believe that they are getting the plaintiffs’ manufacture when they are not, and thus to cheat the plaintiffs of some of their legitimate trade, I should regret to find that the law was powerless to enforce the most elementary principles of commercial morality. I do not think your Lordships are driven to any such conclusion. The principle which is applicable to this class of cases was, in my judgment, well laid down by Lord Kingsdown in Leather Cloth Co v American Leather Cloth Co (1865) 11 HL Cas 523; 11 ER 1435 at 538 (HL Cas). It had been previously enunciated in much the same way by Lord Langdale in the case of Croft v Day (1843) 7 Beav 84; 49 ER 994. Lord Kingsdown’s words were as follows: The fundamental rule is, that one man has no right to put off his goods for sale as the goods of a rival trader, and he cannot, therefore (in the language of Lord Langdale, in the case of Perry v Truefitt (1842) 6 Beav 66; 49 ER 749), be allowed to use names, marks, letters, or other indicia, by which he may induce purchasers to believe that the goods which he is selling are the manufacture of another person. It is, in my opinion, this fundamental rule which governs all cases, whatever be the particular mode adopted by any man for putting off his goods as those of a rival trader, whether it is done by the use of a mark which has become his trade mark, or in any other way. The word “property” has been 5

Compare the now repealed Wine and Brandy Corporation Amendment Act 1993 (Cth) under which certain wine names indicating geographic origin, type of grape or other traditional expressions were phased out according to an agreed timetable. Apart from “champagne”, other names forbidden to Australian wine producers include “burgundy”, “claret”, “moselle”, “port”, “sherry”, “beaujolias”, “vinho verde” (and “vino verde”). These names could not be used for new products as from 1 September 2011 and were phased out over three years for use by existing products. See now, schs 1 and 2 of the Australian Grape and Wine Authority Regulations 1981 (Cth). [12.20]

503

Intellectual Property: Commentary and Materials

Reddaway v Banham cont. sometimes applied to what has been termed a trade mark at common law. I doubt myself whether it is accurate to speak of there being property in such a trade mark, though, no doubt some of the rights which are [210] incident to property may attach to it. Where the trade mark is a word or device never in use before, and meaningless, except as indicating by whom the goods in connection with which it is used were made, there could be no conceivable legitimate use of it by another person. His only object in employing it in connection with goods of his manufacture must be to deceive. In circumstances such as these the mere proof that the trade mark of one manufacturer had been thus appropriated by and to entitle the person aggrieved to an injunction to restrain its use. In the case of a trade mark thus identified with a particular manufactory the rights of the person whose trade mark it was, would not, it may be, differ substantially from those which would exist if it were, strictly speaking, his property. But there are other cases which equally come within the rule that a man may not pass off his goods as those of his rival which are not of this simple character – cases where the mere use of the particular mark or device which had been employed by another manufacturer would not of itself necessarily indicate that the person who employed it was thereby inducing purchasers to believe that the goods he was selling were the goods of another manufacturer. The name of a person, or words forming part of the common stock of language, may become so far associated with the goods of a particular maker that it is capable of proof that the use of them by themselves without explanation or qualification by another manufacturer would deceive a purchaser into the belief that he was getting the goods of A when he was really getting the goods of B. In a case of this description the mere proof by the plaintiff that the defendant was using a name, word, or device which he had adopted to distinguish his goods would not entitle him to any relief. He could only obtain it by proving further that the defendant was using it under such circumstances or in such manner as to put off his goods as the goods of the plaintiff. If he could succeed in proving this I think he would, on well-established principles, be entitled to an injunction. … [212] I … demur … to the view that the defendants in this case were telling the simple truth when they sold their belting as camel hair belting. I think the [213] fallacy lies in overlooking the fact that a word may acquire in a trade a secondary signification differing from its primary one, and that if it is used to persons in the trade who will understand it, and be known and intended to understand it in its secondary sense, it will none the less be a falsehood that in its primary sense it may be true. A man who uses language which will convey to persons reading or hearing it a particular idea which is false, and who knows and intends this to be the case, is surely not to be absolved from a charge of falsehood because in another sense which will not be conveyed and is not intended to be conveyed it is true. In the present case the jury have found, and in my opinion there was ample evidence to justify it, that the words “camel hair” had in the trade acquired a secondary signification in connection with belting, that they did not convey to persons dealing in belting the idea that it was made of camel’s hair, but that it was belting manufactured by the plaintiffs. They have found that the effect of using the words in the manner in which they were used by the defendants would be to lead purchasers to believe that they were obtaining goods manufactured by the plaintiffs, and thus both to deceive them and to injure the plaintiffs. On authority as well as on principle, I think the plaintiffs are on these facts entitled to relief. [Lord Herschell later observed at [214]–[215]]: What right, it was asked, can an individual have to restrain another from using a common English word because he has chosen to employ it as his trade mark? I answer he has no such right; but he has a right to insist that it shall not be used without explanation or qualification if such a use would be an instrument of fraud. [In reversing the Court of Appeal judgment and orders, Lord Herschell emphasised, at 215, that the injunction granted by the House of Lords (effectively restoring Collin J’s injunction) was not aimed at prohibiting the defendants’ use of the words “camel hair”. More accurately, the defendants were restrained from utilising “camel hair” in a way that would mislead the public (ie not clearly 504 [12.20]

Protection of Business Reputation

CHAPTER 12

Reddaway v Banham cont. distinguishing their belting from those of the plaintiffs. Lord Halsbury LC and Lord Macnaughten also allowed the appeal, and so too did Lord Morris, but arguably in less enthusiastic terms: see [221]–[222].]

Reputation may be more than protection for a mark AG Spalding v Gamage [12.30] AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449 House of Lords (United Kingdom) [The respondent scrap rubber merchants had sold a superseded line of the appellant’s footballs as the appellant’s latest product.] LORD PARKER OF WADDINGTON: … [450] There appears to be considerable diversity of opinion as to the nature of the right, the invasion of which is the subject of what are known as passing off actions. The more general opinion appears to be that the right is a right of property. This view naturally demands an answer to the question property in what? Some authorities say property in the mark, name, or get-up improperly used by the defendant. Others say, property in the business or goodwill likely to be injured by the misrepresentation. Lord Herschell in Reddaway v Banham [1896] 65 LJ QB 381; [1896] AC 199 expressly dissents from the former view; and if the right invaded is a right of property at all, there are, I think, strong reasons for preferring the latter view. In the first place, cases of misrepresentation by the use of a mark, name, or get-up do not exhaust all possible cases of misrepresentation. If A says falsely, “These goods I am selling are B’s goods,” there is no mark, name or get-up infringed unless it be B’s name, and if he falsely says, “These are B’s goods of a particular quality,” where the goods are in fact B’s goods, there is no name that is infringed at all. Further, it is extremely difficult to see how a man can be said to have property in descriptive words, such as “Camel Hair” in the case of Reddaway v Banham where every trader is entitled to use the words, provided only he uses them in such a way as not to be calculated to deceive. Even in the case of what are sometimes referred to as Common Law Trade Marks the property, if any, of the so-called owner is in its nature transitory, and only exists so long as the mark is distinctive of his own [451] goods in the eyes of the public or a class of the public. Indeed, the necessity of proving this distinctiveness in each case as a step in the proof of the false representation relied on was one of the evils sought to be remedied by the Trade Marks Act 1875, which conferred a real right of property on the owner of a registered mark. I had to consider the matter in the case of Burberrys v Cording (1909) 26 RPC 693 and I came to the same conclusion.

Reckitt & Colman Ltd v Borden Inc [12.40] Reckitt & Colman Ltd v Borden Inc & Ors [1990] RPC 341; [1990] 1 All ER 873; [1990] 1 WLR 491; (1990) 17 IPR 1 House of Lords (United Kingdom) [Reckitt & Colman had since 1952 sold preserved lemon juice in yellow lemon-shaped plastic 55ml containers embossed with the (barely conspicuous) word “Jif”, and bearing a green triangular neck label with the word “Jif” in yellow lettering with black shadowing. After acquiring earlier competitors that had utilised lemon-shaped containers to sell lemon juice, Reckitt & Colman, from the late 1970s, pursued a (largely successful) strategy of bringing or threatening to bring actions for passing off for any traders seeking to sell lemon juice in the same way. [12.40]

505

Intellectual Property: Commentary and Materials

Reckitt & Colman Ltd v Borden Inc cont. In 1975, Borden and connected companies (“Borden”) began selling preserved lemon juice in 125 ml yellow squeeze pack bottles under the “ReaLemon” trade mark, and by 1980, had secured a 25% share of the UK lemon juice market. In response to Borden’s market penetration, Reckitt & Colman launched a 150 ml bottle of “Jif” juice in 1979, which in 1981, was replaced with a 250 ml bottle of “Jif” juice. Between the summers of 1985 and 1986, Borden then produced three different versions of natural sized lemon shape containers containing lemon juice which they sought to launch on the UK market. The relevant Mark I, II and III prototypes, and the “Jif” lemon product are not reproduced here, but they are depicted (in colour) at page 343 of the Report of Patents Case reports (but note Mark I is mistakenly depicted there as being Mark III). 6 Mark I (75 ml container) had a green cap, a flat surface to prevent the product from rolling, and had a round lemon-shaped neck label with ReaLemon in green lettering. Mark II was similar to Mark I, but had a red cap and a round yellow “lemon slice” neck label with ReaLemon in red lettering. Mark III was similar to Mark II, but was a slightly larger (100ml) container. The Mark I version was the subject of a successful quia timet action, which led to Borden agreeing not to offer juice in any other lemon-like container without giving Reckitt & Coleman 28 days’ prior notice of submitting samples. Borden later submitted the Mark II and Mark III prototypes, which in turn lead to Reckitt & Colman’s second quia timet action. On the strength of the evidence (particularly survey evidence) that the purchasing public had come to associate the natural-size lemon squeeze pack with Reckitt & Colman and correlative “brand loyalty” to “Jif” lemon juice, the primary judge, Walton J, held there was a threat of an actionable passing off, thus he granted the further quia timet injunction sought. Walton J also found that Borden had acted fraudulently. The Court of Appeal dismissed Borden’s appeal; save for holding that there was insufficient evidence to support a finding of fraudulent intent against the defendants. Borden then appealed to the House of Lords, with Reckitt & Colman cross-appealing, but later abandoning, the Court of Appeal’s finding against it on the fraud issue.] LORD OLIVER OF AYLMERTON: … [406] [T]his is not a branch of the law in which reference to other cases is of any real assistance except analogically. It has been observed more than once that the questions which arise are, in general, questions of fact. Neither the appellants nor the respondents contend that the principles of law are in any doubt. The law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying “get-up” (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff. 6

Compare Reckitt & Colman Ltd v Borden Inc [1990] RPC 341, 348 (Walton J); 405 (Lord Oliver).

506 [12.40]

Protection of Business Reputation

CHAPTER 12

Reckitt & Colman Ltd v Borden Inc cont. Thus the three issues in the instant case … are as follows: (i)

Have the respondents proved that the get-up under which their lemon juice has been sold since 1956 has become associated in the minds of substantial numbers of the purchasing public specifically and exclusively with the respondents’ (or “Jif”) lemon juice? [407]

(ii)

If the answer to that question is in the affirmative, does the get-up under which the appellants proposed to market their lemon juice in all or any of the Mark I, Mark II or Mark III versions amount to a representation by the appellants that the juice which they sell is “Jif” lemon juice?

(iii)

If the answer to that question is in the affirmative, is it, on a balance of probabilities, likely that, if the appellants are not restrained as they have been, a substantial number of members of the public will be misled into purchasing the defendants’ lemon juice in the belief that it is the respondents’ Jif juice?

[Lord Oliver reviewed the findings of the primary judge pertinent to these questions, and in so doing suggested it was prima facie “difficult… to fault” the conclusion of the lower courts that Borden’s use of any of their proposed Mark I, II or II prototypes would constitute an actionable passing off. His Lordship continued at [411]:] … The article itself cannot, it is submitted, constitute the special insignia of its own origin. All that the law will protect are such capricious additions or features as may be attached to the article for the purpose of indicating origin – for instance, the embossed word “Jif” on the respondents’ containers in the instant case, which serves no functional purpose. Whether in fact the particular shape or configuration of the very object sold by a trader is incapable as a matter of law of protection in a case where it has become associated exclusively with his business is a proposition which is at least open to doubt. …. I find it, however, unnecessary to pursue the question further for there is, to my mind, a fallacy in the argument which begins by identifying the contents with the container and is summarised in the central proposition that “you cannot claim a monopoly in selling plastic lemons.” Well, of course you cannot any more than you can claim a monopoly in the sale of dimpled bottles. The deception alleged lies not in the sale of the plastic lemons or the dimpled bottles, but in the sale of lemon juice or whisky, as the case may be, in containers so fashioned as to suggest that the juice or the whisky emanates from the source with which the containers of those particular configurations have become associated in the public mind: see John Haig & Co. Ltd. v. Forth Blending Co. Ltd.(1953) 70 R.P.C. 259. It is, no doubt, true that the plastic lemon-shaped container serves, as indeed does a bottle of any design, a functional purpose in the sale of lemon juice. Apart from being a container simpliciter, it is a convenient size; it is capable of convenient use by squeezing; and it is so designed as conveniently to suggest the nature of its contents without the necessity for further labelling or other identification. But those purposes are capable of being and indeed are served by a variety of distinctive containers of configurations other than those of a lemon-sized lemon. Neither the appellants nor the respondents are in the business of selling plastic lemons. Both are makers and vendors of lemon juice and the only question is whether the respondents, having acquired a public reputation for Jif juice by selling it for many years in containers of a particular shape and design which, on the evidence, has become associated with their produce, can legitimately complain of the sale by the appellants of similar produce in containers of similar, though not identical, size, shape and colouring. So I, for my part, would reject the suggestion that the plastic lemon container is an object in itself rather than part of the get-up under which the respondents’ produce is sold. But it is argued that that is not the end of the matter, for the get-up which is protected is not just a plastic lemon-shaped container, but the container plus the respondents’ labelling, and it is not open to the respondents to argue that, though the labels themselves could not, fairly regarded, possibly be confused, a part, albeit [12.40]

507

Intellectual Property: Commentary and Materials

Reckitt & Colman Ltd v Borden Inc cont. perhaps a dominant part, of the get-up can, as it were, be separated and made the subject matter of protection in its own right. I confess that I do not see why not, given that the respondents establish a right to the protection of their get-up as a [412] whole. The question is whether what the appellants are doing constitutes a misrepresentation that their juice is Jif juice, and whether that results from the similarity of their get-up to the whole of the respondents’ get-up or to only the most striking part of it is wholly immaterial if – and of course this is critical – it is once established as a matter of fact that what they are doing constitutes a misrepresentation which effectively deceives the public into an erroneous belief regarding the source of the product. Then it is said – and again there is no disagreement as to this – that the mere fact that the produce of the appellants and that of the respondents may be confused by members of the public is not of itself sufficient. There is no “property” in the accepted sense of the word in a get-up. Confusion resulting from the lawful right of another trader to employ as indicative of the nature of his goods terms which are common to the trade gives rise to no cause of action. The application by a trader to his goods of an accepted trade description or of ordinary English terms may give rise to confusion. It probably will do so where previously another trader was the only person in the market dealing in those goods, for a public which knows only of A will be prone to assume that any similar goods emanate from A. … … All this is accepted by the respondents. The appellants, however, starting from this undoubted base, argue that what the respondents are asking the court to protect is no more than the use by them of a descriptive term, embodied in a plastic lemon instead of expressed verbally, which is common to the trade. …. Every case depends upon its own peculiar facts. For instance, even a purely descriptive term consisting of perfectly ordinary English words may, by a course of dealing over many years, become so associated with a particular trader that it acquires a secondary meaning such that it may properly be said to be descriptive of that trader’s goods and of his goods alone, as in Reddaway v. Banham [1896] A.C. 199. In the instant case, what is said is that there was nothing particularly original in marketing lemon juice in plastic containers made to resemble lemons. The respondents were not the first to think of it even though they have managed over the past 30 years to establish a virtual monopoly in the United Kingdom. It is, in fact, a selling device widely employed outside the United Kingdom. It is a natural, convenient and familiar technique – familiar at least to those acquainted with retail marketing methods in Europe and the United States. If and so far as this particular selling device has [413] become associated in the mind of the purchasing public with the respondents’ Jif lemon juice, that is simply because the respondents have been the only people in the market selling lemon juice in this particular format. Because there has been in fact a monopoly of this sale of this particular article, the public is led to make erroneous assumption that a similar article brought to the market for the first time must emanate from the same source. This has been referred to in the argument as “the monopoly assumption.” The likelihood of confusion was admitted by the appellants themselves in the course of their evidence, but it is argued that the erroneous public belief which causes the product to be confused arises simply from the existing monopoly and not from any deception by the appellants in making use of what they claim to be a normal, ordinary and generally available selling technique. The difficulty about this argument is that it starts by assuming the only basis upon which it can succeed, that is to say, that the selling device which the appellants wish to adopt is ordinary and generally available or, as it is expressed in some of the cases, “common to the trade:” see e.g. Payton & Co. Ltd. v. Snelling, Lampard & Co. Ltd.(1899) 17 R.P.C. 48. In one sense, the monopoly assumption is the basis of every passing off action. The deceit practised on the public when one trader adopts a get-up associated with another succeeds only because the latter has previously been the only trader using that demonstrates nothing in itself. As a defence to a passing off claim it can succeed only if that which is claimed by the plaintiff as distinctive of his goods and his goods alone consists of something 508 [12.40]

Protection of Business Reputation

CHAPTER 12

Reckitt & Colman Ltd v Borden Inc cont. either so ordinary or in such common use that it would be unreasonable that he should claim it as applicable solely to his goods, as for instance where it consists simply of a description of the goods sold. Here the mere fact that he has previously been the only trader dealing in goods of that type and so described may lead members of the public to believe that all such goods must emanate from him simply because they know of no other. To succeed in such a case he must demonstrate more than simply the sole use of the descriptive term. He must demonstrate that it has become so closely associated with his goods as to acquire the secondary meaning not simply of goods of that description but specifically of goods of which and he alone is the source. Lord Oliver, at [413]–[414] then quoted, with approval, elements of Lord Herschell’s speech in Reddaway v Banham [1896] AC 199, 210; 214–5, [reproduced above in [12.220]] before continuing [414]: … In the instant case the submission that the device of selling lemon juice in a natural-size lemon-shaped squeeze pack is something that is “common to the trade” and therefore incapable of protection at the suit of a particular trader begs the essential question. If “common to the trade” means “in general use in the trade” then, so far at least as the United Kingdom is concerned, the evidence at the trial clearly established that the lemon-sized squeeze pack was not in general use. If, on the other hand, it means, as the appellants submit, “available for use by the trade” then it is so available only if it has not become so closely associated with the respondents’ goods as to render its use by the appellants deceptive; and that is the very question in issue. The trial judge here has found as a fact that the natural size squeeze pack in the form of a lemon has become so associated with Jif lemon juice that the introduction of the appellants’ juice in any of the proposed get-ups will be bound to result in many housewives purchasing that juice in the belief that they are obtaining Jif juice. I cannot interpret that as anything other than a finding that the plastic lemon-shaped container has acquired, as it were, a secondary significance. It indicates not merely lemon juice but specifically Jif lemon juice. … In the end, the question comes down not to whether the respondents are entitled to a monopoly in the sale of lemon juice in natural size lemon-shaped containers but whether the appellants, in deliberately adopting, out of all the many possible shapes of container, a container having the most immediately striking feature of the respondents’ get-up, have taken sufficient steps to distinguish their product from that of the respondents … … [415] … The essence of the action for passing off is a deceit practiced upon the public and it can be no answer, in a case where it is demonstrable that the public has been or will be deceived, that they would not have been if they had been more careful, more literate or more perspicacious. Customers have to be taken as they are found… … It has … to be asked in every case against the background of the type of market in which the goods are sold, the manner [416] in which they are sold, and the habits and characteristics of purchasers in that market. The law of passing off does not rest solely upon the deceit of those whom it is difficult to deceive. … [As to the claim that Reckitt & Colman were in effect securing “a perpetual monopoly in the sale of lemon juice in lemon-shaped squeeze packs”, Lord Oliver said, at 416:] I do not accept at all that this is so, but in any event the principle that no man is entitled to steal another’s trade by deceit is one of at least equal importance. The facts as found here establish that, unless the injunction is continued, that is what the appellants will be doing and it is not necessary for [12.40]

509

Intellectual Property: Commentary and Materials

Reckitt & Colman Ltd v Borden Inc cont. them to do so in order to establish their own competing business for there is nothing in the nature of the product sold which inherently requires it to be sold in the particular format which the appellants have chosen to adopt. I would dismiss the appeal. (Some citations omitted.) [Lord Brandon of Oakbrook, Lord Goff of Chieveley, Lord Jauncey of Tullichettle delivered concurring speeches. Lord Bridge of Harwich also agreed with the result, but not without lodging a judicial protest.] LORD BRIDGE OF HARWICH: [402] My Lords, when plastic containers made in the shape, colour and size of natural lemons first appeared on the market in the United Kingdom as squeeze packs containing preserved lemon juice the respondents were astute enough to realise their potential and to buy up the businesses of the two companies who first marketed preserved lemon juice in this way. They thereby acquired a de facto monopoly which, by the periodical threat or institution of passing off actions over the years, they have succeeded in preserving ever since. … The idea of selling preserved lemon juice in a plastic container designed to look as nearly as possible like the real thing is such a simple, obvious and inherently attractive way of marketing the product that it seems to me utterly repugnant to the law’s philosophy with respect to commercial monopolies to permit any trader to acquire a de jure monopoly in the container as such. But, as Mr. Jacob, for the respondents, quite rightly pointed out, the order made by the trial judge in this case does not confer any such de jure monopoly because the injunction restrains the appellants from marketing their product “in any container so nearly resembling the plaintiffs’ Jif lemon-shaped container as to be likely to deceive without making it clear to the ultimate purchaser that it is not of the goods of the plaintiff.” (Emphasis added.) How then are the appellants, if they wish to sell their product in plastic containers of the shape, colour and size of natural lemons, to ensure that the buyer is not deceived? The answer, one would suppose, is by attaching a suitably distinctive label to the container. Yet here is the paradox: the trial judge found that a buyer reading the labels proposed to be attached to the appellants’ Mark I, II or III containers would know at once that they did not contain Jif lemon juice and would not be deceived; but he also enjoined the appellants from selling their product in those containers because he found, to put it shortly, that housewives buying plastic lemons in supermarkets do not read the labels but assume that whatever they buy must be Jif. The result seems to be to give the respondents a de facto monopoly of the container as such which is just as effective as de jure monopoly. A trader selling plastic lemon juice would never be permitted to register a lemon as his trade mark, but the respondents have achieved the result indirectly that a container designed to look like a real lemon is to be treated, per se, as distinctive of their goods. If I could find a way of avoiding this result, I would. But the difficulty is that the trial judge’s findings of fact, however surprising they may seem, are not open to chal-[403]lenge. Given those findings, I am constrained by the reasoning in the speeches of my noble and learned friends, Lord Oliver of Aylmerton and Lord Jauncey of Tullichettle to accept that the judge’s conclusion cannot be faulted in law. With undisguised reluctance I agree with my noble and learned friends that the appeal should be dismissed.

[12.50]

Note

AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449 and Reckitt & Colman Ltd v Borden Inc [1990] RPC 341 demonstrate a growing recognition of the proprietary rights in goodwill extending beyond rights in a name. Misrepresentation causing harm to the defendant 510 [12.50]

Protection of Business Reputation

CHAPTER 12

can even result from “reverse passing off”, where instead of suggesting that the defendant is the source of the plaintiff’s goods or services, the misrepresentation results from the defendant claiming the plaintiff’s product as their own. In Bristol Conservatories v Conservatories Custom Built [1989] RPC 455, the defendant designed and manufactured conservatories to be built onto existing houses, and its salespeople showed potential customers photographs of the plaintiff’s work. It was held by the United Kingdom Court of Appeal that this amounted to a claim that the defendant’s product was of the same quality as the plaintiff’s. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, the plaintiff complained of the use of photographs of the plaintiff’s furniture range in the defendant’s advertising, although that issue was not supported by sufficient evidence (see further [12.120]).

Development of passing off: composition of goods and geographic indication protection Erven Warnink v J Townend [12.60] Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 House of Lords (United Kingdom) [The appellant manufacturers in the Netherlands of a liquor called “advocaat”, which was exported to Britain, objected to the respondents’ use of that name for a drink that they manufactured and distributed in Britain. The main ingredients of the appellant’s advocaat were eggs and an expensive spirit base, but no wine. The respondents produced their “Keeling’s Old English Advocaat” using a mixture of dried egg powder and Cypress sherry, which was wine-based and attracted a lower rate of excise, therefore making the product cheaper than the appellants’ product. The use of the respondents’ name on their product would have tended to distinguish it from the imported Dutch advocaat; however, the issue was whether the name implied a certain geographic origin, and certain ingredients.] LORD DIPLOCK: [740] …The action for what has become known as “passing off” arose in the 19th century out of the use in connection with his own goods by one trader of the trade name or trade mark of a rival trader so as to induce in potential purchasers the belief that his goods were those of the rival trader. Although the cases up to the end of the century had been confined to the deceptive use of trade names, marks, letters or other indicia, the principle had been stated by Lord Langdale MR as early as 1842 as being: “A man is not to sell his own goods under the pretence that they are the goods of another man”: Perry v Truefitt (1842) 6 Beav 66; 49 ER 749 at 73 (Beav). At the close of the century in Reddaway v Banham [1896] AC 199, it was said by Lord Herschell that what was protected by an action for passing off was not the proprietary right of the trader in the mark, name or get-up improperly used. Thus the door was opened to passing off actions in which the misrepresentation took some other form than the deceptive use of trade names, marks, letters or other indicia; but as none of their Lordships committed themselves to identifying the legal nature of the right that was protected by a passing off action it remained an action sui generis which lay for damage sustained or threatened in consequence of a misrepresentation of a particular kind. Reddaway v Banham, like all previous passing off cases, was one in [741] which Banham had passed off his goods as those of Reddaway, and the damage resulting from the misrepresentation took the form of the diversion of potential customers from Reddaway to Banham. Although it was a landmark case in deciding that the use by a trader of a term which accurately described the composition of his own goods might nevertheless amount to the tort of passing off if that term were understood in the market in which the goods were sold to denote the goods of a rival trader, Reddaway v Banham did not extend the nature of the particular kind of misrepresentation which gives rise to a right of action in [12.60]

511

Intellectual Property: Commentary and Materials

Erven Warnink v J Townend cont. passing off beyond what I have called the classic form of misrepresenting one’s own goods as the goods of someone else nor did it provide any rational basis for an extension. This was left to be provided by Lord Parker in AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449 at 450. In a speech which received the approval of the other members of this House, he identified the right the invasion of which is the subject of passing off actions as being the “property in the business or goodwill likely to be injured by the misrepresentation” The concept of goodwill is in law a broad one which is perhaps best expressed in words used by Lord Macnaghten in Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] AC 217 at 223-224: It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. The goodwill of a manufacturer’s business may well be injured by someone else who sells goods which are correctly described as being made by that manufacturer but being of an inferior class or quality are misrepresented as goods of his manufacture of a superior class or quality. This type of misrepresentation was held in AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449 to be actionable and the extension to the nature of the misrepresentation which gives rise to a right of action in passing off which this involved was regarded by Lord Parker as a natural corollary of recognising that what the law protects by a passing off action is a trader’s property in his business or goodwill. The significance of this decision in the law of passing off lies in its recognition that misrepresenting one’s own goods as the goods of someone else was not a separate genus of actionable wrong but a particular species of wrong included in a wider genus of which a premonitory hint had been given by Lord Herschell in Reddaway v Banham [1896] AC 199 at 211 when, in speaking of the deceptive use of a descriptive term, he said: I am unable to see why a man should be allowed, in this way more than in any other to deceive purchasers into the belief that they are getting what they are not, and thus to filch the business of a rival. I quote this passage, in which I have supplied the emphasis, because it was Lord Herschell who gave the leading speech in an earlier decision of this House in Native Guano Co v Sewage Manure Co (1889) 8 RPC 125 at 129 that was principally relied on by the Court of Appeal as justifying their reversal of the judgment of Goulding J in the instant case. Spalding’s Case (1915) 84 LJ Ch 449 led the way to recognition by judges of other species of the same genus, as where although the plaintiff and [742] the defendant were not competing traders in the same line of business, a false suggestion by the defendant that their businesses were connected with one another would damage the reputation and thus the goodwill of the plaintiff’s business. There are several cases of this kind reported of which Harrods Ltd v R Harrod Ltd (1923) 41 RPC 74, the money lender case, may serve as an example. Lord Parker’s explanation of the nature of the proprietary right protected by a passing off V-C in Dent v Turpin (1861) 2 John & H 139; 70 ER 1003, and Southorn v Reynolds (1865) 12 LT 75, in which one of two traders, each of whom had by inheritance acquired goodwill in the use of a particular trade name, was held entitled, without joining the other, to obtain an injunction restraining a third trader from making use of the name, despite the fact that the plaintiff’s right of user was not exclusive. The goodwill of his business would be damaged by the misrepresentation that the defendant’s goods were the goods of a limited class of traders entitled to make use of it, of whom the plaintiff was one and the defendant was not. My Lords, AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: 512

[12.60]

Protection of Business Reputation

CHAPTER 12

Erven Warnink v J Townend cont. (1)

a misrepresentation;

(2)

made by a trader in the course of trade;

(3)

to prospective customers of his or ultimate consumers of goods or services supplied by him;

(4)

which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and

(5)

which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.

In seeking to formulate general propositions of English law, however, one must be particularly careful to beware of the logical fallacy of the undistributed middle. It does not follow that because all passing off actions can be shown to present these characteristics, all factual situations which present these characteristics give rise to a cause of action for passing off. True it is that their presence indicates what a moral code would censure as dishonest trading, based as it is upon deception of customers and consumers of a trader’s wares but in an economic system which has relied on competition to keep down prices and to improve products there may be practical reasons why it should have been the policy of the common law not to run the risk of hampering competition by providing civil remedies to every one competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares. The market in which the action for passing off originated was no place for the mealy mouthed; advertisements are not on affidavit; exaggerated claims by a trader about the quality of his wares, assertions that they are better than those of his rivals even though he knows this to be untrue, have been permitted by the common law as venial “puffing” which gives no cause of action to a competitor even though he can show that he has suffered actual damage in his business as a result. Parliament, however, beginning in the 19th century has progressively [743] intervened in the interests of consumers to impose on traders a higher standard of commercial candour than the legal maxim caveat emptor calls for, by prohibiting under penal sanctions misleading descriptions of the character or quality of goods; but since the class of persons for whose protection the Merchandise Marks Acts 1887-1953 and even more rigorous later statutes are designed, are not competing traders but those consumers who are likely to be deceived, the Acts do not themselves give rise to any civil action for breach of statutory duty on the part of a competing trader even though he sustains actual damage as a result: Cutler v Wandsworth Stadium Ltd [1949] AC 398 and see London Armoury Co Ltd v Ever Ready Co (Great Britain) Ltd [1941] 1 KB 742. Nevertheless the increasing recognition by Parliament of the need for more rigorous standards of commercial honesty is a factor which should not be overlooked by a judge confronted by the choice whether or not to extend by analogy to circumstances in where the circumstances although different had some features in common with those of the case which he has to decide. Where over a period of years there can be discerned a steady trend in legislation which reflects the view of successive parliaments as to what the public interest demands in a particular field of law, development of the common law in that part of the same field which has been left to it ought to proceed upon a parallel rather than a diverging course.

Note

[12.70]

In Diageo North America Inc v Intercontinental Brands (ICB) Ltd [2011] 1 All ER 242; [2010] EWCA Civ 920 (“Vodkat” case), Patten LJ, at 252, observed where products do not denote a particular geographical location, but rather, for example, a particular way a type of spirit has been distilled, such products can only qualify for the “extended form” or passing off [12.70]

513

Intellectual Property: Commentary and Materials

if they have “acquired a reputation and goodwill in their own name by dint of the qualities or characteristics which they possess”. However, this extended form of passing off does not require that the claimant’s product have a “cachet” – ie being of superior quality, a luxury brand, or premium product – especially vis-a-vis the defendant’s product. Patten LJ emphasised, at 264, that in terms of goodwill, distinctiveness was the key and that in the present case, vodka’s qualities as a “clear, tasteless, distilled, high strength spirit have given [it] a following which has created significant goodwill in the name. …Nothing more is needed or… justified”. Lord Diplock’s formulation in Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 of the five characteristics of a passing off action based on AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449 and other cases was not intended to be determinative of the circumstances in which the elements of the tort are present. Nevertheless, his formulation has almost become a “general proposition” of the law, despite the warning against this. In practice, certain of the elements are either assumed to exist or have been criticised as unduly restrictive and conveniently overlooked. The Australian courts, for example, have been prepared to allow passing off to be extended to protect images, characters and personalities per se without the necessity for public deception being shown. The next extract discusses this trend.

Not a proprietary right, but misrepresenting Telstra v Royal & Sun Alliance Insurance [12.80] Telstra Corporation Ltd v Royal & Sun Alliance Insurance Australia Ltd (2003) 57 IPR 453 (Goggomobil Case) Federal Court of Australia MERKEL J: [454] … Introduction The first applicant (“Telstra”) and the second applicant (“Sensis”), which is a wholly owned subsidiary of Telstra claim declaratory and injunctive relief, as well as damages or an account of profits, against the first respondent (“Royal”) and the second respondent (“Wilson Everard”) in respect of their advertising of car insurance to the public under the name of Shannons Insurance (“Shannons”). … The Yellow Pages Goggomobil advertising campaign … [455] …At the time of the campaign the Goggomobil, which was manufactured in the 1950s, was a rare, inexpensive and relatively unknown car. The first Goggomobil advertisement commences in the driveway of a suburban house, in which a yellow Goggomobil is parked on a jack with a man underneath it. The man, portrayed by the actor Tommy Dysart (“Dysart”), crawls out from underneath the car. He is middle-aged, heavy-set, dressed in overalls and wears a pendant. The car is leaking oil. The scene moves to inside the house where the man, with a heavy Scottish accent, tells his wife “I’ve broken Fritz”. He then flicks through a publication, picks up the telephone and, after dialling a number, asks “I was wondering if you could help me” stating that “I’ve got a problem with my Goggomobil”. He pauses, and slowly repeats the word “Goggo-mobil”. He rings up another number and again says he has a problem with his Goggomobil. The man, becoming increasingly frustrated, is required to spell in his Scottish brogue, “G-O-G-G-O”. He rings again to say he has a problem with his Goggomobil, pauses, and cautiously says “yeah, 1954” and, getting excited, says “Yeah, no not the dart. Not the Dart. They always think it’s the Dart!”. The Dart is a particular Goggomobil model of that era. The man, with his wife smiling at him, starts laughing uproariously and, simultaneously, the 514 [12.80]

Protection of Business Reputation

CHAPTER 12

Telstra v Royal & Sun Alliance Insurance cont. advertisement fades to the well-known yellow and black Yellow Pages walking fingers logo, with the man’s laughter and joyous voice calling out in the background “It’s a wee ripper”. The first Goggomobil advertisement featured a likeable and memorable character, an unusual and distinctive motor vehicle, the use of the telephone to help solve an obscure problem, and tells its story in a humorous manner. … In 1998 Sensis produced a second advertisement using Dysart, who by then had become known as “Mr Goggomobil”, his wife and the same yellow Goggomobil. This advertisement showed “Mr Goggomobil” and his wife, who was sitting with him in the Goggomobil, being prevented from driving the Goggomobil out of their driveway by two Yellow Pages directories placed under one of the rear wheels of the vehicle. …[456] … The Shannons advertising campaign In May 2000 Royal, a major general insurer, acquired Shannons, which had specialised in insuring vintage, veteran or classic motor vehicles since the early 1970s. After the acquisition Royal decided to expand the business conducted by Shannons by increasing the exposure of the Shannons brand to motoring enthusiasts who owned “special vehicles”. In particular, in pursuit of its objective of marketing its policies to a broader cross-section of motoring [457] enthusiasts Shannons, acting through its marketing consultant Frank Moore Advertising Pty Ltd, engaged Wilson Everard to create the television, radio and print advertising for its campaign. Late in 2001 Wilson Everard came up with the idea of using Dysart and a Goggomobil for Shannons advertising. It was thought that “using Tommy Dysart and a Goggomobil would be instantly recognisable for Shannons as people were aware of Tommy and his appearance in the Yellow Pages advertisement.” The Goggomobil vehicle was attractive to Shannons as it had come to the public’s attention in the Yellow Pages campaign and was the type of enthusiast’s car that would be insured by Shannons. Also its rare and unique character would not offend the car brand loyalties of Shannons customers. … In January 2002 an animatic (ie a rough mock-up) of a proposed advertisement was produced by Wilson Everard in order to obtain the reaction of focus groups to the advertisement. The animatic started with a voice-over that stated that the advertisement would open on “the famous and instantly recognisable figure of Mr Goggomobil standing proudly by his car”. The animatic was made up of stills from the first Goggomobil advertisement with a voice-over that revealed that “Mr Goggomobil” was now looking for insurance for his vehicle. The animatic concluded with the Shannons logo, rather than the Yellow Pages logo. At no point did the animatic make any reference to Yellow Pages or its logo. Klein and Associates, a professional marketing group, was engaged by Shannons to show the animatic and another proposed advertisement to four selected focus groups comprising Shannons. The other three groups did not insure with Shannons but were likely to have known of it. The research report prepared by Klein and Associates stated: All respondents in this study recognised “Goggomobil” as an historic, outstanding, iconic, talked about and much loved Yellow Pages TVC [television commercial], with estimates of the time since it was on air ranging from 5 to 15 years. Among the majority and as a television commercial promoting Shannons insurance, “Goggomobil” was exceptionally well received and well regarded. Importantly, we highlight that: [458] [12.80]

515

Intellectual Property: Commentary and Materials

Telstra v Royal & Sun Alliance Insurance cont. • the idea of borrowing (or ambushing) an old advertising icon for Shannons gain was considered to be a masterful act of cleverness and was variously described as “quirky”, “clever”, “opportunistic”, “taking a free kick”, “smart”, “brilliant”, “cheeky”, “mad”, “fun”, and so forth • not a single interviewee in this study deemed it inappropriate or wrong (or held it against Shannons) for borrowing “Goggomobil”, with most admiring Shannons for being sufficiently cheeky and clever to do so: • “It’s absolutely brilliant to have thought of it and such a clever idea.” • “Good on Shannons I reckon.” • “Goggomobil” was considered to be a perfect vehicle for promoting Shannons (for as interviewees themselves had done, Mr Goggomobil was now using the Yellow Pages and his telephone to shop for car insurance) • no-one was alienated by a Goggomobil (which might have occurred among Holden people if a Ford had been featured or an American muscle car owner if a Jag had been utilised, etc.) … [459] … The approval of Pacific Access to the reproduction of parts of the first Goggomobil advertisement was sought. Pacific Access’ response was that copyright subsisted in the first Goggomobil advertisement, the proposed advertisement was a reproduction of the first Goggomobil advertisement and Pacific Access was not prepared to allow its advertisement to be incorporated into Shannons’ advertising campaign. After Pacific Access’ refusal Wilson Everard was instructed “to create a script that did not reproduce parts of the 1991 Yellow Pages advertisement”. [460] Mr Lachlan Dunn (“Dunn”), an employee of Wilson Everard, was given the task of creating the new script. His evidence was that he was told to take “the Goggomobil concept a step further” and make it look “completely different to the Yellow Pages advertisement”. Dunn created three scripts dated 6 February 2002, but only the 30 second script, entitled “The Ol’ Dart”, was proceeded with. … [Following further consultation and objection from Pacific Access] the script was revised to remove the reference to Dysart’s expression of the “G” after Goggomobil and Dysart’s voice-over of the telephone number, with its emphasis on “O” “O”, was also removed. With those changes, and some other less significant changes, the final form of the script was as follows: Vision: We open on a sunny outdoor scene in the driveway of a typical suburban house. We see a man giving a final polish to a gleaming vehicle. We instantly recognize the man – it is Mr Goggomobil – and it is obvious a few years have past since we last saw him – he is graying and he is carrying an extra bit around the middle! The car is different too – instead of a yellow sedan up on blocks, his pride and joy is a a gleaming, immaculate goggomobil dart (that’s right, the Dart!) in flawless, Shannons green. As he takes a step back to admire his handiwork, Mr Goggomobil pulls a mobile phone form his pocket and beings punching in numbers before speaking … [Dysart]: Hello …I’d like to insure my Goggomobil … (pause) … (frustrated) … Go-ggomob-il … Vision: Before he continues we fade to a later shot of the same scene – he is pacing around the car impatiently while on another call. We fade again to another shot – these quick scenes are simply to show him becoming more and more frustrated. We then … fade to a final shot – he is sitting in the car, tapping his fingers impatiently on the steering wheel … MVO: Shannons Insurance shares the passion with car enthusiasts … [Dysart]: Aye that’s right – it is the Dart – aye!!! (laughs) Vision: He is excited and very happy to have finally found what he’s looking for. We fade to final super … 516 [12.80]

Protection of Business Reputation

CHAPTER 12

Telstra v Royal & Sun Alliance Insurance cont. Super: Shannons (logo) – Share the passion 1300 139 006 Agreed value. Choice of repairers. Lifetime no claim bonus protection MVO: … so call Shannons for a special quote on your special vehicle. … [464] … The first Shannons advertisement is alleged to be an infringement of the copyright owned by Telstra in the first Goggomobil advertisement and in the script for that advertisement. However, the televising and broadcasting of all of the Shannons advertisements is alleged to constitute passing off and a contravention of ss 52, 53(c) and 53(d) of the TPA. [His Honour found that there was no infringement of the literary or dramatic works related to the Telstra advertisement as the first Shannons advertisement did not use substantially the same dialogue and the setting or structure of the first Shannons advertisement was sufficiently different to fall well short of a “substantial” reproduction of the first Goggomobil advertisement.] [468] … Passing off and misleading conduct It appears to be common ground between the parties that, subject to the requirement of actual damage in the passing off claim, the applicants’ passing off case is, in general, coextensive with their case of contravention of ss 52, 53(c) and 53(d) of the TPA. Both cases depend on whether the Shannons advertisements represent that Yellow Pages was in some way associated or [469] connected with Shannons, the Shannons advertisements or the services Shannnons offers. If no such representation has been made the applicants’ claims must fail. If any such representation was made it is untrue and a necessary prerequisite for the success of the passing off and misleading conduct claims will have been established. Although the applicants made their claims in relation to the two television advertisements and the four radio advertisements broadcast as part of Shannons advertising campaign, in my view the only substantial case of misrepresentation is in respect of the first Shannons television advertisement. [469] … Advertising that conjures up a brand without referring to it was described in the evidence as “secondary” or “suggestive” brand advertising. By such advertising images can become established and so well-known that they create an impression of association or connection to a primary brand, notwithstanding that the name of the brand does not appear in the advertisement. The symbol, logo or image is referred to as secondary or suggestive primary brand. Examples of such advertising include the Nike swoosh, McDonald’s arches, the “Ronald McDonald” character, the Coca Cola bottle and the Yellow Pages “walking fingers” logo. Secondary branding or suggestive brand advertising occurs when a word, [470] character, symbol or image creates, on its own, instant recognition or association with a particular product or business. The adoption of such characters, symbols or images by another advertiser will usually raise the question of whether that advertiser is representing that it, or its goods or services, have an affiliation, association or connection they do not have. In R & C Products Pty Limited v S C Johnson & Sons Pty Limited (1993) 42 FCR 188 at 194 Davies J observed: … if advertising or get-up has acquired special signification, then the adoption of elements of the advertising or get-up by another trader may give rise to a misrepresentation. Then the question will be whether other steps have been taken which sufficiently distinguish the one trader and its products from the other trader and its products. Twentieth Century Fox Film Corporation v South Australian Brewing Co Ltd (1996) 66 FCR 451 (“the Duff Beer case”) was concerned with the name “Duff”, which had acquired a powerful secondary meaning in relation to “Duff Beer” as a result of the use of the name “Duff Beer” in the television program “The Simpsons”. Tamberlin J concluded (at 470) that the use by the respondents of the term “Duff Beer” was misleading and deceptive as it is likely to lead to an assumption by consumers that [12.80]

517

Intellectual Property: Commentary and Materials

Telstra v Royal & Sun Alliance Insurance cont. permission had been given by “The Simpsons” to the respondents to produce “Duff Beer”. His Honour found (at 467) that the respondents’ intention was “to ‘sail as close as possible to the wind’ in order to ‘cash in’ on the reputation of ‘The Simpsons’ without stepping over the line of passing off or deceit”. Tamberlin J observed (at 466): Intention to take advantage of the goodwill of another, does not of itself establish a cause of action … A court will, however, more readily infer where there is intention, that the promoters who know the field of business well, were justified in entertaining the hope or expectation that the attempt would succeed and it assists the conclusion that the public was so influenced: cf Australian Guarantee Corporation Ltd v Sydney Guarantee Corp Ltd (1951) 51 SR (NSW) 166 at 170-171, applied by Gummow J in Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 at 445. Of course each case must depend on its own particular facts. In the present case the evidence establishes that as a result of the first Yellow Pages advertisement Dysart’s “Mr Goggomobil” had become a form of secondary branding for Yellow Pages when employed in the manner and context set out in the first Goggomobil advertisement… [473] The real question for the Court in the present case is whether the manner and context in which Dysart and the Goggomobil were used by Shannons in the first Shannons advertisement represented that Yellow Pages had some association or connection with that advertisement or had endorsed or approved the services offered in it. It is to that question that I now turn. [474] … The Yellow Pages Goggomobil campaign was directed to the public at large or, at the least, that large part of the public capable of using the Yellow Pages directory. Although the first Shannons advertisement targeted motor enthusiasts it was shown on commercial television to a large segment of the viewing public over a number of timeslots and in the course of a variety of programs. As was said in Parkdale Custom Built Furniture Proprietary Limited v Puxu Proprietary Limited (1982) 149 CLR 191 at 199, consideration must be given as a case such as the present as the initial question is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to “the ordinary or reasonable members” of the relevant segment of the viewing public: see Campomar Societad Limitada v Nike International Ltd (2000) 202 CLR 45 at [105] 86-87. In the present case the relevant class of the public likely to be affected by the conduct in question were viewers who saw the first Shannons advertisement and were aware of the Yellow Pages Goggomobil campaign. Plainly, that class constitutes a significant segment of the public. As observed above, whether the use of Mr Goggomobil and his Goggomobil vehicle to solve a problem by use of the telephone would result in secondary or suggestive brand advertising for Yellow Pages depends upon the manner and context in which that subject matter is employed. The extensive and significant contextual similarities between the first Goggomobil advertisement and the first Shannons advertisement and the manner in which Dysart and his Goggomobil have been used to ensure “instant recognition” have led me to conclude that the first Shannons advertisement constitutes such secondary advertising. The difficulty that confronted Shannons is that it needed to appropriate the features that made the first Goggomobil advertisement both famous and popular, if it were to “cut through the ‘clutter’” of advertising and gain the instant recognition and attention of the viewing public that it was seeking. Thus, the features that Shannons most desired to retain, and did retain, in the advertisement that was broadcast were the features that were most likely to result in the first advertisement being perceived by the relevant class of the public to be another Yellow Pages advertisement or to be in some other way connected or associated with Yellow Pages. Of course, the further Shannons moved away from those features (such as the other Shannons advertisements) the less likely its advertisement would be seen to have a connection with Yellow Pages. However, the problem for Shannons with that outcome is that it would lose the advantage of the instant recognition and response it was seeking from its first advertisement. That recognition and response was gained by 518 [12.80]

Protection of Business Reputation

CHAPTER 12

Telstra v Royal & Sun Alliance Insurance cont. Shannons recreating in its advertisement the features that gave the first Goggomobil [475] advertisement the “warmth, humour and familiarity” that made that advertisement so well-known, popular and memorable … In particular, Shannons relied on re-creating the character of “Mr Goggomobil” in a similar problem solving context. As was explained by Burchett J in Pacific Dunlop Pty Ltd v Hogan (1989) 23 FCR 553 at 584, in the analogous context of character advertising: The whole importance of character merchandising is the creation of an association of the product with the character; not the making of precise representations. Precision would only weaken an impression which is unrelated to logic, and would in general be logically indefensible. Yet the impression must be powerful to be effective. The only medium likely to convey the vague message of character merchandising, while giving it the force and immediacy of an exciting visual impact, is television. In Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61 (“Mark Foys”) at 76-78 the Full Court explained why it is sufficient that “some form” of association or connection is conveyed notwithstanding that the precise form of the association or connection may not be articulated or identified. That is akin to the situation in the present case. I am satisfied that the overall impression created by the showing of the first Shannons advertisement upon a significant portion of ordinary and reasonable members of the relevant class of the public was that Yellow Pages is in some way associated or connected with the advertisement or with locating the services offered in it. Accordingly, I am satisfied that the advertisement made a representation to that effect. While there would be doubt as to the precise form of the association or connection a significant segment of the relevant public would also be likely to conclude that the first Shannons advertisement is another Yellow Pages “Mr Goggomobil” advertisement, but that he is now using his telephone to look for Shannons insurance, rather than a repairer, for his vehicle. The representations of association or connection I am satisfied were conveyed by the first Shannons advertisement “cause more than mere wonderment or confusion [as to whether an association or connection exists] and travel into the areas of positive misrepresentation”: see Mark Foys at 77. The most compelling argument of the respondents against a connection or association between the first Shannons advertisement and Yellow Pages is the absence of any Yellow Pages branding, and the presence of Shannons branding, in the advertisement. It was argued that those features would leave the public in little doubt that this was an advertisement for Shannons insurance and not for Yellow Pages. There may be force in that argument if the viewing public consisted solely of persons who had insured with Shannons or were aware of its specialised products. Those persons might have responded to the advertisement by regarding it as a clever use of the Yellow Pages advertisement in an advertisement by Shannons insurance. That view, however, is predicated upon those persons being well aware of Shannons and the unique role it plays in insuring “special” vehicles. The problem with that view is that such persons only constitute a small segment of the viewing public and therefore their likely response to the advertisement provides no answer as to how the larger section of the relevant viewing public, which would not have an awareness of Shannons, might view it. Indeed, the advertisement was primarily targeting a section of the viewing public that was not aware of Shannons. … [476] … For the above reasons I have concluded that the first Shannons advertisement misrepresents that it is also an advertisement by Yellow Pages or that Yellow Pages is in some way associated or connected with that advertisement or with locating the services offered in it. As Yellow Pages had no association or connection whatsoever with the advertisement or with those services, the making of the representation: • contravened s 52 of the TPA because it was misleading or deceptive or likely to mislead or deceive; • contravened s 53(d) of the TPA because it represented that Shannons had an “affiliation” with Yellow Pages (ie, an association: see Mark Foys at 76-77) which it did not have; [12.80]

519

Intellectual Property: Commentary and Materials

Telstra v Royal & Sun Alliance Insurance cont. • established a critical element of the applicants’ claim of passing off. However, I do not regard the first Shannons advertisement as representing that the insurance services offered by Shannons are sponsored or approved by Yellow Pages. [477] … The respondents argued that the applicants’ claims are misconceived insofar as they seek to claim some proprietary rights or goodwill in the character of “Mr Goggomobil”. As explained above, I have not founded my decision in respect of the first Goggomobil advertisement on any such rights or goodwill. Indeed, my rejection of the applicants’ claims in respect of the other Shannons advertisements is based upon my acceptance of the respondents’ argument that the applicants do not have proprietary rights or goodwill in the character of “Mr Goggomobil”. However, a different outcome attended the first Shannons advertisement because the context and the manner in which “Mr Goggomobil” was used in that advertisement resulted in a representation of association or connection that does not exist.

ESTABLISHING REPUTATION AND DECEPTIVE CONDUCT [12.90] The three key interrelated elements in a passing off suit –often referred to as the

“classical trinity” – are the subsistence of some reputation or goodwill on the part of the plaintiff, deceptive conduct on the part of the defendant, and the existence or threat of damage to the plaintiff as a result of that conduct. There are many ways of trespassing on the reputation comprising the proprietary rights protected by passing off. Indeed, Gummow J in the leading case of ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302, at 356, cautioned that the “law of passing off contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in the short form”, before his Honour went on to observe “’the classical trinity’ [nonetheless] serves to emphasise three core concepts in this area of the law” (see [12.210]). Thus, rather than provide a case on each “type” of passing off, the extracts below set out the general principles which lead to a finding that the vital elements of “misrepresentation … made by a trader” as set out by Lord Diplock in Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 (see [12.60]), and also in the Trade Practices Act 1974 (Cth) s 52 (now Australian Consumer Law s 18) and equivalent fair trading provisions in Australian State/Territory legislation. The principles of establishing reputation are also relevant to understanding the concept of “distinctiveness” in trade mark law. The most obvious form of passing off is the use of another’s name, whether a business name or product name. The difficulty of establishing reputation in descriptive material is emphasised by the following extracts, which also illustrate that the actual decision in any particular case will depend very much upon the particular facts. If the existence of a reputation can be shown to exist, then even descriptive material will be protected. There may be limits on using even one’s own name or family name if, in the circumstances, it could be taken to refer to another person or business: see Noel Leeming Television Ltd v Noel’s Appliance Centre Ltd (1985) 5 IPR 249; Gollel Holdings v Kenneth Maurer (1987) 9 IPR 109. As the internet grows in importance as a means of obtaining goods and services – including information, conflicts between company and product names, and domain names – this will lead to the possibility of trade mark infringement, discussed in the next chapter, but also more generally to passing off. 520 [12.90]

Protection of Business Reputation

CHAPTER 12

The general principles of establishing reputation and then showing that the defendant has misled consumers will apply, albeit updated for the speed of communications and globalisation of reputation. Apart from the use of names and descriptive terms, it is often convenient for defendants to “borrow” fictitious characters, copy the get-up or packaging of a product, or otherwise mislead the persons concerned to buy the relevant products or services into thinking the plaintiff is the supplier. The flexibility of the passing off action can be seen in the vast range of subjects sought to be protected, including the “theme” or particular scenes from movies: see, for example, Hogan v Pacific Dunlop Ltd (1988) 12 IPR 225. As mentioned in Telstra Corporation Ltd v Royal & Sun Alliance Insurance Australia Ltd (2003) 57 IPR 453 (Goggomobil Case) above at [12.70], in Twentieth Century Fox Film Corp v South Australian Brewing Co Ltd (1996) 66 FCR 451, an Australian brewer was prevented from selling beer using the name of an imaginary product – “Duff” beer – used by cartoon characters in the cult television program The Simpsons. Indeed, even the facial make-up of a pop star has been the subject of an action: see Merchandising Corp of America Inc v Harpbond Ltd [1982] FSR 32. The passing off action, as the character merchandising cases illustrate, is often a last, but successful resort when other IP actions are not available and especially in Anglo-Australian law where there are no freestanding “publicity” or “personality” rights. These points and the flexibility of the tort of passing off was illustrated most recently in Fenty v Arcadia [2013] EWHC 2310 (Ch), where the plaintiff, famous pop star Rihanna (aka Robyn Fenty), ultimately succeeded in an action for passing off against well-known retailer, TopShop, which sold t-shirts bearing a large licensed image of Rihanna. 7 At the outset of his Honour’s judgment, Birss J observed that: [2] … this case is not concerned with so called “image rights”. Whatever may be the position elsewhere in the world, and how ever much various celebrities may wish there were, there is today in England no such thing as a free standing general right by a famous person (or anyone else) to control the reproduction of their image (Douglas v Hello [2007] UKHL 21). There is a developing law of privacy but no question of that arises in this case. The taking of the photograph is not suggested to have breached Rihanna’s privacy. A celebrity may control the distribution of particular images in which they own the copyright but that right is specific to the particular photographs in question. Whether an image right can or should be developed is not what this case is concerned with. [3] This case is concerned with passing off. To establish passing off three things must be proved by Rihanna. She must show that she has a goodwill and reputation amongst relevant members of the public; the conduct complained of must be shown to make a misrepresentation, i.e. to be likely to deceive those members of the public into buying the product because they think it is authorised by her; and that misrepresentation must cause damage to her goodwill. If these elements are established, Rihanna has a good claim against Topshop. If they are not, Rihanna has no ground in law to object to the sale of her image on the t-shirt. That is what this case is about.

The following extracts cover different aspects of establishing reputation in passing off. Read the approach taken by the judges in terms of assessing: the extent of reputation and how that is evidenced; location of reputation; effect on the purchaser of the defendant’s behaviour; and the expectations of consumers in regarding their own interests. Note how the statutory action 7

Even though Birss J observed, at [75], that the “mere sale by a trader of a t-shirt bearing an image of a famous person is not, without more, an act of passing off”, his Honour held that Topshop’s sale of the Rhianna t-shirt in question without her approval was an act of passing off. On appeal, Fenty v Arcadia [2015] 1 WLR 3291; [2015] EWCA Civ 3, the Court of Appeal upheld this finding: see especially [38], [46]–[48]. [12.90]

521

Intellectual Property: Commentary and Materials

for misleading and deceptive conduct 8 is invariably pleaded together with an action for passing off, the general principles surrounding its operation, and how, in many ways, the statutory action is often more advantageous to a claimant than an action for passing off (see eg Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61 [extracted at [12.310]). On the relationship between s 52 and passing off, see Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397, at 418–9 (discussed in Hansen Beverage Company below [12.230]) and Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, at 197 (Deane and Fitzgerald JJ) citing Stephen J in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 227 with approval, where their Honours added that the: purposes and the interests which [s 52 and of the law of passing-off] primarily protect are contrasting. Their areas of operation do not coincide. The indiscriminate importation into s 52 cases of principles and concepts involved in passing-off and the associated area of trade mark law is likely to be productive of error and to give rise to arguments founded on false assumptions.

For a fuller discussion of the differences between passing off and the statutory action for misleading and deceptive conduct (now Australian Consumer Law s 18), see Mark Davison and Ian Horak, Shanahan’s Australian Law of Trade Marks and Passing Off, (Thomson Reuters, 5th ed, 2012) pp 877–888 and Robert Burrell and Michael Handler, Australian Trade Mark Law, (Oxford, 2nd ed, 2016) ch 13.

S & I Publishing v Australian Surf Life Saving [12.100] S & I Publishing Pty Ltd v Australian Surf Life Saving Pty Ltd (1998) 88 FCR 354 (Triathlon Case) Federal Court of Australia [356] THE COURT: The appellant, S & J Publishing Pty Ltd (S & I), appeals from the judgment of a judge of this Court restraining it at the instance of Australian Surf Life Saver Pty Ltd (Life Saver), the respondent in the present proceedings, from selling, offering for sale or distributing in Australia a publication Triathlon & Multi Sport Magazine with the get-up of its title reproduced in a manner depicted in a particular exhibit tendered in the proceedings or in a substantially similar manner. There is now little, if any, dispute between the parties as to the underlying facts or, for that matter, the relevant legal principles to be applied. What is, however, at issue is the application of those legal principles to the facts of the present case. Life Saver has, since July 1998, been the proprietor of a magazine called Triathlon Sports. A magazine under that name had been published since 1984. As the title suggests, it is concerned with articles, photos and editorials dealing with the triathlon sport involving competitive activity in the fields of running, swimming and cycling. The magazine has been sold and marketed to the general public through news agents and by subscription since its initial publication in 1984. There is a pattern of 10 issues per year published monthly, except for the months of May, June, July and August when the magazine has appeared bi-monthly reflecting seasonal conditions in triathlon competition. It may easily be inferred that the magazine is largely purchased and read by persons interested in triathlon sports. Distribution figures disclose that for the nine editions since February 1998, between approximately 7,000 and 8,000 copies had been distributed and between approximately 2,500 and 4,300 were sold. 8

Formerly, Trade Practices Act 1974 (Cth) s 52, now found in the Australian Consumer Law s 18, which itself is located in the Competition and Consumer Act 2010 (Cth), sch 2.

522 [12.100]

Protection of Business Reputation

CHAPTER 12

S & I Publishing v Australian Surf Life Saving cont. Until early 1997, the front cover of the magazine had as its masthead the word “triathlon” printed prominently and in upper case and the word “sports” appearing less prominently below it but also in upper case. That format changed in early 1997. In the new format the word “triathlon”, though still prominent, was shown in lower case (other than the letter “T”) with the word “sports” in upper case and smaller letters off-centre and appearing above the letters “on” being the last two letters of the word “triathlon”. In June of the present year, S & I published the first edition of a magazine under the name Triathlon & Multi Sport Magazine. Although the style and contents of the two magazines may be distinguished, both can generally be said to concern triathlon sports. S & l’s masthead had the word “triathlon” prominently displayed in black with greylblue edging in upper case. Underneath the word “triathlon” in smaller upper case, appear the words & “multi sport magazine”. On top of the word “triathlon” appears prominently in white and yellow print, upper case the words “Australia’s new triathlon multi-sport magazine”. The word “new” predominates because of the yellow printing. The cover shows the edition to be volume 1, number 1. To enable the mastheads to be compared there follows a representation of each of them, of necessity shown in black and white; [Mastheads not reproduced.] [357] The primary decision After setting out the facts outlined above, the trial judge then proceeded to summarise evidence led by both sides from purchasers and advertisers. … Suffice it to say for the moment that, as one might expect, there was some evidence of confusion on the part of [358] witnesses called by Life Saver and at least some evidence of persons who said they were misled into believing that the publication Triathlon & Multi Sport Magazine was the magazine owned by Life Saver. The evidence filed on behalf of the appellant was to the contrary effect. His Honour recognised that evidence of this kind, while admissible, did not displace the duty the judge has himself or herself to consider objectively whether the conduct complained of was misleading or deceptive or likely to mislead or deceive. Ultimately it does not seem that his Honour gave any particular significance to the evidence but rather approached the matter, correctly in our view, on the basis that the decision ultimately was his to make. The case originally was brought both as one arising under s 52 of the Trade Practices Act 1974 (Cth) (the Act) and under the general law of passing off. However, the parties agreed, correctly, that in a case such as the present, success or failure on the s 52 question determined success or failure in the tortious claim. For this reason his Honour ultimately confined his conclusions to the question whether the conduct of S & I in publishing the Triathlon & Multi Sport Magazine was conduct which was misleading and deceptive or likely to mislead or deceive so as to fall within s 52, there being no dispute that the publication of the magazine was in trade or commerce. We proceed on the same basis. His Honour then turned to consider the problem that the word “triathlon” itself was the name of a sport and descriptive of the contents of the magazine or the type of magazine that was being published. His Honour concluded, and in our view correctly, that the word “triathlon” was not of itself a word over which a monopoly of use could be asserted in the name of a magazine. However, his Honour rested his conclusion upon the fact that the word “triathlon” had been featured prominently throughout the publication of the magazine Triathlon Sports, prominence not being altered by the use of lower case since 1997 for the initial upper case. … [359] The appellant’s submissions S & I put its submissions in three ways. This is not to say that it resiled in any way from the submissions which it had filed but rather that it was an attempt to summarise the material in a logical way. The three submissions were as follows: [12.100]

523

Intellectual Property: Commentary and Materials

S & I Publishing v Australian Surf Life Saving cont. 1.

That the learned primary judge erred in the comparison he made of the get-up of the two publications and the conclusion he reached that S & I’s masthead in effect represented that the publication Triathlon & Multi Sport Magazine was a magazine owned and published by Life Saver.

2.

Insofar as the evidence of witnesses supported his Honour’s conclusion, that evidence was of little weight. In particular there was evidence of witnesses supporting the case of S & I that they were not or would not be misled.

3.

On the basis that his Honour was correct in concluding that the use of the S & I masthead involved conduct which was misleading or deceptive or likely to mislead or deceive, the case was one where in all the circumstances an injunction should not have been granted because: a. any misleading or deception would be transient and its effect dissipated once the S & I magazine was sold on the market; and b.

Life Saver had said in its evidence that it proposed to change its current masthead and so a permanent injunction was not appropriate.

The respondent’s submissions The submissions on behalf of Life Saver, as may be expected, supported the approach taken by the primary judge. So it was submitted that, in the present case, where members of the relevant section of the public would not only be caused to wonder whether the two magazines came from the same source but also to conclude that they did, there was misleading and deceptive conduct. Counsel for Life Saver also submitted that, on the evidence, the primary judge was entitled to find that the conduct of S & I in publishing its magazine was misleading and deceptive and that S & I had shown no error of law in this conclusion. In response to S & I’s third submission, Life Saver said that the question before the Court had necessarily to be decided at the time of publication and it was irrelevant what the situation might be in the future if no injunction had been granted. Role of appellate court … [I]t is useful to say something about the role of an appellate court in cases such as the present. Once the primary facts have been found, the question whether conduct is misleading or deceptive or likely to mislead or deceive is a conclusion of fact. No doubt the question whether conduct is capable of being misleading or deceptive or likely to mislead or deceive would involve a question of law. … … [361] We propose therefore to proceed to consider for ourselves the question whether S & I engaged in conduct which was misleading or deceptive while giving respectful weight to the conclusion to which the learned trial judge came. Relevant principles … Section 52 creates what Fox J in Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 348 referred to as “a norm of conduct”. Where that “norm” is not observed, a cause of action may arise under s 82 of the Act in a person who suffers loss or damage thereby. Section 52 operates in a variety of situations. It may not be limited to cases where the conduct complained of is a misrepresentation although that is the normal case which presents itself: Henjo investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546; 79 ALR 83 at 555 (FCR), 93 (ALR) per Lockhart J. Where the conduct claimed to be misleading or deceptive involves what is said to be a misrepresentation a number of principles applicable are well established. These were summarised in Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 50,943 at 50,950-51 in a passage which has been followed in many cases and which was applied by the learned primary judge. We would restate the applicable principles relevant to the present case as follows: 524

[12.100]

Protection of Business Reputation

CHAPTER 12

S & I Publishing v Australian Surf Life Saving cont. 1.

There will be no contravention of s 52 unless the error or misconception which occurs results from the conduct of the corporation and not from other [362] circumstances for which the corporation is not responsible: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199-200 per Gibbs CJ and at 209-211 per Mason J; Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 91; …

2.

Conduct will be misleading and deceptive if it leads into error: Parkdale at 198.

3.

Conduct will be likely to mislead or deceive if there is a “real or not remote chance or possibility” of misleading or deceiving regardless of whether it is less or more than 50 per cent: Global Sportsman at 87.

4.

Conduct causing confusion or uncertainty in the sense that members of the public might have cause to wonder whether the two products or services might have come from the same source is not necessarily misleading and deceptive conduct: Parkdale at 200; Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460; 57 ALR 401 at 472-473 (FCR), 413 (ALR) per Lockhart J; Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 2 TPR 48; 42 ALR 177.

5.

In a case such as the present an applicant must establish that it has acquired the relevant reputation in the name or get-up such that the name or get-up has become distinctive of the applicant’s business or products: Sheraton Corporation of America v Sheraton Motels Ltd [1964] RPC 202; BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1976) 51 ALJR 254; 12 ALR 363.

6.

Conduct may be misleading or deceptive or likely to mislead or deceive notwithstanding that the corporation said to engage in that conduct acted honestly and reasonably and did not intend to mislead or deceive: Parkdale at 197 per Gibbs CJ; Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 223 per Stephen J; Global Sportsman at 88. Logically, a finding that conduct had been intentionally engaged upon will be irrelevant in determining whether that conduct is misleading or deceptive. It may perhaps be imagined that conduct engaged upon with the intent to mislead or deceive may fail in its purpose and not be found misleading or deceptive. Nevertheless, where the intention to mislead or deceive is found, it logically would be likely that a court would more easily find that the conduct was misleading or deceptive: … It is unnecessary in the present case to consider the question whether a finding of intention to mislead or deceive can have relevance in other ways to issues such as remedies.

7.

In many cases it will be necessary to consider the class of persons to whom the representation was directed: Parkdale at 199 and Taco Bell at 72; 202. To the extent that it is here necessary so to do that must be the class of persons interested in purchasing magazines concerned with triathlon sport.

8.

There is no proposition of law to the effect that intervention from erroneous assumption between conduct and misconception destroys the necessary chain of causation with the consequence that the conduct cannot be regarded as likely to mislead or deceive: Taco Bell at 70; 200; … [363]

9.

The test of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective one for the Court to determine. It is ultimately a question of fact.

[12.100]

525

Intellectual Property: Commentary and Materials

S & I Publishing v Australian Surf Life Saving cont. [363] Descriptive name One matter which assumes particular significance in the present case is where the conduct complained of involves a representation said to be that of a product where the name of the product or a get-up including a name is a word of general application, in the present case descriptive of a sport. …. No doubt it is correct to say that where a descriptive trade name is used, there will always be the possibility of confusion. It is also true to say that where a descriptive trade name is used it will be difficult for that name to become distinctive of a particular business, application to like businesses would not ordinarily mislead the public: Hornsby at 229. Distinctiveness The name of a sport is not quite on all fours with a descriptive name in the sense used in the above citation. It is difficult to see how the name of a sport on its own could ever become distinctive of particular products of a person. … [364] We do not doubt that the name Triathlon Sports used over a period of time in connection with a magazine could become and indeed (as his Honour found) did become distinctive of the magazine of Life Saver. No doubt anyone using the same name would engage in conduct within the meaning of s 52 of the Act. We do not think that the mere use of the name Triathlon & Multi Sport Magazine on its own is sufficiently similar to the name Triathlon Sports to itself constitute conduct which is misleading and deceptive. Indeed it would seem that the trial judge took the same view for his Honour did not concentrate on the name itself but on the prominence which the word “triathlon” had in the masthead or, in other words, upon the get-up which S & I had adopted. So much is clear from the orders made by his Honour as well as the reasons to which we have already referred. Differentiation The question whether the get-up of the two publications should be taken to constitute a representation that the magazine of S & I is a magazine under the proprietorship of Life Saver is an objective one as we have said. It requires a comparison of the two mastheads to reach a conclusion, having regard to their similarities and differences but viewed as a whole, whether the similarity is such as to amount to conduct falling within s 52. In our view, when that objective comparison is undertaken, the conclusion that must be reached is that the S & I masthead is well differentiated from the Life Saver masthead. Of great significance in the making of this comparison is the fact that the Triathlon & Multi Sport Magazine included in quite prominent lettering a statement that it was “Australia’s New Triathlon and Multi-Sport Magazine”. That was a clear indication that it was not the same as another magazine which had been in existence for some time. There are other factors, both as to the volume numbers and as to the period of establishment and the selection of type face and colours which can be taken into account. In our view, it is not correct to say that the S & I masthead carries with it the representation that the Triathlon & Multi Sport Magazine is a magazine the same as Triathlon Sports and published by Life Saver or, for that matter, related to it. It seems to us that his Honour erred in giving too much significance to what his Honour refers to as the “prominent display” of the word triathlon being a word relevant to the name of a sport and the subject matter of the magazine rather than to the overall masthead and get-up. Prominence of the name of a sport alone, absent other factors such as distinctive printing, colouring or other matters of get-up, could not have the necessary distinctiveness to bring about the conclusion that a contravention of s 52 has occurred. Having reached this position, it is not necessary for us to consider the differentiating effect of the contents of each of the magazines upon which the appellant’s case placed additional reliance. Significance of the evidence of witnesses … [365] The state of the evidence was not compelling and of little assistance. It is the objective comparison of the two magazines which in the present case answers the question favourably to S & I. 526 [12.100]

Protection of Business Reputation

CHAPTER 12

S & I Publishing v Australian Surf Life Saving cont. [The Court allowed the appeal with costs and set aside the orders of the primary judge, Moore J,] (Some citations omitted).

Mimicking success: can a competitor use a descriptive term? Apand v Kettle Chip Company [12.110] Apand Pty Ltd v Kettle Chip Company Pty Ltd (Kettle Case) (1994) 30 IPR 337 Federal Court of Australia [Since 1989, The Kettle Chip Company (“KCC”), manufactured and marketed “Kettle Chips” in Australia. Utilising American know-how, KCC made kettle chips via the “batch-cooking” method, which essentially involves an operator stirring chips in a vat of hot oil until cooked, thereby producing a chip with distinctive flavour and texture. The batch-cooking method (sometimes referred to as “hand cooked” method) limits the volume of chip output, leading to higher production costs, which are in turn reflected in the unit price of each packet (ie with “premium” pricing). KCC was the first manufacturer to introduce kettle chips into the Australian market, and in doing so, realised rapid success in the potato chip market, securing 5% market share by late 1991.] Apand Pty Ltd (“Apand”) is a mass manufacturer of potato chips, in fact, the largest in Australia, and its most well-known brand is “Smiths”. Apand manufactures chips through use of a conveyor belt carrying a continuous flow of potato slices through an oil-filled cooker. It later installed “multi-zone fryers” (ie computer-controlled continuous fryers) producing chips that resembled the texture and flavour of chips produced by the batch-cooking method. However, this manufacturing process (which the primary judge said could not be described as “hand cooked”) enjoys lower production costs than those incurred in the batch-cooking method. In April 1992, Apand (utilising mutli-zone fryers) introduced a new line of potato chips under the name “Country Kettle” (in prominent lettering) with its get-up closely resembling KCC’s get-up (especially the use of a cauldron device on its packets). Although Apand later revised its packaging, in particular, by deleting the cauldron device, it continued to use the name “Country Kettle” and subordinate the “Smiths” name. Apand’s original and revised products were not cooked via the batch-cooking method. The primary judge, Burchett J, upheld KCC’s action for passing off and contravention of the Trade Practices Act 1974 (Cth) s 52. By leave of Burchett J, Apand appealed to the Full Federal Court.] LOCKHART, GUMMOW AND LEE JJ: … [341] … At the trial, the respondent contended that the combination of the words “The Kettle Chip” and the get-up used in the packaging of the respondent’s product distinguished the respondent’s goods to a significant number of consumers and that the original and revised forms of packaging used by the appellant appropriated the respondent’s reputation and constituted passing off and contravention of s 52 of the Act. The learned primary Judge concluded that when the appellant launched its product in May 1992, the packaging of the respondent’s product had acquired a considerable reputation. His Honour found (46 FCR at 164-165): Even if (as the [appellant] contended) the word “Kettle” and the symbol of a cauldron, although each was marked “TM” for trade mark, did not in themselves exclusively identify the [respondent’s] goods for “a significant number of consumers in the relevant market” (Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 336, per Lockhart J), there can be no doubt on [342] the evidence that its packet, including that word and symbol together with all the other features I have mentioned, did identify its potato chips for a great many people. It had sold millions of packets so marked. The [appellant’s] choice of [12.110]

527

Intellectual Property: Commentary and Materials

Apand v Kettle Chip Company cont. a packet design so closely resembling the [respondent’s] is eloquent and expert testimony to the attractive power of its combination of features. Once the [appellant] made that choice, even if it acted honestly in doing so (and in all the circumstances I do not think it did), it came under an obligation to take particular care to ensure that its product was adequately distinguished from that of the [respondent]. … The primary Judge had given close consideration to the differences between the relevant packaging. He said (at 161): Of course, a person who places the packets before him, side by side, can also see differences. But that is not how passing off by imitation of another trader’s mark or get-up is to be tested. In general, and more particularly in the case of an item likely to be purchased for a small price without long consideration, the comparison which must be made is between the impression of the (respondent’s) goods retained in a customer’s mind and the impression made by the sort of consideration he is likely to give to the (appellant’s) product before purchasing it. Only a rare potato chip consumer, who has previously studied the (respondent’s) packets, is likely to go through that exercise again upon seeing a packet, some time later, on display in a service station or a corner shop. If, as he passes it, it appears to him to be the same “Kettle” product he liked before, or another flavour put out by the same people, he is very likely to purchase it without further examination. In reaching what he described as a “clear conclusion” that the case for passing off and contravention of s 52 of the Act had been made out, his Honour said “The packets speak for themselves” (at 165). The appellant had submitted that the word “Kettle” was a descriptive word which the appellant was entitled to use in its packaging. …[343]… His Honour went on to say that in any case he would have great difficulty with the proposition that the word “Kettle” was relevantly descriptive. He pointed out that since a descriptive word may be distinctive, the context and circumstances of its use must be considered. His Honour found that the word had little descriptive connection with the product manufactured and marketed by the respondent and, furthermore, that the manner in which it was used by the respondent, namely as an apparent brand name in conjunction with the display of a conventional cauldron in stylised form with other elements of get-up, gave the word a secondary meaning. As stated earlier, his Honour accepted that at the time the appellant introduced its batch-cooked product to the Australian market, the word “Kettle” was not a generic term descriptive of a type of potato chip sold in that market. His Honour appeared to be prepared to infer that the word “Kettle” as used in the respondent’s labelling of its packets, with the strong symbols used on those packets, reinforced by the distinctiveness of the respondent’s product, had caused the word “Kettle” to be part of a matrix of “memory hooks” which identified the respondent’s potato chips for “a significant number of consumers in the relevant market” particularly the casual consumers who represented many of the purchasers of goods in the “route market”. (See Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 336.) The primary Judge was satisfied that the manner in which the word “Kettle” was used by the respondent had resulted in the word acquiring a secondary meaning, namely, that of a brand name distinguishing the respondent’s products. His Honour reached that conclusion by finding that the word “Kettle” neither naturally nor readily described a potato chip and the prominence of “Kettle” in the labelling of the respondent’s packets associated with striking symbols was unlikely to convey a meaning other than that of a brand name. His Honour was left in no doubt by the evidence relating to get-up that the word “Kettle”, supported by those symbols identified the respondent’s product for a great many people. … 528 [12.110]

Protection of Business Reputation

CHAPTER 12

Apand v Kettle Chip Company cont. [345] …The central point of the appellant’s appeal, however, was whether the primary Judge erred in treating the word “Kettle” as a “key” word and one which had obtained a secondary meaning distinctive of the respondent’s product at the time the appellant commenced to market potato chips under the name “Country Kettle”. As we have said, his Honour was satisfied that the combination of the use of strong symbols, the get-up and the use of the word “Kettle” in the appellant’s packaging had appropriated sufficient elements of the distinctive labelling and get-up of the respondent’s product to constitute the tort of passing off and an infringement of s 52 of the Act. His Honour stated that he was aided in reaching that conclusion by the absence of evidence from certain managerial staff employed by the appellant. However, it is apparent that the foundation for inferences of reputation in the respondent’s product made available by the evidence before him, and that his Honour’s willingness to make those findings did not depend in any degree upon the absence of evidence from executives involved in the design or selection of the label “Country Kettle” or the packaging of that product. In dealing with the appellant’s contention that the word “Kettle” was a descriptive word, his Honour noted that the appellant relied upon opinions expressed in qualitative market survey reports and upon evidence of Mr Ballard [Managing Director of the Appellant] that “Kettle” signified a particular style of potato chip and not a name used by the respondent for its product. Although the primary Judge found that Mr Ballard’s evidence was not reliable, his Honour’s opinion on Mr Ballard’s credit was inessential to his Honour’s [346] conclusion that the word “Kettle” had a secondary meaning. … [347] “Hand cooked” His Honour further found (at FCR 180) that if the word “Kettle”, as applied to potato chips, referred to potato chips of the type made by the respondent, an integral part of that description was a representation that they were hand cooked. His Honour found, therefore, that even if the respondent had no exclusive right to the use of the word “Kettle” or to the use of the cauldron symbol in conjunction with the word “Kettle”, representation by the appellant on its packets that its potato chips were “Kettle Style” amounted to either passing off the appellant as a member of a group of producers of a distinctive product, namely a potato chip that was hand cooked, when it was not a member of that group or to engaging in conduct that contravened the provisions of s 52 of the Act. It was not in dispute that the appellant accepted that if its contention that the word “Kettle” was descriptive of a type of potato chip, the description carried with it a significant public awareness that this type of chip received more care and “hand cooked attention” than “mass produced” chips. In those circumstances it was open to his Honour to conclude that either the use of the word “Kettle” or the term “Kettle Style” was not designed to alert a potential consumer to the distinctive taste of the appellant’s product, but to appropriate an attribute of the respondent’s product likely to encourage a consumer to switch from the respondent’s product, or make a purchase of the appellant’s product that may otherwise have been a sale made by the respondent in reliance upon a product attribute which belonged to the respondent alone. … [348] Issues of honesty and credit We turn now to his Honour’s findings on the honesty of the appellant’s conduct and the credit of Mr Ballard. Certain propositions were not in dispute before us. They are discussed in authorities such as Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Cadbury-Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] RPC 429; ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302; and Levi Strauss v Kimbyr Investments Ltd (1994) 28 IPR 149. First, merely to imitate the trade mark or [12.110]

529

Intellectual Property: Commentary and Materials

Apand v Kettle Chip Company cont. get-up of another trader does not establish a case of fraudulent intent to attract custom by misleading purchasers of the goods of the defendant into the belief that they are acquiring those of the plaintiff, or goods with which the plaintiff is connected in the course of trade. The plaintiff must always show the necessary reputation in its name or get-up and if it fails to do so, then the existence of a fraudulent intent itself cannot supply that deficiency. Here, his Honour found, and we agree, that the necessary reputation was established. Further, the finding which followed as to passing off and contravention of s 52 was not dependent upon the supplementary finding as to dishonesty. … The findings relating to Mr Ballard’s credit were not necessary in order to decide the critical issues in the case, in view of the opinion of his Honour that there had been passing off and contravention of s 52, determined in accordance with the customary objective tests applicable to each cause of action. … [356] … Conclusion as to fraudulent intent Intent to mislead or deceive or to pass off is not an essential element in the proof of a contravention of s 52 of the Act or passing off although proof of intention to mislead or deceive may lead the Court to infer more readily that there has in fact been conduct which is misleading or deceptive or that passing off has occurred. With respect to the primary Judge’s decision, in our opinion the evidence does not support the finding that the appellant intended to mislead or deceive consumers into believing that its “Country Kettle” product was the product of the respondent, or emanated from it or was in some way associated with it. There is, as the primary Judge found, a definite similarity between the name and get-up of the package of the two products. But, as we have said earlier in these reasons, mere proof of the fact that a person has deliberately copied the name or get-up of a trade rival does not of itself establish a contravention of s 52 or a passing off of goods or services. The evidence supports the finding that the intention of the appellant was rather to promote an awareness in the mind of the consumer of “Country Kettle” as a new brand of chip to gain the benefit of the favourable impression shared by consumers that a “Kettle Chip” was a better chip produced by a different process [357] than most mass produced chips; but not to lead people to believe that the appellant’s product was linked or associated with the respondent’s product. … [358] … Remedies It remains for the respondent to elect between a remedy in damages or an account of profits. We have referred to the objective considerations which establish a finding of contravention of s 52 of the Act and leads to damages under s 82. It has not yet clearly been settled whether the width of s 87 of the Act includes a restitutionary remedy in the nature of an account of profits; see Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 713; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525-527; Dart Industries Inc v Decor Corp Pty Ltd (1993) 179 CLR 101. We say nothing further upon that issue. There remains for consideration the election between damages and an account of profits in aid of the passing off action. The relevance of fraud to recovery of damages in passing off is discussed in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302. As to the remedy of an account, in Dart Industries, supra at 110-111, Mason CJ, Deane, Dawson and Toohey JJ said (omitting footnotes):

530 [12.110]

Protection of Business Reputation

CHAPTER 12

Apand v Kettle Chip Company cont. Damages and an account of profits are alternative remedies. An account of profits was a form of relief granted by equity whereas damages were originally a purely common law remedy. As Windeyer J pointed out in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 34, even now an account of profits retains its equitable characteristics in that a defendant is made to account for, and is then stripped of, profits which it has dishonestly made by the infringement and which it would be unconscionable for it to retain. An account of profits is confined to profits actually made, its purpose being not to punish the defendant but to prevent its unjust enrichment. The ordinary requirement of the principles of unjust enrichment that regard be paid to matters of substance rather than technical form is applicable. The reference to profits which have been “dishonestly made” requires further comment. It is not to be understood as requiring fraud sufficient for the purposes of an action in deceit. In Colbeam Palmer, supra at 34, Windeyer J spoke of profits made by the defendant “during the period he knew of the plaintiff’s rights”. In such a context what is involved is persistence after notice of the claims of the plaintiff which, when made good, found the successful action against the defendant; see BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1976) 51 ALJR 254 at 258; US Surgical Corp v Hospital Products International Pty Ltd (1983) 2 NSWLR 157 at 248-249 (rev’d on other grounds: 156 CLR 41); ConAgra Inc v McCain Foods (Aust) Pty Ltd supra at 362-364. Thus, in My Kinda Town Ltd v Soll (1983) RPC 15 at 47, Slade J [359] accepted that in principle the plaintiffs were entitled to an account of profits to run from the date of receipt by the defendants of the plaintiffs’ solicitors’ letter before action.

Note

[12.115]

Despite the success of the Kettle Chip Company in the case extracted above – and, indeed, the registration of KETTLE as a trade mark – the company lost an action against Frito-Lay, which sold “Thins” crisps with the slogan “kettle cooked potato chips” on the packet. This use of the name was held not to amount to trade mark infringement nor to passing off since the phrase described the process of production, rather than identifying the source of the chips: Pepsico Australia Pty Ltd v Kettle Chip Co Pty Ltd (1996) 33 IPR 161. For a more recent example where a defendant “sailed to close to the wind” by adopting packaging get up that was deceptively similar to the plaintiff’s product such that it constituted an actionable passing off and contravened s 52 of the Trade Practices Act 1974 (Cth), see Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1228 (Conti J) affirmed on appeal: Sydneywide Distributorrs Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 (for a representation of the relevant products, see the Annex to the Full Court judgment).

Conduct of the defendant must be misleading, not merely unfair Parkdale Custom Built Furniture v Puxu [12.120] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 High Court of Australia [The respondent manufacturer of “Contour” furniture, had sought to prevent the appellant from imitating the design of its furniture, in the latter’s “Rawhide” range. The respondent had sought an injunction under Trade Practices Act 1974 (Cth) s 80 to restrict the appellant from engaging in misleading or deceptive conduct in breach of s 52 of that Act. Gibbs CJ and Mason J (Murphy J [12.120]

531

Intellectual Property: Commentary and Materials

Parkdale Custom Built Furniture v Puxu cont. dissenting) did not consider that the appellant’s conduct breached s 52. Brennan J, who also decided in favour of the appellant, relied on passing off principles.] BRENNAN J: [219] … In my opinion, this is a case where common law principles are relevant to a true understanding of the scope and operation of s 52. The relevant principles prescribe the protection to which a manufacturer is entitled against the consumers who might be led by the appearance of a copy into believing that it is made by that manufacturer. The protection afforded by the common law stops short of according to a manufacturer a monopoly right to the manufacture and sale of goods of a particular design unless he is the owner of a design validly registered under the Designs Act 1906 (Cth) in respect of goods of that kind. The relevant principles in a passing off action were stated by Graham J in Benchairs Ltd v Chair Centre Ltd [1974] RPC 429, a case in which the plaintiffs’ claim in passing off depended solely on the fact that the shape and design of the defendants’ chair was so close to the shape and design of the plaintiffs’ chair that its mere existence on the market would lead to confusion with the plaintiffs’ chair. (An alternative claim for infringement of a registered design succeeded before Graham J, but failed before the Court of Appeal.) Graham J held (at 435): The mere copying of the shape of the plaintiffs’ article is not in itself such a representation … (ie a representation by the defendant that his goods are those of the plaintiff) … Anyone is entitled, subject to some monopoly or statutory right [220] preventing him, to copy and sell any article on the market, and false representation and passing off only arise when a defendant does something further which suggests that the article which he is selling is that of the plaintiff. This he may do by a direct representation to that effect such as by the use of the plaintiffs’ name or mark, or by an indirect representation such as by imitation of get-up by enclosing the article in a distinctive package which is similar to that used by the plaintiff. … [221] … The public freedom to manufacture and sell an article to which a particular design is applied is not taken away by the Designs Act except in favour of the registered owner of a registered design, and his prima facie monopoly will be defeated if the design was not novel or original when it was registered: Macrae Knitting Mills Ltd v Lowes Ltd (1936) 55 CLR 725. The validity of registration depends upon the novelty or originality of the design (see Designs Act 1906 s 17(1)); if it were otherwise the registered owner would acquire a monopoly without any compensating benefit being obtained by the public. The design of the “Contour” suite was not registered under the Designs Act 1906. Puxu acquired no statutory monopoly in the manufacture and sale of lounge suites of the “Contour” design; it acquired no right (either under the Designs Act 1906 or otherwise) to exclude others from manufacturing lounge suites of the “Contour” design. Therefore Parkdale was free to apply the design of the “Contour” [222] suite to suites of its own manufacture. Of course, Parkdale was not free to pass off the “Rawhide” suite as a “Contour” suite, but there is no evidence that it did so. It used its own trade name; it affixed its own distinguishing label. Nor did Parkdale get up the “Rawhide” suite for sale in a way which would induce anybody to think that it was the “Contour” suite. A distinction is drawn between the get-up of goods and the copying of the actual goods. Similarity in get-up may evidence passing off, but (statutory monopoly apart) all are free to copy the goods themselves. The distinction was stated by Fletcher Moulton LJ in JB Williams Co v H Bronnley & Co Ltd (1909) 26 RPC 765 at 773-774: The get-up of an article means a capricious addition to the article itself, the colour, or shape, it may be, of the wrapper, or anything of that kind; but I strongly object to look at anything, that has a value in use, as part of the get-up of the article. Anything which is in itself useful appears to me rightly to belong to the article itself. For instance, supposing that a firm had been, say for 20 years, the only firm to sell wooden chairs in which the natural wood was simply varnished, and not painted at all, that would not give them the slightest right to 532 [12.120]

Protection of Business Reputation

CHAPTER 12

Parkdale Custom Built Furniture v Puxu cont. complain of a person putting on the market chairs simply varnished, even though they had been the only persons who had sold them for so long that such chairs might at first be supposed to be their manufacture. The reason is that the newcomer has not in any way imitated the get-up; he has only reproduced the article.

Reputation exists among prospective customers or ultimate consumers of goods or services [12.130] In Weitmann v Katies Ltd [1977] ATPR 40,041, it was alleged by the seller of

expensive women’s blouses using the mark “St Germain” that Katies, a store frequented by “value for money” shoppers, was deceiving customers by selling t-shirts with “St Germain” embroidered on the sleeve, and shown on a label. Franki J, who was dealing with a s 52 application, said (at 17,442): Whether conduct is deceptive in the subject case must be examined in the light of what the alleged deceptive words mean to the relevant purchaser when used on the sleeve of the ladies T-shirts as they are to be sold. This involves two questions, first, who is to be considered as the relevant purchaser; and, second, what will the words mean to that purchaser? This seems to lead to two of the questions which arise in a passing off action, first, what is the appropriate class of purchasers to be considered and, secondly, have the words “Saint Germain” acquired what is commonly called a secondary meaning, namely do they indicate to the appropriate class of purchasers that the goods have come from a particular source, whether the name of that source is known or not?

As the S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 (Triathlon Case) and Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 30 IPR 337 (Kettle Case) cases illustrate, the way that consumers shop for casual purchases of small-value items will influence the view taken of the defendant’s behaviour. The purchaser will be expected to look after their own interests to some extent, according to the majority view in the next extract from Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.

Parkdale Custom Built Furniture v Puxu [12.140] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 High Court of Australia GIBBS CJ: [199] … Section 52 does not expressly state what persons or class of persons should be considered as the possible victims for the purpose of deciding whether conduct is misleading or deceptive or likely to mislead or deceive. It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion be regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will of course depend on all the circumstances. The persons likely to be affected in the present case, the potential for a label, brand or mark if they were concerned to buy a suite of particular manufacture. [12.140]

533

Intellectual Property: Commentary and Materials

Parkdale Custom Built Furniture v Puxu cont. The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act, which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading. It is obvious that where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words. The same is true of acts. In the present case the conduct of the appellant was not simply to manufacture and sell furniture that resembled that of the respondent. The appellant sold only furniture that had been labelled, in the ordinary way, so as to show the name of the manufacturer. If the appellant’s conduct was likely to mislead possible purchasers, it is difficult to see why the respondent’s conduct in selling its furniture would not also be likely to mislead. However that may be, in my opinion, the conduct of the appellant did not contravene s 52. Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly [200] labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases indeed no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article. In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public. If the label is removed by some person for whose acts the defendant is not responsible, and in consequence the purchaser is misled, the misleading effect will have been produced, not by the conduct of the defendant, but by the conduct of the person who removed the label. MASON J: [201] … Keely J stated that it was necessary to consider whether the appellant’s conduct was misleading or deceptive or likely to mislead or deceive “ordinary members of the public likely to be considering purchasing such an item from a retailer” noting that this included “the shrewd and the ingenuous, the educated and uneducated and the experienced and the inexperienced in commercial transactions”: CRW Pty Ltd v Sneddon [1972] AR (NSW) 17 at 28; see also World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 203. However, his Honour gave detailed consideration to which of the differences between the “Contour” and “Rawhide” suite he considered “would be likely to be observed by an ordinary member of the public who had previously looked at the Post and Rail ‘Contour’ chair as a potential purchaser”. Lockhart J considered that Keely J had applied too narrow a test in excluding those who may have seen pictures of the furniture in newspapers, magazines, or on television but not the actual chairs themselves. Whether or not Keely J did so err, Lockhart J is correct in stating that here “the relevant class of persons likely to be exposed to the alleged misleading or deceptive conduct would be anyone interested in purchasing lounge suites or chairs in the higher price range”. As his Honour noted, the class protected by s 52 must vary according to the facts of each case. In furniture of this price range in the order of $1500 for a three piece lounge suite one Would, in the ordinary course, expect persons within the admittedly wide range of potential purchasers to exercise somewhat more vigilance than may be the case with the purchase of items of less financial significance having less impact on the appearance of the home: cf Jafferjee v Scarlett (1937) 57 CLR 115 at 124. Conduct does not breach s 52(1) merely because members of the public would be caused to wonder whether it might not be the case that two products come from the same source. … 534 [12.140]

Protection of Business Reputation

CHAPTER 12

Parkdale Custom Built Furniture v Puxu cont. MURPHY J [dissenting]: [214] … The prudent buyer may not be misled, but not all buyers are prudent. The Act aims to protect the imprudent as well as the prudent. What degree of imprudence is protected? In applying a similar provision of the Consumer Protection Act 1969 (NSW) the Industrial Commission said that an advertiser’s responsibility extended to readers both “shrewd and … ingenuous, … educated and … uneducated and … inexperienced in commercial transactions. … An advertisement may be misleading even though it fails to deceive more wary readers”. (See CRW Pty Ltd v Sneddon [1972] AR (NSW) 17 at 28, adopted by St John J in Parish v World Series Cricket Pty Ltd (1977) 16 ALR 172 at 179 [215]; see also Re Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 206, in relation to the Trade Marks Act.) In the US the standard adopted under the Federal Trade Commission Act 1914 in relation to a somewhat similar provision takes into account “the ignorant, the unthinking and the credulous, who, in making purchases do not stop to analyse, but are governed by appearances and general impressions”. (See Florence Mfg Co v JC Dowd & Co 178 F 73 at 75 (1910); also Aronberg v Federal Trade Commission 132 F 2d 165 (1942)). In Federal Trade Commission v Standard Education Society 302 US 112 at 116 (1937) [82 Law Ed 141] the Supreme Court pointed out that the fact that a false statement is obviously false (or an imitation obviously an imitation): [T]o those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception. The circumstances of this case have provoked judicial differences on the effect of the label. Without extending to extremes the reach of s 52, my view is that the case fits within it.

Deceiving how many consumers? [12.150] The different conceptual approaches to this issue, in passing off and Trade Practices

Act 1974 (Cth) s 52 (now Australian Consumer Law s 18) are referred to in the extract below.

.au Domain Administration v Domain Names Australia [12.160] .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 61 IPR 81 Federal Court of Australia FINKELSTEIN J: [85] [12]…On the question of s 52, I am going to guide myself by the following principles. Most of them are uncontroversial: (1)

Conduct will be misleading or deceptive if it conveys a false representation.

(2)

The question whether conduct is misleading or not is an objective question of fact which the court must determine for itself against the background of all relevant facts. Accordingly, while evidence of deception may be led it is not essential to the case.

(3)

Whether conduct is misleading does not, however, depend upon the defendant’s intention, for a corporation which acts honestly and lawfully may contravene s 52. But if there is an intention to mislead, the court may more easily infer that the conduct was in fact misleading. [86]

(4)

Conduct which does no more than cause confusion or uncertainty is not misleading or deceptive. Section 52 is directed to something else. [12.160]

535

Intellectual Property: Commentary and Materials

.au Domain Administration v Domain Names Australia cont. (5)

For there to be a contravention of s 52 the conduct must cause (in the sense explained in point 6) an erroneous assumption or misconception. That is, there must be a “sufficient nexus” between the conduct and the error or misconception.

(6)

Nevertheless, it is not necessary to show that anyone has in fact been misled. It is enough that the conduct is likely to mislead or deceive in the sense that there is a real chance or possibility of deception.

(7)

Where the conduct involves the making of a statement which is literally true or accurate the conduct may still be misleading. It all depends upon the circumstances.

[13] The precise manner in which these principles are applied will differ from case to case. In particular, the way in which the court will determine whether certain conduct has the capacity to cause error or misconception will vary dependent upon the nature of the case before the court. Here I have in mind the two broad categories of case brought under s 52. The first is an action by a plaintiff who complains that he has been misled by the defendant’s conduct and seeks redress. Section 52 appears in Pt V of the Trade Practices Act 1974. Part V is headed “Consumer Protection” and it is with consumers that s 52 is principally concerned. In this type of case the plaintiff has the burden of proving that the impugned conduct was misleading and that he altered his position (that is, was induced) as a result. In most cases it will not be difficult to determine whether the defendant’s conduct amounts to misleading conduct. Nor will it be difficult to determine whether the conduct induced the plaintiff to act to his detriment. [14] The second category is where the plaintiff has not been, and does not fear being, deceived or misled. Such a plaintiff brings a s 52 action for a different purpose. He may be in competition with the defendant and is seeking to protect his business from unfair competition (as he might in a passing off action). Or the plaintiff may be a statutory authority such as the ACCC which brings the action to vindicate the public interest. In this type of case the plaintiff usually alleges that the conduct is likely to cause a third party to be misled or deceived. The question whether the conduct is likely to mislead a third party cannot be resolved in the same way as in an action where the plaintiff seeks to establish that he personally has been misled. In such a situation it is necessary to keep in mind the two further classes of action identified by Deane and Fitzgerald JJ in Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, 202-203. The first concerns a case where there is an “express untrue representation made only to identified individuals”. I take the judges’ reference to the case of an “express representation” to refer to an action that is founded on the literal meaning of a representation about a fact (including the non-existence of a fact) or state of affairs. An express representation may be made by words, through the use of symbols for conveying information or by representation – “[a]n implication is included in and part of that which is expressed: an inference is something additional to what is stated”: Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113, 118. Deane and Fitzgerald JJ said that as regards this first class of case, the task of deciding (1) whether a representation conveys a false representation and (2) whether the representation [87] has caused error or misconception, should be “uncomplicated”. Most actions where the plaintiff alleges that he has been misled will fall into the first (express representation) class. [15] The second class identified by Deane and Fitzgerald JJ concerns a case where the alleged misrepresentation is not express and is not made to identified individuals, but is made to the public at large or to a section of the public. As regards this class, Deane and Fitzgerald JJ said that determining whether conduct may lead to error should involve the following process. First, it is necessary to identify the relevant section (or sections) of the public by reference to which the issue is to be tested. Second, once the section of the public is identified the issue is to be considered by reference to all who come within the section. This may include the astute and the gullible, the intelligent and the not so intelligent, the well educated and the poorly educated. Third, it is permissible (but not essential) to 536 [12.160]

Protection of Business Reputation

CHAPTER 12

.au Domain Administration v Domain Names Australia cont. have regard to evidence that some person has in fact been misled, though this evidence will not be conclusive. Finally, it is necessary to enquire whether any proven misconception has arisen because of the misleading or deceptive conduct. [16] In Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 the High Court (at 84) approved the observations of Deane and Fitzgerald JJ regarding the manner in which a plaintiff should go about establishing whether or not particular conduct has produced error or misconception. In addition, the High Court (at 85-86) laid down two further rules. First, where the persons allegedly misled are not identified individuals but are members of a class it is necessary to isolate “a representative member” of the class and enquire whether this hypothetical individual is likely to be deceived. Second, when considering the likely effect of the misrepresentation on this hypothetical person he (or she) should be judged as an “ordinary” or “reasonable” member of the class. In this way, reactions to the representation that are “extreme” or “fanciful” will be disregarded. [17] The High Court’s decision in Campomar Sociedad has settled some issues arising out of s 52 and raised others. One unresolved issue concerns a matter of characterisation. How is one to distinguish between a case which involves a representation made to identified individuals and a case where the representation is made to the public or to a section of the public? I had occasion briefly to consider this problem in Australian Securities and Investments Commission v National Exchange Pty Ltd (2003) 202 ALR 24, at 27-28. There the defendant had made false representations to approximately 5,000 shareholders of a major public company. Each shareholder to whom the representations were made was identifiable by name and address. I treated the case as one where the representation had been made to identified individuals. If I were to adopt that approach in the instant case, it would be characterised as a case concerning representations to identified individuals, although the notices in issue were despatched to several hundred thousand businesses. [18] Upon further reflection I suspect I was probably in error in the National Exchange case, although the error was not one which could have affected the result. There can be no doubt that when the impeached conduct is directed towards an indeterminate group or to a group defined by general or collective criteria the case should be treated as one involving a representation to the public at large or to a section or class of consumer. It seems that the same approach should be followed when the case involves a representation to an identifiable [88] group and the plaintiff is alleging not that he was misled but that members of the group (whether great or small in number) were misled by the conduct. In Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 at 241 Gummow J indicated that he would treat this type of claim as a “representation to the public” case. This approach, which is the approach I propose to adopt, invites attention to the nature of the claim and not the identity of the person to whom the representation is directed. [19] I appreciate that on one view the approach might be criticised for applying too fine a distinction. There will be cases where a person other than the representee brings the action and the group to whom the allegedly misleading representation was made is so small that it cannot sensibly be described as a class or a section of the public. In that circumstance it may be neither possible nor necessary to identify a hypothetical member of the group for the purpose of deciding the likely effect of the impugned conduct. If no hypothetical individual is identified the court must determine the likely effect of the conduct on the actual members of the group. There will also be cases on the margin where it will not be clear whether they should be treated as “representation to the public” cases. But the difficult cases are likely to be few and far between. [20] I also appreciate that the approach I am required to adopt has the potential of producing anomalous results, at least at the theoretical level. Let it be assumed that the proprietor of a business brings an action against a competitor complaining that one of the competitor’s advertisements, sent only to a handful of customers, contained allegedly false statements about the origin of the competitor’s products. In order to succeed the plaintiff would have to establish that a hypothetical [12.160]

537

Intellectual Property: Commentary and Materials

.au Domain Administration v Domain Names Australia cont. member of the group of customers would have been misled by the advertisement. On the other hand, if a member of the group were to bring an action complaining that he personally had been misled by the advertisement, he would need to prove that only he had been misled. The anomaly is that by virtue of the different tests it is possible that the individual complainant might lose his action but the proprietor of the business may succeed, or vice versa. This would be a very strange result. [21] Another potential difficulty arises because the class to whom the impugned conduct is directed will often comprise a diverse group. That is, the members of the group might include the uneducated, the inexperienced, the ignorant and the unthinking as well as the educated, the intelligent and the informed consumer. How then is one to identify and give characteristics to Campomar Sociedad’s hypothetical individual? Logic demands that if one is dealing with a diverse group then, for the purpose of determining whether particular conduct has the capacity to mislead, it is necessary to select a hypothetical individual from that section of the group which is most likely to be misled. If the court is satisfied that this hypothetical individual is likely to have been misled by that conduct, that would be sufficient. [22] The final point in relation to “representation to the public” cases concerns the requirement, which has been stated in many decisions both at first instance and on appeal, that for the representation to be actionable it must be shown that significant numbers of the group to whom the representation is directed are likely to have been misled or deceived. This requirement can be traced back to the decision of Franki J in Weitmann v Katies Ltd (1977) 29 FLR 336, an early s 52 case. … [see [12.130]] [89] The application failed because the judge held that the particular mark, the name of a geographic location, did not indicate that the clothing sold by the respondent originated from the applicant. In giving his reasons, however, the judge went further than the case required. He said (at 339) that in a s 52 case the principles relating to a passing off action were “in a general sense … particularly relevant with regard to determining whether certain conduct is misleading or deceptive”. He went on to say (at 343) that in such a case he was required to “consider whether a reasonably significant number of potential purchasers would be likely to be misled or deceived just in the same way as this question should be considered in a passing off action”. [23] Franki J was correct in stating that in a passing off action it is necessary for the plaintiff to show that a large number of consumers are liable to be deceived by the defendant’s use of a particular name or get up: Saville Perfumery Ltd v June Perfect Ld (1941) 58 RPC 147 at 175-176. This is hardly surprising. The basis for a passing off action is a proprietary right in goodwill established through the use of a name or get up in connection with the plaintiff’s goods: A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 at 284; Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 at 741-742, 754. The action is for damage done or threatened to be done to that property by the defendant. That is the reason the plaintiff must show that a significant number of people are likely to be misled. Unless many people are misled it is unlikely that the plaintiff’s goodwill will be damaged. [24] In my opinion, however, Weitmann v Katies Ltd borrowed from the law relating to passing off without due regard to the difference between a passing off action and a claim based on s 52. In Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 226 Stephen J warned against such reasoning. He said that a s 52 case is not (unlike in passing off) founded upon protection of a trader’s goodwill, but is directed to preventing the very deception of the public which operates to injure that goodwill. Put another way, a passing off action is concerned with deception or confusion of the public as to the source of goods, whereas the policy behind Pt V of the Trade Practices Act is designed to prevent the deception of consumers of goods or services: cf McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394 at 410. Moreover, as Mason J said in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 205: “[t]he operation of s 52 is not restricted by the common law principles relating to passing off”. 538 [12.160]

Protection of Business Reputation

CHAPTER 12

.au Domain Administration v Domain Names Australia cont. [25] It seems to me that there is simply no warrant for imposing a requirement that in a “representation to the public” case significant members of the public must be misled by the impugned conduct before there can be a contravention of s 52. First, s 52 does not prescribe this requirement. Second, there is no reason in principle why the requirement should exist. Third, it would be strange if a court were to determine that certain conduct had the capacity to mislead (and did in fact mislead a handful of people) but nevertheless held that the conduct was not actionable because an insufficient number of people were misled. [26] These reasons are not, of course, enough for me to disregard the previous case law on the topic because the position is that a number of Full Court decisions [90] have followed Franki J’s dictum, albeit without any analysis. The decisions include, among others: Snoid v Handley (1981) 38 ALR 383; 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299; Siddons Pty Ltd v Stanley Works Pty Ltd (1991) 29 FCR 14. But there is a way out. I am of opinion that the dictum cannot survive the High Court’s decision in Campomar Sociedad. By laying down the rule that in a “representation to the public” case the question whether conduct is misleading or deceptive is to be assessed by reference to the reaction of the hypothetical representative member of the class to whom the representation is directed, the High Court has left no scope for the operation of the requirement that it must also be shown that a significant number of members of the class have been misled. That is, the two requirements cannot sit side by side. I take the position now to be that the dictum imposed in Weitmann v Katies Ltd has been overtaken.

Source of reputation [12.170] Traditionally, passing off protects traders against other traders and the defendant will inevitably be a business person or enterprise. The Australian Consumer Law s 18 prohibits a person “in trade or commerce” from engaging in misleading and deceptive conduct. On the other hand, plaintiffs may be sporting bodies, charities or churches, as long as the reputation they are trying to protect is sufficiently established in the public mind as “belonging” to the plaintiff. This does not mean that the actual identity and business address of the plaintiff must be known by the relevant consumers, as long as the public associates a product or service with a particular source that, in fact, turns out to be the plaintiff. Even if the plaintiff is only one of a class of traders sharing a reputation, each will be entitled to protect their own interests against passing off by outsiders.

Location of reputation [12.180] Reputation exists among customers or potential customers – those who are “attracted to do business” 9 with the supplier. A series of older cases held that those customers and the trader must be within the same jurisdiction, as “mere reputation” does not by itself constitute property that the law protects: see, for example, Anheuser Busch Inc v Budejovivky Budvar NP [1984] FSR 413. A more modern approach has been to require customers within a jurisdiction, even if the goods or services come from elsewhere. Moreover, in Australia, a plaintiff, in establishing reputation, need not have a place of business or physical business presence in the jurisdiction. Rather, it suffices if the plaintiff’s reputation among persons in Australia (whether residents or otherwise) is such that “there is a likelihood of deception 9

Re Taco Bell Pty Limited v Taco Company of Australia Inc (1981) 60 FLR 60. [12.180]

539

Intellectual Property: Commentary and Materials

among consumers and potential consumers and of damage to its reputation”: see ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302, 344 (Lockhart J) (but note that the plaintiff there ultimately failed to prove “sufficient reputation” to maintain a passing off action). However, it is worth noting that the United Kingdom Supreme Court has recently diverged from Australian authority on this point by requiring trade or business (ie with customers) in the jurisdiction before an action for passing off can be entertained: see further Starbucks (HK) Ltd v British Sky Broadcasting Group plc (No 2) [2015] 3 All ER 469; [2015] UKSC 31; [2015] 1 WLR 2628. After a lengthy review of common law authorities, including ConAgra, Lord Neuberger for the UK Supreme Court, at 483 [47]–[48] “reaffirmed” that: [T]he law is that a claimant in a passing off claim must establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question. And, where the claimant’s business is abroad, people who are in the jurisdiction, but who are not customers of the claimant in the jurisdiction, will not do, even if they are customers of the claimant when they go abroad. It seems to have been the consistent view of the House of Lords and Privy Council from 1915 to 1990 that a plaintiff who seeks passing off relief in an English court must show that he has goodwill, in the form of customers, in the jurisdiction of the court. ….

Lord Neuberger later observed, at 484 [52], that: As to what amounts to a sufficient business to amount to goodwill, it seems clear that mere reputation is not enough… The claimant must show that it has a significant goodwill, in the form of customers, in the jurisdiction, but it is not necessary that the claimant actually has an establishment or office in this country. In order to establish goodwill, the claimant must have customers within the jurisdiction, as opposed to people in the jurisdiction who happen to be customers elsewhere. Thus, where the claimant’s business is carried on abroad, it is not enough for a claimant to show that there are people in this jurisdiction who happen to be its customers when they are abroad. However, it could be enough if the claimant could show that there were people in this jurisdiction who, by booking with, or purchasing from, an entity in this country, obtained the right to receive the claimant’s service abroad. And, in such a case, the entity need not be a part or branch of the claimant: it can be someone acting for or on behalf of the claimant.

In trade mark law, the concept of a “well-known mark” is discussed in the next chapter. The delineation between having reputation (as a form of property) and being “well-known” is not yet well understood, however it is a status that may not be “conferred lightly”. 10 It would appear that reputation can be established more quickly, and travel faster when a financial product is involved, or an online newspaper, where customers deal with the supplier electronically. In Al Hyat Publishing Co Ltd v Sokarno (1996) 34 IPR 214, the publisher of a well-known Arabic language newspaper, Al Hyat, began negotiations to electronically transmit pages and have the paper published in hard copy by an Australian agent. When the enterprise proved too expensive to be viable, the defendant went ahead and applied for trade mark registration of the name, masthead and logo. Although interlocutory, Tamberlin J found that the evidence supported the conclusion that a substantial number of persons in Australia would have accessed Al Hyat via the internet, and would be likely to be misled by the proposed sale and publication of the Australian sourced newspaper under that name and logo. For an example of a reputation forged overnight due to press announcements of a new 10

See L Bently and B Sherman, Intellectual Property Law (Oxford University Press, Oxford, 2001), p 689, citing Microsoft Corp’s Applications [1997–1998] Information Technology Law Reports 361.

540 [12.180]

Protection of Business Reputation

CHAPTER 12

corporation, see Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196, discussed in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 (Healthy Choice Case) (at [12.210] below).

Maxim’s v Dye [12.190] Maxim’s Ltd v Dye [1978] 2 All ER 55 High Court of Justice, Chancery Division (United Kingdom) [The plaintiff, an English company, had owned, since 1907, the famous Parisian restaurant Maxim’s, which, it argued, enjoyed extensive goodwill in England, being patronised by persons resident in England. In December 1975, the defendant had opened a restaurant in Norwich under the name Maxim’s and decorated it in such a style as to give it a French atmosphere. The plaintiff sought an injunction to restrain the defendant from using the name “Maxim’s”, arguing that the lower standard of the defendant’s restaurant would injure the plaintiff’s goodwill.] GRAHAM J: [59]… If it is in law correct to say that a plaintiff cannot establish that he has goodwill in England which will be protected by our courts without actually showing that he has a business in England, then of course that is the end of the matter and the plaintiff cannot recover here, but in my judgment that is not the law. The true position is, I think as I stated in the Baskin-Robbins case [1976] 2 FSR 545 and I would like to quote my conclusion in that case on the point (at 548): Some businesses are, however, to a greater or lesser extent truly international in character and the reputation and goodwill attaching to them cannot in fact help being international also. Some national boundaries such as, for example, those between members of the European Economic Community are in this respect becoming ill-defined and uncertain as modern travel, and Community rules make the world grow smaller. Whilst therefore not wishing to quarrel with the decisions in question, if they are read as I have suggested, I believe myself that the true legal position is best expressed by the general proposition, which seems to me to be derived from the general line of past authority, that that existence and extent of the plaintiff’s reputation and goodwill in every case is one of fact however it may be proved and whatever it is based on. If writing the passage again I would, for purposes of clarity, add the words “in his business” after the words “reputation and goodwill” towards the end of the quotation. In circumstances such as the present it also seems to me that a plaintiff’s existing goodwill in this country, which derives from and is based on a foreign business, such as one in Paris or elsewhere in the common market, may be regarded as prospective but nonetheless real in relation to any future business which may later be set up by the plaintiff in this country. [Graham J supported his conclusion by reference to the effect of Britain’s accession to the European Economic Community.]

Taco Bell v Taco Co of Australia [12.200] Taco Bell Pty Ltd v Taco Co of Australia Ltd (1981) 60 FLR 60 Federal Court of Australia [Since 1973, the plaintiff had conducted a Mexican food restaurant at Bondi under the name “Taco Bell’s Casa”. The defendant operated and franchised the operation of a large chain of Mexican food restaurants under the name “Taco Bell” in the US, Canada and Guam, but no restaurant or other business had been carried on in Australia by the defendant or its franchisees in Australia prior to September 1981. In that month, the defendant opened Mexican food restaurants under the Taco Bell [12.200]

541

Intellectual Property: Commentary and Materials

Taco Bell v Taco Co of Australia cont. name in Sydney and Granville, a Sydney suburb. The plaintiff and defendant brought claims and cross-claims alleging passing off and misleading or deceptive conduct in breach of Trade Practices Act 1974 (Cth) s 52.] ELLICOTT J: [75] … In Athlete’s Foot Marketing Associates Inc v Cobra Sports Ltd [1980] RPC 343, Walton J considered most of the cases cited on behalf of the respondent and the applicant and decided that a plaintiff cannot sue for passing off if he has no customers or nobody who is in a trade relation with him in the jurisdiction. He summarised his views in the following passage (at 350): [I]t would appear to me that, as a matter of principle, no trader can complain of passing although it is well conceivable in the modern world that it will not – in which he has no customers, nobody who is in a trade relation with him. This will normally (76) be expressed by saying that he does not carry on any trade in that particular country … but the inwardness of it will be that he has no customers in that country; no people who buy his goods or make use of his services (as the case may be) there. In that case Walton J refused to grant an injunction because the plaintiffs did not disclose “one single solitary transaction by way of trade with anybody in this country at all”. Having considered all the authorities cited, I agree in general terms with the conclusion which Walton J reached. In order to succeed in an action for passing off in relation to the Sydney metropolitan area a plaintiff must show that it has a goodwill here. This can usually be established by proof that there has been some prior business activity here involving the use of the name or mark or get-up in question in relation to the plaintiff’s goods or services. The nature and degree of business activity will differ from case to case. It does not follow from what Walton J said that a single transaction will always suffice. In some cases it may. Nor is it necessary that a plaintiff has established a place of business here. Its goods may have been imported and sold here under the relevant name or mark by another. It may have licensed people to use its name or mark on products which are sold there. It may have advertised here to solicit orders by post from the public or to encourage the public to travel to do business at its premises in another country. In this time of fast communication it may even have solicited customers here to travel long distances to another country to use its services there. … [78] … A business has goodwill attached to it in a particular place if there is an attraction among people there to do business with it. Even if it has no place of business there people residing there may, nevertheless, be attracted to do business with it. For example, by buying goods which it produces and are sold there by importers, or by ordering goods from it by mail or by travelling from their residence to its place of business in an adjoining country. This “attractive force” is usually created because there has been some business activity in that place on the part of the owner of the business or those dependent on it, intended to so attract people. One cannot, in logic, exclude the possibility that it could exist because people who live there are prompted to seek out the business by a knowledge gained by them whilst travelling or living in another country where the place of business exists (for example, a Hong Kong tailor). However, one thing, in my opinion, is clear, namely, knowledge by people in Sydney that a successful business is being conducted in the United States under a distinctive name does not give that business a reputation or goodwill here unless people in Sydney are attracted to do business with it despite the distance separating them. Only then could it be said that there existed in Sydney “the attractive force which brings in custom”. In many cases distance or the nature of the business will make it highly improbable that anybody could be so attracted. Here, the overseas business is operating or licensing the operation of fast Mexican food restaurants in the US under the name “Taco Bell”. People living here have for some time been aware of that business because they have travelled or lived in the US. But neither the proprietor of the business nor any person [79] dependent on it has ever carried on business here. Nor have they sought by advertising or otherwise to attract customers from here to patronise its restaurants in the US. Indeed, the very nature of the business conducting fast-food outlets and the great distances separating Sydney 542 [12.200]

Protection of Business Reputation

CHAPTER 12

Taco Bell v Taco Co of Australia cont. from that place makes it highly improbable that they would ever attempt to do so. This case, in this respect, is quite unlike the case of Maxim’s Ltd (see above [12.190]]). It is possible that some of those people who have this knowledge, if they travel to the United States, might patronise “Taco Bell” restaurants there, but clearly enough it would be absurd to suggest that they would resort there for that purpose or while living in Sydney attempt to do business with it. It follows, in my view, that the knowledge of this section of the public in Sydney of “Taco Bell” restaurants in the US is no evidence of relevant reputation nor of the existence of a goodwill here which the respondent or Taco Bell of California is entitled to protect by an action of passing off. Nor is it, in the circumstances of this case, any defence to an action for passing off by the applicant since, having regard to the evidence, it did not, in my opinion, prevent the applicant from establishing a reputation for its restaurant under the name “Taco Bell’s Casa”. [An appeal to the Full Federal Court was dismissed: see Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177.]

ConAgra v McCain Foods (Aust) [12.210] ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 (Healthy Choice Case) Federal Court of Australia LOCKHART J: [303] This case raises two important questions of law in the field of passing off: first, is it necessary that a plaintiff carry on business or have a place of business in Australia to maintain an action for passing off; and second, what is the significance of fraudulent intention of a defendant? The appeal is brought from the judgment of a Judge of the Court (Hill J), whose reasons are now reported in (1991) 101 ALR 461. The appellant, ConAgra Inc, is a company incorporated in the US which carries on business there in diverse areas but generally related to food. The appellant manufactures and markets in the US frozen foods under a number of brand names including the name relevant to this case, “Healthy Choice”. The concept of the product Healthy Choice originated in September 1985 following a heart attack of the Chairman and Chief Executive Officer of the appellant who found himself unable to obtain food with a pleasant taste that fell within his restricted diet, that is to say, food low in fat, cholesterol and salt. A few years passed before Healthy Choice was marketed as a range of frozen dinners. The name “Healthy Choice” was the result of a “brainstorming session” in June 1987. The packaging design for the product was formulated so that the product would stand out from all other frozen food packaging, would communicate the twin ideas of pleasant taste and good health and prominently feature the nutritional claims of “low fat, low cholesterol and low sodium”. The colour green was chosen as the primary background colour of the packaging to differentiate the Healthy Choice product from other products; and a small figure of a running man appeared on the packet to convey, so it was said, an image of health and vitality. Trademark registration was sought and obtained in the United States for the mark Healthy Choice in connection with a number of food items. Since the national launch of the product in January 1989 with an initial range of ten products, the range has expanded so that at the present time it consists of some 79 products. … [304] The appellant does not presently manufacture the Healthy Choice products other than in the United States but, due to the geographical position of the US, there is a spillover of the product both into Canada and Central America. In March 1986 the appellant entered into a licence agreement with Wattie Frozen Foods Limited (Wattie) whereby Wattie was licensed to introduce and distribute ConAgra Frozen Foods in both Australia and New Zealand and in other Pacific markets. Subsequently, probably in January 1991, [12.210]

543

Intellectual Property: Commentary and Materials

ConAgra v McCain Foods (Aust) cont. Australia was deleted from the agreement. This coincided with the view formed by Mr McNamara (Vice-President, International Business of ConAgra Frozen Foods) in December 1990 that Australia was a strategic market in which to do business. Some research into the possibility of commencing manufacture in Australia is presently being conducted, but no firm decision to do so has, it would seem, yet been made. It is Mr McNamara’s present intention, however, to introduce the product range Healthy Choice to Australia by about June this year. … The respondent, McCain Foods (Aust) Pty Ltd, is the wholly owned subsidiary of a Canadian company. It estimates its sales turnover in Australia for 1990-1991 as $A206m. It commenced operations in Australia in 1968 selling imported French Fries, later turned to producing frozen pizzas and frozen vegetables, and in 1987, as a result of an acquisition, moved into [305] manufacturing and marketing frozen food dinners. The respondent now has some 21% of the total frozen food market in Australia, second only to the food brands sold by the Petersville Group of companies and ahead of the competing brands of Nestle and Sara Lee. The respondent’s estimated market share of the frozen dinner market in Australia is 23%. The respondent had, in February 1989, commenced manufacturing and selling a low cholesterol range of French Fries. The success of that product prompted the research and development manager of the respondent to write in October 1989 a memorandum to the product manager of the respondent, with a copy to Mr Boyle, the then marketing director of the respondent, that consideration should be given to producing low cholesterol dinners. In October 1989, Mr Boyle travelled to the US and Canada and noticed the appellant’s product on the shelves in supermarkets in various cities in Canada and the US. He was sufficiently impressed that he obtained five examples of the packaging and took them back with him to Australia along with packets of other products. On Mr Boyle’s return to Australia he prepared a report on his trip to the senior management of the respondent saying that, “The … product ‘Healthy Choice’ (low cholesterol) is getting very favourable comments in the US. We should look closely at this one.” Discussions ensued between Mr Boyle and the product manager. In early December 1989 Mr Boyle instructed a member of the respondent’s staff to request the respondent’s patent attorney to lodge an application for registration of the trade mark HEALTHY CHOICE. Subsequently in July 1990, after advice, the patent attorney lodged an application for registration of those words together with the McCain logo. … [341] In the United Kingdom there are two opposed lines of authority on the question of whether the tort will protect a plaintiff’s business, goodwill or reputation where there is no business carried on in the United Kingdom. The “hard line” cases require, in addition to any reputation in the United Kingdom, a form of business presence or activity within the jurisdiction or some use of that reputation. However, even within the “hard line” authorities there is inconsistency on the question of the extent or degree of use. I agree with Cooke P’s comments in the New Zealand Budget case [Dominion Rent A Car Ltd v Budget Rent A Car Systems (1970) Ltd [1987) 2 NZLR 395] that the “hard line” approach may be the result of a reluctance of the courts in the United Kingdom to diminish the test too much when they are, after all, restraining somebody in their own territory and, as a result, would stifle local competition and enterprise. In earlier times when television and radio were in their infancy and when international trade in domestic goods was less extensive than it is today, it is understandable why the “hard line” cases developed with England separated from foreign plaintiffs by the English Channel and the Atlantic 544 [12.210]

Protection of Business Reputation

CHAPTER 12

ConAgra v McCain Foods (Aust) cont. Ocean. But in today’s age of satellite television stations, massive improvements in all forms of global communications and frequent international travel, the maintenance of a “hard line” is no longer defensible, at least in Australia. Although Star Industrial [Star Industrial Co Ltd v Yap Kew Kor (t/as New Star Industrial Co) [1976] FSR 256] and Advocaat [Erven Wamink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731] are sometimes referred to in certain of the cases and articles by learned authors as supporting the “hard line” approach, in my view Lord Diplock in Star Industrial and Lord Diplock and Lord Fraser in Advocaat were not directly considering the question of the particular connection with the United Kingdom which is required before a plaintiff can successfully maintain an action for passing off; so the observations of their Lordships must be read with this clearly in mind. In this respect, I agree with the observations of Slade J in My Kinda Bones [[1984] FSR 289]. Further it is interesting to note, as I mentioned earlier, that in the recent decision of the House of Lords in Reckitt & Colman Properties Ltd v Borden Inc [[1990] 1 All ER 873] their Lordships, in describing the elements of the tort of passing off, made no reference to a requirement of local business activities. The “softer” line of cases do not require an actual place of business or business activity or the presence of customers within the jurisdiction. The rationale for the protection of a trader’s business and reputation was explained convincingly by Graham J in Baskin-Robbins ([Baskin-Robbins Ice Cream Co v Gutman [1976] FSR 545] at 547-548) … who stressed that it is impossible to prescribe artificial limits as to geographical areas over which reputation and goodwill can or cannot extend and to state rules as to what a trader must or must not do to prove the existence of his reputation and goodwill; these are questions of fact in each case. The Canadian and United States cases seem to take a much broader approach but, as was pointed out in the Canadian case of Orkin [Orkin Extenninating Co Inc v Pestco Co of Canada Ltd (1985) 19 DLR (4th) 90], this may be [342] explicable, at least in part, by the large elements of commonality within North America, not necessarily dependent upon national boundaries of the US and Canada. Similar considerations apply in my view as between Australia and New Zealand. There obviously must be some link with the forum and, it seems to me, reputation is the most appropriate link. There must be evidence of local reputation, but business activities need not be carried on within the forum. The test for whether a foreign plaintiff may succeed in a passing off action is, according to most of the more recent English cases, not that he must have business activities or a place of business in the UK; but whether, as a question of fact, his business has goodwill or a reputation in England. This is a broader, though more uncertain and elastic, concept than its Zealand courts, together with the English cases of which Baskin Robins is one example, are more in harmony with the realities of contemporary business. The Australian authorities do not present an entirely clear picture. In Taco Bell [Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 2 TPR 48], as mentioned earlier, the Judge at first instance and Franki J, a member of the Full Court on appeal, followed fairly closely Athletes Foot, although Deane and Fitzgerald JJ, after noting “a degree of inconsistency in the cases”, did not find it necessary to decide the question whether any goodwill or reputation which the appellants possessed was sufficient to base their action for passing off because they disposed of the case on another ground. The High Court in Turner [Turner v General Motors (Australia) Pty Ltd (1929) 42 CLR 352], in particular Isaacs J, and the High Court in Budget [B M Auto Sales Pty Ltd v Budget Rent A Car Systems Pty Ltd (1976) 51 ALJR 254] left open the point that arises in this case. However it was made clear by the High Court in Budget, that for a plaintiff to succeed, whether he conducts his business here directly or through agents or other intermediaries, the courts will often accept minimal evidence that a business is being carried on, though the cases do show that this may depend on the extent to which he has a substantial reputation there. [12.210]

545

Intellectual Property: Commentary and Materials

ConAgra v McCain Foods (Aust) cont. It is no longer valid, if it ever was, to speak of a business having goodwill or reputation only where the business is carried on. Modern mass advertising through television (which reaches by satellite every corner of the globe instantaneously), radio, newspapers and magazines, reaches people in many countries of the world. The international mobility of the world population increasingly brings human beings, and therefore potential consumers of goods and services, closer together and engenders an increasing and more instantaneous awareness of international commodities. This is an age of enormous commercial enterprises, some with budgets larger than sovereign states, who advertise their products by sophisticated means involving huge financial outlay. Goods and services are often preceded by their reputation abroad. They may not be physically present in the market of a particular country, but are well known there because of the sophistication of communications which are increasingly less limited by national boundaries, and the frequent travel of residents of many countries for reasons of business, pleasure or study. In my opinion, the “hard line” cases in England conflict with the needs of contemporary business and international commerce. A trader’s reputation may be injured locally by many means. A trader may have a famous and well-known commodity, yet a person, totally unconnected with him, may in a country where the trader’s goods are not sold and where he has no place of [343] business nevertheless cause confusion in the marketplace and lead the consumers to believe that a business connection exists between the two. The local person may produce a product inferior in quality to the product of the overseas trader and this may taint irreparably the reputation of the original product and of its maker. The reality of modern international business is that contemporary consumers are not usually concerned about the actual location of the premises of a company or the site of its warehouse or manufacturing plant where the goods are produced, but they are concerned with maintenance of a high level of quality represented by internationally known and famous goods. The requirement in some of the cases that a very slight form of business activity is sufficient is really a somewhat artificial concept. The real question is whether the owner of the goods has established a sufficient reputation with respect to his goods within the particular country in order to acquire a sufficient level of consumer knowledge of the product and attraction for it to provide custom which, if lost, would likely to result in damage to him. This is essentially a question of fact. As I outlined in more detail earlier, it is still necessary for a plaintiff to establish that his goods have the requisite reputation in the particular jurisdiction, that there is a likelihood of deception among consumers and a likelihood of damage to his reputation. But reputation within the jurisdiction may be proved by a variety of means including advertisements on television, or radio or in magazines and newspapers within the forum. It may be established by showing constant travel of people between other countries and the forum, and that people within the forum (whether residents there or persons simply visiting there from other countries) are exposed to the goods of the overseas owner (see for example C and A Modes, Orkin … Certainly the law of passing off does not confer protection on the owners of goods who have no reputation in a particular jurisdiction, otherwise they would have an international monopoly with respect to the name, get-up or mark applied to their goods (and services) and may never intend to exploit it in the particular jurisdiction. It is the likelihood of deception among consumers and of damage to reputation that are the critical requirements to establish a case of passing off and they prevent any such unauthorised international monopoly being granted to a plaintiff. … [344] For these reasons, I am of the opinion that it is not necessary in Australia that a plaintiff, in order to maintain a passing off action, must have a place of business or a business presence in Australia; nor is it necessary that his goods are sold here. It is sufficient if his goods have a reputation in this country among persons here, whether residents or otherwise, of a sufficient degree to establish that there is a likelihood of deception among consumers and potential consumers and of damage to his reputation. 546 [12.210]

Protection of Business Reputation

CHAPTER 12

ConAgra v McCain Foods (Aust) cont. What is the relevance of fraud? … [351] As appears earlier in my reasons, fraud is significant in two respects. • First, fraud in the sense of a deliberate intent to steal a plaintiff’s business, goodwill or reputation as in the Collins Company v Brown [Collins Co v Brown [1857] 3 K & J 423; 69 ER 1174] case. • Second, in the sense of “digging a commercial pit” in advance of the plaintiff who is proposing to commence business in the jurisdiction and thus cause injury or the probability of injury to the plaintiff. It is in this latter sense that one must read the observations of Isaacs J in Turner at 364-365 and the judgment of Needham J in Olin [Olin Chemical Pty Ltd v Pace Chemical & Swimming Pool Equipment Pty Ltd (unreported, Supreme Court, NSW, Needham J, 22 December 1978)]. In my opinion, his Honour’s findings of fact when considering the question [352] of fraud have not been shown to be in error; but I must confess to having difficulty with the conclusion of his Honour that fraud “in the relevant sense” has been established. At the highest his Honour’s findings mean that the respondent deliberately set out to copy or adopt the appellant’s packaging and the name “Healthy Choice” to positively establish a relationship of some kind between the appellant and the respondent or their respective products, though this is not a finding specifically made by his Honour on the issue of fraud. More likely though is that his Honour’s findings as to fraud mean that the respondent embarked upon a course of deliberately appropriating the name “Healthy Choice”, the use of the words “low cholesterol, low fat, low sodium” and aspects of the appellant’s packaging in such a way that the respondents knew could cause confusion between the two products or could cause some consumers to believe that the McCain product was in some way connected with the ConAgra product. Merely to imitate the name of another trader or his product or his get-up does not establish a case of fraud. That appears clearly from the Pub Squash [Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] RPC 429] case. I have the distinct impression from my reading of the evidence in this case that what the respondent really set out to do was to apply to its own product and packaging so much of the name of the appellant’s product Healthy Choice and get-up of its packaging as it could do, without contravening the law, not because it wanted to have its product confused with that of the appellant, but because it was most impressed by the striking success of the appellant’s frozen food in the US and sought to adopt it for its own products in Australia as a good idea … [Some authorities omitted.] GUMMOW J: [353] I would dismiss the appeal and cross-appeal. The appellant should pay the respondent’s costs of the appeal and the respondent should pay the appellant’s costs of the cross appeal. I turn first to the passing off issues. … [354] … Putting to one side the necessity for a local trading goodwill, this is not a case of reliance upon a famous name or mark which over a substantial period has become well known in the forum. This was the position with “Selfridges” (Selfridges Ltd v Selfridges (Australasia) Ltd, Harvey CJ in Eq, Sydney Morning Herald, 6 April 1933); “General Motors” (Turner v General Motors (Australia) Proprietary Ltd (1929) 42 CLR 352 at 363) and “C and A” (C and A Modes v C and A (Waterford) Ltd [1978] FSR 126 at 137). In cases where the courts have moved (whether on an interlocutory or final basis) to protect the potential exploitation, by the conduct of local trading, of an existing reputation in the forum, the plaintiff still has been required to make out (at the appropriate level for interlocutory or final relief) its case for the existence of that reputation. Examples are Sheraton Corp of America v Sheraton Motels Ltd [1964] RPC 202 at 203; Globelegance BV v Sarkissian [1974] RPC 603 at 612; Metric Resources Corp v Leasemetrix Ltd [1979] FSR 571 at 579; Home Box Office Inc v Channel 5 Home Box Office Ltd [1982] FSR [12.210]

547

Intellectual Property: Commentary and Materials

ConAgra v McCain Foods (Aust) cont. 449 at 456; Esanda Ltd v Esanda Finance Ltd [1984] 2 NZLR 748 at 752-753 and Orkin Exterminating Co Inc v Pestco Co of Canada Ltd (1985) 19 DLR 4th 90 at 93-94. All of these judgments, save the last, were delivered upon applications for interlocutory relief. (See also BM Auto Sales Pty Ltd v Budget Rent a Car System Pty Ltd (1976) 51 ALJR 254 at 258.) Some caution is needed against treating findings as to reputation at the interlocutory level as if they were findings as to what would suffice to establish reputation at a trial. … [355] The failure of the appellant’s case as to reputation spells doom for the appellant, whatever the position as to fraud. I agree that in a case such as the present a failure to establish a reputation in the forum cannot be overcome by proof of fraud on the part of the defendant. The role of fraud in the modern passing off action was debated before us and it is a topic to which I return later in these reasons. Another issue of law which arose on the appeal was the significance attached to the absence of local trade in the appellant’s product. Notwithstanding the failure of the appeal on the facts, the Court should express its conclusions upon these important issues in the law of passing off, there being no binding Australian appellate authority. Passing off Within the passing off action, there is an accommodation and adjustment of three competing interests. First that of the plaintiff in protecting the commercial advantages flowing from his efforts and investment, secondly that of the defendant in being free to attract purchasers for his goods and services by what appears to him to be an effective means, and thirdly that of consumers in selecting between competing goods and services without the practice upon them of misrepresentations. Attempts to produce a definition of the tort which is both succinct and comprehensive have had mixed success. In Erven Warnink Besloten Vennootschap v J Townend and Sons (Hull) Ltd [1979] AC 731 at 742, Lord Diplock identified five essential characteristics of a passing off action, and Lord Fraser of Tullybelton [1979] AC 731 at 755-756, also identified, but in somewhat different terms, five such characteristics. There followed in the English Court of Appeal differences of opinion as to whether these two sets of criteria were distinct, overlapping, or cumulative and whether, in any event, either was comprehensive: Anheuserv Conservatories Custom Built Ltd [1989] RPC 455 at 465-467; Morcom “Developments In the Law of Passing off” (1991) 10 EIPR 380 at 382. As Ralph Gibson LJ pointed out in the second of these cases (supra at 466) the probanda formulated by Lord Diplock and Lord Fraser would not, for example, allow for cases of “reverse” passing off. In Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341 at 406, Lord Oliver of Aylmerton formulated the essential elements in a passing off action without referring specifically to earlier authority. Now, Nourse LJ (in Consorzio del Prosciutto di Parma v Marks & Spencer plc [1991] RPC 351 at 368-369) has said that the formulations by Lord Diplock and Lord Fraser had not in his experience given the same degree of assistance in analysis and decision as “the classical trinity” of (1) reputation (2) misrepresentation and [356] (3) damage. Nourse LJ regards what was said in the Borden case as signalling a “welcome return to the classical approach”. It is neither necessary nor appropriate for us to comment upon these vicissitudes of the recent English case law. But it is to be observed that the law of passing off contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in short form. However, “the classical trinity” does serve to emphasise three core concepts in this area of the law. This appeal is concerned with all of them, namely, the geographical requirements for a sufficient reputation, the nature of the interests damaged, and the significance of fraud in the making of the misrepresentation. … [364] Fraud today 548 [12.210]

Protection of Business Reputation

CHAPTER 12

ConAgra v McCain Foods (Aust) cont. What then is the present significance of fraud in the passing off action? There are various categories of case in which it will be significant if the defendant has embarked upon his activities fraudulently in the sense of the old common law cases. These categories are in addition to the class of case [365] where there is some evidentiary assistance to be derived from those circumstances. First, the absence or presence of fraud in the common law sense will be determinative of the plaintiff’s equitable rights in cases where a charge of unclean hands is made out against the plaintiff; this is because whilst the plaintiff’s unclean hands ordinarily would disentitle him to relief in equity, the existence of the fraud on the part of the defendant would give the plaintiff a right to damages at law. In that action the equitable defence would be of no effect. The plaintiff may then have an injunction to avoid the necessity of repeated actions at law, notwithstanding the plaintiff’s unclean hands. That is what is established in Kettles and Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1935) 35 SR (NSW) 108, with reference to the analysis of Ford v Foster (1872) LR 7 Ch App 611, by Isaacs ACJ in Angelides v James Stedman Hendersons Sweets Ltd, supra at 65-66. Secondly, whilst there is some authority for the view that there is no passing off where the defendant does no more than carry on business under his own name, such user must be bona fide; Clayton v Vincent’s Products Ltd (1934) 34 SR (NSW) 214; Parker Knoll Ltd v Knoll International Ltd [1962] RPC 265; Parker and Son (Reading) Ltd v Parker [1965] RPC 323. Thirdly, in my view, in the ordinary passing off case (where the whole of the dispute is centred in the one jurisdiction) the failure of the plaintiff to show the existence of his reputation cannot be overcome merely by proof of a fraudulent design on the part of the defendant. The authorities bearing upon the question are collected in Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 at 444-445. However, fraudulent conduct is important in the line of cases which I have described where the plaintiff and the defendant export their goods for sale in a foreign market and the plaintiff has no reputation with consumers in the jurisdiction in which the action is brought, although he does have a reputation in the foreign market where the goods of the defendant are sold. The present case is concerned with a variant of this third situation. The complaint of the appellant is not that the respondent is manufacturing in Australia goods for export to the appellant’s markets in the US where the appellant has conducted activities on a large scale, but that the respondent seeks to pre-empt the entry of the appellant into the Australian market. In such a case is it necessary that the appellant establish a case of the existence in Australia of a reputation among consumers, or is it sufficient that the respondent is acting in the manner described by “digging a pit” in the path of the entry by the appellant into the Australian market? In my view, the appellant cannot succeed in such a case, even if fraud be shown, unless the plaintiff can show a reputation in that market. Only if this be so will the activities of the defendant convey a misrepresentation to the public and the misrepresentation is the gist of the action. Before returning to this issue, it is appropriate first to consider whether, in any event, the existence of such a reputation would be sufficient, or whether the appellant would also have to show (as it cannot do on the facts) the existence of a reputation attached to the present conduct of a business in Australia. The answer to that question requires some further consideration of the development of the notion of the proprietary right which is said to be protected by the passing off action. [366] The property right Having found that equity intervened in passing-off cases to protect proprietary rights, it remained for the courts further to describe, if not define, the constituents of those rights. Unless copyright subsisted in the trade mark in question, it would be anomalous to describe the plaintiff as having proprietary rights in the name or mark per se. The point was dealt with authoritatively by Lord Parker in A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 at 283-284. His Lordship noted that in [12.210]

549

Intellectual Property: Commentary and Materials

ConAgra v McCain Foods (Aust) cont. equity liability might arise whether or not the defendant had acted fraudulently although the innocence of the defendant might be a reason for limiting the account of profits to the period subsequent to the date at which he became aware of the true facts. Lord Parker said that the view taken by the common law courts was somewhat different. What is of significance for present purposes is the statement by Lord Parker in Spalding’s case (supra) (at 284) that if the nature of the right, the invasion of which is the subject of passing-off actions, is a right of property, what is referred to is “property in the business or goodwill likely to be injured by the misrepresentation”. … The notion of a trade mark, in the common law sense, is now wide enough to encompass slogans and visual images which radio and television or other means of advertising leads the market to associate with the goods or business of the plaintiff. The Privy Council so declared in Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1981] RPC 429 at 490. What has given rise to difficulty in some of the recent decisions is the notion that the plaintiff is entitled to have protection only for a business reputation acquired in the forum, and that this only can be generated by some sort of business activity by the plaintiff in the forum. … What is of present significance for this appeal is that, in considering the constituent elements of the action for passing off and the concept of injury or apprehended injury to a right in the nature of property, caution is necessary against importing into this field observations made elsewhere as to the nature of “goodwill”. The result of undiscriminating adoption of those remarks may be the subversion of the basic nature of the passing-off action. … [367] Reputation and present business operations … [371] The question for the court is whether in this divided state of English authority we should adopt the approach that was accepted by the English Court of Appeal in the Budweiser case, at the expense of the earlier Australian authorities. … [372] The preferred position In my view, where the plaintiff, by reason of business operations conducted outside the jurisdiction, has acquired a reputation with a substantial number of persons who would be potential customers were it to commence business within the jurisdiction, the plaintiff has in a real sense a commercial position or advantage which it may turn to account. Its position may be compared with that of a plaintiff who formerly conducted business within the jurisdiction and has retained a reputation among its erstwhile customers, and with that of a plaintiff with a reputation which arises from its trade in the jurisdiction, but extends to goods or services which are not presently marketed by him. If the defendant moves to annex to itself the benefit of such a reputation by attracting custom under false colours, then the defendant diminishes the business advantage of the plaintiff flowing to it from the existence of his reputation. This is so whether the plaintiff is a party which may expand into a new field of business or resume a former business conducted in the jurisdiction, or a party which may enter the jurisdiction to establish a business for the first time. The immediacy and intensity of the intention of the plaintiff to commence or resume business is, in my view, a question going not so much to the invasion of the plaintiff’s rights as to the imminence of a threat sufficient to justify an injunction. The bad faith of the defendant will not be sufficient to confer rights upon a plaintiff where the necessary reputation in the jurisdiction is lacking. Further, in my view, in these cases the presence of bad faith on the part of the defendant is not an additional requirement which is to be satisfied by the plaintiff; fraud in the sense of persistence after notice of the plaintiff’s rights will suffice. 550 [12.210]

Protection of Business Reputation

CHAPTER 12

ConAgra v McCain Foods (Aust) cont. In Ballarat Products Ltd v Farmers Smallgoods Co Pty Ltd [1957] VR 104 at 108, Hudson J said: “On behalf of the defendant it was contended that, as no business is being carried on by the plaintiff, there can be no goodwill of which the name can form part. I cannot accept this proposition. In my opinion goodwill may continue to exist despite the cessation of the business operations that have given rise to it. If a trader by his personality, skill or method of trading has acquired a reputation in a particular class of business and thereby established an extensive connection in that business, to say that upon his ceasing to trade his reputation will (373) immediately disappear is contrary to fact. It remains as something of value which he can turn to account whenever he chooses.” To the same effect, but the setting of a claim based upon foreign reputation, is the decision of the Ontario Court of Appeal in Orkin Exterminating Co Inc v Pestco Co of Canada Ltd (1985) 19 DLR (4th) 90 (noted (1986) 76 TMR 173; (1986) 2 IPJ 375). The plaintiff was an American company which had begun its operations in Georgia in 1901 and had built up one of the largest pest control businesses in the world. It did not carry on business in Ontario or elsewhere in Canada, but had a reputation there. This was held to be sufficient to support an action for passing off against a Canadian company which began using the plaintiff’s name in the business it conducted in metropolitan Toronto. The judgment of the Court of Appeal was delivered by Morden JA. The decision has since been applied, at the interlocutory level, in HIT Factory Inc v HIT Factory Inc (1986) 12 CPR (3d) 287. Morden JA made the following points which are of significance on the present appeal. First, he referred to Harrods Ltd v R Harrods Ltd supra and Yale Electric Corp v Robertson supra, together with Stork Restaurant Inc v Sahati 166 F 2d 348 (1948) in relation to the proposition (at 101): “[A] plaintiff does not have to be in direct competition with the defendant to suffer injury from the use of its trade name by the defendant. If the plaintiff’s trade name has a reputation in the defendant’s jurisdiction, such that the public associates it with services provided by the plaintiff, then the defendant’s use of it means that the plaintiff has lost control over the impact of its trade name in the defendant’s jurisdiction.” Secondly, at 103-104, his Lordship referred to the significance attached in some of the English decisions to very slight business activities in the jurisdiction as “purely symbolic” rather than illustrative of the true principle, namely that the plaintiff was entitled to retain the possibility of exploiting its goodwill in England. Thirdly, he did not see it as imposing an unreasonable restraint on the defendant to enjoin it from using the name of the plaintiff, saying (at 105): The public are entitled to be protected from such deliberate deception and Orkin, which has laboured long and hard and made substantial expenditures to create the reputation which it now has, which reputation has spread to Ontario, is entitled to the protection of its name for misappropriation. The spectre of Orkin having a monopoly in Ontario in its name and distinctive logo, even though it is not now carrying on business here, is considerably less troubling than the deceptive use of its name and symbol by another. Fourthly, in response to the submission by the defendant that the circumstance that it had embarked upon deliberate deception was irrelevant, Morden JA said (at 106-107) that whilst the defendant’s bad faith alone did not confer a cause of action on a foreign plaintiff, it was a relevant factor to take into account in framing the law so as to adjust the competing interests, [374] the interests of a dishonest defendant being entitled to less weight than those of one which had acted bona fide. Finally, with reference to the meaning attached to the term “goodwill” in such English cases as the Budweiser Case, his Lordship observed (at 107-108) that this meaning appeared to be based on definitions assigned to “goodwill” in a tax case, namely Muller’s Case, and continued: [12.210]

551

Intellectual Property: Commentary and Materials

ConAgra v McCain Foods (Aust) cont. Virtually no words have a single fixed meaning, particularly goodwill, and, with respect, I do not think that the meaning appropriate in the Muller case is necessarily appropriate in a passing off case which involves issues of remote territorial use. In this kind of case I think the main consideration should be the likelihood of confusion with consequential injury to the plaintiff. Generally, where there is such confusion there is goodwill deserving of protection. I would, with respect, accept all that was said for the Ontario Court of Appeal in those five propositions, save only that I would regard the dishonesty of the defendant as going more to the remedy than the right of the plaintiff. What is said in the Canadian decision is consistent with an Australian decision, Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196. Powell J (at 205) stated the relevant question as being “does the plaintiff have the necessary reputation?”, rather than “does the plaintiff itself carry on business here?”. Where the intention of the defendant is to cause harm to the plaintiff by pre-empting the plaintiff’s exploitation in the jurisdiction of its goodwill there, then, in my view, the charge of fraud is made out. In an otherwise appropriate case, damages may be awarded in addition to equitable relief. This is so even if, as in the present case, there may be insufficient grounds for holding that the defendant also had the objective of building up its goodwill in the jurisdiction by misleading the customers who dealt with it into believing they were getting the goods of the plaintiff. In the present case, the primary Judge (101 ALR at 487) held that it was likely, in the sense of more probable than not, that the appellant would commence, at some time in the future, the manufacture and marketing in Australia of its “Healthy Choice” product; should it do so, then it was clear that the appellant would suffer damage by there being on the market another product with the name “Healthy Choice”, and the probability of that damage was sufficient to found a passing off action, subject to the need to show a sufficient reputation in the jurisdiction. However, whilst I would not disturb the finding of the primary Judge as to fraud, I should add that, like Lockhart J, my impression from the evidence is that there is much to be said for the view that the respondent acted as it did, not to filch the appellant’s market or prospective market in Australia, but because it was impressed by the success of the appellant’s product in the US and thought that a similar product was likely to succeed here. That would not amount to fraud in the required sense. Deliberate copying does not necessarily indicate fraud. A notable example is provided by Cadbury-Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429 at 493-494. See also, in the field of registered trade marks Aston v Harlee Manufacturing Co (1960) 103 CLR 391 at 400-402; Moorgate Tobacco Company Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 477. [375] Trade Practices Act I agree with what has been said by Lockhart J as to the issues arising under this legislation.

Location of reputation: sales by foreign websites? Ward Group v Brodie & Stone [12.220] Ward Group Pty Ltd v Brodie & Stone Plc (2005) 143 FCR 479 Federal Court of Australia MERKEL J: [481] [1] Introduction The applicant (“the Ward Group”) is the Australian manufacturer and distributor of anti-greying hair creams and lotions marketed under the brand name “Restoria” (“the Australian Restoria 552 [12.220]

Protection of Business Reputation

CHAPTER 12

Ward Group v Brodie & Stone cont. products”). The Ward Group claims that similar hair creams and lotions manufactured and distributed by the respondents in the United Kingdom under the same brand name (“the UK Restoria products”), which were advertised for sale and sold on certain websites on the internet, infringed its trademarks and passed off the UK Restoria products as and for the Australian Restoria products. …[482]… [5] At trial the issues arising for determination were: (1)

whether the advertising and sale of the UK Restoria products on the Internet by the website proprietors infringed the Ward Group’s Australian trade marks or constituted a passing off of the UK Restoria products as and for the Australian Restoria products of the Ward Group; and, if so

(2)

whether Brodie & Stone, as the manufacturer and distributor of the UK Restoria products in the United Kingdom, was liable as a joint tortfeasor in respect of the trade mark infringements and passing off of the website proprietors.

[6] There are two special features about the claims in the present case. The first is that the advertising of the UK Restoria products, together with numerous other products, for sale on the internet by the website proprietors was not specifically targeted or directed at customers in Australia. Rather, the advertising targeted potential purchasers anywhere in the world at large. [7] The second feature is that the case against Brodie & Stone is not based upon it having sold UK Restoria products to any of its customers intending or knowing that those goods were to be advertised for sale or sold by a customer on the Internet. Rather, the case was based upon the Ward Group informing Brodie & Stone that some of Brodie & Stone’s customers were selling the UK Restoria products to entities or individuals who, in turn, were selling UK Restoria products on the Internet, and that the offering to sell and selling of those products to customers in Australia on the Internet constituted an infringement of the Ward Group’s Restoria trade marks in Australia and passing off. The Ward Group contended that once Brodie & Stone became aware of those matters it was obliged to place restrictions on the resale of its UK Restoria products, and its failure to do so made it a joint tortfeasor in respect of the trademark infringements and passing off alleged against the website proprietors. [8] Plainly, the Ward Group’s claims, if upheld, can have significant consequences for the sale of goods on the Internet. Background [9] The Ward Group manufactures and distributes the Australian Restoria products in Australia and elsewhere under the brand name “Restoria”. It is registered under the Trade Marks 1995 (Cth) (“the TMA”) as the proprietor of four trade marks bearing the mark “RESTORIA” in the class concerned with hair products and cosmetics (“the Australian Restoria marks”). It is also the registered proprietor of Restoria trade marks in over 70 other countries, but not in the United Kingdom. [10] The Ward Group has manufactured, advertised, marketed, distributed and sold the Australian Restoria products in Australia since its incorporation in 1957. It began exporting the products in 1965 and conducts a wide and extensive trade worldwide, although not in the United Kingdom, in the Australian Restoria products. It is clear that the Ward Group has established a substantial reputation and goodwill in relation to the Australian Restoria products and their brand name, Restoria. [483]… … Selling the UK Restoria products on the internet [484] [16] … In the usual course persons searching in Australia for a particular product on the Internet are likely to obtain search results for web pages located around the world. For example, a [12.220]

553

Intellectual Property: Commentary and Materials

Ward Group v Brodie & Stone cont. person searching for Restoria products may carry out a Google or Yahoo search on the internet which will reveal, inter alia, the websites, including the Ward Group sites, that advertise those products under the Restoria name. [17] The UK Restoria products were advertised for sale on three websites (http://www.westons.com, http://www.beauty4you.co.uk, and http://www.auravita.com (“the websites”)), which were owned or operated by one or other of the website proprietors … [20] ….The only evidence of sales of the UK Restoria products in Australia is the [485] evidence adduced by the Ward Group of purchases of those products by its solicitors acting on its behalf (“the trap purchases”). … [487] … Passing off … [31] The misrepresentation pleaded by the Ward Group is that the website proprietors passed off their businesses and products as and for the Ward Group’s businesses and products, or as businesses or products endorsed or approved by the Ward Group. Although no such representation was expressly made by the website proprietors, the representation is said to be implied by the advertising and sale on the Internet by the website proprietors of the UK Restoria products under the Restoria brand name. [32] The representation expressly made by the website proprietors was that they were advertising the UK Restoria products for sale under their established brand name on the Internet. That was an accurate representation which, in the present context, only became capable of being a misrepresentation once the UK Restoria products were advertised for sale in Australia where the brand name Restoria had a repute and goodwill associated with the Ward Group. If Australian consumers had been targeted by the website proprietors for the marketing and sale of the UK Restoria products under the Restoria name, the fact that the representation, when made in the United Kingdom, was accurate would probably not save it from becoming a misrepresentation when the representation was made and received in Australia. The reason for that [488] conclusion is that the cases to which I later refer … treat such a representation as being made to and received by consumers in Australia, rather than a representation made to the world at large. [33] But that is not what occurred in the present case. Rather, the website proprietors did not target or direct their advertising at Australian consumers. The only specific representations made in relation to the UK Restoria products by the website proprietors in Australia were the representations made in the course of the trap purchases. …

Location of reputation: via indirect advertising? Hansen Beverage Company v Bickfords (Australia) Pty Ltd [12.230] Hansen Beverage Company v Bickfords (Australia) Pty Ltd & Anor (2008) 171 FCR 579; [2008] FCAFC 181 Federal Court of Australia [Since 1992, the appellant, Hansen Beverage Company, has developed, marketed, sold and distributed non-alcoholic beverages in the United States. In 2002, to compete with Red Bull, the world leading energy drink at the time, Hansen launched a new energy drink – “Monster Energy” – targeting the 18 to 30 year old male demographic. In support of targeting this demographic, Hansen sponsors athletes and athletic competitions, especially those known as the “extreme sports”. Monster Energy is sold across the US and throughout the world, but it was not then sold in Australia. The first respondent, Bickfords, is a well-established Australian manufacturer and distributer of beverages. The second respondent, Meak Pty Ltd, distributes and exports Bickfords’ products. In 1998, 554 [12.230]

Protection of Business Reputation

CHAPTER 12

Hansen Beverage Company v Bickfords (Australia) Pty Ltd cont. Bickfords launched an energy drink called “Hi NRG”, but sales were poor. Bickfords became aware of Hansen’s Monster Energy drink and unsuccessfully sought a licence agreement with Hanson. Bickfords later developed its own Monster Energy drink, and by April 2006, it began to distribute this drink across Australia. Hansen, at first instance, was unsuccessful in its action for passing off and misleading and deceptive conduct against the first and second respondents. Hansen then appealed to the Full Court.] Tamberlin J: [585] [25] The similarities between the two products, which Hansen alleges will mislead or deceive a consumer for the purposes of s 52 of the TPA and the tort of passing off, are as follows: Hansen product Name is MONSTER ENERGY Super-size can Black can with green “M” claw for the original version Black can with blue “M” claw for the lo-carb version Black can with orange “M” for the Khaos (juice) version “Unleash the Beast” slogan tilted diagonally Website stated: monsterenergy.com Ingredients prominently identified on the can: • Taurine • Ginseng • B vitamins

Bickfords product Name is MONSTER ENERGY Super-size can Black can with green MONSTER mark for the sugar-free version Black can with blue MONSTER mark for the original version Black can with orange MONSTER mark for the juice version “Find the Monster within” slogan tilted diagonally Website stated: monsterenergy.com.au Ingredients prominently identified on the can: • Taurine • Ginseng • B vitamins

… [27] There is no dispute that the similarities between the products could relevantly mislead or deceive for the purposes of the TPA and the tort of passing off. Reasoning below [28] The primary Judge considered the reputation of the names MONSTER and MONSTER ENERGY in Australia, and their association with Hansen’s products as at the date when Bickfords’ products became available to consumer in April/May 2006. This was the date which his Honour found was the appropriate date at which to assess Hansen’s reputation in Australia. [29] His Honour proceeded on the basis that: (i) the target market for Bickfords’ [586] products was males between the ages of 18 to 24; (ii) the target market for Hansen’s products was males between the ages of 18 to 30; and (iii) unless Hansen establishes the required reputation among this target market it could not succeed. … [31] The primary Judge also considered Hansen’s indirect advertising strategies, which exposed people to its products through the means of logos on clothing, signage and other incidental depictions of the terms MONSTER ENERGY and MONSTER. His Honour observed that, on the evidence, there were at the relevant time approximately 1 million males in Australia aged between 18 and 24. [32] His Honour also referred to a series of perceived shortcomings in the evidence, stressing that the target demographic was not “just the extreme sports follower”, but rather the young male adult [12.230]

555

Intellectual Property: Commentary and Materials

Hansen Beverage Company v Bickfords (Australia) Pty Ltd cont. more generally. Importantly, his Honour considered that even if a number of extreme sports followers, having seen the material relied on by Hansen, were aware of the Hansen products, this was not a sufficient basis from which to draw in inference that young male adults, which constitute a wider group of consumers, would have the same awareness. His Honour did not accept that the impression conveyed by exposure to incidental or indirect advertising, which contained fleeting references to the terms MONSTER ENERGY and MONSTER, was sufficient without other circumstances, such as substantial direct sales or direct advertising in Australia, to support Hansen’s argument. His Honour gave an example of one type of exposure through indirect advertising which was not regarded as sufficient to establish reputation. His Honour stated that even if extreme sports enthusiasts were exposed to such advertising on television, it was not possible to extrapolate how many young male adults would recognise some association between Bickfords’ product marketed in Australia and the Hansen product to they had been exposed. [33] His Honour described the references in the indirect advertising to the presence and size of the terms MONSTER ENERGY and MONSTER as “occasional fleeting and background reference”. His Honour’s evaluation of such indirect advertising was that the potential consumer (other than perhaps some extreme sports enthusiasts) would not have been impacted to an extent that would cause these references to create an association with Hansen’s product. Rather, his assessment was that most viewers would be likely to focus on the sporting activities in respect of which the indirect advertising was being conducted, rather than to focus on the indirect advertising itself. His Honour concluded that the quality of exposure in Australia would not, without any other exposure, give rise to a sufficient level of awareness as to generate the necessary reputation. [587] Legal principles [34] In order to succeed in a passing off action, an applicant must establish, as one element of tort existing as at the date when the conduct commenced, that the applicant had the requisite reputation in the name or goods in the jurisdiction of the respondent and that there is a likelihood of deception among consumers or potential consumers resulting from the respondent’s actions. An applicant must prove that there are, within the relevant jurisdiction, a substantial number of persons who were aware of the applicant’s name or product and are possible consumers. It is necessary to show in a practical and business sense a sufficient reputation in the forum and this requires an evaluation of the size and distribution of the population of prospective consumers likely to be affected: see ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 342, 343, 346 (per Lockhart J), and 380 (per French J). [35] The tort of passing off is designed to protect the property and goodwill of a business. It is only available where an applicant can show goodwill or reputation in relation to the name or get-up of his or her goods or services because they have become distinctive of his goods or services in a particular market. An applicant will succeed where he or she can show that a potential customer is likely to be misled into believing that the respondents’ goods are goods of the applicant or are somehow associated with the applicant: see Cadbury Schweppes Pty Ltd v Pub Squash Company Pty Ltd [1980] 2 NSWLR 851 at 858. [36] In ConAgra 33 FCR at 381, in relation to a claim under the TPA, French J referred to the expression “a not insignificant number” of persons who would be potential customers as being an appropriate criterion. His Honour went on to observe that if the similarity complained of is “commercially irrelevant”, having regard to the number of people who know of that similarity, then the name or get-up is not misleading or deceptive. In considering the question of reputation, although s 52 of the TPA makes no reference to reputation, decisions under that provision have referred to the need to prove a “significant” or “substantial” proportion of persons within the relevant market who would be likely to be misled: see 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 301; National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420 at 440; cf .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 at 529-530. 556 [12.230]

Protection of Business Reputation

CHAPTER 12

Hansen Beverage Company v Bickfords (Australia) Pty Ltd cont. [37] In the present case, the primary judge approached the question of the reputation in Australia of the terms MONSTER ENERGY and MONSTER and Hansen’s products on the basis that the difference between “insignificant” and “significant” or “substantial proportion” of persons was only a matter of expression, and not of any substantive distinction. In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (2007) 159 FCR 397, the Full Federal Court considered whether the use by the respondent of a shade of the colour purple in connection with chocolate confectionery might mislead consumers to mistakenly conclude that there was some connection between the respondent’s and the appellant’s businesses, and in the course of doing so referred to the distinction between the elements of a passing off action and proceedings under the TPA. The Full Court at 418-419 said: There is an overlap between causes of action arising under Pt V of the Trade Practices Act [588] and the common law tort of passing off. However, the causes of action have distinct origins and the purposes and interests that both bodies of law primarily protect are contrasting. Passing off protects a right of property in business or goodwill whereas Pt V is concerned with consumer protection. Part V is not restricted by common law principles relating to passing off and provides wider protection than passing off. Whether or not there is the requirement of some exclusive reputation as an element in the common law tort of passing off, there is no such requirement in relation to Pt V of the Trade Practices Act. The question is not whether an applicant has shown a sufficient reputation in a particular get-up or name. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant’s product to believe that the two products are associated, having regard to the state of knowledge of consumers in Australia of the claimant’s product. [40] A central issue in the present case is whether the use of the terms or get-up of MONSTER ENERGY and MONSTER by Bickfords in relation to its products is likely to mislead or deceive persons who have become familiar with the product. In turn, this raises questions as to whether any persons are likely to be familiar with the product and as to whether that number of persons is not insignificant. [41] In considering whether sufficient reputation has been established, it is helpful to bear in mind the observations of Lockhart J in Lumley Life Ltd v IOOF of Victoria Friendly Society (1989) 16 IPR 316 at 323-324, where his Honour observed that there might be in the minds of some people a temporary and commercially irrelevant confusion, which is distinct from a confusion arising from misleading or deceptive conduct. Also, a transitory or ephemeral impression, if misleading, but which is immediately dispelled, may, depending on the circumstances, be of no commercial significance and therefore will not constitute misleading conduct: see Knight v Beyond Properties Pty Ltd (2007) 242 ALR 586 at 597-598. Reasoning on appeal [42] The appellants submit that the reasoning of the primary Judge is based on an error of law because his Honour approached the case on the premise that, even if there was a sufficient reputation among potential customers in Australia who were extreme sports enthusiasts, this reputation could not be relied on because the target audience for the marketing of the products was the more widely described group of young Australian males. [43] His Honour accepted that many followers of extreme sports would be young adult males. While his Honour’s judgment at times indicates that young adult males who engaged in extreme sports may know of the MONSTER ENERGY and MONSTER names as they are used by Hansen’s products and that they may have drawn an association or connection between Bickfords’ and Hansen’s respective products, his Honour made no express finding to that effect: see, for example, Hansen [2008] FCA 406 at [87]. [12.230]

557

Intellectual Property: Commentary and Materials

Hansen Beverage Company v Bickfords (Australia) Pty Ltd cont. [44] It should be noted that s 52 of the TPA imposes no requirement that any particular reputation must be established before a breach of s 52 can be made out. … [589] [T]he sufficiency of the reputation which is required to be shown may be less in proceedings under the TPA than in proceedings alleging passing off. [45] The appellant submits that the primary Judge erred in wrongly selecting the class of persons in respect of which the reputation of Hansen’s product, and their possibility of being misled, should be assessed. His Honour, it is said, addressed the wrong question, and should have asked simply whether there was a sufficient number of the Australian public who would be likely to be misled. The selection of a class of persons by reference to advertising goals is said to be unwarranted and unduly restrictive. The evidence indicates, so the appellant submits, that it was open to his Honour to infer that a substantial number of extreme sports enthusiasts in Australia who would be potential customers exposed to Hansen’s overseas and local indirect advertising had formed the view that there was an association or connection between Bickfords’ and Hansen’s respective products. However, due to the restrictive approach adopted by his Honour, consideration of whether such an inference was open on the evidence was foreclosed. The result of such an approach was that his Honour concluded it not possible to draw an inference as to reputation in respect of any particular sub-class, and he thought it was necessary to infer that there was a reputation among a substantial proportion or number of persons within the broader class of young adult males. In our view, such an approach and its outcome are in error. [46] There is no foundation in the language of s 52 of the TPA to require that a reputation exist among any particular class or group of persons (particularly as defined by advertising objectives) before a breach of that provision can be made out. The provision is designed to regulate conduct which can be characterised as misleading and to protect consumers. In our view, the language of the section and its purpose do not require the Court to select any particular group as targeted by advertisers when assessing whether a breach has occurred. The fact that certain pieces or strategies of advertising may target a particular class of people as potential customers of the relevant product does not justify the conclusion that a significant number of persons in that class must be shown to be aware of the reputation before a claim under s 52 is made out. The question which must be answered can properly be framed as being whether a not insignificant number of persons in the Australian community, in fact or by inference, have been misled or are likely to be misled. [47] In the present case, the primary Judge made no general finding as to the size of the class of persons identified as extreme sports enthusiasts. His Honour proceeded on the erroneous basis that, even if the number of members in that class of persons was significant, it could not be relied on to establish reputation because the group of extreme sports followers was not the group targeted for [590] advertising. There is no sound basis in this case for a conclusion that the class targeted for advertising purposes is, of itself, a determinative criterion. We therefore consider that his Honour erred in law in approaching the question of reputation in this case and did not make the appropriate findings as to whether there was a significant number of persons in the Australian community to give rise to, or to allow an inference of, reputation in Hansen’s products, such that the conduct, which was conceded to be misleading in nature, contravened the norm proscribed by s 52 of the TPA. [48] As a consequence of the above conclusion, the question arises whether the matter should be remitted to the primary Judge for reconsideration. In our view, it should be. His Honour can then consider whether a not insignificant number of persons in the Australian community, in fact or by inference, have been misled or are likely to be misled, even if those persons are mostly or exclusively extreme sports enthusiasts. [Tamberlin J (with Siopis J agreeing) allowed the appeal, set aside orders of the primary judge, and remitted the matter to the primary judge for orders to be made in accordance with the Full Federal 558 [12.230]

Protection of Business Reputation

CHAPTER 12

Hansen Beverage Company v Bickfords (Australia) Pty Ltd cont. Court’s reasons.] Finkelstein J also allowed the appeal, but his Honour’s comments on the importance of “indirect advertising” are worth reproducing here: [593] [60] When the case is reheard I think the judge is also required to give greater weight than he was prepared to give to the indirect marketing campaign undertaken by Hansen to establish its reputation. It is quite clear that the judge was wary of indirect advertising. … [61] The judge’s caution is, I think, misplaced. Billions of dollars are spent on advertising. The object is to obtain brand recognition. The purpose is to influence consumer decision-making. Advertising does this by attempting direct persuasion, providing information to influence a choice between alternatives and making known what the alternatives are. [62] The most obvious form of advertising, and the easiest form of advertising to understand, is the direct message. But the advertising industry has now moved away from primarily relying on direct advertising. The belief is, and the belief is likely to be correct, that indirect communication sometimes expresses a point with more impact. The idea is that an advertisement should not be a lecture; it achieves its object sufficiently if it imports the desired information. Advertisements can do this by providing information verbally or visually. And an advertisement will have effect although the consumer is not aware someone is trying to communicate a message. [63] There are a plethora of examples of indirect advertising and it is a key topic of discussion in advertising literature. Indirect advertising of the kind with which everyone is familiar is the sponsorship of sports. Many people in many countries place great value upon entertainment, competition and accomplishment, all of which are seen in the sporting arena. Brand names and logos appear around sporting arenas, on the clothing worn by sportsmen and [594] women and on the equipment sportsmen and women use. This form of advertising is seen by many thousands of fans who attend sporting events and, in the case of popular sports, by hundreds of thousands of people if the event is broadcast on television. There are numerous studies that show that this type of indirect advertisement is far more effective at eliciting a consumer recall response than a direct television commercial. [64] In my opinion the judge was entitled to infer that the indirect brand advertising employed by Hansen (and, for that matter, Bickfords) can establish reputation as well as, if not better than, direct advertising. After all, everyone knows that James Bond drives an Aston Martin, Janis Joplin wanted to own a Mercedes Benz and Audrey Hepburn had breakfast at Tiffany’s. (Some citations omitted.)

Proving reputation: admissibility of expert evidence [12.240] Evidence needs to prove reputation and deception. In what circumstances is expert evidence relevant on these points?

Henschke v Rosemount Estates [12.250] CA Henschke & Co v Rosemount Estates Pty Ltd (1999) 47 IPR 63 Federal Court of Australia [Henschke, a South Australian boutique winemaker and owner of the “Hill of Grace” label and trade mark, objected to Rosemount Estate marketing wines under the “Hill of Gold” label. Expert evidence from marketing experts, wine writers, and wine retailers was called by both parties on the points of reputation and confusion. Rosemount Estate disputed the admissibility of much of Henschke’s expert evidence.] FINN J: [83] [69] As to the first of these matters, reputation, I am prepared to accept that, for present purposes, these experts are able to venture opinions on facets of the wine’s reputation [12.250]

559

Intellectual Property: Commentary and Materials

Henschke v Rosemount Estates cont. especially as to quality. What I am far less inclined to accept is that, whatever their specialised knowledge based on experience might be: cf Evidence Act 1995 s 79; that knowledge would enable or qualify them relevantly to express opinions on the reputation of the wine amongst the segment of the wine consuming public with which this case is concerned (“uninvolved consumers”: see below) … [70] As to the opinions ventured on the issue of mistake, confusion etc resulting from the names a somewhat different issue presents itself. The respondent has submitted that this evidence is simply inadmissible. Reliance was placed upon the observations of Gummow J (with whom Black CJ and Lockhart J agreed) in (Interlego AG v Croner Trading Pty Ltd (1992) 111 ALR 577), at 617-618 on the admissibility of “consumer evidence” in cases of the present variety. His Honour observed (inter alia): Secondly, the question whether a mark or get up so nearly resembles another as to be deceptive or likely to deceive is a question for the tribunal of fact and is not a matter for any witness to decide: Kerly, supra, p 425. The issue of whether consumers have been or are likely to be deceived was described by Lord Diplock as a “jury question”: GE Trademark [1973] RPC 297. … Thirdly, evidence of consumers and retailers as to the likelihood of deception will be critical if a special market is involved. … Fifthly, … evidence as to the habits of purchasers does not include evidence of prospective purchasers that they would be deceived, or evidence of retailers that purchasers would be deceived. This, it is said, is a case of the second and fifth propositions. [71] The applicants had submitted in contrast, relying upon [Co-Director, Wine Marketing Research Centre, SA] Professor Lockshin’s evidence, that the wine market is relevantly a “special market” and [84] that the experts’ opinions are admissible in consequence under the third proposition above. I have referred above to the essence of the Professor’s evidence in this regard. [72] I am unable to agree with the applicants in this. The difference between the ordinary was, as Gummow J acknowledged, explained by Lord Diplock in GE Trademark, above, at 321-322: [W]here goods are of a kind which are not normally sold to the general public for consumption or domestic use but are sold in specialised markets consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential. A judge, though he must use his common sense in assessing the credibility and probative value of that evidence is not entitled to supplement any deficiency in evidence of this kind by giving effect to his own subjective view as to whether or not he himself would be likely to be deceived or confused. In the instant case this would apply to the large industrial electrical machinery sold under the Rondel Mark. But where goods are sold to the general public for consumption or domestic use, the question whether such buyers would be likely to be deceived or confused by the use of the trade mark is a “jury question”. By that I mean that if the issue had now, as formerly, to be tried by a jury, who as members of the general public would themselves be potential buyers of the goods, they would be required not only to consider any evidence of other members of the public which had been adduced, but also to use their own common sense and to consider whether they would themselves be likely to be deceived or confused. The question does not cease to be a “jury question” when the issue is tried by a judge alone or on appeal by a plurality of judges. The judge’s approach to the question should be the same as that of a jury. He, too, would be a potential buyer of the goods. He should, of course, be alert to the danger of allowing his own idiosyncratic knowledge or temperament to influence his decision, but the whole of his training in the practice of the law should have accustomed him to this, and this should provide the safety which in the case of a jury is provided by their number. That in issues of this kind judges are entitled to give effect to their own opinions as to 560 [12.250]

Protection of Business Reputation

CHAPTER 12

Henschke v Rosemount Estates cont. the likelihood of deception or confusion and, in doing so, are not confined to the evidence of witnesses called at the trial is well established by the decisions of this House itself. See also Polaroid Corp v Hannaford & Burton Ltd [1974] 1 NZLR 368 at 378. [73] While the wine purchasing market may be special in the sense that it has unusual features (for example, over 16,000 brands and over 1000 producers), it is not “specialised” in the sense that participants therein have and are to be expected to have a particular knowledge, skill or experience that the general public relevantly does not. The wine market is one in which the general public participates directly: wine is sold to the public for consumption. In Lord Diplock’s sense it is a market in which a judge “would be a potential buyer”. A market is not to be made a “specialized” one merely because a feature (or features) within it differentiates it in some way from other consumer markets. Such a feature could probably be identified for many consumer markets. I would have to say in the present case, that the process of differentiation suggested by the applicants seemed to owe more both to the understandable desire to accentuate whatever differences were in fact available and to the scholars’ desire to emphasise the distinguishing characteristics of their particular field of interest, than to the identification of a specialisation based upon differences of moment and substance. I should indicate that I do not regard Dr Hall’s acceptance that the study of wine marketing is a specialist area of expertise is in any way inconsistent with the above conclusion. It merely means that a person with that expertise may [85] be able to be of assistance to the Court in explaining behaviour in that market. It does not make the market itself a “specialised market”. [75] … To the extent that the experts express an opinion of the likelihood of an association being made by the relevant section of the wine purchasing public (see below) in consequence of the shared words in the brand names of the two wines, I am not satisfied that, save possibly for Mr Forrestal (a well-known writer and wine judge), they have been shown to possess a specialised knowledge based on experience that would allow them to venture that opinion. In saying this I am not in any way doubting the particular respective experience of each in aspects of the wine industry. What I am questioning is their demonstrated possession of such specialised knowledge of consumer decisionmaking processes in this market as would admit of their expressing the particular opinion they have. Their experience would, at least in some cases, indicate a knowledge of the fact of actual mistake or confusion arising where there has been a particularly close similarity in brand names (for example, Moss Wood and Moss Brothers; Karrivale and Karriview; Wyndham Estate Bin 555 and Eden Valley TR 222). What it does not adequately suggest is a knowledge based on an experience of the factors that may be causative of, and the conditions that create the likelihood of, mistake or confusion in the decision-making of uninvolved wine purchasers as could found the opinion ventured: cf Clark v Ryan (1960) 103 CLR 486. At best some number of the opinions on mistake and confusion seem based on no more than conjecture or intuition. These experts in my view are being used to argue the applicants’ case: Clark v Ryan, at 491. … [77] With the possible exception of Mr Forrestal, I am not satisfied (a) that [86] these experts have the specialised knowledge to give an opinion on the likelihood of mistake, confusion, etc; or (b) that, in any event, their actual opinions are ones from which I might receive some assistance. Accordingly, Mr Forrestal apart, I do not admit their evidence insofar as it relates to the issue of mistake, deception etc caused by the Hill of Gold name. Even if admissible, and I here include Mr Forrestal, I have grave doubts that any weight could or can be attributed to this body of evidence. The opinions represent little more – if that – than a general statement of practical experience and then a conclusion by way of assertion on the issue in this case. The conclusion in my view merely invites further question. As Mr Shavin QC for the applicants acknowledged, to the extent the detailed processes of thought by which each reached their conclusions are not set out, there is an element of uncertainty as to how much reliance can be placed on them. I agree but would go much further. Without significant [12.250]

561

Intellectual Property: Commentary and Materials

Henschke v Rosemount Estates cont. elaboration its reliability must be open to question – the more so when one has regard to the evidence of the academic experts, Professor Lockshin and Dr Hall, on the complex of factors affecting the making of consumer purchasing decisions. [78] Having ruled the applicants’ expert evidence (a) on reputation admissible but to be accorded little weight unless otherwise indicated in a particular instance; and (b) on the issue of mistake, etc, inadmissible or else of little weight, I make like rulings for like reasons in relation to the same type of expert evidence adduced in response by the respondent. …

[12.260] An appeal and cross-appeal to the Full Federal Court was dismissed: see CA

Henschke & Co v Rosemount Estates Pty Ltd (2000) 52 IPR 42. The Court there observed, at 56 [28], that the “value of expert evidence depends very largely on the cogency of the reasoning on which it is based. An opinion is not necessarily to be accepted simply because it is offered by someone who has expertise and experience in the particular field”. See also Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2006] FCA 363. In this case, Heerey J rejected marketing expert evidence about the likelihood of consumer misassociations and errors being made because of similar uses of the colour purple by Darrell Lea Chocolates on the grounds that “ordinary human behaviour is not a matter to be proved in courts by opinion evidence, whether expert or otherwise”. For another case involving strong criticism of some of the expert evidence relied on, see Coca Cola v PepsiCo In (No 2) (2014) 109 IPR 429; [2014] FCA 1287, especially at 460 [173] where Besanko J drew attention to the difference between an expert’s personal opinion (not based on any expertise) and expert empirical evidence.

PROVING REPUTATION: ADMISSIBILITY OF SURVEY EVIDENCE [12.270] Evidence of “ordinary human behaviour” may be provided by survey evidence.

Federal Court Practice Note CM13 Survey Evidence establishes a procedure for obtaining this type of evidence. Compliance with the practice note is not a criterion of admissibility; however, it can be argued that poor surveys should be excluded under Evidence Act 1995 (Cth) s 135 because the probative value of the evidence is substantially outweighed by the danger that it might be unfairly prejudicial, be misleading or confusing, or result in undue waste of court time. If admitted, non-compliant surveys may be judged as lacking in probative value because of deficiencies in survey design. See Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 2) [2006] FCA 364; Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) [2006] FCA 446. For recent cases where the survey evidence relied on was criticised by the court see eg Adidas AG v Pacific Brands Footwear Pty Ltd (No 3) [2013] FCA 905 and Telstra Corporation Ltd v Phone Directories Co Pty Ltd [2014] FCA 568.

Federal Court of Australia: Practice Note CM13 [12.280] Practice Note CM13, Survey Evidence, Chief Justice Black of the Federal Court (September 2009). 11. Survey evidence 562

[12.260]

Protection of Business Reputation

CHAPTER 12

Federal Court of Australia: Practice Note CM13 cont. 1.

There are many problems in obtaining acceptable survey evidence including the use of relevant and unambiguous questions and whether the actual conduct of the survey (including methodology) is satisfactory.

2.

The admissibility of surveys is always a matter for the trial Judge to determine but the risk of the survey being rejected or given little, if any, weight at the trial may be diminished if the following procedure when a party seeks to have a survey conducted. Subject to other directions of the Court in the particular case, the Court expects that this practice will usually be followed: 1. Notice should be given in writing by the party seeking to have the survey conducted to the other parties to the proceeding. 2.

The notice should give an outline of: a. the purpose of the proposed survey; b.

the issue to which it is to be directed;

c.

the proposed form and methodology;

d.

the particular questions that will be asked;

e.

the introductory statements or instructions that will be given to the persons conducting the survey;

f.

other controls to be used in the interrogation process.

3.

The parties should attempt to resolve any disagreement concerning the manner in which the survey is to be conducted and any of the matters mentioned in 2 above.

4.

The matter of the survey should be raised with the Court at the directions hearing as soon as possible after the steps mentioned above have been taken.

TEMPORAL ISSUES [12.290] It is trite to say that traders ordinarily generate and maintain goodwill through trading and that it is always a question of fact whether there is sufficient goodwill to maintain a passing off action. Some cases have found that goodwill may be generated in a very short space of time. 11 Although the traditional view was that a trader had to be trading in order to acquire goodwill, 12 there are now many instances where the courts have recognised and protected – through injunctive relief after upholding a successful action for passing off – so-called “pre-trade” goodwill, especially where the plaintiff engages in heavy pre-launch promotion. 13

11

12 13

The classic example here is Stannard v Reay [1967] FSR 140, where Buckley J held that the plaintiffs, who commenced trading as a mobile fish and chip van under the name “Mr Chippy” on Isle of Wight, had acquired, within three weeks of trading, sufficient goodwill to support a passing off action against the defendant. See eg Maxwell v Hogg (1867) LR 2 Ch App 307. See eg Alllen v Brown Watson [1965] RPC 191; BBC v Talbot [1981] FSR 228, and in Australia, see Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196 discussed in Conagra above [12.210]. But for a more nuanced and more critical view of these cases, see Christopher Wadlow, The Law of Passing Off (Sweet & Maxwell 2011) pp 152–156. [12.290]

563

Intellectual Property: Commentary and Materials

A trader’s goodwill is not coterminous with its trading activity. Indeed, as the next two extracts illustrate, courts in the United Kingdom and Australia 14 have found that a trader’s goodwill may subsist after (sometimes well after) its actual trade ceases. It is worth pointing out here that under the common law, a trader must intend to resume business operations in order to support an action for passing off, whereas such an intention is not necessary in the statutory action for misleading and deceptive conduct (see especially Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61 (see [12.310]).

Ad-Lib v Granville [12.300] Ad-Lib Club Ltd v Granville [1971] 2 All ER 300 High Court of Justice, Chancery Division (United Kingdom) [For about two years, the plaintiff operated a successful nightclub, called “Ad Lib”, in Leicester Place, London until it was forced to close in early 1966 due to noise complaints. Consistent with its efforts to reopen this nightclub, the plaintiff first sought to soundproof the above premises, and later looked for alternative premises, albeit without success. Almost five years after the closure of the original club, the defendant intended on re-opening the “Ad-lib Club” on the same premises as the original club. The plaintiff brought an action for passing off against the defendant. The defendant did not appear and was not represented.] PENNYCUICK V-C: … [302] … The basis of the present action, to quote the words of Lord Parker of Waddington in A G Spalding Brothers v A W Gamage Ltd, is a proprietary right not so much in the name itself but in the goodwill established through use of the name in connection with the plaintiff’s establishment. I have no doubt that on the evidence the plaintiff company had by the end of 1965 established a substantial goodwill to which the name Ad-Lib Club was attached and that that name had become distinctive of the plaintiff company’s establishment. It follows beyond a doubt that if at the end of 1965 any other person had sought to use the name Ad-Lib in connection with a club of this character that would have been a plain invasion of the plaintiff company’s goodwill. The question which is raised by the present action is simply whether by the interval of some five years which has passed since the plaintiff company’s club was closed the plaintiff company must be regarded as having ceased to have any goodwill to which this name could fairly be said to be attached. The matter is put in 38 Halsbury’s Laws (3rd Edn) p 599, para 1001, in these terms: Since the right of action for passing off is based on injury to goodwill, a person who has ceased to carry on the business in which a name or mark was used, or has discontinued the use of the name or mark in his business, cannot maintain an action for passing off in respect of the name or mark, unless, it seems, he can prove that the name or mark retains a residual renown as denoting his goods. … [303] … It seems to me clear on principle and on authority that where a trader ceases to carry on his business he may nonetheless retain for at any rate some period of time the goodwill attached to that business. Indeed it is obvious. He may wish to re-open the business or he may wish to sell it. It further seems to me clear in principle and on authority that so long as he does retain the goodwill in connection with his business he must also be able to enforce his rights in respect of any name which is attached to that goodwill. It must be a question of fact and degree at what point in time a trader who 14

See eg Ballarat Products Ltd v Farmers Smallgoods Co Pty Ltd [1957] VR 104 (discussed above in Conagra [12.210]).

564 [12.300]

Protection of Business Reputation

CHAPTER 12

Ad-Lib v Granville cont. has either temporarily or permanently closed down his business should be treated as no longer having any goodwill in that business or in any name attached to it which he is entitled to have protected by law. In the present case, it is quite true that the plaintiff company has no longer carried on the business of a club for five years. On the other hand, it is said that the plaintiff company on the evidence continues to be regarded as still possessing goodwill to which this name Ad-Lib Club is attached. It does, indeed, appear firstly that the defendant must have chosen the name Ad-Lib Club by reason of the reputation which the plaintiff company’s Ad-Lib acquired. He has not filed any evidence giving any other reason for the selection of that name and the inference is overwhelming that he has only selected that name because it has a reputation. In the second place, it appears from the newspaper cuttings which have been exhibited that members of the public are likely to regard the new club as a continuation of the plaintiff company’s club. The two things are linked up. That is no doubt the reason why the defendant has selected this name. It will be observed that there is no question here of a name referring to a locality, type of activity or anything of that kind, unless one considers ’Ad-Lib’ as a form of activity. I think that the proper inference to be drawn from the evidence is that the plaintiff company has indeed a residual goodwill to which this name is attached and that that goodwill is an asset of value in the hands of the plaintiff company which it is entitled to exploit, if it is so minded, in future and which it cannot be said to have abandoned. That being the position, the name is something which it is entitled to have protected by injunction. When one comes to the balance of convenience, the balance is, as far as I can see–and I have only the plaintiff company’s evidence before me–wholly in favour of granting immediate interlocutory relief. It is pointed out and it is plainly right that if the defendant once opens his club under the name of Ad-Lib Club the plaintiff company’s goodwill in that name will be gone and gone for good. On the other hand, apart from, I suppose, such promotion expenditure as has been incurred it cannot be any hardship to the defendant to be restrained from carrying on his new club under a name which he can only have selected because of the reputation in that name which resulted from the successful activities of the plaintiff company. [Pennycuick VC granted an injunction restraining the defendant from carrying on a night club or other place of entertainment under the name or style of Ad-Lib (or any another name including those words) and from in any other manner passing off the defendant’s business as that of the plaintiff’s].

Mark Foys v TVSN [12.310] Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 104 FCR 61 Federal Court of Australia [“Mark Foys Ltd” (Old Mark Foys) was a well-known retail business in Sydney which traded at the “Piazza” building from 1909 to 1980. After it ceased trading, a new owner (“New Mark Foys”, later “Mark Foys”) became the registered proprietor of this bsiness but had not traded or carried out business under the name “Mark Foys”. TVSN sells consumer goods via television. As part of its re-branding strategy aimed at connecting with department store concept, TVSN sought to license or purchase the name “Mark Foys”. During the relevant negotiations, which ultimately broke down, TVSN sought to register “The House of Mark Foys” as a trade mark. Two days later, New Mark Foys sought to register “Mark Foys” across 19 classes of goods or services. On or about that time TVSN sought to register (and later secured) “markfoys” as a domain name. In its broadcasts, TVSN utilised “The House of Mark Foys” branding and a logo of the Piazza building. At first instance, Mark Foys Pty [12.310]

565

Intellectual Property: Commentary and Materials

Mark Foys v TVSN cont. Ltd was unsuccessful, inter alia, in its application to restrain TVSN from using the name “Mark Foys” or the depiction of the “Piazza Store” pursuant to s 52, 53(c) or (d) of the Trade Practices Act 1974 (Cth). Mark Foys Ltd appealed.] THE COURT: [72] [37] It is well settled that it is open to this Court sitting on an appeal from a trial judge to come to a different view from that of the trial judge as to whether the conduct of TVSN is misleading or deceptive: see S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 at 361… Relevant law [38] Sections 52 and 53 appear in the [Trade Practices] Act in “Part V - Consumer Protection”. This emphasises that the provisions are designed to protect the members of the public who are consumers of goods and services from unfair trading practices: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216. They are not specifically designed to protect traders, although the operation of those sections may incidentally have that effect: see per Barwick CJ at 220 in that case. … [Sections omitted.] [39] The conduct and representations at issue in this case are in substance directed to the retail services undertaken by TVSN rather than to the origin of the goods themselves which are offered for sale. At the same time, the representations [73] alleged are said to be made “in connexion with … the possible supply of goods” (emphasis added). [40] The principles relating to the application of s 52 were recently considered by the High Court in Campomar Sociedad, Limitada v Nike International Ltd (2000) 74 ALJR 573; 169 ALR 677. That case concerned alleged misrepresentations arising from the promotion of a fragrance with the name “Nike Sport Fragrance”. The Court held that the use of the well-known brand was likely to mislead or deceive members of the public into thinking that the “Nike Sport Fragrance” was “in some way promoted or distributed by Nike International itself or with its consent or approval” (emphasis added) when in fact it was not. The Court accepted the proposition that s 52 is not restricted by common law principles relating to passing off but provided an additional remedy. [41] The Court referred to the distinction between cases which involved representations made to the public at large or a section thereof, such as retail purchasers, and those which involved representations made to identified individuals. In relation to the former type of case (such as that before us), and the nexus which must be shown between the conduct in question and the misconception or deception of prospective retail purchasers the Court said (at 593; 705): “Nevertheless, in an assessment of the reactions or likely reactions of the ‘ordinary’ or ‘reasonable’ members of the class of prospective purchasers of a mass-marketed product for general use, such as athletic sportswear or perfumery products, the court may well decline to regard a controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful. For example, the evidence of one witness in thc present case, a pharmacist, was that he assumed that ‘Australian brand name laws would have restricted anybody else from putting the NIKE name on a product other than that endorsed by the [Nike sportswear company]’. Further, the assumption made by this witness extended to the marketing of pet food and toilet cleaner. Such assumptions were not only erroneous but extreme and fanciful. They would not be attributed to the ’ordinary’ or ’reasonable’ members of the classes of prospective purchasers of pet food and toilet cleaners. The initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers.” (Emphasis added.) [42] In support of its position that its conduct was not misleading TVSN referred to a number of authorities to the effect that where a business which has goodwill as one of its assets ceases to exist the goodwill which it previously attracted also ceases to exist. It then submits that there cannot be the 566 [12.310]

Protection of Business Reputation

CHAPTER 12

Mark Foys v TVSN cont. necessary nexus between the misleading or deceptive conduct and the false impression created in the perception of the public where the goodwill of the business no longer exists. Reference was made to Star Industrial Co Ltd v Yap Kwee Kor (tlas New Star Industrial Co) [1976] 2 FSR 256, a passing off and trade mark case, where Lord Diplock said (at 269): “… A passing-off action is a remedy for the invasion of a right of property not in the mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentations made by passing off one person’s goods as the goods of another. Goodwill, as (74) the subject of proprietary rights, is incapable of subsisting by itself It has no independent existence apart from the business to which it is attached. It is local in character and divisible; if the business is carried on in several countries a separate goodwill attaches to it in each.” (Emphasis added.) … [75] …[47] … there is a significant awareness in a section of the community of Old Mark Foys and this awareness is precisely what is exploited by TVSN’s promotion. [48] The statements relied on in the cases cited by TVSN [Pink v J A Sharwood & Co Ltd (1913) 30 RPC 725, 739–40; Thai World Import & Export Co Ltd v Shuey Shing Ply Ltd (1989) 17 IPR 289, 302; ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302, 353] were made in the context of passing off or trade marks actions and are not relevant to an application under the Act for breach of s 52 or 53. These authorities cannot be taken to establish any general proposition that in order to show sufficient connection between the conduct and the deception, so as to amount to a contravention of the Act, it is necessary to prove that there is a continuing goodwill which attaches to the business of any particular person or entity. The task of the Court is simply to give effect to the language of ss 52 and 53 without any such preconceived limitation. [49] This case is unusual in that Mark Foys ceased to trade at the Piazza Store premises for more than 20 years and the previous entity has been wound up. Despite this both the name and the store image, as the marketing advice demonstrates, still carry a strong resonance of quality and respectability. The Court has not been referred to any authority directly in point. [59] Determination of the issue raised in the present case … turns on the likely deception of the public as the [76] basis for relief rather than on the existence of any proprietary interest of New Mark Foys in goodwill. [51] The nature and effect of conduct and representations which evoke an association between a product or corporation and another person, product or corporation were considered by Burchett J in Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553 (the Crocodile Dundee case) in the context of the impressions conveyed by character merchandising which is based on an association of products or services with well-known persons. The exact impression created need not be identifiable with precision. Indeed, in many cases as his Honour points out it will be difficult to pinpoint the exact nature of the impression conveyed. Sometimes the association arises in the form of a generalised favourable impression evoked by the personality or entity with which a product or service is sought to be associated. … where the strategy was to evoke an aura of respectability and tradition by association with the retail services formerly offered by Old Mark Foys, when in fact there was no association with either the building, the entity, the goods or services provided by that retailer. The High Court judgment in Nike accepts as sufficient the fact that the conduct was likely to mislead members of the public into thinking that the Nike fragrance was “in some way promoted or distributed by Nike International”. Reasoning [53] In the present case the strategy of TVSN was to upgrade its image so as to create an impression or perception to potential customers of tradition, quality and service which was not previously perceived as attaching to television marketing of the type engaged in by TVSN. This was to [12.310]

567

Intellectual Property: Commentary and Materials

Mark Foys v TVSN cont. be achieved by association with Mark Foys arising from the use of images of the Piazza Store, the use of the words “Mark Foys” in oral television presentations, and by the web site address of “markfoys.com” and the e-mail address “[email protected]”. [54] In deciding whether this strategy was likely to create that deception it is permissible to take into account the overall campaign and promotion mounted by TVSN to achieve this re-positioning by perceived association: see Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 657. The course of conduct must be looked at as a whole and it is not [77] appropriate to analyse separate aspects of it in isolation. In Australian Woollen Mills the Court had regard to the purpose and judgment of traders as providing an expert opinion whether the conduct in question was likely to deceive. The promotion of the association in the present case was based on this expert market opinion as to what was likely to be achieved, namely a commercially beneficial indication of association. This association was inherently likely to occur as a consequence of the promotion campaign. In the present case the deception lies in the fact that some form of association is conveyed between TVSN and the quality and tradition of services previously provided by Mark Foys when in fact there is no such association whatsoever. [55] Once the nature of the deception is determined it is necessary to consider whether the deception came about as the result of an erroneous assumption on the part of potential customers which could not be considered to be attributable to the conduct of TVSN. This issue is discussed in detail in Nike at 702-706. … [57] In the present case, having regard to the numerous, repeated, and prominent uses of the name “Mark Foys” and the graphic depiction of the Piazza Store, we consider that a reasonable member of the relevant class of the public, potential purchasers, would be likely to form the false opinion that there was an association of some kind between TVSN and Mark Foys. In considering whether a member of the public has been misled it is appropriate to determine the matter in a practical way: per Lockhart J in Bridge Stockbrokers Ltd v Bridges (1984) 4 FCR 460 at 474-475; 57 ALR 401 at 414-415. … [59] Although thc exact nature of the association between the characteristics of Old Mark Foys and the goods marketed by TVSN is not spelled out by the conduct or representations, the evidence supports the conclusion that in some way the retailing service provided by TVSN has the approval of Old Mark Foys. The verb “approved” can convey as a primary meaning the notion of being considered good or worthy or being regarded favourably. “Approval” conveys the notion of permission: see Macquarie Dictionary (2nd ed, 1991) at p 81. In the present context a member of the public familiar with the Old Mark Foys could reasonably be led to consider that the goods and services retailed by TVSN were permitted to be sold under the Old Mark Foys name or that they were in some way considered favourably or approved of by the Old Mark Foys. [60] We also consider that the representations made in the present case cause more than mere wonderment or confusion and travel into the areas of positive misrepresentation. A reasonable prospective purchaser, looking at the material [78] placed before the Court, would not simply wonder or be confused as to whether there was an association between Old Mark Foys and TVSN but rather he or she would be likely to infer that in fact an association existed.

568 [12.310]

Protection of Business Reputation

CHAPTER 12

DAMAGE OR LIKELIHOOD OF DAMAGE [12.320] Although this casebook is not intended to cover remedies for infringement of IP, the

“damage” element in passing off is addressed here more from the point of view of an essential aspect of the cause of action. In AG Spalding & Bros v AW Gamage Ltd (1915) 84 LJ Ch 449 ([12.30]), Lord Diplock required, as one of the elements of passing off, injury to the goodwill of another trader, or probability of damage in the sense of it being a “reasonably foreseeable consequence”. In Pacific Dunlop Ltd v Hogan (1989) 14 IPR 398, Beaumont J had this to say (at 428) about the “damage” element in passing off cases: The substantive position is well settled. The cause of action for passing off is complete as soon as the relevant misrepresentation is made, even though no actual deception and damage to the plaintiff can be shown to have resulted from it: see Naresh, Passing off, Goodwill and False Advertising: New Wine in Old Bottles [1986] CLJ 97 at 103-104; see also Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 (the Advocaat case); see also Morison, “Unfair Competition and “Passing Off”” (1956) 2 Sydney L Rev 50 at 61. The position under s 52 is the same. Independently of these substantive questions, adjectival matters may call for separate consideration. For instance, the grant of an injunction is discretionary and a claim for more than nominal damages would require evidence because substantial damages are compensatory. But none of this is to say that passing off and a contravention of s 52 had not been established here. I would dismiss the appeal.

In Hogan v Koala Dundee Pty Ltd (1988) 12 IPR 508, Pincus J summarised the position (at 522): The question of loss is relevant in two ways. First, at least some risk of loss, if not actual loss, is necessary in order to justify the grant of an injunction to restrain passing off: Harrods Ltd v R Harrod Ltd (1923) 41 RPC 74 at 81; Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 196. Secondly, the applicants want damages. As to the first point, although the evidence is not strong, I think enough has been shown to satisfy the condition I have mentioned. The use of these images in two little shops would not make much of a dent in the marketing plans of the applicants. Nevertheless, the prospects of licensing another vendor of (for example) T-shirts would, one would expect, be a little diminished by the fact that Crocodile Dundee images have already been used in that connection. Apart from that, in this extended passing off field it is in my opinion enough, in order to justify an injunction, to show loss in the sense that the applicant has lost the chance of getting a fee from the respondent. The second aspect of damage poses rather more difficult questions. The weight of authority is in favour of the view that “fraud” is necessary in order to support a claim for damages for passing off, but precisely what fraud means in this connection is unsettled.

BM Auto Sales v Budget Rent a Car System [12.330] BM Auto Sales Pty Ltd v Budget Rent A Car System Pty Ltd (1976) 12 ALR 363 High Court of Australia GIBBS J: [370] It was further argued on behalf of the appellants that the award of damages could not be sustained because fraud was neither sufficiently alleged nor proved. It is unnecessary to consider whether proof of fraud was necessary to support the recovery of nominal damages. It is enough to say that fraud, for the purposes of an action of this kind, “is not necessarily such as would support an action of deceit, but would [371] be constituted by persistence after notice”: Turner v General Motors (Aust) Pty Ltd, per Isaacs J, at 362.

[12.330]

569

Intellectual Property: Commentary and Materials

BM Auto Sales v Budget Rent a Car System cont. The evidence in the present case left no doubt that the appellants persisted in the use of the name with full knowledge that it had become distinctive of the respondent’s business and that the use of the name was calculated to deceive. … It is trite law that fraud should be distinctly and clearly alleged, and no relaxation of that requirement should be encouraged, but in an action of passing off, where fraud is not a necessary ingredient of the cause of action, it is not an inflexible rule that the court cannot find fraud unless it has been pleaded. … This passage suggests that the court regarded the element of fraud necessary to justify an award of damages as being at least akin to deceit in the ordinary sense. One may deduce that from the holding that “the use of the name was calculated to deceive” and the reference to the way in which fraud must be pleaded. [The other members of the Court agreed.]

[12.340] The role of “fraud” in both a finding of misleading conduct and in creating the likelihood of awarding damages has been covered in a number of the cases in this chapter, notably in ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 (Healthy Choice Case) ([12.210]) and the Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 30 IPR 337 (Kettle Case) ([12.100]).

Common field of activity: confusion [12.350] For some time, the courts were reluctant to find that the plaintiff could suffer any damage or likelihood thereof unless the parties were engaged in a “common field of activity”, a phrase used by Wynn-Parry J in the following case.

Derek McCulloch v Lewis A May [12.360] Derek McCulloch v Lewis A May Ltd (1947) 65 RPC 58 High Court of Justice, Chancery Division (United Kingdom) [The presenter of Children’s Hour, known as “Uncle Mac”, objected to the sale of breakfast cereal under the name “Uncle Mac’s Puffed Wheat”. Further, the packaging proclaimed that “Uncle Mac loves children, and children love Uncle Mac!”.] WYNN-PARRY J: … [64] … It is of the essence of an action for passing off to show, first, that there has been an invasion by the defendant of a proprietary right of the plaintiff, in respect of which the plaintiff is entitled to protection, and, secondly, that such invasion has resulted in damage or that it creates a real and tangible risk that damage will ensue. It is with the first part of that proposition that I am immediately concerned. It is established beyond argument that under the law of England a man is not entitled to exclusive proprietary rights in a fancy name in vacuo; his right to protection in an action for passing off must depend on his showing that he enjoys a reputation in that name in respect of some profession or business that he carries on or in respect of some goods which he sells. Further, he must show that the acts of the defendant of which he complains have interfered or are calculated to interfere with the conduct of his profession, business, or selling goods, in the sense that those acts of the defendant have led or are calculated to lead the public to confuse the profession, business or goods of the plaintiff with the profession, business, or goods of the defendant. The element of confusion is essential, but the element of confusion necessitates comparison.

570 [12.340]

Protection of Business Reputation

CHAPTER 12

Derek McCulloch v Lewis A May cont. … [66] … I have listened with care to all the cases that have been cited and upon analysis I am satisfied that there is discoverable in all those in which the court has intervened this factor, [67] namely, that there was a common field of activity in which, however remotely, both the plaintiff and the defendant were engaged and that it was the presence of that factor that accounted for the jurisdiction of the court. … Upon the postulate that the plaintiff is not engaged in any degree in producing or marketing puffed wheat, how can the defendant, in using the fancy name used by the plaintiff, be said to be passing off the goods or the business of the plaintiff? I am utterly unable to see any element of passing off in this case. If it were anything, it were libel, as to which I say nothing. Passing off, in my judgment, it certainly is not. If I were to accede to the plaintiff’s claim I should, as I see it, not merely be extending quite unjustifiably the scope of the action of passing off, but I should be establishing an entirely new remedy; and that I am quite unprepared to do. I therefore conclude that the plaintiff in this case established no cause of action.

[12.370] For a long time, the requirement that there be a “common field of activity” between the business affairs of the plaintiff and the defendant in a passing off suit effectively denied pop stars, actors, so-called “celebrities”, and the owners of rights in fictitious characters any relief against unauthorised character merchandisers. In Wombles Ltd v Womble Skips [1977] RPC 99, the creator of the fictitious “Wombles” characters, famous for cleaning up Wimbledon Common, objected to the use of the name for rubbish skips. Walton J said this (at 100): In the present case is there a common field of activity in the sense in which I have above-defined it between the plaintiff Wombles Ltd and the defendant Wombles Skips Ltd? I regret to say that in my opinion there is no such common field of activity. What the plaintiff is doing is to license people to use some of the copyright material comprised in and surrounding the Wombles. That in most cases, if indeed not in all of them, involved the use of a picture of one of the Wombles, whether it be a picture of Great Uncle Bulgaria, Tobermory, or one of the other well-known Wombles. But there is no such similar picture on any of the skips. Indeed Mr Robin Jacob, appearing for the defendant, protested that he was the only real Womble because he was the only person really carrying on the business of clearing up rubbish, and it may be that hereafter the defendant company’s skips will be illustrated accordingly. I have nothing to do with that at all.

See also Tavenor Rutledge Ltd v Trexapalm Ltd [1977] RPC 275; Lyngstad v Anabas Products Ltd [1977] FSR 62. In Children’s Television Workshop Inc v Woolworths (NSW) Ltd [1981] 1 NSWLR 273 at 281, Helsham CJ expressly ruled that the plaintiffs (producers of the Sesame Street television programme and the creator of the “Muppet” characters appearing in the show) and the defendant (manufacturers and vendors of soft toys, including dolls of characters from Sesame Street) were operating in a common field. This was because the public was, by now, familiar with the practice of licensing out names and characters to manufacturers of a variety of products, and so would see a connection between the originator of a character and the producer and seller of the merchandise: In a relevant sense the defendants are acting in a way that will cause the public to believe that they are selling the plaintiffs’ goods. In more refined terms, the deception is that the public will believe that the plaintiffs, or the first plaintiff, as a licensor are, or is, associated with the defendants in putting these goods on the market for sale, or in permitting the defendants to sell them. That amounts to a connection, in respect of the marketing of these three character representations, between the business of the plaintiffs and the business of the defendants. [12.370]

571

Intellectual Property: Commentary and Materials

It is this somewhat artificial requirement – that there needs to be a connection between the licensor and the seller of merchandise, recognised by the public – that Pincus J found unnecessary in Hogan v Koala Dundee Pty Ltd (1988) 12 IPR 508. As the next case indicates, Australian courts had previously rejected the necessity for the parties to be in a common field of activity. English courts have since endorsed this approach: Irvine v Talksport [2002] 2 All ER 414 [see 12.235]. The following extracts demonstrate the importance of this development in the so-called “false or misleading celebrity endorsement” cases.

Henderson v Radio Corp [12.380] Henderson v Radio Corp Pty Ltd [1960] SR (NSW) 576 Supreme Court of New South Wales EVATT CJ AND MYERS J: [589] … This is an appeal by the defendant in a passing off suit in which it was restrained by injunction from selling, distributing, or supplying copies of a gramophone record cover entitled “Strictly for Dancing” having upon it a representation of a photograph of the plaintiffs in the suit. [590] The respondents are husband and wife and are well-known professional ballroom dancers, particularly in professional dancing circles. They came to Australia from England in August 1957 and since that time have engaged in public performances, lectures and demonstrations. There is evidence that they are the best-known dancers of their type here. They are known professionally as “The Hendersons”. The appellant is a maker and distributor of gramophone records. On 6 March 1958 it placed on the market a gramophone record entitled “Strictly for Dancing: Vol 1”. Three hundred and sixty-two copies of the record were made and 268 were sold to retailers in Australia. The number sold in New South Wales was not stated. The record is one of music suitable for ballroom dancing and was described as strict tempo dance music. It was intended for the instruction of students in dancing and for use by dancing teachers, but might also be bought by the public. The cover or container is blue and has upon it two black and white photographs of couples dancing. The background, as it were, to the photographs is a ballroom with a couple dancing and people seated at tables and is all in shades of blue. The background is printed in such a way that it is hardly distinguishable unless it is some distance from the eye. The result is that when the record cover is held in the hand, as one would read it, the figures in the black and white photographs are clear and sharp, but the figures in the background (viz the two Hendersons dancing) are blurred. However, when the cover is seen from a little distance, as it would be in a shop window, or on a shelf behind a counter, its appearance is altered. The background figures become quite distinct and striking, but the black and white figures, because of the distance, cannot be made out except as two couples executing a ballroom dance. The general effect in a shop display is to give prominence to the Hendersons and their dancing: which could easily lead to deception of possible purchasers. On the back of the cover is a list of dances recorded and, in heavy type, a strong recommendation of the record by one Kingston, a professional dancer, who claims to be superior to all others and the world champion ballroom dancer. The background figure on the front is a reproduction of a photograph of the respondents, but their names do not appear anywhere on the cover. The photograph was taken in a television studio in England for a magazine called Dance News, which granted a licence to use it to a company manufacturing records in England. That company made the record “Strictly for Dancing” and designed the cover. Later it sent the metal master record with a copy of the cover to the appellant and gave to it a licence to reproduce the cover. The cover complained of 572

[12.380]

Protection of Business Reputation

CHAPTER 12

Henderson v Radio Corp cont. is an exact copy of the English cover and the records were made by pressing them from the metal master. Until the respondents complained to the appellant, it was not aware of the identity of the background figures. The appellant having refused to discontinue the use of the reproduction of the photograph of the respondents on the cover, the respondents commenced a passing off suit to restrain them. Sugerman J granted an injunction but refused an inquiry as to damages, because he found that any damage would have been represented by only a nominal sum. It is from that decree [591] that the appeal is brought, but there is no cross-appeal on the question of damages. The only question at the hearing and before us was whether there had been a passing off by the appellant which the respondents were entitled to have restrained … Four witnesses were called on this issue on behalf of the respondents. They were the president of an association of dancing teachers, the secretary of another such association, a theatrical agent and the assistant secretary of the trade union to which the professional dancers belong. Each said in substance that when he saw the record he recognised either Henderson or Henderson and his wife and gathered from the fact that their pictures were on the cover, that they had sponsored ie, recommended or approved the record, or were associated in some way with it. The appellant called no evidence on this aspect. His Honour did not express any adverse view of these witnesses but he did not accept the view that buyers of the record would come to the same conclusion as the witnesses. However, the facts relevant to this issue, including the evidence to which we have referred, are not in dispute. The only question is the proper inferences to be drawn from them, and in those circumstances we are entitled to form our own opinion: Benmax v Austin Motor Co Ltd [1955] AC 370. Unaided by evidence, one might consider that the dancing figures merely indicate the type of music on the record and that it is not possible to come to the conclusion for which the respondents contend. But one is not unaided by evidence and, having regard to the fact that the record was primarily intended for professional dancing teachers, and to the uncontradicted evidence of four experts in that field, we are of opinion that the proper finding is that the class of persons for whom the record was primarily intended would probably believe that the picture of the respondents on the cover indicated their recommendation or approval of the record. The only rational purpose of the wrongful use of the respondents’ photograph on the disc container was to assist the sale of the disc it contained. [592] This false representation was not only made by the appellant, but would almost inevitably lead to a similar false representation on the part of every shopkeeper who might buy the records from the appellant and sell them or display them for sale. It still remains to be considered whether that finding establishes the necessary element of deception, namely, that the business of the appellant was connected with the business of the respondents. In our opinion it does. The representation that the respondents recommended the record is an inducement to buy it. The recommendation can only be attributed to the respondents in their capacity of professional dancers, that is, a recommendation made in the course of their professional activities, and means that as professional dancers they have associated themselves with the appellant in promoting sales of the record, and that amounts to a connection, in respect of the marketing of the record, between the business of the respondents and the business of the appellant … In our opinion the evidence established a passing off by the appellant and, subject to proof of injury, as to which we will have something to say later, the respondents, were entitled to relief by way of injunction. [12.380]

573

Intellectual Property: Commentary and Materials

Henderson v Radio Corp cont. It has been contended, however, that the court has no jurisdiction to grant an injunction unless there is what has been called a common field of activity and in this case, it is said, there is none. The argument is based on a statement by Wynn-Parry J in McCulloch v Lewis A May (Produce Distributors) Ltd (1947) 65 RPC 58 at 66, 67: “I am satisfied”, he said, “that there is discoverable in all those (cases) in which the court has intervened this factor, namely, that there was a common field of activity in which, however remotely, both the plaintiff and the defendant were engaged and that it was the presence of that factor that accounted for the jurisdiction of the court.” This principle was accepted by Sugerman J, who found a common field of activity in the capacity of the respondents to place their approval upon a record of ballroom dance music, which, he said, might be regarded as appurtenant or potentially appurtenant to the profession or business of ballroom dancing. We have some difficulty in accepting the proposition stated in McCulloch’s case. If deception and damages are proved, it is not easy to see the justification for introducing another factor as a condition of the court’s power to intervene. … … [593] … The remedy in passing off is necessarily only available where the parties are engaged in business, using that expression in its widest sense to include professions and callings. If they are, there does not seem to be any reason why it should also be necessary that there be an area, actual or potential, in which their activities conflict. If it were so, then, subject only to the law of defamation, any businessman might falsely represent that his goods were produced by another provided that other was not engaged, or not reasonably likely to be engaged, in producing similar goods. This does not seem to be a sound general principle.

Irvine v Talksport [12.390] Irvine v Talksport [2002] 2 All ER 414 High Court of Justice, Chancery Division (United Kingdom) [The plaintiff, Edmund “Eddie” Irvine was a famous Formula 1 (F1) driver. In 1999, he drove for Ferrari, coming a narrow second in the F1 World Championship. The defendant, Talksport (formerly “Talk Radio”) was a successful commercial radio station and in 1999 secured the rights to broadcast live coverage of the F1 World Championship. As part of a broad promotional campaign flagging its shift from commercial news and talk-back radio to sports coverage, and with a view to generating interest among potential advertisers, the defendant distributed, in July 1999, various promotional sports-themed boxes produced by a marketing agency that it had engaged. One of these boxes contained a brochure with a digitally altered photograph of Irvine holding a portable radio with the words “Talk Radio” on its cover (see Annex 2, 438). (The original photo merely depicts Irvine holding a mobile phone.) The defendant had earlier purchased the original photo, thus there was no issue of copyright infringement. Irvine and related companies (with whom he had endorsement arrangements) claimed that the distribution of the brochure constituted an actionable passing off.] LADDIE J: [423] …[29] The approach adopted by the Supreme Court in New South Wales in Henderson v Radio Corpn Pty Ltd [1969] RPC 218, supported more recently by the full High Court of Australia in Campomar Sociedad Ltda v Nike International Ltd [(2000) 202 CLR 45)] is to be preferred and seems to me to be consistent with a long line of English authority both before and since McCulloch v Lewis A May (Produce Distributors) Ltd [1947] 2 All ER 845. … 574 [12.390]

Protection of Business Reputation

CHAPTER 12

Irvine v Talksport cont. [31] The law of passing off is not designed to protect a trader from fair competition. It is not even to protect him against others selling the same goods or copied goods. If the latter is possible at all it is only as a result of the application of the law of copyright, designs, patents or confidential information: see [424] British American Glass Co Ltd v Winton Products (Blackpool) Ltd [1962] RPC 230. Furthermore, passing off does not create or protect a monopoly in a name or get-up. The latter point was made clearly over a hundred years ago by Parker J in Burberrys v J C Cording & Co Ltd (1909) 26 RPC 693, 701: The principles of law applicable to a case of this sort are well known. On the one hand, apart from the law as to trade marks, no one can claim monopoly rights in the use of a word or name. On the other hand, no one is entitled by the use of any word or name, or indeed in any other way, to represent his goods as being the goods of another to that other’s injury. If an injunction be granted restraining the use of a word or name, it is no doubt granted to protect property, but the property, to protect which it is granted, is not property in the word or name, but property in the trade or goodwill which will be injured by its use. [32] What is protected is goodwill. The nature of goodwill was described by the House of Lords in Inland Revenue Comrs v Muller & Co’s Margarine Ltd [1901] AC 217. The oft-quoted passage from the speech of Lord Macnaghten, at pp 223–224, reads: What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. [33] However, there is another passage in that speech, at p 223, which is just as important and throws light on rights held by the owner of goodwill: It is very difficult, as it seems to me, to say that goodwill is not property. Goodwill is bought and sold every day. It may be acquired, I think, in any of the different ways in which property is usually acquired. When a man has got it he may keep it as his own. He may vindicate his exclusive right to it if necessary by process of law. He may dispose of it if he will–of course under the conditions attaching to property of that nature. [34] Expressed in these terms, the purpose of a passing-off action is to vindicate the claimant’s exclusive right to goodwill and to protect it against damage. When a defendant sells his inferior goods in substitution for the claimant’s, there is no difficulty in a court finding that there is passing off. The substitution damages the goodwill and therefore the value of it to the claimant. The passing-off action is brought to protect the claimant’s property. But goodwill will be protected even if there is no immediate damage in the above sense. For example, it has long been recognised that a defendant cannot avoid a finding of passing off by showing that his goods or services are of as good or better quality than the claimant’s. In such a case, although the defendant may not damage the goodwill as such, what he does is damage the value of the goodwill to the claimant because, instead of benefiting from exclusive rights to his property, the latter now finds that someone else is squatting on it. It is for the owner of goodwill to maintain, raise or lower the quality of his reputation or to decide who, if anyone, can use it alongside him. The ability to do that is compromised if another can use the reputation or goodwill without his permission and as he [425] likes. Thus Fortnum & Mason is no more entitled to use the name F W Woolworth than F W Woolworth is entitled to use the name Fortnum & Mason. … [426] [38] …[T]he law of passing off now is of greater width than as applied by Wynn-Parry J in McCulloch v Lewis A May (Produce Distributors) Ltd [1947] 2 All ER 845. If someone acquires a valuable reputation or goodwill, the law of passing off will protect it from unlicensed use by other parties. Such use will frequently be damaging in the direct sense that it will involve selling inferior goods or services under the guise that they are from the claimant. But the action is not restricted to protecting against that sort of damage. The law will vindicate the claimant’s exclusive right to the reputation or goodwill. It will not allow others to so use goodwill as to reduce, blur or diminish its exclusivity. It follows that it is not necessary to show that the claimant and the defendant share a common field of activity or that sales of products or services will be diminished either substantially or directly, at least in the short term. [12.390]

575

Intellectual Property: Commentary and Materials

Irvine v Talksport cont. Of course there is still a need to demonstrate a misrepresentation because it is that misrepresentation which enables the defendant to make use or take advantage of the claimant’s reputation. [39] Not only has the law of passing off expanded over the years, but the commercial environment in which it operates is in a constant state of flux. Even without the evidence given at the trial in this action, the court can take judicial notice of the fact that it is common for famous people to exploit their names and images by way of endorsement. They do it not only in their own field of expertise but, depending on the extent of their fame or notoriety, wider afield also. It is common knowledge that for many sportsmen, for example, income received from endorsing a variety of products and services represents a very substantial part of their total income. The reason large sums are paid for endorsement is because, no matter how irrational it may seem to a lawyer, those in business have reason to believe that the lustre of a famous personality, if attached to their goods or services, will enhance the attractiveness of those goods or services to their target market. In this respect, the endorsee is taking the benefit of the attractive force which is the reputation or goodwill of the famous person. … [427] [43] Manufacturers and retailers recognise the realities of the market place when they pay for well-known personalities to endorse their goods. The law of passing off should do likewise. There appears to be no good reason why the law of passing off in its modern form and in modern trade circumstances should not apply to cases of false endorsement. … … [428] [46] It follows from the views expressed above that there is nothing which prevents an action for passing off succeeding in a false endorsement case. However, to succeed, the burden on the claimant includes a need to prove at least two, interrelated, facts. First, that at the time of the acts complained of he had a significant reputation or goodwill. Second, that the actions of the defendant gave rise to a false message which would be understood by a not insignificant section of his market that his goods have been endorsed, recommended or approved of by the claimant. … [Laddie J found these elements satisfied, and in a later judgment (see [2002] All ER (D) 460; [2002] EWHC 539 (Ch)) awarded the plaintiff £2,000 (being the reasonable endorsement fee that the defendant would have paid for Irvine’s endorsement) plus interest in damages. The Court of Appeal (Jonathan Parker LJ with whom the other Lord Justices agreed) dismissed Talksport’s cross-appeal on liability, upholding Laddie J’s finding on the misrepresentation issue, and holding that the defendant’s claim that the brochure was intended as a joke did not, in any event, affect Laddie’s conclusion regarding the relevant misrepresentation. The Court of Appeal also allowed Irvine’s appeal as to the assessment of damages, increasing it significantly to £25,000, with that amount reflecting Irvine’s minimum endorsement fee at the time of the passing off: see Irvine Talksport Ltd [2003] 2 All ER 881; [2003] EWCA Civ 423.]

Damages require actual damage Henderson v Radio Corp [12.400] Henderson v Radio Corp Pty Ltd [1960] SR (NSW) 576 Supreme Court of New South Wales EVATT CJ AND MYERS J: [594] … Passing off is a wrong and is actionable at law. In such an action damage is presumed on proof of passing off and therefore a nominal sum by way of damages follows as a matter of course. General damages may, however, only be awarded if there is evidence of damage. Instead of proceeding at law a plaintiff may sue in equity for an injunction, as may be done in respect of other wrongful acts of a different nature. If he sues in equity, he takes advantage of the equitable principle that the court will interfere by injunction to restrain irreparable injury to property (per Romer LJ in Samuelson v Producers Distributing Co Ltd (1932) 48 RPC 580 at 593), and therefore he must go further than he need at law. He must show irreparable injury, that is that he has suffered injury which cannot be properly compensated by damages, or that he will probably suffer such injury. 576 [12.400]

Protection of Business Reputation

CHAPTER 12

Henderson v Radio Corp cont. If a plaintiff in equity succeeds in having the defendant enjoined, he may also have an account of profits or an inquiry as to damages. Formerly, he could only have had an account, because that was equity’s only remedy, but since Lord Cairns’ Act, he may have damages. If he elects to take an inquiry as to damages, he takes a common law remedy and his damages will be ascertained in the same way as they would have been ascertained at law. With these considerations in mind, we turn to the arguments advanced on behalf of the respondents. First, it was said, it was unnecessary for the respondents to prove damage, because damage is presumed. That is clearly incorrect because the question is whether they have made out a case for an injunction and to do that they must show irreparable injury. We have been strongly pressed with some remarks of the Court of Appeal in Draper v Trist (1939) 56 RPC 429, to the effect that, upon proof of passing off, damage is presumed. But in that case the court was dealing with the assessment of damages pursuant to an inquiry, an order for an injunction having been made in the action with the consent of the defendant, and did not deal with the question under discussion here. That a plaintiff in equity must prove damage is such a well-established principle that it is almost unnecessary to cite authority for it. We have already referred to the statement of Maugham J in British Medical Association v Marsh (1931) 48 RPC 565 at 574, that a plaintiff must prove either positive injury or, in a quia timet action, a reasonable probability of injury and will only add to it the remarks of Farwell J in British Legion v British Legion Club (Street) Ltd (1931) 48 RPC 555. He said (at 563): There must be evidence either of damage already committed, or the circumstances must be such as that the court can properly come to the conclusion that there is a serious risk, a real tangible risk, of damage in the future.

Establishing damage: trap purchases Ward Group v Brodie & Stone [12.410] Ward Group Pty Ltd v Brodie & Stone Plc (2005) 143 FCR 479 Federal Court of Australia [The facts of this case are discussed at [12.220]]. MERKEL J: … [484] [20] The only evidence of sales of the UK Restoria products in Australia is the [485] evidence adduced by the Ward Group of purchases of those products by its solicitors acting on its behalf (the trap purchases). … [486] [26] There was some controversy between the parties about the trap purchases. As was pointed out by Farwell J in CC Wakefield & Co Ld v Purser (1934) 51 RPC 167 at 171: Test orders or, as the Defendant prefers to call them, trap orders are in a case of this kind, it seems to me, quite essential. I fail to see how the Plaintiffs can safeguard themselves or the public without having resort to some such method of testing the matter as is used in the present case; but, trap orders or test orders, whichever they may be called, are scrutinised by the Courts with some jealousy and rightly so because, if, as a result of a trap order or a test order, a person is to be charged with the very serious offence of fraudulently misrepresenting the goods which he is supplying to the public, to the detriment of the public as well as of the Plaintiffs, the Court must be satisfied that the offence has been proved strictly. Further, if a person is resorting to a test order or a trap order, even in a case of this kind, where the necessity for such a device may be a real one, that person is bound to carry out the proceeding with the utmost fairness to the prospective defendant to the action. It is essential, if the plaintiff is to succeed in the action which he ultimately brings, that he should be able to satisfy the Court that he has acted throughout with the most exact fairness to the defendant and has given him every reasonable chance of investigating the matter for himself, so that he may be in a position to put forward in the action, if one follows, any and every defence properly open to him. [12.410]

577

Intellectual Property: Commentary and Materials

Ward Group v Brodie & Stone cont. [27] In the present case the trap purchases made on behalf of the Ward Group by its solicitors undoubtedly satisfied the criteria laid down by Farwell J. Nonetheless, Brodie & Stone contended that the trap purchases might convey a misleading impression. It was contended that because Restoria products are available from a large number of retail outlets in Australia and on the Ward Group’s websites, it is unlikely that Australian consumers would seek out or become aware of the UK websites offering the UK Restoria products for sale. It was also contended that, even if a consumer in Australia became aware of the websites offering the UK Restoria products, it would make little economic sense for the consumer to purchase the UK Restoria products from the website [487] proprietors at higher prices and higher postage costs than those applicable to the Australian Restoria products available for purchase either on the Ward Group’s Australian websites or at retail outlets in Australia. [28] There was no evidence of any sales of the UK Restoria products in Australia apart from the trap purchases. Also, although the UK Restoria products continue to be available for sale on the Internet there is no reason to expect that sales in Australia were likely to occur. In that regard it is not disputed that it would be more expensive to purchase the UK Restoria products rather than their Australian counterparts. That is of some significance given that the Ward Group has accepted that “this is not a case where there are material differences in quality or standard” between the UK and the Australian Restoria products. … [488] [34] There is also an additional issue arising from the fact that the trap purchasers, being the persons who procured the representations to be made in Australia and being the only persons in Australia to whom the representations were specifically directed, were well aware that the Restoria mark used on the websites was, and was intended to be, related to the UK Restoria products and not the Australian Restoria products. In the context of a passing off claim that circumstance might make the present case distinguishable from Star Micronics Pty Ltd v Five Star Computers Pty Ltd (t/as Computerfair) (1990) 18 IPR 225 at 237 where Davies J stated that a representation to a trap purchaser was misleading conduct notwithstanding that the purchaser was aware of the true facts. [35] However, I need not finally decide these issues as I am satisfied that the Ward Group has failed to establish the fifth characteristic referred to by Lord Diplock [in Erven Warnink BV v J Townend & Sons (Hull) Ltd (The Advocaat Case) [1979] AC 731 at 74], which requires the party seeking relief in a passing off action to establish some actual or probable damage: see Taco Bell at 196. In the present case the trap purchases were the only sales able to be established on the evidence. However, and importantly, the evidence also established that it was most unlikely that anyone else in Australia had searched on the Internet for, and then purchased, the UK Restoria products instead of, or in preference to, the Australian Restoria products. I would add that, as the UK and Australian Restoria products have a common origin and are not materially different in quality or standard, any sale of UK Restoria products in Australia is unlikely to harm the goodwill attaching to the Australian Restoria products. In that regard the circumstances of the present case may be analogous to those considered in Revlon Inc at 102-104. In any event, the issue of actual or probable damage is a question of fact and I am not satisfied that the Ward Group has established that any representations made by the website proprietors, or any other conduct engaged in by them, has caused actual damage to the Ward Group or will probably do so. Thus, I am not satisfied that the Ward Group has made out its cause of action in passing off against the website proprietors.

578 [12.410]

Protection of Business Reputation

CHAPTER 12

Relief under Australian Consumer Law/former Trade Practices Act: Protecting the Purchasing Public Mark Foys v TVSN [12.420] Mark Foys Pty Ltd v TVSN (Pacific)Ltd (2000) 104 FCR 61 Federal Court of Australia [The facts are set out in [12.310]. In fashioning the appropriate relief for misleading and deceptive conduct and false or misleading representations under the former Trade Practices Act 1974 (Cth) ss 52 (equivalent to Australian Consumer Law s 18) and 53 (equivalent to Australian Consumer Law s 29), the Full Federal Court, at 78 [62], emphasised the consumer-focussed regime surrounding these statutory prohibitions: In the present case, which turns on the protection of the purchasing public from deception, it is not necessary to establish that any specific damage has been suffered. In our view, the circumstance that a substantial number of members of the public are likely to be misled into considering the purchase of goods on the false premise that there is an association, is sufficient to warrant the grant of injunctive relief to restrain further deception. It is inherently likely that a deceived purchaser would consider and compare the products of TVSN in relation to other products with a view to buying from TVSN where, but for the association with Old Mark Foys such a customer would not have been attracted to spend time and effort in considering such a purchase.

Smorgasbord of orders [12.430] Whereas the principal relief in passing off actions and actions for misleading and deceptive conduct is an injunction restraining the defendant from engaging in the impugned conduct, the following extract illustrates the complexity of orders that may be granted in order to grant appropriate relief, and it thus serves as a useful case to conclude this chapter. The principal case – Knott Investments Pty Ltd v Winnebago Industries Inc [2013] FCAFC 59 – drawn from a long running dispute between United States based Winnebago Industries (which manufactures recreational vehicles) and the Australian trader, Knott Investments (and its predecessor, Mr Binns), over the usage of the near identical WINNEBAGO name and logo device for the same goods. (Following a trip to the United States, Mr Binns had adopted this name and device mark, commenced manufacturing recreational vehicles in Australia from 1978.) Winnebago Industries became aware of Knott’s Winnebago trade in 1985, and then (belatedly) took steps to protect its interests. Allsop CJ, at [38]–[39] observed that: [38] The primary judge’s conclusions [regarding]… the existence of sufficient reputation of Winnebago in Australia in 1978 [is such] to support a conclusion that it would be damaged in a real way by another party using its name. Australian tourists to the United States, United States tourists to Australia, Australian tourists to the United Kingdom seeking to use recreational vehicles, readers of magazines such as Australian Caravan World and those in the industry would have been aware of Winnebago. [The defendant] was so aware on his first visit to the United States. He accepted that these groups would have been aware of the Winnebago reputation. …. he set out to take advantage of such reputation as existed of Winnebago in Australia.

[12.430]

579

Intellectual Property: Commentary and Materials

[39] Thus, there was sufficient reputation in Winnebago in Australia to found a passing off claim and claims for misleading and deceptive conduct under the trade practices legislation in 1978

However, of greater interest for present purposes is the complexity of orders made in Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117:

Knott Investments Pty Ltd v Winnebago Industries [12.440] Knott Investments Pty Ltd v Winnebago Industries, Inc (No 2) [2013] FCAFC 117 ALLSOP CJ: [1] On 7 June 2013, judgment was delivered allowing the appeal against orders made by the Court on 6 September 2012: Knott Investments Pty Ltd v Winnebago Industries, Inc [2013] FCAFC 59. The appeal was allowed, but only on a question of the appropriate relief in all the circumstances. Some orders were made by the Court in June, but the parties were invited to put further submissions on orders and costs. … [3] Before addressing each of the major differences in approach between the parties, a number of matters should be stated that guide the form of relief. First, the respondent Winnebago was not enforcing a trade mark. Its suit was for passing off and in respect of misleading or deceptive conduct. (I leave aside claims not presently relevant.) Thus, the central consideration is the prevention of deception, not mere confusion as to trade origin. Secondly, although Mr Binns and Knott were to a degree attempting to exploit such goodwill and reputation of Winnebago as existed in Australia, he and it built their own business in Australia, to the knowledge of Winnebago. At least some of Knott’s reputation in the use of the name and logo was the product of the development of its own goodwill and reputation. Not all of the development of its business involved the taking advantage of Winnebago’s reputation in Australia: see [67] and [68] of the judgment of June 2013. Thirdly, the primary guiding principle of the injunctive relief should be, so far as possible, the protection of the public from being misled. [4] There appears an underlying tension inherent in any relief. On the one hand, Knott has built up over 25 years or more its reputation in the name and marks; on the other hand, to a degree, there has been a taking advantage of the respondent’s reputation and goodwill that spilled over from overseas to Australia. The main judgment recognised a need to avoid injustice to Knott by relief that denied the legitimacy of the building of its own reputation. That said, the protection of the public and of the respondent’s trade reputation requires orders to be made that will prevent any continuation of the capacity of Knott to mislead those people in Australia who have a familiarity with the respondent’s reputation and who are likely to be misled by the use of the name and logo. Thus, the apparent underlying tension is resolved by keeping firmly in mind, at all times, these guiding considerations. [5] To the extent that there may be either some clumsiness or impracticability in framing orders so guided, that can be seen as the product of both Knott’s seeking to take advantage of the respondent’s reputation and the respondent effectively doing nothing to protect its own reputation for 25 years. … [9] The respondent Winnebago seeks an absolute restraint upon the use of the stylised mark. It submits that no disclaimer can prevent deception. The reasoning in the main judgment accepted that the reputation Knott had built up for itself included the use of the stylised logo. To order an absolute restraint would be contrary to the reasoning in the main judgment, but if one were persuaded that no step of differentiation could neutralise the misleading effect, that inconsistency might have to prevail. The earlier reasons were not as finely focused on relief as these. I am unpersuaded, however, that an appropriately expressed and positioned disclaimer of differentiation would not be adequate to prevent any future deception. Thus, I would reject the primary submission of Winnebago.

580 [12.440]

Protection of Business Reputation

CHAPTER 12

Knott Investments Pty Ltd v Winnebago Industries cont. The nature of the disclaimer of differentiation [10] The submissions of the respondent Winnebago, as they ultimately developed during argument, were that if the appellants were not permitted to use the stylised logo, then the terms of an order that the disclaimer be clearly and prominently displayed, would be adequate protection. If, however, Knott is to be entitled to use the logo, Winnebago submitted that the disclaimer should be “in text of equal size and prominence to that of the Winnebago name”. [11] The appellants resisted this, submitting that it was an attempt to force the disclaimer into the brand, thus denying, it was submitted, the entitlement recognised by [67] of the earlier judgment to use the logo. The appellants referred to what Knox CJ had said in Turner v General Motors (Australia) Pty Ltd [1929] HCA 22; 42 CLR 352 at 360-361 about the form of the order. There Knox CJ referred with approval to what had been said by Lord Macnaghten in Reddaway v Banham [1896] AC 199 at 221, who in turn had approved of the form of the order in R Johnston & Co v Archibald Orr Ewing & Co (1882) 7 App Cas 219 at 233-234. In Reddaway v Banham Lord Macnaghten said that: in all cases where the defendant is to be restrained from using unfairly words or marks which he is at liberty to use provided only they are used fairly, it would be better that the injunction should go in the form approved by this House in Johnston v Orr-Ewing …. (Emphasis added) That order, followed by the High Court in Turner was in terms that included the phrase “without clearly distinguishing such ticket from the plaintiffs’ ticket.” [12] Given the variety of contextual circumstances in which a word and a logo may appear, the good sense of that approach commends itself. That is not to say that, in some contexts, a fair use might not require a disclaimer of differentiation immediately adjacent to the use in prominent type. [13] For these reasons, I would accept the appellants’ arguments as to the inappropriateness of an order requiring an equivalent text size. That said, it is perhaps implicit in the words “clearly” and “prominently” that the disclaimer will be spatially reasonably proximate to the use of any name, mark or logo. That spatial relationship should be made explicit in the orders, except for the order dealing with television advertising, where “clearly and prominently” together with a voice over is appropriate, and dealing with radio advertising where a voice over is provided for. [14] The appellants objected to the disclaimer appearing fixed upon the vehicles sold. I see every reason for the disclaimer of differentiation to be placed on the vehicle. No doubt most buyers of these vehicles will inspect before purchasing. The disclaimer should be clear and prominent by reference to the position and use of the name and logo. [15] As to the text of the disclaimer, the parties put forward competing versions. Knott suggested the following: CONSUMER NOTICE Our Winnebago motorhomes are manufactured by Avida, an Australian business, not associated with the USA Winnebago [16] The respondent Winnebago suggested the words: This vehicle was not manufactured by, or by anyone having any association with, Winnebago of the United States [17] In my view, Winnebago’s suggested wording is preferable. It focuses on the essential negative of the message: that it is NOT associated with Winnebago USA.

[12.440]

581

Intellectual Property: Commentary and Materials

Knott Investments Pty Ltd v Winnebago Industries cont. [18] The parties were at issue as to how the disclaimer should be used in relation to the use of the corporate name, otherwise than in the actual promotion and sale of vehicles. The respondent Winnebago sought an order that required (in text of equal size and prominence) the (Knott) Winnebago company or business name to state that it was not and had no association with Winnebago of the United States. The appellants object to this as impractical, citing difficulty of registration of business name and the placement of such name on tax returns and cheques. [19] I am of the same view as earlier expressed as to the need for equivalent text. That said, any impracticality that attends such orders only exists because of the potential deception caused by Mr Binns and Knott seeking to take advantage of such reputation as Winnebago had in Australia and the misleading or deceptive consequences thereof. With appropriate changes as to the requirement of text size, the order sought by Winnebago should be made. [20] In its written submissions Winnebago sought delivery up in terms of order 3 that the Full Court had set aside. In effect, the respondent Winnebago sought a rescission of the Full Court’s orders, insofar as they had set aside order 3 made by the Court at first instance. As was recognised in debate on appeal, the validity of this request depended upon the success of the absolute prohibition of the use of the stylised logo. I have rejected that course; thus, this request should be rejected. [21] The respondent Winnebago also sought an order requiring the appellants to require a buyer or hirer of a vehicle to sign a form stating that they had been informed of the disclaimer. This was opposed by the appellants as unduly onerous. They submitted that it “would turn the entire sales transaction into a legalistic and disconcerting experience for the customer”. They submitted that the requirement is devoid of authority to support it. [22] It must be accepted that the order would be novel. That said, the circumstances here are unusual. One of the difficulties faced by the respondent Winnebago (albeit partly a product of its own inaction) is knowing whether, in the future, its reputation may be traded off. This is also a difficulty for the Court, especially with the continued use of the logo. The aim of the orders is to prevent any future trading off Winnebago’s reputation and to prevent the misleading of the public. The prevention of these things is not an exercise in precision. It must recognise the temptation involved in every-day trade and business. It must withstand the test of time. The relief should be such that the Court is satisfied it will prevent deception. Clear and prominent disclaimers of differentiation advance that satisfaction. It must be recalled, however, that the appellants will be permitted to use, fairly, a trade logo. That fairness is to be brought about by information being clear and prominent as to a lack of connection between the appellants and respondent. Such an order can be seen to add a measure of protection to the public as it requires a written acknowledgment that the person buying or hiring has been informed of that information differentiating the origin of the goods. [23] I was initially opposed to ordering this course. I think, however, it is an appropriate additional protection for the public, that will assist in ensuring as far as reasonably and fairly possible, members of the public are not deceived as to the trade origin of these vehicles and of the business in question. Pecuniary remedies [24] The respondent Winnebago sought remitter of the entitlement to pecuniary relief. As to an account of profits, there should be no remitter. An account is an equitable remedy. The extraordinary delay is an overwhelming consideration in this regard. Further, it would be extraordinarily difficult to ascertain, years after the event, what profits have been made by reference to sales that could be seen to be produced by trading on the respondent’s reputation and sales produced by Knott trading on its own reputation. As a matter of discretion, that almost impossible task should not be allowed to vex the appellants. [25] As to damages, there should be no remitter for any damage suffered prior to six years from the commencement of the action. 582 [12.440]

Protection of Business Reputation

CHAPTER 12

Knott Investments Pty Ltd v Winnebago Industries cont. [26] As to damages after that date, the respondent Winnebago sought a remitter for a hearing based on a reasonable royalty. This was opposed by the appellants on the basis that the evidence was clear that Winnebago would not have licensed its name to Knott. The respondent recognised that there was Full Court authority in its path: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) [2007] FCAFC 40; 157 FCR 564 at 569 [27]-[28]. It sought, however, remitter in this regard to attempt to deal with this authority by reference to cases which recognise that the use of property (here the reputation of the respondent) may be compensated for by reference to notions (perhaps restitutionary in essence) that unauthorised use of property has to be paid for: see generally the discussion of issues in the context of conversion in Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; 82 NSWLR 420 at 464-470 [166]-[186]. … Costs [29] Costs should be looked at realistically as to which party has won and which has lost. Undoubtedly, the appellants have lost on almost all issues. They argued that Winnebago had no reputation; that, if it did, it had lost it, that Winnebago authorised its conduct, and that it had not set out to trade off its reputation. It has won on relief only, based on the uncontested lack of diligence in Winnebago protecting its own rights. The appellants submitted that all the evidence would have been led to contest relief. No doubt some would have been. But a case in which the only argument was relief would have been much shorter; as would the appeal. In my view, a fair reflection of the relevant event and a just resolution of the costs question is that the appellant be ordered to pay 75% of the respondent’s costs of the trial and the appeal. … Orders [31] The orders that I would make in addition to the orders made on 7 June 2013 are as follows: … 3.

In lieu of orders 1, 4, 5 and 6 made by the Court on 6 September 2012: (1) Each of the appellants, whether by itself, its officers, servants, agents or otherwise howsoever, be permanently restrained, without the licence or consent of the respondent, from using in trade or commerce in Australia, in connection with the manufacture, promotion or sale of recreational vehicles: (a) the Winnebago name; (b)

any other name or mark substantially identical with, or deceptively similar to, the Winnebago name;

(c)

the Winnebago logo, being the Winnebago name represented in a stylised manner as shown in Schedule 1 to these orders;

(d)

the W logo, being the letter “W” represented in a stylised manner as shown in Schedule 2 to these orders; and

(e)

any other name or mark or logo substantially identical with, or deceptively similar to, the Winnebago or W logos, without:

(f)

where the name, mark or logo is used on one or more vehicles or in a document (including any print advertisement or webpage), stating in any relevant document (including any print advertisement or web page) or on any vehicle, clearly and prominently, and reasonably proximate to any name, mark or logo: [12.440]

583

Intellectual Property: Commentary and Materials

Knott Investments Pty Ltd v Winnebago Industries cont.

4.

(i)

(where the name, or mark or logo is used on or in relation to a single vehicle) “This vehicle was not manufactured by, or by anyone having any association with, Winnebago of the United States”; or

(ii)

(where the name, or mark or logo is used on or in relation to more than one vehicle) “These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States”;

(g)

where the name is used in a radio commercial, stating by a clear and prominent voiceover of no less than 10 seconds: “These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States”; and

(h)

where the name, mark or logo is used in a television advertisement, stating clearly and prominently and by a clear and prominent voiceover of no less than 10 seconds: “These vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States”.

Each of the appellants, whether by itself, its officers, servants, agents or otherwise howsoever, be permanently restrained, without the licence or consent of the respondent, from using in the name of any corporation or business: (a) the Winnebago name; and (b)

any other name or mark substantially identical with, or deceptively similar to, the Winnebago name,without stating clearly and prominently and reasonably proximate to any such name or mark: “This company is not, and has no association with, Winnebago of the United States”.

5.

Each of the appellants, whether by itself, its officers, servants, agents or otherwise howsoever, be permanently restrained, without the licence or consent of the respondent, from selling, hiring or otherwise dealing in vehicles bearing the Winnebago name without first requiring purchasers, hirers or persons otherwise acquiring an interest in such vehicles to sign a form stating that they have been informed that those vehicles were not manufactured by, or by anyone having any association with, Winnebago of the United States.

6.

Remit for hearing the issue of damages from the date in 2004 six years before the commencement of proceedings, subject to Winnebago Industries, Inc persuading the judge on remitter that there is utility in a hearing for damages. In lieu of order 10 made on 6 September 2012:

7.

The respondents pay 75% of the applicant’s costs of and incidental to the hearing up to 6 September 2012. 8.

The appellants pay 75% of the respondent’s costs of the appeal.

9.

The term “recreational vehicles” when used in order 3(1) above does not include second-hand recreational vehicles manufactured by the first appellant and to which the Winnebago name, the Winnebago logo or the W logo was applied at the time of manufacture.

584 [12.440]

Protection of Business Reputation

CHAPTER 12

Knott Investments Pty Ltd v Winnebago Industries cont. SCHEDULE 1

SCHEDULE 2

[12.440]

585

CHAPTER 13 Trade Marks [13.10]

NATURE OF THE INTEREST PROTECTED ............................................................. 589

[13.20] [13.30]

[13.60]

MEANING OF TRADE MARK ................................................................................. Conceptual issues .................................................................................................. [13.30] What is a sign? .................................................................................... [13.40] Politics of reading signs ...................................................................... [13.50] Reading the legal meaning of a sign ................................................ Used, or intended to be used ...............................................................................

[13.110] [13.120] [13.130]

[13.70] Imperial Group v Philip Morris ................................................ [13.90] Re Trade Mark Holly Hobbie .................................................. To distinguish ......................................................................................................... Goods or services ................................................................................................... Dealt with or provided in the course of trade ....................................................

592 593 593 594 595 598 599 603 604 605 605

[13.140] REGISTRATION ....................................................................................................... 606 [13.140] Administration and Register of Trade Marks ....................................................... 606 [13.150]

[13.155] [13.155] [13.160] [13.170]

Trade Marks Regulations 1995 (Cth) ...................................... 607

SCHEDULE 1–CLASSIFICATION OF GOODS AND SERVICES ............................. 607 Part 1–Classes of goods ......................................................................................... 607 Part 2–Classes of services ...................................................................................... 608 Eligibility for registration ....................................................................................... 609 [13.180] Authorship as the basis of proprietorship ......................................... 610 [13.180]

Aston v Harlee Manufacturing ............................................... 610

[13.200] On what date does protection commence? (s 72) ............................................ 613 [13.210] Proprietor’s use as criterion .................................................................................. 613 [13.210]

Moorgate Tobacco v Philip Morris .......................................... 613

[13.220] What kind of use is sufficient? .............................................................................. 615 [13.220]

Lomas v Winton Shire Council ................................................ 615

[13.240] Processing applications ......................................................................................... 620 [13.250] Convention applications ....................................................................................... 622 [13.260] REGISTRABLE MARKS ............................................................................................ 622 [13.260] Distinctiveness ........................................................................................................ 622 [13.270]

[13.300] [13.310]

Current s 41 – ie Post-Raising the Bar Amendments (on or after 15 April 2013) .......................................................... [13.280] Repealed s 41 – ie Pre-Raising the Bar Amendments (pre-15 April 2013) ............................................................... General principles .................................................................................................. [13.300] Primary Health Care Ltd v Commonwealth ............................. General principles/geographic names ................................................................. [13.310] Clark Equipment v Registrar of Trade Marks ............................ [13.330] Nature’s Blend Pty Ltd v Nestle Australia Ltd ...........................

625 626 629 629 633 633 636

[13.340] Geographic name: not necessarily the name of any place ............. 637 [13.340]

Magnolia Metal Co’s Trade Mark ........................................... 637

[13.350] General principles/entirely descriptive ................................................................ 638 [13.350]

University of Sydney v University of Wollongong ...................... 638 587

Intellectual Property: Commentary and Materials

[13.360] Names of persons .................................................................................................. 641 [13.370] Name of a person represented in a special or particular manner ................................................................................................. 642 [13.390]

[13.370] Fanfold Ltd’s Application ........................................................ [13.380] Standard Cameras Ltd’s Application ....................................... Invented words ...................................................................................................... [13.390] Howard Auto Cultivators v Webb Industries .............................

642 643 644 644

[13.410] Foreign Words ..................................................................................... 647 [13.420]

Cantarella Bros Pty Limited v Modena Trading Pty Limited ................................................................................. 647

[13.430] Words not having direct reference to or not ordinarily used to indicate characteristics of goods/services ......................................... 653 [13.430]

Mark Foy’s Ltd v Davies Coop ................................................ 653

[13.440] Distinctiveness of shape marks ............................................................................. 655 [13.440] [13.450] [13.460]

[13.470]

Kenman Kandy v Registrar of Trade Marks .............................. 655 Chocolaterie Guylian NV v Registrar of Trade Marks ................ 661 Global Brand Marketing Inc v YD Pty Ltd ................................ 662 Distinctiveness of colour marks ............................................................................ 663 [13.470] Woolworths Ltd v BP plc ......................................................... 663

[13.480] RESTRICTIONS ON REGISTRATION ..................................................................... 668 [13.490] Prior use/prior registration (s 44, 124) ................................................................ 668 [13.490]

Southern Cross Refrigerating v Toowoomba Foundry ................ 668

[13.500] Scandalous Marks & Use of Marks Contrary to Law (s 42) ............................... 671 [13.510] Deceptive or confusing (s 43)/ conflict with earlier registered mark (s 44)/ conflicting reputation (s 60) .................................................................... 676 [13.520] [13.530]

[13.540] [13.570]

Torpedoes Sportswear v Thorpedo Enterprises ......................... 680 McCormick & Company Inc v McCormick ............................... 687 Marks becoming deceptive at a later date .......................................................... 692 [13.550] Campomar Sociedad v Nike International ............................... 693 Application made in Bad Faith: s 62A ................................................................. 696 [13.580] DC Comics v Cheqout ............................................................ 697

[13.590] INFRINGEMENT ..................................................................................................... 700 [13.600] Use as a mark ......................................................................................................... 702 [13.600]

Mark Foy’s v Davies Coop ...................................................... 702

[13.610] Descriptive use of a mark: not infringement ...................................................... 703 [13.620]

Shell Co Australia v Esso Standard Oil ..................................... 704

[13.630] Use in Australia: infringement by foreign internet sales? ................................... 706 [13.630]

Ward Group v Brodie & Stone ................................................ 706

[13.640] Substantial identity and deceptive similarity: s 120(1), (2) and (3) ................. 707 [13.640] [13.650]

Coca-Cola v All Fect Distributors ............................................. 707 Australian Postal Corporation v Digital Post Australia .............. 714

[13.670] NON-INFRINGING CONDUCT ............................................................................ 717 [13.680]

[13.690]

Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd ....................................................................................... Parallel importation ............................................................................................... [13.700] Wingate Marketing v Levi Strauss ........................................... [13.710] Review of Intellectual Property Legislation under the Competition Principles Agreement .......................................... [13.720] Productivity Commission, Intellectual Property Arrangements, Overview & Recommendations ........................

718 720 721 722 724

[13.730] REMEDIES ............................................................................................................... 727 [13.740] LOSS OR MODIFICATION OF REGISTERED RIGHTS ........................................... 729 588

Trade Marks

CHAPTER 13

[13.740] Amendment, Cancellation and Revocation of Registration ............................... 729 [13.750] Removal of Trade Marks for Non-Use .................................................................. 731 [13.760] [13.770]

[13.780] [13.780] [13.790] [13.800] [13.810]

E & J Gallo Winery v Lion Nathan ........................................... 733 Dick Smith Investments Pty Ltd v Ramsey ............................... 736

OTHER ASPECTS OF TRADE MARK REGISTRATION ............................................ 739 Collective trade marks ........................................................................................... 739 Certification trade marks ....................................................................................... 739 Defensive registration ............................................................................................ 740 International registration ...................................................................................... 740

NATURE OF THE INTEREST PROTECTED [13.10] Trade marks are primarily a mechanism for the identification of goods and services,

providing a broad social good for consumers and an incentive for investment by manufacturers, service providers, retailers and other entities. In performing this traditional “badge of origin” role, trade marks also, providing a broad social good for consumers and an incentive for investment by manufacturers, service providers, retailers and other entities. Some elements of this constellation of interests are explored further in JT International SA v Commonwealth (2012) 250 CLR 1, where, at 102, Crennan J explained that: Whilst the prime concern of the Trade Marks Act is with the capacity of a trade mark to distinguish the goods of the registered owner from those of another trader, trade marks undoubtedly perform other functions. For example, a trade mark can be an indicium of the quality of goods sold under or by reference to it and it may be accepted that distinctive marks can have a capacity to advertise, and therefore to promote, sales of products sold under or by reference to them. The advertising function of a trade mark is much more readily appreciated than it once was, and that function may be of great commercial value (citations omitted).

In Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45, the High Court, at 65, recognised an inherent tension between trader and consumer interests in Australia’s trade mark registration system: Australian legislation has manifested from time to time a varying accommodation of commercial and the consuming public’s interests. There is the interest of consumers in recognising a trade mark as a badge of origin of goods or services and in avoiding deception or confusion as to that origin. There is the interest of traders, both in protecting their goodwill through the creation of a statutory species of property protected by the action against infringement, and in turning this property to valuable account by licensing or assignment.

In a similar way, in his second reading speech for the Trade Marks Bill 1995 (Cth), Michael Lee, then Member for Dobell, emphasised these dual objectives in Australian trade mark law when he observed that our “trade marks law services two complementary objectives – first, identification and protection of a business’s products and second, protection of the consumer”. 1 However, as the High Court maintained in Campomar, there are broader interests involved in trade mark law: the “exploitation of a trade mark registration … may involve questions of public interest”. What is more, the High Court, at 67, went on to say in rather vibrant terms: [T]rade marks may [also] play a significant role in ordinary public and commercial discourse, supplying vivid metaphors and compelling imagery disconnected from the traditional function of marks to indicate source or origin of goods (emphasis added). 1

Commonwealth, Parliamentary Debates, House of Representatives, 27 September 1995, 1909. (Michael Lee, Minister for Communications and the Arts and Minister for Tourism). [13.10]

589

Intellectual Property: Commentary and Materials

Patricia Loughlan has written extensively on the various (and often competing) interests in trade mark law identified in Campomar. 2 For her, there are three identifiable interests at play here – consumer, trader and general public interests – and these interests are roughly reflected in a trade mark’s different roles: badge of origin, personal property and cultural or societal roles. Recognising the “dynamic created” 3 between these three interests is important as trade mark law develops, because the calibration of interests inter se often operates in a zero sum game. There may even be instances, Loughlan maintains, where the “public interest may sometimes support decisions about the exploitation of trade signs which are not in the particular interests of either consumers or traders as such but which, for example, promote a free and accessible communicative sphere”. 4 Some theorists though merely conceive the law of trade marks to be an extension of the law of passing off, with Australia’s Trade Marks Act 1995 (Cth) complementing the protection provided in common law against passing off and provisions in the Competition and Consumer Act 2010 (Cth) (containing the Australian Consumer Law) (and formerly the Trade Practices Act 1974 (Cth)) concerned with the marketing of goods and services. Whatever its conception, it is clear that legal protection for trade marks in Australia centres on a statutory registration scheme, with registered owners granted rights in relation to a particular mark. 5 In principle, traders are able to enjoy those rights in perpetuity if they renew the registration and otherwise comply with formalities. This protection thus differs from that which is provided under copyright, designs and patent law. In the current “Information Age”, increasingly few products are sold without being labelled in some way. Protection for signifiers of origin and quality is provided by the Trade Marks Act 1995 (Cth), an industrial property enactment that reflects Australia’s participation in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and in the 1883 Paris Convention for the Protection of Industrial Property. The statute protects “signs” associated with a trader’s reputation. Passing off also protects marks or signs that are associated with a particular company or trader, but as we saw in the previous chapter, it can extend to wider manifestations of reputation. Having a system of registered marks overcomes a major hurdle in passing off litigation, which is the need to prove reputation; once a mark (ie sign) is registered, it is the registered owner’s property: see eg Trade Marks Act 1995 (Cth) s 21. In a passing off action, the reputation being claimed must be demonstrated by much more cumbersome evidence (see Chapter 12). The nature of the “property” in a trade mark was discussed in Attorney-General (NSW) v Brewery Employees Union (NSW) (Union Label Case) (1908) 6 CLR 469. The Trade Marks Act 1905 (Cth) Part VII provided for the registration of workers’ marks. These marks were an indication that the goods to which they were appended were the product of “an individual Australian worker or association of Australian workers”. The New South Wales Attorney2

3 4 5

See eg P Loughlan, “The Campomar Model of Competing Interests in Australian Trade Mark Law” (2005) 27(8) European Intellectual Property Review 289; P Loughlan, “Trade Marks: Arguments in a Continuing Contest” (2005) 3 Intellectual Property Quarterly 294; P Loughlan, “Trade Marks: Property Rights and Their Limits” (2005) 31(2) Monash University Law Review 273. P Loughlan, “Trade Marks: Property Rights and Their Limits” (2005) 31(2) Monash University Law Review 273, 276. P Loughlan, “The Campomar Model of Competing Interests in Australian Trade Mark Law” (2005) 27(8) European Intellectual Property Review 289, 292. For the protection of unregistered trade marks, see Ch 12.

590 [13.10]

Trade Marks

CHAPTER 13

General sought, inter alia, a declaration that Parliament had no power or authority to enact Part VII of the Act. The Attorney-General argued that workers’ marks were not trade marks. Griffith CJ in the High Court held (at 512): In my opinion it follows, from a consideration both of the statute law of England and the Australian colonies up to 1900 and of the authoritative expositions of the law with respect to trade marks in British Courts of Justice, that, whether the term “trade mark” as used in s 51(xviii) of the Constitution is to be regarded as a term of art or as a word used in popular language, it did not in that year denote every kind of mark which might be used in trade or in connection with articles of trade and commerce, but meant a mark which is the visible symbol of a particular kind of incorporeal or industrial property consisting in the right of a person engaged in trade to distinguish by a special mark goods in which he deals, or with which he has dealt, from the goods of other persons. This concept includes in my opinion five distinct elements: (1) A right which is in the nature of property. (2) The owner of the right must be a person, natural or artificial, engaged in trade. (3) The right is appurtenant or incident to the dealing with goods in the course of his trade. (4) The owner has such an independent dominion over the goods to which the mark is to be affixed as to entitle him to affix it to them; (it is not material whether this right is incident to his possession of the goods or arises under an agreement with the owner of them). (5) The mark distinguishes the goods as having been dealt with by some particular person or persons engaged in trade; (I use the word “particular” not as meaning that the person in question is indicated nominatim, but as indicating that he is a person who has an independent individual right with respect to the goods in question, and who is capable of ascertainment upon inquiry). With regard to this species of property the power of the Parliament is absolute. They can prescribe the conditions on which it may be acquired, retained, or enjoyed; they may possibly even prohibit its enjoyment altogether; but they cannot, by calling something else by the name of “trade mark”, create a new and different kind of industrial property.

Notwithstanding what the High Court said in the Union Label Case in relation to workers’ marks, collective or certification marks, such as fair trade marks that indicate the goods were manufactured in accordance with particular labour conditions, are permitted under the TRIPS agreement. The external affairs power now provides a supplementary constitutional power to the intellectual property (IP) power under the Australian Constitution, s 51(viii). The fragile nature of this species of property was also noted in JT International v Commonwealth (2012) 250 CLR 1 (JTI), which upheld the constitutionality of the so-called “tobacco plain packaging” legislation, the Tobacco Plain Packaging Act 2011 (Cth). In that case, Gummow J, whom formed part of the majority, observed, at 42, that “trade mark registration systems ordinarily do not confer a liberty to use the trade mark, free from what may be restraints found in other statutes or in the general law”. With the expansion of the internet, rights and obligations between trade marks, domain names, business names and company names start to overlap. The Advisory Council on Intellectual Property (ACIP) Review of Enforcement of Trade Marks (2002) noted that some confusion related to trade mark, business name, company name and domain name use could be addressed by more co-operation between those bodies responsible for trade marks (IP Australia), registration of company names (Australian Securities & Investment Commission (ASIC)), registration of business names in each State and Territory to protect consumers, and the registration of Australian domain names (.auDA). This concern sparked a separate ACIP review in 2004 to examine how confusion in usage can be limited, and how to facilitate the [13.10]

591

Intellectual Property: Commentary and Materials

streamlining of the application process for such names. Education about the particular “rights” that attach to registrations would clearly help matters. Other issues discussed included abolishing business name registrations and making trade mark registration a condition of company or business registration. However, not all company names would be eligible for trade mark registration. Other proposals included the idea of centralising registers. It is worth pointing out that there is now a centralised national register of business name registrations administered by the Australian Securities and Investment Commission (ASIC). ASIC provides an online search engine to allow interested parties to see whether a business name is available for registration. As in trade mark law (see eg Trade Marks Act 1995 (Cth) s 42, s 18, s 39(2), reg 4.15, sch 2 Trade Mark Regulations 1995), certain types of names may be denied registration: Business Names Registration Act 2011 (Cth) s 28. For further guidance, see ASIC Regulatory Guide 235, Registering Your Business Name (August 2013) and Guidelines for Ministerial Consent to Business Names under the Business Names Registration Act 2011 (Cth) (July 2015). ACIP also sought comments on the effectiveness of Australian dispute resolution policies for disputes concerning “cybersquatting” and “bad faith” registrations of domain names. 6 However, this is a policy area generally dealt with at the global level. Although the domain name system began as an electronic addressing system, without necessarily suggesting any proprietary rights inherent in the name used, domain addresses often function as powerful marketing tools. They have thus been the focus of disputes about online use of celebrity, brand or corporate names that may be trade marked and may suggest an association with an “offline” entity. Such disputes were recognised some time ago by Australia’s Intellectual Property Competition Review Committee (the Ergas Committee). The Committee was established in 1999 as a result of the Competition Principles Agreement between State and Federal governments. It reviewed the impact of intellectual property laws on competition, including whether the trade marks regime and domain name rules were meeting the needs of Australian business and consumers while maximising the benefits of domestic and global competition. See further Intellectual Property Competition Review Committee, Review of Intellectual Property Legislation under the Competition Principles Agreement, Final Report (September 2000) and more recently, Productivity Commission, Intellectual Property Arrangements, Overview & Recommendations, No 78 (23 September 2016).

MEANING OF TRADE MARK [13.20] “Trade mark” is defined in Trade Marks Act 1995 (Cth) s 17 as a “sign” used, or

intended to be used, to distinguish goods or services from those of other traders. 7 Each of the constitutive elements will be dealt with in turn. 6

7

Details of those policies, which are restricted to domain name registrations in the “au” space, are available at http://www.auda.org.au. For an introduction to issues: see M Bender, “What’s in a Name? Names, Domains and Trademarks” (2007) 3(2) Monash Business Review 38. Compare Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to Trade Marks (European Trade Marks Directive) Art 3 (“A trade mark may consist of any signs, in particular words, including personal names, or designs, letters, numerals, colours, the shape of goods or of the packaging of goods, or sounds, provided that such signs are capable of: (a) distinguishing the goods or services of one undertaking from those of other undertakings; and (b) being represented on the register in a manner which enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor”).

592 [13.20]

Trade Marks

CHAPTER 13

First, s 6 defines a sign as including “any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent”, or any combination thereof. More broadly, Jacob J has elsewhere observed in Philips Electronics BV v Remington Consumer Products [1998] RPC 283, at 298, that “a ‘sign’ is anything which can convey information”. Building on Jacob J’s definition in light of changes to the Trade Marks Act 1995 (Cth) ushering in so-called “non-traditional” marks – shape, colour, olfactory and other sensory marks – Patricia Loughlan describes a sign as “essentially being carriers of meaning in a communicative act between a trader and consumer”. 8 (See also TRIPS, Art 15.) The conceptual issues surrounding the meaning of sign are explored below.

Conceptual issues What is a sign? [13.30] Communications theorist Charles Sanders Peirce said that “a sign is something by

knowing which we know something more”. 9 A sign is a form of compressed meaning. The trade mark conveys multiple suggestions about the goods and services with which it is associated. Consider the sign used by the Australian Broadcasting Corporation (ABC). It was originally commissioned in 1965, following a competition for the design of a symbol to identify the ABC’s radio and broadcasting activities. The sign was created by Bill Kennard, for which he received £25. The symbol is known as the Lissajous figure, derived from an oscilloscope waveform for measuring radio and television frequencies. As a trade mark, it has a signalling function. It indicates a corporate identity for ABC broadcasting, as well as communicating something about the nature of the service provided by the ABC. It suggests this kind of service comes from this unique source. These signalling connotations of the trade mark are not all that has made it valuable. It has also proven a successful mark because of the simplicity and ease of its recognition, and because of the sign’s ability to be adapted to meet new corporate ends. The sign can be applied in a range of advertising formats. Originally produced for black and white reproduction and used in television broadcasts and on the side of ABC Broadcast Kombi vans, it is now used in various formats and for an extensive range of merchandising. The symbol has gone through various transformations over the years, but each remains readily identifiable and continues to fulfil the signalling function desired by the corporation. It is the underlying symbol that is crucial here and not the precise expression of it. As a matter of graphic representation, there is a world of difference between a two-dimensional vector line oscilloscope rendering of a broadcast signal, and a similar shape expressed as a three-dimensional, rather abstract, reflective object. Yet, though the expressions are graphically and technically quite different creations, the relationship between them remains clear to the intended audiences. In addition to a signalling function, a sign also has an expressive function. 10 This refers to the emotion sought to be engendered in an audience by use of the sign. It is a subjective message, and audiences do not necessarily read all the emotional connotations as intended. 8 9 10

P Loughlan, “The Concept of a “Sign” in Australian Trade Mark Law” (2005) 16 Australian Intellectual Property Journal 95, 95. CS Peirce, Collected Papers of Charles Sanders Peirce vol 8 (Harvard University Press, Cambridge, 1958) p 332. See especially R Cooper Dreyfuss, “Expressive Genericity” (1990) 65(3) Notre Dame Law Review 397; R Cooper Dreyfuss, “Reconciling Trademark Rights and Expressive Values” in GB Dinwoodie and MD Janis (eds), Trademark Law and Theory (Edward Elgar, 2008) p 261. [13.30]

593

Intellectual Property: Commentary and Materials

The signalling and expressive functions of the ABC sign have evolved over the years and in relation to each other. In addition to the signalling features already mentioned above, one of the virtues leading to the choice of the original ABC sign was its purported expressive function. It was taken to be symbolic of the ABC’s mandate to provide radio and television to as many Australians as possible. It was chosen to herald an organisation in charge of new broadcast technologies, disseminated on a grand scale. Under the controversial leadership of Jonathan Shier, a shiny, new metallic computer-generated version of the sign was launched to signal the ABC’s expansion beyond radio and television into digital broadcasting. The evocation of the original symbol today expresses continuity with the technological past and stability of service, as well as gesturing to the corporation’s technological future. Shier’s critics read much else into the expressive function of this new sign: The brutal symbol replaced the customer-connected “Your ABC” with its relaxed musical mnemonic including personal delivery by fingertips as crayons. The cold new logo told what was left of the ABC audience “You can go and get stuffed, it’s my ABC now baby. Like it or lump it!” 11

The meaning attributed to a sign is not simply dictated by its creator or the investor in the sign to a passive, compliant viewer. The viewer’s own experience, preferences, social values, interest in and exposure to the trade mark and its owner affect any significance that is attached to a sign. The departure of Jonathan Shier from the management of the ABC was followed with the launch of a new, more organic-looking, computer-generated version of the corporate logo. Organisations often “rebrand” by updating their logo, which may involve amendment of a registered trade mark. A successful sign will carry with it the connections or reputation recommended by the history of its use, but the meaning of a sign is not fixed. A sign is multi-layered. Its significance is contextual and the meaning attributed to it is ultimately determined by its many and varied audiences. 12 Politics of reading signs [13.40] The development of marketing techniques has complicated the reading of signs. A few

signs, such as an unknown artist’s signature, remain a relatively unsophisticated reference to the unique producer of a particular kind of good. Most signs today, however, serve the function of indicating an origin, as well as persuading customers to partake of an ever-expanding choice of goods or services. These marks are implicated in manufacturing a desire for the product as well as informing about the product, making it difficult to separate the signalling and expressive functions of the sign: in other words, is the Calvin Klein sign below telling me about the product to which it is associated, or, in knowing and attaching value to the sign, does it say more about me and my receptivity to image marketing?

11 12

B Miller, Ad News, 22 June 2001. On the semiotics of trade mark law, see in particular B Beebe, “The Semiotic Analysis of Trademark Law” (2004) 51 UCLA Law Review 621; SK Kaytal, “Semiotic Disobedience” (2006) 84 Washington University Law Review 489.

594 [13.40]

Trade Marks

CHAPTER 13

Figure 13.1

Photo: Nancy Bleck. Model: Cayvan Econmi Source: http://www.adbusters.org/spoofads/fashion Many cultural critics argue that the most successful examples of contemporary marketing eschew any real association with actual products or their origins. The marks are a form of social marketing. What is sold is a nebulous association with a particular lifestyle, set of ideas, philosophy or world view. A well-known mark, through licensing agreements, can be potentially applied to any product deemed capable of sustaining the supposedly unique lifestyle value suggested by it. As anthropologist and legal scholar Rosemary Coombe puts it: An apocryphal story circulates at marketing conferences: Coca-Cola executives, it is said, routinely visit bottling plants around the globe to monitor the size and proportions of the famous logo to ensure that it does not become distorted on the local product. Gathering together the staff from several plants, a senior Coca-Cola executive is reported to have declared that the company could lose all its staff, lose its access to the sources of its raw materials, lose its capital and its accounts, but as long as it had this (lights shine on a display board greatly enlarging the famous red and white script), it would be possible to walk into a bank and receive sufficient credit to replace the entire global infrastructure. 13

The name Coca-Cola once signalled a drink with ingredients of coca leaf and cola nut. Nowadays, very few people can explain what the name stands for, but more can recognise it when it is shown in the correct ribbon script than are able to spell it. 14 Coca-Cola, along with brands such as Nike, Reebok, Virgin, Body Shop, McDonald’s, Starbucks and Pepsi, tobacco advertisers, and fashion labels like Gap, Tommy Hilfiger and Benetton to name just a few, are often read as representing a “world-wide style culture”. 15 In these examples, it is the expressive function, the aspirational quality suggested by the use mark, that is the all-valuable signification. It is because the marks have strong expressive functions and weak signalling functions that they are suitable for licensing in relation to a very wide range of goods or services. Reading the legal meaning of a sign [13.50] Except for a few limited exceptions, the law is generally not all that interested in the

marketing choices or politics associated with the adoption and development of a particular sign (see generally [13.500]). But legal protection of the mark might affect whether an entity chooses it in the first place or not. 13 14 15

R Coombe, The Cultural Life of Intellectual Properties: Authorship, Appropriation and the Law (Duke University Press, Durham, 1998) p 56. P Mollerup, Marks of Excellence: The History and Taxonomy of Trademarks (Phaidon Press, London, 1999) p 24. N Klein, No Logo: Taking Aim at the Brand Bullies (Picador, New York, 2000) p xvii. [13.50]

595

Intellectual Property: Commentary and Materials

Lawyers and trade mark practitioners do not necessarily spend a great deal of time studying semiotics, but they do practice it in a specialist sense. Trade mark law has, as a matter of legal history and policy, focused on maintaining a level playing field amongst all traders, allowing no-one to monopolise a sign that might be a desired association by many, and preventing consumer confusion over competing goods in the marketplace through the use of misleadingly similar signs. This has led to the development of legal tests that require a mark to be “inherently distinctive” and not likely to cause deception or confusion in order to gain registration. From a semiotic point of view, the notion that any sign is “inherently” anything – that is, that the meaning inheres in the sign itself – is meaningless. Put another way, a sign, even a badly designed one, signals some association with a product circulating in a marketplace. It is not internally referent. The law is well aware of this, and what the legal shorthand of “inherent distinctiveness” refers to is the need for a level of abstract association or formal distance between the sign and the product in order to keep the most desired and obvious associations from being monopolised by any one trader. With this in mind, the law has inordinately focused on interpreting the signalling function of a sign, trying to read the meaning of the sign in terms of its most obvious “objective” connotations given the chosen application. In reading the cases on distinctiveness, you will become familiar with reading marks without assuming any particular expressive content or context. A difficulty arises, however, in reading signs abstractly and at a distance, when a sign, whether registered or not, has already obtained a level of reputation in the marketplace. The law needs to pay heed to the existing reputation of signs in order to fulfil its fair competition and consumer protection functions. Deceptive practices, that hurt traders and consumers alike, often involve cheap imitations and piracy of well-known reputable marks. Once a consideration of existing reputation comes into the picture, it is extremely difficult to discern the existing connotation of a sign without being influenced by the marketing of the sign. While the reputation of the sign can be determined with reference to the effect of past marketing on its existing audience – what consumers make of the sign given their existing exposure to it – consumers are not of a homogenous mind. Some are more sophisticated readers of signs than others. Some consumers are more likely to be open to expressive connotations. Other consumers are more literal in interpretation. They do not necessarily form an “objective” audience capable of definitively determining the nature and extent of an existing mark’s reputation and meaning. One of the most difficult tasks in trade mark law is determining the significance of an existing mark’s reputation and its relationship to other traders and their chosen marks. Those investing in trade marks try to maximise economic value by seeking maximum protection of their mark. They are keen to use the law to protect and maintain a mark’s distinctiveness, in order that it remain eligible for registration. However, they are also often motivated to use the protection offered by the law to commercial advantage. It is often hard to differentiate attempts to protect a trade mark from dilution from a more strategic use of the law to expand market position and block competition. In some cases, the owner of a mark is successful in convincing the law that the meaning of the sign simply corresponds with their corporate intention as expressed in past marketing campaigns, without proper reference to the actual comprehension of the sign by consumers. In such cases, the owner of the sign is able to co-opt the law into furthering their corporate 596 [13.50]

Trade Marks

CHAPTER 13

agenda, without due regard to the law’s original policy objectives and other beneficiaries–other traders’ marketing needs and consumer’s information needs. In recent years, the level of legal protection awarded to well-known signs, such as McDonald’s or Nike, has become one of the more controversial areas of trade mark law. The problem has been compounded by the development of global marketing and licensing practices, as discussed above. Where a trade mark has little signalling function outside of a link with a particular branded identity, and a strong expressive content, the sign can have endless possible significance, limited only by the imagination and licensing skill of the corporate owner. Protection of such a mark potentially involves protection against a broad range of a competitor’s possible marketing opportunities. To take a recent English example, is the reputation of the McDonalds sign so pervasive that consumers would assume an association between the giant and a small take-away restaurant called McChina? In deciding in favour of the owner of McChina, Judge David Neuberger said: “It appears to me on analysis that McDonald’s are virtually seeking to monopolise all names and words with the prefix ‘Mc’ or ‘Mac’”. 16 However, using trade mark and equivalents to passing off and trade practices law, McDonald’s were successful in stopping a “McAllan’s” sausage stand in Denmark, a “McCoffee” cafe in San Francisco and a Scottish-themed sandwich bar, “McMunchies”, in Buckinghamshire from using the “Mc” prefix. 17 In Australia, McWilliam’s Wines successfully defended the right to use the name “Big Mac” in connection with wines in McWilliams Wines Pty Ltd v McDonalds System of Australia (1980) 33 ALR 394. E-commerce raises even more difficulties concerning the protection of well-known marks. Trade mark law is territorial. Further, similar marks might be registered in a jurisdiction, if they are used in association with unrelated goods or services, where there is no likelihood of consumer confusion. Where there are multiple possible claimants to a name within a jurisdiction, and beyond, who should be entitled to exclusive use of a domain name that may include a trade mark reference? When Australian swimwear company Absolut Beach sought to register their eponymous trade mark in Australia, Swedish liquor giant Vin & Spirit, the makers of Absolut vodka, opposed it. They believed that the “Absolut” brand had been the subject of such extensive promotion since 1981 that there was now a general public perception that any business carried on with reference to the “Absolut” name or mark would be assumed to be part of, or associated with, the liquor company. While the “Absolut Beach” registration survived this opposition action in Australia, the mark was not registered as a trade mark offshore. When the Australian company set up its “Absolut Beach” website, Vin & Spirit filed trade mark infringement actions in the United Kingdom and United States, and sought to have the domain name handed over to them, accusing the Sydney-based retailer of “cybersquatting”. The Australian company lacked the financial backing to defend the actions, and gave up the domain name. This chapter deals with the way Australian law resolves trade mark disputes, and therefore considers only the local impact of global marketing strategies and practices. However, it is important to remember that Australian legal practice also operates in the context of an increasingly integrated global economy. As Australian trade mark practitioners respond to the 16 17

Frank Yu Kwan Yuen v McDonald’s Corporation, McDonald’s Restaurants Ltd (2001) CH/APP No 183, 67. Alan Bjerum Pedersen v McDonald’s Corp USA, McDonald’s Danmark A/S, Denmark Supreme Court (Hoejesterets) Dec 4 1996 Case I 355/1995 Ugeskrift for Retsvaesen 1997.253H. [13.50]

597

Intellectual Property: Commentary and Materials

needs of their multinational clients, pressure is put on the future development of our law. Further, as the “Absolut” swimwear example demonstrates, advising a small business can require an awareness of the global legal implications of the use of the trade mark. The ACIP Issues Paper (2002) and Review on Enforcement of Trade Marks (2004) noted community concern about the disadvantages facing small and medium enterprises in trade marks law. However, they found that the difficulties and disadvantages facing small businesses were primarily related to the time and financial resources required for managing rights. A separate proposal for the special trade mark treatment of “national icons” 18 such as Phar Lap, Ned Kelly, ANZACS or Sir Edmund (Weary) Dunlop, Waltzing Matilda, was rejected by the government in 2005, although sui generis has been provided for Sir Donald Bradman and St Mary MacKillop through restrictions under corporations law that interact with trade mark law. Despite these initiatives, the perceived inadequacy of protection for national icons continues to be an issue that resurfaces in parliamentary crosshairs. In late 2015, Nationals MP Bob Katter, agitated for the passage of the Australia Trade Marks Amendment (Iconic Symbols of National Identity) Bill 2015. The Bill proposes a new absolute ground of refusal for trade marks that “consists of a sign that is of national significance, or iconic value, to the people of Australia”: cl 39(1AA). This ground of refusal is also proposed as a ground of revocation: cl 84AA. Despite Bob Katter’s strongly held views, the Bill, at the time of writing, is unlikely to secure passage through the Commonwealth parliament. Trade mark law is a mix of a specialist strand of semiotics, assisted by advertising and marketing knowledge in order to best protect investment in a sign, and an understanding of competition and consumer perspectives in order to stop a trade mark owner being granted excessive protection. Readers should be familiar with some of these concerns through their knowledge of passing off law and community debate about marks as an embodiment of globalisation and the “logo economy”. 19 However, trade mark law is statute-based law, centred on registration that involves IP Australia, the local equivalent of the US Patent & Trademark Office (USPTO). This provides for a more particular and technical framework in which these similar principles operate.

Used, or intended to be used [13.60] A second important element of the definition of a trade mark is that a trade mark

must be “used or intended to be used”. Section 7 of the Trade Marks Act 1995 (Cth) deals with actual or intended use of a mark in relation to goods and services, that is, in connection with trade and commerce. It incorporates the important concept of “authorised use” (s 7(1)), which is explored further in s 8. In setting out definitions of “authorised user” in relation to goods and services, s 8 provides illustrative examples of trade mark usage “under the control of the owner”: s 8(5). For instance, this includes a trade mark owner exercising “quality control” (s 8(3)) or “financial control” (s 8(4)) over another person’s usage of a trade mark in relation to goods or services: ss 8(3) and 8(4) respectively. The concepts of “use”, “intention to use a trade mark”, and “ownership” often raise difficult and interrelated issues, especially in trade mark disputes between foreign and local 18 19

See IP Australia, ACIP Report on the Protection of National Icons, (December 2002). On brand semiotics generally, see eg M Danesi, Brands (Routledge, 2006); C Lury, Brands: The Logos of the Global Economy (Routledge, 2004).

598 [13.60]

Trade Marks

CHAPTER 13

traders. Questions as to the requisite temporal element regarding the intention to use also arise: see [13.210] – [13.220]. The nature of “use” was discussed in Imperial Group Ltd v Philip Morris & Co Ltd [1982] FSR 72, with the Court of Appeal considering notions of bona fide and bad faith use.

Imperial Group v Philip Morris [13.70] Imperial Group Ltd v Philip Morris & Co Ltd [1982] FSR 72 Court of Appeal [The plaintiff cigarette manufacturer chose the name “Merit” for a projected brand of cigarettes. It was subsequently advised that the name was unregistrable under the Trade Marks Act 1938 (UK), but that it should obtain registration of “Nerit” as a “ghost mark”. The Nerit mark, which was registered in 1974, was selected because it was as close as possible to the unregistered – and unregistrable on account of its laudatory meaning – word, Merit. Any other person using “Merit” in relation to cigarettes could arguably be infringing the “Nerit” mark by using a confusingly similar mark. In 1975, the defendant launched the brand “Merit” cigarettes in the United States. In the same year, the plaintiff launched a limited quantity of the “Nerit” brand cigarettes in Australia to maintain the registration of the ghost mark. In September 1976, the defendant launched its “Merit” brand in the United Kingdom. In January 1977, the plaintiff made a more substantial launch of its “Nerit” brand. In March 1977, it commenced an infringement action against the defendant that responded with the defence, inter alia, that the plaintiff’s mark should be expunged as it was registered without any bona fide intention for its use. The trial judge, Balcombe J, held, inter alia, that “Nerit” was capable of distinguishing the plaintiff’s goods, but that because there was neither bona fide intention to use the mark or bona fide actual use, the mark ought to be expunged from the register: see [1980] FSR 146.] BALCOMBE J: … [156] … For the defendants to succeed under this head I must be satisfied: (i) that “Nerit” was registered without any bona fide intention on the part of the plaintiffs that it should be used in relation to the goods in respect of which it was registered by the plaintiff; and (ii) that there has in fact been no bona fide use of “Nerit” in relation to those goods by the plaintiffs up to 16 April 1977. In my judgment the question under this head turns upon the meaning to be attributed to the words “bona fide” in the context in which they are used in the two limbs of para (a) of s 26(1). The plaintiffs say that they mean “honest” and that both their intention to use the mark “Nerit” and its actual use were honest. The defendants say that they mean “genuine” and that it is clear from the evidence that there never was any genuine intention to use the mark “Nerit” nor was there ever any genuine commercial use of the mark. [His Honour referred to the case of Electrolux Ltd v Electrix Ltd (1953) 71 RPC 23 (CA).] … [157] In that case the plaintiffs were the proprietors of two registered trade marks “Electrolux” and “Electrux”, the latter having been registered in 1928. (For the sake of simplicity I ignore a third registered mark “Elektrolux”.) At all material times up to 31 March 1947 all the articles which were relevant to the proceedings before the court vacuum cleaners had been marketed under the name “Electrolux”, and “Electrux” was never used at all. In 1947 the plaintiff started to market one of their cheaper models under the name “Electrux”. The reason for this was because they had become aware of the defendants’ use of the mark “Electrix”, also in relation to vacuum cleaners, and they wished to be able to resist any application by the defendants for the removal of “Electrux” from the register under s 26 and to challenge the defendants’ use of the mark “Electrix”. In due course the plaintiffs did commence an action for the infringement of their mark “Electrux” by the defendants’ mark “Electrix” and the defendants moved to expunge the mark “Electrux” from the register on the grounds that the plaintiffs’ use of that mark had not been bona fide. The Court of Appeal held that the plaintiffs’ use of “Electrux”, although commenced with knowledge of the defendants’ use of “Electrix” and for the purpose of enabling an action to be brought against them for infringement, had been genuine, [13.70]

599

Intellectual Property: Commentary and Materials

Imperial Group v Philip Morris cont. substantial and bona fide in the sense of s 26 of the Act. The following passages from the judgments show the considerations which motivated the members of the Court of Appeal in that case. Per Evershed MR (at 36, line 3): I do not propose to attempt any definition of what does or may constitute bona fide use within the terms of s 26. I find it sufficient to say, after much anxious thought and sympathy for the defendants, that I do not think it has here been established that the use by the plaintiffs of the word “Electrux” was not bona fide because the occasion for adopting the policy of marketing their cheaper model under that name was a desire to gain an advantage in proceedings which I assume were then contemplated against the defendants. I have said I attempt no definition, but the use here shown does not seem to me in any real sense capable of [158] being described as a pretended use. … Commercially speaking it is not shown that the use made by the plaintiffs of this mark was not an ordinary and genuine use, and it certainly was substantial. Per Jenkins LJ (at 41, line 29): On the question of bona fide user, there is no doubt that from March 1947 onwards … the plaintiffs consistently used their mark “Electrux” to designate and distinguish one of their products, namely their cheaper type of vacuum cleaner. There is no doubt that such use was perfectly genuine and was substantial in amount. That being so, I feel difficulty in seeing how it can be held not to have been bona fide. The reason urged by Mr Shelley for holding it not to be bona fide is that the use of “Electrux” was a manoeuvre directed against the use by the defendants of “Electrix”; but, as my Lord has said, if in using “Electrux” the plaintiffs indeed had that object in view, nevertheless they were doing no more than asserting and taking advantage of the rights accorded to them by the Act. In my view, the use of “Electrux”, being a real commercial use on a substantial scale and in that sense genuine, cannot on this account properly be regarded as other than bona fide user. Per Morris LJ (at 42, line 21): In regard to the issue as to whether there has been bona fide user by the plaintiffs of the mark “Electrux”, it seems to me that in s 26 of the Act a contrast is being drawn between use, on the one hand, and non-use, on the other. The legislature, in my view, had in mind that someone could not gain immunity from attack by asserting use when there was really only some fictitious or colourable use and not a real or genuine use. (He then refers to a passage from the speech of Lord Simon in Palser v Grinling [1948] AC 291 at 310 and continues): It is, of course, clear that when the phrase “bona fide” is used, its context must be considered when deciding what is its meaning. In my judgment there was in the case bona fide user by the plaintiffs of the mark “Electrux”. The evidence which is before us, to which I need not refer, relating to the volume and extent of the use of the mark since it was applied to one of the models manufactured by the plaintiffs is such as to put it, in my view, beyond all question that, judged by ordinary commercial standards, there was a genuine use by the plaintiffs of this mark. In the instant case, both parties claim to derive assistance from the judgments of the Court of Appeal which I have quoted. The plaintiffs claim that the judgments establish that their motives for registering and using “Nerit” as a mark are irrelevant to the question of bona fides; indeed Mr Falconer went so far as to assert that “Electrux” in that case was a “ghost mark”. Mr Leggatt relied on the repeated references to “commercial” and “genuine” use … [159] … I need not here repeat the findings of fact set out earlier in this judgment; suffice it to say that it is clear from those findings that the plaintiffs never intended to, and never did, use “Nerit” as a genuine commercial trade mark for a brand of cigarettes; the sole purpose of registering and using “Nerit” was to acquire a monopoly right to use the unregistrable name “Merit” and to prevent anyone else from 600 [13.70]

Trade Marks

CHAPTER 13

Imperial Group v Philip Morris cont. using that name. In my judgment such an intention, and such use, were not “bona fide” within the meaning of that phrase as used in the context of s 26 of the Act. The decision of the Court of Appeal in Electrolux Ltd v Electrix Ltd appears to me to support the defendants’ case by the insistence throughout the judgments that the use of the mark “Electrux” was a genuine and commercial use, the inference being that if the court had been satisfied that the use was neither genuine nor commercial they would have considered it not to have been bona fide. The mark “Electrux” was there used genuinely and commercially in that it was used as a trade mark to identify one of the plaintiffs’ particular models, and the fact that that use was prompted by a desire to prevent the defendants using the mark “Electrix” did not make the use of “Electrux” mala fide. To suggest that “Electrux” was a “ghost mark” comparable to “Nerit” in the present case indicates, in my judgment, misunderstanding of the decision in Electrolux Ltd v Electrix Ltd. LAWTON LJ: [Disagreed with Balcombe J’s view that Nerit was a trade mark within the meaning of the Act, and in so doing held, at [79] that “the plaintiffs’ use of the mark ‘Nerit’ was not a use at all. It had the unreal qualities of the ghost mark which the plaintiffs always intended it to be.”] … [79] If “Nerit” was registrable, as Balcombe J. adjudged it was, were the defendants entitled to have it taken off the Register on the grounds set out in section 26(1)(a) of the Act? To succeed, the defendants would have to prove that “Nerit” was registered without any bona fide intention on the part of the plaintiffs that it should be used by them in relation to their cigarettes and that there had in fact been no bona fide use of the mark by the plaintiffs up to the date one month before the delivery of the counterclaim. For the purpose of considering this part of the defendants’ counterclaim I will assume, contrary to what I have adjudged above, that the use of the mark “Nerit” by the plaintiffs in 1976, and between 1977 and 1979, was enough to make it a trade mark within the meaning of the Act. I have already set out what led to this use during these years and what I infer from the evidence, which was not in dispute, were the plaintiffs’ intentions in using the mark in the way they did. The use was limited in size, time and area. It was not accompanied, nor did the plaintiffs want it to be, by what they call “Press support” and the advertising was small in amount. Compared with the ordinary way in which the plaintiffs marketed new brands of cigarettes, the effort they put into introducing the “Nerit” brand was tiny, but not so tiny as to be de minimis. Could such a use be bona fide? When considering whether it was, it is irrelevant that the plaintiffs had a motive for the use which was to protect their use of the unregistrable mark “Merit”: see, Electrolux Ltd v Electrix Ltd (1954) 71 RPC 23 per Lord Evershed M.R. at p 36 and Jenkins LJ at p 41. According to the judgments given in this court in that case a bona fide use should be “ordinary and genuine” (per Lord Evershed MR at p 36), “perfectly genuine,” “substantial in amount,” “a real commercial use on a substantial scale” (per Jenkins LJ at p 41) and not “some fictitious or colourable use but a real or genuine use” (per Morris LJ at p 42). The plaintiffs never intended to use the mark “Nerit” in the ordinary course of their business; their use of it was not substantial; it was not a real use in any commercial sense; it was a colourable stratagem for making their trade rivals think that they were using the [80] mark “Nerit” in a way which gave it the protection of the Act. If the Electrolux case is an authority which binds this court–and seemingly it does–and I have applied it correctly to the evidence, then the defendants succeed on their section 26(1) claim. [Lawton LJ dismissed the appeal, as did the other Lord Justices.] SHAW LJ: [83] In the present case if the substance is to be regarded and the appearance does not provide the whole answer, I am satisfied that when the application to register “Nerit” was made, Imperial did not intend to use that mark for the purpose of indicating a connection in the course of trade between them and cigarettes sold under that name. The sales which ensued were inconsequential as part of Imperial’s trading. Their true and only function was to bolster a projected use by Imperial of [13.70]

601

Intellectual Property: Commentary and Materials

Imperial Group v Philip Morris cont. the ordinary word “Merit,” and in effect to arrogate to themselves an exclusive right to the use of that word as a brand name for cigarettes. This is not merely outside the scope of the Trade Marks Act 1938, but directly contrary to its spirit and intent. Imperial themselves regarded “Nerit” as being in itself devoid not only of meaning but also of any attractiveness. It was, in Imperial’s scheme of things, no more than a device which was to be the dubious procreator of a privilege the Trade Marks Act does not intend to confer on a trader and which the general law would deny him. If the practice of registration of “ghost marks” closely simulating ordinary words or phrases is indeed [84] widespread in the tobacco trade, the sooner it is aborted the better. Pseudo registrations should not be allowed to clutter up the Register. In my judgment, for the reasons I have stated, the respondents are entitled, pursuant to section 32 of the Act, to have the entry of “Nerit” expunged from the Register on the ground that it was made without sufficient cause. The provisions of section 26 of the Act while perhaps applicable also to the situation in the present case, appear to me to have a special relevance to the situation which arises when a trade mark is registered in relation to more than one class of goods. When the relevant application was made, the proprietor may have had all the classes concerned in practical view as goods in which he proposed to trade. If in the light of subsequent history it should emerge that the proprietor had cast his protective net too wide in that he did not trade at all in one or some of the classes of goods to which the registration related any person aggrieved could apply under the section that the registered mark should be taken off the register in relation to the goods or classes of goods for which it had not been bona fide used. It is not straining good sense to accept that a true trading use in relation to a class of goods specified in the application will generally serve to demonstrate a bona fide intention at the time of registration to make use of that mark thereafter in the course of trade. I would construe “bona fide intention” and “bona fide use” in this context as having reference to a course of trading embarked upon as an end in itself and not as embracing an activity which, although in the nature of trading, is in reality subordinate to a wholly independent objective. BRIGHTMAN LJ: [90] On a more general note, registration of ghost marks in order to secure a monopoly in words which a trader is not entitled to monopolise is in my opinion a reprehensible practice and an abuse of the Register which the courts ought not to condone. … [91] “Bona fide” has in section 26 the meaning of “genuine,” rather than the meaning of “honest” which it bears in section 8. This court has so decided. In Baume & Co Ltd v AH Moore Ltd [1958] Ch 907, this court held that the saving provision in section 8 for the “bona fide” use by a person of his own name referred to the honest use of his name. In Electrolux Ltd v Electrix Ltd, 71 RPC 23, this court held that the “bona fide use of the trade mark in relation to those goods,” i.e., the goods in respect of which the mark is registered, means not honest use in the sense of being free from deceit, but bona fide use in the sense of being genuine. In his judgment Sir Raymond Evershed chose for the purpose of defining bona fide use, and contrasting the opposite, such expressions as “not capable of being described as a pretended use,”“not merely spasmodic or temporary,”“commercially speaking … an ordinary or genuine use and … substantial.” Lord Justice Jenkins held that the use in that case was bona fide, being “perfectly genuine and … substantial in amount”; Lord Justice Morris said, “The legislature, in my view, had in mind that someone could not gain immunity from attack by asserting use when there was only some fictitious or colourable use and not a real or genuine use,” adding later that “genuine use” was to be judged by “ordinary commercial standards.” So there are those authorities, binding upon us, as to the different shades of meaning to be given to the expression “bona fide” in sections 8 and 22. Both shades of meaning have the authority of Fowler’s Concise 602 [13.70]

Trade Marks

CHAPTER 13

Imperial Group v Philip Morris cont. Oxford Dictionary, the primary meaning of the adjective “bona fide” being given as “genuine,” and of the noun “bona fides” as “honest intention.” I think that the difference between the two sections follows naturally from the different context in which each expression is found. On the question of fact, I agree entirely with my Lords that there is no justification for disturbing the finding of the learned judge that the use of the trade mark “Nerit” by the appellants during the period in question was not a bona fide use within the meaning of section 26.

[13.80] The presumption that an applicant intends to use a mark is rebuttable by showing

that there is no real possibility of the applicant being able to market the products or services in respect of which a mark is to be applied: see eg Turkovic v Triple Three Leisure Ltd (1993) 27 IPR 430. It may happen that someone wishes to register a name or logo that is well-known overseas but not in use in Australia. This may be possible but can be successfully opposed by the overseas company: see, for example, Michael Sharwood & Partners Pty Ltd v Fuddruckers Inc (1989) 15 IPR 188; Daimaru Pty Ltd v Kabushiki Kaisha Daimaru (1990) 19 IPR 129. See also Sizzler Restaurants International Inc v Sabra International Pty Ltd (1990) 20 IPR 331; cf Dunlop Olympic Ltd v Cricket Hosiery Inc (1990) 20 IPR 475. Furthermore, s 62A of the Trade Marks Act 1955, which came into effect on 23 October 2006 via the Trade Marks Amendment Act 2006 (Cth) now provides another ground of opposition for trade mark applications made in “bad faith”: see [13.570]. A proper intention to “use” a mark “in the course of trade” is the opposite of “trafficking” in trade marks. Previously, Trade Marks Act 1955 (Cth) s 74(4) provided that the Registrar was not to register anyone as a user of a trade mark if this would “tend to facilitate trafficking in the trade mark”. This potentially created a barrier to character merchandisers seeking to license marks for a wide range of goods, but also inhibited the activities of persons seeking to register marks and sell them, possibly to the overseas proprietor of the same mark. In Re Trade Mark “Holly Hobbie” (1984) 1 IPR 486 below, the House of Lords discussed the widespread licensing of the cute “Holly Hobbie” character for use on a wide variety of goods not manufactured by the trade mark owner, American Greetings Corporation.

Re Trade Mark “Holly Hobbie” [13.90] Re Trade Mark “Holly Hobbie” (1984) 1 IPR 486 House of Lords LORD BRIGHTMAN: [488] My Lords, this appeal relates to commercial activity commonly called “character merchandising”. The expression is used to signify the exploitation of a well-known invented name, whereby the author or promoter of the name licenses or purports to license its use on the goods of traders who have no other connection with the licensor. If the invented name is a registered trade mark of the licensor in respect of certain classes of goods, the licensor may wish to protect his position by obtaining registration of the mark in respect of the goods of the licensee. The question is whether, on the facts of the case before your Lordships, applications for the registration of the trade mark “Holly Hobbie” in respect of the goods of certain licensees were properly refused by the registrar on the ground that registration would tend to facilitate trafficking in a trade mark … [492] [After discussing previous authorities, Lord Brightman continued:]

[13.90]

603

Intellectual Property: Commentary and Materials

Re Trade Mark “Holly Hobbie” cont. The law clearly did not recognise the entitlement of the owner of a trade mark to deal with it, like a patent, as a commodity in its own right. The same point was highlighted 15 years later in your Lordships’ House in Bowden Wire Ltd v Bowden Brake Co Ltd (1914) 31 RPC 385, where Lord Loreburn said this (at 392): The object of the law is to preserve for a trader the reputation he has made for himself, not to help him in disposing of that reputation as of itself a marketing commodity, independent of his goodwill, to some other trader. If they were allowed, the public would be misled, because they might buy something in the [493] belief that it was the make of a man whose reputation they knew, whereas it was the make of someone else. … In this case the appellants parcelled out the right to us in their trade mark as if they had been dealing with a patent. … To my mind, trafficking in a trade mark context conveys the notion of dealing in a trade mark primarily as a commodity in its own right and not primarily for the purpose of identifying or promoting merchandise in which the proprietor of the mark is interested. If there is no real trade connection between the proprietor of the mark and the licensee of his goods, there is room for the conclusion that the grant of the licence is trafficking in the mark. It is a question of fact and degree in every case whether a sufficient trade connection exists. In my opinion, on the facts of these particular applications, the Assistant Registrar and the High Court were entitled to take the view that the registration of the licensee as a registered user, pursuant to s 28, would tend to facilitate trafficking in a trade mark.

[13.100] While there is no express prohibition on “trafficking” anymore, the requirement of “use” or “intention to use” requires some connection between the owner of the mark and any licensors (see also s 62A). The nature of the intention to use was considered by Lord Hanworth MR in Ducker’s Trade Mark (1928) 45 RPC 397 at 402, where he observed: I agree that the goods need not be in being at the moment, and that there is futurity indicated in the definition; but the mark is to be a mark which is to be definitely used or in respect of which there is a resolve to use it in the immediate future upon or in connection with goods. I think that the words “proposed to be used” mean a real intention to use, not a mere problematical intention, not an uncertain or indeterminate possibility, but it means a resolve or settled purpose which has been reached at the time when the mark is to be registered.

That intention is presumed on the making of the application for registration, a point emphasised by Fullagar J in Aston v Harlee Manufacturing Co (1960) 103 CLR 391 at 401: There is nothing in the Act or the Regulations which requires [an applicant] to state … an intention [to use the mark] at the time of application, and the making of the application itself is, I think, to be regarded as prima facie evidence of intention to use. I cannot think that the Registrar is called upon to institute an inquiry as to the intention of any applicant, and I think that, on an opposition or on a motion to expunge, the burden must rest on the opponent, or the person aggrieved, of proving the absence of intention. Again, I do not think that “intention” in this connexion ought to be regarded as meaning an intention to use immediately or within any limited time. A manufacturer of (say) confectionery would, I should suppose, be entitled to register three trade marks in relation to confectionery, though he [or she] intended only to use two of them and had not made up his [or her] mind as to which two he [or she] would use (See further [13.180]).

To distinguish [13.110] The words “to distinguish” have generated most trade mark litigation, and an assessment of the distinctiveness of a sign is largely a matter of evidence, judgement, semantics and argument. This is unsurprising given that the requirement of distinctiveness has been a 604 [13.100]

Trade Marks

CHAPTER 13

core, irreducible requirement of Anglo-Australian trade mark registration systems since their inception: see eg Trade Marks Registration Act 1875 (UK) s 10; Trade Marks Act 1905 (Cth) ss 16, 20, 21; and before then some colonial Acts: see eg Trade Marks Registration Act 1876 (Vic) s 2. In Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 254 CLR 337; [2014] HCA 48, the majority of the High Court observed, at 345 [17], that while “the Act does not set out the kinds of trade marks which are registrable, s 17 reflects the objects and policy of all Commonwealth trade marks legislation: (1) that the Register will protect distinctive trade marks; (2) that the monopoly following registration is a sufficient basis upon which to seek relief from infringement; and (3) that the likelihood of deception and confusion between trade marks should be avoided” (citations omitted). The Trade Marks Act 1995 (Cth) s 41 takes the route of outlining what is not distinctive, whereas Trade Marks Act 1955 (Cth) s 24 instead tried to set out categories of what is inherently distinctive. Even under the 1955 legislation, an important aspect of the concept of distinctive marks was defined negatively; that is, not descriptive, not geographic, etc (Trade Marks Act 1955 (Cth) s 24(d)). The cases on distinctiveness extracted below at [13.260] – [13.470], mainly deriving from the 1955 legislation, will be discussed in the context of trade mark registration.

Goods or services [13.120] The Act provides a plain English characterisation of goods and services in relation to trade marks, ie goods or services dealt with or provided in the course of trade by the person. See Trade Marks Act 1995 (Cth) s 6 (“goods of a person” and “services of a person”). Under s 19, trade marks may be registered for both goods and services. They may be registered in more than one class, as discussed below. Trade marks could only be registered in relation to goods until 1978. In that year, the Trade Marks Act 1955 (Cth) was amended to apply to marks in relation to services. The categories of services that can be registered are taken from the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (1957) (Nice Agreement). The way in which the Act was amended to extend its protection to services was, broadly, to apply the provisions relating to goods marks so far as feasible to service marks. See Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 1 IPR 265.

Dealt with or provided in the course of trade [13.130] The definition of “trade mark” in Trade Marks Act 1995 (Cth) s 17 requires that the sign be used to distinguish goods or services “dealt with or provided in the course of trade” from those of other traders. The previous Trade Marks Act 1955 (Cth) required that the mark sought to be registered “indicates a connection in the course of trade between the goods or services and a person who has the right, either as proprietor or registered user, to use the mark” (s 6(1)). This is another manifestation of the general proposition that it is not possible to register what is not the property of the person using (or intending to use) the mark. The “dealing” with in the “course of trade” indicates the need for a proper connection between the trader and the applied-for mark. [13.130]

605

Intellectual Property: Commentary and Materials

REGISTRATION Administration and Register of Trade Marks [13.140] Trade Marks Act 1995 (Cth) Part 19 provides for a Registrar and Deputy Registrar

of Trade Marks. Part 20 s 207 provides that a Register of Trade Marks is be kept at the Trade Marks Office (ie, IP Australia), into which particulars of marks are to be entered together with other relevant information about marks, such as the goods or services in respect of which they are to be used, and “all other matters that were on the old register”, which include any corrections, alterations, rectifications or amendments, disclaimers, limitations or conditions to which a mark is subject, and notice of any assignments or transmissions. This no longer includes details of registered user agreements, and “trafficking” in marks is no longer disallowed, even though it may be poor commercial practice (compare “bad faith” oppositions, Trade Marks Act 1995 (Cth) s 62A). The Trade Marks Act 1955 (Cth) s 14 provided that the Register of Trade Marks be divided into four parts. Part A comprised marks registered under the Trade Marks Act 1905 (Cth) together with marks registered as distinctive since the commencement of the Trade Marks Act 1955 (Cth). Part B comprised marks that were not distinctive but capable of becoming so. Part C comprised certification trade marks, and Part D defensive trade marks. The Register still provides for the recording of “registered marks, certification trade marks and defensive marks” (Trade Marks Act 1995 (Cth) s 207), but no longer divides registered marks into Parts A and B, although many cases on trade marks refer to this division and it is useful to understand the difference. Essentially, Part A was for “inherently distinctive marks” and Part B for those marks that needed some degree of “acquired distinctiveness” to function as a mark. Trade Marks Act 1995 (Cth) s 41 deals with the requirement of distinctiveness, and this is explained below in [13.260]. For administrative convenience, goods and services are divided into classes and registration is required for each class. This classification is based upon that settled by the 1957 Nice Agreement, to which Australia has acceded.

606 [13.140]

Trade Marks

CHAPTER 13

Trade Marks Regulations 1995 (Cth) [13.150] Trade Marks Regulations 1995 (Cth) Schedule 1: Classification of goods and services (reg 3.1)

SCHEDULE 1–CLASSIFICATION OF GOODS AND SERVICES (regulation 3.1)

Part 1–Classes of goods [13.155] Item number (Class number) 1

2 3 4 5

6

7 8 9

10 11 12 13 14 15

Class of goods (Class heading)

Chemicals used in industry, science and photography, as well as in agriculture, horticulture and forestry; unprocessed artificial resins, unprocessed plastics; manures; fire extinguishing compositions; tempering and soldering preparations; chemical substances for preserving foodstuffs; tanning substances; adhesives used in industry Paints, varnishes, lacquers; preservatives against rust and against deterioration of wood; colourants; mordants; raw natural resins; metals in foil and powder form for painters, decorators, printers and artists Bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices Industrial oils and greases; lubricants; dust absorbing, wetting and binding compositions; fuels (including motor spirit) and illuminants; candles, wicks for lighting Pharmaceutical and veterinary preparations; sanitary preparations for medical purposes; dietetic food and substances adapted for medical or veterinary use, food for babies; dietary supplements for humans and animals; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides Common metals and their alloys; metal building materials; transportable buildings of metal; materials of metal for railway tracks; non-electric cables and wires of common metal; ironmongery, small items of metal hardware; pipes and tubes of metal; safes; goods of common metal not included in other classes; ores Machines and machine tools; motors and engines (except for land vehicles); machine coupling and transmission components (except for land vehicles); agricultural implements, other than hand operated; incubators for eggs; automatic vending machines Hand tools and implements (hand operated); cutlery; side arms; razors Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; compact discs, DVDs and other digital recording media; mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment, computers; computer software; fire-extinguishing apparatus Surgical, medical, dental and veterinary apparatus and instruments, artificial limbs, eyes and teeth; orthopaedic articles; suture materials Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes Vehicles; apparatus for locomotion by land, air or water Firearms, ammunition and projectiles; explosives; fireworks Precious metals and their alloys and goods in precious metals or coated therewith, not included in other classes; jewellery, precious stones; horological and chronometric instruments Musical instruments

[13.155]

607

Intellectual Property: Commentary and Materials

Item number (Class number) 16

17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Class of goods (Class heading)

Paper, cardboard and goods made from these materials, not included in other classes; printed matter; bookbinding material; photographs; stationery; adhesives for stationery or household purposes; artists’ materials; paint brushes; typewriters and office requisites (except furniture); instructional and teaching material (except apparatus); plastic materials for packaging (not included in other classes); printers’ type; printing blocks Rubber, gutta-percha, gum, asbestos, mica and goods made from these materials and not included in other classes; plastics in extruded form for use in manufacture; packing, stopping and insulating materials; flexible pipes, not of metal Leather and imitations of leather, and goods made of these materials and not included in other classes; animal skins, hides; trunks and travelling bags; umbrellas and parasols; walking sticks; whips, harness and saddlery Building materials (non-metallic); non-metallic rigid pipes for building; asphalt, pitch and bitumen; non-metallic transportable buildings; monuments, not of metal Furniture, mirrors, picture frames; goods (not included in other classes) of wood, cork, reed, cane, wicker, horn, bone, ivory, whalebone, shell, amber, mother-of-pearl, meerschaum and substitutes for all these materials, or of plastics Household or kitchen utensils and containers; combs and sponges; brushes (except paint brushes); brush-making materials; articles for cleaning purposes; steel wool; unworked or semi-worked glass (except glass used in building); glassware, porcelain and earthenware not included in other classes Ropes, string, nets, tents, awnings, tarpaulins, sails, sacks and bags (not included in other classes); padding and stuffing materials (except of rubber or plastics); raw fibrous textile materials Yarns and threads, for textile use Textiles and textile goods, not included in other classes; bed covers; table covers Clothing, footwear, headgear Lace and embroidery, ribbons and braid; buttons, hooks and eyes, pins and needles; artificial flowers Carpets, rugs, mats and matting, linoleum and other materials for covering existing floors; wall hangings (non-textile) Games and playthings; gymnastic and sporting articles not included in other classes; decorations for Christmas trees Meat, fish, poultry and game; meat extracts; preserved, frozen, dried and cooked fruits and vegetables; jellies, jams, compotes; eggs; milk and milk products; edible oils and fats Coffee, tea, cocoa and artificial coffee; rice; tapioca and sago; flour and preparations made from cereals; bread, pastry and confectionery; ices; sugar, honey, treacle; yeast, baking-powder; salt; mustard; vinegar, sauces (condiments); spices; ice Grains and agricultural, horticultural and forestry products not included in other classes; live animals; fresh fruits and vegetables; seeds; natural plants and flowers; foodstuffs for animals; malt Beers; mineral and aerated waters and other non-alcoholic beverages; fruit beverages and fruit juices; syrups and other preparations for making beverages Alcoholic beverages (except beers) Tobacco; smokers’ articles; matches

Part 2–Classes of services [13.160] Item number (Class number) 35 36 37 38 39 40 41

Class of services (Class heading)

Advertising; business management; business administration; office functions Insurance; financial affairs; monetary affairs; real estate affairs Building construction; repair; installation services Telecommunications Transport; packaging and storage of goods; travel arrangement Treatment of materials Education; providing of training; entertainment; sporting and cultural activities

608 [13.160]

Trade Marks

Item number (Class number) 42 43 44 45

CHAPTER 13

Class of services (Class heading)

Scientific and technological services and research and design relating thereto; industrial analysis and research services; design and development of computer hardware and software Services for providing food and drink; temporary accommodation Medical services; veterinary services; hygienic and beauty care for human beings or animals; agriculture, horticulture and forestry services Legal services; security services for the protection of property and individuals; personal and social services rendered by others to meet the needs of individuals

[13.165] The classes of registration set out above are merely an administrative tool. They are not definitive in deciding if goods or services are the same or similar (Trade Marks Act 1995 (Cth) s 14) or “closely related” (s 44) for the purposes of deciding – this being a question of fact – whether signs conflict with or infringe existing registered signs. See, for example, Coleman Company Inc v Igloo Products Corp (1999) 48 IPR 158. In coming to the conclusion that refrigerators and agricultural equipment were not “goods of the same description”, the High Court in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592, 607 adopted Romer J’s multifactorial test in Re Jellinek’s Application (1946) 63 RPC 59, 70, and the Assistant-Comptroller’s elaboration to that multifactorial test: see further [13.490]. The relevant factors here are: the nature and characteristics of the goods; their origin, their purpose, whether they are usually produced by one and the same manufacturer; whether the goods are distributed by the same wholesale houses, whether they are sold in the same shops over the same counters during the same seasons and to the same class or classes of customers, and whether by those engaged in their manufacture and distribution they are regarded as belonging to the same trade. The Court, at 607, went on to say that: Giving full weight to all these matters we are satisfied that s 25 [of the Trade Marks Act 1905 (Cth), similar to current s 44] has no application to this case. The goods to be compared and their respective uses are vastly different and, though the evidence shows that in the course of marketing and distribution there may be substantial points of contact, the evidence does not lead to the conclusion that the goods of the appellant [refrigerators etc] are of the same description as those the respondent [well drilling and boring machinery, milking machines, windmills, engines and windmills, pumps etc]. (emphasis original)

Eligibility for registration [13.170] Trade Marks Act 1995 (Cth) s 27(1) provides that “[a] person may apply for the registration of a trade mark in respect of goods and/or services” if they claim to be the owner of the mark (and are using or intending to use the mark, authorising or intending to authorise another to use it, or intending to assign the mark to a company about to be formed, which will use the mark). Section 28 allows the possibility of joint proprietorship. Section 58 provides for opposition to registration on the ground that the applicant is not the owner of the mark. Section 59 provides a separate ground of opposition where the applicant does not intend to use or authorise the applied-for mark in Australia. As the following case illustrates, the courts have traditionally taken a liberal view of the intention to use requirement. However, as a matter of practice, where an opponent makes out a prima facie case of lack of intention to use the mark, the evidentiary onus shifts to the applicant to establish that intention to use the mark: see Food Channel Network Pty Ltd v Television Food Network GP [2010] FCAFC 58; (2010) 185 FCR 9, 27 [72]; Suyen Corporation v Americana International [13.170]

609

Intellectual Property: Commentary and Materials

Ltd [2010] FCA 638; (2010) 187 FCR 169; 198 [190] (may shift); Soares v Australian Postal Corporation [2016] ATMO 10, [59] (establishing s 59 and s 62A grounds of opposition). Authorship as the basis of proprietorship

Aston v Harlee Manufacturing [13.180] Aston v Harlee Manufacturing Co (1960) 103 CLR 391 High Court of Australia [On 14 May 1952, the applicant sought registration of the mark “Tastee Freez” in respect of iced milk. The respondent was a US franchisor of dairy and ice cream products, which were franchised under the name “Tastee Freez”. The respondent had applied for registration of that name as a trade mark in the US on 5 August 1950. The registration was effected on 27 April 1954. In December 1951, the applicant had had discussions with the respondent about operating as a franchisee. On 10 February 1956, notice of opposition to the applicant’s registration was lodged by the respondent. The respondent, on 3 April 1956, applied to register the “Tastee Freez” mark.] FULLAGAR J: [398] … The case seems to me to be one of considerable difficulty. What s 27 doubtless primarily contemplates is the case where two or more rival claimants for the same mark, or nearly identical marks, assert a title acquired by user. In the present case there has been, even up to the present time, no relevant user of the mark in question by either party in Australia, but it does not follow that neither party is entitled to register the mark. Section 32 of the Act provides that any person claiming to be the proprietor of a trade mark may apply to the Registrar for the registration of his trade mark. The right to registration depends, therefore, on proprietorship of a mark. The conception of proprietorship, other than proprietorship acquired by a user which has made the mark distinctive of the applicant’s goods, is a difficult conception, but it has been [399] explained by Dixon J in Shell Co of Australia Ltd v Rohm & Haas Co (1949) 78 CLR 601 at 625ff, where his Honour (at 626) refers to the history of the English legislation. His Honour quotes Cotton LJ as saying in Re Hudson’s Trade Marks (1886) 32 Ch D 311 at 319, 320: The difficulty is this: Is a man to be considered as entitled to the use of any trade mark when he has never used it at all? That is a difficulty, but I think the meaning is this. If a man has designed and first printed or formed any of those particular and distinctive devices which are referred to in the first part of s 10, he is then looked upon as the proprietor of that which is under that Act a trade mark, which will give him the right so soon as he registers it. Dixon J then sums up the position by saying (at 627): It is clear enough from the course of legislation and of decision that an application to register a trade mark so far unused must, equally with a trade mark the title to which depends on prior user, be founded on proprietorship. The basis of a claim to proprietorship in a trade mark so far unused has been found in the combined effect of authorship of the mark, the intention to use it upon or in connection with the goods and the applying for registration. “Authorship”, says his Honour a little later (at 628), “involves the origination or first adoption of the word or design as and for a trade mark”. The passages quoted above require careful consideration in relation to the present case. In the first place, I do not think that the requirement of “authorship” means that the applicant must be the true and first inventor: he has not to establish anything analogous to what an applicant for letters patent for an invention must establish. I do not think that an opponent of an application for registration of a trade mark could succeed by saying merely “I thought of it first”, or even “I thought of it first, and communicated it to the applicant”. It is otherwise if the opponent has used the mark in relation to goods. In Re Hick’s Trade Mark (1897) 22 VLR 636 at 640, Holroyd J, speaking for a Full Court, said: In order to substantiate his application to be placed on the register for this word he must have claimed to be the proprietor, and the word “proprietor” must be taken to mean the person 610 [13.180]

Trade Marks

CHAPTER 13

Aston v Harlee Manufacturing cont. entitled to the exclusive use of that name. If there is anyone else who would be interfered with by the registration of the word “Empress” in the exercise of a right which such person has already acquired to use the same word in application to the same kind of thing, then Hicks [400] ought not to have been put on the register for that trade mark. The reference in this passage to a “right acquired” does not, of course, mean that an opponent, or a person aggrieved on a motion to expunge, must show that he has acquired such a right to the mark at common law as would enable him to maintain an action for passing off. In the second place, it would appear that an applicant may be the “author” of a trade mark, although he has deliberately copied or adopted a mark registered in a foreign country in respect of the same description of goods. In Re Registered Trade Mark “Yanx”: Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 202 Williams J said: “To try and register in Australia a word which the applicant to the knowledge of the respondent is using elsewhere on its cigarettes is sharp business practice. But it is not in itself fraudulent or a breach of the law.” (I would think myself that it may or may not, according to circumstances, constitute “sharp business practice”.) Again, it is otherwise if the opponent or person aggrieved has used the mark, for prior user by the foreign proprietor negatives the claim of the Australian applicant to “authorship”. But the user must be user in Australia: the most extensive user by another person in foreign countries will not avail by itself to defeat an applicant for registration in this country. It has been said, however, that the courts frown on these borrowings from abroad, and very slight evidence of user in Australia has been held sufficient to protect the proprietor of a foreign trade mark: Seven Up Co v OT Ltd (1947) 75 CLR 203 at 211. A good example is Blackadder v Good Roads Machinery Co Inc (1926) 38 CLR 332. That was clearly, I think, not a case of fraud. The vital fact was that, as the court held, the goods were to be regarded as having “come into the Australian market” bearing the trade mark “Winner”. Another good example perhaps an extreme example is the Yanx case (1951) 82 CLR 199. But, where there has clearly been no user at all in Australia, an applicant for a trade mark identical with a mark registered in a foreign country is entitled to be regarded, so far as Australia is concerned, as the “author” of the mark. I can see no reason why this should not be so. In Seven Up Co v OT Ltd (1947) 75 CLR 203 at 211, Williams J, after citing certain English authorities, said: In my opinion the effect of these cases is that in the absence of fraud it is not unlawful for a trader to become the registered proprietor under the Trade Marks Act of a mark which has been used, however extensively, by another trader as a mark for similar goods in a foreign [401] country, provided the foreign mark has not been used at all in Australia at the date of the application for registration. Latham CJ quoted this passage with approval (at 216) on an appeal from Williams J, which was dismissed. There is another element mentioned by Dixon J in the Shell Co’s case (1949) 78 CLR 601 at 627, which is stated as essential to the proprietorship of an unused trade mark. That element is the intention of the applicant for registration to use it upon or in connection with goods. As to this I need only say that I do not regard his Honour as meaning that an applicant is required, in order to obtain registration, to establish affirmatively that he intends to use it. There is nothing in the Act or the Regulations which requires him to state such an intention at the time of application, and the making of the application itself is, I think, to be regarded as prima facie evidence of intention to use. I cannot think that the Registrar is called upon to institute an inquiry as to the intention of any applicant, and I think that, on an opposition or on a motion to expunge, the burden must rest on the opponent, or the person aggrieved, of proving the absence of intention. Again, I do not think that “intention” in this connection ought to be regarded as meaning an intention to use immediately or within any limited time. A manufacturer of (say) confectionery would, I should suppose, be entitled to register three trade marks in relation to confectionery, though he intended only to use two of them and had not made up [13.180]

611

Intellectual Property: Commentary and Materials

Aston v Harlee Manufacturing cont. his mind as to which he would use. If he in fact does not use any of them for the period specified in s 72, the unused mark or marks may be expunged under that section. On the other hand, a manufacturer of confectionery, who had no intention of ever manufacturing motor cars, might be held disentitled to register a mark in relation to motor cars: the effect of Re Registered Trade Marks of John Batt & Co [1898] 2 Ch 432; [1899] AC 428, is, I think, correctly stated in the first paragraph of the headnote to the report of the case before Romer J and the Court of Appeal. A claim to proprietorship of a trade mark will be defeated if it is proved that to give effect to it would be to involve a fraud upon another person. A recent example is the case of Farley (Aust) Pty Ltd v JR Alexander & Sons (Qld) Pty Ltd (1946) 75 CLR 487, where Williams J held (at 492) that a registration had been fraudulently obtained, on the ground that a promise not to use the mark after existing stocks [402] had been disposed of had “lulled the applicant” (sc for expungement) “into a state of false security”. It would appear that something short of fraud may suffice to defeat an application for registration, or support an applicant for expungement. Thus, Latham CJ in the Seven Up case (1947) 75 CLR 203 at 215 said: “User in Australia would be relevant. So also would facts establishing a breach of confidential relations or any fraud.” I have now stated the facts which I regard as relevant and the principles which I think I have to apply, and I now come to the first question which I have to determine. That is the question whether Aston is entitled, for the purposes of his application of 14 May 1952, to be regarded as the proprietor of the trade mark “Tastee Freez”. Prima facie he is, in my opinion, so entitled. Before the date of his application for registration neither Harlee nor anybody else had used the mark in Australia, and it follows that, so far as Australia is concerned, he was the author or originator of it. … [404] … It may well be that a scrupulous businessman would not have done what Aston did without informing Harlee beforehand that he intended to make the application, or at least informing Harlee afterwards that he had done so. But I cannot find enough in this case to distinguish it from the Seven Up case (1947) 75 CLR 203. When once it is conceded, as a matter of law, that a person may apply for and obtain in Australia a valid registration of a trade mark registered and used in a foreign country but not used in Australia, I do not think that exceptions and qualifications should be introduced which are based merely on conceptions of commercial ethics. Aston’s action may or may not be what Williams J in the Yanx case (1951) 82 CLR 199 at 202 called “sharp business practice”, but what he did was done without active deception, without the saying or doing of [405] anything misleading and without, as I think, any breach of any confidence reposed in him. For the above reasons, I am of opinion that Aston is entitled to be treated as the proprietor of the trade mark in question. Since his application for registration is poor in time to that of Harlee, it follows that Harlee is not entitled to be treated as the proprietor of the mark. I propose to make a declaratory order accordingly.

[13.190]

Notes

There are numerous examples of local traders adopting marks that have been registered and used overseas. In fact, it has been said that it is a “well established principle of Australian trade mark law that it is no offence to copy a foreign trade mark”: Sizzler Restaurants International Inc v Sabra Int Pty Ltd (1990) 20 IPR 331, 342. See also Michael Sharwood & Partners Pty Ltd v Fuddruckers Inc (1989) 15 IPR 188; Jamieson v American Dairy Queen Corp (1989) 18 612 [13.190]

Trade Marks

CHAPTER 13

IPR 101; Riviera Leisurewear Pty Ltd v J Hepworth & Son Plc (1987) 9 IPR 305; Daimaru v Kabushiki Kaisha Daimaru (1990) 19 IPR 129; Dunlop Olympic Ltd v Cricket Hosiery Inc (1990) 20 IPR 475. Proprietorship in Australia can be established by overseas trade mark owners by “a very small amount of use of the foreign mark”: Seven Up Co v OT Ltd (1947) 75 CLR 203, 211. Nevertheless, Trade Marks Act 1995 (Cth) s 62A may now prove useful to the established foreign trader here: see [13.570]. Furthermore, the Trade Marks Act 1995 (Cth) introduced the concept of a “well-known mark”, whereby a mark used overseas may be regarded as “known” to the Australian public even if not “used” in this country in a trade mark context. However, this concept of being “well-known” does not extend to protecting any prior use, nor does it translate to the “anti-dilution” notion of trade mark infringement as that is understood in the US context. 20

On what date does protection commence? (s 72) [13.200] The applicant’s title to the trade mark is complete on registration, with protection under Trade Marks Act 1995 (Cth) s 72 for registered marks from the date of filing (rather than the date on which the registration was granted). Applicants thus have an inchoate claim pending the grant 21 if an application is not granted. Note that under s 106(1) a mark whose registration is being sought may be assigned or transmitted.

Proprietor’s use as criterion Moorgate Tobacco v Philip Morris [13.210] Moorgate Tobacco Co Ltd v Philip Morris Ltd (1984) 156 CLR 414 High Court of Australia [Philip Morris manufactured and distributed cigarettes in Australia under the trade mark “KENT”, which it was licensed to use by Loew’s Incorporated, the owner of the mark in Australia. Between 1975 and 1976, there were discussions between Loew’s and Philip Morris on the question of extending the scope of the licence agreement to embrace the proposed marks “KENT’S GOLDEN LIGHTS” and “KENT’S SPECIAL MILD”. Advertising material and cartons of the cigarettes displaying the proposed marks, which had been test marketed in the United States and Belgium, were sent to Philip Morris. In June 1977 the appellant entered into an agreement with Loew’s to purchase its international cigarette business, including the Australian “KENT” mark. On 12 July 1977, Philip Morris applied for registration in Australia of the mark “GOLDEN LIGHTS”. The appellant argued that pursuant to the agreement between Philip Morris and Loew’s, which the appellant had purchased, it was entitled to the “GOLDEN LIGHTS” mark.] DEANE J: [431] … The starting point of the first argument is the proposition that, at the time when Philip Morris applied for registration of the trade mark GOLDEN LIGHTS Moorgate had “the right in Australia to the trade mark [432] KENT GOLDEN LIGHTS”. It is conceded that, unless that proposition is made good Moorgate can obtain no protection in respect of the mark GOLDEN LIGHTS from the provisions of the licence agreement protecting the “Trademark Rights” of the licensor. The only basis upon which Moorgate seeks to make good its claim to such a “right” in Australia is that Loew’s had become the proprietor of the trade mark KENT GOLDEN LIGHTS where for the purposes of s 40(1) of the Trade Marks Act 1955 (Cth) with the result that it was entitled to apply for registration of the mark 20 21

See especially M Handler, “Trade Mark Dilution in Australia?” (2007) EIPR 307; compare M Gonsalves and P Flynn, “Dilution Down Under” (2006) 28(3) EIPR 174. Shell Co (Aust) Ltd v Rohm and Haas Co (1948) 78 CLR 601, 631 (per McTiernan J). [13.210]

613

Intellectual Property: Commentary and Materials

Moorgate Tobacco v Philip Morris cont. and to resist the application of any one else who purported to apply for registration of it as “the proprietor”. It was conceded by Moorgate that it could not claim to have become the proprietor of the mark as an unused mark during the currency of the licence agreement since it did not apply for registration of the mark until more than two weeks after the licence agreement had expired. That being so, Moorgate’s claim to have become “the proprietor” of the mark KENT GOLDEN LIGHTS must, of necessity, be based upon prior use: see Kendall Co v Muslyn Paint & Chemicals (1963) 109 CLR 300 at 304-305. The prior use of a trade mark which may suffice, at least if combined with local authorship, to establish that a person has acquired in Australia the statutory status of “proprietor” of the mark, is public use in Australia of the mark as a trade mark, that is to say, a use of the mark in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods with respect to which the mark is used and that person (see, generally, Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 423-424: Re Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 204-205; and the definition of “trade mark” in s 6(1) of the Trade Marks Act 1955). The requisite use of the mark need not be sufficient to establish a local reputation and there is authority to support the proposition that evidence of but slight use in Australia will suffice to protect a person who is the owner and user overseas of a mark which another is seeking to appropriate by registration under the Trade Marks Act 1955. In such a case, the court “seizes upon a very small amount of use of the foreign mark in Australia to hold that it has become identified with and distinctive of the goods of the foreign trader in Australia”: see Seven Up Co v OT Ltd (1947) 75 CLR 203 at 211; [1947] ALR 436 at 437; Aston v [433] Harlee Manufacturing Co (1960) 103 CLR 391 at 400. In so far as the trade mark KENT GOLDEN LIGHTS is concerned, Loew’s was the author, owner and user of that mark in the US. Assuming, in its favour, that evidence of but slight use in the course of trade in Australia would suffice to establish its status as proprietor of the mark, as distinct from merely precluding another from establishing local authorship, the question arises whether there was evidence of even such slight use. For Philip Morris, it is submitted that there was no evidence at all of any relevant use. To establish prior use of the mark in Australia, Moorgate relies upon evidence that, during or in connection with discussions between Loew’s and Philip Morris about the introduction of the low tar and nicotine cigarette in Australia, packets of cigarettes and associated advertising material displaying the name KENT GOLDEN LIGHTS were handed personally, or in one instance sent by mail, to representatives of Philip Morris in Australia. That evidence indicates that there were at least three occasions on which such cigarette packets and advertising material were so delivered. At the times when those items were so delivered, there was no intention on the part of Loew’s that it would itself trade in the goods in Australia. Nor, for that matter, had it been decided what name would be used if Philip Morris were, under licence from Loew’s, to commence to manufacture and market the goods in Australia at some indefinite future time. The court was referred to a large number of cases and to some administrative decisions in which consideration has been given to what constitutes a use or user of a trade mark for the purposes of the statutory notion of proprietorship of the mark before registration. The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark. It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark (Re Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corp Ltd (1951) 82 CLR 199 at 204-205) or that the mark has been used in an advertisement of the goods in the course of trade: Shell Co of Australia v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 at 422. In such cases, however, it is possible to identify [434] an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade. In the present case, there was not, at any relevant time, any actual trade or offer to 614 [13.210]

Trade Marks

CHAPTER 13

Moorgate Tobacco v Philip Morris cont. trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used. The cigarette packets and associated material were delivered to Philip Morris to demonstrate what Loew’s was marketing in other countries and what Philip Morris might market, under licence from Loew’s, if it decided to manufacture and trade in the goods in Australia and to use the mark locally at some future time. There was no relevant trade in the goods in Australia and the delivery of the cigarette packets and associated material to Philip Morris did not, in the circumstances, constitute a relevant user or use in Australia of the mark KENT GOLDEN LIGHTS for the purpose of indicating or so as to indicate a connection in the course of trade between the new cigarettes and Loew’s. It follows that Moorgate has failed to establish proprietorship of the mark KENT GOLDEN LIGHTS either at the time Philip Morris applied to register the mark GOLDEN LIGHTS or at the time when the licence agreement expired. It is unnecessary to consider whether, if Moorgate had succeeded in establishing such proprietorship, its rights in respect of the mark KENT GOLDEN LIGHTS would have been protected by the provisions of Article VI of the licence agreement, notwithstanding that the new low tar and nicotine cigarettes were not “Licensed Products” under that agreement or whether, even if its rights in the mark KENT GOLDEN LIGHTS were within the protection of Article VI, that protection extended to preclude Philip Morris from applying for registration of the mark GOLDEN LIGHTS. It should, perhaps, be mentioned that Moorgate did not argue in this court that the fact that advertisements of the US’ KENT GOLDEN LIGHTS cigarettes came into Australia via American magazines meant that there had been a relevant use or user of the name in Australia: see Seven Up Co v OT Ltd (1947) 75 CLR 203 at 211; [1947] ALR 436 at 437. [Gibbs CJ, Mason, Wilson and Dawson JJ concurred.]

What kind of use is sufficient? Lomas v Winton Shire Council [13.220] Lomas v Winton Shire Council (2002) FCAFC 413 Federal Court of Australia (Full Court) [The applicant, Brenda Lomas, applied to register WALTZING MATILDA in respect of respect of various goods and services in classes 29, 30, 31, 35 and 42. Winton Shire Council (Winton), a local government authority, and a related corporation, Waltzing Matilda Centre Limited, (the company) opposed the registration, inter alia, on the grounds that Lomas was not the owner of the mark pursuant to Trade Marks Act 1995 (Cth) s 58.] COOPER, KIEFEL AND EMMETT JJ: … The Factual Background [20] In April 1895 the song “Waltzing Matilda” (“the Song”), the words of which were written by A B “Banjo” Patterson, was first performed in the town of Winton. The words to the Song had been composed at Dagworth Station, about 100 kilometres from the town of Winton. In April 1995 Winton hosted celebrations, in the town of Winton, of the centenary of the first performance of the Song. The celebrations consisted of a programme of special events, entertainment, historical displays and exhibitions over twelve days. The programme featured different elements of the themes of the Song, its history and the connection between the Song and the town of Winton. [21] A central feature of the marketing and publicity campaign for the celebration was the use of a logo as follows: [Logo not reproduced.] The logo shows a figure of a swagman with an animal over his shoulder in a swag, with the words “1895 Waltzing Matilda Centenary 1995” in a scroll across the figure of the swagman, the words [13.220]

615

Intellectual Property: Commentary and Materials

Lomas v Winton Shire Council cont. “Waltzing Matilda Centenary” above the logo and the words “Winton Queensland” and the date “6 April 1995” below it. Food and beverages provided during the celebrations included damper, billy tea and food cooked in camp ovens by a person employed by Winton dressed in the character costuming of a swagman. [22] From about March 1995 to April 1995, a store was established in the main street of Winton offering a range of products, brochures and material promoting the celebrations and the town of Winton. Products available for sale included stubby holders, pannikin or tin cups, tea towels, T-shirts, teaspoons, postcards and caps. The tin cup, for instance, had “Waltzing Matilda Centenary Winton Queensland 1895-1995” printed on the outside of it, and the tea towel had a stylized swagman set against a depiction of the Southern Cross constellation under which the words “Waltzing Matilda Centenary Winton Queensland 1895” appeared. [23] In March 1995 plans for the design and development of a permanent attraction in the town of Winton celebrating the Song, to be known as the Waltzing Matilda Centre (“the Centre”), were prepared. In October 1996 Winton decided to construct and operate the Centre. In February 1997 the foundation stone for the Centre was laid. On 28 August 1997 a logo for the Centre was finalised and it has been used since then. From October 1997 Winton conducted pre-opening advertising and publicity for the Centre. [24] In particular, in October 1997, Winton circulated a brochure calling attention to “The Waltzing Matilda Centre”. The brochure contains the following reference to an aspect of the proposed activities of Winton at the Centre: Savour old fashioned, home baked bush fare at the Country Kitchen [25] Winton also caused an advertisement (“the Advertisement”) to be published in the 1 November 1997 edition of the Accommodation and Touring Guide of the Royal Automobile Club of Queensland (“the RACQ Guide”). The Advertisement was headed “THE WALTZING MATILDA CENTRE”. Next to a representation of a rural scene the words “Outback Qld’s Newest Attraction Open Easter 1998” appear in a starburst. [26] The following text then appears: Travel the Matilda Highway to Winton, the home of the Waltzing Matilda legend then visit the outback’s exciting new attraction – the Waltzing Matilda Centre. This national centre combines history and creative technology to present the Waltzing Matilda legend, life in the bush, interactive displays with exhibitions which capture the true spirit of the Australian character as well as the famous QANTILDA Museum collection. Visit the Waltzing Matilda General Store for unique souvenirs and the Waltzing Matilda Country Kitchen for a traditional homestead meal. Open 7 days: 9.00 am-5.00 pm. For information: Winton Shire Council. PO Box 228 Winton QLD 4730. [27] Immediately under the Advertisement in the RACQ Guide, the following entry appears: WALTZING MATILDA CENTRE, WALTZING MATILDA CENTRE AND QANTILDA MUSEUM. [Telephone Number] Winton, the home of WALTZING MATILDA, will open the WALTZING MATILDA CENTRE based upon our national song during Easter 1998. Plan to be part of the opening celebrations from 9-13 April 1998. Include the WALTZING MATILDA CENTRE and QANTILDA MUSEUM in your next outback trip. [28] In March 1998 Winton began operating the Centre. Despite the suggestion in the Advertisement, at no time since the publication of the Advertisement has there been any use of the name “Waltzing Matilda Country Kitchen”, whether in connection with the Centre or otherwise. On 616 [13.220]

Trade Marks

CHAPTER 13

Lomas v Winton Shire Council cont. the other hand, from the time when the Centre began operating, there has been an eating establishment conducted in the Centre under the name “Coolibah Country Kitchen”. [29] The Company was formed in January 1999. Since its formation, it has operated the Centre, including the eating establishment called the “Coolibah Country Kitchen”. … Grounds of Appeal [33] The questions that would be raised on appeal are limited to the operation of s 58 of the Act. Ms Lomas formulated four so-called errors on the part of the primary judge as follows: (1) His Honour erred in concluding that there was use of the Trade Mark in relation to country kitchen services since, if there was use of a trade mark by Winton before the Priority Date, the trade mark used was “Waltzing Matilda Country Kitchen”. (2) Any such use as was made of the Trade Mark in the Advertisement was not use of the Trade Mark such as would give ownership of that trade mark to Winton. (3) Contrary to his Honour’s conclusion, an inference should not be drawn that there was an intention to use the Trade Mark as at the Priority Date since Winton’s intention as at the date of publication of the Advertisement had changed by the time of commencement of the operation of the Centre in March 1998. (4) The only services in Class 42 in respect of which there was prior use of the Trade Mark in relation to country kitchen services were: “The establishment, operation and conduct of outlets, venues and facilities for the supplying and provision of meals and refreshments, including restaurants, cafes, food outlets, meal rooms, dining venues, eateries, cafeterias, canteens, snack bars, take away stores and fast food outlets.” Accordingly, any prior use by Winton found by the primary judge was not such as to extend to the following services in Class 42: “Providing food stuffs and beverages to the said outlets, venues and facilities; catering services; advisory and consultancy services pertaining to the said services.” Use of the Trade Mark by Winton [34] It is clear that the Company has never used the Trade Mark in any sense. The question is whether, by causing the Advertisement to be published in the RACQ guide, Winton used the Trade Mark in such a way as to become the owner of it within the meaning of the Act. [35] On questions of fact and degree involving matters of judgment and impression, minds may differ. Thus, in a doubtful case, respect and weight should be given to the views of a primary judge. That approach should not, however, be a fetter on an appellate court in giving effect to its own conclusion where it is definitely of a contrary view to that taken by a primary judge – see SAP Australia Pty Ltd v Sapient Australia Pty Ltd [1999] FCA 1821 at [38]. [36] The legislative scheme relating to opposition proceedings … indicates that an opponent has the onus of establishing the ground of opposition relied on. In the present context, that means that Winton and the Company must establish that Ms Lomas was not the owner of the Trade Mark as at the Priority date, at least on the balance of probabilities. On one view, they may be required to establish that she was clearly not the owner … [37] The basis of any claim to ownership of a trade mark so far unused is to be found in the combined effect of authorship of the mark, the intention to use it upon or in connection with goods or services and applying for registration of the mark – Shell Company of Australia Ltd v Rohm and Haas Company & Anor (1949) 78 CLR 601 at 627 (“Shell Company Case”). Authorship in that sense involves the origination or first adoption of the word as and for a trade mark – Aston v Harlee Manufacturing Company (1960) 103 CLR 391 at 399. [13.220]

617

Intellectual Property: Commentary and Materials

Lomas v Winton Shire Council cont. [38] Thus, if the Trade Mark had not been used prior to the Priority Date in connection with the goods and services specified in the Application, Ms Lomas should be treated as the owner of the Trade Mark. On the other hand, if Winton is able to establish that, as at the Priority Date, it was the owner of the Trade Mark and not Ms Lomas, the opposition based on s 58 would succeed. The only basis advanced by Winton in support of its opposition is that it became the owner of the Trade Mark by reason of the publication of the Advertisement and the inferences that can be drawn from such publication. [39] The question of substance that is raised by the proceeding is what constitutes a use or user of a trade mark for the purposes of the statutory concept of ownership of the mark prior to registration. It is not necessary that there be an actual dealing in goods bearing a trade mark before there can be said to be use of that mark as a trade mark in Australia. For example, there may be use where goods intended to be imported into Australia have not actually reached Australia but have been offered for sale in Australia under the mark. It may even be possible to establish use where the mark has been used in an advertisement of goods in the course of trade in circumstances where there is an existing intention to offer or supply goods bearing the mark in trade or there is an actual trade or offer to trade in the goods bearing the mark – Moorgate Tobacco Co Ltd v Phillip Morris Ltd and Anor [No 2] (1984) 156 CLR 414 at 433-4. However, where there is no actual trade or offer to trade in goods bearing the relevant mark in Australia or any existing intention to offer or supply such goods in trade, but merely preliminary discussions and negotiations about whether the mark would be so used, there is no use so as to constitute ownership of the mark (see Moorgate Tobacco (No 2) at 434). In reaching his conclusion, the primary judge clearly had regard to those principles. [40] The evidence indicates that there have been three uses by Winton of the expression “Country Kitchen”: first on its own in the brochure of October 1997, then in conjunction with “Waltzing Matilda” in the Advertisement and finally in conjunction with “Coolibah” in the operation of the Centre. That tends to suggest that the expression may be descriptive of a kind of service, being an outlet, venue or facility for the supply and provision of meals and refreshments that can be characterised as a “country kitchen”. On the other hand, the use of capital letters is more indicative of a trade name. [41] The Advertisement was headed “THE WALTZING MATILDA CENTRE” and invited tourists to visit “the outback’s exciting new attraction – the Waltzing Matilda Centre”. It referred twice to “the Waltzing Matilda Legend”. It also invited tourists to visit “the Waltzing Matilda General Store for unique souvenirs”. Thus, the Advertisement was drawing attention to the proposed facilities of the Centre, which were to include a general store, for unique souvenirs, and a country kitchen, for traditional homestead meals. [42] The absence of any reference in the brochure to “Waltzing Matilda” in mentioning of the country kitchen, and the fact that, when it commenced operation in April 1998, the country kitchen was called the “Coolibah Country Kitchen”, suggests that the reference to “Waltzing Matilda” in connection with a country kitchen in the Advertisement was no more than a reference to the proposed facility within the Centre. The lack of constancy in the usage by Winton of the expression “Country Kitchen” gives rise to an inference that Winton took some time in forming a settled intention as to the name under which the proposed country kitchen facility would trade. [43] The Court should not hasten to find that a name given to a centre or business superstructure is automatically given to every actual or proposed facility within it. The fact that Winton, in the Advertisement, separated the proposed facilities such as the “country kitchen” and the “souvenir shop” and then subsequently named the country kitchen the “Coolibah Country Kitchen” suggests that the “Waltzing Matilda” name applied to the Centre rather than to every component within it. [44] The Advertisement does not signify that Winton was intending, in November 1997, to offer services using the Trade Mark. Nor does it signify that Winton was, in November 1997, offering to 618 [13.220]

Trade Marks

CHAPTER 13

Lomas v Winton Shire Council cont. provide country kitchen services at some later time under the Trade Mark. Winton had no intention of providing country kitchen services in November 1997, whether in connection with the Trade Mark or otherwise. It did not intend to provide any such services before April 1998. [45] We are not persuaded, on the balance of probabilities, that the Advertisement by itself can be characterised as a use of the Trade Mark in relation to country kitchen services in the course of trade, such that it is possible to identify an intention, existing before the Priority Date, to offer or supply country kitchen services using the Trade Mark. That is the only basis advanced by Winton and the Company in support of the contention that Winton and not Mrs Lomas was the owner of the Trade Mark as at the Priority Date within the principles of the Shell Company Case. Further, we are certainly not persuaded that the Application should clearly be rejected on the ground that Ms Lomas was not the owner of the Trade Mark as at the Priority Date. Specification of Goods and Services [46] In any event, while the services of a country kitchen may be characterised as “the establishment, operation and conduct of an outlet, venue or facility for the supplying and provision of meals and refreshments”, conducting an outlet, venue or facility, which can properly be characterised as a country kitchen providing traditional homestead meals, does not involve: • providing foodstuffs and beverages to outlets, venues and facilities for the supplying of meals and refreshments; • catering services; or • advisory and consultancy services pertaining to the establishment, operation and conduct of outlets, venues and facilities for the supplying and provision of meals and refreshments. It follows that, even if the opposition based on s 58 succeeded, the primary judge erred insofar as his Honour directed that the specification of services in Class 42 be deleted entirely. … Conclusion [48] In the light of the conclusion that Winton had not used the Trade Mark so as to deprive Ms Lomas of ownership as at the Priority Date, the opposition should fail.

[13.230]

Notes

The case also raises broader issues, such as whether traders ought to be able to secure registration over culturally significant icons, or whether such marks can even function as trade marks in the first place. These issues and more are discussed in see Leanne Wiseman and Matthew Hall, “Waiting for the “Billy” to Boil: the Waltzing Matilda Case” in Andrew T Kenyon et al, Landmarks in Australian Intellectual Property Law (Cambridge, 2009) pp 233–250 Moreover, the case attracted special attention in Australian Council on Intellectual Property (ACIP), Protection of National Icons, December 2002, where, “in recognition of its special status as an Australian cultural term, Waltzing Matilda, [ACIP recommended] should be declared, from the commencement date of the regulations declaring it, a ‘non-exclusive’ trade mark under a new section of the Trade Marks Act 1995 (Cth)”; 8 [3.20]. This and ACIP’s other proposals, however, have since come to nothing.

[13.230]

619

Intellectual Property: Commentary and Materials

Processing applications [13.240] Broadly speaking, as usefully illustrated by the Reader’s Guide to Trade Marks Act

1995 (Cth) (Figure 13.2 below), there are up to five important stages in a successful application process: application, examination, acceptance, opposition (if arising) and registration. Following lodgement of an application in the approved form (s 27), the examiner is required by Trade Marks Act 1995 (Cth) s 31 to ascertain and report whether the application meets the prescribed requirements and the trade mark is capable of registration under the Act. Where an adverse report ensues, the applicant is permitted by s 33(4) to amend the application in order to remove the objection. An appeal lies to the Federal Court or Federal Circuit Court from the Registrar’s refusal to accept an application or from the imposition of any conditions by the Registrar (s 35). Part of the art of getting a trade mark registered is engaging in dialogue with the examiner as to the registrability of signs for which registration is sought. Clients will frequently want to register a mark that is too descriptive, or otherwise lacking distinctiveness, so a well-argued debate may secure success even if queries are raised. In Blount Inc v Registrar of Trade Marks (1998) 40 IPR 498, the court determined that the effect of Trade Marks Act 1995 (Cth) s 33 is that where “the Act requires the Registrar to be ‘satisfied’ of any matter, it is to be understood as requiring that he or she be persuaded of the matter according to the balance of probabilities (Rejfeck v McElroy (1965) 112 CLR 517 at 521)”. See also Registrar for Trade Marks v Woolworths PLC (1999) 45 IPR 411. However, it is worth pointing out that Blount proved the catalyst for some recent changes ushered in via the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) (Raising the Bar amendments), in particular, a wider application of the so-called “presumption of registrability” (s 33) to s 41 (see further [13.260]). More broadly, s 39 restricts from registration marks that are excluded by regulation (as to which, see reg 4.15; sch 2), and s 40 requires that a mark must be able to be represented graphically, so that colours, scents and sounds etc must described in precise words, diagrams, musical notation etc, or usually by a combination of these methods. Acceptance of an application is advertised in the Official Journal: Trade Marks Act 1995 (Cth) s 34. While it is beyond the scope of this chapter to discuss in detail the registration process, pursuant to the Raising the Bar amendments, there is now a two-month period that commences following acceptance during which a notice of opposition may be lodged (s 52). Moreover, the new s 52A states that if a notice of opposition has been lodged in accordance with s 52, an applicant may file a notice of intention to defend the application for registration of a trade mark. However, an applicant’s failure to lodge a notice of intention to defend the application within the prescribed manner and period – generally one month (see reg 5.13), unless extended: s 54A(2); reg 5.15 – will cause the application to lapse. From a practical perspective, opponents are through to benefit from these relatively robust periods because they are less likely to invest time and resources on preparing an opposition to an undefended (often entirely speculative) application.

620 [13.240]

Trade Marks

CHAPTER 13

Figure 13.2 Australian Trade Mark Registration Process

Any person may oppose the registration of a mark. The grounds include the same grounds on which an application may be rejected, save for the s 40 requirement that the mark be represented graphically: s 57. The grounds of opposition (and rejection) commonly relied [13.240]

621

Intellectual Property: Commentary and Materials

upon include lack of distinctiveness of a mark (s 41); earlier conflicting registration (s 44); applied-for mark is confusing (see s 43; s 60); applied-for mark is scandalous or contrary to law (s 42); the applicant is not the owner of the mark (s 58); lack of intention to use the mark (s 59); and bad faith applications (s 62A). Less commonly invoked are the s 61 (false geographic indication); s 58A (opponent’s earlier use of similar mark); and s 62 (“defective” application) grounds of opposition. Opposition proceedings typically require a minimum of eighteen months to conclude, with most taking more than two years. Where a notice of opposition has been lodged, the opponent is required to lodge a statement of grounds and particulars (see reg 5.7) and where necessary, file evidence in support of the notice (reg 5.14). The Registrar though first assesses whether the opponent’s statement of grounds and particulars are “adequate” before passing it on to the applicant (reg 5.8). Naturally, the applicant is permitted a reply, and may file evidence within variable periods, which turn on whether or not the opponent has filed evidence in support of the opposition (see reg 5.14). If no notice of opposition is lodged, the mark is registered. Registration runs for an initial period of 10 years from the date of application: s 72. Further renewals of 10 years may be obtained indefinitely, so long as renewal fees are paid: ss 75, 77. Pursuant to s 79, renewal of registration is even possible within six months after registration has expired: see further 75(2) as to the form of this renewal request.

Convention applications [13.250] Where an application for registration is made in Australia within six months after

the first application for the mark in a “Convention country” (most countries are signatories to the relevant IP conventions), Trade Marks Act 1995 (Cth) s 29 deems the date of application, for Australian purposes, to be the date of lodging the Convention application.

REGISTRABLE MARKS Distinctiveness [13.260] Trade Marks Act 1995 (Cth) s 41 sets out the grounds for rejecting a mark on the

basis that the applied-for mark is not “capable of distinguishing the applicant’s goods or services in respect of which the trade mark is sought to be registered”: s 41(1). Given that trade marks serve as signs, a mark that is indistinguishable from other marks will not serve as an effective sign and thus should not be protected under trade mark law. There are various aspects to being “capable of distinguishing”: the mark may be “inherently adapted” to such an extent that it distinguishes the goods or services (in other words, the mark serves as a sign that readily differentiates the particular goods or services from the goods or services of another entity); the mark has acquired distinctiveness, even though it is not to any extent inherently adapted to distinguish; or, as is commonplace, one looks to a combination of some – but insufficient – inherent adaptability to distinguish and (potential or actual) trade mark usage. New types of signs highlighted in the Trade Marks Act 1995 (Cth) (so called “nontraditional marks”, ie, shapes, colours, smells, sounds and aspects of packaging) caused some confusion in terms of how such marks can be distinctive. The ACIP Review of Enforcement of Trade Marks Issues Paper (2002) noted perceptions that examiners, who supposedly refused to accept them on the same grounds applied to traditional word or logo marks, were treating 622 [13.250]

Trade Marks

CHAPTER 13

such applications unfairly. How a “shape” mark and a “colour” mark can be considered distinctive is considered in the cases below (see [13.440] and [13.470] respectively). Before 1995, the Register of Trade Marks used to be divided into Part A for inherently distinctive marks, and Part B for those marks that had to be used and acquire a reputation before being seen as distinctive of the applicant’s goods or services (see [13.140]). However, every mark had to have some “inherent adaptability” about it. Under the Trade Marks 1995 (Cth), that is not necessary: even if an applied-for mark contains no inherent adaptability to distinguish, such a mark may be registered if it has acquired distinctiveness: ie the applied-for mark “does in fact distinguish the designated goods or services as being those of the applicant”: s 41(3). Recent amendments to the Trade Marks Act 1995 (Cth) s 41 flagged above, with effect from 15 April 2013, were introduced by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth) (Raising the Bar amendments). These amendments repealed s 41, and enacted a new s 41. The Explanatory Memorandum emphasised that the core notions of “inherently adapted to distinguish”, “capable of distinguishing”; “does or will distinguish” are not meant to be altered; and that to overcome the difficulties posed by decision-making matrix employed in Blount, the amendments are aimed at clarifying that the so-called presumption of registability (s 33) applies to s 41. 22 In addition to these changes, various subsections of s 41 have been renumbered. For ease of reference, Table 13.1 below offers a shorthand reference to comparable sections of Trade Marks Act 1995 (Cth) s 41 (explanatory notes excluded) 23 before and after the Raising the Bar amendments.

TABLE 13.1 s 41 Before and After the Raising the Bar Amendments Some operative provisions An application for the registration of a trade mark must be rejected if the trade mark is “not capable of distinguishing” the applicant’s goods or services Applied-for trade mark is deemed “not to be capable of distinguishing” applicants goods or services if only either s 41(3) or (4) applies to the trade mark Applied-for mark not to any extent inherently adapted to distinguish, but query whether it does in fact distinguish the applicant’s goods or services through use Applied-for mark is to some extent inherently adapted to distinguish, and query whether mark distinguishes the applicant’s goods or services having regard to the combined effect of the extent to which the mark is inherently adapted to distinguish the applicant’s, use or intended use, and any other circumstances Use of a trade mark by a predecessor in title deemed use of a trade mark by the applicant

Current Provisions (Pre-Raising the Bar) s 41(1) (Identical to former s 41(2)) s 41(2) (N/A) s 41(3) (Comparable to s 41(6)) s 41(4) (Comparable to s 41(5)) s 41(5) (Identical to former s 41(1))

These differences are worth exploring further. Prior to the Raising the Bar amendments, there was a “scale” of registrability beginning with a consideration of the extent to which marks were inherently adapted to distinguish the particular good or services (former s 41(3)). That scale also contemplated a mix of inherent and factually distinctive criteria, including use of the mark and other circumstances (former s 41(5)). Again, as noted above, a totally 22

Explanatory Memorandum, Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) Item 113, 145. Briefly, in Blount Inc v Registrar of Trade Marks (1998) 83 FCR 50 the presumption of registrability was held not to apply if there was any doubt as to whether the applied-for mark was inherently adapted to distinguish the applicant’s good or services. Rather, the correct approach under the former s 41 required the Registrar to resolve this doubt according to the decision-making process set out in ss 41(5) and (6): see 56 – 8 (per Branson J).

23

However, explanatory notes should be treated seriously given recent amendments to the Acts Interpretations Act 1901 (Cth) s 13 brought in via the Acts Interpretation Amendment Act 2011 (Cth). [13.260]

623

Intellectual Property: Commentary and Materials

“unadapted” to distinguish mark may be registered, but only if the Registrar of Trade Marks was convinced that the mark has been used enough to achieve recognition in the market place (former s 41(6)). The current s 41 is framed “negatively”, in that it sets out those circumstances in which a trade mark is not capable of distinguishing the applicant’s goods or services. The Explanatory Memorandum makes clear that the focus of the enquiry here is on what is “wrong with the mark before the Registrar is entitled to reject it”. 24 These amendments, however are said to “preserve the three existing categories of trade mark, based on the degree to which they are inherently adapted to distinguish”. 25 Those three categories are: • Trade marks that are sufficiently inherently adapted to distinguish on their own would not fall within either the new subsection (3) or (4) and could not be rejected under section 41 [prima facie capable of distinguishing]. Consistent with the [former] subsection 41(3), the Registrar would accept such marks without consideration of use, intended use or other circumstances, as these marks are capable of distinguishing due to their intrinsic characteristics. • Trade marks that are to some extent inherently adapted to distinguish, but are not sufficiently inherently adapted to distinguish on their own will be rejected under the new subsection (4) if consideration of the combined criteria in subparagraphs (i) to (iii) shows that the mark does not or will not distinguish. Consistent with the [former] subsection 41(5), the combination of their (limited) inherent adaptation considered with the use, intended use or other circumstances may bring a mark outside the new subsection (4): the Registrar would then accept the mark. • Trade marks that are not to any extent inherently adapted to distinguish will be rejected under new subsection (3) if the pre-filing date use of the mark (if any) does not show that the mark was in fact distinctive at the date of filing. Consistent with the [former] s 41(6), overwhelming pre-filing date use of the mark may show that it is factually distinctive at filing: the Registrar would then accept the mark. 26

IP Australia’s Trade Marks Office Manual of Practice and Procedure (Manual) confirms this tripartite categorisation of distinctiveness. 27 The Manual also offers a useful flowchart in assessing whether the applied-for mark is capable of distinguishing the applicant’s goods or services pursuant to the new structure of s 41:

24 25 26 27

Explanatory Memorandum, Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) Item 113, 146. Explanatory Memorandum, Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) Item 113, 146 (emphasis added). Explanatory Memorandum, Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (Cth) Item 113, 147 (emphases original). IP Australia, Trade Marks Office Manual of Practice and Procedure Pt 22.3 (15 July 2016).

624 [13.260]

Trade Marks

CHAPTER 13

Figure 13.3 IP Australia’s “Capable of Distinguishing” Flowchart

Source: Trade Marks Office Manual of Practice and Procedure (Annex 1A) (as at 17 October 2016) Because most applications/registrations on the Trade Marks Register have secured a filing date before 15 April 2013, the repealed version of s 41 is likely to be of great importance for some time in opposition and cancellation proceedings. Accordingly, the current and repealed versions of s 41 are reproduced in full: -

Current s 41 – ie Post-Raising the Bar Amendments (on or after 15 April 2013) [13.270] 41 Trade mark not distinguishing applicant’s goods or services (1)

An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods or services in respect of which the trade mark is sought to be registered (the designated goods or services) from the goods or services of other persons. Note: For goods of a person and services of a person see section 6.

(2)

(3)

A trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons only if either subsection (3) or (4) applies to the trade mark. This subsection applies to a trade mark if: (a)

the trade mark is not to any extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons; and

[13.270]

625

Intellectual Property: Commentary and Materials

Current s 41 – ie Post-Raising the Bar Amendments (on or after 15 April 2013) cont. (b)

(4)

the applicant has not used the trade mark before the filing date in respect of the application to such an extent that the trade mark does in fact distinguish the designated goods or services as being those of the applicant. This subsection applies to a trade mark if: (a) the trade mark is, to some extent, but not sufficiently, inherently adapted to distinguish the designated goods or services from the goods or services of other persons; and (b)

the trade mark does not and will not distinguish the designated goods or services as being those of the applicant having regard to the combined effect of the following: (i) the extent to which the trade mark is inherently adapted to distinguish the goods or services from the goods or services of other persons; (ii)

the use, or intended use, of the trade mark by the applicant;

(iii)

any other circumstances.

Note 1: Trade marks that are not inherently adapted to distinguish goods or services are mostly trade marks that consist wholly of a sign that is ordinarily used to indicate: (a) the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or (b)

the time of production of goods or of the rendering of services.

Note 2: For goods of a person and services of a person see section 6. Note 3: Use of a trade mark by a predecessor in title of an applicant and an authorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (5) and 7(3) and section 8). (5)

For the purposes of this section, the use of a trade mark by a predecessor in title of an applicant for the registration of the trade mark is taken to be a use of the trade mark by the applicant. Note 1: For applicant and predecessor in title see section 6. Note 2: If a predecessor in title had authorised another person to use the trade mark, any authorised use of the trade mark by the other person is taken to be a use of the trade mark by the predecessor in title (see subsection 7(3) and section 8).

Repealed s 41 – ie Pre-Raising the Bar Amendments (pre-15 April 2013) [13.280] 41 Trade mark not distinguishing applicant’s goods or services (1)

For the purposes of this section, the use of a trade mark by a predecessor in title of an applicant for the registration of the trade mark is taken to be a use of the trade mark by the applicant. Note 1: For applicant and predecessor in title see section 6. Note 2: If a predecessor in title had authorised another person to use the trade mark, any authorised use of the trade mark by the other person is taken to be a use of the trade mark by the predecessor in title (see subsection 7(3) and section 8).

(2)

An application for the registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods or services in respect of which the trade mark is sought to be registered (the designated goods or services) from the goods or services of other persons. Note: For goods of a person and services of a person see section 6.

(3)

In deciding the question whether or not a trade mark is capable of distinguishing the designated goods or services from the goods or services of other persons, the Registrar must

626 [13.280]

Trade Marks

CHAPTER 13

Repealed s 41 – ie Pre-Raising the Bar Amendments (pre-15 April 2013) cont. first take into account the extent to which the trade mark is inherently adapted to distinguish the designated goods or services from the goods or services of other persons. (4)

Then, if the Registrar is still unable to decide the question, the following provisions apply.

(5)

If the Registrar finds that the trade mark is to some extent inherently adapted to distinguish the designated goods or services from the goods or services of other persons but is unable to decide, on that basis alone, that the trade mark is capable of so distinguishing the designated goods or services: (a) the Registrar is to consider whether, because of the combined effect of the following: (i)

the extent to which the trade mark is inherently adapted to distinguish the designated goods or services;

(ii)

the use, or intended use, of the trade mark by the applicant;

(iii) any other circumstances; the trade mark does or will distinguish the designated goods or services as being those of the applicant; and (b)

if the Registrar is then satisfied that the trade mark does or will so distinguish the designated goods or services – the trade mark is taken to be capable of distinguishing the applicant’s goods or services from the goods or services of other persons, and

(c)

if the Registrar is not satisfied that the trade mark does or will so distinguish the designated goods or services – the trade mark is taken not to be capable of distinguishing the applicant’s goods or services from the goods or services of other persons

Note 1: For goods of a person and services of a person see section 6. Note 2: Use of a trade mark by a predecessor in title of an applicant and an authorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (1) and 7(3) and section 8). (6)

If the Registrar finds that the trade mark is not inherently adapted to distinguish the designated goods or services from the goods or services of other persons, the following provisions apply: (a) if the applicant establishes that, because of the extent to which the applicant has used the trade mark before the filing date in respect of the application, it does distinguish the designated goods or services as being those of the applicant – the trade mark is taken to be capable of distinguishing the designated goods or services from the goods or services of other persons; (b)

in any other case – the trade mark is taken not to be capable of distinguishing the designated goods or services from the goods or services of other persons.

Note 1: Trade marks that are not inherently adapted to distinguish goods or services are mostly trade marks that consist wholly of a sign that is ordinarily used to indicate: (a) the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or (b)

the time of production of goods or of the rendering of services.

Note 2: Use of a trade mark by a predecessor in title of an applicant and an authorised use of a trade mark by another person are each taken to be use of the trade mark by the applicant (see subsections (1) and 7(3) and section 8).

[13.280]

627

Intellectual Property: Commentary and Materials

[13.290] A note to s 41 indicates that marks will generally not be “inherently adapted to

distinguish” if they consist of a sign that normally refers to kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic of the goods or services, including time of production of goods or rendering of services: see s 41(4), Note 1 (previously s 41(6), Note 1). The requirement of distinctiveness applies to all “signs”, not only word marks but also all registrable artwork, pictures, device marks, illustrations, logos or non-traditional marks etc. However, if amounting to little more than an illustration of a product or some description of it, the mark will not be “distinctive”. The following cases discuss the concept of distinctiveness. Before moving to consider this concept and the difficulties in demonstrating acquired or factual distinctiveness, it is first appropriate to set out the test now invoked in determining whether a trade mark is sufficiently “inherently adapted to distinguish”. In this regard, the majority of the High Court in Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 254 CLR 337; [2014] HCA 48 articulated a two-step test, broadened here to encompass more than mere word (foreign or English) marks (see further [13.420]). These two steps involve (1) ascertaining the “ordinary signification” (ie “ordinary meaning”) of the mark; and (2) then looking into whether other traders might legitimately wish to use the mark for the sake of its ordinary signification to distinguish the designated goods and/or services. Of course, this must all be decided within the framework set out by s 41. Cantarella has been strongly criticised, especially with respect to how one actually determines a mark’s “ordinary signification” and the relevant audience involved making this determination. 28 Despite some uncertainty regarding the relevant or “target audience”, 29 the majority appeared to equate this to those persons, “in Australia… who will purchase, consume or trade in the goods [or services]”. 30 This conception of the target audience has since been applied in lower court decisions. 31 On its facts, Cantarella is a rather unremarkable case, but the decision may have remarkable consequences for trade mark applicants, especially those seeking to register foreign words in that such applicants may find fewer obstacles than those presented by the 28

29 30

31

See especially M Handler, “All that Glitters is Not Gold: A Critical Assessment of Trade Mark Distinctiveness” (2015) 101 Intellectual Property Forum 14; M Handler, “Grey Skies and Silver Linings: A Critical Assessment of Trade Mark Distinctiveness under Australian Law, Part 2” (2015) 102 Intellectual Property Forum 15; and C Thompson, “Common Signs, Concealed Meanings: Cantarella, Coffee and the Inherent Adaptability of Words” (2015) Australian Intellectual Property Law Bulletin 250. In particular, M Handler (2015), Part 1, raises the spectre of yet more amorphous elements in this ordinary signification test: that is, the test actually being more concerned with determining the “sufficient comprehension amongst those concerned with the goods” [rather] than [the] “signification to those concerned with the goods”: 23 (emphasis added). Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 254 CLR 337, 362 [71]. Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 254 CLR 337, 358 [59] (elaborating on the point that the relevant mark must be “examined from the point of view of the possible impairment of the rights of honest traders and from the point of view of the public”: 358 [59]). Compare the majority’s later observation that the relevant marks “were not shown to convey a meaning or idea sufficiently tangible to anyone in Australia concerned with [designated] goods as to be words having a direct reference to the character or quality of the goods” (emphasis added): 362–3 [73]. See eg Primary Health Care Ltd v Commonwealth of Australia [2016] FCA 313, where Jagot J, rejected the applicant’s contention (see eg [89]) that the ordinary signification of the applied-for marks (PRIMARY HEALTH CARE word and device marks for services in Class 35 (Medical business management etc)) is determined by medical/health professionals only. Instead, Her Honour, in following Cantarella, adopted a broad conception of the target audience: specifically, one looks to the “ordinary signification of [the] words [PRIMARY HEALTH CARE] to all health professionals, other participants in the health care system in Australia, and the Australian public who are potential patients at the medical centres”: [71].

628 [13.290]

Trade Marks

CHAPTER 13

traditional test articulated in Clark Equipment (see [13.310] below). The impact of Cantarella remains to be seen, however, one leading commentator has described its “potential implications … as concerning”. 32 Perhaps its impact will not be as great as feared. Subsequent decisions have not placed excessive emphasis on Cantarella, 33 or its graduated two-step test, 34 while others have instead focussed more on the obvious overlap between these steps. Telstra Corporation Ltd v Phone Directories Company Pty Ltd (2015) 237 FCR 388; [2015] FCAFC 156 may well illustrate the latter point. There the Full Federal Court upheld the primary judge’s finding that the word mark YELLOW – held to describe the colour yellow, where the colour yellow itself was held to signify print and online directories – had no inherent adaptation to distinguish the applicant’s good and services because it was descriptive of those goods and services. In doing so, the Court, at 418–9, noted the interplay between the “closely related questions” of the Cantarella test: (418) … Often the answer to the first question, i.e., what is the ordinary signification of the word mark will provide the answer to the second question, i.e., is it the case that other traders might legitimately need to use the mark in respect of their goods. Sometimes the issues will be relatively (419) clear and little evidence will be required. Burger King [v The Registrar of Trade Marks (1973) 128 CLR 417] appears to be such a case (see Gibbs J at 425). In other cases, evidence might be called on the issue of the ordinary signification of the word mark …. Evidence of other traders about their use of the mark, or something similar, seems to be admissible on the second question (Sports Warehouse Inc v Fry Consulting Pty Ltd (2010) 186 FCR 519 … at [102] per Kenny J), but would be considered in light of all of the evidence in the case. It is important to note the possible dual significance of such evidence. Evidence of other traders using the word yellow or the colour yellow in connection with their print and online directories could be evidence of the ordinary signification of the YELLOW mark and of the fact that other traders might want to use the word to describe their goods or services.

One thing that is clear is that trade mark practice has already shifted towards considering the two-step test laid down by the majority in determining inherent adaptability to distinguish: see eg University of Sydney v University of Wollongong (2016) 118 IPR 592; [2016] ATMO 17 (see [13.350] below). In any event, the general principles regarding distinctiveness established in earlier authorities remain relevant in understanding what it meant by this core concept in trade mark law.

General principles Primary Health Care Ltd v Commonwealth [13.300] Primary Health Care Ltd v Commonwealth [2016] FCA 313 Federal Court of Australia Primary Health Care sought to register the word mark PRIMARY HEALTH CARE and a related device mark for various services in Class 35 (medical centre business management etc). In refusing registration, the Registrar upheld grounds of opposition pursuant to Trade Marks Act 1995 (Cth) s 43. On appeal, the respondents (the Crown in right of the Commonwealth and the Crowns in right of 32

33

M Handler, “All that Glitters is Not Gold: A Critical Assessment of Trade Mark Distinctiveness” (2015) 101 Intellectual Property Forum 14, 25. For a detailed list of the difficult questions that remain unanswered, see especially 25–6. See eg Buchanan Turf Supplies Pty Ltd v Registrar of Trade Marks [2015] FCA 756, [33] (Yates J); Verrocchi v Direct Chemist Outlet Pty Ltd [2015] FCA 234, [103] (where Middleton J cited Cantarella, [59] in support of the observation that the “proper test for assessing the inherent capacity of the registered trade mark to distinguish the designated [goods or] services still remains that articulated by Kitto J in Clark Equipment”).

34

See eg Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 554. [13.300]

629

Intellectual Property: Commentary and Materials

Primary Health Care Ltd v Commonwealth cont. each of the States and Territories), by notice of contention, pressed this and earlier grounds of opposition under ss 41 and 42. In dismissing the appeal, Jagot J held that respondents established their grounds of opposition under ss 41, 42 and 43. Her Honour then set out some relevant principles regarding distinctiveness in the context of Trade Mark Acts (1995) s 41 before the Raising the Bar amendments.] JAGOT J: [14] Insofar as a trade mark being inherently adapted to distinguish is concerned (the s 41(3) issue on which the respondents bear the onus): (1) “The question of distinctiveness is primarily one of fact for the trial judge” (Advanced Hair Studio of America Pty Ltd v Registrar of Trade Marks (1988) 12 IPR 1 at 7). (2) “The ultimate question in applying this test is whether the mark, considered apart from the effects of registration, is such that by its use the applicant is likely to attain its object of thereby distinguishing its goods from the goods of others…[which] requires a practical evaluative judgment about the effects of the relevant mark in the real world” (Kenman Kandy [Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273; (2002) 122 FCR 494] at [47]). (3) It is thus relevant to ask whether others “are likely, in the ordinary course of their businesses and without any improper motive, to desire to use upon or in connexion with their” goods or services (Kenman Kandy at [47], citing FH Faulding & Co Ltd v Imperial Chemical Industries of Australia and New Zealand Ltd [1965] HCA 72; (1965) 112 CLR 537 at 555). (4) Further, inherent adaptability is: something which depends on the nature of the trade mark itself…and therefore is not something that can be acquired; the inherent nature of the trade mark itself cannot be changed by use or otherwise. (Kenman Kandy at [47], citing Burger King Corp v Registrar of Trade Marks [1973] HCA 15; (1973) 128 CLR 417 at 424.) It has been said that: [a] trade mark that is inherently adapted to distinguish goods is one that can “do the job of distinguishing without first educating the public that it is a trade mark.” (Chocolaterie Guylian NV v Registrar of Trade Marks [2009] FCA 891; (2009) 180 FCR 60 at [59], citing with approval British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 at 306. See also Austereo Pty Ltd v DMG Radio (Australia) Pty Ltd [2004] FCA 968; (2004) 209 ALR 93 (Austereo) at [48]). That a trade mark inherently adapted to distinguish must be “instantly adapted to distinguish” is necessary: because otherwise it would be enlisting registration itself, as an aid in making a mark actually distinctive, and so preventing partly by statutory assistance other traders from using the mark if they so desired. (Thompson v B Seppelt & Sons Ltd [1925] HCA 40; (1925) 37 CLR 305 at 312.) (5) Thus, it “is insufficient that the mark may have the potential or capacity to acquire [a distinctive character] in the future” (Austereo at [30], cited with approval in Unilever Australia Ltd v Societe Des Produits Nestlé SA [2006] FCA 782; (2006) 154 FCR 165 (Unilever Australia)). It also follows that: The more apt the word or expression is to describe the goods, the less it is inherently apt to distinguish them as the goods of a particular manufacturer (Clark Equipment at 515 [Clark Equipment Co v Registrar of Trade Marks [1964] HCA 55; (1964) 111 CLR 511]). The setting or context in which the use occurs is relevant in determining whether the use is descriptive or for the purpose of indicating a connection in the course of trade between the product and the 630 [13.300]

Trade Marks

CHAPTER 13

Primary Health Care Ltd v Commonwealth cont. trade mark applicant, as a badge of origin (Shell Co (Australia) Ltd v Esso Standard Oil (Australia) Ltd [1963] HCA 66; (1963) 109 CLR 407 at 424–5; Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd [1991] FCA 310; (1991) 30 FCR 326 at 350–1). (Unilever Australia at [31]). (6) The test for a word directly referring to the character or quality of the good or service has been said to involve the: probability of ordinary persons understanding the words, in their application to the goods, as describing or indicating or calling to mind either their nature or some attribute they possess. (Mark Foy’s Ltd v Davies Co-operative & Co Ltd [1956] HCA 41; (1956) 95 CLR 190 at 195.) (7) As summarised by Yates J in Apple [v Registrar of Trade Marks [2014] FCA 1304; (2014) 227 FCR 511] at [11]: The notion of inherent adaptation is one that concerns the intrinsic qualities of the mark itself, divorced from the effects or likely effects of registration. Where the mark consists solely of words, attention is directed to whether those words are taken from the common stock of language and, if so, the degree to which those words are, in their ordinary use, descriptive of the goods or services for which registration is sought, and would be used for that purpose by others seeking to supply or provide, without improper motive, such goods or services in the course of trade. It goes without saying that it is the distinctiveness of an applicant’s mark in relation to the goods or services for which registration is sought that is relevant (Apple at [14]). In addition: The descriptive capacity of words and their capability to distinguish the goods or services of one person from those of others will vary, depending on occasion and circumstance. (Apple at [16]) (8) Accordingly, Kitto J’s reference to “the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess” in Clark Equipment Co v Registrar of Trade Marks [1964] HCA 55; (1964) 111 CLR 511 (Clark Equipment) at 514 was explained as follows in Modena Trading Pty Ltd v Cantarella Bros Pty Ltd [2013] FCAFC 110; (2013) 215 FCR 16 at [84]: The expressions “the common right of the public” and “common heritage” employed by Kitto J in Clark Equipment are fluid and their content will vary according to the particular case. It seems to us that they refer to the knowledge base, primarily, of the traders in the particular goods and services, for it is the question of their likely use of the mark which is to be considered, although as we have already observed, it may extend to potential consumers. As was put in Cantarella Bros Pty Limited v Modena Trading Pty Limited [2014] HCA 48; (2014) 254 CLR 337 (Cantarella [2014] HCA 48) at [59]: It is the “ordinary signification” of the word, in Australia, to persons who will purchase, consume or trade in the goods which permits a conclusion to be drawn as to whether the word contains a “direct reference” to the relevant goods (prima facie not registrable) or makes a “covert and skilful allusion” to the relevant goods (prima facie registrable). At [44] the majority (French CJ, Hayne, Crennan and Kiefel JJ) said: The requirement that a proposed trade mark be examined from the point of view of the possible impairment of the rights of honest traders to do that which, apart from the grant of a monopoly, would be their natural mode of conducting business (Lord Parker), and from the wider point of view of the public (Hamilton LJ), has been applied to words proposed as trade marks for at least a century, irrespective of whether the words are English or foreign. The requirement has been adopted in numerous decisions of this Court dealing with words as trade marks under the 1905 Act and the 1955 Act. Those decisions show that assessing the [13.300]

631

Intellectual Property: Commentary and Materials

Primary Health Care Ltd v Commonwealth cont. distinctiveness of a word commonly calls for an inquiry into the word’s ordinary signification and whether or not it has acquired a secondary meaning. Their Honours concluded at [70] – [71] that: In accordance with the principles established in Mark Foy’s and restated in Clark Equipment, Faulding and Burger King, determining whether a trade mark is “inherently adapted to distinguish”, as required by s 41(3), requires consideration of the “ordinary signification” of the words proposed as trade marks to any person in Australia concerned with the goods to which the proposed trade mark is to be applied. As shown by the authorities in this Court, the consideration of the “ordinary signification” of any word or words (English or foreign) which constitute a trade mark is crucial, whether (as here) a trade mark consisting of such a word or words is alleged not to be registrable because it is not an invented word and it has “direct” reference to the character and quality of goods, or because it is a laudatory epithet or a geographical name, or because it is a surname, or because it has lost its distinctiveness, or because it never had the requisite distinctiveness to start with. Once the “ordinary signification” of a word, English or foreign, is established an inquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a monopoly of it. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish. (9) A related principle is that: The registrability of a mark, including whether it is capable of distinguishing the applicant’s goods or services from the goods or services of others, must be assessed by reference to the scope of the registration that is sought. (Apple at [17]). It follows that for a word mark without any accompanying stylistic devices, if registered, the monopoly is over use of the word(s) in respect of the goods or services (Apple at [18]). Further, the applicant’s actual use of the word is not the touchstone as, if registered, the monopoly extends to any use of the word(s) in respect of all of the services the subject of the specification (Apple at [19] – [21]). [15] Insofar as a trade mark being capable of distinguishing goods or services is concerned (the s 41(5) and (6) issue on which the applicant bears the onus): (1) “…common sense suggests that significant promotion and use of a trade mark amongst people concerned with the relevant market will have a tendency to enhance, rather than diminish, the trade mark’s capacity to distinguish the goods in respect of which it is used from the goods of others. Certainly, the absence of evidence of promotion and use is likely to assume significance where distinctiveness resulting from use is in issue” (Blount Inc v Registrar of Trade Marks [1998] FCA 440; (1998) 83 FCR 50 (Blount) at 61 – 62). (2) “A trade mark with a very low level of inherent adaptation to distinguish will require correspondingly high levels of use as a trade mark and other circumstances in order to permit registration (Time Warner Entertainment Co, LP v Stepsam Investments Pty Ltd [2003] FCA 1502; (2003) 134 FCR 51). For common, descriptive or laudatory words, even extensive use is unlikely to be sufficient (Re Ocean Spray Cranberries Inc (1999) 46 IPR 601 at [24])” (Cantarella Bros Pty Ltd v Modena Trading Pty Ltd [2013] FCA 8; (2013) 299 ALR 752 … at [107]).

632

[13.300]

Trade Marks

CHAPTER 13

Primary Health Care Ltd v Commonwealth cont. (3) “The question to be considered under s 41(6) is whether the applicant has established that, because of the extent to which the applicant has used the trade mark before the filing date in respect of the application…it does distinguish the designated goods as being those of the applicant” (Blount at 60).

General principles/geographic names Clark Equipment v Registrar of Trade Marks [13.310] Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 High Court of Australia [The applicant sought to register the trade mark “MICHIGAN” in respect of tractor shovels, front end loaders and other heavy earthmoving equipment. The Registrar refused registration.] KITTO J: [512] On the evidence before me I am satisfied that in Australia the word MICHIGAN has been extensively used by the appellant for more than 20 years as a mark to distinguish its goods of the description in respect of which registration is sought, and that its use of the word for that purpose, in advertisements and upon its products themselves, has resulted in a widespread recognition of the word, among persons concerned with products of the kind, as distinguishing the appellant’s goods from the goods of other persons. But s 26 makes it plain that that is not enough to entitle the appellant to the registration it seeks. I need not dwell upon [513] the point that the word “registrable” in s 25(1) is appropriate to allow for, and at least does not displace, the view often expressed or implied in judgments of the courts that the Registrar has a discretion to refuse registration even where the express requirements of the Act appear to be satisfied. I am concerned more with the fact that s 26, having in subs (1) denied registrability unless the mark is “adapted to distinguish” the applicant’s goods, by subs (2) dissects the expression “adapted to distinguish” so as to show that two inquiries are relevant not only an inquiry concerning acquired distinctiveness but an inquiry concerning the inherent fitness of the mark for the purpose of distinguishing the applicant’s goods from those of other persons. It is undeniable that a mark which, considered by itself, would seem unadapted to that purpose, because its natural signification is against a notion that goods to which it is applied are the goods of the applicant and of no one else, may yet come by actual use or by virtue of special circumstances to be so closely associated with the applicant’s goods in the minds of the relevant public that its apparently disqualifying signification is effectively obscured, and distinctiveness in fact is thus achieved. But although such a measure of practical success with the mark may well provide a sufficient foundation for a passing off action, the Trade Marks Act 1955 does not accept it as necessarily sufficient for the special protection which it affords to registered trade marks. True, the Act does not say that a mark which has any degree of natural unsuitability to distinguish an applicant’s goods shall be refused registration notwithstanding that it has acquired a degree of distinctiveness in relation to his goods; but it does require that if the mark is to any extent inherently unadapted for the purpose that fact shall be weighed in the scales against the degree of acquired distinctiveness in determining the ultimate question whether the mark is registrable as being “adapted to distinguish” the applicant’s goods. That ultimate question must not be misunderstood. It is not whether the mark will be adapted to distinguish the registered owner’s goods if it be registered and other persons consequently find themselves precluded from using it. The question is whether the mark, considered quite apart from the effects of registration, is such that by its use the applicant is likely to attain his object of thereby distinguishing his goods from the goods of others. In Registrar of Trade Marks v W & G Du Cros Ltd [1913] AC 624 at 634, 635 Lord Parker of Waddington, having remarked upon the difficulty of finding the right criterion by which to determine whether a proposed mark [514] is or is not “adapted to [13.310]

633

Intellectual Property: Commentary and Materials

Clark Equipment v Registrar of Trade Marks cont. distinguish” the applicant’s goods, defined the crucial question practically as I have stated it, and added two sentences which have often been quoted but to which it is well to return for an understanding of the problem in a case such as the present. His Lordship said: The applicant’s chance of success in this respect [ie in distinguishing his goods by means of the mark, apart from the effects of registration] must, I think, largely depend upon whether other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods. It is apparent from the history of trade marks in this country that both the legislature and the courts have always shown a natural disinclination to allow any person to obtain by registration under the Trade Marks Act a monopoly in what others may legitimately desire to use. The interests of strangers and of the public are thus bound up with the whole question, as Hamilton LJ pointed out in the case of RJ Lea Ltd [1913] 1 Ch 446; (1913) 30 RPC 216 at 463 (Ch), 227 (RPC); but to say this is not to treat the question as depending upon some vague notion of public policy: it is to insist that the question whether a mark is adapted to distinguish be tested by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess will think of the word and want to use it in connection with similar goods in any manner which would infringe a registered trade mark granted in respect of it. The fact that this is the test is the basic reason for the frequent refusal, exemplified in this court by the case of Thomson v B Seppelt & Sons Ltd (1925) 37 CLR 305, to register as a trade mark a word of prima facie geographical signification. It is well settled that a geographical name, when used as a trade mark for a particular category of goods, may be saved by the nature of the goods or by some other circumstance from carrying its prima facie geographical signification, and that for that reason it may be held to be adapted to distinguish the applicant’s goods. Where that is so it is because to an honest competitor the idea of using that name in relation to such goods or in such circumstances would simply not occur: see per Lord Simonds in the Yorkshire Copper Works case (1954) 71 RPC 150 at 154. This is the case, for example, where the word as applied to the relevant [515] goods is in effect a fancy name, such as “North Pole” in connection with bananas: A Bailey & Co Ltd v Clark Son & Morland Ltd (the Glastonbury case [1938] AC 557; (1938) 55 RPC 253 at 562 (AC), 257 (RPC)) (see also the Livron case (1937) 54 RPC 327 at 339), or where by reason of user or other circumstances it has come to possess, when used in respect of the relevant goods, a distinctiveness in fact which eclipses its primary signification. Compare in the case of a descriptive word: Dunlop Rubber Co’s Application (1942) 59 RPC 134. But the probability that some competitor, without impropriety, may want to use the name of a place on his goods must ordinarily increase in proportion to the likelihood that goods of the relevant kind will in fact emanate from that place. A descriptive word is in like case: the more apt a word is to describe the goods, the less inherently apt it is to distinguish them as the goods of a particular manufacturer. This may seem at first blush a paradox, as Lord Simonds and Lord Asquith suggested in the Yorkshire Copper Works case (1954) 71 RPC 150 at 154, 156, but surely not when Lord Parker’s exposition of the subject is borne in mind. The consequence is that the name of a place or of an area, whether it be a district or a county, a state or a country, can hardly ever be adapted to distinguish one person’s goods from the goods of others when used simpliciter or with no addition save a description or designation of the goods, if goods of the kind are produced at the place or in the area or if it is reasonable to suppose that such goods may in the future be produced there. In such a case, the name is plainly not inherently ie in its own nature, adapted to distinguish the applicant’s goods; there is necessarily great difficulty in proving that by reason of use or other circumstances it does in fact distinguish his goods; and even where that difficulty is overcome there remains the virtual if not complete impossibility of satisfying the 634 [13.310]

Trade Marks

CHAPTER 13

Clark Equipment v Registrar of Trade Marks cont. Registrar or the court that the effect of granting registration will not be to deny the word to a person who is likely to want to use it, legitimately, in connection with his goods for the sake of the geographical reference which it is inherently adapted to make. The leading authorities on the subject include the Yorkshire Copper Works case (1954) 71 RPC 150 (the judgment of Lord Evershed in that case when it was in the Court of Appeal (1953) 70 RPC 1 contains a valuable discussion of the topic), the Glastonbury case [1938] AC 557; (1938) 55 RPC 253 and the Liverpool Electric Cable Co case (1928) 46 RPC 99. These cases show, as the Registrar said in Dan River Trade Mark [1962] RPC 157 at 160 in a decision which was [516] endorsed by Lloyd-Jacob J, that there is a category of words which are so adapted for descriptive purposes that no amount of acquired distinctiveness can justify their registration, and that among such words are the names of large and important industrial towns or districts, and also of smaller towns or districts if they are a seat of manufacture of the goods for which registration is sought. The principles to which I have referred appear to me to conclude the present case against the appellant. Michigan is the name of a State of the USA. The appellant produces there goods of the kind for which it uses the name as its mark in Australia as well as in America. It is true that there is no evidence before me that any other manufacturer produces similar goods in Michigan at present, but it is a matter of common knowledge, of which I take judicial notice, that in the State there are important manufacturing centres, and it is well within the bounds of reason to suppose that persons other than the appellant may in the future produce there goods similar to some or all of the goods comprised in the category for which the appellant now seeks trade mark registration. There are only two circumstances which may be considered as tending to diminish the normal likelihood that another manufacturer of for example power cranes in Michigan, sending his goods to Australia, may fairly wish to use the word Michigan in respect of them in this country in a manner which a trade mark registration would prevent. One circumstance I have mentioned already: it is that the word has at present a reputation here as referring specifically to the appellant’s goods. The other I have not mentioned: it is that in the US the appellant has obtained registration of the word MICHIGAN as a trade mark in respect of such goods as those described in its present application. No evidence has been tendered as to the effect of trade mark registration according to US law, but I shall assume for the purposes of the case that apart from the appellant no manufacturer of the relevant goods, not even a Michigan manufacturer, is free to use the word Michigan in the manner of a trade mark for his goods in the US. The appellant submits that for that reason no such manufacturer will be very likely to want the word for use in Australia in any manner which would infringe a registered trade mark consisting of the word, especially if he knows, as he almost certainly will, of the distinctiveness the word has come to have in this country. But even allowing for the cumulative effect of these considerations it seems to me impossible to conclude that there is no likelihood of other traders, in the [517] ordinary course of their businesses and without any desire to get for themselves a benefit from the appellant’s reputation, wishing in advertisements and otherwise to describe, for example, their power cranes from Michigan as Michigan power cranes. They may well wish by such means to take legitimate advantage of a reputation which they believe or hope that the State of Michigan possesses among Australians for the quality of its manufacturing products, and it would be contrary to fundamental principle to grant a registration which would have the effect of denying them the right to do so by using the name of the State. It is no answer to say that if registration be granted such a manufacturer may nevertheless describe his goods as “made in Michigan” or in some other ways indicate that Michigan is their place of origin. He is not to be excluded by the registration of a trade mark from any use of the word Michigan that he may fairly want to make in the course of his business. For these reasons I am of opinion that MICHIGAN is not adapted, and is not capable of becoming adapted, to distinguish goods of the relevant kinds with which the appellant is or may be connected in the course of trade from goods in respect of which no such connection subsists, and is therefore not [13.310]

635

Intellectual Property: Commentary and Materials

Clark Equipment v Registrar of Trade Marks cont. registrable in Part B as being or as capable of becoming distinctive of goods in respect of which registration is sought and with which the appellant is or may be connected in the course of trade. Accordingly, I hold that the Assistant Registrar was right in refusing to accept the application in this case, and I dismiss the appeal.

[13.320]

Note

As with passing off, geographic names are unlikely to be distinctive. See Re Application by Sakata Rice Snacks Pty Ltd (1998) 43 IPR 378 (Sakata is the name of a city in Japan, a major seaport that houses large national stores of government rice holdings). See, however, Chancellor, Master and Scholars of the University of Oxford (t/a Oxford University Press) v Registrar of Trade Marks (1988) 15 IPR 646, where there was discussion of the fact that even if the publisher Oxford University Press could sue in passing off to protect their reputation as a supplier of prestigious books, the Trade Marks Act 1955 (Cth) would have prevented registration on the grounds that the word “OXFORD” in isolation can never be adapted to distinguish publications by the University’s Press from publications by another entity that featured the same word, such as Oxford Book Co of Oxford, Mississippi See also Re Waterford Glass Group Ltd (1987) 9 IPR 339; Re Chubb Australia Ltd (1990) 20 IPR 175; Re Willow Lea Pastoral Co Pty Ltd (1990) 20 IPR 180. In the Trade Marks Act 1995 (Cth), one ground of rejection of a mark is that is contains or consists of a false geographical indication (s 61). Protection for geographical indications, particularly wine names, was upgraded in the 1995 Act as part of Australia’s international obligations to give proper protection to such geographic names. Moreover, geographical indications for Australian and European wines are afforded additional protection via Australian Grape and Wine Authority Act 2013 (Cth), see especially Pt VIB.

Nature’s Blend Pty Ltd v Nestle Australia Ltd [13.330] In Nature’s Blend Pty Ltd v Nestle Australia Ltd [2010] FCA 198, Sundberg J of the Federal Court considered the Trade Marks Act 1995 (Cth) and Trade Practices Act 1974 (Cth) in connection with a claim by Nature’s Blend – a small confectionary manufacturer – that Nestlé had infringed its registered trade mark for “Luscious Lips”. Nature’s Blend, which initially sold “veterinary, animal and medical products”, had expanded into confectionary. It was using the registered mark – satisfying Trade Marks Act 1995 (Cth) s 17 – for chocolates as goods under class 30 of the Act. Nestlé, having acquired the Allens confectionary business, sold a product – mixed confectionary, including lip-shaped jellies – by the name of “Retro Party Mix” from 2007 to 2009. The packaging for that product referred to “luscious Lips” (at [1]): That’s right! All your favourites are back, so put on those flares and get ready to party! Up to 7 lolly varieties including … cool Cola Bottles, those radical Racing Cars, yummy Honey flavoured Bears, totally freeeekie Teeth, luscious Lips, partying Pineapples and outrageous Raspberries. The product was elsewhere promoted as “All Delicious! All FUN! 99% Fat Free!”. Nature’s Blend argued that Nestlé was liable in relation to trade mark infringement under the Trade Marks Act 1995 (Cth), the tort of passing off, and misleading and deceptive conduct under the Trade Practices Act 1974 (Cth). It submitted that (at [16]): 636 [13.320]

Trade Marks

CHAPTER 13

Nature’s Blend Pty Ltd v Nestle Australia Ltd cont. … the phrase “luscious Lips” is not a phrase which ordinarily and naturally describes confectionary and is “in no sense laudatory of confectionary, whether in relation to the shape, appearance, or taste”, nor does it refer to the character or quality of confectionary. … the phrase is inherently distinctive and newly-coined … in relation to confectionary. Sundberg J noted that “the words ‘luscious Lips’ were substantially identical with or deceptively similar to the ‘LUSCIOUS LIPS’ mark. However this in itself is not sufficient to infringe; the context is all-important”. After discussing Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 30 IPR 337 (Kettle Case, see [12.110]) and other cases, he stated that (at [38]): When considering the evidence on use as a whole, I am not satisfied that the there has been “use as a trade mark” for the following reasons. First, the word “luscious” is descriptive and is intended to convey to consumers a laudatory, perhaps even humorous, description of such of the respondent’s confectionary contained in the Retro Party Mix Product which are shaped as lips, in the same way that the expression “cool Cola Bottles” or “yummy Honey flavoured Bears” provides a laudatory description of confectionary in the product that are shaped like cola bottles and bears respectively. It may be the case that some consumers would not read the marketing narration on the back of the pack at all. However, for those consumers who took the time to do so, my impression is that they would have taken “luscious Lips” as essentially a humorous way to describe the products contents, not as a badge of origin. See Johnson & Johnson Australia Pty Limited [1991] FCA 310; 30 FCR 326. Second, the effect of the words “luscious Lips” on consumers is diluted by the prominence of the well known mark “ALLEN’S” on both the front and back of the packaging, along with the mark “NESTLE” appearing on the back of the packaging. These two registered marks perform the role of distinguishing the respondent’s confectionary from that of others. In addition, the product name “RETRO PARTY MIX” appears in large font on the front and the back of the product. I accept that, in some circumstances, there may be trade mark use despite other marks appearing on the product: see Anheuser-Busch, Inc [2002] FCA 390; 56 IPR 182. However, in my view, this case is distinguishable from that type of case. In Anheuser-Busch, Inc [2002] FCA 390; 56 IPR 182 the infringing mark “Budweiser” was the most prominent word on the label. That is not the case here. In this case, the registered marks “ALLEN’S”, and to a lesser extent “NESTLE”, are prominent especially when contrasted with the positioning and use of the words “luscious Lips”. In essence, Nestlé’s use of the words in the particular setting setting was not as a trade mark and did not infringe the Nature’s Blend mark: its use of the word “luscious” was descriptive (with consumers likely to regard the expression as laudatory – for example, as an indicator of tastiness – and humorous), and the effect of the phrase was diluted by the prominence of the Nestlé, Allens and “RETRO PARTY MIX” marks. Interestingly, Sundberg J was prepared to find that Nestlé was using the phrase as a good faith description, given Nestlé’s claims about development of the packaging and the company’s lack of awareness of the Nature’s Blend mark.

Geographic name: not necessarily “the name of any place”

Magnolia Metal Co’s Trade Mark [13.340] Magnolia Metal Co’s Trade Mark [1897] 2 Ch 371 Court of Appeal (United Kingdom) RIGBY LJ: [392] The objection to the word “Magnolia”, as being a geographical name within the meaning of the section, in our opinion fails as to both the marks (2) and (3). It is no doubt shewn by the evidence that there are places in the US called by the name “Magnolia”, and if “geographical name” in s 64, subs (e), were equivalent to “the name of any place”, “Magnolia”, as the name of the [13.340]

637

Intellectual Property: Commentary and Materials

Magnolia Metal Co’s Trade Mark cont. places mentioned in the [393] evidence, would fall within the exception. But, in our judgment, the phrase “geographical name” in s 64, subs (e), ought not in general to receive so wide an interpretation. It must, we think, in the absence of special circumstances, be interpreted so as to be in accordance in some degree with the general and popular meaning of the words, and a word does not become a geographical name simply because some place upon the earth’s surface has been called by it. For example, we agree with Kekewich J that the word “Monkey” is not proved to be a geographical name by shewing merely that a small and by no means generally known island has been called by that name. If, indeed, in its primary and obvious meaning the word has reference to locality, as the word “Melrose” in Van Duzer’s case (1887) 34 Ch D 623, or the word “Eboli” in Sir Titus Salt Co’s case [1894] 3 Ch 166 (from which Chitty J declined to distinguish the derivative “Eboline”), it may well be a geographical name within the meaning of the subsection. Even when the primary signification is not geographical, if the name is really a local name (however little known the locality may be), and the name is given because of the connection of the article with the locality, whether that be real or imputed only by those who give the name, it may well be a geographical name within the meaning of the subsection. An instance of this is to be found in the case of the word “Apollinaris”, given to the water from a spring known as the Apollinaris Spring. So, if “Magnolia” had been the name of a place where the metal was manufactured, we should have been by no means inclined to say that it would not be a geographical name when applied to the article manufactured in the place having the name. In mark No (2) the word “Magnolia” is so associated with the device of the flower as to shew on the fact of the mark what its origin was. But, as to both marks, the evidence shews that the word “Magnolia” was adopted, not as the name of or in connection with any place, but after the flower, which again was named, as pointed out by Lindley LJ during the argument, after a French botanist, Magnol, and we should not have been prepared to say that it was a geographical name within the meaning of the section, if that were the only objection to the trade marks.

General principles/entirely descriptive University of Sydney v University of Wollongong [13.350] University of Sydney v University of Wollongong (2016) 118 IPR 592; [2016] ATMO 17, Decision of a Delegate of the Registrar of Trade Marks [The University of Wollongong [UoW] applied to register the word mark “SYDNEY BUSINESS SCHOOL” across various goods and services in Classes 16, 35, 41, 42 on 23 April 2012. The University of Sydney [UoS] opposed registration on grounds based on Trade Marks Act 1995 (Cth) ss 41, 42, 43 and 60. The decision applied s 41 before the Raising the Bar amendments came into effect.] Hearing Officer D. Lyons: 13. Accordingly, the first step is that I take account of the extent to which the Trade Mark is inherently adapted to distinguish the goods and services of the Specification from the goods or services of other persons. 14. The notion of inherent adaptability is concerned only with the nature of the Trade Mark itself. It is not something that can be acquired and is not affected by use. … 15. [The] High Court in Cantarella Bros Pty Limited v Modena Trading Pty Limited (“Cantarella”) highlighted the following part of Kitto J’s test: …in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess… 638 [13.350]

Trade Marks

CHAPTER 13

University of Sydney v University of Wollongong cont. 16. The Opponent’s submissions in this regard are that: The word “Sydney” in the mark applied for cannot serve to distinguish the Applicant’s goods and services. The Full Court of the Federal Court in MID Sydney Pty Ltd v Aust Tourism Co Ltd [1998] 42 IPR 561 described the names of a town, a suburb or a municipality as “part of the common heritage” and therefore as incapable of distinguishing the goods or services of a particular trader from those of others. In so doing they were summarising a long history of trade mark decisions in relation to geographical descriptors. Among the best known is Clark Equipment Co v Registrar of Trade Marks … in which Kitto J concluded that MICHIGAN was wholly incapable of distinguishing. His Honour emphasised that the exclusion from registerability of simple geographic names was not merely so that another trader would be able to say that their goods were made in or originated from the particular place. It was to ensure that all traders were able to make whatever use of the geographic name they wished without restriction imposed by the existence of a trade mark registration. See also Oxford University v Registrar (1990) 24 FCR 1. Equally unregisterable are marks which have a direct reference to the nature of the goods or services provided. “Business School” is a central example of such a mark. To paraphrase Wilcox J’s statement in Ocean Spray Cranberries Inc v Registrar of Trade Marks (2000) 47 IPR 579 at 588, “all business school operators may be expected to wish to describe their product as ‘business school’; so those words cannot be regarded as inherently adapted to distinguishing the products of one of them.” It is of course the case that a distinctive trade mark can be formed by joining together non-distinctive elements. But to achieve that the mark as a whole must have some character of identifying a particular trade source of goods or services, and go beyond the inherent character of the words as merely describing what is provided or where it is provided from. The question is whether the whole phrase continues to convey the nature (and location) of the Applicant’s services. Hearing Officer D. Nancarrow summarised the correct approach to such a collation of non-distinctive elements in his decision in Re Application by College of Law (2000) 47 IPR 404 at 409: The words “The College of Law” are all well-known and produce a clear meaning, in combination, as denoting services of an educational or training body in providing legal courses. The present mark has no device elements and it has no “get-up” by way of stylisation of lettering. I am of the opinion that the mark THE COLLEGE OF LAW is entirely descriptive of the applicant’s services and lacks any inherent adaptation to distinguish those services from the similar services of other traders. With the substitution of “Sydney Business School”, for “The College of Law”, and “business courses” for “legal courses”, that passage could apply directly to the current dispute. 17. The Applicant submits that: The Mark is the whole phrase “SYDNEY BUSINESS SCHOOL”. Throughout its submissions the Opponent misstates the matter: the Mark is not the word “SYDNEY”, nor either or both of the words “BUSINESS” or “SCHOOL”. Parsing the Mark into individual words is an incorrect approach when determining the registrability of the Application. 18. Further, the Applicant’s submissions, redacted so as to focus on the issue of inherent adaptation to distinguish, are that: Section 41 generally seeks to strike a balance between two public interests: the public interest in the general body of traders and consumers having available a vocabulary of signs to facilitate communication about a class of goods or services, and the public interest in a particular trader being able to use a sign to communicate a “packet of information” about the source of that trader’s goods or services. The majority of the High Court in Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2014) 109 IPR 134; [2014] HCA 48, at [67] in the context of s 41(3) of the TM Act, in assessing whether [13.350]

639

Intellectual Property: Commentary and Materials

University of Sydney v University of Wollongong cont. a mark is inherently adapted to distinguish, identified the second aspect above as itself involving two steps: as a first step to ask what is the ordinary signification (that is the ordinary meaning) of the word (here the phrase), and as a second step, to test the likelihood that honest traders may wish to use the phrase in connection with their goods or services because of the phrase’s ordinary meaning. The first consideration under s 41 lies within s 41(3) and involves an assessment of the extent to which the trade mark is inherently adapted to distinguish the designated services from the goods and services of other traders. … … The test to be applied under s 41 is that stated by Kitto J in Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 at 514, recently reiterated and explained by the High Court of Australia in Cantarella Bros Pty Ltd v Modena Trading Pty Ltd 109 IPR 154; [2014] HCA 48. … As the majority of the High Court stated in Cantarella at [39] the determination of whether a word [phrase] has “direct reference” to goods [or services] depends critically on the goods/services themselves, because a word containing a direct reference to goods/services in one trade may not convey any such direct reference to goods [services] in another trade. The question of what is the ordinary signification of a mark is directed to persons who will purchase, consume or trade in the designated goods or services (see Canterella [sic] at [59]). This includes whether there is a legitimate desire of other traders to use a word or phrase which is directly descriptive in relation to their same or similar goods or services. As the majority of the High Court noted at [59], however, it does not encompass the desire of other traders to use words/phrases which in relation to the designated goods or services are allusive or metaphorical. So too, it cannot encompass the desire of traders, learning of another trader’s use of a mark, to use the mark themselves – such traders do not exhibit the foundational bona fides and proper motives. Once the ordinary signification of the trade mark is established, then the enquiry moves to whether other traders might legitimately need to use the phrase in respect of their goods/services (Cantarella at [71]). Again, the motives of the other traders are relevant. 19. If I test the character of the Trade Mark by reference to its ordinary signification and the likelihood of other traders legitimately wishing to use it to describe their goods or services, it is difficult to avoid the conclusion that the Trade Mark is the apt, if not only, way to describe a school of business studies located in Sydney. Accepting the Applicant’s submission that the Trade Mark should be considered as a whole phrase, rather than parsed and the component parts analyzed, does not alter my assessment. 20. It seems to me that the only way in which that conclusion might be avoided would turn on the possible extent to which the Trade Mark might not describe, or otherwise lack inherent adaptation to distinguish, some goods or some services coming within the Specification. … 31. A second preliminary matter is whether the Trade Mark might have some greater degree of inherent distinctiveness because of the word “Sydney” within the Trade Mark. I think not. This is not because many of the courses offered by the Applicant under the Trade Mark are taught in Sydney, nor because what might be considered on the evidence to be the Applicant’s flagship campus offering those courses is located in the Sydney CBD. It is because the place name “Sydney” is for the purposes of section 41 wholly non-distinctive having regard to the Specification and the Trade Mark as a whole. To cite a contrasting example from the old cases, the goods are not “bananas” and the trade mark is not “NORTH POLE”. 32. Therefore, if I take account of the degree to which the Trade Mark comprises words which are, in their ordinary use, descriptive of the goods or services of the Specification, and would be used for 640 [13.350]

Trade Marks

CHAPTER 13

University of Sydney v University of Wollongong cont. that purpose by others seeking to supply or provide, without improper motive, such goods or services in the course of trade, I find that the Trade Mark is not to any extent inherently adapted to distinguish those goods or services. 33. That finding leads me to section 41(6) and to the question whether the Trade Mark does, as a matter of fact, distinguish the goods and services of the Specification as the Applicant’s goods or services. The onus is upon the Applicant in that regard and the only evidence of use taken into account is that before the filing date of the application. If the Applicant does not establish that fact, the application must be rejected [Various exhibits not reproduced here] 50. The Opponent’s submission is that use of the Trade Mark “is conjoined with the use of a distinctive logo and the registered trade mark ‘University of Wollongong’, so that at most it is the combined mark which is functioning as a trade mark.” Further, that “in many of the examples the words ‘Sydney Business School’ have no trade mark function whatever.” … Conclusions as to section 41(6) 60. I am in agreement with the Opponent’s criticisms of the evidence of use of the Trade Mark. I find that many examples of use of the words “Sydney Business School” have no role in identification of the origin of the goods or services. They are not examples of trade mark use. Instead they are simple descriptive use of the words in the same way terms such as “the Faculty of Science” or “the Geology Department” are ordinarily used, albeit with a geographical descriptor added. 61. The other examples of use are flawed for the reasons I have described. I have already found the Trade Mark to be not to any extent inherently adapted to distinguish the goods and services of the Specification. The consequence of that finding is that a member of the public seeing the words “Sydney Business School” and untutored by use of that name would be unable to associate it with one particular trader. To make a connection with the Applicant that person would need help in the form of additional cues such as the Crest or the words “University of Wollongong”. It is the Opponent’s submission that “at most it is the combined mark which is functioning as a trade mark.” I would go further and say that, on the evidence, the words “Sydney Business School” make no contribution to the trade mark function of the putative “combined mark”. 62. In making that finding I have taken account of the Applicant’s submission that a word or phrase may also function as a trade mark, in the sense of being a badge of origin, even though another mark or indication of origin is used almost invariably in close proximity and I have taken account of the cases to which I was referred but I find that learning has no application here. I do not accept on the evidence that the Trade Mark has any life of its own separate from and independent of the additional signs that distinguish the Applicant’s goods or services from those of others. 63. I find that the Applicant has failed to establish that through use the Trade Mark does, as a matter of fact, distinguish the goods and services of the Specification as the Applicant’s goods or services as at the Priority Date. 64. Accordingly I cannot accept the Trade Mark under section 41(6) and so I find that the Opponent has established its ground of opposition under section 41. (footnotes omitted)

Names of persons [13.360] Personal names may lack inherent distinctiveness as many people can share a name. The Trade Marks Office conducts a search of Australian surnames to assess whether a “name” [13.360]

641

Intellectual Property: Commentary and Materials

trade mark is too common (Search for Australian Surnames (SFAS) database). A SFAS value is generated, and as a general guide, an SFAS value of 750 or more may well indicate the surname is common enough to raise a ground for rejection, but this depends on the nature of the goods or services involved: see further, IP Australia, Trade Marks Office Manual of Practice and Procedure, Pt 22.16 (15 July 2016). In Re Application by Glenleith Holdings Ltd (Patent Office) (1989) 15 IPR 555, the applicant sought to register the name ROBBIE BURNS (with a small picture of the poet) for Scotch Whisky. The Senior Examiner of Trade Marks (J Hooton) said: In order to qualify as a registrable mark under s 24(1)(a) the name of a person must be rendered in a special or particular manner. The applicant’s submission that “Robbie Burns” is not the name of a person being the name of a deceased Scottish poet does not overcome the objection in terms of s 24(1)(a) because the names “Robbie” and “Burns” did not die with that famous Scottish poet. “Burns” is in fact a very common surname occurring 7584 times in the Standard Search for Australian Surnames and “Robbie” is a well-known form of Robert. There is therefore a reasonable probability that persons with the name of “Robbie Burns” exist.

In Re Application by Lee Kum Kee (Patent Office) (1988) 12 IPR 212, the name Lee Kum Kee in Chinese characters could not be registered for sauces, condiments and spices, as it constituted a surname recognised by purchasers. However, the transliteration of the Chinese name into the three English words was registrable (in Part B of the Register of Trade Marks, at that time: see [13.140]), although the name “LEE” on its own was too common to achieve registration. Similarly a name written in Arabic was refused registration where it conveyed primarily “surnomial significance”: Avedis Zildjian Co (1990) 18 IPR 474. A person’s signature is usually regarded as inherently distinctive, and one type of mark allowed registration under the Trade Marks Act 1955 (Cth) was “the signature of the applicant for registration or some predecessor in the business”, unless the signature was in too commonplace a style of writing. See “Barry Artist” Trade Mark [1978] RPC 703; cf Parison Fabrics Ltd’s Application (1949) 66 RPC 217. Registering a name that is not very unusual in its own right requires it to be written in a way that makes it “distinctive”. Name of a person represented in a special or particular manner

Fanfold Ltd’s Application [13.370] Fanfold Ltd’s Application (1928) 45 RPC 325 Court of Appeal (United Kingdom) LORD HANWORTH MR: [329] … The facts can be stated quite shortly. There is a company which carries on its business as Fanfold Ltd, and they applied for the registration in Part A, of the register of a trade mark, which consists of their name written in a particular manner somewhat arched so that the word “Limited” can be written in rather smaller letters underneath it and below the word “Limited”, and making a tangent to the arch there is a scroll or ribbon pattern somewhat faintly indicated. [Mark not reproduced.] The matter went before the Registrar, and he decided that the company were not entitled to register the mark. I have read his judgment carefully, and I think that he decided two things … The Registrar set out the description of the mark, and then said: The name is represented in relatively very heavy type which at once impresses the eye and rivets the attention; while the scroll, when looked at from a short distance, loses its identity if it does not wholly disappear. So far, therefore, as the features of the proposed trade mark go, the learned Registrar comes to the conclusion that it does not consist of more than the name 642 [13.370]

Trade Marks

CHAPTER 13

Fanfold Ltd’s Application cont. of Fanfold Ltd, because the accompanying ribbon or scroll does not arrest the eye, and loses its identity, if it does not wholly disappear … The type employed in the representation of the name is quite ordinary; and it does not appear to me that the slight arching of the name (which in itself is a common form of display) and the addition of the indistinctive scroll device are so special or particular as to fit the whole mark to distinguish the applicants’ goods. … [332] … In order to be registrable under para (1) you must, first of all, have a name which is represented in a special or particular manner; but (it may be either superadded or interpreting what is meant by “special or particular manner”) there must be distinction, and that distinction is required so that there may be an indication that the goods on which the mark is put are the goods of the proprietor, and the distinction must be one which is adapted to distinguish those goods of the proprietor for the purpose of enabling the definition of a trade mark to be fulfilled.

Standard Cameras Ltd’s Application [13.380] Standard Cameras Ltd’s Application (1952) 69 RPC 125 High Court of Justice, Chancery Division (United Kingdom) [Mark not reproduced.] LLOYD-JACOB J: … [128] … [I]t appears that the main ground upon which registration was sought was that the representation attached to the application form was of a distinctive mark within the meaning of that phrase in s 9(1)(e) of the Trade Marks Act 1955. As Mr Whyman very rightly says, if the representation is looked at the conclusion is obvious that in the ordinary circumstances of trade goods bearing this mark would be known as, and asked for under the name, “Robin Hood”. Accordingly, he was induced thereby to consider that the real decision in this matter turned upon whether the name “Robin Hood”, or the words “Robin Hood” as such, wholly unembellished or added to, could properly be regarded as conveying the distinctiveness necessary to justify registration under the Act. He goes on to point out that although the name “Robin Hood” is attached to a legendary or possibly historical character, none the less the surname “Hood” is by no means uncommon in this country and that, as the proper name “Robin” is also familiarly used in these days, the combination of the two is not altogether unexpected and, as the trade and commerce of this country is open to everybody, it is only right that the tribunal should have in mind the possibility that the male son of Mr and Mrs Hood, to whom the proper name “Robin” may have been given at his christening, may find himself eventually engaged in trade in the manufacture or distribution of photographic apparatus, and in that connection it is at any rate not unlikely that he may desire or make use of his own name. It has always to be borne in mind when considering that sort of approach that, in connection with the registration of surnames upon evidence of distinctiveness, the court has said on a number of occasions that the uncommonness of the name itself is a factor to be borne in mind when considering registrability. Where the danger to be guarded against requires the combination of a number of circumstances, including, firstly, the accident of the surname being the same, secondly, the event that the proper name is the same, thirdly, that the trade engaged upon by this person shall be the same, and fourthly, that the desire to use the name upon the goods should also have presented itself to the mind of this hypothetical person, quite obviously the possibilities of confusion are correspondingly diminished the more factors it is necessary to add together in order to arrive at the probability. The Act specifically provides for the safeguarding of a bona fide use of a person’s own name or of the name of his place of business. Therefore generally, in considering the propriety of permitting applications such as the present to proceed to registration, the tribunal must always have in mind the [13.380]

643

Intellectual Property: Commentary and Materials

Standard Cameras Ltd’s Application cont. likelihood or otherwise of the events which ingenuity can so readily formulate having any real relation to what can be expected in practice. On the whole, I should be inclined to share his view that, if in practice this mark were to come to be understood by the trade and public as amounting to no more than the name “Robin Hood”, it would be a mark that could not properly fall to be registered under the provisions of s 9(1), but would require to have evidence of its distinctiveness before it could properly be entered upon the register … [129] … As I see the matter, it is therefore incumbent upon a tribunal judging the propriety of this application to look at that which is applied for and if it appears, as it does, that it is the name of an individual, namely, “Robin Hood”, then to consider whether that is represented in a special or particular manner as the section requires. No one, I think, would seriously contend that to any ordinary eye the representation of the words “Robin Hood” set out on this application would not be accepted by everybody as being out of the common. Having come to the conclusion that it is out of the common, I have to look at it to see whether it is sufficiently out of the common to strike the eye as being peculiar, and by “peculiar” I mean not likely to occur to somebody who merely wishes to represent the word. I myself entertain no doubt that it is an unusual representation, which does strike the eye as uncommon, and which I should suppose is so unlikely as to be substantially impossible for any ordinary man wishing to represent the name “Robin Hood” to arrive at. Accordingly, were the matter before me, sitting as the Registrar of Trade Marks, I should have accepted this application for registration under the provisions of s 9(1)(a) of the Trade Marks Act 1955.

Invented words Howard Auto Cultivators v Webb Industries [13.390] Howard Auto Cultivators Ltd v Webb Industries Pty Ltd (1946) 72 CLR 175 High Court of Australia DIXON J: [180] … A rotary hoe is a familiar agricultural implement and the appellants whose business consists in the manufacture and sale of machines for agriculture and horticulture, trade largely in them. The respondent’s application is to register in respect of cultivating implements the wordmark “Rohoe”. It is clear that it is not registrable as a trade mark unless it is an invented word within the meaning of s 16(1)(c) of the Commonwealth Trade Marks Act 1905-1936. The Registrar, who dismissed the appellants’ opposition and granted registration, [181] held that it does amount to an invented word and the question is whether that decision is right. The fact that a word is not included in the dictionaries is not enough to show that it is an invented word, nor is the fact that it has been newly constructed: Re Yalding Manufacturing Co’s Application (1916) 33 RPC 285 at 289. The materials from which such a word has been fashioned cannot be neglected and if it is compounded of elements of which the source is manifest and the intended meaning is transparent, it becomes a question whether there is anything more than a colourable attempt at reproducing some of the sounds and all the sense of an expression belonging to common speech. Misspellings, variations and distortions of ordinary words do not amount to invention, and it has been held that to write a proper name backward is not to invent a word: Re George Cording Ltd’s Application (1916) 33 RPC 83. Novelty is, of course, looked for and that means more than giving existing words or a combination of words a disguise, whether phonetic or graphic, which the mind of 644 [13.390]

Trade Marks

CHAPTER 13

Howard Auto Cultivators v Webb Industries cont. the hearer or reader at once penetrates. In the words of Lord Shand (Eastman Photographic Materials Co v Comptroller-General of Patents, Designs & Trade Marks [1898] AC 571; 15 RPC 476 at 585 (AC), 487 (RPC)): There must be invention, and not the appearance of invention only. It is not possible to define the extent of invention required; but the words, I think, should be clearly and substantially different from any word in ordinary and common use. The employment of a word in such use, with a diminutive or a short and meaningless syllable added to it, or a mere combination of two known words, would not be an invented word; and a word would not be “invented” which, with some trifiing addition or varied trifiing variation, still leaves the word one which is well-known or in ordinary use, and which would be quite understood as intended to convey the meaning of such a word. On the other hand the new word need not be wholly meaningless and it is not a disqualification “that it may be traced to a foreign source or that it may contain a covert and skilful allusion to the character or quality of the goods”. This is the expression of Lord Macnaghten (at 583), who also said “the word must be really an invented word. Nothing short of invention will do. On the other hand, nothing more seems to be required”. No one now supposes that the Trade Marks Act 1955 requires that a word or words, although invented, shall not contain or suggest any reference to the character or quality of the goods or that it imposes any further requirement which must be [182] fulfilled for the word to be registrable. But, though, as appears from Lord Macnaghten’s statement, some signification or indication of meaning is not inconsistent with invention, yet in deciding whether what is put forward is an invented word or is but an old word or words masquerading under some thin disguise of orthography, abbreviation or pronunciation, the fact that it is effectual in conveying the same meaning cannot be disregarded. It is not surprising, the subject matter being trading goods, that more often than not the meaning discernible in a word said to be newly devised relates to the character or quality of the goods. But logically the circumstance that it is this particular kind of meaning that is signified rather than some other should not weigh against the claim for invention, notwithstanding that, in the case of an existing word, such a meaning would disqualify the word as the essential particular of a registrable mark. The real difficulty lies in the recognisable features of a word said to be new and invented. If in its features there is an immediate disclosure of the origin and meaning of the elements of which it has been formed, the question must arise whether it is anything more than a version or perversion of an existing word or words. Lord Herschell (at 581) thought that an invented word had no meaning until one has been attached to it. He made a qualification, not now material, with reference to combinations of foreign words little known to Englishmen. He stated his opinion that a combination of two English words was not an invented word, even although the combination might not have been in use before, and that a mere variation in orthography or termination of a word would not be sufficient to constitute an invented word if to the eye or ear the same idea would be conveyed by the word in its ordinary form. The same thing had been put by Lindley LJ in the course of his dissenting judgment in Re Farbenfabriken Application [1894] 1 Ch 645 at 652, the decision of the majority in which was overruled by the House of Lords in the Solio case (Eastman Photographic Materials Co v ComptrollerGeneral [1898] AC 571). He said (at 652, 653): Any word which is in fact new, and not what may be called a colourable imitation of an existing word, is, in my opinion, an invented word. … Again, I do not think that a word can fairly be called an invented word if it is so nearly like a known word in spelling or sound as to be an obvious imitation of it and is in substance that word though spelt or sounded a little differently. In Lord Parker’s summary in Philippart v William Whiteley Ltd [1908] 2 Ch 274 at 279 the two things, viz that the word must [183] be new and that it must not be connotative, are expressed as separate conditions: “To be an invented word, within the meaning of the Act, a word must not only be newly [13.390]

645

Intellectual Property: Commentary and Materials

Howard Auto Cultivators v Webb Industries cont. coined in the sense of not being already current in the English language, but must be such as not to convey any meaning, … to ordinary Englishmen. It must be a word having no meaning, or no obvious meaning, until one has been assigned to it.” He employed the expression “ordinary Englishmen” because “it is not enough that it might suggest a meaning to a few scholars.” Lord Greene MR in Re Boots Pure Drug Co [1938] Ch 54 at 65, in pointing out that Lord Parker had stated two considerations as essential before a word could be an invented word, transformed the “ordinary Englishmen” into “an ordinary educated Englishman” and proceeded to restate and illustrate the requirement as follows: But the next question would be whether, although not a word current in the English language, it was a word which would convey an obvious meaning, as might well happen if the word was by some sort of a jingle, of the presence of some element in it, one which suggested an obvious meaning to the English hearer. Examples of words which, although new in formation, have failed because of these principles, to qualify as invented words are, “Orlwoola” (1909) 26 RPC 683 at 850, “Absorbine” (Christy v Tipper [1905] 1 Ch 1; 21 RPC 755), “Arsenoid” (Re Yalding Manufacturing Co’s Application (1916) 33 RPC 285), “Eanco”, scil “E and Co” (Re Eisman & Co’s Application (1920) 37 RPC 134), “Uneeda” (Re National Biscuit Co’s Application [1902] 1 Ch 783; 19 RPC 281), “Panoram” (Re Kodak Ltd’s Trade Mark (1903) 20 RPC 337), “Aluminox” (Re Salter’s Application (1923) 40 RPC 402), “Trakgrip” (at all events so I read the judgment of Simonds J in Re Dunlop Rubber Co’s Application (1942) 59 RPC 134). On the other hand “Yeastvite” has been accepted into the category of invented words (Irving’s Yeast-Vite Ltd v Horsenail (1934) 150 LT 402), and so has “Sardovy”, from sardines and anchovy (Re Brown, Wills & Nicholson’s Application (1923) 41 RPC 171), and “Oxo” (Re Liebig’s Extract of Meat Co’s Trade Mark (1902) 22 NZLR 165) … … [185] … The question, though in a very small compass, is not an easy one, as the division of opinion it has provoked shows. But my conclusion is that the word formed bears a face value for those for whom it is meant and to them has an obvious meaning based upon an obvious structure, one element in which is a plain English word and the other a transparent abbreviation. It is very different from a covert and skilful allusion to the character of the goods. I therefore think that it is not an invented word within the meaning of s 16(1)(c) of the Trade Marks Act 1905-1936. I think that the appeal should be allowed and the application for registration refused. [Rich, Starke and McTiernan JJ delivered judgments to like effect; Latham CJ and Williams J dissented.]

[13.400]

Notes

A good example of an “invented word” – one with no meaning apart from when it is applied to the goods or services – is the word “FUDDRUCKERS”, which was used with respect to hamburgers: see Michael Sharwood & Partners Pty Ltd v Fuddruckers Inc (1989) 15 IPR 188. Manufacturers may give a new product a distinctive name that then becomes the industry term for the item and, therefore, a descriptive one: for example, “Beta movie” in Re Sony Kabushiki Kaisha (1987) 9 IPR 466. In that case, the word “BETA” was refused registration because it had already become a generic term before the application: see further Trade Marks Act 1995 (Cth) s 24. While most traders prefer their mark to contain words, devices or phrases that are descriptive or suggest something complimentary about their goods, the general rule is that the registrability of such words, devices or phrases is subject to the proviso in the previous 646 [13.400]

Trade Marks

CHAPTER 13

legislation that words not have a “direct” reference to the character or quality of goods or services, and a note to s 41 states that marks are not inherently adapted to distinguish if they are “ordinarily” used to indicate characteristics of goods or services. Foreign Words [13.410] “Foreign” words having some meaning in English will be refused registration if the meaning is too readily apparent. In Re Applications by Maxam Food Products Pty Ltd (Patent Office) (1991) 20 IPR 381, the mark “LA DELIZIOSA” was refused registration on the basis that it amounted to a laudatory expression in relation to the goods, a range of pasta products. It was argued that the expression was “a nonsensical combination which would not be used by Italian speakers”; however, even though it was not grammatically correct, it still had a transparent meaning. Contrast this to the well-known decision of Burgoyne’s Trade Mark (1889) 6 RPC 227 where the word OOMOO – signifying “select” or “choice” in an Australian Aboriginal language – was held to be distinctive in relation to wine and spirits. Chitty J, at 232, found the mark was registrable because it did not mean “choice to an ordinary Englishman, or to a sufficient number of Englishmen in [the United Kingdom] to … say that it has any meaning. … [I]t is a meaningless word … with reference to wine and spirits”. Notwithstanding Australia’s linguistic and cultural diversity, the recent High Court decision of Cantarella arguably maintains this “Anglo-centric perspective” 35 in determining the registrability of foreign words. Given that Cantarella is likely to cast a long shadow over practice for some time, generous extracts of the majority judgment, and importantly, Gaegeler J’s dissenting judgment (promoting the more traditional approach) are reproduced below.

Cantarella Bros Pty Ltd v Modena Trading Pty Ltd [13.420] Cantarella Bros Pty Limited v Modena Trading Pty Ltd (2014) 254 CLR 337; [2014] HCA 48 [Cantarella appealed the decision of the Full Federal Court ordering the cancellation of two of its trade marks ORO and CINQUE STELLE – in Italian, meaning “gold” and “five stars”, respectively – in Class 30 (mainly for coffee and coffee-related products). The cancellation proceedings were brought via s 88(1)(a) on the grounds the relevant marks lacked distinctiveness. In restoring these marks to the Trade Marks Register, the High Court, by majority, held that the two marks are “inherently adapted to distinguish” the goods for which they were registered from the goods of other persons.] FRENCH CJ, HAYNE, CRENNAN and KIEFEL JJ: [347][26] [I]n Clark Equipment, Kitto J explained that whether a trade mark consisting of a word is “adapted to distinguish” certain goods is to be tested: by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion [348] with similar goods in any manner which would infringe a registered trade mark granted in respect of it. (emphasis added) [27] The purport of the emphasised parenthesis was a particular focus of dispute before the Full Court, which dispute was reiterated in this Court. 35

See Modena Trading Pty Ltd v Cantarella Bros Pty Ltd (2013) 215 FCR 16, 31 [85], [87]; 24 [44]–[49]; cf Cantarella Bros Pty Limited v Modena Trading Pty Limited (2014) 254 CLR 337; [2014] HCA 48, 21 [72]. [13.420]

647

Intellectual Property: Commentary and Materials

Cantarella Bros Pty Ltd v Modena Trading Pty Ltd cont. [28] Cantarella relied on the emphasised passage to support the proposition that the inherent adaptability of a trade mark consisting of a word (including a foreign word) is to be tested by checking the ordinary meaning (that is, the “ordinary signification”) of the word to anyone ordinarily purchasing, consuming or trading in the relevant goods, characterised by Cantarella as “the target audience”. [29] Modena asserted that the emphasised language was not essential to the test because Lord Parker of Waddington in Registrar of Trade Marks v W & G Du Cros Ltd (“Du Cros”) stated the test in terms of the likelihood that other traders might legitimately desire to use the word in connection with their goods. [30] The debate makes it necessary to refer to some historical matters which inform and explain the test stated by Kitto J [in Clark Equipment]. A consideration of those matters and relevant authorities shows that Cantarella’s submissions are correct and must be accepted. [After considering the development of various types of registrable marks under early UK trade mark legislation, the majority turned to their attention to the importance of determining the “ordinary signification” of any applied-for word mark under that legislation] Foreign words [45] Establishing the “ordinary signification” of a trade mark consisting of a word is just as critical if the word is to be found in a dictionary of a foreign language. This is particularly so when an objection to registrability is based on an assertion that the mark is not an invented word because it makes direct reference to the character or quality of the goods in question. The Solio Case concerned the registrability of “SOLIO” for photographic papers. It had been contended that “solio” (a word in Italian and Latin) was not an invented word and moreover was a word containing a “reference” to the goods. Lord Macnaghten stated the principle to be applied to a word put forward as an invented word: If [a word] is an invented word, if it is “new and freshly coined” (to adapt an old and familiar quotation), it seems to me that it is no objection that it may be traced to a foreign source, or that it may contain a covert and skilful allusion to the character or quality of the goods. I do not think that it is necessary that it should be wholly meaningless. [46] That was followed by Parker J (as his Lordship then was) in Philippart v William Whiteley Ltd (“the Diabolo Case”) when he found a trade mark consisting of the Italian word “diabolo” unregistrable, because it applied to a well-known game in England called “the devil on two sticks”, for which reason it could not be treated as an “invented word”. Parker J explained [354]: To be an invented word, within the meaning of the Act, a word must not only be newly coined in the sense of not being already current in the English language, but must be such as not to convey any meaning, or at any rate any obvious meaning, to ordinary Englishmen. [47] In Howard Auto-Cultivators Ltd v Webb Industries Pty Ltd (“Howard”), Dixon J stated what was required for a word to qualify as an invented word. Citing Lord Macnaghten in the Solio Case, his Honour said that although a word should be: substantially different from any word in ordinary and common use … [it] need not be wholly meaningless and it is not a disqualification “that it may be traced to a foreign source or that it may contain a covert and skilful allusion to the character or quality of the goods.” [48] These authorities show that it is not the meaning of a foreign word as translated which is critical, although it might be relevant. What is critical is the meaning conveyed by a foreign word to those who will be concerned with the relevant goods. [49] In Kiku Trade Mark [[1978] FSR 246], the Supreme Court of Ireland approved Parker J’s speech in the Diabolo Case and held that the Japanese word “kiku”, meaning chrysanthemum, was registrable for perfume because the word had no “direct reference” to the character or quality of the goods. The 648 [13.420]

Trade Marks

CHAPTER 13

Cantarella Bros Pty Ltd v Modena Trading Pty Ltd cont. Court considered that a word which required translation could not be said to have any signification to ordinary people living in Ireland who see and hear it. That approach accords with Dixon J’s statement of principle in Howard. Words containing a reference to goods [50] The practical difference between a word making some “covert and skilful allusion” to the goods (prima facie registrable) and a word having a “direct reference” to goods (prima facie not registrable) is well illustrated in two Australian cases decided under the 1905 Act. Understanding the distinction is the key to resolving this appeal. [51] In Howard, this Court was considering whether a trade mark consisting of the word “rohoe” was registrable as an invented word in respect of agricultural implements. Parker J’s reference in the Diabolo Case to a word (in that case a foreign word) having an “obvious meaning” to “ordinary Englishmen” was considered by [354] Dixon J. Because of the special nature of the goods to which “rohoe” was to be applied, Dixon J said the question was whether the word “rohoe” would appear as an obvious contraction of “rotary hoe” and be so understood by “a farmer, a horticulturist, a trader in agricultural and horticultural implements or a person otherwise concerned with them”. [52] By comparison, in Mark Foy’s, the trade mark “TUB HAPPY” was found registrable by a majority in this Court as a trade mark having no direct reference to the character or quality of cotton garments. In agreeing with Williams J, Dixon CJ described the test for a word having “direct reference to the character or quality of the goods” as lying “in the probability of ordinary persons understanding the words, in their application to the goods, as describing or indicating or calling to mind either their nature or some attribute they possess”. His Honour considered “TUB HAPPY” to be allusive such that it did not convey a meaning or idea “sufficiently tangible” to amount to a “direct reference” to the character or quality of the goods. Citing with approval Lord Macnaghten in the Solio Case and Parker J in the Diabolo Case, Williams J illustrated why a covert and skilful allusive reference to goods does not render a word directly descriptive of goods as that expression is used in trade mark law. His Honour said the registration of “TUB HAPPY” for cotton goods did not prevent others from describing their cotton goods as having the characteristics or qualities of “washability, freshness and cheapness”. … … [356]“Ordinary signification” and “inherently adapted to distinguish” … ... [358][59] The principles settled by this Court (and the United Kingdom authorities found in this Court to be persuasive) require that a foreign word be examined from the point of view of the possible impairment of the rights of honest traders and from the point of view of the public. It is the “ordinary signification” of the word, in Australia, to persons who will purchase, consume or trade in the goods which permits a conclusion to be drawn as to whether the word contains a “direct reference” to the relevant goods (prima facie not registrable) or makes a “covert and skilful allusion” to the relevant goods (prima facie registrable). When the “other traders” test from Du Cros is applied to a word (other than a geographical name or a surname), the test refers to the legitimate desire of other traders to use a word which is directly descriptive in respect of the same or similar goods. The test does not encompass the desire of other traders to use words which in relation to the goods are allusive or metaphorical. In relation to a word mark, English or foreign, “inherent adaption to distinguish” requires examination of the word itself, in the context of its proposed application to particular goods in Australia. … [361] ... [71] As shown by the authorities in this Court, the consideration of the ″ordinary signification″ of any word or words (English or foreign) which constitute a trade mark is crucial, whether (as here) a trade mark consisting of such a word or words is alleged not to be registrable because it is not an invented word and it has “direct” reference to the [362] character and quality of goods [Howard [13.420]

649

Intellectual Property: Commentary and Materials

Cantarella Bros Pty Ltd v Modena Trading Pty Ltd cont. (1946) 72 CLR 175; Faulding (1965) 112 CLR 537], or because it is a laudatory epithet [Burger King (1973) 128 CLR 417] or a geographical name [Thomson v B Seppelt & Sons Ltd (1925) 37 CLR 305; Clark Equipment (1964) 111 CLR 511. See also Chancellor, Masters and Scholars of the University of Oxford v Registrar of Trade Marks (1990) 24 FCR 1], or because it is a surname [Mangrovite Belting Ltd v J C Ludowici & Son Ltd (1938) 61 CLR 149], or because it has lost its distinctiveness [James A Jobling & Co Ltd v James McEwan & Co Pty Ltd [1933] VLR 168], or because it never had the requisite distinctiveness to start with [Faulding (1965) 112 CLR 537]. Once the “ordinary signification” of a word, English or foreign, is established an enquiry can then be made into whether other traders might legitimately need to use the word in respect of their goods. If a foreign word contains an allusive reference to the relevant goods it is prima facie qualified for the grant of a monopoly [Howard (1946) 72 CLR 175 and Mark Foy’s (1956) 95 CLR 190 approving the Solio Case [1898] AC 571]. However, if the foreign word is understood by the target audience as having a directly descriptive meaning in relation to the relevant goods, then prima facie the proprietor is not entitled to a monopoly of it [Howard (1946) 72 CLR 175 and Mark Foy’s (1956) 95 CLR 190 approving the Diabolo Case [1908] 2 Ch 274]. Speaking generally, words which are prima facie entitled to a monopoly secured by registration are inherently adapted to distinguish. … [73] Both Modena in argument and the Full Court in its reasons misunderstood Lord Parker’s reference in Du Cros to the desire of other traders to use the same or similar mark in respect of their goods. Lord Parker was not referring to the desire of traders to use words, English or foreign, which convey an allusive or metaphorical meaning in respect of certain goods. What Lord Parker’s “other traders” test means in practice is well illustrated by the fate of the marks considered in Faulding, Clark Equipment and Burger King. Like “TUB HAPPY” in respect of cotton goods, “ORO” and “CINQUE STELLE” were not shown [363] to convey a meaning or idea sufficiently tangible to anyone in Australia concerned with coffee goods as to be words having a direct reference to the character or quality of the goods. … [75] The evidence led by Modena purporting to show that rival traders used (or desired to use) the word “oro” to directly describe their coffee products showed no more than that the word “oro” or the form “d’oro” had been employed on internet sites and coffee product packaging in respect of coffee products in a range of composite marks featuring Italian words which ostensibly were distinguishable aurally, visually and semantically. Further, the presence on the Register, before Cantarella’s trade mark “ORO” was registered, of another proprietor’s composite mark “LAVAZZA QUALITA ORO plus device” and Cantarella’s own composite mark “MEDAGLIA D’ORO” in respect of coffee products fell well short of proving that the word “oro”, standing alone, is understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of such goods. [76] The evidence led by Modena to show that some traders in Australia used the expression “five star” on packaging of coffee and many traders used “five star” in respect of a range of services including restaurant and accommodation services also fell well short of proving that “cinque stelle” is understood in Australia by persons concerned with coffee products to be directly descriptive of the character or quality of such goods. [77] Modena’s complaint that the primary judge insufficiently considered the desires of rival traders to use the words “oro” or “cinque stelle” to directly describe their coffee goods was premised on a misconception that such was demonstrated by the evidence. The primary judge was right to reject Modena’s submission, based on the evidence, that honest traders might legitimately wish to use the words to directly describe, or indicate, the character or quality of their goods. Conclusion 650

[13.420]

Trade Marks

CHAPTER 13

Cantarella Bros Pty Ltd v Modena Trading Pty Ltd cont. [78] ... For the reasons given, Cantarella’s registered trade marks “ORO” and “CINQUE STELLE” are inherently adapted to distinguish the goods for which they are registered from the goods of other persons. (some citations omitted.) (in dissent) GAGELER J [365]: … [84] The extent to which a trade mark is “inherently adapted to distinguish” – the language of – is the language of s 26(2)(a) of the Trade Marks Act 1955 (Cth) (“the 1955 Act”). That language of the 1955 Act originated in s 9(3) of the Trade Marks Act 1938 (UK) (“the 1938 UK Act”). There it had “always been treated as giving statutory expression” to the “public policy” “that a trader ought not to be allowed to obtain by registration … a monopoly in what other traders may legitimately desire to use”. [85] The public policy expressed in the speech of Lord Parker of Waddington in Registrar of Trade Marks v W & G Du Cros Ltd was articulated in the context of addressing the meaning of “adapted to distinguish” in s 9(5) of the Trade Marks Act 1905 (UK). It was captured by Isaacs J addressing, in Thomson v B Seppelt & Sons Ltd, the meaning of the same words in s 16(2) of the Trade Marks Act 1905 (Cth) (“the 1905 Act”): The statutory criterion looks wholly to the future, and seeks to know “What will be the effect of the mark after registration?” Is it adapted in future trade to distinguish the proprietor’s goods from those of other persons? That, however, does not mean “is the word adapted to acquire distinctiveness?” but “is the word instantly adapted to distinguish the proprietor’s goods in his future trade?”… That must in all fairness be so, because otherwise it would be enlisting registration itself as an aid in making a mark actually distinctive, and so preventing partly by statutory assistance other traders from using the mark if they so desired. [86] The public policy gave rise to a legal discrimen which was given succinct authoritative expression in F H Faulding & Co Ltd v Imperial Chemical Industries Ltd. Again addressing the meaning of the words “adapted to distinguish” in s 16(2) of the 1905 Act, Kitto J (with whom Barwick CJ and Windeyer J agreed) said: [T]he question to be asked in order to test whether a word is adapted to distinguish one trader’s goods from the goods of all others is whether the word is one which other traders are likely, in [366] the ordinary course of their businesses and without any improper motive, to desire to use upon or in connexion with their goods. His Honour’s reasoning in that case demonstrated that actual use of the word by other traders before and after registration may be logically probative of that question. Yet it also emphasised that application of the test was separate from and anterior to any question as to whether or not another particular trader may have begun to use the word with a view to appropriating an applicant’s reputation. … [368] ... [92] The decisions [Clark Equipment Co v Registrar of Trade Marks (1965) 112 CLR 537; Burger King Corporation v Registrar of Trade Marks (1973) 128 CLR 417; Eutectic Corporation v Registrar of Trade Marks (1980) 32 ALR 211] together illustrate that the focus of the test imported by the words “inherently adapted to distinguish”, now in , is on the extent to which the monopoly granted on registration of a trade mark would foreclose options otherwise available to rival traders acting in the ordinary course of their businesses without any desire to benefit from the applicant’s reputation. … [93] None of the three decisions concerned an attempt to register a mark comprising a word shown to have an ordinary meaning in a language other than English. There is no reason, however, why the test should operate differently in relation to a mark of that kind. The parenthetic reference by Kitto J in Clark Equipment to a trader acting in the exercise of “the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they [13.420]

651

Intellectual Property: Commentary and Materials

Cantarella Bros Pty Ltd v Modena Trading Pty Ltd cont. ordinarily possess” must in that respect be understood in the context of that case, dealing as it did with a foreign place name. Plainly, his Honour’s attention was not confined to traders located in Australia. Equally plainly, his Honour’s reference to words forming part of the common heritage was not confined to ordinary English words. [369][94] The three decisions also illustrate that the F H Faulding test is not exhausted by an inquiry into the intrinsic capacity of a word or other sign to acquire connotations which would in fact distinguish the goods or services of an applicant for registration from the goods or services of rival traders. Eutectic Corporation, in particular, illustrates that the test is not exhausted by an inquiry into how the mark might be expected to be understood in Australia by ″ordinary persons″ or by actual or potential purchasers of goods or services of the relevant kind. The relevant perspective is, rather, that of another trader, located in Australia or elsewhere, who might desire to use the word or other sign in the ordinary course of its business. … [370] ... [99] Here the primary judge [Cantarella Bros Pty Ltd v Modena Trading Pty Ltd (2013) 299 ALR 752, Emmett J] citing F H Faulding test, said: “The question to be asked in order to test whether a word is adapted to distinguish one trader’s goods from the goods of all others is whether the word is one that other traders are likely, in the ordinary course of their businesses, and without any improper motive, to desire to use upon or in connection with their goods”. Later, citing Tub Happy, his Honour said: The test must lie in the probability of ordinary persons understanding the words, in their application to the goods, as describing, indicating or calling to mind either their nature or some attribute they possess. [371] His Honour was not persuaded “that the Italian language is so widely spread that the conclusion should be drawn that Cinque Stelle and Oro would be generally understood in Australia” to mean “five stars” and “gold” respectively. His conclusion, expressed in terms of the Tub Happy test, was that “the Italian words are not so obvious to ordinary English speaking persons in Australia that Cinque Stelle and Oro have a specific meaning”. [100] The Full Court held that his Honour erred in equating the F H Faulding test test with the Tub Happy test, and in applying the latter to the exclusion of the former. That conclusion was correct. The central contention of the appellant (“Cantarella”) in this Court is that the two tests are the same. They are not. Application [101] The Full Court went on itself to apply the F H Faulding test test. Foreshadowing the analysis in which it engaged, the Full Court explained: There is no necessity to approach the enquiry from an Anglocentric perspective in the Australian context which has rich cultural and ethnic diversities within its population. Adopting the language of Kitto J, to accommodate this reality in the marketplace, one may consider the relevant words against the collective diverse heritage. Viewed in that way, the ’common heritage’ here included that of traders in coffee products sourced from Italy. Such traders may well be Italian or local importers. They may be local distributors who have in mind the large Italian speaking population in Australia as well as other Australians who, when it comes to coffee, want something with an Italian look and feel. Much of this country’s coffee heritage in its language has its provenance in the Italian language eg caffè latte; cappuccino; affogato; caffè machiatto and espresso. It is evident that pure coffee in Australia is often associated with Italy and Italian coffee products. [102] The Full Court stated its conclusion to be that “other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the Oro and Cinque Stelle marks, 652 [13.420]

Trade Marks

CHAPTER 13

Cantarella Bros Pty Ltd v Modena Trading Pty Ltd cont. or some mark nearly resembling them, upon or in connection with their own coffee-related goods”. That conclusion, the Full Court explained, [372] was based on the cumulative effect of a number of considerations which it went on to enumerate. … [These considerations include that the words, Oro and Cinque Stelle, in Italian, re laudatory expressions signifying quality; in Australia, coffee is often associated with Italy; Italian is the second most spoken language in Australia; common usage of these words by other coffee traders before Cantarella applied to register them as trade marks.] [374] ... [111] ... The significance which the Full Court attached to that prior use by Molinari and its Australian distributors is also to be evaluated in the light of the primary judge’s findings of contemporary use in Australia to which the Full Court also referred. Those findings were that, as at 2011, dozens of coffee distributors in Australia used Oro or D’oro to denote products within their ranges or to denote their house brands. The findings were also that there was use at that time by a number of coffee distributors of 5 Stelle and Five Star, and that hundreds of Australian businesses have Five Star in their names. [112] Gold and Five Star are ordinary English words. Used in respect of goods or services, they signify quality. They always have. No authority is necessary to establish that, used alone, they are not inherently adapted to distinguish goods or services of one person from goods or services of another. They are words which any person in the ordinary course of business might legitimately seek to use. [113] The Full Court’s conclusion was that the Italian equivalents of those words were not, on 24 March 2000 and on 6 June 2001 respectively [their respective filing dates], inherently adapted to distinguish the goods of one person from the goods of another when applied in Australia to goods of a kind commonly associated with Italy, often enough imported from Italy and [375] often enough sold to Italian speakers. That conclusion, and the analysis of the Full Court which led to it, are, in my view, sound. (some citations omitted).

Words not having direct reference to or not ordinarily used to indicate characteristics of goods/services

Mark Foy’s Ltd v Davies Coop [13.430] Mark Foy’s Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 High Court of Australia [The appellant was the registered proprietor of the mark “Tub Happy” in respect of articles of clothing. It brought infringement proceedings against the respondent who used the slogan “Exacto Cotton Garments Tub Happy Cotton Fresh Budget Wise” in an advertising campaign. The respondent resisted the infringement action by claiming, inter alia, that the appellant’s trade mark was not registrable since it was a reference to the character or quality of goods falling within Trade Marks Act 1905 (Cth) s 16(1)(d).] DIXON CJ: [194] It is, I think, a mistake first to assume that words like “tub happy” do convey a meaning either to people in general or to a particular class of persons and then on that assumption to inquire what exactly the meaning is. Indeed to institute a search for a meaning almost necessarily implies that in ordinary English speech the words do not possess a connotation sufficiently definite to amount to a direct reference to the character or quality of the goods. And that is true even when to standard English usage is added all the figurative idiomatic and slang phraseology that may be currently in use. Once, however, the question is asked what do the words mean and there is started a search for a meaning, a process of analysis and of reasoning by exclusion of alternatives is begun. No [13.430]

653

Intellectual Property: Commentary and Materials

Mark Foy’s Ltd v Davies Coop cont. doubt such a search may, without any sacrifice of logic, end in construing the words as meaning that the garments will emerge happily from the washtub. But if they are so interpreted, the interpretation is chiefly the consequence of failure to find another meaning. I venture to think, however, that a man, or for that matter a woman, hearing for the first time the words used in combination and in connection with cotton garments, would not so understand the words at once. Certainly such a person would not so understand them intuitively and without stopping to reflect and ask himself or herself what meaning the words could really possess. The fallacy of asking what is the meaning of the phrase lies in the basal assumption that the words are intended to convey some definite meaning and perhaps the further assumption that the meaning has reference to the garments or the cottons. The assumption is fallacious because it overlooks the fact that language is not always used to convey an idea. Many uses of words are purely emotive. A word or words are often employed for no purpose but to evoke in the reader or hearer some feeling, some mood, some mental attitude. This is true of much advertising, which common experience shows to be full of meaningless but emotive expressions supposedly capable of inducing a generally favourable inclination in the almost subconscious thought of the passing auditor or hasty reader. Words put forward as trade marks are very likely indeed to be chosen in the same way. [195] Though Mr Holmes for the respondent did of course put forward the claim that “tub happy” means washable, it was a meaning it was necessary to suggest. It was not a meaning that had sprung unaided to the mind and it was not one which he was able to establish by reference to instances of known usage. It is easy to say that the words are addressed to persons who are accustomed to speak an idiom to which courts are strangers and who are more sensitive than judges to allusive forms of speech, which, it is claimed, possess a greater efficacy in the lively communication of more or less definable ideas. But if the claim is that the words possess a meaning which courts might not be expected to know, it would have been easy enough to adduce evidence of the meaning; a thing which was not attempted. The reason for introducing the word “direct” into the provision from which comes was to check the tendency which had been disclosed by certain decisions to find a sufficient reference to the character or quality of goods in expressions from which it could only be spelled out. The test must lie in the probability of ordinary persons understanding the words, in their application to the goods, as describing or indicating or calling to mind either their nature or some attribute they possess. I cannot think that the words now in question go further than, if as far as, suggesting in a vague and indefinable way a gladsome carelessness a propos of the tub. They may have an emotive tendency, but they do not appear to me to convey any meaning or idea sufficiently tangible to amount to a direct reference to the character or quality of the goods. … WILLIAMS J: [201] Any reference that the words “tub happy” have to the character or quality of articles of clothing is very remote. They are in the nature of a coined phrase. Inanimate objects including articles of clothing cannot have the character or quality of happiness whether they are in a tub or not. But the defendants’ case is that the common metaphorical use of the adjective would convey to prospective buyers of the fabrics that the cotton emerged from the wash tub more attractive than ever in appearance with fibres and colours as good if not better than ever. Therefore, so it is said, the words are a description of the character or quality of the goods and moreover are not entitled to registration. This claim gives far too specific a meaning to the vague figurative use of the word “happy” in connection with “tub”. Like so many expressions used in advertisements no definite or actual meaning seems to belong to the combination “tub happy”. There is a cloudy suggestion only about it that all will be well in a wash tub but that is all. The attitude of mind of those who glance at such advertisements may be affected favourably by some sort of vague association of ideas but it falls a long way short of conveying any meaning to them. To say that articles of clothing are tub happy is in the ordinary use of English meaningless. The words contain at most a “covert and skilful allusion” to 654 [13.430]

Trade Marks

CHAPTER 13

Mark Foy’s Ltd v Davies Coop cont. the quality of washability which is characteristic of articles of clothing made of some kinds of material including cotton. At most they create an impression that this is what they are intended to convey. They do not trespass upon the rights of other traders to use any ordinary English words or phrases referring to the washable qualities of their goods. They do not attempt to “enclose and appropriate as private property certain little strips of the great open common of the English language”. No doubt the words are intended to “contain a meaning–a meaning is wrapped up in them if you can only find it out”: see the speech of Lord Macnaghten in the Solio case [1898] AC 571 at 583. And it may not be hard to find out that meaning but the words do not refer in any ordinary sense, laudatory or otherwise, to any character or quality of articles of clothing, still less do they do so directly. [Kitto J dissented.]

Distinctiveness of shape marks Kenman Kandy v Registrar of Trade Marks [13.440] Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks (2002) 56 IPR 30 Federal Court of Australia (Full Court) Image for Trade Mark 783465 [Image not reproduced.] FRENCH J: [31] Introduction Kenman Kandy Australia Pty Ltd (“Kenman Kandy”) has applied for and been refused registration of the shape of its “millennium bug” sweet as a trade mark under the Trade Marks Act 1995 (Cth). An appeal to a judge of this Court against the decision of the Registrar of Trade Marks was dismissed and the company now seeks leave to appeal to the Full Court. The law relating to the registration of shape trade marks in Australia is still relatively new, such registration only having been possible with the coming into operation of the 1995 Act. Its application is not without difficulty. The criteria of registrability applicable to quite different kinds of “signs” under trade marks law as it stood prior to 1995 must now be applied to shapes. In this case the central issue is whether the shape of the goods in question is inherently adapted to distinguish them from the goods of other traders. … The Essential Features of a Trade Mark [42] In July 1992, the Working Party to Review Trade Marks Legislation established by the Minister for Science, Customs and Small Business in 1989 presented its report entitled Recommended Changes to the Australian Trade Marks Legislation. … On the question of distinctiveness the working party proposed that, in accordance with Article 15.1 of the TRIPS Agreement, a trade mark should be [43] defined as “any sign capable of distinguishing the goods or services of one person from those of other persons”. The basic test for registrability, it was suggested, should be defined in a way that provided guidance on its application. The working party’s recommendation in this respect (Rec 5) was, in substance, though not in precise wording, reflected in s 41 of the 1995 Act. At the beginning of the Report the Working Party observed that, under the law as it stood in 1992, registrable marks had largely been confined to signs consisting of words, letters, numerals, figurative [13.440]

655

Intellectual Property: Commentary and Materials

Kenman Kandy v Registrar of Trade Marks cont. elements of combinations of one or more of these. The registration of colours, shapes, sounds, tastes or smells as marks was “either difficult or impossible under these provisions”. (par 1.1) The Working Party said: Developments in marketing and technology throughout the world indicate that the Australian legislation should now cater for a wider range of “signs” than have hereto been considered capable of functioning as trade marks. These developments have been recognised in the General Agreement on Tariffs and Trade (GATT) discussions and by the European Communities (EC) and the United Kingdom (UK) in the Draft Final Act, Directive and White Paper, and more recently by New Zealand (NZ) and South Africa (SA) in the NZ Proposed Recommendations and the SA Draft Trade Marks Bill respectively. (Report p 35) The changes proposed to the definition of trade mark were therefore placed in the context of international developments. In relation to the shape and packaging of goods it was said by the Working Party: There is majority support for the proposition that if the sign constitutes some element of the shape or the packaging of the product, and if the applicant can demonstrate that that element is not necessary for the proper functioning, or does not result from the nature of the product or its packaging, then it should be capable of registration. (Report p 37) The Criteria of Registrability for Shapes [44] It is necessary to inquire what the Act requires of shapes that would be trade marks. To be a trade mark, a shape must be used to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person. That definition is entirely consistent with the idea of “shape” as an attribute of goods which distinguishes them from others. It is not to be read down to cover only some aspect of the physical configuration of goods. The shape which distinguishes the goods may be their shape taken as a whole. The inclusion of “shape” in the definition of “sign” stands against the suggestion that it can never be an attribute separate from the goods to which it relates. It mandates consideration of shape as a distinctive attribute although not a necessary feature of the particular goods. Where shape serves function, then it may not bear that character of a distinctive attribute. Like the three headed shape of the Philips Rotary Shaver it would not be capable of registration – Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd. As Stone J observes in her reasons for judgment, the separation issue in that case was at least in part an element of the capacity to distinguish. I respectfully agree with the observations of Burchett J in that a shape that goods possess because of their nature or the need for a particular technical result could not operate as a trade mark. I respectfully also agree with the analysis of Stone J in this regard and with her Honour’s conclusion that there is no suggestion in this case that the shape of the millennium bug has any functional significance other than aesthetic. … The ultimate question in applying this test is whether the mark, considered apart from the effects of registration, is such that by its use the applicant is likely to attain its object of thereby distinguishing its goods from the goods of others – Clark Equipment Co v Registrar of Trade Marks at CLR 513. This does not involve adventures in the Aristotelian taxonomy of form and substance. It requires a practical evaluative judgment about the effects of the relevant mark [44] in the real world. Kitto J, in Clark Equipment, referred to the way in which the question was approached by Lord Waddington in Registrar of Trade Marks v W & G du Cros Ltd [1913] AC 624 at 634-635, when he said: The applicant’s chance of success in this respect [ie in distinguishing his goods by means of the mark, apart from the effects of registration] must, I think, largely depend upon whether 656 [13.440]

Trade Marks

CHAPTER 13

Kenman Kandy v Registrar of Trade Marks cont. other traders are likely, in the ordinary course of their businesses and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods. … The shape of the millennium bug involves a symmetrical disposition of projections (“legs”) and recesses (“eyes”). Theoretically it may be the case that the number of possible symmetrical arrangements of projections and recesses is not infinite. Assuming that to be so, it is speculative, absent evidence, to draw conclusions about that number and whether the particular arrangement has any significant impact upon the access of other traders to the use of insect like shapes as trade marks. In that connection it is necessary to bear in mind that this trade mark is still at the registration stage. It enjoys the benefit of the presumption of registrability mandated by s 33. To the extent that critical criteria upon which registration might be rejected are in doubt, the application should be accepted. Closer adversarial scrutiny may occur in opposition – Registrar of Trade Marks v Woolworths at CLR 377. In my opinion the appeal should be allowed. STONE J: [61] … the current state of the authorities suggests that there is a particular problem concerning the registrability of a shape trade mark, namely whether it is necessary that a trade mark be able to be described and depicted as something separate and apart from the goods in relation to which it is to be used and, if so, whether this is possible for a shape which is the whole shape of a good (the “separation issue”). This issue sometimes appears to be quite separate from the issue of inherent adaptation and sometimes an element of that issue. Separation of trade mark from goods The separation issue was articulated by Windeyer J in Smith Kline and French Laboratories (Australia) Limited v Registrar of Trade Marks (1967) 116 CLR 628 (Smith Kline). This was an appeal from a decision of the Registrar of Trade Marks refusing to accept for registration certain applications relating to medicinal capsules, one half of which was opaque and coloured and the other half, transparent and colourless. The capsules contained different coloured [62] granules or pellets that gave a speckled appearance to the transparent part of the capsule. According to Windeyer J, the applicant wanted to register “the total appearance of its capsules” and thus obtain a monopoly for the sale of “parti-coloured capsules containing pellets of different colours”. In an ex tempore judgment his Honour said this (at 639-640): A trade mark is defined in the [Trade Marks Act 1955] as “a mark used or proposed to be used in relation to goods” for the purposes stated. This definition assumes, it seems to me, that the mark is something distinct from the goods in relation to which it is used or to be used. It assumes that the goods can be conceived as something apart from the mark and that the mark is not of the essence of the goods. The goods are assumed to have an existence independently of the mark. … A thing can always be described and distinguished in appearance by any visible characteristic which it has, its shape, colour or any mark which it bears. But the test is not – Can the goods be described or depicted without reference to their markings? As I see it, a mark for the purposes of the Act must be capable of being described and depicted as something apart from the goods to which it is to be applied, or in relation to which it is to be used. … It accords … with the various things included in the definition of “mark”. That list is not expressed as exhaustive but it is certainly illustrative. I do not think that a mere description of goods simply by shape, size or colour can be a trade mark in respect of those goods. It would seem from Windeyer J’s subsequent comments that his Honour regarded the separation issue as distinct from the issue of capacity to distinguish. In the context of legislation that, at the time, did not permit the registration of shape trade marks this is not surprising. Did the 1995 Act effect a radical change to trade mark law? Burchett J stated, [in Philips v Remington (Aust)] at [15], that the changes in the 1995 Act were not intended to effect a radical change in trade mark law and concluded that a shape that goods [13.440]

657

Intellectual Property: Commentary and Materials

Kenman Kandy v Registrar of Trade Marks cont. possessed “because of their nature” or because of the need for a “particular technical result” could not function as a trade mark because such a shape could not distinguish the trade source. His Honour went on to say, at [16], that he did not regard this as precluding the shape of goods being registered as a trade mark where the shape is the whole or part of the relevant goods, but added, But that is not to say that the 1995 Act has invalidated what Windeyer J said in Smith Kline. The special cases where a shape of the goods may be a mark are cases falling within, not without, the principle he expounded. For they are cases where the shape that is a mark is “extra”, added to the inherent form of the particular goods as something distinct which can denote origin. The goods can still be seen as having, in Windeyer J’s words, “an existence independently of the mark” which is imposed upon them. The conclusion of this discussion is not that the addition of the word “shape” to the statutory definition calls for some new principle, or that a “shape” mark is somehow different in nature from other marks, but that a mark remains something “extra” added [63] to distinguish the products of one trader from those of another, a function which plainly cannot be performed by a mark consisting of either a word or shape other traders may legitimately wish to use. … The issue of function was of great significance in the dispute between Philips and Remington that surfaced in a number of jurisdictions. In Philips v Remington (Eng), Jacob J was quite explicit about this aspect. His Honour accepted that it was possible to make an effective rotary shaver that would be outside the scope of the trade mark protection but stated, at 287-288: However, it is also the case that the engineering scope for variation outside the trade mark is very limited. Moreover the three-headed shape of the present Philips design is one of the best ways possible of making a rotary shaver. … So, if Philips are right, they will have obtained a permanent monopoly in respect of matters of significant engineering design by virtue of a trade mark registration. The concerns expressed in both Philips v Remington (Aust), FC and Philips v Remington (Eng) about the prospect of trade marks creating monopolies related only to the registration of trade marks that would restrict access to functional features or innovations, and for this reason were well founded. It is this concern that finds expression in the requirement that a trade mark be something added to the inherent form of goods. The “inherent form” of goods, in my view, can only refer to those aspects of form that have functional significance. Were the 1995 Act to enable the registration of a trade mark that would give the owner a monopoly over functional features it would indeed have made a radical change to trade mark law. There is nothing in the 1995 Act or in the discussions that preceded it to suggest that this was intended. [64] … I agree that the 1995 Act was not intended to make the radical change of providing for registration of a trade mark that would have the effect of restricting access to functional features or innovations. The policy concerns expressed by Burchett J were relevant to the issues considered in Philips v Remington (Aust), FC, because that case was concerned with functional features. There is however, no suggestion, that in this case, the appellant’s bug shape has any functional significance unless one regards having an attractive shape as functional. For reasons expressed below … I do not regard the fact that a sign may evoke a positive emotional response as having functional significance for present purposes. … [65] Inherent adaption The authorities give very little guidance as to what is necessary for inherent adaption either generally or with respect to shapes. It is clear that words (ordinary or technical) which are descriptive of the character or quality of the goods are not inherently adapted to distinguish; Burger King Corporation v The Registrar of Trade Marks (1973) 128 CLR 417 (“Whopper” as descriptive of large hamburgers); Eutectic Corporation v Registrar of Trade Marks (1980) 32 ALR 211 (“eutectic” as descriptive of machines and tools used in welding); FH Faulding & Co Limited v Imperial Chemical Industries of Australia and New Zealand Limited (1965) 112 CLR 537 (“Barrier” in respect of hand 658

[13.440]

Trade Marks

CHAPTER 13

Kenman Kandy v Registrar of Trade Marks cont. cream). This is so even if the word or words are contractions or corruptions of ordinary words; Tastee Freez’s Application [1960] RPC 255 (“Tastee Freez” used in connection with ice cream [66] and water ices); The Registrar of Trade Marks v Muller (1980) 144 CLR 37 (“Less” in respect of pharmaceutical products); Bausch & Lomb Inc v Registrar of Trade Marks (1980) 28 ALR 537 (“Soflens” in respect of contact lenses); Advanced Hair Studio of America Pty Ltd v Registrar of Trade Marks (1988) 12 IPR 1 (“hairfusion” in respect of a service for fixing hairpieces to the head). The same principle applies to pictorial descriptions of goods; Eclipse Sleep Products Incorporated v The Registrar of Trade Marks (1957) 99 CLR 300 (a six-sided border having circular ends, as in the shape of a spring, used in connection with a “Springwall Mattress”). It is also well established that the name of a geographical location is not inherently adapted to distinguish goods because another trader may legitimately wish to use the name in connection with goods made in or associated with that place; Thomson v B Seppelt & Sons Limited (1925) 37 CLR 305 (use of the words, “Great Western” in respect of still and sparkling wines produced from grapes grown in the Great Western region of Victoria); Clark Equipment (use of the name “Michigan” in respect of earthmoving and the like equipment); Blount Inc (use of name “Oregon” inside an oval device in respect of power tool accessories); Oxford University Press v Registrar of Trade Marks (1990) 24 FCR 1 (use of name “Oxford” in respect of printed publications); A Bailey and Company Limited v Clark, Son and Morland [1938] AC 557 (use of name “Glastonburys” in connection with sheepskin slippers). Signs that are descriptive of the character or quality of the relevant goods or which use a geographical name in connection with them cannot be inherently distinctive because the words have significations or associations that invite confusion and because registration of a trade mark using such words would preclude the use by others whose goods have similar qualities or which have a connection with the relevant areas … … In my opinion it is the absence of these associations and significations that makes a sign inherently adapted to distinguish one trader’s goods from those of another. In other words the concept is negative not positive. Support for this [67] view can be found in the cases in which a trade mark has been found to be inherently adapted to distinguish. In Mid Sydney Pty Ltd v Australian Tourism Co Ltd (1998) 90 FCR 236 it was argued that the registration of a trade mark consisting of the words “Chifley Tower”, registered by the owner of a large office and retail building of that name, in respect of property management services and retail and office leasing services should be cancelled because, inter alia, it lacked the capacity to distinguish the services in respect of which it was registered. The Full Federal Court, applying the principles formulated by Kitto J in Clark Equipment, rejected this argument, stating at 251: The Chifley Tower is not part of the common heritage in the sense that a town, suburb or municipality is. … There is not public policy against [the building owner] restricting those who have come to occupy space within its building as to the way in which they use its name in connection with goods they produce or services they provide. That being so, it is not easy to see, in our view, why any separate public policy, of a kind identified by Kitto J, should apply so as to deprive the name selected by [the building owner] of a capacity to distinguish, in circumstances where there could be no legitimate reason for persons other than those carrying on business within The Chifley Tower to use its name in connection with their goods or services. It is the absence of association and signification that accounts for invented words often being found to be inherently adapted to distinguish a trader’s product. A good example of the invented word that has no meaning and therefore is inherently adapted to distinguish is the word “Fuddruckers” used in respect of services rendered by restaurants and other similar establishments; Sharwood v Fuddruckers Inc (1989) 15 IPR 188. [69] … It was accepted by the respondent’s delegate that the bug shape was not a shape in common use. The delegate stated: [13.440]

659

Intellectual Property: Commentary and Materials

Kenman Kandy v Registrar of Trade Marks cont. It is a stylised six-legged “creature”. It does not represent a recognisable animal or insect or other living or mythical thing of which I am aware, and no ready descriptive word comes to mind in viewing it. It is, in my view, an invented shape. It strikes the eye as distinguishable from other shapes, being not so amorphous or ordinary as to be unmemorable, even though no name readily attaches it. It could be said that it carries the stamp of an individual imagination. The delegate distinguished such an invented shape from ordinary well-known shapes which, in relation to confectionery, could include: • easily recognisable shapes that occur in nature (for example animals, flowers, insects, people, teeth); • reproductions of common man-made objects (for example pillows, buildings); • shapes familiar to everyone because they are commonplace solid geometric forms (for example cubes, globes, rectangular solids); and • shapes neither natural nor geometric that form part of our common mythologic heritage (for example mermaids, angels, dragons). Despite the delegate accepting that the bug shape did not fall into any of these categories but was an invented shape and was not a shape that others need to use, he ultimately rejected the claim that it was inherently adapted to distinguish the appellant’s confectionery because their shape did not appear, at first instance, to have trade mark significance. The learned primary judge … accepted the respondent’s submissions that registration of the trade mark with the consequent grant of exclusive use of that trade mark to the appellant would narrow the “great common” of shapes available to traders generally. His Honour stated, at [33], I have reached the conclusion that the subject mark is not inherently adapted to distinguish Kenman’s confectionery from that of others. I agree that the mark is concocted; so far as I am aware, no real insect has this shape. However, the shape [70] is reminiscent, to a greater or lesser degree, of a variety of insects. That fact is important, especially when it is remembered that the mark is intended to be registered in respect of confectionery. Children constitute a significant part of the confectionery market; and children relate spontaneously and strongly to animals and animal-like creatures. Moreover, confectionery is highly malleable. Taken together, these factors make it likely that confectionery manufacturers will, from time to time, wish to put out products in shapes reminiscent of animals. To allow registration, for confectionery, of the shape of a real or readily-imagined animal would be to commence a process of “fencing in the common” which would speedily impose serious restrictions upon other traders. Conclusion The delegate’s conclusion implies a view that the test of inherent adaptation has a positive aspect as well as a negative. This view is also inherent in his Honour’s reasons along with the concern expressed as “fencing in the common”. For reasons already explained, it is my opinion that the test propounded by Kitto J in Clark Equipment … sets out the necessary and sufficient criteria to determine whether a mark is adapted to distinguish one trader’s goods from those of another. Applied here, the question is whether, if the bug shape were to be registered as a trade mark, other persons trading in confectionery and “being actuated only by proper motives” would think of this shape and want to use it connection with their goods in any manner that would infringe the appellant’s trade mark. That question must be answered bearing in mind that infringement would include using as a trade mark in relation to confectionery, not only the bug shape but also any “sign that is substantially identical with, or deceptively similar to” the bug shape; s 120 of the 1995 Act. A subsidiary and difficult question is 660 [13.440]

Trade Marks

CHAPTER 13

Kenman Kandy v Registrar of Trade Marks cont. whether the appellant’s bug shape, by virtue of it being recognisable as a “bug”, has associations that deprive it of the inherent capacity to distinguish the appellant’s confectionery from that of other traders. A shape (or word) that is entirely concocted does not have the associations that would lead to confusion. I do not regard such a shape as being part of the “great common” any more than does a concocted word or a novel combination of common words; see for example Mark Foy’s and Wella. The learned primary judge drew a distinction between concocted words, which, he said, were possibly infinite in number and the possibilities for concoction of animal-like shapes, which, he said were finite. With respect, I do not see the justification for this distinction. If there is any distinction I would have thought the advantage of greater variety lay with the category of three dimensional shapes which may involve any number of combinations of planes, arcs, angles and so forth. Although the bug shape is suggestive of insect life it is not the shape of any specific insect or bug. Indeed, were it not for the description given by the appellants, it might as easily be seen as some extra-terrestrial object or space equipment such as a modified lunar landing module. Registration of the bug shape as a trade mark would not give the appellant a monopoly over all bug or insect shapes – only this particular shape and any substantially identical or deceptively similar shape. I see no reason in principle or policy why this should be so. In my opinion the appeal should be allowed and the decision of the primary judge set aside. [LINDGREN J dissented.]

Chocolaterie Guylian NV v Registrar of Trade Marks [13.450] Sundberg J in Chocolaterie Guylian NV v Registrar of Trade Marks (2009) 180 FCR 60; [2009] FCA 891 upheld the Registrar’s decision to refuse trade mark registration of Guylian’s seahorse-shaped chocolate on the basis of insufficient distinctiveness, commenting that (at [78]): … there is a danger that first impressions will be sidelined when an analysis of a shape’s individual components or features is undertaken. In this case, the immediate impression one has of the mark in suit is of an ordinary seahorse. I would not expect most ordinary consumers to know that the tails of seahorses do not curl backwards, only forwards. I think most would know that seahorses have a tail and expect that they curl up in some direction. Accepting that the tail and the stocky appearance might, to a studious observer, appear unusual, I consider on balance that the average consumer would see it as a relatively ordinary representation of a seahorse. The possibility for confusion therefore between Guylian’s shape and any other seahorse shapes is, I think, a real one. 36 His Honour stated (at [77]) that: In my view, it is quite possible that as at the priority date other traders might want to depict a seahorse, along with starfish, crabs, prawns for example, in a way that is similar enough to cause potential confusion in the minds of consumers. … It might be thought that that fact, together with the fact that Guylian had been selling its seahorse shape in Australia for a long time (since the 1980s), would diminish the likelihood that, as at 2002, other legitimately motivated traders might in the ordinary course of their business wish to sell seahorse chocolate shapes. However, the absence of other seahorses on the market does not in my 36

In contrast, note (2009) 4(7) Journal of Intellectual Property Law & Practice 461–463 reporting on Chocolaterie Guylian NV v Commissioner of Japan Patent Office, Case No H-19 (gyo-ye) No 10293 in the Intellectual Property High Court of Japan (IPHCJ), where that court found that Guylian’s more famous seashell-shape chocolate was inherently distinctive and registrable without secondary meaning evidence. [13.450]

661

Intellectual Property: Commentary and Materials

Chocolaterie Guylian NV v Registrar of Trade Marks cont. view mean it was unlikely that others may in the future wish to depict that particular sea creature.

Global Brand Marketing Inc v YD Pty Ltd [13.460] In Global Brand Marketing Inc v YD Pty Ltd [2008] FCA 605; (2008) 76 IPR 161; Sundberg J upheld the registrations of two shape marks (986713) and (986709) registered in Class 25 (footwear) relating to the shape of the shoe and its sole. Before going on to find that the respondent had not infringed the applicant’s registered trade marks, His Honour concisely articulates the relevant principles concerning the registrability of shape marks: [61] The principles relevant to use of shape as a trade mark are now set out: (a)

A special shape which is the whole or part of goods may serve as a badge of origin. However the shape must have a feature that is “extra” and distinct from the inherent form of the particular goods: Mayne [Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd [2008] FCA 27] at [67], Remington [Koninklijke Philips Electrics NV v Remington Products Pty Ltd [2000] FCA 876; (2000) 100 FCR 90] at [16] and Kenman Kandy [Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273; (2002) 122 FCR 494] at [137].

(b)

Non-descriptive features of a shape point towards a finding that such features are used for a trade mark purpose. Where features are striking, trade mark use will more readily be found. For example, features that make goods more arresting of appearance and more attractive may distinguish the goods from those of others: All-Fect at [25].

(c)

Descriptive features, like descriptive words, make it more difficult to establish that those features distinguish the product. For example, the word COLA or an ordinary straight walled bottle are descriptive features that would have limited trade mark significance: All-Fect [Coca-Cola Company v All-Fect Distributors Ltd [1999] FCA 1721; (1999) 96 FCR 107] at [25] and Mayne at [61]-[62].

(d)

Where the trade mark comprises a shape which involves a substantial functional element in the goods, references to the shape are almost certainly to the nature of the goods themselves rather than use of the shape as a trade mark: Mayne at [63]. For example, evidence that a shape was previously patented will weigh against a finding that the shape serves as a badge of origin: Remington at [12] and Mayne at [69].

(e)

If a shape or a feature of a shape is either concocted compared to the inherent form of the shaped goods or incidental to the subject matter of a patent, it is unlikely to be a shape having any functional element. This may point towards the shape being used as a trade mark: Kenman Kandy at [162] and Mayne at [69].

(f)

Whether a person has used a shape or a feature of a shape as a trade mark is a matter for the court, and cannot be governed by the absence of evidence on the point: All-Fect at [35].

(g)

Context “is all important” and will typically characterise the mark’s use as either trade mark use or not: Remington at [19] and Mayne at [60]-[62].

[62] As is apparent from the foregoing propositions, a shape mark case may require consideration of different types of features in determining whether the mark is used as a trade mark for the purposes of the Act. At one end of the spectrum are shapes or features thereof that are purely functional. The features may have derived substantially from a patented product, such as the S-shaped fence dropper, or go to the usefulness of the product: Remington at [3] and [12]. Cases such as Mayne and Remington show that such features point away from trade mark use. 662 [13.460]

Trade Marks

CHAPTER 13

Global Brand Marketing Inc v YD Pty Ltd cont. [63] At the other end of the spectrum are those features of a mark that are non-descriptive and non-functional. They ordinarily make the shape more arresting of appearance and more attractive, thus providing a means of distinguishing the goods from those of others. All-Fect and Remington show that non-functional features add something extra to the inherent form of the shape. A concocted feature will typically be considered non-functional: Kenman Kandy. [64] Finally, there will be cases, such as the present, that fall between the ends of the spectrum. These cases are not black and white. They involve consideration of whether one set of features supersedes, submerges or overwhelms the other.

Distinctiveness of colour marks Woolworths Ltd v BP plc [13.470] Woolworths Ltd v BP plc [2006] FCAFC 132 Federal Court of Australia (Full Court) Image for Trade Mark 676547 [Image not reproduced.] HEEREY, ALLSOP AND YOUNG JJ: Introduction 1. The respondent BP plc made two applications for registration of the colour green in association with service stations. The appellant Woolworths Ltd opposed registration. A delegate of the Registrar of Trade Marks refused the applications on the ground that the marks were not capable of distinguishing BP’s goods and services: Trade Marks Act 1995 (Cth), s 41(2), (5) and (6). The primary judge allowed an appeal and directed that the applications proceed to registration: BP plc v Woolworths Ltd (2004) 212 ALR 79. A Full Court of this Court granted Woolworths leave to appeal: Woolworths Ltd v BP plc (2006) 150 FCR 134. 2. Woolworths does not challenge the primary judge’s conclusion that the colour green as such is not inherently adapted to distinguish BP’s goods and services but is capable of acquiring distinctiveness through usage as a trade mark. The appeal concerned three main issues. Broadly stated, the first is whether the trial judge erred in finding that the amendments to the endorsements of each of the applications were not made contrary to s 65 of the Act; the second is whether each of the marks does distinguish BP’s goods or services by reason of its prior use and whether the trial judge erred in finding that BP’s trade mark applications should be registered pursuant to s 41(6) of the Act; and the third concerns this Court’s power to grant relief. … Distinctiveness and the operation of s 41 … 65. His Honour noted (at [16]) that the Act does not suggest that the registrability of a colour mark is to be approached any differently from that of any other mark. 66. His Honour held (at [19]-[23]) that, for the purposes of s 41(3) and (5), the colour green, in the shade shown in the applications, was not inherently adapted to distinguish BP’s goods and services. Accordingly, his Honour had to consider whether use of the marks before the filing of the applications distinguished the goods and services of BP. As his Honour put it (at [23]), BP had to establish: first, that it has used the particular shade of green as a trade mark and, second, that in the minds of the public the primary significance of that shade of green, when used in connection with the supply of petroleum products or the provision of petroleum services, identifies the source of those goods or the provider of those services as originating from a particular trader, though not necessarily from an identified trader. [13.470]

663

Intellectual Property: Commentary and Materials

Woolworths Ltd v BP plc cont. 67. His Honour noted (at [24]) that since most objects have some colour, merely applying a colour to a product will not act as an identifier for that product. For colour to function as a trade mark the colour must be used to distinguish products, and not as mere ornamentation or decoration. The question is whether the trader has used the colour in a way that informs the public that the product emanates from a particular source. 68. There was no issue on appeal about the correctness of the primary judge’s view that the colour green was not inherently adapted to distinguish the designated goods and services for the purposes of s 41(3) and (5) of the Act. Thus, the only issue was the application of s 41(6). 69. It is convenient to set out the key paragraphs of the trial judge’s reasoning on s 41(6), at [62]-[65] of his reasons for judgment: From all of the evidence there is at least one inescapable conclusion. It is that each major oil company that retails petroleum products through service stations has adopted a get-up for its stations which is distinctive of that company’s products. The same is true of a non-oil company retailers, such as Woolworths and 7-Eleven, whose own evidence (the 7-Eleven witness was called by Woolworths) speaks eloquently of the distinctiveness of their own styles. So far as BP is concerned, there is simply no doubt in my mind that its get up, with its predominant use of green, is a badge of origin. Not only do consumers know that a predominantly green (in a particular shade) service station signifies a source, for the most part they also know that source to be BP. I am quite satisfied that this was as true in 1991 as it was in 1995. At the time of the first group of applications, the new get up had been in existence in some areas for upwards of three years and in almost all areas of Australia for at least a short time. Although short it was of sufficient duration to establish distinctiveness, in my opinion. Here, however, we have a problem of a different order. BP’s get-up consists of more than one feature. It comprises the shield, the letters BP, the use that is made of the colour yellow, as well as the colour green. It is true that as a result of its green program, green was regarded as BP’s dominant corporate colour. Yet green is only one aspect of its total image. The question that arises in these circumstances is whether it is possible to dissect that total image and obtain trade mark registration of only one component of the whole image. I have not found any English or Australian authorities which provide any guidance on this issue. On the other hand the matter has been extensively considered in the US. Most, but not all, of the cases have arisen when an attempt has been made to register as a trade mark the background design for a word, letter or device mark. … The relevant principles to be extracted from these cases, principles which I intend to apply, are these: Separate components of a single get-up or design may qualify for registration as a mark. They will be capable of registration if each feature considered separately distinguish the goods or services in question. If the get-up or design creates “a separate and distinct commercial impression” then the separate parts will not be registrable. However, if each separate part creates an impression which is totally separate from the others and is distinctive, that is it performs the trade mark function of identifying the source of the goods and services to customers, that will suffice. J McCarthy, McCarthy on Trade Marks and Unfair Competition Vol 1 at SS 7.28 puts it this way: “The design must emerge out of the ‘background’ and ‘hit the buyer in the eye’ such that it is likely to guide the buyer in purchasing decisions.” Customers identified BP’s service stations by the colour green alone, independently of the shield. These are the reasons. First BP is the only service station that used green as the predominant colour on its get up when the applications were filed. Second BP has made extensive use of the colour green in its get up – not only with the implementation of Project Horizon but as early as 1956 when green was adopted as one of BP’s corporate colours in Australia. Third the colour green has featured prominently in the company’s advertising. On the evidence which I have, much of which was not before the examining officer, I am bound to reach the conclusion that the colour green in the shade depicted in the applications had 664 [13.470]

Trade Marks

CHAPTER 13

Woolworths Ltd v BP plc cont. acquired a secondary meaning and had become distinctive of BP’s goods and services in the classes for which registration is sought when the applications were filed in 1991 and 1995 respectively. 70. There were two related strands to Woolworths’ arguments on appeal. The first strand was that the primary judge’s focus was not directed to the full scope of the mark. Woolworths stressed that the use of the word predominant in the endorsements meant that the mark was not for the colour green alone, but was wider – green as the predominant colour with any other (unspecified) colour. Thus, Woolworths submitted, the primary judge erred by considering the distinctiveness of green alone and not the distinctiveness of the mark in its full scope. The second strand was that, by relying on the results of the survey that was put into evidence, the trial judge confused the fact that green was associated with BP and its getup with the more specific question of whether green had been used by BP in the manner claimed in the application as a badge of origin. 71. Bound up in both strands of the argument were the propositions that the evidence was inadequate to establish trade mark usage of green alone prior to 1991 or 1995 and that the analysis was not to be undertaken by looking to the get-up of BP’s service stations. Woolworths submitted that the questions posed by s 41(6) ought to have been addressed by examining the evidence which showed the extent to which BP had actually used the trade mark it had applied for, as a trade mark, in order to assess the distinctiveness called for by s 41(6). The requirements of s 41(6) and use as a Trade Mark … 81. One of the difficulties with the approach of the primary judge is that one does not find any analysis expressed in the terms of s 41(6), although his Honour referred to the statutory questions posed by s 41(6) early in his reasons. The primary judge proceeded to analyse the evidence and draw his conclusions by reference to the get-up of the service stations: at [62]-[65]. Apart from those conclusions his Honour made no express finding about what had been used as a trade mark. Certainly, one can recognise the discussion of what may be a very similar issue in the United States of disaggregating get-up for the purposes of individual trade mark registration. However, s 41(6) calls for a more precise analysis. In Philmac Pty Ltd v Registrar of Trade Marks (2002) 126 FCR 525 at 548 [71], Mansfield J said that for the purposes of applying s 41(6) to a colour mark two issues needed to be addressed. The first is whether the use of the colour in the manner described in the application has, prior to the date of the application, constituted use of the colour as a trade mark. The second issue is whether the trade mark applied for does in fact distinguish the applicant’s products, having regard to evidence concerning the actual use of the colour as a trade mark. We agree with that approach. Thus, s 41(6) requires specific consideration of the extent to which BP has used each of the marks applied for as a trade mark before the date of filing and whether that use was sufficient to distinguish the designated goods and services as being those of BP: Blount v Registrar of Trade Marks (1998) 83 FCR 50 at 60. 82. In our view, there are obvious dangers in approaching these issues by reference to the get-up of the service stations. The foremost danger, perhaps, is that the inquiry will be diverted into an examination of the distinctiveness of the colour green alone, and away from the questions posed by s 41(6). That danger must be heightened where the evidence clearly showed that BP had used the colour green in ways, and as part of other trade marks, that did not correspond with the trade marks that were the subject of the applications in suit. For the purpose of s 41(6), the focus of the inquiry should be the use of the marks applied for, rather than use of colour as part of the get-up or packaging of goods generally: cf British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 at 302. Woolworths submitted that the primary judge was diverted in this way, and as a result incorrectly concluded that the trade marks the subject of the applications had been used by BP, either at all or to such an extent that they did distinguish BP’s goods and services. We agree with this submission. The evidence of use [13.470]

665

Intellectual Property: Commentary and Materials

Woolworths Ltd v BP plc cont. … 99. Taking all the evidence together the following can be said. First, in the context of the oil industry in which a small number of companies had for many years used colours to distinguish their goods and services from the goods and services of competitors, before 1989 BP used green and yellow to distinguish its service stations, goods and services from those of its competitors. 100. Secondly, by 1989, BP made a deliberate decision to change what might be called the colour branding of BP. Green was to be, and was, used more extensively than yellow in the livery of service stations and in advertising. It continued, however, to be used with yellow. 101. Thirdly, on the fascias of buildings, petrol pumps, signage boards, (including poster boards, pole signs and price boards), and spreaders in service stations (the parts of service stations referred to in the endorsements), green was used as the predominant colour, but only with yellow. This use of green as the predominant colour, with the use of yellow, can be understood as trade mark use, replacing the use of green and yellow given approximately equal weight and prominence as the company’s brand colours before 1989. 102. Fourthly, the question arises whether, after 1989, the advertising reveals not only the use of predominantly green with yellow as the company’s colours and as a trade mark, but also the use, as a trade mark, of green alone. This question cannot be answered simply by attempting to find an advertisement without yellow present, although there is no such advertisement in evidence. For the conclusion to be drawn that green alone was being used by BP as a trade mark prior to 1991 or 1995, one must understand the material as stating to the ordinary person that green alone was being used as a badge of origin to distinguish BP’s goods and services from those of its competitors. 103. Some of the print media referring to “green stations” and the “green light” clearly sought to use green in this way. Overall, however, it is difficult to conclude that the colour green was used by BP before 1991 and 1995 as a trade mark other than by its use of green as the predominant colour in conjunction with yellow. Certainly, on the evidence, in relation to the parts of the service station referred to in the endorsements, green has always been used in conjunction with yellow. 104. The fact that from a distance the predominant green of the colour of the service station (in particular the fascias of the canopy and buildings and any pole sign) would be noticed, and would assist the motorist in identifying the existence of a BP service station, is not sufficient to transform the use of green predominantly with yellow into the use of green as a trade mark. The fact is that the fascias had yellow logos and marks prominently placed on them, the main identification signs had the green and yellow logo and mark, as well as yellow script, the price boards had a green background and yellow writing, the pumps and spreaders had yellow logos and marks. 105. After the change brought about by “Project Horizon”, green predominated in the colour scheme of the service station, but at all times it was used with yellow as the subsidiary, but ever present companion. Looking at all the advertisings, print, television and point of sale material, we conclude that the colours used to distinguish BP’s goods and services from those of its competitors in the parts of the service stations referred to in the endorsements were its existing brand colours, green and yellow, with a marked and clear predominance of green. Green, alone, was not used as a trade mark in the parts of the service stations referred to in the endorsements. BP stressed, however, the educative role of that part of the advertising which stressed green – that told the reader of the “Green BP stations” and to “stop at the green light”. But even if it be assumed that there was some trade mark use of green alone in the particular print advertisements to which we have referred, the evidence is inadequate to elevate that to the point where it establishes the matters referred to in s 41(6). 106. Taking all of the evidence into account, including the absence of evidence as to the frequency of specific print or television advertising, we are unable to conclude that any trade mark use of colour by BP at the relevant times has been other than green as the dominant colour in conjunction with yellow as the subsidiary colour. 666 [13.470]

Trade Marks

CHAPTER 13

Woolworths Ltd v BP plc cont. The survey evidence 107. BP relied heavily on the results of a survey that was admitted into evidence. The survey was professionally and competently done under the supervision of a person qualified to undertake and to assess the survey and its results, a Dr Bednall. The appellant did not seek to impugn Dr Bednall’s evidence, so far as it went. However, the appellant challenged the trial judge’s reliance on the survey evidence to support his Honour’s conclusions as to the distinctiveness of BP’s use of green as a trade mark. 108. BP sought to prove two things by the survey: that the colour green had become distinctive of BP and of the goods and services of BP, and that this conclusion was indicative of the perception by the public before 1991 and 1995 of BP’s use of the colour green being trade mark use. … 121. We are satisfied that the primary judge fell into error in the key paragraphs of his reasons at [62] and [65]. First, his Honour erred by directing his attention to the “get-up” of the service stations, as opposed to the use before 1991 or 1995 of colour as a trade mark, whether green, or green and yellow, in respect of the parts of the service station claimed in the application. Given BP’s use of the colours green and yellow in its trade marks and in other ways, we do not think that BP’s total image could be dissected so as to support these applications in the manner suggested by the primary judge. Secondly, his Honour did not consider whether BP’s use of the colour green prior to 1991 and 1995 constituted trade mark use of the marks claimed in the applications, such that they had become distinctive of BP’s goods and services. In particular, his Honour did not consider the full scope of each of the marks by asking whether BP had used the colour green as the predominant colour with yellow or any other (unspecified) colour: cf Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 76 [72]. Thus, in our view, his Honour’s conclusion on BP’s use of green prior to 1991 and 1995 did not support his finding of distinctiveness under s 41(6). Thirdly, his Honour erred in treating the survey as evidence that the trade marks the subject of the applications must have been in use as trade marks before the priority dates, so as to distinguish BP’s goods and services. In reality, the survey respondents were directed to the use of green alone, which was not the mark the subject of the applications. As a result of these errors, the primary judge did not properly address the statutory questions posed by s 41(6). 122. Thus, we do not accept the proposition that the survey itself or the survey together with the other evidence of use, proves that before 1991 or 1995 there was trade mark use of the colour green alone on the parts of the service station that are referred to in each endorsement. Nor do we accept that it proves trade mark use of the colour green as the predominant colour on the parts of the service station that are referred to in each endorsement, with any other accompanying colour. 123. In our view, BP failed to establish as at July 1991 or October 1995 that it had used each of the trade marks it had applied for, that is green as the predominant colour of the parts of the service station referred to in the endorsements with any other (unspecified) colour. Nor in our view did BP establish as at July 1991 or October 1995 use as a trade mark of the colour green alone in respect of the parts of the service station referred to in the endorsements. 124. Thus, in our view, on the evidence, BP failed to establish the matters provided for in s 41(6) of the Act. 125. Even if the submission of BP were to be accepted that it had established trade mark use of the colour green on the parts of the service station referred to in the endorsements before 1991 or 1995, the two applications do not claim any such trade mark use of colour. They do not claim the use of green alone in the trade mark, nor do they claim the use of predominant green with yellow. Rather the applications claim green as the predominant colour to the various parts of the service station identified, with the subsidiary colour or colours of the trade mark unidentified. That was not the use of green before 1991 or 1995. The trade mark use before 1991 and 1995 in relation to the parts of the [13.470]

667

Intellectual Property: Commentary and Materials

Woolworths Ltd v BP plc cont. service station referred to in the endorsements was predominantly green with yellow as the subsidiary colour or, assuming contrary to our view, green alone. …

RESTRICTIONS ON REGISTRATION [13.480] The Trade Marks Act 1995 (Cth) features general prohibitions on non-distinctive

marks (s 41) (above [13.260]), false geographic indicators (s 61), generic marks (s 24), marks which cannot be represented graphically (s 40) and marks excluded by regulation (s 39). The Act also addresses overriding concerns about marks that are deceptive, scandalous, contrary to law, or already registered for the goods or services in question. Those concerns are reflected in provisions regarding trade marks that are scandalous/contrary to law (s 42), likely to deceive or cause confusion because of some connotation in the trade mark (s 43), identical to or deceptively similar to an existing mark (s 44), and opposition on the basis that a similar mark has acquired a reputation (s 60), or where the application was made bad faith (s 62A). Most of these objections were covered by Trade Marks Act 1955 (Cth) ss 28 and 33. An assessment of the issues as to whether marks are “substantially identical with or deceptively similar to” each other and whether goods or services are the same, or closely related (see eg Trade Marks Act 1995 (Cth) ss 10, 44) are also relevant in deciding infringement (s 120). Accordingly, the following extracts, especially Kitto J’s “caused to wonder” test at first instance, are best kept in mind when considering trade mark infringement.

Prior use/prior registration (s 44, 124) Southern Cross Refrigerating v Toowoomba Foundry [13.490] Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 High Court of Australia [The appellant had sought registration of the trade mark “SOUTHERN CROSS” in respect of gas absorption and electric refrigerators and parts thereof. The application was opposed by the respondent which had registered the trade mark “SOUTHERN CROSS” in respect of well-drilling machinery, milking machines, engines and windmills. Its opposition was based on Trade Marks Act 1905 (Cth) s 25 (roughly equivalent to Trade Marks Act 1995 (Cth) s 44) and s 114 (specifically, that “use of a trade mark would be likely to deceive”, which forms part of ss 43 and 60 of the present Act). Kitto J at first instance held that s 25 was not applicable since the appellant’s goods were not “goods of the same description”. However, Kitto J upheld the alternate grounds of opposition (s 114), accepting that the opponent had made a “powerful case” that “because of [its] reputation its goods had acquired under its registered goods” as at date of the appellant’s application for registration, there was a “serious likelihood that confusion would arise if that application for registration were successful”: 598. In coming to this conclusion, Kitto J, at 595, set out the classic test for determining confusion: It is not necessary … to prove that there is an actual probability of deception leading to a passing-off. While a mere possibility of confusion is not enough – for there must be a real, tangible danger of its occurring… – it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the 668 [13.480]

Trade Marks

CHAPTER 13

Southern Cross Refrigerating v Toowoomba Foundry cont. two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt.’ (emphasis added, citations omitted) The High Court affirmed Kitto J’s decision and His Honour’s “caused to wonder” test, which is now widely adopted as the relevant test in determining the likelihood of confusion (ie whether a mark is “deceptive similarity or likely to cause confusion”) under the present Act (see eg [13.520]). DIXON CJ, MCTIERNAN, WEBB, FULLAGAR AND TAYLOR JJ: [606] The fact that examination of the nature of the applicant’s goods may, by itself, induce an observer to conclude that they are different in character from those of an opponent, and designed to serve different purposes, is by no means conclusive. Nor is the fact that the applicant’s goods are not specified by the regulations as being within the same class of goods: see Re The Australian Wine Importers Ltd (1889) 41 Ch D 278 at 291 and Reckitt & Colman (Aust) Ltd v Boden per Latham CJ (1945) 70 CLR 84 at 90. There may be many matters to be considered apart from the inherent character of the goods in respect of which the application is made and some indication of what matters are relevant to this inquiry was given by Romer J in Re Jellinek’s Application (1946) 63 RPC 59. Romer J thought it necessary to look beyond the nature of the goods in question and to compare not only their respective uses but also to examine the trade channels through which the commodities in question were bought and sold. Shortly after the decision in Jellinek’s case (1946) 63 RPC 59 the Assistant-Comptroller elaborated on the observations of Romer J in the following manner: [I]n arriving at a decision upon this issue the reported cases show that I have to take account of a number of factors, including in particular the nature and characteristics of the goods, their origin, their purpose, whether they are usually produced by one and the same manufacturer or distributed by the same wholesale houses, whether they are sold in the same shops over the same counters during the same seasons and to the same class or classes of customers, and whether by those engaged in their manufacture and distribution they are regarded as belonging to the same trade. In the case of Jellinek’s Application, Romer J classified these various factors under three heads, viz, the nature of the goods, the uses thereof, and the trade channels through which they are bought and sold. No single consideration is conclusive in itself, and it has further been emphasised that the classifications contained in the schedules to the Trade Marks Rules are not a decisive criterion as to whether or not two sets of goods are “of the same description”: Re an Application by John Crowther & Sons (Milnsbridge) Ltd (1948) 65 RPC 369 at 372. Much the same considerations are evident in the observation of Dixon J (as he then was) in Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84 at 94 when he said: What forms the same description of goods must be discovered from a consideration of the course of trade or business. One factor is the use to which the two sets of goods are put. Another is whether they are commonly dealt with in the same course of trade or [607] business. In the present case, the goods are quite different, their uses are widely separated and they are not commonly sold in the same kinds of shops or departments. Giving full weight to all of these matters we are satisfied that s 25 has no application to this case. The goods to be compared and their respective uses are vastly different and, though the evidence shows that in the course of marketing and distribution there may be substantial points of contact, the evidence does not lead to the conclusion that the goods of the appellant are of the same description as those of the respondent. We have thought it necessary to make some references to the matters proper for consideration in relation to this issue under s 25 for the argument of the appellant seizes upon them and asserts that once these matters have been considered and the relevant issue answered in favour of an applicant it is impossible to say that the use by him, with respect to his goods, of the trade mark in question would be “likely to deceive” within the meaning of s 114. Whilst conceding that the likelihood of deception is not as great where, in no sense, can it be said that an applicant’s goods are the same or of the same description as those of an opponent, it is quite clear that the latter finding by no means disposes of the relevant inquiry under s 114. To suggest that it does really confuses the nature of the inquiry which [13.490]

669

Intellectual Property: Commentary and Materials

Southern Cross Refrigerating v Toowoomba Foundry cont. arises under s 25 for it is not sufficient in order to reach the conclusion that an applicant’s goods are of the same description as those of an opponent, merely, to find that in the course of marketing there is a likelihood of deception taking place; the inquiry is much more limited and must be answered in favour of the applicant unless upon an examination of the material matters the conclusion is justified that the applicant’s goods ought to be regarded as being of the same description as those of the opponent. This is far from saying that if the evidence shows a probability or likelihood of deception such a conclusion would be justified. Indeed, if it were not a distinct and separate inquiry it would be impossible to reconcile the multitude of cases – of which Re Jellinek’s Application (1946) 63 RPC 59 and Reckitt & Colman (Aust) Ltd v Boden (1945) 70 CLR 84 are themselves examples – in which it has been thought necessary to consider the likelihood of deception notwithstanding a finding that the respective goods of the applicant and the opponent were not the same or of the same description. The question whether it is likely that deception will result from the use of a mark which is the same as, or which closely resembles, [608] a trade mark already in use may, and frequently will, require the consideration of matters additional to and distinct from those which are relevant to an inquiry under s 25. It may be of importance to see whether the registered mark is general or special in character and to ascertain the extent of its reputation. Again, it may be important to see whether the goods in respect of which it is registered constitute a narrow class or a wide variety of goods as also will be the question whether the goods of both the applicant and the opponent will be likely to find markets substantially in common areas and among the same classes of people. It is, of course, for the person applying for registration to establish that there is no likelihood of confusion and we agree with Kitto J that registration should be refused if it appears that there is a real risk that “the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products came from the same source”; it is, of course, not necessary that it should appear that the user of the mark will lead to passing off: see Morton J (as he then was) in Re Hack’s Application (1940) 58 RPC 91 at 103. Further, it is not enough for the applicant: “to negative the likelihood of confusion in relation to the actual trade carried on by the opponent at the time of registration and to the manner in which the latter then uses his mark. The applicant must also take into account all legitimate uses which the opponent may reasonably make of his mark within the ambit of his registration” (Reckitt & Colman (Aust) Ltd v Boden per Dixon J (as he then was) (1945) 70 CLR 84 at 94, 95.) The second branch of the appellant’s argument asserted that the question of fact under s 114, which was decided adversely to him, should, upon the evidence, have been decided otherwise. In our opinion, there was, however, abundant evidence to justify his Honour’s conclusion; there was evidence which his Honour found “entirely convincing” and we find it of equal cogency. Not only was there evidence which established the probability of confusion but, also, quite substantial evidence of actual confusion. But the appellant claims that any actual or probable confusion had proceeded or would proceed from a belief that the respondent had a monopoly of the “Southern Cross” mark. This mistaken belief, it was said, alone had led to the actual confusion deposed to and this circumstance operated to strip the evidence of real weight. We do not agree. In part the confusion resulted from the use by the appellant of a mark which had long and widely been used by the respondent, in part from the fact that it was a mark which had been used by the latter [609] with respect to such diverse objects as both manual and power well-drilling and boring machinery, milking machines and engines and windmills, in part from the fact that in the course of business those articles frequently are and have, for a long time, been sold in country stores where, side by side with them, domestic refrigerators are stocked and sold, and last, but not least, from the circumstances that the name “Southern Cross” is a mark of a general character and – as appears from what we have already said – of a wide and varied significance. A careful scrutiny of the evidence convinces us that the respondent made out a clear case, not only that a user of the mark by the appellant for the purposes proposed by it would be likely to 670 [13.490]

Trade Marks

CHAPTER 13

Southern Cross Refrigerating v Toowoomba Foundry cont. deceive, but that it has already done so in a not inconsiderable number of cases. In those circumstances we do not propose, nor do we think it necessary to traverse the whole of the facts again.

Scandalous Marks & Use of Marks Contrary to Law (s 42) [13.500] Section 42 of the Trade Marks Act 1995 (Cth) provides that “an application for the registration of a trade mark must be rejected if (a) the trade mark contains or consists of scandalous matter; or (b) its use would be contrary to law”. 37 This provision may be invoked by the Trade Marks Office in examination, and by an opponent in opposition proceedings, but it also serves as one of the limited grounds on which registered trade marks may be cancelled. 38 Although the restriction on registering “scandalous” marks figured in Australia’s first federal trade mark legislation, 39 and before that, some colonial trade mark statutes, 40 and the first British trade mark general registration statute, 41 it was not accompanied by any meaningful explanation as to its justification. 42 This provision is – or at least ought to be – oriented towards refusing registration, and thus denying state-sanctioned imprimatur, to obscene, irreligious, racist, and/or sexist applied-for marks. 43 The Trade Marks Register, however, contains many examples of such marks that were found registrable by the Trade Marks Office.

37 38

39 40

41 42

43

Its legislative forerunners in federal trade mark legislation were Trade Marks Act 1955 (Cth) s 28 and before that, Trade Marks Act 1905 (Cth) s 114. See Trade Marks Act 1995 (Cth) s 57 for the relevant provision in the opposition proceedings, and see s 88(2)(a) for rectification proceedings. On the challenges posed in seeking rectification of a registered trade mark that subsequently recognised as “scandalous”, see further [13.560]. Trade Marks Act 1905 (Cth) s 114. Trade Marks Registration Act 1876 (Vic) 27 Vict, No 539, s 8. Similar provisions were later included in the trade mark laws of other colonies: see, eg, Patents, Designs and Trade Marks Act 1884 (Qld) s 72; Designs and Trade Marks Act 1884 (WA) 48 Vict, No 7, s 30. Trade Marks Registration Act 1875, 38 & 39 Vict, c 91, s 6. See eg Commonwealth, Parliamentary Debates, House of Representatives, 28 November 1905, 5894, where J Cook observed “We have in this clause a very proper prohibition of any offence against morality – a prohibition which should, and no doubt does, find a place in every Trade Marks Bill” (regarding what would become Trade Marks Act 1905 (Cth) s 114). See in particular Peter Hanlon’s Application [2011] ATMO 45, 6–7 [19]. For a recent example of foreign government interjection with respect to an offensive mark, the United Kingdom’s intervention in support of OHIM’s position refusing registration to PAKI: The United Kingdom’s argument here was unequivocal PAKI is a racist and derogatory term, and should be denied registration: see PAKI Logistics GmbH v OHIM (General Court of the European Union, T-526/09, 5 October 2011). [13.500]

671

Intellectual Property: Commentary and Materials

Figure 13.4 ABO BRAND Paints (1921)

Consider, for example, the outrageous ABO BRAND device mark (Figure 13.4 above), 44 clearly stigmatising of Indigenous Australians, but by virtue of its registration, was found not to run afoul of Trade Marks Act 1905 (Cth) s 114. 45 Of course, such a mark would now be rightly refused registration: in short, standards have changed. More generally, there is an increased sensitivity to the representations of Indigenous persons (especially by nonIndigenous persons) 46 and other racial or ethnic groups. The Manual makes clear that trade marks “promoting racial vilification” – ie “marks incorporating racial or ethnic abuse”– “will always attract a ground for rejection under subsection 42(a)”. 47 Other (often overlapping) “categories” 48 with which s 42(a) is concerned are those trade marks that offend religious sensibilities (“profanity”); 49 are “obscene”; 50 and miscellaneous

44

45

46 47

48

Australian Paint Manufacturing Co Ltd, of Lilyfield, NSW, applied for this trade mark, TM No. 31,246, on 18 July 1921 in Class 1 (Paint and enamels). It was not renewed, and thus it was removed from the register 14 years later on 30 July 1935: see (1921) 32 Australian Official Journal of Trade Marks (31,001–32,000), 246. Its associated trade mark, ABO (Australian Before Others) TM No. 41,655, was registered 18 May 1925, but was removed 14 years later on 26 May 1939 on account of its non-renewal: see (1926) 40 Australian Official Journal of Trade Marks, 329. For other examples, see CITRATO EFFERVESCENTE AL LIMONE NIGGER BOY (1966) and SAMBO THE WONDER CLEANER (1966) available via IP Australia’s Australian Trade Mark Online Search System (ATMOSS). See eg the debate surrounding Racial Discrimination Act 1975 (Cth) s 18C and Bill Leak’s depiction of supposed Indigenous child neglect in a cartoon first published in The Australian, 6, 4 August 2016. Manual (1 July 2016) Pt 30.2.11. Perhaps because of Peter Hanlon’s Application [2011] ATMO 45 (31 May 2011) (TM No. 1267253) (permitting the registration of “POMMIEBASHER” in Class 25 (clothing, footwear, and headgear) and Class 32 (beer, mineral and aerated waters and other non-alcoholic drinks)), the word “always” no longer enjoys the emphasis it was given in earlier versions of the Manual. For a more nuanced categorical approach, see especially SR Baird, “Moral Intervention in the Trademark Arena” (1993) 83(5) Trademark Reporter 661, 726–8. Baird’s seminal article establishes, at 704, seven “distinct groupings” in which scandalous under the Lanham Act 1946, § 2(a); 15 USC §1052(a)) may be broken into: (1) marks with a religious nexus; (2) marks consisting of or comprising racial slurs or epithets;

672 [13.500]

Trade Marks

CHAPTER 13

offensive marks that promote the “personal abuse of an individual”, 51 incorporate “racial and ethnic abuse” 52 or “elements of religious intolerance/abuse” 53 and what may loosely be described as marks promoting “criminality”. But these categories do not offer much by way of an answer to least two important questions suggested by the first limb of s 42(a): first, legally speaking (ie as a legal standard), what is meant by the term “scandalous” and, second, by whom (and how widely) must a trade mark be viewed as scandalous. 54 In this connection, the Manual says that the Registrar must decide “on behalf of the ordinary person, whether a trade mark should be regarded as shameful, offensive or shocking, and therefore be rejected”, and that the dynamic meaning of these terms reflect serve as a barometer of changing societal norms and attitudes. 55 However, the various tests invoked in relevant decisions reveal an inconsistency in logic as well as a dissonance between official practice guidelines and actual registration. 56 To illustrate, consider the multiple tests relied on in Peter Hanlon’s Application. 57 One approach suggests that the narrower, technical meaning of scandalous (in that the registration would

49

50

51 52 53 54

55 56

57

(3) marks consisting of or comprising profane matter; (4) marks consisting of or comprising vulgar matter; (5) marks relating to sexuality; (6) “innuendo” marks and (7) marks suggesting or promoting illegal activity. But note Peter Hanlon’s Application [2011] ATMO 45 (31 May 2011), where Hearing Officer Williams, at 12 [40], referred to the categorical approach adopted in Baird, yet sceptically observed that reducing his “seven categories to inputs in a formula” may prove problematic since [community] standards change over time. Moreover, it was observed that the Registrar must “careful[ly] balance … the facts of a very wide range of cases”, and that the “complexity of these issues should not be underestimated”: 11 [37]. Manual (1 July 2016) Pt 30.2.8. See eg In re Postum [1906] Board of Trade (12 November 1906) (denying registration to ELIJAH’S MANNA for cereals); Maglificio Calizificio Torinese SpA’s App (1982) 52 AOJP 1764 (denying registration to JESUS JEANS device mark in class 25); Mercy’s Application (1955) AOJP 938 (denying registration to MECCA in class 34 in respect of cloths and stuffs of wool, worsted or hair). Cf other cases which may be relevant here, even though they were not decided pursuant to the operative elements of s 42(a): namely, Ellis & Co’s Trade Marks (1904) 21 RPC 617 (re QUAKER mark in class 43 (fermented liquors and spirits, not including whiskey) (denied standing as applicant not an “aggrieved person”) and Hallelujah Trade Mark [1976] RPC 605 in class 25 (denying registration on the “contrary to morality” or pursuant to an overarching discretion to refuse registration). Manual (1 July 2016) Pt 30.2.6. See eg Kuntstreetwear Pty Ltd’s Trade Mark Application (2007) 73 IPR 438 (KUNT, a “colourable imitation of an obscene word” denied registration for class 25). Cf those marks merely considered risqué or in poor taste (eg Cosmetic, Toiletry and Fragrance Association Foundation v Fanni Barns Pty Ltd (2003) 57 IPR 594 (LOOK GOOD + FEEL GOOD = ROOT GOOD registered in classes 3 and 25 for cosmetics, sexual hygiene products and clothing; NUCKIN FUTS in class 29 (prepared nuts etc) ultimately allowed registration subject to an endorsement: specifically, that “the trade mark will not be marketed to children”). Manual (1 July 2016) Pt 30.2.11. Ibid. Ibid. This two-pronged approach is favoured by Patricia Loughlan, “Oh Yuck! The Registration of Scandalous Trade Marks” (2005) (61) (June 2005) Intellectual Property Forum 38. It is also favoured by Stephen Baird who notes, in the classic article on the law relating to the US equivalent (s 2(a) Lanham Act 1948; 15 USC §1052(a), that dictionary definitions “offer little guidance in answering the critical question of who it is that must be shocked or offended for scandal to be raised”: Stephen R Baird, “Moral Intervention in the Trademark Arena” (1993) 83(5) Trademark Reporter 661, 703. Manual (1 July 2016) Pt 30.2.1. Later, referencing “ordinary Australians”: Pt 30.2.3. Sometimes within the same decision, see eg Kuntstreetwear Pty Ltd’s Trade Mark Application (2007) 73 IPR 438 and the inconsistent treatment regarding the word “scandalous”, the relevant context in which the mark is considered, and the relevant audience (including quantum) that needs to be scandalised by the applied-for mark. [2011] ATMO 45 (31 May 2011) (TM No. 1267253). [13.500]

673

Intellectual Property: Commentary and Materials

cause scandal of the Registrar) 58 may be given wide scope for application because it is tethered to a wider audience (potentially the world at large). 59 Yet another test asserts a broader view of the meaning of scandalous (ie its natural and ordinary meaning) 60 which is connected to a narrower audience. 61 Applying both tests, as the hearing officer in Peter Hanlon’s Application purports to do, offers little guidance as to the correct approach. Much of the confusion arises because of the perceived exclusion of morality from this debate brought about by the Dean Committee Report. 62 This misguided exclusion, thought to relieve decision-makers from difficult normative judgements, has in fact left decision-makers hamstrung: they are now compelled to mark normative decisions shorn of the (legitimising) broad (yet structured) discretionary grounds necessary for such effective decision-making. Despite such inconsistency in decisions 63 and in the Manual, 64 we may distill some basic methodologies employed here. Decision-makers seem fond of referring to dictionaries in establishing the ordinary and natural meaning of disputed terms. Occasionally, empirical evidence (especially if it supports the case for trade mark registration) may be taken into consideration. Furthermore, there appears to be a continuum of registrability according to which category the applied-for mark falls. At one end of the registrability continuum are those questionable trade marks that more or less secure registration. These include trade marks that are vulgar or in poor taste, which are often characterised as having a “tendency to be scandalous”, but are not in fact scandalous. 65 By contrast, trade marks that are promote racial or religious intolerance or the abuse of an individual or group are now considered per se unregistrable. Trade marks that offend religious sensibilities or promote violence to the world at large (as opposed to targeting certain groups) lie somewhere in between, but are probably closer to the unregistrability end of the continuum. Incredibly, sexist or misogynistic trade marks do not explicitly fall into a “per se” prohibitive category, with such marks often securing registration, perhaps because they are dismissed as merely being in “poor taste”. 66 Given the increased attention given to this restriction on registration elswhere, 67 it is hoped

58 59

Ibid 10–11 [34]–[35]. Peter Hanlon’s Application [2011] ATMO 45, 15 [50].

60 61 62

Ibid 4 [15]. Ibid 6 [18]. But note later in the decision the unfortunate reference to “ordinary customers” Commonwealth, Report of the Committee Appointed by the Attorney-General of the Commonwealth to Consider What Alterations Are Desirable in the Trade Marks Law of the Commonwealth (Commonwealth Government Printer, 1954) (“Dean Committee Report”), where at 17 [63] it was observed that former s 28 of the Trade Marks Act 1955 (Cth) “while in different words, has in substance the same effect as section 114 of the [Trade Marks Act 1905], but it relieves the Registrar and the Court from consideration of ‘morality’”.

63

See eg Peter Hanlon’s Application [2011] ATMO 45 (31 May 2011) [7]: “The history [of former s 28(c)/ current s 42(a)] makes it clear that… [these provisions are] not intended to directly address issues of morality” (emphasis added). Manual (1 July 2016) Pt 30.2.1 (adopting a dictionary definition of scandalous that that references the “moral feelings of the community”). Cosmetic, Toiletry and Fragrance Association Foundation v Fanni Barns Pty Ltd (2003) 57 IPR 594, 599. See eg TM No. 1081573 for Class 25 and TM No. 1081576 for Class 16 (paper and cardboard products including greeting cards).

64 65 66 67

At the time of writing, the United States Supreme Court is yet to decide whether Lanham Act 1946, § 2(a); 15 USC §1052(a) is constitutionally valid in light of the First Amendment jurisprudence. For differing opinions of lower courts, compare In Re Tam 808 F 3d 1321 (Fed Cir, 2015) (re THE SLANTS) with Pro-Football, Inc v. Blackhorse 112 F Supp 3d 439 (ED Va, 2015) (re various REDSKINS marks).

674 [13.500]

Trade Marks

CHAPTER 13

the Parliament can offer clearer guidance as to the object and scope of s 42(a), starting perhaps with a frank acknowledgement of its unavoidable moral core. 68 One of the striking features of the s 42(b) jurisprudence is the extent to which the Trade Marks Office continues to shirk its statutory duties by adopting an artificially narrow construction of s 42(b). Before Madgwick J’s decision in Advantage-Rent-A-Car Inc v Advantage Car Rental Pty Ltd, 69 the Trade Marks Office took an even narrower interpretation, enlivening the contrary to law prohibition in opposition proceedings only where “clear finding that the registrar can apply”, such as clear-cut court decisions where a “mark infringes the law” 70 and express legislative prohibitions. Although Madgwick J acknowledged registrar concerns here about looking at “questions of law outside his or her expertise” and the “large and onerous responsibility” 71 this may place on the registrar, his Honour nonetheless pointed out the errors in this narrow construction: any reticence on the part of an administrative decision-maker to express an opinion on a matter of law [cannot] be encouraged. The idea that “contrary to law” in the context of judicial proceedings means contrary to all laws, whilst in the context of proceedings before the Registrar it means contrary to laws which are easy for the Registrar to determine or which are “clear cut”, is not sustainable. 72

Despite reassurances that the effect of any determination applying s 42(b) is “limited to refusal of registration” and that a right of appeal de novo to the Federal Court subsists from the registrar’s decision, 73 The Trade Marks Office now maintains a broader (though still narrow) construction of s 42(b). Arguably, it has drawn too much comfort from Madgwick J’s statement that the relevant “criterion is that the use ‘would’ not ‘could’ be contrary to law”. 74 Even though his Honour clarified that “what is required is that the registrar form a view as to whether the use of a trade mark would be contrary to law”, 75 some commentators have interpreted the Advantage-Rent-A-Car case has been interpreted as requiring “convincing evidence” and placing a “significant evidentiary onus on opponents” for s 42(b) to be triggered. 76 Moreover, in emphasising the “administrative, rather than judicial function” of the Trade Marks Office, the Manual also claims s 42(b) only applies for “clear breach[es] of … legislation, as opposed to common law rights”. 77 The Manual states that this section, at the examination stage, is “usually limited to circumstances” where there clear legislative proscription or a court decision establishing the illegality of the trade mark’s use. 78 Outside this context, s 42(b) issues are “unlikely” to occur in the examination stages, but may be of 68 69 70

See eg Trade Marks Act 2002 (NZ), s 17(1)(c) and s 3(c) (reflecting a concern regarding Māori signs). Advantage-Rent-A-Car Inc v Advantage Car Rental Pty Ltd [2001] FCA 683; (2001) 52 IPR 24. Ibid 30 [23].

71 72 73

Ibid 32 [28]. Ibid 31 [26] (emphasis original). Ibid 32 [28].

74

75

Ibid. For a general criticism of the bureaucratic response to this decision, see Robert Burrell, “Trade Mark Bureaucracies” in Graeme B Dinwoodie and Mark D Janis (eds), Trademark Law and Theory, (Edward Elgar, 2008) 95, 129–31. Ibid 32 [28] (emphasis added).

76 77

Colin J Oberin and Benjamin J Fitzpatrick, Practical Guide to Australian Trade Mark Law (Lawbook, 2004) 68. Manual (1 July 2016) Pt 30.3.2. See also Manual (15 March 2013) Pt 20, 5.4.2.

78

Manual (1 July 2016) Pt 30.3.1. [13.500]

675

Intellectual Property: Commentary and Materials

relevance during opposition proceedings. 79 Nonetheless, s 42(b) has been successfully invoked in many opposition proceedings, but these cases all involve competing pecuniary interests, such as passing off and misleading and deceptive conduct claims. 80

Deceptive or confusing (s 43)/ conflict with earlier registered mark (s 44)/ conflicting reputation (s 60) [13.510] In relation to trade marks that are deceptive or confusing, conflict with earlier registered marks, or that conflict with the reputation of another trade mark, see Trade Marks Act 1995 (Cth) ss 43, 44 and 60 respectively. Putting aside cancellation proceedings (see [13.740]) for one moment, ss 43 and 44 can operate as grounds for rejecting and opposing a trade mark, whereas s 60 operates only as a grounds of opposition. Although these provisions are aimed at different regulatory targets, they are often pleaded together in opposition proceedings. Section 43 is invoked where because of some connotation in a trade mark or sign contained in the trade mark, the use of the mark in relation to the relevant goods or services would be likely to deceive or cause confusion. In the present author’s humble opinion, the focus of the inquiry here ought to be on the “inherent qualities” 81 or “features” of the mark, not on confusing connotations arising because of some perceived sponsorship or affiliation with another (invariably famous) trader/person and/or their interests. 82 Re Trade Mark “Orlwoola” (1909) 26 RPC 850 is the classic authority demonstrating a mark’s liability to deceive or cause confusion on account of its misleading qualities. Fletcher Moulton LJ observed the ORLWOOLA word mark: [i]s in substance a case of registration of the words “All wool,” grotesquely mis-spelt, as a Trade Mark for textile fabrics. … The mis-spelling does not affect the words when spoken, so that we have only to decide whether the qords “All wool” are proper for registration in respct of such goods. To this there can be but one answer. If the goods are wholly made of wool the words are the natural and almost description of them. If they are not wholly made of wool it is a misdescription which is so certain to deceived that its use can hardly be otherwise than fraudulent. In either case the words are utterly unfit for registration as a Trade Mark. 83

Another noteworthy example, dealing with confusing connotations relating to geographical origin, is provided by the High Court decision of Australian Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corporation Ltd (1951) 82 CLR 199. There the High Court 79 80

81 82

83

Manual (1 July 2016) Pt 30.3.4. See, eg, Wolverine World Wide, Inc v Khodar Ali Ahmed [2008] ATMO 93 (27 November 2008); Automobile Club de L’Quest v Gardiakos (2005) 66 IPR 191; Kimberly-Clark Worldwide, Inc v Goulimis [2008] FCA 1415; Marco Polo Foods Pty Ltd v Benino Fine Foods (Aust) Pty Ltd (2005) 67 IPR 179; Virgin Enterprises Limited v Virgin International Pty Ltd [2010] ATMO 38. Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365, 389 [79] (per Branson J). But for a line of authority recognising deceptive or confusing connotations based on the appearance of another person’s imprimatur, sponsorship, or affiliation, see eg Amalagamated Television Services Pty Ltd v Pickard [1999] ATMO 103 (SUMMER BAY device marks); Amalgamated Television Services Pty Limited v Sylvia Margret Clissold [2000] ATMO 14 (SUMMER BAY device mark); Durkan v Twentieth Century Fox Film Corporation [2000] ATMO 5 (BRAVEHEART THE MUSICAL word mark); McCorquodale v Masterson [2004] FCA 1247 (DIANA LEGACY IN ROSES “D” device mark). Re Trade Mark “Orlwoola” (1909) 26 RPC 850, 860. Farwell J, at 864, also held that since the “registration is for articles made not only of wool but of worsted and hair; the word ‘Orlwoola’ as spoken is calculate to deceive…”

676 [13.510]

Trade Marks

CHAPTER 13

ordered the expungement of the misleading registered “YANX” trade mark – a label mark described in some detail 84 – and in doing so, at 206, held that: The question [“whether the use of the word ‘Yanx’ is deceptive as suggesting to persons buying the goods, contrary to fact, that they are American cigarettes or that they are in some definite way connected with the United States”] is essentially one of fact. The respondent has not used [the YANX] trade mark … in Australia so that the applicant could not be expected to produce evidence of actual confusion. The words on the label ″Made in England″ assist the respondent to the extent stated by the Assistant Comptroller in Green’s Case (1946) 64 RPC, at p17: “They are a factor which might reduce the possibility of deception but would not entirely remove it.” There is no doubt that in its ordinary signification the word “Yankee” or “Yank” has come to mean a citizen of the United States of America and that “Yanx” means such citizens in the plural. The word “Yanx”, which is simply a mis-spelling of “Yanks”, is so conspicuously displayed on the label that its use alone would suggest to persons buying the cigarettes that they were American cigarettes, and this suggestion would be heightened by its combination with the stars and stripes which are emblematic of the national flag and song of the United States. The words “Made in England” are not very conspicuous on the label and could easily be overlooked. On the whole I think that the label is likely to cause such deception and that in the public interest it should be expunged on this ground…

Of course, many authorities go the other way: ie where marks were held not likely to deceive or cause confusion because of a connotation arising from their qualities or geographical origin. For example, in Joseph Bancroft & Sons Co v Registrar of Trade Marks (1957) 99 CLR 453, the High Court, at 458, observed that: No doubt the words “Miss America”, just like the words “Miss Australia”, and the corresponding titles in other countries, when used in connexion with female apparel would be capable of suggesting in a vague and indefinable way to likely female purchasers that the goods were suitable in quality to be fashioned for such glamorous beauties, but such vague and indefinable suggestions, emotive as they might be, could hardly be said to refer directly to the character or quality of the goods. Nor could the words “Miss America” according to their ordinary signification be considered to be a geographical name or a surname. They do not signify that the goods have their origin in the United States of America, and although a surname can include a title, added to a person’s name derived from some achievement, the words “Miss America” could not be considered to be a surname even in this sense. 85

For a recent example of an applied-for mark for services that, inter alia, ran afoul of s 43, see Primary Health Care Ltd v Commonwealth [2016] FCA 313, [161]–[188] (Jagot J). Section 44 seeks to deny registration to marks that may conflict with registered trade marks in respect of the same, similar or closely related goods or services. More fully, it provides that the Registrar must reject an application to register an applied-for mark that is “substantially identical with, or deceptively similar to” marks already on the Register, or those with an earlier priority date, in respect of “similar goods or closely related services”. This involves a 84

Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corporation Ltd (1951) 82 CLR 199, Williams J, at 200, described the trade mark as consisting of a “label suitable for printing on packets or other containers of cigarettes comprising the word ‘Yanx’ in very prominent letters in combination with stars and stripes, the same word in less prominent letters, and also the words ‘Yanx Cigarettes’ followed by a statement that the cigarettes are manufactured from the finest Macedonian and choicest American tobaccos blended proportionately to bring out the flavour of each tobacco and ending with the words ‘Made in England,’ the letters of the words ‘Yanx Cigarettes’ and ‘Made in England’ being of about the same size as the letters of the word ‘Yanx’ where it secondly appears. The words Menzala and Menzala Cigarette Co Ltd, London, EC, also appear on the label)”.

85

See also “Roman Holiday” Trade Mark [1964] RPC 129; Bavaria NV v Bayerischer Brauerbund eV (2009) 177 FCR 300. [13.510]

677

Intellectual Property: Commentary and Materials

comparison of the two marks, and one generally looks to the notional use of the marks in question. Even if the applied-for mark is ensnared by s 44(1) or (2), the Registrar may nonetheless exercise discretion by permitting the registration of that mark (subject to any conditions or limitations thought appropriate) if the applicant establishes “honest concurrent use” of their mark, or “because of other circumstances, it is proper” to permit registration: s 44(3). Moreover, pursuant to s 44(4), the Registrar may not reject the application if s/he is satisfied that the applicant has “continuously used” the applied-for mark before (and up to) the priority date of the other trader’s registered mark. 86 However, it is worth pointing out that an opposition under s 58A will defeat a potential s 44(4) registration if the opponent establishes prior (ie first) continuous use of their mark. 87 Section 44 is set out below: 44 Identical etc. trade marks (1) Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant’s trade mark) in respect of goods (applicant’s goods) must be rejected if: (a) the applicant’s trade mark is substantially identical with, or deceptively similar to: (i) a trade mark registered by another person in respect of similar goods or closely related services; or (ii) a trade mark whose registration in respect of similar goods or closely related services is being sought by another person; and (b) the priority date for the registration of the applicant’s trade mark in respect of the applicant’s goods is not earlier than the priority date for the registration of the other trade mark in respect of the similar goods or closely related services. Note 1: For deceptively similar see section 10. Note 2: For similar goods see subsection 14(1). Note 3: For priority date see section 12. Note 4: The regulations may provide that an application must also be rejected if the trade mark is substantially identical with, or deceptively similar to, a protected international trade mark or a trade mark for which there is a request to extend international registration to Australia: see Part 17A. (2) Subject to subsections (3) and (4), an application for the registration of a trade mark (applicant’s trade mark) in respect of services (applicant’s services) must be rejected if: (a) it is substantially identical with, or deceptively similar to: (i) a trade mark registered by another person in respect of similar services or closely related goods; or (ii) a trade mark whose registration in respect of similar services or closely related goods is being sought by another person; and (b) the priority date for the registration of the applicant’s trade mark in respect of the applicant’s services is not earlier than the priority date for the registration of the other trade mark in respect of the similar services or closely related goods. Note 1: For deceptively similar see section 10. Note 2: For similar services see subsection 14(2). Note 3: For priority date see section 12. 86

87

Cf the limited protection offered to a “prior continuous user” against trade mark infringement actions, so long as such use was before the other trader’s priority date or first use, whichever is earlier: Trade Marks Act 1995 (Cth) s 124. The s 58A ground of opposition, with effect from 23 October 2006, was introduced by the Trade Marks Amendment Act 2006 (Cth).

678 [13.510]

Trade Marks

CHAPTER 13

Note 4: The regulations may provide that an application must also be rejected if the trade mark is substantially identical with, or deceptively similar to, a protected international trade mark or a trade mark for which there is a request to extend international registration to Australia: see Part 17A. (3) If the Registrar in either case is satisfied: (a) that there has been honest concurrent use of the 2 trade marks; or (b) that, because of other circumstances, it is proper to do so; the Registrar may accept the application for the registration of the applicant’s trade mark subject to any conditions or limitations that the Registrar thinks fit to impose. If the applicant’s trade mark has been used only in a particular area, the limitations may include that the use of the trade mark is to be restricted to that particular area. Note: For limitations see section 6. (4) If the Registrar in either case is satisfied that the applicant, or the applicant and the predecessor in title of the applicant, have continuously used the applicant’s trade mark for a period: (a) beginning before the priority date for the registration of the other trade mark in respect of: (i) the similar goods or closely related services; or (ii) the similar services or closely related goods; and (b) ending on the priority date for the registration of the applicant’s trade mark; the Registrar may not reject the application because of the existence of the other trade mark. Note 1: An authorised use of the trade mark by a person is taken to be a use of the trade mark by the owner of the trade mark (see subsection 7(3)). Note 2: For predecessor in title see section 6. Note 3: For priority date see section 12.

Section 60 of the Trade Marks Act 1995 (Cth) provides that an applied-for mark may be opposed if an earlier trade mark has “acquired a reputation in Australia” before the applicant’s priority date, and “because of the reputation” of the opponent’s mark, the use of the applied-for mark is likely to deceive or cause confusion. This provision is particularly useful to opponents who have not secured Australian registration of their trade mark (ie unregistered common law marks that have acquired a reputation in Australia). Section 60, in full, states:– 60 Trade mark similar to trade mark that has acquired a reputation in Australia The registration of a trade mark in respect of particular goods or services may be opposed on the ground that: (a) another trade mark had, before the priority date for the registration of the first-mentioned trade mark in respect of those goods or services, acquired a reputation in Australia; and (b) because of the reputation of that other trade mark, the use of the first-mentioned trade mark would be likely to deceive or cause confusion. Note: For priority date see section 12.

The following extracts from two leading cases set out the relevant principles pertaining to the operation of ss 43, 44, and 60, and in particular, notions of “honest concurrent use”, “substantial identity”, “deceptive similarity” and “reputation” referred to therein. Moreover, McCormick & Company Inc v McCormick [2000] FCA 1335 illustrates how a successful opposition under s 60 can defeat an honest concurrent user pursuant to s 44(3). [13.510]

679

Intellectual Property: Commentary and Materials

Torpedoes Sportswear v Thorpedo Enterprises [13.520] Torpedoes Sportswear Pty Ltd v Thorpedo Enterprises Pty Ltd (2003) 59 IPR 318; [2003] FCA 901 Federal Court of Australia BENNETT J: [319] This is an appeal from the decision of the Delegate of the Registrar of Trade Marks (“the Delegate”) to accept the application made by the first respondent, Thorpedo Enterprises Pty Limited (“Enterprises” or “the respondent”) on 17 March 1999 to register the trade mark THORPEDO (“the THORPEDO mark”). … The parties Australian Trade Mark Registration No 585117, being PARADISE LEGENDS TORPEDOES (“the Paradise Legends mark”), was registered by Paradise Legends Pty Ltd (“Paradise”) in 1992 in class 28: protective paddings, protective paddings for sporting shorts, therapeutic protective padding. Paradise assigned the Paradise Legends mark on 24 February 1998 to Torpedoes International Pty Limited (“International”). Paradise was placed into liquidation on 1 October 1998. International filed a trade mark application on 7 September 1998 in class 25: clothing including headgear and footwear, which is Australian Trade Mark Registration No 772346 (“the T device mark”) as follows: [Mark not reproduced.] I shall refer to the large, stylised T that precedes the word Torpedoes as “the T device”. International was placed into liquidation on 6 December 1999. On 9 December 1999, Sportswear acquired the assets of International, including the Paradise Legends mark and the T device mark (together, “the Sportswear marks”) for $25,000. … [320] Mr Ian Thorpe describes himself as “an Australian swimming representative”. The first occasion on which Mr Thorpe was called “Thorpedo” was, apparently, on 17 March 1997, when it was used in an article in the Daily Telegraph newspaper. Since then, on numerous occasions, in both the print and electronic media and in advertisements the word “Thorpedo” has been referred to in connection with Mr Thorpe. On each occasion, according to the evidence, Mr Thorpe’s name and/or his likeness have appeared when the word was used. In early 1998, Mr Thorpe instructed his financial adviser, Mr Sheridan, to incorporate a company to enter into commercial arrangements on his behalf, to be called Thorpedo Enterprises Pty Ltd. Mr Thorpe chose the “Thorpedo” part of the company name because he liked the name that the media had used to describe him. In 2001, he instructed Mr Sheridan to incorporate Thorpedo International Pty Limited (“Thorpedo International”). Enterprises applied for the THORPEDO mark on 17 March 1999 (“the relevant date”). While some goods are not within the registered classes for both the Sportswear marks and the THORPEDO mark, there are common classes of goods for which the competing marks are registered. … [329] Relevant principles The question of deceptive similarity involves a number of different and additional considerations. The question is whether the normal use of the THORPEDO mark in relation to the class of goods specified in the application would be likely to cause deception and confusion in the face of Sportswear’s normal use of its marks. A different comparison is made than that for substantial identity. Here the question is one of impression based on recollection of the mark (Shell at 415). While it is not necessary to prove actual deception, neither is a mere possibility of confusion sufficient: Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 (Southern Cross); there must be real, tangible danger of 680 [13.520]

Trade Marks

CHAPTER 13

Torpedoes Sportswear v Thorpedo Enterprises cont. confusion occurring (Woolworths). It is sufficient if, by reason of use of the mark, a number of people would wonder if two products came from the same source (Southern Cross). In Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641 (Woollen Mills), Dixon and McTiernan JJ apparently considered both the visual and aural use of the marks there in question; the reference by their Honours to the effect produced in the course of the ordinary conduct of affairs would include aural use, where the evidence was that the mark was applied to goods that were regularly referred to orally by name (at 658). The task is one requiring the application of common sense and impression, which can depend on a combination of visual and aural impression and the estimation of the effect likely to be produced in the ordinary conduct of affairs (Anheuser-Busch Inc v Budejovicky Budvar (2003) 56 IPR 182 at 217. I was referred to a number of cases in which words were compared and conclusions drawn as to whether or not there was deceptive similarity. It is, of course, helpful to see the process of reasoning applied in each case but, of necessity, much turns on the individual words under consideration. It is not necessarily helpful to trawl through decided cases to examine how different decision makers have formed conclusions, based on their own impressions, as to whether or not confusion or deception arises when two specific words are compared visually and aurally. In this regard, I refer to the words of Windeyer J in Re Bali Brassiere Co Inc’s Registered Trade Mark and Berlei Limited’s Application (1968) 118 CLR 128 at 139: Cases were cited to me from passages in judgments dealing with marks held to be, or held not to be, by reason of similarities, deceptive or confusing. I have read these cases, and others. I do not think I need discuss them. The governing principles are not in dispute; and little is to be gained by the quotation of enunciations and elaborations of them in other cases. The difficulty is always in their application to the facts of the case in hand. Much depends on the words themselves, their origins and meanings and the surrounding circumstances of their use. What an examination of the cases where similar words are compared visually and aurally show, is that each such comparison depends on matters such as the pronunciation of the words, their meaning and the categories of goods to which the marks are to be applied. [330] There is little dispute as to the principles to be applied although it must be remembered that previous decisions frequently turned on the question of onus, which has changed under the Act. [The opponent bears the onus to establish deception and confusion, and opposition should only be upheld if the court is satisfied that the mark should clearly not have been registered See Registrar for Trade Marks v Woolworths (1999) 45 IPR 411; Lomas v Winton Shire Council (2003) AIPC 91-839]. Those principles, as relevant to this case, can be summarised as follows and are largely drawn from the very well known and regularly cited cases Pianotist Company Ltd’s Application (1906) 23 RPC 774 (Pianotist) per Parker J; Woollen Mills; Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 (Cooper Engineering) (which specifically adopted Parker J in Pianotist); Southern Cross; Shell and other cases to which I shall refer: • The rights of the parties are determined as at the date of the application (Woolworths at 383). • The two words are considered by look and by sound but not side by side. An attempt must be made to estimate the effect or impression produced on and retained by customers and potential customers (Shell at 415; Woollen Mills at 658). • What is to be compared with one mark is the impression based on recollection of the other mark that persons of ordinary intelligence and memory would have (Shell at 415; MID Sydney Pty Ltd v Australian Tourism Co Limited (1998) 90 FCR 236 (MID Sydney) at 245). • Consideration is given to the goods to which the marks are to be applied and the nature of the customer, as well as all the surrounding circumstances when the marks are used in a normal way as a trade mark (Pianotist at 777). [13.520]

681

Intellectual Property: Commentary and Materials

Torpedoes Sportswear v Thorpedo Enterprises cont. • In considering the look and sound of the marks, the goods, the customers and all the surrounding circumstances, it is also important to look at the whole of the marks (Mars GB Ltd v Cadbury Ltd [1987] RPC 387 at 395). • If a mark in fact or from by its nature is 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. The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected (Woollen Mills at 658). • The question is whether there will be confusion in the mind of the public which will lead to confusion in the goods (Pianotist at 777); that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source (Southern Cross at 595 and 608). This involves estimating the effect or impression produced on the mind of potential customers (Woollen Mills at 658). • Deceptiveness must result but from similarity; a likelihood of deception is judged by the effect of the similarity in all of the circumstances (Shell at 416). • It is not necessary to prove actual probability of deception leading to a passing off but mere possibility of confusion is not enough; there must be a real, tangible danger of it occurring (Southern Cross at 595). The court would need to be satisfied that there was a reasonable likelihood of deception or confusion before denying acceptance of the application for registration (Woolworths at 381). [331] • When the sounds of two words are being compared, it is generally a matter of first impression, because a person familiar with the two words will be neither deceived nor confused. It is not a question of meticulous comparison and allowance must be made for imperfect recollection and bad or careless pronunciation (Aristoc Ltd v Rysta Ltd (1944) 1B IPR 467 (Aristoc) at 472). • In making an aural comparison, one has regard to what appears to be the natural and ordinary pronunciation, although evidence is admissible to establish a pronunciation that departs from the normal fashion, such as evidence of those in the trade or consumers (Wingate Marketing Pty Ltd v Levi Strauss (1994) 49 FCR 89 at 129 per Gummow J; Pacific Publications Pty Ltd v IPC Media Pty Ltd (2003) 57 IPR 28 at 56). • The fact that two marks convey the same idea is not sufficient in itself to create a deceptive resemblance between them and a proprietor of a mark is not entitled to a complete monopoly of all words conveying the same idea as that mark (Cooper Engineering at 539). This fact can, however, be taken into account in deciding whether two marks which really looked alike or sounded alike were likely to deceive (Cooper Engineering at 539). The presence of a common idea may be a determining factor because the idea is more likely to be recalled that the precise details of the mark (Jafferjee v Scarlett (1937) 57 CLR 115 (Jafferjee) at 121-2) but the suggestion of differing ideas may serve to reduce the risk of confusion (Johnson & Johnson v Kalnin (1993) 26 IPR 435 (Johnson & Johnson) at 440). The idea that is relevant is the idea that the mark will naturally suggest to the mind of one who sees it (Jafferjee at 121). • Where an element of a trade mark has a degree of notoriety or familiarity, it would be artificial to separate out the physical features of the mark from the viewer’s perception of them. The question of resemblance is about how the mark is perceived (Woolworths at 386). • It is sufficient if persons who only know one of the marks and have perhaps an imperfect recollection of it are likely to be deceived (Cooper Engineering at 538; Aristoc at 472). • Consideration must be given of all goods or class of goods in respect of which registration is desired (Pianotist at 777-778). 682 [13.520]

Trade Marks

CHAPTER 13

Torpedoes Sportswear v Thorpedo Enterprises cont. • The comparison is between marks, not uses of marks, although use is not irrelevant as a circumstance. The consideration is not only actual use but also the extent of the statutory monopoly by reference to the full extent of the goods or services in respect of which the mark is registered (MID Sydney at 245). • Onus of proving that there is or is not a reasonable probability of deception may be a deciding factor (for example Aristoc). The test of “resemblance” for the purposes of s 6(3) of the Trade Marks Act 1955 was summarised by Lindgren J in Gardenia Overseas Pte Ltd v The Garden Co Ltd (1994) 29 IPR 485 (Gardenia) at 493: “Resemblance” with s 6(3) of the [1955] Act involves an assessment by the court of the visual and aural impressions made by the two marks when compared, but the likelihood of deception or confusion referred to in that subsection involves an [332] assessment of what would be the probable visual and aural impressions on customers and potential customers which would arise if the marks were being used properly and within the scope of the registration, that is to say, it involves the concept of “notional normal and fair use”. This was approved by the Full Court in The Coca-Cola Company v All-Fect Distributors Ltd (t/as Millers Distributing Company) (1999) 47 IPR 481 at 496 in respect of the Act. In Gardenia, Lindgren J found sufficient difference in the words “garden” and “gardenia”, including differences in “syllabic structure and pronunciative emphases” of the respective words, bearing in mind that the test of aural impression is not one of supposing the two words are said one after the other. I have already noted the slight difference in “pronunciative emphasis” of “Thorpedo” and “Torpedoes”. His Honour concluded in Gardenia that it may be possible that a person would be caused to wonder but that there was no “real tangible risk” of confusion occurring. Decision … Visual impression I accept the respondent’s submission that, by reason of the visual differences between the T device mark and the THORPEDO mark, the visual impression of the marks is different. There is no evidence that consumers would [333] ignore the T device. Even if I were to disregard the typeface and the joinder of the letters in “Torpedoes”, that device would convey an impression of dissimilarity. Aural comparison I am prepared to accept that goods may be ordered by the relevant members of the public over a counter or by telephone by the spoken word. It is then necessary to balance the relative importance of the aural use of the marks and their visual appearance. It is not the case, however, (as in Woolworths at 421) where marks used in relation to services would not be displayed on goods. In those circumstances, as the Full Court noted, the aural impression might be more important than the manner of visual presentation. One may have regard to the likelihood of careless pronunciation (Eno v Dunn (1890) 1B IPR 391) but there is no evidence as to what the consequence of such carelessness would be. It is, of course, possible to pronounce “Thorpedo” and “Torpedoes” in a very similar fashion. One could ignore the “th” and pronounce it as a “t”; one could then, simultaneously, ignore the “es”. However, in ordinary use, “th” functions as a different letter and different sound to “t”. The presence of the “es” not only adds to the end of the word, it also serves to shift to some extent the emphasis on the syllables of “Torpedoes” compared to “Thorpedo”. In the latter there is slightly more emphasis on the middle syllable; in the former the emphasis is more evenly distributed throughout the word. The respondent again submits that the comparison aurally is between “Tee Torpedoes” and “Thorpedo”, the “tee” being necessary to take account of the essential feature, the T device. I do not [13.520]

683

Intellectual Property: Commentary and Materials

Torpedoes Sportswear v Thorpedo Enterprises cont. accept that a consumer would speak of the T device mark in this way and would not include the “tee”. However, if the consumer did so, that would further lessen the likelihood of deception or confusion. I am not persuaded that, aurally, the words themselves are sufficiently similar to cause confusion but that is not an end to the matter. Confusion as to the origin of the goods … The evidence establishes a linkage between “Thorpedo” and Mr Thorpe. Bearing in mind Mr Thorpe’s sporting ability, that linkage would reasonably extend to the mind of a customer for sporting goods and clothing. In the absence of evidence of actual confusion, I am of the view that it is unlikely that customers would attribute a “Torpedoes” origin to goods bearing the THORPEDO mark, especially when the test is not one of mere possibility of confusion but of real, tangible danger that a number of persons will be caused to wonder whether the products come from the same source (Southern Cross at 595 and 608). Imperfect recollection Is THORPEDO sufficiently close to the T device mark to cause confusion, particularly in terms of imperfect recollection? … [334] When comparing two words which are both well known, one as a word used in ordinary parlance and the other a word associated with a particular person, it is more difficult to establish a likelihood of mistaken impression. In Johnson & Johnson, the court dealt with a submission that, with a famous mark, the likelihood of imperfect recollection should be discounted. The evidence there did suggest that perception and recognition do not involve the whole word so much as certain features which are then matched to that which is contained in the memory, so that the word is then recognised. There is no such evidence in this case and the situation is reversed, in that the evidence leads to the conclusion that, as between “Thorpedo” and “Torpedoes”, the former was, at the relevant date, the more well known and, it could be said, famous. The idea behind the marks … In Sports Café Ltd v Registrar of Trade Marks (1999) 42 IPR 552 (Sports Café), the Full Court considered deceptive similarity and the relevance of the idea behind a mark. The Court there affirmed the principle that, rather than a side by side comparison, regard is had to the impression carried away as well as the effect of spoken description. Citing Cooper Engineering which, in turn, approved the principles summarised by Parker J in Pianotist at 777, the Full Court adopted the test of judging the look and the sound, together with the goods to which the marks are to be applied and the nature and kind of customer likely to buy those goods and the surrounding circumstances. In Cooper Engineering the High Court observed (at 539): [t]he fact that two marks convey the same idea is not sufficient in itself to create a deceptive resemblance between them, although this fact could be taken into account in deciding whether two marks which really looked alike or sounded alike were likely to deceive. “Thorpedo”, while an invented word, is based upon Mr Thorpe’s name. The evidence is that it was a name by which Mr Thorpe was known and referred to; it connotes Mr Thorpe rather than a torpedo, the connotation of the T device mark. Use of the opposed mark, not necessarily as a trade mark, before the filing date of the application may serve to distinguish goods of Sportswear from the goods of another person (Blount at 508-510) and this would lessen the likelihood of confusion. While I am of the view that the marks are not visually similar, visually similar marks can engender different meanings which provoke [335] independent ideas, for example by reason of surname significance. That is the case here so that, even if they were visually similar, the marks can exist side by side without confusion (Sporoptic Pouilloux SA v Arnet Optic Illusions Inc (1995) 32 IPR 430 at 436. It has been put that the idea behind each of the words is a torpedo. Again, of course, there was no evidence to establish this point. The evidence points the other way. “Thorpedo” is associated with 684 [13.520]

Trade Marks

CHAPTER 13

Torpedoes Sportswear v Thorpedo Enterprises cont. Mr Thorpe, as a play on his name. While it may well have been coined to bring in the connotation of a torpedo that is not, according to the evidence, the primary association of the word. The words “Thorpedo” and “Torpedoes” are used separately and distinctly and in different contexts in the evidence. In any event, the presence of some common idea (a torpedo) may tip the scales because the idea is more likely to be recalled than the precise details (Jafferjee at 121-2; Johnson & Johnson at 439) while the suggestion of different ideas (Mr Thorpe versus a torpedo) may serve to reduce the risk of confusion (Johnson & Johnson at 440). To give a proprietor of a mark a monopoly over any mark which conveyed an idea would contravene the Cooper Engineering principle (Sports Café at 559). In any event, a registered trade mark does not give a complete monopoly of all words conveying an idea. Even if it were to be accepted that both words only conveyed the idea of a torpedo, the fact that a common idea is conveyed becomes relevant only if the marks themselves look or sound alike and then might tip the balance (Sports Café at 557). In looking at questions of aural similarity, it is not sufficient to look at similarities of sound alone; similarities of meaning must also be considered (Woollen Mills at 658). There is no evidence that the public would attribute the same or a similar meaning to the two words; the evidence is to the contrary. Rights under s 60 of the Act Reputation [336] … Even if I were to find that the words are deceptively similar, Sportswear would need to establish that “Torpedoes” had acquired a reputation in Australia and that, because of the reputation, the use of the THORPEDO mark would be likely to deceive or cause confusion. [337] … The test for reputation required under s 60, as set out by Kitto J in The Kendall Co v Mulsyn Paint and Chemicals (1963) 109 CLR 300 at 305 is that any substantial number of persons likely to be concerned in the purchasing of goods must either infer that the goods have come from the same source or at least be caused to wonder whether that might be so but it is necessary for a party relying on reputation to establish it by evidence. Sportswear submits that, where a holder of a mark has obtained a reputation but is not advertising or selling products at the time the respondent enters the market, the likelihood of confusion may be increased due to the inability of a consumer to conduct a side by side comparison of the marks or to analyse them from a standpoint of having a fresh recollection of Sportswear’s mark. Sportswear says that “it is possible that confusion … would occur”. A mere possibility is not sufficient and there is, of course, no evidence of actual confusion in which the reputation of “Torpedoes” played a part which, while not necessary, would support Sportswear’s case. Sportswear also submitted that it can rely on the combined reputation arising from use of the Paradise Legends mark, which placed prominence on the word “Torpedoes” in a relatively unstylised presentation, the use of the T device mark and the use of the word “Torpedoes” alone. This ignores the words of s 60 which require a link between the mark, to which the THORPEDO mark is said to be deceptively similar and the reputation of that mark. It also draws attention to the lack of evidence directed to the reputation of the word “Torpedoes” alone. Sportswear has not established the link. Even if I were to assume that I can take account of the combined use of the Paradise Legends mark, the T device mark and the word “Torpedoes” as giving rise to a reputation in the word alone, and taking no account of the status of Sportswear and its predecessors in title, the evidence, including that of advertising and sales does not establish reputation. The evidence does not lead to the conclusion that, because of the reputation of “Torpedoes”, the use of the THORPEDO mark would be likely to deceive or confuse.

[13.520]

685

Intellectual Property: Commentary and Materials

Torpedoes Sportswear v Thorpedo Enterprises cont. Reverse confusion Acceptance of the notoriety of the THORPEDO mark and its association with Mr Thorpe gives rise to the question whether the public may be confused and wonder whether “Torpedoes” has a connection with the THORPEDO mark and/or Mr Thorpe (“reverse confusion”). Where a name or a word is clearly associated in the public mind with a particular person, such as Mickey Mouse and Minnie Mouse with Walt Disney, their use by another as trade marks would be likely to deceive, as suggesting that the goods are somehow connected with that person (Radio Corporation Pty Ltd v Disney (1937) 57 CLR 448). [338] … The question is whether the reputation of the mark for which application is made is relevant in the question of deceptive similarity in s 44. This raises the question whether s 44 is “directional”, that is, whether the deceptive similarity is determined only by making the comparison as against the registered mark. This involves determining whether a consumer would be caused to wonder whether goods with the proposed mark come from the registered mark’s source. Alternatively, the non directional construction would include consideration as to whether a consumer would be caused to wonder whether goods bearing the registered mark come from the source of the proposed mark. The language of the section “an application for the registration of a trade mark … must be rejected if the applicant’s mark is … deceptively similar to a trade mark registered by another person” (emphasis added) may indicate that a directional approach is mandated. The section does not say, for example, that as a result of registration there is deception, which would indicate a non-directional approach. This is in contrast to the more neutral language, in a directional sense, of s 28 of the Trade Mark Act 1955 (Cth) which refers to “a mark … the use of which would be likely to deceive or cause confusion … shall not be registered as a trade mark”. Section 44 directs reference to s 10 of the Act for deceptive similarity. Section 10 provides that “a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark” as to deceive or cause confusion. This language is somewhat more consistent with a directional approach. Further, the Working Party Report, in dealing with permissible grounds of opposition (at page 47) spoke in terms of the prior reputation in Australia of the registered mark whereby use of the proposed mark would be likely to deceive or confuse and did not refer to the reputation of the proposed mark. Combining the effect of s 44(1)(a)(i) and s 10, the registration of the THORPEDO mark must be rejected if the THORPEDO mark is substantially identical with the Sportswear marks or if it so nearly resembles the Sportswear marks that it is likely to deceive or cause confusion (emphasis added). [339] … it must be borne in mind that what is being compared for the purposes of deceptive similarity are the marks themselves. To focus on an issue of whether there is established a reputation sufficient to support a business goodwill for a passing-off action diverts attention from the real issues that arise under s 44 (Pioneer Hi-Bred at 439; Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 31 IPR 375 (Carnival Cruises) at 383). Reputation is only relevant as one of the surrounding circumstances affecting an evaluation of whether consumers would be likely to be deceived or confused. Reputation of the proposed mark is then a factor which may mean that resemblance to the registered mark will still not result. … Does s 44 mandate a consideration whether, by reason of the reputation of the opposed mark (the THORPEDO mark), purchasers of the goods with the registered mark (the T device mark), may be caused to wonder whether the source of those goods is Mr Thorpe or Enterprises? In my opinion, the answer is no. The reputation of the THORPEDO mark is relevant, in the way I have dealt with it. As I have said, that reputation, relevant as a circumstance to be taken into account in considering

686 [13.520]

Trade Marks

CHAPTER 13

Torpedoes Sportswear v Thorpedo Enterprises cont. deceptive similarity under s 44, indicates that purchasers of goods would be less likely to be deceived or confused. In any event, there is no evidence that purchasers of Sportswear’s goods would be confused as to the source of those goods. … I am not satisfied that any of the grounds of opposition have been made out.

McCormick & Company Inc v McCormick [13.530] McCormick & Company Inc v McCormick [2000] FCA 1335 Federal Court of Australia On 9 March 1992, Mary McCormick applied to register two word marks, McCORMICK’S and MCCORMICKS INSTANT BATTER SIMPLY ADD WATER, for all goods in Class 30, but the relevant goods were later restricted to “instant batter”. This application was opposed by McCormick & Co, a large multinational company, and registered owner of six device marks featuring the word “McCormick” across two classes covering goods such as spices, condiments, seasonings, mayonnaise and other salad dressings (“McCormick marks”). The McCormick marks enjoy a priority date before 9 March 1992. Kenny J found Mary McCormick’s instant batter product and the goods the subject of the McCormick & Co marks to be “goods of the same description” as set out in s 44(1). Her Honour turned to consider whether Mary McCormick could nevertheless secure registration as an honest concurrent user of the marks (pursuant to s 44(3)), and then, whether this could survive McCormick & Co’s opposition under s 60.] KENNY J: [30] Section 44(3) gives the Registrar a discretion to accept an application that would otherwise be rejected under s 44(1) in the case of honest concurrent use or other circumstances making it proper to do so. The authorities establish that the principal criteria for determining whether registration should be permitted pursuant to s 44(3) include: (1)

the honesty of the concurrent use;

(2)

the extent of the use in terms of time, geographic area and volume of sales;

(3)

the degree of confusion likely to ensue between the marks in question;

(4)

whether any instances of confusion have been proved; and

(5)

the relevant inconvenience that would ensue to the parties if registration were to be permitted.

…. These factors are not necessarily exhaustive of the matters to be considered, but they are a useful guide: see In Re Electrix Ltd’s Application [1957] RPC 369 at 379. THE HONESTY OF THE USE [31] The rights of the parties are to be determined as at the date of the application for registration – in this case, 9 March 1992: Southern Cross [Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592] at 594-95…. [32] The honesty of concurrent use refers to “commercial honesty, which differs not from common honesty”: see In Re Parkington & Co Ltd’s Application (1946) 63 RPC 171 at 182. In that case, Romer J said at 181-182: [T]he circumstances which attend the adoption of a trade mark in the first instance are of considerable importance when one comes to consider whether the use of that mark has or has not been a honest user. Mary McCormick’s evidence was that she and her husband chose the name “MCCORMICK’S” for their instant batter product because it was their surname and “people associated the batter with the distinctive fish and chips sold by us from our roadside caravan”. She conceded that, at the time the [13.530]

687

Intellectual Property: Commentary and Materials

McCormick & Company Inc v McCormick cont. name was chosen, she was aware that certain mixed herbs, paprika, pepper and basil products were sold under the “MCCORMICK” brand. But she pointed out that the range of the company’s products in the supermarket in Innisfail at the relevant time was very limited. She said that she did not think that her use of “MCCORMICK’S” would result in any confusion as to the source of her own and the company’s products because instant batter was a different product from any that were, to her knowledge, being sold by the company. Further, in the area in which she was trading, the use of “MCCORMICK’S” was associated with the caravan business run by her and her husband. [33] The mere fact that at the time when she and her husband chose the name “MCCORMICK’S” Mary McCormick knew of the company’s use of its marks on its products does not preclude a finding that she acted honestly… I accept that Mary McCormick’s initial adoption and use of “MCCORMICK’S” was honest. Indeed, on appeal, McCormick & Co conceded as much. Whatever her reasons for her registration application, the evidence does not lead me to take a different view of her conduct as at the date upon which the honesty of any concurrent use falls to be assessed, namely, 9 March 1992. … [57] I have taken into account all the circumstances mentioned, including that: (1) as at 9 March 1992, Mary McCormick’s use of her marks was an honest use; (2) her instant batter business is not only based in Queensland but that most sales continue to take place there; (3) in the decade before March 1992 the volume of her out-of-state sales was probably very slight; and, by 1992, only 17.8% of Mary McCormick’s instant batter supermarket sales were outside Queensland and only 11.1% of her total sales were outside Queensland; (4) there is a likelihood of confusion about the source of the parties’ products occasioned by the similarity of the relevant marks; (5) absent registration, Mary McCormick may very well sell her product under the name “Mary McCormick”, being her own name; and that this course would not involve a very great departure from her present get-up at least on the retail side; and (6) the volume of sales of McCormick & Co is very large across all states. In exercise of the discretion conferred by s 44(3), I would accept Mary McCormick’s application for registration upon the basis that registration be limited to the State of Queensland. I do not consider that the other matters that the parties invited me to consider in this connection (discussed below) would lead me to a different conclusion. Section 60 raises other issues, however: I deal with them last. … Is registration precluded by section 60 of the act? [79] Almost as an afterthought, McCormick & Co submits that s 60 of the Act presents an insurmountable obstacle to Mary McCormick’s application. … McCormick & Co submits that the evidence establishes the circumstances set out in pars 60(a) and (b). … [80] Mary McCormick’s marks are substantially identical with, or deceptively similar to, the McCormick & Co marks. That was not in issue on the appeal. But does the evidence establish that before 9 March 1992 the McCormick & Co marks had acquired a reputation in Australia on account of which the use of Mary McCormick’s marks would be likely to deceive or cause confusion? Counsel for Mary McCormick submits that McCormick & Co fails at this fundamental point. [81] What is intended by the word “reputation” in s 60? The word is defined in The Macquarie Dictionary as follows: reputation … 1. the estimation in which a person or thing is held, esp. by the community or the public generally; repute … 2. favourable repute; good name … 3. A favourable and publicly recognised name or standing for merit, achievement, etc. … 4. The estimation or name of being, having done, etc, something specified. Cf. The Oxford English Dictionary. In s 60, the word is, I think, apt to refer to “the recognition of the McCormick & Co marks by the public generally”. 688 [13.530]

Trade Marks

CHAPTER 13

McCormick & Company Inc v McCormick cont. [82] Does the evidence establish that in Australia before 9 March 1992 the McCormick & Co marks were recognised by the public generally and, because of that, the use by Mary McCormick of her marks would be likely to cause the public confusion, as for example, by the public’s mistakenly attributing a business connection between the two or attributing her product to the company? [83] … In ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 343, Lockhart J said: [R]eputation within the jurisdiction may be proved by a variety of means including advertisements on television or radio, or in magazines and newspapers within the forum. It may be established by showing constant travel of people between other countries and the forum, and that people within the forum (whether residents there or persons simply visiting there from other countries) are exposed to the goods of the overseas owner …. In this case McCormick & Co relied on the following evidence to establish the reputation of its marks: … that certain McCormick marks were distinctive; (2) extensive sales under the marks; (3) considerable expenditure on advertising; and (4) the use of promotional material. [84] As I have said, McCormick & Co directly or through its subsidiary, McCormick Australia, had sold products in Australia since 1962, i.e., for thirty years before March 1992. There was evidence that in 1991 (and thereafter until 1995) the value of McCormick & Co’s retail gross sales across Australia was very large. (The precise details were the subject of a confidentiality order.) Further, the sales were substantial in every state, save perhaps for Tasmania. There was evidence that in 1998 the company marketed its products to about 1400 supermarkets throughout Australia. The evidence supports the inference that the company was marketing its products to a large number of supermarkets in 1992, including major supermarket chains. Use of the McCormick & Co marks has been extensive. Very many of the McCormick & Co’s products bore one or other of the McCormick & Co marks. The products ranged from herbs and spices to condiments, sauces and food flavourings. Notwithstanding the large value of the company’s retail gross sales, the company’s products were commonly relatively inexpensive. There was also evidence that in 1991 (and thereafter until 1998) the company spent a very large amount (about 1.5% in 1991 and about 3% of its gross retail sales in 1995) on advertising and promotion. There was extensive use made of the MCCORMICK marks in that advertising and promotional material. Officers of McCormick & Co, including Mr R W Skelton (the company’s chief legal officer and an honest and credible witness) believed that the MCCORMICK marks were well known. … I infer from these facts, when taken together, that consumers would recognise with relative ease the McCormick & Co marks as indicative of the food products made and supplied by the company. [85] It may be correct to say, as counsel for Mary McCormick did, that the volume of the company’s sales does not directly establish that a significant number of people held the McCormick & Co marks, as distinct from the company’s products, in favourable regard. It does not follow, however, that the volume of sales and promotional expenditures are irrelevant. … [86] In practice, it is commonplace to infer reputation from a high volume of sales, together with substantial advertising expenditures and other promotions, without any direct evidence of consumer appreciation of the mark, as opposed to the product: … This Court has followed this approach as well, acknowledging that public awareness of and regard for a mark tends to correlate with appreciation of the products with which that mark is associated, as evidenced by sales volume, amongst other things. Thus, in Toddler Kindy Gymbaroo Pty Ltd v Gymboree Pty Ltd [2000] FCA 618 (“Gymboree”), Moore J accepted at [94] that the applicant had established a reputation for the purposes of s 60 solely on the basis of use and promotion of the relevant mark. Another example of this approach is Nettlefold Advertising Pty Ltd v Nettlefold Signs Pty Ltd (1997) 38 IPR 495 (“Nettlefold”), in which Heerey J relied upon the public visibility of the applicant’s marks over approximately two decades as well as a $100,000 promotional campaign in finding that a reputation for the purposes of s 28 of the 1955 Act existed. [13.530]

689

Intellectual Property: Commentary and Materials

McCormick & Company Inc v McCormick cont. [87] It is true, as Mary McCormick’s counsel points out, that the evidence does not establish what proportion of sales was made under or by reference to any particular mark. It is also true, as he points out, that, apart from the evidence as to sales and advertising expenditure, there is little or no evidence about the effect of advertising upon consumers. There were no consumer surveys in evidence, nor was there evidence about the marketing of McCormick & Co’s products. There was also no evidence to connect whatever international reputation McCormick & Co might have with the reputation of the McCormick & Co marks in Australia. [88] I accept that those were important omissions and, in another case, might have proved fatal. Still, none of the factors pointed to by counsel for Mary McCormick are essential requirements for a finding of reputation under s 60. The sales and advertising of the order of magnitude involved in this case are, in my view, a sufficient basis for establishing reputation along the lines of the approach indicated in Gymboree and Nettlefold and other relevant authorities. … Without speculating on what the threshold level of sales or promotional expenditures might be (if, indeed, one exists), McCormick & Co have clearly passed it. Bearing in mind all the circumstances to which I have referred, I am satisfied that McCormick & Co have established that the McCormick & Co marks had acquired a reputation in Australia before March 1992. [89] I am also satisfied that because of the reputation of the McCormick & Co marks, the use of Mary McCormick’s marks would be likely to cause confusion. Briefly, not only are Mary McCormick’s marks deceptively similar to those of McCormick & Co, the name “McCormick” is a prominent element of the marks in question. As I have said, Mary McCormick seeks the registration of her marks for a product (instant batter) that is sold in the same channels of trade, to the same kind of customers, as the products sold by McCormick & Co under its marks. Mary McCormick’s instant batter is sold in supermarkets. So too are McCormick & Co’s spices, herbs and like products. Mary McCormick’s instant batter is ordinarily located in close proximity to the herbs, spices and like products of McCormick & Co. The dollar value of Mary McCormick’s 150g instant batter packet is low and broadly commensurate with many of McCormick & Co’s supermarket products. [90] The ultimate question is whether s 60 is subject to s 44(3) of the Act. The delegate decided that it was upon the basis that ss 44(3) and 60 were the equivalent of ss 34(1) and 28 of the 1955 Act respectively. … [91] Section 28 was held to be subject to s 34 of the 1955 Act, which was the honest concurrent use provision, in New South Wales Dairy Corporation v Murray Goulburn Co-Operative Company Ltd (1990) 171 CLR 363 (“NSW Dairy”) at 384 per Mason CJ, 390 per Brennan J, 405-406 per Dawson and Toohey JJ with whom Gaudron J agreed at 414. At 405-406, Dawson and Toohey JJ wrote: At common law the right to a trade mark was an adjunct of the goodwill in a business and incapable of an existence separate from it. If, however, the goodwill of a business was divided, the need to recognize more than one user of a trade mark arose, despite the possibility of confusion. For each proprietor to have been able to seek an injunction against the other would have been to undermine ownership. In addition, the increase in the ease of communications during the nineteenth century meant that goods displaying deceptively similar marks, which previously had been restricted to a particular locality, might be offered to a wider set of purchasers, thus producing a greater likelihood of confusion through simultaneous use. The doctrine of honest concurrent user, now embodied in the legislation, developed at common law as a response to this. It prevented one owner of a trade mark from bringing an action of infringement against the proprietor of a substantially identical or deceptively similar mark, but permitted either owner to obtain an injunction to restrain the use of the mark by a usurper …. The doctrine of honest concurrent user meant that a degree of confusion had to be tolerated within the system. The mere fact that the use of a mark would be likely to deceive or cause confusion was not necessarily sufficient to support an injunction restraining that use… 690 [13.530]

Trade Marks

CHAPTER 13

McCormick & Company Inc v McCormick cont. The doctrine of honest concurrent user is also an explanation of the form of s 114 of the Trade Marks Act 1905 (Cth) and if, as we think is the case, s 28 was not intended to effect any relevant change in meaning, it is an explanation of the use of the word “otherwise” in s 28(d). It is a reference back to s 28(a). Section 28(a) must be read together with s 28(d) so that the reference in s 28(a) to a “use … which would be likely to deceive or cause confusion” is a reference to a use which would not only be likely to deceive or cause confusion but would be not entitled to protection in a court of justice. The word “otherwise” in s 28(d) is thus given some work to do. … … [93] As counsel for McCormick & Co observes, the structure of the Act and the provisions with which this appeal is concerned differ markedly from the 1955 Act. Parts 4 and 5 of the Act relate to separate stages in the registration process. The reasoning that led Mason CJ, Dawson, Toohey and Gaudron JJ to hold that s 28 was subject to s 34 of the 1955 Act does not apply under the new Act. Within Division 2 of Part 4, s 44(1) provides for a ground for rejecting an application before acceptance by the Registrar. Subsection 44(1) expressly states that it is subject to s 44(3), the honest concurrent user provision. The whole of s 44 is expressed as an interlocking series of subsections. Section 60, which is part of a Division specifically setting out the grounds for opposing registration, is directed to the position after acceptance. Section 60 is not expressed to be subject to s 44(3), any analogous limitation, or even the Act generally: contrast s 89(1). On its face, it is a stand-alone provision. Furthermore, s 60 is apparently intended to afford a ground of opposition that is additional to the grounds set out in Part 4. Section 57 expressly states that the grounds of opposition may be “any of the grounds on which an application for the registration of a trade mark may be rejected under Division 2 of Part 4” (which includes s 44). Sections 58 to 62 add further grounds for opposition. On its face, there is no honest concurrent user exception to s 60. [94] Further, there are pertinent differences between s 44(1) and s 60. Subsection 44(1) requires a comparison of the applicant’s mark with the mark of another person and the goods to which they both apply. If the Registrar concludes the marks are deceptively similar and the goods to which they apply are goods of the same description (and par 44(1)(b) is satisfied), then the registration application must be rejected; that is, of course, unless, in an exercise of discretion under s 44(3), the Registrar determines to permit the registration. Section 60 also requires a comparison, this time between the accepted mark and a mark that, before the relevant date, had acquired a reputation in Australia. If the marks are deceptively similar, then the question is whether the use of the mark, which has been accepted, would be likely to deceive or cause confusion, because of that reputation. Under s 60, the new inquiry centres on the reputation of the earlier mark. That reputation is critical to the opposition under s 60: contrast s 28 of the 1955 Act and see Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495 at 504 per Gummow J. [95] These differences may reflect the different stages of the registration process at which the questions of deceptive similarity and confusion arise. In this connection the observations of Branson J in Woolworths at 389-390 are apposite. Her Honour said: The broad provision contained in s 28(a) of the 1955 Act is now reflected in two separate sections of the Act: ss 43 and 60. Section 43, which is a ground for the rejection of an application for registration of a trade mark, looks to the inherent qualities of the trade mark of which registration is sought for the purpose of identifying whether the use of the trade mark would be likely to deceive or cause confusion. Section 60, which is a ground of opposition to registration, is concerned with whether the use of the trade mark of which registration is sought would be likely to deceive or cause confusion by reason of the reputation in Australia of another trade mark. The fact that s 43 is found in Pt 4, Div 2 of the Act, whilst s 60 is found in Pt 5, Div 2, reflects, in my view, an appreciation of the practical reality that before the acceptance for registration [13.530]

691

Intellectual Property: Commentary and Materials

McCormick & Company Inc v McCormick cont. and advertising of an application for registration of a trade mark, the information available to the Registrar touching on issues of likely deception and confusion will be limited. The Registrar will be in a position to assess the extent to which the trade mark for which registration is sought resembles a registered trade mark. He or she will also be in a position to appreciate the proper uses which may be made of the registered trade mark on the one hand, and of the trade mark for which registration is sought, should it be registered, on the other. However, the Registrar cannot reasonably be expected to be cognisant of the reputation of registered and unregistered trade marks generally or, indeed, of the extent, for example, to which all Australians, whose circumstances and geographic locations are diverse, may be assumed to be familiar with particular words. As French J has pointed out, the acceptance stage is not the time for detailed adversarial examination of an application. The position will change following the filing of a notice of opposition to registration. An opponent is entitled to rely on evidence in support of the opposition and the applicant for registration may rely on evidence in answer to the opposition. By this means, material which could not ordinarily be expected to be available to the Registrar for the purpose of determining whether an application for registration of a trade mark should be accepted, may become available to him or her for the purpose of determining whether the trade marks should be registered. … [96] Whilst I accept, as counsel for Mary McCormick contends, that the doctrine of honest concurrent user is derived from the common law and pre-dates trade mark legislation, I am of the view that s 44(3) of the Act does not provide an exception to s 60. Accordingly, I would order that the appeal pursuant to s 56 of the Act be allowed and the cross appeal be dismissed. I would set aside the delegate’s decision and in lieu refuse registration. … (some citations omitted)

Marks becoming deceptive at a later date [13.540] Pursuant to s 88(2)(c) it is now clear that rectification is possible for trade marks that become “likely to deceive or cause confusion” post-registration: ie due to circumstances arising post-registration. 88 This might occur, for instance, if an “assiduous infringer” 89 has adopted a registered mark (or a substantially identical or deceptively similar variant) over a sustained period, such that use of the registered mark has led to confusion in the marketplace. However, the position under the former Act as to whether rectification in circumstances where use of a registered mark became “likely to deceive or cause confusion” (ie through post-registration events) was rather unclear. In short, there was great uncertainty as to whether s 28(a) of the Trade Marks Act 1955 (Cth) had a continuing or prospective operation. Former s 28 provided that: “A mark” – (a) the use of which would be likely to deceive or cause confusion; (b) the use of which would be contrary to law; (c) which comprises or contains scandalous matter; or 88 89

This subject to the qualification set out in Trade Marks Act 1995 (Cth) s 89: see [13.740]. As Windeyer J famously asked in the context of considering former ss 28 and 61 (similar to current s 234(2)) of the Trade Marks Act 1955 (Cth) “Is a mark which was valid when registered to be removed because later events, perhaps the assiduous efforts of an infringer, have created a likelihood of confusion?”: see Re Bali Brassiere Co Inc’s Registered Trade Mark & Berlei Ltd’s Application (1968) 118 CLR 128, 133.

692 [13.540]

Trade Marks

CHAPTER 13

(d) which would otherwise be not entitled to protection in a court of justice, shall not be registered as a trade mark.

In Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45, the High Court, in sweeping aside the ambivalence of earlier authorities, 90 held that s 28(a) did not have a continuing operation. Put another way, in rectification proceedings, the question of whether a mark would be likely to deceive or cause confusion must be determined as at the date of registration. The High Court also observed that the notion of “blameworthy conduct” on the registered owner ought not be a relevant consideration in making this determination. In support of these conclusions, the High Court noted the trade mark system’s robustness in tolerating some confusion, as evidenced by provisions such as those dealing with honest concurrent users. Selected paragraphs of the judgment relating to these points, as well as the arguments for and against the continuing operation of former s 28(a), are set out below. Despite the repeal of the Trade Marks Act 1955 (Cth), these observations regarding former s 28 remain relevant because of s 234(d) of the current Act (the so-called “prescriptive validity” provision). 91

Campomar Sociedad v Nike International [13.550] Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 High Court of Australia GLEESON CJ, GAUDRON, McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ: … [68] Deception and confusion The 1955 Act established a system which, in various respects, involved a prospect of deception and confusion. Those provisions dealing with licensing and assignment “in gross” and honest concurrent user are examples. Provisions with respect to licences by way of registered user and to assignments without goodwill had been introduced by the Trade Marks Act 1948 (Cth) and were continued respectively by Parts IX (ss 73 – 81) and X (s 82) of the 1955 Act. Of these registered user provisions, Fullagar and Taylor JJ said in Heublein Inc v Continental Liqueurs Pty Ltd: It may, of course, be said that the provisions as to registered users, contemplating, as they do, the use by one person of another person’s mark, sanction what would have been regarded under the earlier legislation as a form of deception but the deception which would result from the use by the appellant of the mark in question here could not [69] by any means be described in the language of the Report of the Goschen Committee as “no material deception” (Kerly on Trade Marks). Later, in Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA, Bowen CJ referred to the provisions in the 1955 Act for the assignment of trade marks without goodwill and to the concurrent user provisions of s 34 of the 1955 Act as indicating that “inherent in the system” established by that statute there was “some degree of deception and confusion”. A similar point was made by McHugh J in Murray Goulburn [New South Wales Dairy Corporation v Murray Goulburn Co-Operative Company Ltd (1990) 171 CLR 363]. His Honour referred to the House of Lords decision in Eno v Dunn with respect to the 1883 UK Act. This often is referred to as indicating that the purpose of a provision such as s 28 is the protection of the public. McHugh J then continued: 90 91

See especially New South Wales Dairy Corporation v Murray Goulburn Co-Operative Company Ltd (1990) 171 CLR 363. See generally Mark Davison and Ian Horak, Shanahan’s Australian Law of Trade Marks and Passing Off (Thomson Reuters, 5th ed, 2012) [65.2345]–[65.2350]. [13.550]

693

Intellectual Property: Commentary and Materials

Campomar Sociedad v Nike International cont. But the [1955 Act] has other competing purposes. Since the decision in Eno v Dunn, the scope of the legislation has changed. Thus, while the [1955 Act] has the purpose of protecting the public by indicating the origin or nature of goods or services, it also has the purpose of protecting the valuable rights which a proprietor acquires in relation to a trade mark. Since the decision in Eno v Dunn, the enactment of provisions with respect to registered users (ss 73-81) and assignment of trade marks without goodwill (s 82) has changed the focus of the [1955 Act]. The registered user provisions, the assignment provisions and the limited indefeasibility given to registered proprietors tend to suggest that, after registration, the interests of traders are preferred to the competing interests of consumers in being protected from the use of marks which are likely to deceive or confuse. Thus, the presence in the [1955 Act] of ss 73-82 tends to neutralise the inference to be drawn from s 28 standing alone. Provisions respecting honest concurrent use, whereby identical or nearly identical trade marks for the same goods or description of goods might be registered by more than one proprietor, subject to possible imposition of conditions, had first been made in Australia by s 28 of the 1905 Act. Of the concurrent use provision in s 34 of the 1955 Act, Bowen CJ observed in Riv-Oland: No doubt this provision had its origin in the situation that [70] traders in different parts of the country might be circulating goods within their particular region under marks which were similar and doing so quite honestly. In such circumstances expansion of the respective markets might tend to bring the likelihood of deception or confusion. Notwithstanding this the policy of the legislation was to enable honest concurrent users to register their marks. Further, the 1955 Act contemplated that two or more persons might be proprietors of registered trade marks which were substantially identical or deceptively similar. This was so, even where, as in the present litigation, the registrations were not for the same goods or services. Section 58(3) provided that in such a case: [R]ights of exclusive use of either of those trade marks are not (except so far as their respective rights have been defined by the Registrar or a prescribed court) acquired by any one of those persons as against any other of those persons by registration of the trade marks but each of those persons has otherwise the same rights as against other persons (not being registered users) as he would have if he were the sole registered proprietor. The statute thus recognised the continued registration of trade marks which were substantially identical or deceptively similar and regulated the rights of those proprietors inter se. … Enough has been shown to demonstrate that, in varying ways and to varying degrees, the 1955 Act, by its express provisions, established and sanctioned a system the operation of which involved a measure of likely deception or confusion. The construction of s 28 of the 1955 Act should be approached with this in mind and not from a vantage point which abhors the prospect of any such deception or confusion. The operation of s 28 on its proper construction should not be so strained to avoid that prospect. … [72] In Murray Goulburn, Deane J said, in a passage which we would adopt: It is true that there are considerations of policy which favour removal from the register of any registered mark whose use is likely to deceive or cause confusion. Those considerations are, however, modified by the availability of ordinary criminal or civil procedures to prevent dishonesty, fraud and passing off and by the fact that registration of a trade mark does not ordinarily constitute a licence for what would otherwise be unlawful conduct: see, for example, Lyle and Kinahan Ltd’s Application; Van Zeller v Mason, Cattley & Co; and note the narrowness of the trade mark exception in s 51(3)(c) of the [TP Act]. On balance, it appears to me that the policy considerations favouring a construction of s 28 which would make the section directly applicable to prohibit the continued registration of any duly registered mark which was brought within par (a) by subsequent events are outweighed by the considerations militating against the lessening of the effective protection of a mark which due registration was, in my view, intended to provide. 694

[13.550]

Trade Marks

CHAPTER 13

Campomar Sociedad v Nike International cont. … [75] The construction of s 28 It is convenient now to come to the immediate issue respecting the construction of s 28. The text is set out earlier in these reasons. Section 28 appeared in Part IV (ss 24 – 39) which was headed “REGISTRABLE TRADE MARKS”. … Within Part IV, the criteria which had to be satisfied to supply a capacity for registration in Part A or Part B were expressed in positive and negative form. A trade mark with specified characteristics “[was] registrable” in Part A (s 24) or Part B (s 25) as the case may be. On the other hand, a mark which met one or more of the four adverse criteria listed in s 28 “shall not be registered as a trade mark”. The result was that, even if a trade mark, being, say, an invented word within the meaning of s 24(1)(c), was registrable as a distinctive mark, it was not to be registered as a trade mark if its use “would be likely to deceive or cause confusion” (s 28(a)). It was for the applicant for registration to show that there was no such likelihood. The circumstances which render the mark deceptive or confusing in this sense may, of course, stem from the prior commercial activities of others, not the inherent character of the mark. In this way, by denying to any other trader registration of the same or a similar mark, s 28 provided what might be described as a “negative protection” for a well-known mark, even one not already registered and not used in relation to the same goods or services as those in respect of which the application for registration was made. The result was that, to a degree, s 28 operated as an “anti-dilution” device. Further, the phrase in s 28(a), “would be likely”, involved a particular prospective inquiry. The question whether there was a likelihood of confusion was not to be answered by reference to the manner in which the applicant for registration had used its mark in the past. Rather, regard was to be had to the use to which, within the ambit of the registration, the applicant could properly put the mark if the application were to be granted. The onus to show that there was no such likelihood was to be discharged by the applicant in respect of [77] all of the goods coming within the specification in the application, not only in respect of those goods on which the applicant proposed to use the mark immediately. Thus, if registration were sought in respect of particular goods and there would be a likelihood of deception if the mark were used upon such goods marketed as expensive products, it was no answer that the applicant proposed to use the mark only upon goods to be sold as inexpensively produced items. But that is not to give s 28(a) the secondary or continuing operation for which the respondents contended on these appeals. Where it applied to preclude registration, s 28 required the provision of an adverse report by the Examiner under s 41(b) as to whether the trade mark the subject of the application in question was capable of registration, and refusal by the Registrar of the application (s 44), even if the trade mark otherwise was registrable in Part A (s 24) or Part B (s 25). Although otherwise capable of registration, the mark was not to be registered as a trade mark if it displayed one or more of the negative characteristics listed in s 28. Further, even if registered despite the barrier imposed by s 28, that original registration would have been “wrongly made” and thereafter be liable to expungement under s 22(1)(b). If the structure and purpose of the 1955 Act are understood in this way, there is no reason to depart from the apparent and ordinary meaning and effect of s 28. Further, to fail to do so and to give s 28 a continuing or secondary operation, thereby prescribing conditions for the continued registration of a trade mark, which had been capable of registration when registered, would lead only to confusion worse confounded. The doctrine, if it be that, of “blameworthy conduct” is an example; it is a gloss on the text of s 28 to mitigate what would appear to be the harsh consequences of a construction of s 28 which accommodates such a continuing or secondary operation. The difficulties to which this in turn gives rise are exemplified in the differences of judicial opinion, both in the Murray Goulburn litigation and the present case in the Federal Court, as to what particular [13.550]

695

Intellectual Property: Commentary and Materials

Campomar Sociedad v Nike International cont. facts must be shown to support a holding of “blameworthy conduct”. It is unnecessary to peer further into this overgrowth upon the statutory structure because, as we have indicated, the occasion for any such doctrine disappears once the terms of s 28 be allowed their ordinary meaning in the setting in which they are found in Part IV of the 1955 Act.

[13.560]

Notes

Even though Campomar dealt specifically with s 28(a) of the Trade Marks Act 1955 (Cth), the High Court’s observations are clearly capable of broader application, such that they apply to all the operative elements of s 28. In other words, by extension, former s 28(b), (c) (d) must also be deemed not to have a continuing or prospective operation. To hold otherwise, that is, maintaining a construction that accommodates a continuing or secondary operation, the High Court observed, would lead to “harsh consequences”, 92 presumably for the registrant. While the reticence in abrogating established trader rights is generally good public policy, it may be less defensible in specific situations, especially those involving the continued registration of certain types of scandalous marks. To illustrate this point, consider the continued registration of a trade mark – one that many would now find utterly offensive (ie “scandalous”) such as Arnott’s GOLLIWOG trade mark (TM No. 115,348). Such a mark secured registration before 1 January 1996, thus it has the benefit of “prescriptive validity” pursuant to s 234 of the Trade Marks Act 1995 (Cth). Any attempt to remove this so-called “old” mark because of its “scandalousness” is therefore an exercise of Byzantinian complexity. Nonetheless, it is worth pursuing here. In simple terms, before an “aggrieved person” can seek cancellation of this mark pursuant to s 88(2)(a) – itself subject to s 89 – (discussed below in [13.740]), one must first overcome the hurdles presented by s 234: ie relevantly, establish that the GOLLIWOG mark “comprises or contains scandalous matter” (former s 28(c)) as at the date of the original registration (ie in 1953). This may prove an insurmountable hurdle, with the result being that the GOLLIWOG mark will remain on the register indefinitely, which is arguably an undesirable outcome in modern day cosmopolitan Australian society. In any event, the easier course for “any person” might be to seek to remove the GOLLIWOG mark on the basis of non-use (see [13.750]).

Application made in Bad Faith: s 62A [13.570] Section 62A of the Trade Marks Act 1995 (Cth) provides that an application for

trade mark registration may be opposed on the “ground that the application was made in bad faith”. Since its introduction in late 2006, opponents (especially foreign traders) have invariably relied on s 62A in ownership disputes over applied-for marks. To do otherwise, predicted one commentator, would be “foolish”. 93 Exactly what s 62A adds to other grounds of opposition – particularly ss 58, 59 and 60 – or other restrictions on registration (eg ss 44, s 42(b)) is not yet clear, and the legislative history unfortunately provides little assistance on this point. There are, however, decisions where s 62A oppositions have been upheld, even 92 93

Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45, 74. Paul Sumpter, “Section 62A: Pandora’s box for Trade Mark Practitioners?” (2007) 18 AIPJ 110, 116.

696 [13.560]

Trade Marks

CHAPTER 13

though alternate grounds of opposition were not made out. That is not to say that the Australian Trade Marks Office’s treatment of s 62A oppositions has been entirely liberal. As with other grounds of opposition, the opponent bears the onus of establishing this ground of opposition on the balance of probabilities. As is the case with s 59 oppositions, this may well mean that an opponent relying on s 62A must first establish a prima facie case in order to shift the onus of proof to the applicant. Merely asserting that the application is in bad faith, however, will not suffice: the allegation of bad faith is serious, and is not taken lightly. In determining whether s 62A is enlivened, the relevant legal test is whether the applicant’s knowledge when applying for the mark was such that “persons adopting proper standards would regard the decision to register as in bad faith, or that reasonable and experienced persons in the field would view such conduct as falling short of acceptable commercial behaviour”. 94 This test contains subjective elements (focusing on the applicant’s actual state of mind) but ultimately it has an objective bottom line (evaluating the impugned conduct in light of reasonable standards of commercial behaviour). A fuller discussion of the relevant principles are extracted below in DC Comics v Cheqout [2013] FCA 478; (2013) 212 FCR 194.

DC Comics v Cheqout [13.580] DC Comics v Cheqout [2013] FCA 478; (2013) 212 FCR 194 Federal Court of Australia [DC Comics appealed against the decision by a delegate of the Registrar’s allowing the registration (over its opposition) of Cheqout’s “SUPERMAN WORKOUT” in Class 41 services of conducting exercise classes; fitness and exercise clinics, clubs and salons; health club services (exercise). There were three grounds of appeal: ss 43, 60 and 62A. The focus of extracts below relate to s 62A, and whether DC Comics discharged the onus of proof with respect to this ground of opposition.] BENNETT J: … [60] [Dodds-Streeton J in Fry Consulting v Sports Warehouse Inc (No 2) [2012] FCA 81; (2012) 201 FCR 565] considered (at [144]) the Explanatory Memorandum relating to s 62A, which stated: 1.

The Act allows removal of a trade mark on the basis that there was no intention in good faith to use, authorise use of, or assign the trade mark. However, current opposition grounds do not cover instances in which a person has deliberately set out to gain registration of a trade mark, or adopted a trade mark in bad faith. There have been several instances in which trade mark applicants have deliberately set out to gain registration of their trade marks, or have adopted trade marks, in bad faith. Some examples of these include:

• a person who monitors new property developments; registers the name of the new property development as a trade mark for a number of services; and then threatens the property developer with trade mark infringement unless they licence or buy the trade mark; • a pattern of registering trade marks that are deliberate misspellings of other registered trade marks; and • business people who identify a trade mark overseas which has no market penetration in Australia, and then register that trade mark with no intention to use it in the Australian market and for the express purpose of selling the mark to the overseas owner. When such situations occur, there is very little third parties can do to prevent registration of this type of trade mark, because existing grounds for rejection and opposition do not allow the Registrar to take these facts into account. 94

Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81; 201 FCR 565, 599 [174]. [13.580]

697

Intellectual Property: Commentary and Materials

DC Comics v Cheqout cont. [61] Justice Dodds-Streeton observed (at [163]) that the examples of bad faith given in the Explanatory Memorandum are predominantly, but not exclusively, manifestations of blocking or holding to ransom a party which is, at least in conscience, entitled to a mark. However, her Honour noted that the illustrations are merely inclusive and do not limit the breadth of the concept of bad faith. Her Honour observed (at [145]) that the bad faith must be at the time of the application, that the onus is on the opponent seeking to establish bad faith and that the standard of proof is on the balance of probabilities. [62] Given limited Australian authority, her Honour (at [145]–[166]) also considered relevant authorities from the United Kingdom. These cases stated, relevantly: • Bad faith is a serious allegation and the more serious the allegation, the more cogent the evidence required to support it. • Bad faith does not require dishonesty. • Bad faith is a combined test that involves subjective and objective elements. The subjective element refers to the knowledge of the relevant person at the time of making the application. The objective element requires the decision-maker to decide whether, in the light of that knowledge, the relevant person’s behaviour fell short of acceptable commercial standards. • The question is whether the conduct falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in the particular area. It is whether the knowledge of the applicant was such that the decision to apply for registration would be regarded as in bad faith by persons adopting proper standards. • It is difficult to see how a person who applies to register, in his own name, a mark he has previously recognised as the property of a potential overseas principal can be said to be acting in accordance with acceptable standards of commercial behaviour. Combining the mark with the applicant’s own name is no answer to that criticism. • The registration of a trade mark is designed to enable bona fide proprietors to protect their proprietary rights without having to prove unfair trading. • All the circumstances surrounding the application to register the mark are relevant. • An act of bad faith cannot be cured by an action after the date of application. [63] Justice Dodds-Streeton concluded (at [164]) that bad faith in the context of s 62A does not require (although it includes) dishonesty or fraud and that it is a wider notion, potentially applicable to diverse species of conduct. Her Honour rejected the proposition that mere awareness that an overseas company owning the mark operated or intended to operate in Australia would amount to bad faith, concluding that this would be unduly absolute. Justice Dodds-Streeton instead adopted as a touchstone the United Kingdom formulation of conduct falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons (at [165]). Her Honour observed that the applicant’s mental state is also relevant, and stated (at [166]) that: … mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character. … [70] It is an agreed fact that Cheqout used the Trade Mark together with the BG Shield Device in relation to its personal training and film and entertainment services and in titles to video clips appearing on its website. The triangular shape of the BG Shield Device is of a similar shape and style of lettering to the S Shield Device in DC Comics’ trade marks. This similarity can be observed through the side to side comparison of the devices: 698 [13.580]

Trade Marks

CHAPTER 13

DC Comics v Cheqout cont.

[71] The evidence as to the use of the BG Shield Device as at the Priority Date of 2 June 2009 is not clear. What is clear is that Cheqout’s website displayed the BG Shield Device at the time the images in the Statement of Agreed Facts were captured on 15 December 2009. It only removed the BG Shield Device after receipt of a “cease and desist” letter sent on behalf of DC Comics on 17 December 2009. [72] The Registrar’s decision sets out evidence adduced in the statutory declaration of Mr Gabrielle, the sole director and company secretary of Cheqout. Mr Gabrielle stated that the use of the words “superman workout” was designed to: … convey to potential users of my exercise program the potential of changing yourself into a muscularly powerful athletic superman … not to associate my exercise program with the Opponent’s comic book character. [73] That assertion is, in my view, at odds with the use of the BG Shield Device, to which Mr Gabrielle’s evidence did not refer. It was Mr Gabrielle’s decision to use the words “superman workout” together with the BG Shield Device. As the sole director of Cheqout, that mental element is attributable to the company. In my view, the inference is clear, from the immediate use of the Trade Mark together with the BG Shield Device that, in making the application to register the Trade Mark, Mr Gabrielle (and therefore Cheqout) intended to use it in combination with the BG Shield Device in order to strengthen the allusion to Superman. The inference can also be drawn that this use was designed to gain a benefit by appropriating Superman indicia and the reputation of the DC Comics superhero, so as to further the viewer’s association between the Trade Mark and the Superman word mark. [74] This is a “relevant circumstance” in a consideration of bad faith for the purposes of s 62A (Fry at [167]). [75] The Registrar submits that if the fair use of the mark is unlikely to deceive or cause confusion, then this should “undercut” any argument that the application to register the trade mark was in bad faith. However, an important factor in both the Registrar’s decision and my conclusion as to whether the Trade Mark is likely to deceive or cause confusion is the absence of any of the indicia associated with Superman. The relevant use of the Trade Mark for s 60 purposes is the notional use of the mark itself, which properly excludes the appropriation of indicia associated with Superman. [76] Conversely, s 62A was introduced into the Act as a separate ground of opposition to the registration of a trade mark. Section 62A does not require the opponent to establish that the trade mark’s use would result in deception or confusion. That aspect is the subject of other grounds of opposition, such as ss 43 and 60. Such a requirement would, in my view, contradict the legislative intent in introducing a new ground of opposition by limiting its application to circumstances provided for by existing grounds. Evidence that the use of a mark is likely to cause confusion or deception may [13.580]

699

Intellectual Property: Commentary and Materials

DC Comics v Cheqout cont. be persuasive in considering whether the application to register a mark was in bad faith. However, it is neither determinative of that finding, nor a prerequisite for it. [77] I am satisfied that DC Comics has established that Cheqout made the application for the Trade Mark in bad faith. This is evidenced by the use, soon after the application, of the word Superman together with the BG Shield Device, in the context of male fitness and strength. I note also that the red, white and blue colours traditionally used in conjunction with the Superman character were used by Cheqout together with the BG Shield Device. The design of the BG Shield Device closely resembles the insignia closely associated with the DC Comics character and the DC Comics registered trade marks. I am satisfied that at the date of application for the Trade Mark, Cheqout’s conduct fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons. [78] For the above reasons, I conclude that DC Comics has discharged its onus of proof with respect to the ground of opposition provided for in s 62A of the Act.

INFRINGEMENT [13.590] Trade Marks Act 1995 (Cth) s 20 gives the registered owner of a trade mark the exclusive rights to use the mark, authorise others to use it and obtain relief in respect of infringement. Infringement of a trade mark is defined in s 120. This important provision sets out ascending levels of infringement that are increasingly difficult to prove as one moves across s 120(1), (2), and (3). As the core infringement provision, s 120 is worth reproducing in full. 120 When is a registered trade mark infringed? (1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. Note 1: For registered trade mark see section 6. Note 2: For deceptively similar see section 10. Note 3: In addition, the regulations may provide for the effect of a protected international trade mark: see Part 17A. (2) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to: (a) goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or (b) services that are closely related to registered goods; or (c) services of the same description as that of services (registered services) in respect of which the trade mark is registered; or (d) goods that are closely related to registered services. 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. Note 1: For registered trade mark see section 6. Note 2: For deceptively similar see section 10. Note 3: In addition, the regulations may provide for the effect of a protected international trade mark: see Part 17A. (3) A person infringes a registered trade mark if: (a) the trade mark is well known in Australia; and 700

[13.590]

Trade Marks

CHAPTER 13

(b) the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to: (i) goods (unrelated goods) that are not of the same description as that of the goods in respect of which the trade mark is registered (registered goods) or are not closely related to services in respect of which the trade mark is registered (registered services); or (ii) services (unrelated services) that are not of the same description as that of the registered services or are not closely related to registered goods; and (c) because the trade mark is well known, the sign would be likely to be taken as indicating a connection between the unrelated goods or services and the registered owner of the trade mark; and (d) for that reason, the interests of the registered owner are likely to be adversely affected. Note 1: For registered trade mark see section 6. Note 2: For deceptively similar see section 10. Note 3: For well known in Australia see subsection (4).x Note 4: In addition, the regulations may provide for the effect of a protected international trade mark: see Part 17A. (4) In deciding, for the purposes of paragraph (3)(a), whether a trade mark is well known in Australia, one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason.

Dealing first with s 120(1): this operates on rather narrow grounds; ie a person infringes here by using, as a trade mark, a sign which is substantially identical with, or deceptively similar to, a registered trade mark for the same goods or services in which the registered mark is registered. Pursuant to s 10 of the Trade Marks Act 1995 (Cth), a trade mark is taken to be deceptively similar to another trade mark if it so nearly resembles that other trade mark that it is likely to deceive or cause confusion. Because there is no requirement to prove actual or potential confusion, s 120(1) offers strong (but narrow) protection. Next, s 120(2) sets out a wider form of infringement: specifically, where a person infringes a registered trade mark by using, as a trade mark, a sign that is substantially identical with, or deceptively similar to, goods or services that are of the “same description” or are “closely related”. However, s 120(2) makes it clear that there is no liability if the defendant can prove that their use of the sign “is not likely to deceive or cause confusion”. Finally, an even wider conception of infringement is provided by s 120(3): here, four elements must be satisfied: (i) the plaintiff’s mark must be “well-known” in Australia (as to which see s 120(4)); (ii) the defendant uses, a trade mark, a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to “unrelated” goods or services; (iii) on account of the notoriety of the plaintiff’s mark, the impugned sign is taken to indicate a connection between the unrelated goods or services and the registered owner’s trade mark; and (iv) for that reason, the registered owner’s interests are “likely to be adversely affected”. It is worth emphasising that all types of infringement require use of a trade mark as a trade mark, a key concept inextricably linked to the definition of a mark under s 17, and a concept which has always operated as an implicit defence to an action for trade mark infringement. In Coca-Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107; [1999] FCA 1721, the Court, at 115–6, explained that: Use “as a trade mark” is use of the mark as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods. See Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR [13.590]

701

Intellectual Property: Commentary and Materials

326 at 341, 351. That is the concept embodied in the definition of “trade mark” in s 17 – a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else. The authorities provide no support for the view that in determining whether a sign is used as a trade mark one asks whether the sign indicates a connection between the alleged infringer’s goods and those of the registered owner. … [Rather they] show that the question is whether the sign used indicates origin of goods in the user of the sign; whether there is a connection in the course of trade between the goods and the user of the sign

This case (see [13.640]) and those that follow elaborate on this “use as a mark” concept, as well as demonstrating instances where this requirement is not met. Moreover, they set out judicial consideration of what is meant by “substantially identical” marks, “deceptive similarity” marks, and when a putatively infringing mark is “not likely to deceive or cause confusion”.

Use as a mark Mark Foy’s v Davies Coop [13.600] Mark Foy’s Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 High Court of Australia [See [13.430] for the facts of this case.] WILLIAMS J: [202] The remaining question is whether the rights conferred on the plaintiff by s 50 have been infringed. The defendants have used the exact words of the plaintiff’s trade mark so that the plaintiff need not rely on s 53. It is contended that the plaintiff’s rights have not been infringed because the defendants have not used the words as a trade mark at all, but only descriptively as a laudatory [203] or puffing expression to extol the goods. They rely on the speech of Lord Tomlin, concurred in by Lord Atkin and Lord Russell of Killowen, in the Yeast-Vite Case in the House of Lords (1934) 51 RPC 110. The Act there in question was the English Trade Marks Act 1905-1919 and the particular section under review was s 39, which corresponds to s 50 of the Commonwealth Act 1912. The definition of “trade mark” in the English Act was the same as the definition in the Commonwealth Act 1912. There was no section in the English Act corresponding to s 53 of the Commonwealth Act 1912. The plaintiffs were the proprietors of the registered trade mark “YEAST VITE” and it was held that this mark was not infringed by the defendant selling in his shop a preparation labelled “Yeast Tablets a substitute for Yeast-Vite” which was not the plaintiff’s preparation. Lord Tomlin said (at 115): Now the act which the appellants contend amounts in law to an infringement of their exclusive right as registered proprietors of the trade mark is the use by the respondent upon the bottles in which he sells his preparation of the phrase “Yeast Tablets, a substitute for Yeast-Vite”. 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. His Lordship continued (at 116): The question therefore here … is, what is the property right of the appellants and has it been infringed? It is true that the language of the definition of a trade mark contained in s 3 of the Act of 1905 cannot without some change of form be read directly into s 39, but it is equally true that the language of s 39 must carry with it some implied limitation, unless it is to be given a meaning extending its operation altogether outside the scope of the Trade Marks Acts. 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. 702 [13.600]

Trade Marks

CHAPTER 13

Mark Foy’s v Davies Coop cont. [204] … If the defendants in the present case had advertised that their Exacto cotton frocks washed as well as the plaintiff’s Tub Happy frocks it could not be said that the words “Tub Happy” were used by the defendants in relation to goods to indicate a connection in the course of trade between the goods and themselves. They would only be used in support of a claim that their cotton goods washed as well as the plaintiff’s Tub Happy goods. In such a case the words “Tub Happy” would not be used as a trade mark within the meaning of the present definition. Section 50 states that the proprietor of a registered trade mark has the exclusive right to the use of the trade mark upon or in connection with the goods in respect of which it is registered. This appears on its face to mean that no one but the proprietor can use the trade mark upon or in connection with the goods in respect of which it is registered for any purpose. One purpose within the section would appear to be the use of the trade mark by an opponent for the purpose of claiming that his goods were a substitute for those of the proprietor. It does not matter that the identity of the proprietor of the trade mark is unknown to the public. It is the trade mark which identifies the goods and the sale of goods that have acquired a reputation could be seriously prejudiced by an opponent offering his goods as substitutes for them. But in the Yeast-Vite Case the House of Lords narrowed the meaning of Section 50 by implying after the words “the exclusive right to the use of the trade mark” the words “as a trade mark”. Their Lordships held that the exclusive rights of the registered proprietor are only infringed if the trade mark is used as a trade mark for the purpose mentioned in the definition. This construction must be applied to s 50 of the Commonwealth Act 1914 and the presence of s 53 in that Act can make no difference. Section 53 is really an appendage to s 50 and its function is to widen the definition of infringement so as to include cases where the defendant does not use the identical trade mark but uses a mark substantially identical with it or so nearly resembling it as to be likely to deceive. But the alleged infringement must still be the use of the plaintiff’s trade mark or some mark substantially identical with it as a trade mark. But the Yeast-Vite Case does not assist the defendants. They are not using the words “Tub Happy” in the same way as the defendant was using the words “Yeast-Vite” in that case. They [205] are advertising the words “Tub Happy” and emphasising them in relation to their own cotton garments for the purpose of indicating a connection in the course of trade between the goods and themselves. The public are not being invited to compare the “Exacto” goods of the defendants with the “Tub Happy” goods of the plaintiff. They are being invited to purchase goods of the defendants which are to be distinguished from the goods of other traders partly because they are described as “Tub Happy” goods. In Aristoc Ltd v Rysta Ltd [1945] AC 68 at 94, Viscount Maugham cites the following appropriate passage from the judgment of Lord Green MR in Saville Perfumery Ltd v June Perfect Ltd (1941) 58 RPC 147 at 161: In an infringement action, once it is found that the defendant’s mark is used as a trade mark, the fact that he makes it clear the commercial origin of the goods indicated by the trade mark is some business other than that of the plaintiff avails him nothing, since infringement consists in using the mark as a trade mark, that is, as indicating origin. Needless to say, if the defendant uses the words of the plaintiff’s trade mark as indicating origin it is still an infringement notwithstanding that the defendant always adds his own name: Kerly on Trade Marks (7th ed, 1951), p 445. For these reasons the appeal should be allowed.

Descriptive use of a mark: not infringement [13.610] For the circumstances in which descriptive use of a trade mark is not infringement, see Trade Marks Act 1995 (Cth) s 122 (see further [13.620] “non-infringing conduct” below). [13.610]

703

Intellectual Property: Commentary and Materials

Shell Co Australia v Esso Standard Oil [13.620] Shell Co Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 High Court of Australia KITTO J: [420] This appeal is from a judgment given in favour of the plaintiff upon the trial of an action brought in this court for infringement of two trade marks. The trade marks are registered in respect of “products and preparations for lubricating, heating, illuminating, and fuel and power generating purposes”. One mark consists of a grotesque drawing of a person with a head in the shape of a drop of oil which has just fallen from a container and by reason of its viscosity is drawn out to an asymmetrical peak at the top. A face is suggested by lines indicating eyebrows, eyelids and mouth (but no nose or ears), all so curved and disposed as to give the impression that the being depicted is immensely pleased with himself. There is no neck. The body is about as long as the head but narrower; and it is bifurcated to create [421] a suggestion of short legs, each with a foot turned outwards. Arms and hands are indicated, and they assist the impression of self-satisfaction by being drawn as if the thumbs were hooked into braces near the armpits, though no braces, and indeed no indication of clothes, are to be seen. The other trade mark is identical, save that the figure displays an oval badge suspended immediately below the head and bearing the word “Esso”, which is a name used by the respondent for some of its products. … The conduct of the appellant which the learned primary judge held to have constituted infringement consisted in causing two advertising films, of the animated cartoon variety, to be exhibited to the public in the course of television programmes. … In each film a “humanised” oil drop is made to personify the appellant’s “Shell” petrol, and to perform a series of exuberant antics designed, in conjunction with some letterpress and the spoken word, to create in the minds of viewers a feeling of pleasure at recognising desirable attributes in Shell petrol. In the course of his merry pranks, the Shell Eulenspiegel constantly changes in shape and expression. He always has a head in the shape of an oil drop drawn to a peak at the top, and generally the head is supported, without a neck, by a body bifurcated to indicate short legs with feet turned outwards. Arms and hands take up varying positions, and what passes for a face expresses varying emotions. On some occasions the figure, in the course of its mutations, approaches fairly closely in appearance to the respondent’s trade marks; but the name “Esso” is never [422] seen, and the changes of appearance follow one another so swiftly that the viewer can hardly gain more than a general impression of a Protean creature who could be, having regard to some of his manifestations at least, the man whom the respondent has registered as its trade mark, but could equally be another member of the same tribe. It may be assumed for present purposes, however, that in the course of each film the figure takes on, at least for a moment or two now and then, an appearance substantially identical with that of the trade marks. The question, then, is whether such a user of the oil drop figure as takes place by the exhibition of the films on television involves infringement of the trade marks. It is a question not to be answered in favour of the appellant merely by pointing to the brevity of the occasions when substantial identity is achieved. The assumption I have made means, of course, that if the oil drop figure as appearing in some of the individual frames of the films were transferred as separate pictures to another context the use of the pictures in that context could be an infringement. But the context is all-important, because not every use of a mark which is identical with or deceptively similar to the trade mark, in the course of trade, in relation to property which the proprietor of the mark possesses in virtue of the registration. … The crucial question in the present case seems to me to arise at this point. Was the appellant’s use, that is to say its television presentation, of whose particular pictures of the oil drop figure which were substantially identical with or deceptively similar to the respondent’s trade marks a use of them “as a trade mark”? [425] With the aid of the definition of “trade mark” in s 6 of the Act, the adverbial expression may be expanded so that the question becomes whether, in the setting in which the particular pictures referred to were presented, they would have appeared to the television viewer as 704 [13.620]

Trade Marks

CHAPTER 13

Shell Co Australia v Esso Standard Oil cont. possessing the character of devices, or brands, which the appellant was using or proposing to use in relation to petrol for the purpose of indicating, or so as to indicate, a connection in the course of trade between the petrol and the appellant. Did they appear to be thrown on to the screen as being marks for distinguishing Shell petrol from other petrol in the course of trade? Clearly they were used so that the figure in all its varying forms would be understood as representing Shell petrol for the purposes of the disjointed tale that is told. But the connection in the films between the oil drop man and the petrol he symbolises is a connection limited by the purpose of the occasion. At every point of the exhibition, whether the resemblance to the respondent’s trade marks be at the moment close or remote, the purpose and the only purpose that can be seen in the appearance of the little man on the screen is that which unites the quickly moving series of pictures as a whole, namely the purpose of conveying by a combination of pictures and words a particular message about the qualities of Shell petrol. This fact makes it, I think, quite certain that no viewer would ever pick out any of the individual scenes in which the man resembles the respondent’s trade marks, whether those scenes be few or many, and say to himself: “There I see something that the Shell people are showing me as being a mark by which I may know that any petrol in relation to which I see it used is theirs.” And one may fairly affirm with even greater confidence that the viewer would never infer from the films that every one of the forms which the oil drop figure takes appears there as being a mark which has been chosen to serve the specific purpose of branding petrol in reference to its origin. No doubt if, later, the viewer were to come across the respondent’s trade mark used in relation to petrol his recollection of the films might lead him to think that the appellant, taking advantage of a reputation created for the oil drop figure by means of the films, had adopted the figure, in one of its forms, as a mark for its petrol. But that would be quite a different matter from inferring, while sitting in front of his television set, that the figure in one or more, some or all, of its exhibited forms was being placed before him there as a trade mark for Shell petrol. In my opinion this case is covered in principle by the English decisions I have cited. One or two may be particularly mentioned. [426] In JB Stone & Co Ltd v Steelace Manufacturing Co Ltd (1929) 46 RPC 406 (CA), a registered trade mark which consisted of the word ALLIGATOR was held infringed by a use of the expression “alligator pattern”; but the judgments make it plain that if the second word had been clear enough in meaning to make the whole expression signify only that the goods were of a type of which ALLIGATOR goods were an example there would have been no infringement, because the context would then have shown that the word “alligator” was being used otherwise than as a trade mark. The Yeast-Vite Case is a striking example of a context precluding a conclusion that a use complained of as an infringement was a use as a trade mark. The case of Edward Young & Co Ltd v Grierson Oldham & Co Ltd (1924) 41 RPC 548 is perhaps the case most usefully to be compared with the present. There the use complained of was a use of a static picture; here it is of a series of pictures. The only purpose served by the use of the single picture there was, as the only purpose of the use of all the pictures here is, to convey a particular message to those who should see it. There the purpose became apparent when the single picture was considered in the light of a usage common in the relevant trade; here it appears when each picture is considered in the light of all the other pictures amongst which it has a place in the sequence and of the accompanying letterpress and spoken word. There the message was simple: that the goods came from Portugal; here it is simple also, though the method of conveying it is complicated and incoherent; it is that the chemical composition of Shell petrol gives it advantages over its rivals. There, once the “purpose and nature” of the use were understood that is the expression of Sargant LJ (at 579) the action for infringement failed. In my opinion the purpose and nature of the use complained of in the present case are such that this action should fail also. For these reasons I would allow the appeal. [Dixon CJ, Taylor and Owen JJ concurred; McTiernan J dissented.] [13.620]

705

Intellectual Property: Commentary and Materials

Shell Co Australia v Esso Standard Oil cont. See also Montana Wines Ltd v Villa Maria Wines Ltd (1984) 2 IPR 203, in which a vintner promoted its goods through an advertisement featuring an image of a bottle of its wine alongside a bottle of a competitor’s wine (including the competitor’s trade mark) and suggested that both goods were of equal quality.

Use in Australia: infringement by foreign internet sales? Ward Group v Brodie & Stone [13.630] Ward Group Pty Ltd v Brodie & Stone Plc (2005) 64 IPR 1 Federal Court of Australia [See [12.220] for the facts of this case.] MERKEL J: [11] Trade Mark Infringement In Hoffman-La Roche at 45 [145]-[146] I considered the question of when a statement originating outside of Australia is made and received in Australia: In a different context, Mason CJ, Deane, Dawson and Gaudron JJ in Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 observed at 567-568: In some cases an act passes across space or time before it is completed. Communicating by letter, telephone, telex and the like provide examples. However, after also observing that generally the tort of negligent misstatement is committed where the statement is received and acted upon their Honours pointed out that the statement may be received in one place and acted upon in another. They stated: If a statement is directed from one place to another place where it is known or even anticipated that it will be received by the plaintiff, there is no difficulty in saying that the statement was, in substance, made at the place to which it was directed, whether or not it is there acted upon. See also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 547-548 and Diamond v Bank of London and Montreal Ltd [1979] 1 QB 333 at 345-346. This principle has been applied to conduct found to contravene Pt V of the TPA: see No 1 Raberem Pty Ltd v Monroe Schneider Associates Inc (unreported, Federal Court, No G10 of 1989, von Doussa J, 8 February 1991). In Norbert Steinhardt & Son Limited v Meth (1961) 105 CLR 440 at 442 Fullagar J stated that a groundless threat of patent infringement “is to be regarded as made at the time when, and at the place where, it is received by the person to whom it is addressed”. In that case, a letter containing the relevant threats was written in the USA and received in England, and his Honour found that the threats were made in England. A similar approach has been taken in relation to publications or statements made on the Internet. When such publications or statements are made to the world at large, and not to persons or subscribers in a particular jurisdiction, there is some difficulty in regarding them as having been made by a website in a particular jurisdiction. However, where the publication or statement is directed or targeted at persons or subscribers in a particular jurisdiction there is no difficulty in treating them as having been made and received in that jurisdiction: see Zippo Manufacturing Company v Zippo Dot Com Inc 952 F Supp 1119 (WD Pa 1997) at 1125-1127, New Zealand Post Ltd v Leng [1999] 3 NZLR 219 at 225 and 230-231 and Mecklermedia Corp v DC Congress GmbH [1998] Ch 40 at 51-52. That question arose in Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309 (Chen), which concerned false representations of an association or connection between certain American websites (which used the name of the Sydney Opera House) and the Sydney Opera House, which were 706 [13.630]

Trade Marks

CHAPTER 13

Ward Group v Brodie & Stone cont. intended to be made to, and were directed at, Australian consumers. The representations were found to have been made in Australia by the website proprietors when the intended downloading in Australia occurred. [12] On the facts of the present case the first occasion on which the website proprietors would be considered to have intended to use and used the RESTORIA mark in Australia was when they accepted the orders placed by the trap purchasers in respect of the UK Restoria products in terms that used the RESTORIA mark. The reason I have arrived at that conclusion is that prior to that time the trap purchasers were downloading a representation made on the Internet to the world at large, and not a representation intended to be made to, or directed or targeted at, them in Australia. Thus, I do not accept the contention made by the Ward Group that the use of the RESTORIA mark by the website proprietors on the Internet, without more, was a use of the mark by them in Australia. In summary, the use of a trade mark on the Internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded. However, as explained above, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded. Of course, once the website intends to make and makes a specific use of the mark in relation to a particular person or persons in a jurisdiction there will be little difficulty in concluding that the website proprietor used the mark in that jurisdiction when the mark is downloaded. [His Honour found that because the only evidence of infringement of the trade mark via downloading in Australia was “trap purchases”, this conduct involved implicit, if not explicit, consent to the infringing use of the trade mark.]

Substantial identity and deceptive similarity: s 120(1), (2) and (3) Coca-Cola v All Fect Distributors [13.640] Coca-Cola Co v All Fect Distributors Ltd (1999) 96 FCR 107; [1999] FCA 1721 Federal Court of Australia BLACK CJ, SUNDBERG AND FINKELSTEIN JJ: [109] The appellant is the manufacturer and distributor of Coca-Cola. It is the proprietor of a trade mark registered under the Trade Marks Act 1955 (the 1955 Act) and the Trade Marks Act 1995 (the Act), namely a contour drawing of the glass bottle in which Coca-Cola has traditionally been sold. The trade mark is registered in class 32 in respect of beverages and syrups for the manufacture of such beverages. At first instance two other registered trade marks were in issue-the word marks COCA-COLA and COKE. Those marks are no longer in issue. The contour drawing mark is depicted below. [Mark not reproduced.] The respondent is a confectionery wholesaler which imports and distributes, amongst other products, a cola flavoured confectionary which is shaped somewhat like the contour bottle. When fresh the confectionary is soft and gelatinous and lies curled or rolled up in its container. However, when laid out flat it looks like this – [Graphic not reproduced.] … [110] It was common ground before the primary judge that: • since 1938 the appellant has carried on the business of manufacturing, promoting and selling non-alcoholic carbonated beverages known as Coca-Cola throughout Australia under and by reference to the marks COCA-COLA and COKE and the contour bottle, which was a bottle of distinctive appearance [13.640]

707

Intellectual Property: Commentary and Materials

Coca-Cola v All Fect Distributors cont. • since at least 1938 the appellant has widely advertised its business and beverages in Australia by reference to the word marks COCA-COLA and COKE and the contour bottle • the appellant’s business and goods have become widely and favourably known and identified in the minds of the general public throughout Australia by means of the word marks COCA-COLA and COKE and the contour bottle • the appellant’s business and goods have a substantial, exclusive and valuable reputation and goodwill throughout Australia by reference to the word marks COCA-COLA and COKE and the contour bottle • members of the public who have acquired or propose to acquire goods or services from, or otherwise transact or propose to transact business with, any person carrying on business under or by reference to the word marks COCA-COLA and COKE and the contour bottle, expect to be dealing [111] with persons associated with or licensed or approved by the appellant, and rely upon the reputation acquired by the appellant in Australia. The appellant contended that the extensive use, including the licensing, of the contour bottle as a trade mark has resulted in the bottle being so well known in Australia that it is understood by the public to be used exclusively in connection with products made by, for, or with the approval of the appellant. As a consequence, it was claimed that any product with that shape would be identified and recognised by the public as the appellant’s product or a product made for it or with its approval. The respondent denied all the claims, and cross claimed for the loss and damage it had suffered as a result of the seizure of the consignments. See s 137(4) of the Act. Coca-Cola Coca-Cola is one of the most extensively advertised products in Australia. In Australia the Coca-Cola beverage is sold in glass bottles, aluminium cans and plastic bottles. The contour bottle has been used extensively in Australia since 1938. From the 1960s the drink has been sold in cans as well as in the contour bottles. Since the 1970s Coca-Cola has been sold mainly in plastic bottles. Notwithstanding this, the contour bottle has remained a mark or sign which is readily recognised by its shape alone as the COCA-COLA or COKE bottle. Since 1994 a significant proportion of the marketing of the Coca-Cola beverage in Australia has used or promoted the image of the contour bottle. Cans of the drink include a pictorial representation of the contour bottle, and Coca-Cola advertisements regularly feature the bottle as a distinctive identifier of Coca-Cola products. In 1994 the appellant modified some of the plastic bottles to use the contour bottle design. Further, since 1994 certain of the advertising has used the contour bottle alone, whereas previously the bottle had almost invariably been used in advertisements in conjunction with the words COCA-COLA or COKE. The applicant has developed a comprehensive merchandising program to exploit the goodwill associated with its trade marks in relation to a wide range of products which are unrelated to the original beverage. Examples in Australia of products which feature the contour bottle are a bottle opener, a tin container, a drinking mug, a fridge magnet, an ornament, a key chain, and salt and pepper containers. The confectionary The confectionary is made in Germany by Efruti GmbH & Co KG and is distributed in Australia by the respondent. It is gelatinous and cola flavoured, and when laid out flat bears some resemblance to a Coca-Cola contour bottle. As appears from the representation set out earlier in this judgment, when compared with the contour bottle mark the confectionary is slightly elongated and somewhat distorted in shape. The bulk of the respondent’s sales are from warehouses where tubs of the confectionary are presented in cardboard boxes for purchase. About 90% of the respondent’s sales of the confectionary are made to small wholesalers who in turn supply retailers. The remaining 10% of sales are direct to retailers. 708 [13.640]

Trade Marks

CHAPTER 13

Coca-Cola v All Fect Distributors cont. The transparent plastic tubs in which the confectionary is sold contain one hundred sweets. Because of their gelatinous content the sweets lie curled or rolled up in the tub. The primary judge considered that until a piece is removed from the tub and straightened out it does not look much like a contour bottle. The tub is clearly labelled as containing “Efruti” cola bottles. The label on the tub [112] shows two cola bottles reclining in the sun on a desert island sipping cola. The primary judge thought the bottles on the label similar to, but not recognisable as, contour bottles. His Honour was of the view that the confectionary, whether in its edible form or as represented on the label, was plainly intended to convey a “fun version” of the contour bottle. The colour scheme, get up and pictorial representations on the tub do not suggest any association with Coca-Cola or the appellant. Retailers usually sell the confectionary from the Efruti tub or from their own containers. It is sold in milk bars, convenience stores, newsagents, petrol stations and other similar outlets. The cola bottle confectionary had been on the market in Australia for some time before the respondent started selling it in 1992. The respondent has sold the product in Australia since that time. A sales brochure for the confectionary shows the bottles standing up in a tub and prominently features the Efruti label. The primary judge considered that even when the bottles are standing up they are not easily recognised as having a shape similar to that of the contour bottle. His Honour thought the brochure consistent with the “fun” representation on the tub labels. On the respondent’s evidence the bottles were referred to by its employees as “Cola bottles”, “Cola bottle lollies” and “Cola lollies”, and no reference was made to the sweets as “Coca-Cola lollies” or “Coca-Cola bottles”. Despite some inconclusive evidence to the contrary from a private investigator retained by the appellant, the primary judge was not satisfied that the respondent or its employees, in marketing or distributing the confectionary, identify it as associated or connected with COCA-COLA or COKE, or use those names. His Honour said that putting to one side the shape and appearance of the bottle, nothing in the get up, labelling or manner of presentation of the confectionary indicates any such association or connection. The legislation Section 120 of the Act deals with infringement of a trade mark. …[113]… Primary judge’s reasoning The appellant’s case before the primary judge under s 120(2) was that the respondent had used as a trade mark a sign substantially identical with, or deceptively similar to, the contour bottle mark in relation to goods of the same description as the goods in respect of which the mark was registered (beverages and syrups for the making of beverages). Under s 120(3) it was contended that the respondent had used as a trade mark a sign substantially identical with, or deceptively similar to, the well known contour bottle mark in relation to unrelated goods (confectionary), which use was likely to indicate a connection between the confectionary and the appellant. The parties joined issue on two main points, common to both s 120(2) and (3). The first was whether the importation, distribution and sale of the cola bottle confectionary constituted use of the confectionary “as a trade mark”. The second was whether the cola bottle confectionary was substantially identical with, or deceptively similar to, the appellant’s mark. The primary judge decided both points in the respondent’s favour. He also decided in the respondent’s favour an issue that does not appear to have been in dispute, and is not described as one of the matters in contention. This was whether for the purposes of sub-s (2) the confectionary is “goods of the same description as that of goods … in respect of which the trade mark is registered”, namely beverages and syrups for the manufacture of such beverages. His Honour dealt with that point in the course of considering the claim that the respondent had infringed the COCA-COLA trade mark. He said: [13.640]

709

Intellectual Property: Commentary and Materials

Coca-Cola v All Fect Distributors cont. The applicant relied upon the ingredients of confection (“a sweet preparation (liquid or dry) of fruit or the like, as a preserve or sweet meat”) and the Coca-Cola beverage, which share sugar, colour, flavour and acids. [114] However, having some overlapping ingredients does not, in my view, make the cola bottle confectionary goods of the same description [or closely related goods] as required. Further, the fact that both categories of goods may be sold through the same or similar trade channels, such as convenience stores, is of limited assistance to the applicant when one considers the wide range of unrelated goods sold in outlets that sell beverages, such as Coca-Cola and the cola bottle confectionary. The use to which the goods in respect of which the mark is registered are put, for example, using concentrates, extracts etc or ingredients in beverages or drinking a beverage and eating confectionary, are quite different. In my view, the cola bottle confectionary is basically a good of a different description to the registered goods [and is not a closely related good] for the purposes of s 120(2). His Honour adopted these reasons when he came to consider whether the confectionary was goods of the same description as those in relation to which the contour bottle trade mark was registered. (It is not clear why his Honour used the expressions we have placed in brackets – closely related goods.) The primary judge regarded the appellant’s “real case” of infringement to have arisen under subs (3) – the use by the respondent of a sign substantially identical with, or deceptively similar to, the contour bottle mark, in relation to unrelated goods, in a manner which is likely to be taken as indicating a connection between the unrelated goods (the cola bottle confectionary) and the registered owner of the trade mark. The two issues peculiar to s 120(3) that arose in connection with this claim were whether the cola bottle confectionary had been used as a trade mark, and if so, whether that use was likely to be taken as indicating a connection between the confectionary and the appellant. The first issue turned on the words in subs (3)(b) – “uses as a trade mark” – and the second on those in subs (3)(c) – “likely to be taken as indicating a connection between the unrelated goods … and the registered owner of the trade mark”. His Honour concluded that: • the cola bottle confectionary, as such, does not indicate or connote origin of the goods and hence application or use of the contour bottle (represented by the confection) as a trade mark or, to put the matter in terms of s 17 of the Act, the confectionary does not distinguish the goods so as to indicate they were goods dealt with or provided by any particular person; • whilst the cola bottle confection is recognisable as having the shape of the contour bottle, consumers would not be likely to believe or expect it to have a commercial or trade connection of some kind with the applicant by reason of having that shape; [and] consumers would not be led to wonder whether it might be the case that the confectionary comes from the same source as Coca-Cola. After observing that use as a mark requires that the mark be used in such a way as to indicate or connote origin of the goods, his Honour gave four reasons for concluding that the confectionary does not indicate or connote origin: • The inscription “Cola” and the colour of the confectionary are descriptive of the flavour rather than the origin of the goods. • The elongated and distorted form and appearance of the confectionary, although generally recognisable as having the shape and basic markings of the contour bottle, is dissimilar to it in significant respects and is far from [115] an exact copy of it. Thus the product itself does not present as indicating or connoting its origin. • Insofar as the packaging, labelling and get up of the tub containing the confectionary feature a shape similar to that of the contour bottle, they do not do so in a manner that indicates or connotes origin. To the extent origin is indicated, the predominantly blue and green label points to “Efruti” as the origin of the product. 710 [13.640]

Trade Marks

CHAPTER 13

Coca-Cola v All Fect Distributors cont. • His Honour’s “impression and estimate” was that the confectionary is presented as a fun product, perhaps cheekily imitating the contour bottle, but not as representing any other connection with it. The primary judge concluded by saying: Thus, the cola bottle confectionary is merely recognisable as having the well known shape of the contour bottle but would not be likely to be believed or expected to have a trade or commercial connection of some kind with the applicant by reason of having that shape. Likewise consumers would be unlikely to be led to wonder whether it might be the case that the confectionary comes from the same source as Coca-Cola. His Honour dismissed the trade practices and passing off claims because, for the reasons he had given in relation to the trade mark claim, the appellant had not established any misrepresentation as to the existence of a trade or commercial connection between it or its confectionary and the respondent or its products. “Uses as a trade mark” Under the 1955 Act a registered mark was infringed by someone who “uses a mark which is substantially identical with, or deceptively similar to, the trade mark, in the course of trade”. In Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 it was said to be implied in both s 58(1) and s 62(1) of the 1955 Act that the “use” there referred to is limited to use “as a trade mark”. Section 120 of the current Act expressly incorporates that requirement. Counsel for the respondent submitted that whether the respondent was using the sign as a trade mark depended on the answer to the question – “Do I, just by looking at the confectionary, conclude that the shape is put there to tell us that the Coca-Cola Co is the manufacturer of those goods?” This formulation, it was said, was an adaptation of what Kitto J had said in Shell. In our view counsel’s formulation is not a correct adaptation and does not ask the right question. Use “as a trade mark” is use of the mark as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods. See Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 341, 351. That is the concept embodied in the definition of “trade mark” in s 17 – a sign used to distinguish goods dealt with in the course of trade by a person from goods so dealt with by someone else. The authorities provide no support for the view that in determining whether a sign is used as a trade mark one asks whether the sign indicates a connection between the alleged infringer’s goods and those of the registered owner. Cases such as Mark Foy’s Ltd v Davies Coop & Co Ltd (1956) 95 CLR 190 at 204-205, the Shell case at 425, Johnson & Johnson at 347-348, 351, Wingate Marketing Pty Ltd v Levi Strauss (1994) 49 FCR 89 at 134-145 and Musitor BV v Tansing (1994) 29 IPR 203 at 213, 216 show that the question is whether the sign used indicates origin [116] of goods in the user of the sign; whether there is a connection in the course of trade between the goods and the user of the sign. Thus in Shell at 424-425 Kitto J, with whom Dixon CJ, Taylor and Owen JJ agreed, said: Was the appellant’s use, that is to say its television presentation, of those particular pictures of the oil drop figure which were substantially identical with or deceptively similar to the respondent’s trade marks a use of them “as a trade mark”? With the aid of the definition of “trade mark” in s 6 of the Act, the adverbial expression may be expanded so that the question becomes whether, in the setting in which the particular pictures referred to were presented, they would have appeared to the television viewer as possessing the character of devices, or brands, which the appellant was using or proposing to use in relation to petrol for the purpose of indicating, or so as to indicate, a connection in the course of trade between the petrol and the appellant. Did they appear to be thrown on to the screen as being marks for distinguishing Shell petrol from other petrol in the course of trade? (Emphasis added.) And later his Honour said: [13.640]

711

Intellectual Property: Commentary and Materials

Coca-Cola v All Fect Distributors cont. no viewer would ever pick out any of the individual scenes in which the man resembles the respondent’s trade marks, whether those scenes be few or many, and say to himself: “There I see something that the Shell people are showing me as being a mark by which I may know that any petrol in relation to which I see it used is theirs”. (Emphasis added.) … [118] … “Uses as a trade mark” – conclusion The confectionary has three features that are not descriptive of the goods. They are the silhouette, the fluting at the top and bottom, and the label band. It is not necessary for the respondent to adopt any of those features in order to inform consumers that its product is a cola flavoured sweet. It could do so by using the cola colour, the word COLA and the shape of an ordinary straight-walled bottle. The silhouette, fluting and band are striking features of the confectionary, and are apt to distinguish it from the goods of other traders. The primary function performed by these features is to distinguish the goods from others. That is to use those features as a mark. It is true, as the respondent said, that the fact that a feature is not descriptive of goods does not necessarily establish that it is used to distinguish or differentiate them. But in the present case we are compelled to the conclusion that the non-descriptive features have been put there to make the goods more arresting of appearance and more attractive, and thus to distinguish them from the goods of other traders. … [121] … “Substantially identical” A person infringes a registered trade mark within s 120(2) by using as a trade mark a sign that is substantially identical with or deceptively similar to the trade mark. The primary judge did not deal expressly with the first of these alternatives, though his conclusion that consumers would not be led to wonder whether it might be the case that the confectionary comes from the same source as Coca-Cola (ie the confectionary was not deceptively similar to the contour bottle mark) may well carry with it that the features of the confectionary are not substantially identical with the mark. In order to determine whether marks are substantially identical they should be compared side by side, their similarities and differences noted and the importance of these similarities and differences assessed having regard to the essential features of the registered mark and the total impression of resemblance or dissimilarity that emerges from the comparison. See Shell at 414 per Windeyer J; Powell v Glow Zone Products Pty Ltd (1996) 36 IPR 343 at 364; Carnival Cruise Lines Inc v Sitmar Cruises Ltd (1994) 120 ALR 495 at 513. There are significant differences between the confectionary and the contour bottle mark. Even when the confectionary is laid out flat, it does not have the pronounced waisting effect that there is in the bottom quarter of the mark. There is a space for the label on the confectionary, but it is of a different shape from that on the mark. The confectionary has COLA written in the label area. The only close similarity is in the fluting. A total impression of similarity does not emerge from a comparison of the two marks, and accordingly the shape of the confectionary is not substantially identical with the contour bottle mark. “Deceptively similar to” Section 10 of the Act provides that a trade mark is taken to be deceptively [122] similar to another trade mark if it so nearly resembles that other mark as to be likely to deceive or cause confusion. No intention to deceive or cause confusion is required: Re Bali Brasserie Co Inc’s Registered Trade Mark (1968) 118 CLR 128 at 139. The distinction between “likely to deceive” and “likely to cause confusion” lies not in some element of culpability in the user to be inferred from the word “deceive”, but in the effect of the mark on prospective purchasers. In Pioneer Hi-Bred Corn Co v Highline Chicks Pty Ltd [1979] RPC 410 at 423 Richardson J, in the New Zealand Court of Appeal, said: “Deceived” implies the creation of an incorrect belief or mental impression and causing “confusion” may go no further than perplexing or mixing up the minds of the purchasing public … Where the deception or confusion alleged is as to the source of the goods, deceived 712 [13.640]

Trade Marks

CHAPTER 13

Coca-Cola v All Fect Distributors cont. is equivalent to being misled into thinking that the goods bearing the applicant’s mark come from some other source and confused to being caused to wonder whether that might not be the case. … In the Shell case at 414-415 Windeyer J said: On the question of deceptive similarity a different comparison must be made from that which is necessary when substantial identity is in question. The marks are not now to be looked at side by side. The issue is not abstract similarity, but deceptive similarity. Therefore the comparison is the familiar one of trade mark law. It is between, on the one hand, the impression based on recollection of the plaintiff’s mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions that such persons would get from the defendant’s television exhibitions. To quote Lord Radcliffe again: “The likelihood of confusion or deception in such cases is not disproved by placing the two marks side by side and demonstrating how small is the chance of error in any customer who places his order for goods with both the marks clearly before him … It is more useful to observe that in most persons the eye is not an accurate recorder of visual detail, and that marks are remembered rather by general impressions or by some significant detail than by any photographic recollection of the whole”: de Cordova v Vick Chemical Co (1951) 68 RPC 103 at 106. Whether one device mark “resembles” another involves an assessment of the visual impression made by the two marks when compared. In contrast, the likelihood of deception or confusion involves an assessment of what would be the probable visual impression on customers or potential customers which would be produced as a result of the “notional normal and fair use” of the marks. See Gardenia Overseas Pty Ltd v The Garden Co Ltd (1994) 29 IPR 485 at 493. The notional normal and fair use of the confectionary is as an item acquired on impulse by consumers in a retail environment such as a convenience store, a milk bar, a newsagent, a petrol station or other similar outlet. Those who buy the confectionary are children and teenagers, especially teenage girls. Coca-Cola is also sold at some of those outlets to a similar type of purchaser. As Dixon and McTiernan JJ said in Australian Woollen Mills Ltd v F S Walton & Co Ltd (1937) 58 CLR 641 at 659 [123], whether a mark is deceptively similar to another depends on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs. In many cases it is a question to which different answers can reasonably be given. Taking into account the “imperfect recollection” that customers may have of the contour bottle mark, and the fact that the “idea” suggested by the mark is more likely to be recalled than its precise details, the factors that have led us to conclude that the features of the confectionary are likely to cause confusion in consumers, that is to say, cause them to wonder whether it might be the case that the confectionary comes from the same source as Coca-Cola, are these: • the contour bottle is extremely well known • there are similarities between the features of the confectionary and the contour bottle mark: – both have curved rather than flat sides – both have a top portion with longitudinal fluting, a central portion without fluting and a lower portion with fluting – the upper and lower portions have the same number of flutes – the fluting on the confectionary closely resembles that on the contour bottle mark – both have a flat base and a banded neck • to a greater or lesser degree depending on the feature, the respondent has taken all significant features of the contour bottle mark • the word COLA on the confectionary, though not itself a mark, reinforces the link between the confectionary and Coca-Cola that is conveyed by the shape of the confectionary [13.640]

713

Intellectual Property: Commentary and Materials

Coca-Cola v All Fect Distributors cont. • when fresh, the lower half of the confectionary is the same colour as Coca-Cola, again reinforcing the link referred to. “Not likely to deceive or cause confusion” Section 120(2) concludes with the words: 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. As Lord Evershed MR said in Taverner Rutledge Ltd v Specters Ltd [1959] RPC 355 at 359-360: Though it may generally be as you say a mark likely to cause confusion, in fact in the way I have used it and in the circumstances and environment in which I have used it, it is not likely to cause confusion. Whether the respondent can establish that the use of the features of the confectionary is not likely to cause typical consumers to wonder whether it might be the case that the confectionary comes from the same source as Coca-Cola should be remitted to the primary judge. As will appear, other issues will also be remitted to his Honour. Section 120(3) In view of the respondent’s concession at trial, to which the appellant held it on appeal, that the confectionary was goods of the same description as the registered goods, there is no need to consider whether the primary judge was correct in concluding that no infringement under s 120(3) had been made out. Sub-sections (2) and (3) are mutually exclusive-the former dealing with [124] “goods of the same description …” and the latter with “goods … that are not of the same description …”.

Australian Postal Corporation v Digital Post Australia [13.650] Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153 Federal Court of Australia NORTH, MIDDLETON AND BARKER JJ: [1] This is an appeal from the decision of the primary judge in Australian Postal Corporation v Digital Post Australia Pty Ltd (No 2) [2012] FCA 862. [2] The primary judge decided that “DIGITAL POST AUSTRALIA” was not deceptively similar to “AUSTRALIA POST” within the meaning of s 120(1) of the Trade Marks Act 1995 (Cth) (“the TM Act”), that the domain names adopted by Digital Post Australia Pty Ltd (“DPA”) did not infringe the “AUSTRALIA POST” trade marks, and the adoption of the name “DIGITAL POST AUSTRALIA” did not constitute misleading or deceptive conduct in contravention of Sch 2 of the Competition and Consumer Act 2010 (Cth). Furthermore, the primary judge held that DPA used its name in good faith, and as such, in the event that he had found “DIGITAL POST AUSTRALIA” and “AUSTRALIA POST” to be deceptively similar, DPA would have had a defence to the infringement claim under s 122(1) of the TM Act. [3] The Appellant (“Australia Post”) is now only challenging the primary judge’s findings in respect of the TM Act. We confine our attention to that contest. … THE LAW ON DECEPTIVE SIMILARITY… The task to undertake in determining deceptive similarity has been variously described. [63] In a passage approved by the High Court in Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 at 538, Lord Parker in the English High Court in Re an Application by the Pianoist for the Registration of a Trade Mark (1906) 1A IPR 379 at 380; 23 RPC 774 at 777 stated: You must take the two words. You must judge of them, both by their look and by their sound. You must consider the goods to which they are applied. You must consider the nature and 714 [13.650]

Trade Marks

CHAPTER 13

Australian Postal Corporation v Digital Post Australia cont. kind of customer who would be likely to buy those goods. In fact, you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks. If considering all those circumstances, you come to the conclusion that there will be a confusion…in the mind of the public…you must refuse the registration in that case. [64] Justices Dixon and McTiernan in Australian Woollen Mills Lts v FS Walton Stores & Co Ltd (1937) 58 CLR 641 (Australian Woollen Mills) at 658 added further context: In deciding this question [whether there is a reasonable probability of deception or confusion], 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…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. The usual manner in which ordinary people behave must be the test of what confusion or deception may be expected. Potential buyers of goods are not to be credited with any high perception or habitual caution. On the other hand, exceptional carelessness or stupidity may be disregarded. The course of business and the way in which the particular class of goods are sold…the setting, and the habits and observation of men considered in the mass affords the standard… …The main issue in the present case is a question never susceptible of much discussion. It depends on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs. (at 659) [65] Furthermore, in Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd (1954) 91 CLR 592 at 595 Kitto J elaborated: It is enough if the ordinary person entertains a reasonable doubt… In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the character of the probable purchasers of the goods). [66] The impressionistic nature of the analysis is borne out in the following passage from Windeyer J in Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1961) 109 CLR 407 at 415: [The comparison is] between, on the one hand, the impression based on recollection of the plaintiff’s mark that persons of ordinary intelligence and memory would have; and, on the other hand, the impressions such persons would get from the defendant’s [use of its marks]. [67] More contemporary authorities from this Court have restated these principles. [68] In Registrar of Trade Marks v Woolworths Ltd (1999) 93 FCR 365 at [50], French J (as his Honour then was), with whom Tamberlin J agreed, set out a number of propositions relevant to the question of deceptive similarity. His Honour restated the principles as follows: (i)

To show that a trade mark is deceptively similar to another it is necessary to show a real tangible danger of deception or confusion occurring. A mere possibility is not sufficient.

(ii)

A trade mark is likely to cause confusion if the result of its use will be that a number of persons are caused to wonder whether it might not be the case that the two products or closely related products and services come from the same source. It is enough if the ordinary person

[13.650]

715

Intellectual Property: Commentary and Materials

Australian Postal Corporation v Digital Post Australia cont. entertains a reasonable doubt. It may be interpolated that this is another way of expressing the proposition that the trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products or the products and services in question come from the same source. (iii)

In considering whether there is a likelihood of deception or confusion all surrounding circumstances have to be taken into consideration. These include the circumstances in which the marks will be used, the circumstances in which the goods or services will be bought and sold and the character of the probable acquirers of the goods and services.

[69] Recently, Bromberg J, in REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559 summarised the position as follows: 226 A mark will be deceptively similar to another mark if there is “a real, tangible danger” of confusion occurring. A mark may be deceptively similar to another mark if its use causes people to wonder whether it might not be the case that the products to which the marks are applied come from the same source. Allowance must be made for the imperfect recollection of a trade mark by people of ordinary memory and intelligence especially those who know one mark but do not know the other: Vivo International Corporation Pty Ltd v Tivo Inc (2012) 294 ALR 661 at [115] (Nicholas J, with whom Dowsett J agreed); and see [77] and [80] (Keane CJ). 227 The threshold for trade mark infringement is lower than that required to establish misleading or deceptive conduct: Puxu at 198 (Gibbs CJ). The wider inquiry of the kind which might be undertaken in a passing off case or where misleading or deceptive conduct is alleged is not appropriate, because the court is not looking at the totality of the conduct: Crazy Ron’s at [86]-[87]. The court needs to consider the use of the respondent’s mark alone. The fact that a respondent makes it clear by means external to the mark that there is no connection between its product or services and that of the applicant is not relevant: Mark Foy Limited v Davies Coop & Co Ltd (1956) 95 CLR 190 at 205 (Williams J). [70] It is clear from the above passages that the threshold for confusion is not high. Courts must compare the marks visually and aurally in the context of how the marks are used, and decide if there is a reasonable probability that the ordinary person to whom the marks are targeted, entertains a reasonable doubt as to the relationship between the marks. But there must be a realistic assessment, and a mere possibility of confusion is not enough. THE GOOD FAITH DEFENCES [71] Sections 122(1)(a)(i) and (1)(b)(i) of the TM Act provide a “good faith” defence to infringing conduct … [72] Central to both defences is the notion of “good faith”. This was the real issue raised in this appeal on the application of s 122(1) of the TM Act. [73] In Johnson & Johnson Aust Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 353-4 Gummow J held that the respondent must show that it acted honestly and without ulterior motive. Earlier, in Baume & Company Ltd v AH Moore Ltd [1958] Ch 907 at 921, Romer LJ held that the respondent must honestly have believed that no confusion would arise and that there was no intention to wrongly divert business. [74] There have been many cases where the good faith defences have been permitted, but what is obvious is that the defence is clearly not available in cases where the respondent is engaging in sharp conduct with an eye on wrongly diverting business. [75] For example, and in the context of s 122(1)(a)(i), Allsop J (as his Honour then was) in Anheuser-Busch Inc v Budejovicky Budvar (2002) 56 IPR 182 (Anheuser-Busch) at [216] – [218] held that 716 [13.650]

Trade Marks

CHAPTER 13

Australian Postal Corporation v Digital Post Australia cont. while there was no fraud or conscious dishonesty, the fact the respondent knew about its competitor’s registered trade marks and reputation in Australia, the respondent could not hold the view that no confusion would arise, and use of the relevant marks was not in good faith. … … [The Court then considered the relevant class of consumers involved in determining the deceptive similarity of the respondent’s marks] [81] The correct approach is to consider whether a substantial or significant number of the general public potentially interested in a digital mailbox service would have cause to wonder if DPA’s service was associated with Australia Post. We would not credit these consumers necessarily with habitual high perception or caution, or even treat them as “internet savvy”. Nor would we look to see whether Australia Post was associated in the minds of the general public with digital mail. To the extent these matters were relied upon by the primary judge and supported his conclusion, they were extraneous to the main enquiry. [82] However, in our view, the primary judge did come to the correct conclusion in finding no deceptive similarity. [83] In the reasons we have identified above, the primary judge looked to the visual and aural composition of the marks, and concluded they were distinct, and conveyed different ideas to the consumer. He compared the whole mark “DIGITAL POST AUSTRALIA” with “AUSTRALIA POST”. At [57] the primary judge concluded (correctly in our view) that the essential element of DPA’s mark was the composite phrase “DIGITAL POST”, conveying the idea of mail delivered in a digital form. To that extent the term “DIGITAL POST AUSTRALIA” was descriptive. [After describing the survey evidence in support of the appellant’s case as “unreliable”, the Court then held, at [87], that respondent’s DIGITAL POST AUSTRALIA’ and “www.digitalpostaustralia.com.au” were not deceptively similar to Australia Post’s relevant registered trade marks.]. In dismissing the appeal in this ground, the Court, also upheld (albeit unnecessarily) the primary judge’s finding of the “good faith” defence.]

NON-INFRINGING CONDUCT [13.670] In an infringement action, a plaintiff must not only establish the relevant operative elements in s 120(1), (2) or (3) of the Trade Marks Act 1995 (Cth), but quite often must contend with the “defences” (or, rather non-infringing conduct) set out in ss 122 – 124. 95 These are:

• Good faith use of defendant’s (or predecessor’s) name or name of its (or predecessor’s) place of business (s 122(1)(a)); • Use of sign in good faith to indicate the kind, quality, quantity, intended purpose, value, geographical origin, or some other characteristic, of goods or services; or the time of production of goods or of the rendering of services (s 122(1)(b)); • Use of a trade mark in good faith to indicate the intended purpose of goods (in particular as accessories or spare parts) or services (s 122(1)(c)); • Use of a trade mark for the purposes of comparative advertising (s 122(1)(d)); 95

There are limited circumstances where trade mark infringement actions may not be brought, specifically, for otherwise infringing acts after expiry and before renewal of a trade mark within the relevant grace periods set out in the Trade Marks Act 1995 (Cth): see s 128. [13.670]

717

Intellectual Property: Commentary and Materials

• Exercise of a right to use a trade mark given under the Trade Marks Act (s 122(1)(e)); • Defendant would obtain registration of the trade mark (or a substantially identical or deceptively similar mark to the registered mark) in his/her name upon application to the court (s 122(1)(f) and (fa)); • Defendant does not (because of a condition or limitation subject to which the trade mark is registered) infringe the exclusive right of the registered owner to use the trade mark (s 122(1)(g)); • Use of a disclaimed part of a registered trade mark (s 122(2)); • Use of a trade mark in relation to goods/services that are similar to goods/services to which the trade mark has been applied, by, or with the consent of the registered owner (s 123); and • Prior continuous use of the trade mark by defendant (or predecessor) before the plaintiff’s registration date or first use, whichever is earlier (s 124). Naturally, the defendant bears the onus of establishing these defences. 96 As the next case extract shows, there are instances where a defendant cannot rely on the “good faith” defence under s 122(1)(a) even when utilising their own name.

Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [13.680] Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2013] FCA 1255 Federal Court of Australia [Bob Jane is a famous Australian racing car driver who established a successful automotive business, Bob Jane Corporation Pty Ltd, which own and runs “Bob Jane T-Marts”, a business principally concerned with tyre and wheel sales. His son, Rodney Jane, later became involved in Bob Jane Corporation Pty Ltd, eventually becoming (in 2002) its chief executive office. In 2011, following a dispute with other family members, Bob Jane quit as a director and sold all his shares in Bob Jane Corporation Pty Ltd. Through various related parties, he then commenced a rival business utilising various trade marks that were substantially identical or deceptively similar to those owned by Bob Jane Corporation Pty Ltd. Bob Jane Corporation Pty Ltd sought injunctive, declaratory and other relief against Bob Jane, Denis Rigon, and related entities, for trade mark infringement, passing off, and various breaches of the Australian Consumer Law, especially s 18(1) (misleading and deceptive conduct). The respondents did not appear, and the orders sought by the applicant were granted.] BESANKO J: [122] Two points about the defence in s 122(1) of the Trade Marks Act should be noted. First, the defence extends to corporations but, although the corporation may delete abbreviations such as “Pty” or “Ltd”, the whole of the corporation’s name must be used. [123] Secondly, the defence of use in good faith involves a consideration of a person’s subjective belief. In Baume & Co Limited v A H Moore Ltd [1958] Ch 907 the English Court of Appeal considered the exception in the case of a bona fide use of one’s own name in s 8(a) of the Trade Marks Act 1938 (UK). The Court said that the exception or defence required an honest use by a person of his or her own name and that that meant without any intention to deceive anybody and without any intention to make use of the goodwill which has been acquired by another trader. The Court said that the mere fact that the alleged infringer knew of the registered trade marks did not mean that the use was not in good faith provided that he or she honestly thought that no confusion would arise and had no 96

For a successful example, albeit in obiter, see Australian Postal Corporation v Digital Post Australia [2013] FCAFC 153, [88]–[95].

718 [13.680]

Trade Marks

CHAPTER 13

Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd cont. intention to wrongfully divert business to himself or herself by using the name. An alleged infringer was either honest or dishonest in his or her motives and there was no such thing as constructive dishonesty. [124] In Anheuser-Busch Inc v Budejovicky Budvar, Narodni Podnik and Others (2002) 56 IPR 182 Allsop J (as his Honour then was) adopted, subject to one qualification which is not material for present purposes, the test in Baume & Co Limited v A H Moore Ltd (at 234 [216]). His Honour made the point that in the case before him, no witness from the alleged infringer gave evidence that they considered no confusion would arise. In the result, his Honour said that the alleged infringer had not persuaded him that anybody did hold that view. [125] In Wellness Pty Ltd v Pro Bio Living Waters Pty Ltd and Others (2004) 61 IPR 242 Bennett J noted that in the case of a respondent named Pro Bio Living Waters Pty Ltd, it could use that name with or without the “Pty Ltd”. Her Honour noted that the requirement for the use to be in good faith imported an absence of intention to make use of the goodwill which had been acquired by another trader. She noted that the resemblance between the registered trade mark in that case of which the first respondent was aware and the name of the first respondent did not prevent the use being bona fide “provided that there was an honest belief that no confusion would arise and if there was no intention of wrongfully diverting business”. Her Honour also noted that evidence of such an honest belief was necessary to establish “bona fide use”. In the case before her Honour no evidence was led to establish use in good faith, or the belief or intention of the respondents. Her Honour noted that there had been no submission in the case addressed to the defence other than a mere assertion that there was an entitlement to use the name (at 250 [43]). Her Honour said that there was no basis upon which to conclude that the first respondent in that case had used the name in good faith for the purposes of s 122(1)(a)(i) of the Trade Marks Act. [126] In Nature’s Blend Pty Ltd (ACN 126 406 488) v Nestle Australia Ltd (ACN 000 011 316) (2010) 272 ALR 487 the Full Court of this Court made observations which support the conclusion that the matter in s 122(1)(a) is a defence and that the onus of proof lies on the party seeking to rely on the defence (at 497 [51] and [52]). [127] The respondents cannot rely on the defence in s 122(1)(a)(i) in this case. They have not appeared and they have adduced no evidence in support of the defence. In any event, the evidence before me negates such a defence. Bob Jane allowed his name to become part of the trade marks of the applicant and he was aware of the applicant’s use of the trade marks. In late 2010 he approached potential suppliers for the respondents. He and Mr Rigon [former director and controlling mind of many of the respondents] represented that they were involved in a new tyre enterprise, that the company would be structured as a franchise organisation and the proposed name for the company was “bobjanetyresdirect.com.au pty ltd”. Bob Jane’s conduct after leaving the applicant and prior to the launch of the respondents’ Bob Jane Global Website indicated that he harboured significant animosity towards his son and did not have regard to any restrictions on his behaviour. The names of three of the corporate respondents were chosen at the time of or shortly after Bob Jane had left the applicant. Bob Jane, Mr Rigon and the respondents communicated with representatives of the applicant’s suppliers which misled at least one of those representatives to believe they were dealing with the applicant. The respondents’ marks were used with the intention that consumers would associate the respondents’ business with the applicant. A document appearing to be a draft investor presentation prepared by the respondents showed that the respondents intended to leverage off the reputation of the “Bob Jane T-Marts” business and BOB JANE Marks. The respondents only took steps to disavow their association with the applicant after the interlocutory injunction was put in place. This was in the form of a weak and confusing disclaimer on their website. Following the interlocutory [13.680]

719

Intellectual Property: Commentary and Materials

Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd cont. injunction the respondents have continued to use the respondents’ marks in a number of forms and in or around mid-2013 the respondents returned to the use of the BOB JANE word mark in respect of the respondents’ retail outlet at West Melbourne. [128] The various infringements of the applicant’s trade marks have been established and it has also been established that unless restrained they are likely to continue in the future. [Besanko J granted the orders sought, inter alia, restraining Bob Jane, related entities and/or agents from trading under a business name that includes JANE or any trade mark that is substantially identical or deceptively similar to the [BOB JANE] trade marks. In a subsequent case, Bob Jane Corporation succeeded in its contempt of court action against Bob Jane, related entities and others for breaching these court orders: see Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] FCA 637. However, Bob Jane Corporation was unsuccessful in another contempt of court application against Bob Jane for his use of “BOB JANE INTEGRITY INSURANCE” and related device mark: see Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2016] FCA 1129.]

Parallel importation [13.690] While the importation of goods bearing counterfeit Australian trade marks

obviously constitutes an infringement, it is less certain whether the unauthorised importation of genuine goods bearing a mark applied by the registered proprietor – so-called “grey” market goods – constitutes an infringement. The relevant provision of the Trade Marks Act 1995 (Cth) here, s 123, states a person does not infringe a registered trade mark by using it in relation to similar goods/services to which the mark has been registered where the mark has been applied to goods/services “by, or with the consent of, the registered owner of the mark”. The scope of protection afforded by Trade Marks Act 1995 (Cth) s 123 is unclear. However, in Paul’s Retail Pty Ltd v Lonsdale Australia Ltd [2012] FCAFC 130, the Full Federal Court, observed, at [68] that: The surest guide to the nature and extent of the proprietary right created by the registration of a trade mark under the [Trade Marks] Act is the text of the Act. In that regard, the language of ss 120 and 123 of the Act leaves little room for doubt that an importer who sells goods which bear the same marks as have been registered as a trade mark under the Act is liable to an action for infringement by the registered owner if those marks were not applied by the registered owner or with its consent.

Difficult questions nevertheless arise as to precisely what it means to speak of applying an Australian registered trade mark “with the consent of the registered owner”. As the following extracts reveal, the interpretation of s 123 has bedevilled parallel importers, courts and various governmental and non-governmental bodies for many years. The “current twilight zone of legality”, writes Davison, is undesirable and “unsatisfactory” because it “generates uncertainty for trade mark owners and importers” alike. 97 As a result, the Productivity Commission, in yet another law reform effort aimed at increasing certainly and confidence in the marketplace, has recently recommended amending s 123 so that it in effect reflects

97

M Davison, “Parallel Importing in Australia: What is the Objective and is it Being Achieved” (2012) 38 Monash University Law Review 173, 173.

720 [13.690]

Trade Marks

CHAPTER 13

“exhaustion doctrine”. 98 The effect of this would be to permit parallel imports into Australia so long as the marked goods are brought to market elsewhere by the owner or licensee of the mark (see further [13.720]). In this connection, Burrell and Handler have called for a broader “resurrection” of the Champagne Heidsieck rule, arguing that this is the “most promising” of all reform options. 99 In Champagne Heidsieck et Cie Monopole Societe Anonyme v Buxton [1930] 1 Ch 330, the French manufacturer of wine intended for the French market objected to the importation of that wine into Britain. Clauson J (at 341) held that the importation of the plaintiff’s wine was not an infringement since “the use of a mark by the defendant which is relied on as an infringement must be a use upon goods which are not the genuine goods, ie, those upon which the plaintiff’s mark is properly used, for anyone may use the plaintiff’s mark on the plaintiff’s goods, since that cannot cause the deception which is the test of infringement”. In short, the defendant had not infringed the plaintiff’s mark because it was not “used as a trade mark”. Despite agitation by commentators and various governmental and non-governmental bodies, it remains to be seen what, if anything, will be done by way of (much needed) law reform.

Wingate Marketing v Levi Strauss [13.700] Wingate Marketing Pty Ltd v Levi Strauss Pty Ltd (1994) 16 ATPR 41-303 Federal Court of Australia [In this case, the issue arose as to whether the importation of substantially altered Levi jeans, sold as second-hand goods, amounted to trade mark infringement. It was held that use of a mark on repaired clothing was not infringement.] SHEPPARD J: [42,045] … A second hand shop or a charity shop selling second hand clothing which included worn or used Levi Strauss jeans would not without more infringe any of the Levi Strauss marks by selling the second hand garments although they might bear one or more of those marks. Members of the public acting reasonably are not misled or confused by the fact that in countless cases second hand products have attached to them original labels, many of which will consist of or contain the trade marks of a variety of manufacturers and distributors. Certainly they will not think that the second hand shop with which they deal is an offshoot of, or has some connection with, the original supplier of the product when new. They may think that a substantially altered garment bearing a trade mark is a second hand garment manufactured or distributed by the company whose name appears on the label affixed to the goods, but if that be so, it will not be because the mark is being used as a trade mark, but because of other factors, which taken together, may well warrant the conclusion that the person marketing the goods is passing them off as having been originally made or produced in the form in which they then are. That really is the essence of the Levi Strauss complaint in relation to this aspect of 98

99

See Productivity Commission, Intellectual Property Arrangements, No 78, (23 September 2016) especially ch 12 and Recommendation 12.1, 36; 21 (advocating for this reform to resolve existing “uncertainty” in the case law and to “ultimately benefit the community”) and more generally 614 (noting TRIPS is silent on this issue thus Australia remains free to permit parallel importation of trade marked goods and services). The idea behind the “exhaustion doctrine” (sometimes (wrongly) referred to as the “principle of universality”) is that once a trade mark owner has applied its trade mark to goods and put those goods on the market, it cannot control later dealings in those goods: see M Davison and I Horak, Shanahan’s Australian Law of Trade Marks and Passing Off (Thomson Reuters, 5th ed, 2012) [90.10] (also discussing the competing “exhaustion” and “territoriality” doctrines), and more generally, L Grigoriadis, Trade Marks and Free Trade (Springer, 2014) ch 1. R Burrell and M Handler, “A Requiem for Champagne Heidsieck: Trade Mark Use and Parallel Importations”, (2016) 26 AIPJ 110, 111, 130–1. [13.700]

721

Intellectual Property: Commentary and Materials

Wingate Marketing v Levi Strauss cont. the case. But, in my opinion, it is properly dealt with in the context of misrepresentation and passing off and not in the context of infringement of trade mark.

Review of Intellectual Property Legislation under the Competition Principles Agreement [13.710] Intellectual Property Competition Review Committee, Review of Intellectual Property Legislation under the Competition Principles Agreement, Final Report (September 2000) [188] Parallel importation and the Trade Marks Act Background Use of a trade mark in relation to goods or services will not infringe the Trade Marks Act provided that the registered mark has been applied to the goods or services by, or with the consent of, the Australian owner of the mark [see the Montana case below]. The Trade Marks Act therefore adopts the principle of international exhaustion, whereby placing the goods onto the market exhausts the owner’s ability to control subsequent dealings with the goods or services. The Federal Court in March 1999 consolidated the consistent approach of Australian courts in rejecting the rights of an international trade mark owner to control the distribution channels of its goods through trade mark rights, affirming the exhaustion of rights doctrine. However, there appears to still be uncertainty surrounding the situation where goods are imported from overseas after an assignment of the Australian trade mark to the Australian distributor. Views for and against The Committee received submissions on parallel importation and the Trade Marks Act which point out the uncertainty of the position where the overseas owner of a trade mark conditionally assigns the trade mark to an Australian distributor. The assignment is made on the condition that once the distributorship arrangement between the owner of the overseas trade mark and the Australian trade mark comes to an end, the Australian trade mark must be reassigned to the overseas owner. The purpose of such an arrangement is to permit the Australian distributor to prevent the parallel importation of trade marked goods from overseas that would compete with the Australian distributor. Even despite questions about the legality of these arrangements there are various transactional costs involved in setting up these assignments aimed at giving the distributor the right to control the flow of the trade marked goods. If the overseas trade mark owner retained the Australian ownership of the trade mark and retained the Australian distributor merely as an authorised user, neither the Australian distributor nor the overseas trade mark owner could prevent parallel importing. This would be due to the impact of s 123 of the [189] Trade Marks Act and the various case law concerning parallel importation that was decided pursuant to the Trade Marks Act 1955 (Cth). Section 123(1) of the Trade Marks Act 1995 provides that a mark applied to the same or similar goods “with the consent of” the registered owner does not infringe. There are doubts as to what “consent” means in this context, although the section is presumed to introduce into trade mark legislation the concept of exhaustion of rights. However, before the introduction of s 123 into the present trade mark legislation, arrangements preventing parallel importation of trade marked goods were effected through the mechanism of foreign companies assigning their Australian trade marks to local distributors in order to assist the local distributor to prevent parallel importation. In the Fender Guitar Case, Fender Australia v Bevk [(1989) 15 IPR 257] Justice Burchett held that a local distributor, to whom the foreign owner had assigned its trade mark in Australia, was entitled to 722 [13.710]

Trade Marks

CHAPTER 13

Review of Intellectual Property Legislation under the Competition Principles Agreement cont. prevent the parallel importation of goods bearing the trade mark. On the facts before him, the Judge found that the local company had developed an independent reputation in the trade mark by virtue of its selection of the goods it imported and the after sales service which it provided to the public. There was no challenge to the validity of the assignment of the trade mark from the foreign company to the local company. Following this case it became common for foreign companies to assign their Australian trade marks to local distributors in order to assist the local distributor to prevent parallel importation. [A recent case], Transport Tyre Sales Pty Ltd v Montana Tyres Rims & Tubes Pty Ltd (1999) 43 IPR 481 (the Montana case) has cast doubts upon the “Fender Guitar” arrangements, where an international manufacturer assigned its Australian trade marks to a local distributor, in order to use trade mark rights to challenge parallel importation. This case consolidates the consistent approach in Australian courts in rejecting the rights of an international trade mark owner to control the distribution channels of its goods through trade mark rights, affirming the “exhaustion of rights doctrine”. However, the appeal judgment leaves unanswered some of the most important issues arising out of the facts in the Montana case. [In relation to the recording of assignments], the Court did not consider the issue of “sham” transactions, [and] [t]here remains a question whether in some circumstances involving “Fender” assignments, where the assignment document does not on its face reflect the real agreement between the parties, the lodgement of the document could amount to a false suggestion thereby invalidating the assignment. A submission by Mr Mark Davison states that there are some difficulties and inefficiencies associated with the present position. They include: • the situation is uncertain. Neither authorised Australian distributors nor the parallel importer are certain of the legality of the parallel importer’s activity. • trade mark owners and their Australian distributors will be entering into assignments and related agreements purely for the purpose of preventing parallel importing. There are various transactional costs incurred in these activities such as liability for capital gains tax and legal fees every time the trade mark is assigned and re-assigned; and [190] • parallel importers can have their trading activities ended by the stroke of a pen although there is no real change in the trade activities of the overseas owner, the Australian distributor or the parallel importer. The appropriateness of parallel importing from the policy perspective is not altered in any way by the mere conditional assignment of Australian ownership to an Australian distributor but the legality of parallel importing may hinge on it. Davison therefore concludes: What is clear is that the type of artificial arrangements that have lead to the Montana case and Fender v Bevk should not impact on the legality of parallel importing of trade marked goods. Whatever policy position is taken on the issue of parallel importing, that position should not be capable of being altered by the formation of artificial arrangements in which an Australian distributor which was previously acting as an authorised user becomes the owner of the Australian trade mark in circumstances which demonstrate that it will simply continue to perform its role as an authorised user. Section 123 of the Act needs to be amended or a new subsection introduced to clarify that issue of what is included within the concept of “consent” by the trade mark owner to the application of the trade mark to goods. Such an amendment should make it clear that a registered owner who is, in effect, the authorised user of the overseas owner of the same trade mark is consenting to the application of the trade mark to goods made by or under the control of that overseas owner. Submissions also pointing out the restrictions on competition of this issue were also received from the ACCC and Mr Leslie Aldor acting on behalf of Holstar Cycles Pty Ltd. Committee considerations [13.710]

723

Intellectual Property: Commentary and Materials

Review of Intellectual Property Legislation under the Competition Principles Agreement cont. The Committee accepts that the current situation imposes costs, including creating uncertainties that inevitably affect the competitive process. Generally, the Committee believes that suppliers should be able to enter into exclusive dealing arrangements except when these will substantially lessen competition in a market. We accept that the contractual assignment of trade marks is one way exclusive dealing arrangements may be established. However, in line with its broader approach to parallel importation, the Committee does not believe that trade mark assignment contracts should serve as a means of triggering statutory provisions that protect a supplier from import competition.. We are mindful of the costs to consumers that can arise from such dealings, particularly from restrictions on competition. The Committee therefore believes that legislative changes should be enacted to ensure that artificial arrangements are not used to defeat the policy of international exhaustion with respect to trade marks. [191] Recommendations The Committee recommends that the Trade Marks Act should be amended to ensure that the assignment provisions are not used to circumvent the intent to allow the parallel importation of legitimately trade marked goods. (References omitted.)

Productivity Commission, Intellectual Property Arrangements, Overview & Recommendations [13.720] Productivity Commission, Intellectual Recommendations, No 78 (23 September 2016)

Property

Arrangements,

Overview

&

(p 22) The law that governs the importation of legitimately trade marked goods produced in other countries also needs reforming. While the Trade Marks Act contains provisions about when parallel imports may be allowed, recent legal cases have ‘muddied the waters’ to the point where firms are unsure if they are able to import marked goods legally. Amending the Act to make clear that parallel imports are allowed, would resolve the uncertainty and ultimately benefit the community. (p 393) Improving efficiency by reforming parallel imports Recent legal decisions (box 11.2) have made it more difficult to import legitimately marked goods – an outcome that can be anticompetitive and welfare eroding. Parallel imports, which in this context apply to the importation of legitimately trade marked goods, [are] notionally allowed under s. 123 of the Trade Marks Act. But now confusion reigns as to when imports are allowed, and this makes for a less efficient trade mark system. As IP Australia put it: IP Australia notes that the existing law around the parallel importation of trade marked goods has led to uncertainty and confusion. It is also arguable that section 123 of the Trade Marks Act is not effectively implementing the policy intention of allowing for the parallel importation of legitimate goods. … IP Australia notes that the complexity and uncertainty existing in this area makes it more difficult for potential parallel importers to operate with confidence that their activities will not lead to infringement of a trade mark. (sub. 23, p. 12) Legal professionals have also expressed concerns around how difficult the law has become to interpret. As put by Rothnie, and the Law Council of Australia: Trade Marks Act s 123 provides an express defence against infringement for the use of a registered trade mark in relation to goods to which the trade mark has been applied by or with the consent of the trade mark owner. In a number of recent decisions, the Federal Court 724 [13.720]

Trade Marks

CHAPTER 13

Productivity Commission, Intellectual Property Arrangements, Overview & Recommendations cont.

has struggled with the deceptively simple terms of the provision to the extent that, arguably, neither trade mark owners nor prospective parallel importers can confidently predict when the defence may be relied on. So, almost 20 years after its enactment, it is still not clear who is the “trade (394) mark owner” for this purpose nor the nature or scope of the “consent” that is required. ([W. Rothnie 2014, Trade Marks and Parallel Imports, Competition and Consumer Law Journal, vol. 22, 39]) … in light of several significant decisions by the courts, it has become very difficult to advise clients on what is, or is not, a legitimate parallel import. … In addition, section 123 operates as a defence so the onus lies on the importer or retailer to prove all the requirements of the defence have been satisfied. This is typically very difficult to satisfy. The members of the [Intellectual Property Committee] are aware that some Australian retailers and importers are therefore avoiding the risks associated with parallel imports for fear of engaging in criminal conduct and being labelled a counterfeiter. (Law Council of Australia [Submission to the Competition Policy Review on the Parallel Imports of Trade Marked Goods, 19 June, Canberra] 2014, pp. 1–3) The onus is currently on the parallel importer to prove that the product was manufactured under licence from the trade mark owner. This is often impractical for someone who has merely purchased products in a foreign market to prove. The current drafting of section 123 is also the source of uncertainty where an overseas manufacturer or trade mark owner registers its trade marks in Australia in the name of a related entity or local distributor. In many cases, this will preclude the clear application of section 123, and is becoming more frequently used as a means to circumvent the statutory intention of the section and control parallel imports. (Law Council of Australia sub. 64a, pp. 4–5) The issues around parallel imports have been examined previously in a number of reviews: • The Ergas review in 2000 recommended that the Trade Marks Act should be amended to ensure that its provisions were not used to circumvent the intent to allow parallel importation of legitimately trade marked goods (IPCRC 2000, pp. 190–191). While this recommendation was accepted by the government at the time, implementation did not occur (Law Council of Australia 2014, p. 3) • ACIP sought comments on the Ergas review recommendation about parallel imports as part of its 2004 review of trade mark enforcement. It found ‘mixed support’, noting that there was a lack of evidence to suggest that trade mark owners were commonly adopting practices to block parallel imports (ACIP [Review of Trade Mark Enforcement, Final Report, Canberra, 2004] 2004, p. 24) • The House of Representatives Standing Committee on Infrastructure and Communications (2013, p. 106) inquiry into IT pricing in 2013 recommended “that the (395) parallel importation defence in the Trade Marks Act be reviewed and broadened to ensure it is effective in allowing the importation of genuine goods” [See also Competition Policy Review, Final Report (March 2015) (“Harper Review”).]

Box 12.2 Case studies of parallel trade marked goods Sporte Leisure case [Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd (2012) 202 FCR 286; [2012] FCAFC 51] This case involved trade marked clothing products imported into Australia by the retailer Pauls Warehouse. The trade marked clothing was imported from India. The Indian manufacturer had obtained a licence from the Australian trade mark licensor to use the trade mark, but had agreed to not supply the goods outside of India. The Federal Court held that even though the clothing products had been manufactured overseas with the consent of the Australian licensor, the unauthorised importation and sale of those goods in Australia may infringe the registered trade mark. Lonsdale case [Paul’s Retail Pty Ltd v Lonsdale Australia Ltd [2012] FCAFC 130] [13.720]

725

Intellectual Property: Commentary and Materials Productivity Commission, Intellectual Property Arrangements, Overview & Recommendations cont.

Similar to the Sporte Leisure case, this case also involved the importation of trade marked clothing into Australia. Here, a United Kingdom company, Lonsdale Sports Limited granted a German company, Punch, a licence to promote, distribute and sell goods bearing the Lonsdale trade mark within a defined territory in Europe. Pursuant to this licence, Punch sold Lonsdale branded clothing to a subsequent company in Europe. Ultimately, the Lonsdale branded clothing reached Paul’s Retail who offered and sold the trade marked clothing in Australia. Lonsdale Australia, the Australian trade mark owner commenced action for infringement. The Full Federal Court considered the application of section 123 of the Trade Marks Act. The court found that there was no consent by Lonsdale Australia as the use was outside the scope of the original licence, between Lonsdale Sports Limited and Punch, which was to sell the trade marked products within the specified territory. Scandinavian Tobacco Group and Trojan Trading Company case [Scandinavian Tobacco Group Eersel BC v Trojan Trading Company Pty Ltd [2016] FCAFC 91] In this case, the Trojan Trading Company imported tobacco products into Australia that bore trade marks of the Scandinavian Tobacco Group, removed their packaging, and repackaged them in a manner that conformed to local tobacco packaging laws, including a reapplication of the original trade marks. Trojan was successfully able to defend a claim of trade mark infringement by relying on the defence for parallel imports in the Trade Marks Act 1995 (Cth). This ruling was affirmed by the full Federal Court in June 2016. Sources: ACCC (2014c, p. 61); Downie (2016); Rothnie (2016); Scandinavian Tobacco Group Eersel BC v Trojan Trading Company Pty Ltd [2016] FCAFC 91. The Commission has received submissions from participants that argue for caution in changing parallel import arrangements. These objections largely fall into two categories: that parallel imports devalue a trade mark in Australia, as marked goods tailored for overseas tastes are found to be unattractive to domestic tastes, or otherwise mislead consumers (INTA [International Trademark Association], sub. 20, p. 4). The second is that parallel imports are often of poorer quality, and may be dangerous (FCAI, sub. 88, attachment 1, p. 4). Were parallel import restrictions to be lifted, some participants argued in favour of clearly distinctive packaging to denote them as parallel imports, or clear disclaimers to be required in the case of warranties that may be void from using “unapproved” imports (INTA, sub. DR516). These arguments expect the Trade Marks Act to do too much. There is other information regarding parallel imports manufactured to different tastes – such as country of origin labelling requirements (DIIS 2016) and differences in price – to provide consumers with information on provenance and quality. Similarly, the argument that the Trade Marks Act should play a role in preventing dangerous goods being imported is without merit. The Commission notes that there are laws designed to prevent the importation and use of dangerous goods (‘parallel’ or otherwise), and there are regulatory agencies at the state and federal level designed to police such matters. Accordingly, the Commission sees no role for the Trade Marks Act to screen dangerous goods. Restrictions on parallel imports could be in the public interest if it could be demonstrated that they are overcoming the ‘free–riding’ problems inherent in creative ideas. But such a notion is irrelevant to trade marks – laws against counterfeit goods respond to free riding, whereas restrictions on parallel imports only serve to help rights holders price discriminate. As put by the ACCC: Legislative restrictions on parallel imports are not justified by the traditional ‘free rider’ concerns relating to IP which relate to preventing unauthorised reproduction. Instead, parallel importation restrictions extend IP rights into the process of distribution. They may also lead to inefficient outcomes by providing rewards to creators that are not proportional to the value or risk of their creation and create a public detriment. Parallel import restrictions grant an exclusive right to import to IP owners. By preventing international arbitrage these import monopolies may be used to support international price 726

[13.720]

Trade Marks

CHAPTER 13

discrimination by firms with market power. The ACCC considers that restrictions on parallel imports prevent consumers gaining access to an alternative source of goods which can promote competition and potentially provide consumers with lower cost products and improve the international competitiveness of user industries. (sub. 35, pp. 13–14). The Commission agrees. There are clear benefits to allowing the parallel importation of trade marked goods where the importer has secured a license from the mark holder. Reforming the provision that hinders parallel imports could take different forms, including: • •one that clarifies how “use of a mark” and “consent of ownership” applies to trade marks, and adjusts such terms to allow for parallel importation. • one that spells out when the rights afforded to trade marks are exhausted. The Commission considers that the latter approach is preferable, and has greater scope to prevent future legal uncertainty around parallel imports. Such an approach is also consistent with the current practice in New Zealand and with the suggestion of the Law Council of Australia on how to rectify the problem: A simpler test is whether the goods are genuine in that they have originated from the trade mark owner or its licensee. This would be consistent with the principle that a trade mark is a badge of origin, not of geographic control. (sub. 64a, pp. 4–5) The Commission notes that the use of the provision in New Zealand does not appear to have engendered the issues suggested in the submissions objecting to such a change. And in any case, the resulting loss of consumer welfare from price discrimination that the status quo allows is potentially a worse outcome for the community than any confusion that may arise from relaxing parallel imports restrictions. Amending the Australian Trade Marks Act to reflect a similar provision would resolve confusion with the workings of the trade mark system, more closely reflect the original intent of the Trade Marks Act, and improve efficiency by fostering greater competition.

Recommendation 12.1 The Australian Government should amend the Trade Marks Act 1995 (Cth) to ... ensure that parallel imports of marked goods do not infringe an Australian registered trade mark provided that the marked good has been brought to market elsewhere by the owner of the mark or its licensee. Section 97A of the Trade Marks Act 2002 (New Zealand) could serve as a model clause in this regard. (Some references omitted.)

REMEDIES [13.730] Trade Marks Act 1995 (Cth) s 126 provides:

(1)

The relief that a court may grant in an action for an infringement of a registered trade mark includes: (a) an injunction, which may be granted subject to any condition that the court thinks fit; and (b)

at the option of the plaintiff but subject to section 127, damages or an account of profits.

[13.730]

727

Intellectual Property: Commentary and Materials

(2)

A court may include an additional amount in an assessment of damages for an infringement of a registered trade mark, if the court considers it appropriate to do so having regard to: (a) the flagrancy of the infringement; and (b) (c)

the need to deter similar infringements of registered trade marks; and the conduct of the party that infringed the registered trade mark that occurred: (i) after the act constituting the infringement; or (ii)

(d)

after that party was informed that it had allegedly infringed the registered trade mark; and

any benefit shown to have accrued to that party because of the infringement; and

(e) all other relevant matters. In an oft-cited explanation of the difference between damages or an account of profits, and elaboration of the latter, Windeyer J in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25, at 32, observed: The distinction between an account of profits and damages is that by the former the infringer is required to give up his ill-gotten gains to the party whose rights he [or she] has infringed: by the latter he [or she] is required to compensate the party wronged for the loss he has suffered. The two computations can obviously yield different results, for a plaintiff’s loss is not to be measured by the defendant’s gain, nor a defendant’s gain by the plaintiff’s loss. Either may be greater, or less, than the other. If a plaintiff elects to take an inquiry as to damages the loss to him [or her] of profits which he[or she] might have made may be a substantial element of his claim… But what a plaintiff might have made had the defendant not invaded his [her] rights is by no means the same thing as what the defendant did make by doing so (citations omitted)…. [His Honour went on to say] (34) The remedy of injunction … reflects the history of the way in which equity protected and established a property in trade marks before they were recognized by statute. And the account of profits retains the characteristics of its origin in the Court of Chancery. By it a defendant is made to account for, and is then stripped of, profits he has made which it would be unconscionable that he retain. These are profits made by him dishonestly, that is by his knowingly infringing the rights of the proprietor of the trade mark. This explains why the liability to account is still not necessarily coextensive with acts of infringement. The account is limited to the profits made by the defendant during the period when he knew of the plaintiff’s rights. So it was in respect of common law trade marks. So it still is in respect of registered trade (35) marks.

Because of the Raising the Bar amendments, s 126 now provides for “additional damages”: s 126(2). The Explanatory Memorandum to Intellectual Property Laws Amendment (Raising The Bar) Bill 2011, 113 (footnotes omitted) explained why these changes were considered necessary: Additional damages (also known as punitive or exemplary damages) are available for flagrant infringement of patents, registered designs, and copyright. However, additional damages are not currently available for trade mark infringement. This limits the ability of a court to mark its disapproval of the blatant violation of the trade mark owner’s personal property rights under the Trade Marks Act. Additionally, stakeholders have submitted that many counterfeiters do not maintain sufficient business records to enable a satisfactory calculation of ordinary damages or an account of profits: purely nominal damages may be regarded by counterfeiters as merely the cost of doing business, rather than an effective deterrent. The absence of additional damages under the Trade Marks Act limits the ability of a court to provide an effective deterrent to intentional counterfeiting. 728 [13.730]

Trade Marks

CHAPTER 13

The amendment remedies these problems by giving the court the discretion to award additional damages. This aligns the remedies for trade mark infringement with other forms of intellectual property. It permits the court to provide a substantial deterrent and to mark its disapproval of flagrant infringement.

The Raising the Bar amendments also bolstered the Customs CEO’s search and seizure powers (Trade Marks Act 1995 (Cth) Pt 13), introduced “summary offences”, increased the pecuniary and custodial penalties for various indictable trade mark offences, and crucially, made indictable offences “strict liability” provisions: see generally Pt 14. Gaol terms are a real possibility for trade mark counterfeiters: see eg Ly v The Queen [2014] FCAFC 175 (for breach of copyright and Trade Marks Act 1995 (Cth) s 148(1)). Finally, as with rights holders in other areas of intellectual property, registered trade mark owners must be cautious not to make “groundless threats” against putative infringers, otherwise they may face legal proceedings by that “threatened person” pursuant to Trade Marks Act 1995 (Cth) s 129.

LOSS OR MODIFICATION OF REGISTERED RIGHTS Amendment, Cancellation and Revocation of Registration [13.740] A well-known adage in sport is that sometimes the best defence is a strong offence. Thus, when faced with a trade mark infringement action, the defendant may be wise to counterclaim by challenging the validity of the plaintiff’s registration in the first place. 100 In this respect, there are multiple avenues available (some more important than others) via ss 85 – 88 of the Trade Marks Act 1995 (Cth). Pursuant to these provisions, an “aggrieved person”, or the Registrar, 101 may apply to a prescribed court for rectification of the Register:

• to correct any error or omission (s 85); 100

101

However, that may not be the end of the matter for the defendant/cross-claimant. Even if the registration of the allegedly infringed mark is cancelled, there is some uncertainty as to whether an action for trade mark infringement must necessarily fail, or whether the order for cancellation can only operate prospectively, so that such an order does not abrogate accrued trade mark rights (that were potentially infringed) before the order of cancellation is granted. Some cases under the current Act take the former view: see especially Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd [2004] FCAFC 196, [134]; and Modena Trading Pty Ltd v Cantarella Bros Pty Ltd [2013] FCAFC 110; Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 3) [2015] FCA 1436, [42]–[43] (in obiter) (ultimately ordering cancellation, but not stipulating when the order took effect). For the latter view, see eg Deckers Outdoor Corporation Inc. v Farley (No 2) [2009] FCA 256, [49]-[56]. The matter, however, is made more complicated depending on the precise s 88 grounds invoked. Some commentators argue that the former approach (cancellation extinguishing any trade mark rights and offering a defence to trade mark infringement) applies to all s 88 grounds, save for 88(2)(c) (ie for ss 88(2)(a), (b) and (e)): see Robert Burrell and Michael Handler, Australian Trade Mark Law and Passing Off (Oxford 2016) 332–4. These commentators, at 333, have criticised Deckers Outdoor Corporation – insofar as it relates to s 88 cancellation proceedings generally – as being “overbroad” and “contrary to the weight of authority”, suggesting instead that cancellations pursuant to s 88(2)(c) should be decided on a “case by case basis”, but that cancellation, at the earliest, should take effect from the date the registered mark had become deceptive, or, at the latest, from the date rectification proceedings were commenced. Cf Generally Mark Davison and Ian Horak, Shanahan’s Australian Law of Trade Marks and Passing Off (Thomson Reuters, 5 th ed, 2012) [85.15]. Certainly, the position was much clearer under previous legislation because various rights (including the right to “obtain relief” via trade mark infringement actions) were predicated on “valid” registrations: see Trade Marks Act 1995 (Cth) s 58. In any event, the court’s discretion to grant relief under s 126 will no doubt be informed by questions of “validity” and post-registration deceptiveness: see eg EOS Australia Pty Ltd v Expo Tomei Pty Ltd (1998) 42 IPR 277, 283. But the Registrar must not make an application under ss 86 – 88 unless s/he considers the application “desirable in the public interest”: Trade Marks Act 1995 (Cth) s 88A. [13.740]

729

Intellectual Property: Commentary and Materials

• cancel a mark, remove or amend any entry because of a contravention of a condition or limitation (s 86); • because the registered trade mark has become a victim of so-called “genericide” (s 24) or describes (or is) the name of a expired patent (s 25) 102 (both via s 87); or • most importantly, to cancel registration, remove or amend an entry “wrongly made or remaining” on the Register, or impose a condition or limitation on registration (s 88(1)) 103 pursuant to grounds set out in s 88(2). These grounds include: any ground of opposition (s 88(2)(a)); an application (or subsequent amendment to same) for trade mark registration was obtained by fraud, false suggestion or misrepresentation (s 88(2)(b) and (e)); and because of circumstances applying at the filing date of rectification proceedings, the use of the mark is likely to deceive or cause confusion (s 88(2)(c)). Sections 87, 88(2)(a) or (c) must be read in light of s 89(1) which provides that a court “may decide not to grant … rectification” here if the registered owner establishes that the ground relied on by the applicant has “not arisen through any act or fault of the registered owner”. In coming to a decision under s 89(1), the court must take into account any “prescribed” 104 matters (s 89(2)(a)) and “may” take into account any other “relevant” matters (s 89(2)(b)). 105 Since the High Court decision in Health World Ltd v Shin-Sun Australia Ltd, 106 the notion of an “aggrieved person” (again, a standing requirement in ss 85 – 89) has been liberalised. The majority of the court there spoke of a legislative scheme which “reveals a concern with the condition of the Register of Trade Marks”: “a concern that it have ‘integrity’ and that it be ‘pure’”. 107 This broad purpose, however, must be weighed against a competing purpose of: preventing the security of the Register from being eroded by applications for rectification or removal by busybodies or “common informers or strangers proceeding wantonly” or persons without any interest in the Register or the functions it serves beyond gratifying an intellectual concern or reflecting “merely sentimental motives”. 108

Of course, the grounds above are not the only way in registered trade mark rights may be lost. Obvious grounds include non-renewal of the trade mark (s 78), or cancellation of registration on the request of the registered owner (s 84). Another common way is for the mark to be

102 103

106 107

See eg Mayne Industries Pty Ltd v Advanced Engineering Group Pty Ltd (2008) 166 FCR 312. Once the power under s 88(1) is enlivened, there is a question as to whether this is a “true” discretionary provision: ie whether the “may” in s 88(1) should really be read as “must”. For arguments in support of s 88(1) being a discretionary provision, see Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd [2004] FCAFC 196, [129]; and against, see eg EOS Australia Pty Ltd v Expo Tomei Pty Ltd (1998) 42 IPR 277, 286–7 (a conclusion said to be supported by the terms of s 89) Anakin Pty Ltd v Chatswood BBQ King Pty Ltd [2008] FCA 1467, [47]–[50]; and Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2015) 115 IPR 67, 79. Trade Mark Regulations 1995 reg 8.2 states these matters, “so far as they are relevant”, are (a) the extent to which the public interest will be affected if registration of the trade mark is not cancelled; (b) whether any circumstances that gave rise to the application have ceased to exist; (c) the extent to which the trade mark distinguished the relevant goods and/or services before the circumstances giving rise to the application arose; (d) whether there is any order or other remedy, other than an order for rectification, that would be adequate in the circumstances. There are also problems with the operative terms (and consequential scope) of the cumbrously drafted s 89(1), especially as to what is meant by the registered owner’s “act or fault”. (2010) 240 CLR 590. Ibid 597 [22] (citations omitted).

108

Ibid [27] (citations omitted).

104

105

730 [13.740]

Trade Marks

CHAPTER 13

removed on the basis of non-use (s 92, see below [13.750]). Finally, it is worth pointing out that the Registrar’s additional revocation powers: 109 • the first is a discretionary provision – where s/he is satisfied that the mark should not have been registered (considering all the circumstances that existed when the trade mark became registered) (see s 84A(2)) and it is reasonable to do so in light of all the circumstances: 110 (but revocation must be within 12 months of registration: s 84A(4)); • the second is an obligatory provision – the registration must be revoked where a notice of opposition was “ignored” during the registration process, where the Register becomes aware of his/her failure within 1 month of when the relevant notice was filed (but revocation must be done within a month of the registration) (s 84B). Section 84D provides that revocation under s 84A may be appealed to the Federal Court or Federal Circuit Court: see eg FPInnovation Pty Ltd v Registrar of Trade Marks [2013] FCA 826 (also considering the Registrar’s revocation of acceptance of certain marks pursuant to s 38).

Removal of Trade Marks for Non-Use [13.750] As we saw earlier in the chapter, trade marks are signs used or intended to be used to

distinguish one trader’s goods or services in the marketplace from those of another (see [13.60]). We also saw that a lack of intention to use a mark operates a ground of opposition (Trade Marks Act 1995 (Cth) s 59). There are strong public policy reasons for requiring trade mark usage as a condition for maintaining registration. Chief amongst these are serious concerns about the possible anti-competitive effects of unscrupulous traders stockpiling registered marks that they have no intention of using, thereby denying other traders access to such marks for their competing goods or services. The European Trade Marks Directive (2015) has elaborated recently on how trade mark usage impacts on consumers, trade mark registration systems generally, and in particular, on possible conflicts between traders: [31] Trade marks fulfil their purpose of distinguishing goods or services and allowing consumers to make informed choices only when they are actually used on the market. A requirement of use is also necessary in order to reduce the total number of trade marks registered and protected in the [European] Union and, consequently, the number of conflicts which arise between them. It is therefore essential to require that registered trade marks actually be used in connection with the goods or services for which they are registered, or, if not used in that connection within five years of the date of the completion of the registration procedure, be liable to be revoked. 111

109

This is not to be confused with the Registrar’s other powers, such as, correcting, at his/her own initiative, “any error or omission” made in entering the mark (s 81), or, on the written request of the registered owner, amending the representation or certain particulars (so long as these amendments do not “substantially affect” the trade mark’s “identity” and do not extend the trade marks owner’s rights respectively) (s 83), or amending the Register to reflect any change in the classification of goods/services (s 82).

110

The list of non-exhaustive circumstances here include are (a) any use that has been made of the trade mark; (b) any past, current or proposed legal proceedings relating to the trade mark as a registered trade mark or to the registration of the trade mark; (c) other action taken in relation to the trade mark as a registered trade mark; (d) any special circumstances making it appropriate: (i) to revoke the registration; or (ii) not to revoke the registration: s 84A(3). For the operative article, see EU Trade Marks Directive (2015), Article 19.

111

[13.750]

731

Intellectual Property: Commentary and Materials

In short, marks that are not used are vulnerable to removal from the Register. In Australia, the relevant procedures for removing a trade mark on the basis of non-use is set out in Pt 9 of the Trade Marks Act 1995 (Cth) (ss 92 – 105). 112 The core provision, s 92, provides: (1) (2)

Subject to subsection (3), a person may apply to the Registrar to have a trade mark that is or may be registered removed from the Register. The application: (a) must be in accordance with the regulations; and (b)

(3)

may be made in respect of any or all of the goods and/or services in respect of which the trade mark may be, or is, registered.

An application may not be made to the Registrar under subsection (1) if an action concerning the trade mark is pending in a prescribed court, but the person may apply to the court for an order directing the Registrar to remove the trade mark from the Register. Note: For prescribed court see section 190.

(4)

An application under subsection (1) or (3) (non–use application) may be made on either or both of the following grounds, and on no other grounds: (a) that, on the day on which the application for the registration of the trade mark was filed, the applicant for registration had no intention in good faith: (i)

to use the trade mark in Australia; or

(ii)

to authorise the use of the trade mark in Australia; or

(iii)

to assign the trade mark to a body corporate for use by the body corporate in Australia; in relation to the goods and/or services to which the non–use application relates and that the registered owner: (iv)

has not used the trade mark in Australia; or

(v) has not used the trade mark in good faith in Australia; in relation to those goods and/or services at any time before the period of one month ending on the day on which the non–use application is filed; (b)

that the trade mark has remained registered for a continuous period of 3 years ending one month before the day on which the non–use application is filed, and, at no time during that period, the person who was then the registered owner: (i)

used the trade mark in Australia; or

(ii) used the trade mark in good faith in Australia; in relation to the goods and/or services to which the application relates. Note 1: For file and month see section 6. Note 2: If non–use of a trade mark has been established in a particular place or export market, then instead of the trade mark being removed from the Register, conditions or limitations may be imposed under section 102 on the registration of the trade mark so that its registration does not extend to that place or export market. 112

Note that the Productivity Commission has recently recommended reducing the grace period from five to three years before new trade mark registrations can be challenged for non-use: see Productivity Commission, Intellectual Property Arrangements: Overview & Recommendations, No 78 (23 September 2016), 36, Recommendation 12.1.

732 [13.750]

Trade Marks

CHAPTER 13

(5)

If the right or interest on which a person relied to make an application (under subsection (1) or (3)) to obtain the removal of a trade mark from the Register becomes vested in another person, the other person may, on giving notice of the relevant facts to the Registrar or the court (as the case requires), be substituted for the first–mentioned person as the applicant. Once a non-use allegation is made pursuant to s 92(4), the opponent (typically the registered owner) bears the onus of proof in rebutting that allegation by establishing trade mark use. However, even if the non-use ground is ultimately made out, the Registrar (or the court) enjoys a general discretion not to remove the impugned mark from the Register (pursuant to s 101(3)), or as is more common, the removal of the trade mark from the Register may be ordered in respect of “any or all” of the specified goods and/or services (s 101(1)). The next two cases, and the authorities cited therein, illustrate the challenges in bringing a successful non-use application.

E & J Gallo Winery v Lion Nathan [13.760] E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144; [2010] HCA 15 High Court of Australia [Pursuant to s 92(4)(b), Lion Nathan sought to remove Gallo’s BAREFOOT device mark for wine for alleged non-use for a three year period being 7 May 2004 to 8 May 2007. Mr Houlihan, the original registered owner of the mark, had licensed the mark to US company Grape Links Inc (trading as Barefoot Cellars). In January 2005, Gallo bought Barefoot Cellars, and subsequently became the registered owner of the mark. During the alleged non-use period, Beach Avenue, a Victorian distributer, imported 144 bottles of wines affixed with Gallo’s BAREFOOT mark from Germany. 41 of these bottles were sold in Australia during the alleged non-use period. Barefoot Cellars, Mr Houlihan or Gallo knew nothing of these sales or the importation. The lower courts upheld Lion Nathan’s non-use application on the grounds that Barefoot Cellars had not “knowingly projected” the goods into the Australian market. Gallo appealed.] FRENCH CJ, GUMMOW, CRENNAN AND BELL JJ: [159][28] As framed by Gallo, the principal issue raised on the appeal is whether, within the terms of s 100(3)(a), there was use by Gallo or its predecessor in title, Mr Houlihan, of the registered trade mark in respect of wines, in good faith during the alleged statutory period. In our opinion, for the reasons which follow, there was such use. [160][29] The Full [Federal] Court correctly recognised that the offer for sale and selling, by Beach Avenue, of the bottles of wine which bore the registered trade mark constituted “use” of the trade mark in Australia within the meaning of s 7(4). Accordingly, the principal issue turns on whether that use was use by the registered owner. … [162][40] Reduced to essentials, the dispute between the parties is over whether the circumstances in this case are sufficient to establish use in Australia as required by [ss 92(4)(b), 100(1)(c) and 100(3)(a) of the Trade Marks Act 1995 (Cth)] … Did the circumstances fall short of constituting a use within the meaning of those sections because neither the registered owner nor Barefoot Cellars engaged in any act or conduct known by them to have had, or potentially to have, the result that the goods to which the registered trade mark was attached would be dealt with in some way within Australia in the course of trade? … [163][44] … [T]he reference in s 17 to “the course of trade” encompasses the idea that use of a trade mark is use in respect of “vendible articles”. A mark is used only if it is used “in the course of trade”. [13.760]

733

Intellectual Property: Commentary and Materials

E & J Gallo Winery v Lion Nathan cont. [164][45] In Estex [Clothing Manufacturers Pty Ltd v Ellis and Goldstein Ltd (1967) 116 CLR 254], Windeyer J and then the Full Court considered whether an overseas manufacturer (who was a registered owner of the trade mark in question) uses a trade mark in Australia when the manufacturer sells goods to Australian retailers for delivery in Australia and those retailers import the goods into Australia and sell them. [46] In considering what “use” meant under s 23 of the Trade Marks Act 1955 (Cth) [not reproduced here], a provision similar to, but not identical with, s 92(4)(b), Windeyer J said [Estex at 266-267]: [W]hen it is said that a trade mark is used to distinguish the goods of one man from those of another, that abbreviated statement obviously does not refer to the goods of the owner of the mark in the sense of goods which he owns or possesses. After the goods have been sold by him his mark may still, using the definition of trade mark in the Act, be used in relation to those goods for the purpose of indicating a connexion in the course of trade between them and him, the registered proprietor of the mark. The manufacturer who sells goods, marked with his mark, to a warehouseman, wholesaler or retailer does not, in my view, thereupon cease to use the mark in respect of those goods. The mark is his property although the goods are not; and the mark is being used by him so long as the goods are in the course of trade and it is indicative of their origin, that is as his products. Goods remain in the course of trade so long as they are upon a market for sale. Only when they are bought for consumption do they cease to be in the course of trade. [47] His Honour distinguished the facts in Estex from those in W D & H O Wills (Australia) Ltd v Rothmans Ltd [(1956) 94 CLR 182; [1956] HCA 15] where the consumers of certain goods concluded their purchases overseas, with the result that the trade mark in question was not used “in the course of trade” in Australia [Estex at 268-269]. [48] In dismissing appeals from the judgment of Windeyer J, the Full Court said nothing to detract from Windeyer J’s analysis of use. The Full Court stated that the denotation of use in s 23 was “not limited by any concept of the physical use of a tangible object”. The Full Court went on to state [Estex at 271]: [W]hen an overseas manufacturer projects into the course of trade in this country, by means of sales to Australian retail houses, goods bearing his mark and the goods, bearing his mark, are displayed or offered for sale or sold in this country, the use of the mark is that of the manufacturer. [165][49] This passage and a similar passage led to Lion Nathan’s contention that it was a necessary condition to establish a use in Australia that an overseas manufacturer knowingly “projects” his goods into the course of trade in Australia. This misreads the judgment. In Estex, the facts described in the passage set out above were sufficient for establishing a use in Australia. There was no suggestion that what was sufficient in that case was necessary in every case. As Aickin J observed in Pioneer Kabushiki Kaisha v Registrar of Trade Marks [(1977) 137 CLR 670; [1977] HCA 56 at 688 (CLR)], Estex was authority for “the proposition that the foreign owner of an Australian mark uses it in Australia when he sells goods for delivery abroad to Australian retailers and those retailers import them into Australia for sale and there sell them”. [50] On the facts of this case, there was use of the registered trade mark on vendible products offered for sale and sold in Australia by the trader Beach Avenue to consumers. There was no issue about the registered trade mark’s capacity to distinguish the goods to which it was attached. The goods had been on the market for sale under the registered trade mark in the United States of America and had arrived in Australia via Germany. The then registered owner, Mr Houlihan, through Barefoot Cellars, had sold the goods to a German trader for resale without any limitation as to their destination. 734

[13.760]

Trade Marks

CHAPTER 13

E & J Gallo Winery v Lion Nathan cont. [51] The capacity of a trade mark to distinguish a registered owner’s goods from those of others, as required by s 17, does not depend on whether the owner knowingly projects the goods into the Australian market. It depends on the goods being in the course of trade in Australia. Each occasion of trade in Australia, whilst goods sold under the trade mark remain in the course of trade, is a use for the purposes of the Trade Marks Act. A registered owner who has registered a trade mark under the provisions of the Trade Marks Act can be taken, in general terms, to have an intention to use that trade mark on goods in Australia. It is a commonplace of contemporary international trade that prior to consumption goods may be in the course of trade across national boundaries. [52] An overseas manufacturer who has registered a trade mark in Australia and who himself (or through an authorised user) places the trade mark on goods which are then sold to a trader overseas can be said to be a user of the trade mark when those same goods, to which the trade mark is affixed, are in the course of trade, that is, are offered for sale and sold in Australia. This is because the trade mark remains the trade mark of the registered owner (through an authorised user if there is one) whilst the goods are in the course of trade before they are bought for consumption [Estex at 266-267]. As affirmed by Gummow J in Wingate Marketing Pty Ltd v Levi Strauss & Co [(1994) 49 FCR 89 at 136], “whilst a trade mark remains on goods, it functions as an indicator of the person who [166] attached or authorised the initial use of the mark”. During the trading period, the trade mark functions as an indicator of the origin of the goods, irrespective of the location of the first sale. [53] Provided Barefoot Cellars was an authorised user, the facts and circumstances of this case are sufficient to constitute a use of the registered trade mark by the registered owner for the purposes of the relevant sections of the Trade Marks Act set out above. It is not necessary to decide whether by importation and sale Beach Avenue has also used the mark (as was found by the Full Court [E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2009) 175 FCR 386 at 403 [57]) because the only relevant question is whether the registered owner used the mark [Pioneer Kabushiki Kaisha v Registrar of Trade Marks (1977) 137 CLR 670 at 688 per Aickin J]. “Use in good faith” [60] Section 92(4)(b)(ii) has been set out above. Lion Nathan contended that the requirement that use of a trade mark be “use in good faith” involved consideration of the volume of use, which it was suggested should be substantial, and also involved consideration of the state of mind of the registered owner in respect of the use. Lion Nathan’s position was that the use of the registered trade mark was neither substantial nor genuine. In terms of volume, Lion Nathan described the sales in Australia as minuscule. It was also submitted that a registered owner should not be taken to have used a trade mark in good faith when the owner was unaware that such use was occurring. The primary judge rejected these arguments and the Full Court did not consider them. [61] Gallo responded with a submission that the use which was proven to have occurred was sufficient to constitute use in good faith. [168][62] In Electrolux Ltd v Electrix Ltd [(1953) 71 RPC 23] (“Electrolux”) a question arose of bona fide use within the meaning of s 26 of the Trade Marks Act 1938 (UK). It was held that bona fide use must be ordinary and genuine use judged by commercial standards [Electrolux Ltd v Electrix Ltd (1953) 71 RPC 23 at 36 per Sir Raymond Evershed MR]. In Imperial Group Ltd v Philip Morris & Co Ltd [[1982] FSR 72] (“Imperial Group”), it was held that use of a trade mark for a purpose other than deriving profit and establishing goodwill is not use as required by the legislation [Imperial Group Ltd v Philip Morris & Co Ltd [1982] FSR 72 at 83 per Shaw LJ]. It has also been held that contriving use for the purpose of defeating a trade rival’s plans will lack the necessary quality of genuineness [“Concord” Trade Mark [1987] FSR 209]. However, a use does not cease to be genuine even if it only occurs after an appreciation that a registration was vulnerable to an attack on the grounds of non-use [New South Wales Dairy Corporation v Murray-Goulburn Co-operative Co Ltd (1989) 86 ALR 549 at 567 per Gummow J]. In deciding that a use is not genuine, a court may be influenced by the quantum of sales [13.760]

735

Intellectual Property: Commentary and Materials

E & J Gallo Winery v Lion Nathan cont. [Imperial Group Ltd v Philip Morris & Co Ltd [1982] FSR 72 at 79 per Lawton LJ, 83 per Shaw LJ; see also “Concord” Trade Mark [1987] FSR 209]. In “Concord” Trade Mark [[1987] FSR 209 at 219] (“Concord”), Falconer J relied on Lawton LJ’s summary of the findings in the Electrolux case in Imperial Group [[1982] FSR 72 at 79]: According to the judgments given in this court in that case [Electrolux] a bona fide use should be “ordinary and genuine” (per Lord Evershed MR at p 36), “perfectly genuine”, “substantial in amount”, “a real commercial use on a substantial scale” (per Jenkins LJ at p 41) and not “some fictitious or colourable use but a real or genuine use” (per Morris LJ at p 42). [63] Lion Nathan relied on a passage in New South Wales Dairy Corporation v Murray-Goulburn Co–operative Co Ltd [(1989) 86 ALR 549 at 567] in which Gummow J noted that in Concord, Falconer J held that, for a use to be bona fide within the meaning of s 26 of the Trade Marks Act 1938 (UK), the use should be “substantial and genuine judged by ordinary commercial standards considered in relation to the trade concerned”. Concord concerned the launch of cigarette products under a trade mark which had not been in use for some years. Falconer J found that the sales, in the context of cigarette sales, were “negligible” and therefore could not be regarded as substantial [“Concord” Trade Mark [1987] FSR 209 at 226]. [64] Whilst a single act of sale may not be sufficient to prevent removal [“Nodoz” Trade Mark [1962] RPC 1], in the case of genuine use, a relatively small amount of use may be sufficient to constitute “ordinary and genuine” [Electrolux Ltd v Electrix Ltd (1953) 71 RPC 23 at 36 per Sir Raymond Evershed MR] use [169] judged by commercial standards. It has been recognised by the Court of Justice of the European Communities, dealing with the expression “genuine use” as used in Arts 10 and 12 of Directive 89/104 of the Council of the European Communities[These Articles can be found set out in Kerly’s Law of Trade Marks and Trade Names, 14th ed (2005) at 934-935.], that use of a mark “need not … always be quantitatively significant for it to be deemed genuine” [Ansul BV v Ajax Brandbeveiliging BV [2005] Ch 97 at 116 [39]]. On the facts here, it is not necessary to decide whether a single use of the registered trade mark in good faith would have been sufficient to resist removal [Cf Woolly Bull Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166 at 172 [17] per Drummond J]. [65] A commercial quantity of wine, some 144 bottles, was imported and offered for sale under the registered trade mark by Beach Avenue during the statutory period. Some 41 sales during that time were proven by reference to invoices and tax paid. There was no suggestion in the evidence that the offering for sale and selling either overseas or in Australia was for any purpose other than making profit and establishing goodwill in the registered trade mark. It was not contended that the use was fictitious or colourable. In all the circumstances the use was genuine and sufficient to establish use in good faith for the purposes of Lion Nathan’s application for removal. (some citations omitted)

Dick Smith Investments Pty Ltd v Ramsey [13.770] Dick Smith Investments Pty Ltd v Ramsey [2016] FCA 939 Federal Court of Australia [This case is the latest iteration in a bitterly fought tit-for-tat battle between two traders – employing homophones as trade marks, OzEmite and AussieMite – in competition for Australian market share of the yeast extract spread market. On 23 June 1999, Dick Smith (a well-known Australian entrepreneur and philanthropist) via his related entities registered OzEmite in respect of spreads and snack foods (in class 29) and yeast; yeast extracts; spreads and snack foods (in class 30). The OzEmite mark was later registered on 23 October 2003, notwithstanding opposition (later withdrawn) from Roger Ramsey, a South Australian businessperson. Ramsay made his AussieMite yeast 736 [13.770]

Trade Marks

CHAPTER 13

Dick Smith Investments Pty Ltd v Ramsey cont. spread commercially available by January 2001, and on 7 May 2001 applied to register AussieMite as a trade mark in respect of spreads; spreads and snack foods containing yeast and yeast extracts (in class 30). Ramsey’s AussieMite mark was later registered (over the objections of Dick Smith companies) on the basis of honest and concurrent use (s 44(3(b)). Even though the OzEmite mark was heavily promoted, albeit intermittently over a number of years, no goods were offered for sale under the mark for more than eight years. The OzEmite spread was eventually made commercially available in mid-2012. In the interim, Ramsay filed (on 1 June 2011), and later succeeded (on 25 February 2014) in an application to remove OzEmite from the Register on the basis of non-use. This case is an appeal of the delegate’s removal decision.] KATZMANN J: [6] The battle lines are clear. [7] In a nutshell, the Dick Smith parties claim that publicity featuring the OzEmite name during the non-use period is evidence that the name was used as a trade mark, despite the fact that no product had been sold under that name and none was then available for sale. In the alternative, they claim they have a defence to the non-use application in that there are circumstances amounting to an “obstacle” to the use of the mark which caused the delay in the launch of the OzEmite product. In essence, the “obstacle” is a reference to the difficulties Mr Smith and his companies experienced in sourcing spent brewer’s yeast, a key ingredient in Vegemite, the taste of which they were seeking to replicate. It is apparently uncontroversial that Kraft, the American purchaser of Vegemite, had cornered the market on spent brewer’s yeast by entering into contracts with major Australian breweries. If they fail on both counts, the Dick Smith parties say that the Court should exercise its discretion to allow the OzEmite trade mark to remain on the Register. … [117] In my opinion, the reference in [E & J] Gallo [Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144] to “vendible goods” should be read as goods which are “sold or otherwise traded in”, but not so as to limit the scope of trade mark use to goods which are actually sold. After all, “vendible” does not mean sold. It means capable of being sold. It also means “marketable”. … [118] Furthermore, the Act contemplates the registration of trade marks in relation to goods at a time before they are traded. … What is more, as Barwick CJ, McTiernan, Taylor and Owen JJ emphasised in the appeal in Estex [Clothing Manufacturers Pty Limited v Ellis and Goldstein Limited (1967) 116 CLR 254] at 271, “use” is “not limited by any concept of the physical use of a tangible object”. [119] Like the words of a statute, remarks in a judgment must be read in context. Gallo also concerned an application for the removal of a trade mark from the Register for non-use but that is where the similarity ends. The facts and the issues in Gallo were very different from those in the present case. [120] Proceedings in Gallo began in this Court as an infringement suit, but by a cross-claim Lion Nathan Australia Pty Ltd (“Lion Nathan”), the alleged infringer, applied for an order under s 101(2) that the mark be removed from the Register for non-use. The primary judge held that there had been no infringement and granted Lion Nathan’s application. A Full Court reversed the finding on infringement but upheld the order for removal. But the High Court allowed the appeal, all five justices holding that there had been use of the trade mark in good faith during the statutory period. [125] … The “course of trade” is not confined to sales. It includes “merchandising, advertising and promotion, making offers, selecting, distributing, selling, hiring, leasing, letting out for public use, exporting, importing, repairing, processing, maintenance, servicing – all the operations of a commercial character by which a trader provides to customers for reward some kind of goods or services”: Lahore JW, Patents, Trade Marks & Related Rights (LexisNexis Butterworths, 2006), vol 1A, at [60,130] and the cases referred to there. [13.770]

737

Intellectual Property: Commentary and Materials

Dick Smith Investments Pty Ltd v Ramsey cont. [130] In Gallo (as in Nodoz [Re Nodoz Trade Mark [1962] RPC 1]), to demonstrate use of the trade mark the registered owner was relying on sales (and only on sales). As the Dick Smith parties submitted, the circumstance that a single act of sale may not be sufficient to establish use does not prove that there has been no use. Use may be demonstrated by other means. Each case will turn on its own facts. [131] After all, it could not seriously be contended that, if a trader offers for sale goods to which his or her mark is attached but no-one chooses to buy them, there has been no use of the mark in relation to the goods. The mark is being employed in the course of trade just as surely as it would have been if the trader managed to secure a sale. [132] For all these reasons I accept the submission by the Dick Smith parties that Gallo is not authority for the proposition that there must at least be “a single act of sale”. Since in Gallo actual sales of goods to which the trade mark was attached had taken place during the statutory period, there was no occasion to consider whether something short of an actual sale could amount to use of the trade mark in relation to the relevant goods. [155] … Gallo should not be read as excluding from “use as a trade mark” during the statutory period all steps antecedent to a sale or the offering for sale of the goods the subject of the application. [156] The evidence in the present case establishes that the Dick Smith parties did not merely have a subjective intention to use the OzEmite trade mark in relation to the goods the subject of the application. … [T]he evidence went well beyond preliminary investigations and showed “an objectively ascertainable commitment” (Woolly Bull [Enterprises Pty Ltd v Reynolds (2001) 107 FCR 166] at [28]) to producing a “vendible” product which would carry the mark. I am satisfied that the OzEmite product remained under development during the non-use period and that, notwithstanding the various setbacks and, at times, some understandable frustration, the Dick Smith parties were intent on bringing it to market. Considerable funds had been invested in its development. While there was no evidence about the full extent of the expenditure, as I mentioned above the evidence does disclose that by August 2005 over $100,000 had been spent. I expect that by the end of the statutory period that sum would have been significantly greater. [157] It may not be strictly correct to describe the broadcasts in 2010 and 2011 as “pre-launch publicity”, as the launch of the product was not then imminent. But that is beside the point. What matters is whether the mark was being used as a trade mark to distinguish the prospective product from the products of others. The references to OzEmite in the two promotional pieces answer this description. To adopt Lord Macmillan’s language in Aristoc [Aristoc Ltd v Rysta Ltd [1945] AC 68], they reveal uses of the mark in “association with the goods in the course of their production and preparation for the market” and in this way were uses of the mark in connection with goods in the course of trade. Their objective purpose was to revive, if not maintain, interest in the OzEmite product amongst potential purchasers so that there would be a viable market for the product once it was released. I do not doubt that in each of these appearances, and notwithstanding the humour in The Chaser skit, Mr Smith’s promotion of OzEmite was an expression of a genuine intent to use the mark for commercial purposes. Consequently, each involved a use of the mark in good faith for the purposes of s 94(1)(b)(ii). I find that at the time of the broadcasts Mr Smith (the controlling mind and will of DSI, the then owner of the mark) had a genuine expectation that his intentions would shortly be realised. It just took longer than he predicted. [158] For these reasons I am satisfied that the Dick Smith parties have discharged their burden of proof. I find that DSI, the then registered owner of the OzEmite trade mark, used the mark in Australia during the statutory period in relation to goods to which the non-use application relates. 738 [13.770]

Trade Marks

CHAPTER 13

Dick Smith Investments Pty Ltd v Ramsey cont. [In obiter, Katzmann J went on to observe that (1) the difficulties in finding suppliers and bringing OzEmite to market were not circumstances that were obstacles for the purposes of s 100(3)(c); (2) in any event, the general discretion under s 102 should be exercised in favour of Dick Smith’s OzEmite so that the mark remains on the register.] (some citations omitted.)

OTHER ASPECTS OF TRADE MARK REGISTRATION Collective trade marks [13.780] Trade Marks Act 1995 (Cth) Pt 15 provides for the registration of collective marks:

that is, marks that signify that goods or services offered in the course of trade are by members of a specific association: s 162. In this way, such members can distinguish the good and services they offer from non-members of that association. Section 164 provides that application for the registration of a collective trade mark must be made by the association to which the mark belongs. Collective marks, it is worth point out, cannot be assigned or transmitted: s 166. Some notable examples of collective marks include the INDUSTRY SUPER FUND, YOUR FUND YOUR FUTURE device mark (TM No. 679462); SURF LIFE SAVING SOUTH AUSTRALIA device mark (TM No. 791666); AGRIBUSINESS COUNCIL OF AUSTRALIA device mark (TM No. 1566958); AUSTRALIAN INTERNATIONAL MOVERS ASSOCIATION LIMITED device mark (TM No. 1751506).

Certification trade marks [13.790] Trade Marks Act 1995 (Cth) Pt 16 provides for the registration by organisations or associations of marks that they apply as attesting to a particular standard or quality. Applications for registration are accompanied by the rules that will govern the use of the mark. The registration process is quite involved. Not only must the applicant file a copy of the rules governing the use of the certification trade mark along with their application (s 173), but the applied-for certification mark is then considered by the Australian Competition and Consumer Commission (ACCC). The ACCC plays an important role here: see generally ss 175 – 181. Crucially, it considers whether the applicant (or approved certifier) is competent to certify in accordance with the rules; and whether the rules are detrimental to the public (eg not anti-competitive, misleading or deceptive, contravene product safety concerns etc): s 175. Famous certification marks include the Woolmark device mark (TM No. 185835), the Australian Made Campaign’s triangular kangaroo device mark (eg TM No. 451219); National Heart Foundation’s Approved “tick” mark (TM No. 506334), and various FAIR TRADE CERTIFIED marks (see eg TM no. 951395 in class 30 (Coffee and coffee beans)). The wrongful use of a certification mark, such as approved by the Standards Association of Australia (eg TM No. 741725), will also breach Australian Consumer Law s 29, contained in Competition and Consumer Act 2010 (Cth) Sch 2: for early authority considering analogous provisions see Hartnell v Sharp Corp of Australia Pty Ltd (1975) 5 ALR 493.

[13.790]

739

Intellectual Property: Commentary and Materials

Defensive registration [13.800] Certain marks that have a considerable reputation could cause confusion if registered by other than their originators in respect of novel categories of goods or services. Trade Marks Act 1995 (Cth) Part 17 permits registration of such marks to prevent their use for goods or services not covered by the registration. Examples of marks registered as defensive marks in Australia include “HOLDEN”, “LEVI’S”, “CHANEL”, “GILLETTE”, “KLEENEX”, “WEDGWOOD”, “VIAGRA” and “VICKS”. For Pt 17 registration, the applicant need not use or to intend to use the mark for goods or services in respect of which registration is obtained: see especially s 185. The Productivity Commission has recently criticised defensive trade mark registration, and had earlier called for their abolition: see Productivity Commission, Intellectual Property Arrangements, Draft Report (29 April 2016) 338–9. However, in its final report issued later in year, the Productivity Commission adopted a less hostile approach: see eg Productivity Commission, Intellectual Property Arrangements, No. 78 (23 September 2016), 387, Box 12.1.

International registration [13.810] Australia is a member of the Paris Union established by the Paris Convention for the

Protection of Industrial Property (1883), under which the members of the Union enjoy the same rights in each Union country as those countries’ own nationals, as well as certain Convention rights. The principal Convention right is a right of priority. Following the filing of an application for registration of a trade mark in a Union country, a person has a period of six months during which he or she has priority in filing for registration in any other Union country. Trade Marks Act 1995 (Cth) Part 17A gives effect to this priority. Australia is also a member of the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (1957), which provides for a common classification of goods or services for the purpose of registration of marks, discussed at [13.150].

740 [13.800]

OTHER INTELLECTUAL PROPERTY AREAS

PART5

CHAPTER 14 Designs and Circuit Layouts [14.10]

DESIGNS – INTRODUCTION ................................................................................ 744

[14.20] [14.20]

SUBJECT MATTER OF DESIGN REGISTRATION ................................................... 746 Definition of design ............................................................................................... 746

[14.30]

Designs law protects appearance, not the article itself ..................................... 747

[14.20]

Designs Act 2003 (Cth) ......................................................... 746

[14.40] [14.60]

[14.80] [14.100]

Re Wolanski’s Registered Design ............................................. Designs Act 2003 (Cth) ......................................................... Designs must be new and distinctive .................................................................. [14.80] Designs Act 2003 (Cth) ......................................................... New designs have not been used or published ................................................. [14.100] Designs Act 2003 (Cth) .........................................................

747 748 750 750 751 751

[14.120] Assessing newness and distinctiveness ............................................. 751 [14.130] [14.150]

Designs Act 2003 (Cth) ......................................................... 752 Review 2 Pty Ltd v Redberry Enterprise Pty Ltd ......................... 753

[14.160] REGISTRATION AND PUBLICATION ..................................................................... 754 [14.170] INFRINGEMENT ..................................................................................................... 755 [14.170]

Designs Act 2003 (Cth) ......................................................... 755

[14.200] Spare parts defence ............................................................................................... 756 [14.210] JURISDICTION AND REMEDIES ............................................................................ 756 [14.220] INTERNATIONAL PROTECTION ............................................................................ 756 [14.230] OVERLAP WITH COPYRIGHT PROTECTION ........................................................ 757 [14.230] Introduction ........................................................................................................... 757 [14.240] Spare parts and copyright protection ................................................................. 758 [14.250]

Warman International v Envirotech Australia ........................... 758

[14.260] Legislative developments ...................................................................................... 759 [14.270] Prevention of design/copyright protection overlap ........................................... 760 [14.280]

Copyright Act 1968 (Cth) ...................................................... 760

[14.290] Where corresponding design is registered ....................................... 760 [14.300] Where corresponding design is not registered ................................ 760 [14.300]

Copyright Act 1968 (Cth) ...................................................... 760

[14.310] Summary .............................................................................................. 762 [14.320] CIRCUIT LAYOUTS ................................................................................................. 763 [14.320] What is a circuit layout? ........................................................................................ 763 [14.330] Definition of eligible layout .................................................................................. 763 [14.330]

[14.350] [14.370] [14.390] [14.420]

Circuit Layouts Act 1989 (Cth) ............................................... 763 763 764 764 765

Eligible layout rights .............................................................................................. Commercial exploitation ...................................................................................... Originality of circuit layout ................................................................................... Overlap of circuit layouts with designs and copyright ......................................

743

Intellectual Property: Commentary and Materials

DESIGNS – INTRODUCTION [14.10] The value that is added to an article by reason of the way it looks to a consumer is

something that designers, investors and governments have considered worth protecting, with law that seeks to encourage creativity. Statutory protection for the creativity inherent in designs, primarily through the Designs Act 2003 (Cth), is discussed in this chapter. That Act provides short-term protection, based on registration, for the appearance of manufactured products that can range from everyday consumer goods to luxury items, building materials, industrial components and sophisticated consumer electronics. The protection relates to the “look” of the product rather than its functionality, with functionality potentially being protected under the Patents Act 1990 (Cth), another industrial property statute that reflects the global 1883 Paris Convention for the Protection of Industrial Property (Paris Convention). The protected “look” might be a product’s three-dimensional appearance (eg, the shape of a jug) or the decoration applied to a surface (eg, the pattern decorating a container, or the pattern visible on wallpaper, carpet or clothing fabric). A previous edition of this text described designs law as “the less glamorous cousin of other intellectual property (IP) regimes, protecting neither novel technology (the realm of patents) nor the products of our cultural lives (the realm of copyright)”. 1 Students of industrial property law and design aficionados might however consider that law protecting design is significant, not least because the art that most people encounter on a day-to-day basis takes the form of electronic devices, furniture and jewellery rather than old master canvases or live performances of works by Mahler, Beethoven and Schubert. “Design can be nothing more than eye candy, or it can change the world. Its reach is extraordinary and its imprint on our lives enormous. Design affects all of us, in one way or another, every day, even though we may fail to realise it most of the time”. 2 The Australian law governing rights in registered designs is contained in the Designs Act 2003 (Cth), which, in essence, provides the proprietor of a registered design with a temporary monopoly “for one thing only … one particular individual and specific appearance”, as stated in Re Wolanski’s Registered Design (1953) 88 CLR 278 at 279 (see [14.120]). The Designs Act 2003 (Cth) replaced the Designs Act 1906 (Cth) legislation, which was based on UK legislation that dated from the middle of the preceding century. The 1906 statute was initially concerned with a mercantilist encouragement of “mechanical” or “ornamental arts”, such as printed textiles and wallpaper, that were commercially significant but held to be less worthy than the fine arts, such as painting and sculpture. The 1906 statute was updated from time to time, notably through changes made in 1981, but in practice was often considered as not particularly useful and thus not relied on by many small designers. Debate about international IP frameworks, particularly as much of the production of consumer items moved offshore, and criticisms of the coherence of the statute resulted in examination by the Australian Law Reform Commission (ALRC), which published a major report in 1995. 3 That report offered an extensive and still relevant review of designs law, with recommendations for a new statutory designs regime. The resultant statute came into effect in December 2003. 1 2 3

J McKeough, K Bowrey and P Griffith, Intellectual Property: Commentary and Materials (4th ed, Lawbook Co, Sydney, 2007), Chapter 11, p 529. N Barrowclough, Good Weekend, The Sydney Morning Herald, 16 June 2005, p 22. ALRC, Designs, Report 74 (AGPS, 1995).

744 [14.10]

Designs and Circuit Layouts

CHAPTER 14

Designs law underwent further review by the Advisory Council on Intellectual Property (ACIP) in 2015. 4 ACIP identified a need for increased harmonisation of the Australian designs system with international practices and treaties, and recommended revision of some of the changes introduced by the Designs Act 2003 (Cth). The recommendations of ACIP were largely accepted by the Australian Government and changes to the legislation can be expected to follow in due course. 5 The aim of this chapter is to give students of IP an understanding of the scope of designs protection, an ability to recognise the subject matter, and the capacity to analyse its relationship with copyright law, particularly the Australian legislature’s attempts to reduce “dual protection” that would otherwise confer a long term of copyright protection on mass-produced household and industrial items. The precursor of Australian designs law is the Patents, Designs & Trade Marks Act 1883 (46 & 47 Vict c 57) (UK), developed as part of the establishment of the Paris Convention. The Patents, Designs & Trade Marks Act 1883 (UK) derived its design regulation aspects from a series of statutes, commencing with the Designing & Printing of Linens (etc) Act 1787 (27 Geo 3, c 38) (ENG) that initially conferred a two-month period of “copyright” protection on designs for linens, calicoes, cottons and muslins that met certain criteria of originality. Protection was then extended to other textiles and, in the Copyright of Designs Act 1839 (2 & 3 Vict c 17) (UK), to any “article of manufacture” for the “shaping and configuration thereof”. That protection related to the look of manufactured items; that is, “multiples” rather than items that were a “one off”. Extension through the Designs Registration Act 1839 (UK), Ornamental Designs Act 1842 (UK) and Utility Designs Act 1843 (UK) resulted from an inquiry, initiated in 1835, by a parliamentary select committee concerned with the best means of competing with the superiority of French industrial design, which was attributed to the encouragement and protection given by French law. That inquiry may resonate with readers of this chapter who encounter statements about international competitiveness and the support for design that exists in Scandinavia, Germany, Italy and “design-oriented” export economies. An emphasis on textile, footwear and clothing design is still important for developing economies, and is apparent in disputes surrounding the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Apart from textile designs (eg, fabric patterns), clothing may be protected by designs legislation; indeed, between 2011 and 2015 the greatest number of design applications by any one company was by fashion designers Forever New Clothing Pty Ltd. 6 In the United States there have been proposals for a statute to specifically protect fashion – the Innovative Design Protection and Piracy Prevention Act (US) (S. 3728) and the Innovative Design Protection Act (US) (S. 3523) but neither proceeded beyond the Senate. Designs generally are protected in the United States by a form of patent. The rationale for design protection is to allow the registered owner (under Designs Act 2003 (Cth) s 13, an individual creator or the proprietor who has commissioned or acquired rights to a design) exclusively to exploit the work for a period of time, with the community benefiting from that monopoly through access to attractive products. An effective design may involve technical skills (eg, about techniques for machining a piece of plastic or metal) and fine 4 5 6

Advisory Council on Intellectual Property, Review of the Designs System (March 2015). Government response - ACIP Review of the Designs System, available at https://www.ipaustralia.gov.au/ about-us/news-and-community/news/government-response-acips-review-designs-system. IP Australia, Australian Intellectual Property Report. Available via https://www.ipaustralia.gov.au/ip-report2016. [14.10]

745

Intellectual Property: Commentary and Materials

aesthetic discrimination, with that judgement or effort deserving recognition in its own right. More broadly, manufacturing involves costs. Development of a marketable design may involve substantial expense in developing prototypes, then tooling and laying down plant to produce the item. Not all good ideas succeed commercially, and as part of the cost of finished products reflects the risks taken by entrepreneurs, it is desirable to be able to protect the investment made in producing a saleable design and prevent others “free riding” by unauthorised copying of viable items. Product development and the design of new products is an important aspect of entrepreneurial effort in developed economies. Manufacturing has been identified as a key growth area for the Australian economy, to complement the volatility of the market for primary sector exports from agriculture and mining. Manufactured products must appeal to the consumers who are going to buy them. Design is not something that should be added on afterwards, but should receive attention from the outset. The important advantages conferred by good design can gain statutory protection based on registration of new and distinctive designs. As indicated above, design protection is not concerned with a product’s functionality (although the attributes that make a product functional may also make it visually appealing). Design registration may complement patent rights but is not a substitute. It is, however, potentially valuable since design protection may be available for a product that is not patentable. Examples of unpatentable but protected design technology include such familiar items as light switches and power points, window locks, tapware, car parts and furniture. The ALRC has stated that the primary objective of designs law is to encourage innovation in Australian industry for the country’s net economic benefit, and is a key element in both the innovation and marketing processes. 7 ACIP has observed that “[A]n effective design law must be sufficiently strong to prevent excessive copying and thus encourage adequate financing and investment in design, but must not be so restrictive that it acts as a barrier to further innovation that arises from the free flow of ideas.” 8 By way of illustration of how marketers regard effective design as important in selling a product, see the evidence in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257, where electric shavers with a triple rotary head were sold on the basis of a “motoring theme”; “a ‘masculine’ association with a fantasy world of fast sports cars – Jaguars and Porsches”, with the three heads as three wheels. 9

SUBJECT MATTER OF DESIGN REGISTRATION Definition of design Designs Act 2003 (Cth) [14.20] Designs Act 2003 (Cth) ss 5 and 6 5 Definitions design, in relation to a product, means the overall appearance of the product resulting from one or more visual features of the product. … 7 8

ALRC, Designs, Report 74 (AGPS, 1995), p 31. Advisory Council on Intellectual Property, Review of the Designs System (March 2015), p 14.

9

Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd (2000) 48 IPR 257 at 279.

746 [14.20]

Designs and Circuit Layouts

CHAPTER 14

Designs Act 2003 (Cth) cont. 6 Definition of product (1) For the purposes of this Act, a thing that is manufactured or hand made is a product (but see subsections (2), (3) and (4)). (2) A component part of a product may be a product for the purposes of this Act, if it is made separately from the product. (3) A thing that has one or more indefinite dimensions is only a product for the purposes of this Act if any one or more of the following applies to the thing: (a) a cross-section taken across any indefinite dimension is fixed or varies according to a regular pattern; (b) all the dimensions remain in proportion; (c) the cross-sectional shape remains the same throughout, whether or not the dimensions of that shape vary according to a ratio or series of ratios; (d) it has a pattern or ornamentation that repeats itself. (4) A kit which, when assembled, is a particular product is taken to be that product.

Designs law protects appearance, not the article itself [14.30] Intellectual property laws are framed to allow competition in the marketplace while

protecting that which is truly innovative. To this end, the distinction between a product and its appearance, which is referred to in Re Wolanski’s Registered Design (1953) 88 CLR 278, below, remains important under the 2003 legislation.

Re Wolanski’s Registered Design [14.40] Re Wolanski’s Registered Design (1953) 88 CLR 278 High Court of Australia KITTO J: [279] This is an application by motion on notice, asking that the registration of a design under the Designs Act 1906-1950 (Cth) be cancelled. Several grounds are stated in the notice of motion, but the only jurisdiction of this court, as a court of first instance, to cancel the registration of a design is that which is created by s 28(a) of the Act, and under that section the only ground provided for is that the design has been published in the Commonwealth prior to the date of the registration, that is to say, prior to the date of the lodging of the application for registration: see ss 17, 26(2). The design to which the application relates is registered in class 14 in respect of “neck-tie support”, and the representation of it, appearing in the certificate of registration in evidence before me and consisting of drawings showing a front and rear view respectively depicts an article shaped so that, if covered with material of a kind of which ties are made, it will resemble the knot of a necktie which has been tied in the manner usually adopted by men. It is equipped with a projection at its back, sloping downwards from the top, by which it may be hooked on to the neckband of the wearer’s shirt between the peaks of the collar. A piece of material is intended to be added so as to resemble the portion of a tie which normally falls from the knot. When the article thus produced is placed in position, the collar of the shirt will fall over and thus conceal the corner extremities of the pseudo-knot, and the illusion of a normally-tied tie will result. Such is the function to be performed by the article for which the design is intended, but, for the purpose of deciding the case, I am not concerned with any question of function: Hecla Foundry Co v Walker, Hunter & Co (1889) 14 App Cas 550. It is necessary to keep steadily in mind that that which is [14.40]

747

Intellectual Property: Commentary and Materials

Re Wolanski’s Registered Design cont. the subject of the impugned registration and is said to have been published before the date of registration is nothing but a design, applicable, as the definition in s 4 says, to the purpose of the ornamentation, or pattern, or shape, or configuration, of an article. It is not an article made according to a particular shape or pattern. Much less is it a method of making such an article, or a method of achieving an end by the use of such an article. It is a conception or suggestion as to shape, configuration, pattern or ornament: Pugh v Riley Cycle Co Ltd [1912] 1 Ch 613 at 619; and accordingly what the proprietor of a design gets by its registration is a monopoly for one thing only, and that is “one particular individual and specific appearance”: Russell-Clarke on [280] Copyright in Industrial Designs (5th ed, 1930), p 17; Kestos Ltd v Kempat Ltd (1935) 53 RPC 139 at 151. In the present instance, the design is not one which is applicable to ornamentation or pattern; it is an idea of shape, or configuration, two words between which there is no need to draw.

[14.50] The object of modern designs law is thus to protect the visual features (“overall

appearance”) of products with exclusive rights for a limited term. The current definition of “visual feature” borrows much of the language of the definition of “design” found in the Designs Act 1906 (Cth), which was said to be specifically aimed at reserving “to the owner of the design the commercial value resulting from customers preferring the appearance of articles which have that design to that of those which do not have it” (AMP Inc v Utilux Pty Ltd [1972] RPC 103 at 108 per Lord Reid). Although it is now clear that the value of a design may have little or nothing to do with the “preference” of customers for a particular appearance and much more to do with an association in customers’ minds between how something looks and particular product or service characteristics, nevertheless what distinguishes one design from another is how the two appear to the eye. This appearance is created by the visual features of a product, defined in Designs Act 2003 (Cth) s 7, as follows.

Designs Act 2003 (Cth) [14.60] Designs Act 2003 (Cth) s 7 7 Definition of visual feature (1) In this Act: visual feature, in relation to a product, includes the shape, configuration, pattern and ornamentation of the product. (2) A visual feature may, but need not, serve a functional purpose. (3) The following are not visual features of a product: (a) the feel of the product; (b) the materials used in the product; (c) in the case of a product that has one or more indefinite dimensions: (i) the indefinite dimension; and

748 [14.50]

Designs and Circuit Layouts

CHAPTER 14

Designs Act 2003 (Cth) cont. (ii) if the product also has a pattern that repeats itself - more than one repeat of the pattern.

[14.70] Designs law protects the look of a product and not the “fundamental form” of the

product itself, which other manufacturers must be free to make and sell. The “fundamental form” is the imaginary form of an article which embodies the simplest and commonest features of the article necessary for it to fulfil its function. 10 Before 1981 (when Designs Act 1906 (Cth) s 18 was inserted to prevent refusal of registration of a design on the ground that it consists of or includes features that serve a functional purpose) there was considerable doubt as to whether any functional aspects of articles could be registered, even if they also had some “eye appeal”. While protection of functionality may come close to protecting the basic form of a product and could be considered to extend the protection so as to monopolise the market for certain products, concentrating on the protection of visual features is said to leave an “innovation gap”, where some features of articles cannot get either patent or design protection. Examples are machine components where the technology is not innovative enough for a patent (or the relevant patent has expired) and the item, as part of a machine, lacks the distinctive visual features required for design registration. The visual features of some objects may in fact constitute the functional features of the object; for example, key blanks (Ramsay v Master Locksmiths Association of Australasia Ltd (2004) 64 IPR 94). The ALRC looked at the innovation threshold for design, which is confined to the appearance of an article, and decided against recommending extension of the boundaries beyond visual appearance, in line with existing law: see Kestos v Kempat (1935) 53 RPC 139; Re Wolanski’s Registered Design (1953) 88 CLR 278; Edwards Hot Water Systems v SW Hart & Co Pty Ltd (1983) 49 ALR 605; Weir Pumps Ltd & CML Pumps Ltd v Central Electricity Generating Board (1983) 2 IPR 129. ACIP also recommended no change to the current requirement that protection relate to the visual appearance of a (whole) product. In an earlier version of the current Act (Designs Bill 2001 (Cth)), “the mere colour of a product” was specifically excluded from being a visual feature, and the case law indicates that the colour of an article does not itself constitute a design (Re Application by Bourjois Ltd (1988) 11 IPR 625; Application by Nigel Louez Graphic Design Pty Ltd (1989) 15 IPR 570). For some readers, the Design Act 2003 (Cth) and case law may seem counter-intuitive, with protection under the Act relating to a product that has visual features, but not covering its appearance in isolation (ie, independent of the product). However, appearance could potentially be protected under the Copyright Act 1968 (Cth), as discussed later in this chapter. One example of the distinction is provided by Re Application for Type Font in the Name of Microsoft Corporation (2007) 71 IPR 664, in which it was held that the software company’s font was visibly discernible but was not a product in terms of the Designs Act 2003 (Cth). The font was not applied to a tangible product; thus the Act did not apply. In a similar category are such ephemera as graphical user interfaces, icons, screen layouts and the like. It is not clear that such things are any more “products” within the meaning of Designs Act 2003 (Cth) s 5 than is a font. Their protection my lie more in the domain of copyright than in designs law. 10

See Interlego AG v Croner Trading Pty Ltd [1992] FCA 624; [1993] AIPC 90-956; (1992) 111 ALR 597; 25 IPR 65; 39 FCR 348. [14.70]

749

Intellectual Property: Commentary and Materials

Under Designs Act 2003 (Cth) s 46, the period of protection for a design is five years from the filing date, with potential renewal under Designs Act 2003s 47 for a further five years (ie, an aggregate period of 10 years). The duration of protection, which is the minimum permissible under TRIPs, is significantly less than the default life-plus-70 years term offered under the Copyright Act 1968 (Cth), and is rather less than in a number of Australia’s major trading partners such as the United States, Europe and Japan.

Designs must be new and distinctive Designs Act 2003 (Cth) [14.80] Designs Act 2003 (Cth) ss 15(1) and 16(1) and (2) 15 Registrable designs (1) A design is a “registrable design” if the design is new and distinctive when compared with the prior art base for the design as it existed before the priority date of the design. …. 16 Designs that are identical or substantially similar in overall impression (1) A design is new unless it is identical to a design that forms part of the prior art base for the design. (2) A design is distinctive unless it is substantially similar in overall impression to a design that forms part of the prior art base for the design (see section 19) …..

[14.90] The priority date of a design may be up to six months earlier than the filing date of an

application for design registration in Australia if an application for registration of the same design had been filed in a Convention country (see [8.200]) within that period of time (Designs Act 2003 (Cth) s 27). For the purposes of the Act, a design’s distinctiveness is to be judged by looking at the overall impression in relation to that design. Section 19 sets out the factors to be considered in looking at the overall design. The Designs Act 1906 (Cth) prohibited registration of designs that were not “new or original”, including those which differ only in “immaterial details” from (see Re Calder Vale (1934) 53 RPC 117 at 125 per Farwell J) or in “features commonly used in the relevant trade” from a previous design (see Dalgety Australia Operations Ltd v FF Seeley Nominees Pty Ltd (1985) 5 IPR 97). However, the previous criteria of “new or original” were not onerous, so that “a small difference in appearance from the prior art is enough to give novelty”: Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) 4 IPR 120 at 125 per King J. The previous designs regime was criticised as having too low a standard of novelty and, correspondingly, infringement was therefore more difficult to establish where very minor changes were enough to take the copy outside of the scope of registration.

750 [14.80]

Designs and Circuit Layouts

CHAPTER 14

New designs have not been used or published Designs Act 2003 (Cth) [14.100] Designs Act 2003 (Cth) s 15(2) 15 Registrable designs … (2) The “prior art base” for a design (the “designated design”) consists of: (a) designs publicly used in Australia; and (b) designs published in a document within or outside Australia; and (c) designs in relation to which each of the following criteria is satisfied: (i) the design is disclosed in a design application; (ii) the design has an earlier priority date than the designated design; (iii) the first time documents disclosing the design are made available for public inspection under section 60 is on or after the priority date of the designated design.

[14.110] Prior publication or prior use of a design within Australia prevents it from being

“new and distinctive” so as to be registrable. Section 15(2), above, sets out the prior art base as including publication generally and through disclosure in an application for design registration. Section 15(2)(c) also incorporates into the prior art base applications for design registration which were not published at the relevant priority date but which themselves have an earlier priority date. This may be seen as analogous to the “whole of contents” component of the prior art base for patent applications (see [9.530]). What constitutes “publication” is not defined and has not always been clear, even under the Designs Act 1906 (Cth). However, the ALRC considered that advertising (and certainly selling) would amount to publication. In Safe Sport Australia Pty Ltd v Puma Australia Pty Ltd (1985) 4 IPR 120, it was suggested that showing a prototype to a buying organisation could amount to prior publication, in the absence of any suggestion of confidentiality. See also Re Application by Baker & Priem (No 2) (1989) 15 IPR 660; Mining Equipment “Minquip” Pty Ltd v Alfagamma Australia Pty Ltd (2005) 64 IPR 237; cf Hall v Lewis (2004) 64 IPR 61. Designs Act 2003 (Cth) s 17, together with Design Regulations 2004 (Cth) reg 2.01, sets out previous disclosures of a design that are to be disregarded in deciding if the design is “new and distinctive”. They are similar to analogous exclusions that apply to patents but currently do not include a grace period following self-publication. In response to the ACIP review, the Australian Government has announced that it will introduce a grace period and a prior user defence, but the duration of the grace period is yet to be determined. Assessing newness and distinctiveness [14.120] The Designs Act 2003 (Cth) s 19, below, provides guidance on determining

“substantial similarity of overall impression”. Rather like the previous Designs Act 1906 (Cth) s 20, Designs Act 2003 (Cth) s 19 provides for a statement of newness and distinctiveness which may identify what features or combinations thereof the design applicant considers to constitute novelty and distinctiveness in the design. [14.120]

751

Intellectual Property: Commentary and Materials

Designs Act 2003 (Cth) [14.130] Designs Act 2003 (Cth) s 19 19 Factors to be considered in assessing substantial similarity in overall impression (1) If a person is required by this Act to decide whether a design is substantially similar in overall impression to another design, the person making the decision is to give more weight to similarities between the designs than to differences between them. (2) The person must also: (a) have regard to the state of development of the prior art base for the design; and (b) if the design application in which the design was disclosed included a statement (a “statement of newness and distinctiveness”) identifying particular visual features of the design as new and distinctive: (i) have particular regard to those features; and (ii) if those features relate to only part of the design-have particular regard to that part of the design, but in the context of the design as a whole; and (c) if only part of the design is substantially similar to another design, have regard to the amount, quality and importance of that part in the context of the design as a whole; and (d) have regard to the freedom of the creator of the design to innovate. (3) If the design application in which the design was disclosed did not include a statement of newness and distinctiveness in respect of particular visual features of the design, the person must have regard to the appearance of the design as a whole. (4) In applying subsections (1), (2) and (3), the person must apply the standard of a person who is familiar with the product to which the design relates, or products similar to the product to which the design relates (the “standard of the informed user”). (5) In this section, a reference to a person includes a reference to a court.

[14.140] Including a statement of newness and distinctiveness with a design application is

optional. When it is included, it directs attention to the part or parts of a design that are asserted to be new and distinctive, but in deciding about the registrability of a design, or the validity of a design registration, the Registrar or the court must determine for itself whether a design as a whole is new and distinctive. Conversely, if a design registration includes no statement of newness and distinctiveness the owner can still point to the feature or features of the design which it considers to be new and distinctive. A feature that is referred to in a statement of newness and distinctiveness may be absent from an infringing article without necessarily avoiding infringement; it is the overall appearance that is determinative both of registrability and infringement (Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449; (2010) 268 ALR 613; (2010) 87 IPR 1; [2010] AIPC 92-384 at [257]-[264]). The comparison of a design application with the prior art base involves comparing the article with each piece of prior art separately, rather than with some kind of composite design made up of individual features present in different prior art designs (Keller v LED Technologies Pty Ltd [2010] FCAFC 55; (2010) 185 FCR 449; (2010) 268 ALR 613; (2010) 87 IPR 1; [2010] AIPC 92-384 at [244]-[245]). Distinctiveness is more readily found where features of a design are selected as a result of conscious choice, rather than compelled by an 752 [14.130]

Designs and Circuit Layouts

CHAPTER 14

industry standard or technological constraint (LED Technologies Pty Ltd v Elecspess Pty Ltd [2008] FCA 1941; (2008) 80 IPR 85; [2009] AIPC 92-330 at [65]). In assessing whether features of a design are “new and distinctive” (or whether two designs are substantially similar) the court now must apply the standard of “the informed user”, being a person familiar with the product to which the design relates (s 19(4)). The informed user standard is intended to introduce a more objective test for infringement. An example illustrating the deficiencies of the previously narrowly applied test is Koninklijke Philips Electronics NV v Remington Products Australia Ltd (2000) 48 IPR 257, in which the features of a design (a “three wheeled” shaver) had been copied but, due to differences of dimensions between the products, no infringement was found despite the copying being fairly blatant. Under the new “informed user” test, the distinctive aspects of the product are to be given more weight in assessing whether infringement has occurred. In fact, even under the previous legislation, courts were, on occasion, assisted by expert evidence in understanding design features in infringement cases: see Dart Industries Inc v Decor Corp Pty Ltd (1989) 15 IPR 403; Gerard Industries Pty ltd v Auswide Import Export Pty Ltd (1998) 40 IPR 119. Examples of the application of the requirement for a court to give more weight to similarities than to differences when determining issues of infringement are to be found in two cases concerned with the same registered design in respect of ladies’ dresses: Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588; (2008) 173 FCR 450; (2008) 79 IPR 214; [2008] AIPC 92-319 ([14.150]) and Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589; (2008) 79 IPR 236.

Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [14.150] Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588; (2008) 173 FCR 450; (2008) 79 IPR 214; [2008] AIPC 92-319 Federal Court of Australia KENNY J: [19] Who is the informed user? Plainly, the informed user must be a person who is familiar with the product to which the design in question relates. Moreover, the informed user must be a user of the class of product in question, in this case, ladies’ garments, or perhaps, more narrowly, ladies’ dresses. A designer or manufacturer of such garments is not an informed user merely because he or she designs or manufactures them. Further, this user is not simply an ordinary consumer: the user must be an informed user. ….. [25] In Australia, the Australian Designs Office (“ADO”) considered the informed user standard in Re Application in the name of Apple Computer Inc (2007) 74 IPR 164 (“Apple”) and Icon Plastics Pty Ltd [2007] ADO 2 (5 July 2007) (“Icon”). In Icon, the ADO cited the ALRC Report but rejected the view that “a notional informed user is a melding of the (probably divergent) views of those who exemplify a range of informed users. A better approach is to say that, in dealing with this jury question, the legislation defines a standard, such that the registrar or the court should postulate the view of a typical member of a sample of informed users”: see Icon at [19]. The Registrar concluded that “to apply the standard of the informed user for the purpose of s 19 would therefore be to postulate a user that is ‘reasonably’ informed; not either barely informed, on one hand, or fully expert on the other”: see Icon at [21]. Apple cited the ALRC Report, this time for the proposition that the informed user standard is objective, and stated the view that an informed user is an ordinary intended user of the product made from the design, who is familiar with the product: see Apple at [11], [14]. [26] In summary, the standard of the informed user is an objective one. In this case, the assessment must be that of a user of ladies’ garments, which would include a potential purchaser, either in retail [14.150]

753

Intellectual Property: Commentary and Materials

Review 2 Pty Ltd v Redberry Enterprise Pty Ltd cont. sales (such as a buyer for a fashion store) or at the ultimate consumer level. A designer or manufacturer of ladies’ garments is not, on account of design or manufacturing knowledge alone, an informed user. The notional user must be informed, in the sense that the user is familiar with ladies’ garments. The informed user is not an expert, but must be more than barely informed. The focus for consideration is on eye appeal and not on internal or less visible manufacturing features. [27] There may be a difference in the discussion to date as to what is needed to have the requisite product familiarity. On one view, this familiarity is greater than the information possessed by the average user; on another view, this familiarity is that which is possessed by the ordinary user: compare Woodhouse UK Plc v Architectural Lighting Systems [2006] RPC 1 at [50] with Apple at [14]. The former approach is to be preferred. I doubt that, generally, the ordinary user will be appropriately regarded as an informed user. In the present context, women as a class are the ordinary users of ladies’ garments, but not all women have the requisite degree of familiarity to be described as informed users.

REGISTRATION AND PUBLICATION [14.160] Designs Act 2003 (Cth) ss 20 – 61 deals with the application for registration of designs. An application will be examined to check its compliance with formal requirements but, unlike in the previous design regime, substantive examination on whether the design is “new and distinctive” will only take place after registration if it is requested by someone or if the Registrar decides to examine the design. Once a design application has been examined, and if it is not refused, it is said to be “certified”. The owner of the design will be “the entitled person” defined in s 13, namely the creator (designer) of the design, or their employer or another person to whom the rights have been assigned. The registration of a design by someone other than the owner is a ground for revocation of the registration, but not of refusal of registration by the Registrar. It may be difficult to decide the issue of ownership when the design is produced by co-operative effort or when the question of authorship being exercised pursuant to an agreement for valuable consideration arises: see Chris Ford Enterprises Pty Ltd v B H & JR Badenhop Pty Ltd (1985) 4 IPR 485. Co-ownership is dealt with in s 13 and, in the event of a dispute, the Registrar of Designs under the Act may make a determination as to who is entitled to the design (s 29). As with patents, the priority date is important in determining rights. When a design is registered, information set out in s 60 is made open to public inspection. The Designs Act 2003 (Cth) provides an alternative to this, however, and the applicant may, instead of requesting registration, ask instead that the design simply be published. The request for registration or publication must be made within six months of the priority date or the application lapses. Publication will not in itself provide protection against infringement but will prevent others subsequently registering the same design. Note that s 43 requires the Registrar to refuse to register certain designs on the basis that they are prescribed (notably the Commonwealth, State and Territory coats of arms, emblems, flags and seals), are contrary to restriction in other statutes (such as the Olympic Insignia Protection Act 1987 (Cth)), are scandalous or are part of an integrated circuit protected under the Circuit Layouts Act 1989 (Cth).

754 [14.160]

Designs and Circuit Layouts

CHAPTER 14

INFRINGEMENT Designs Act 2003 (Cth) [14.170] Designs Act 2003 (Cth) s 71 71 Infringement of design (1) A person infringes a registered design if, during the term of registration of the design, and without the licence or authority of the registered owner of the design, the person: (a) makes or offers to make a product, in relation to which the design is registered, which embodies a design that is identical to, or substantially similar in overall impression to, the registered design; or (b) imports such a product into Australia for sale, or for use for the purposes of any trade or business; or (c) sells, hires or otherwise disposes of, or offers to sell, hire or otherwise dispose of, such a product; or (d) uses such a product in any way for the purposes of any trade or business; or (e) keeps such a product for the purpose of doing any of the things mentioned in paragraph (c) or (d). (2) Despite subsection (1), a person does not infringe a registered design if: (a) the person imports a product, in relation to which the design is registered, which embodies a design that is identical to, or substantially similar in overall impression to, the registered design; and (b) the product embodies the design with the licence or authority of the registered owner of the design. (3) In determining whether an allegedly infringing design is substantially similar in overall impression to the registered design, a court is to consider the factors specified in section 19. (4) Infringement proceedings must be started within 6 years from the day on which the alleged infringement occurred.

[14.180] It is noteworthy that s 71 closely matches s 10, which sets out the rights of a registered owner of a design. However, although s 10 shows that an owner’s rights include the right to authorise another to do any act which, otherwise, would be the exclusive domain of the owner. s 71 does not make it an infringement for a person to authorise an infringing act without the licence or authority of the registered owner. In practice, however, a person who has authorised an infringing act is likely to be liable as a joint tortfeasor under the common law, whether or not they are caught by s 71 of the Designs Act 2003 (Cth). [14.190] In referring to “substantial similarity in overall impression”, Designs Act 2003 (Cth) s 19 provides detailed guidance for the court in assessing this similarity (or otherwise) – see [14.130]. This is to address the perception that previously the scope of protection was construed extremely narrowly, with the result that only a minor variation in appearance was needed to avoid infringement of design rights: see Foggin v Lacey (2003) 57 IPR 225 at 231 per Moore and Bennett JJ, where infringement “requires that there be no differences that the eye can detect”. [14.190]

755

Intellectual Property: Commentary and Materials

Giving more weight to similarities than differences, even if they are only part of the product as a whole, may result in more findings of infringement than under the previous test of “imitation”, obvious or fraudulent, where differences from a registered design may have been accorded too much weight in the view of some users who considered that the previous test for infringement did not meet the needs of those seeking design protection. Action must be commenced within six years of any alleged infringement (s 71(4)), but must be preceded by the certification of the registered design.

Spare parts defence [14.200] A controversial defence to infringement appears in the Designs Act 2003 (Cth), to protect consumers by allowing reverse engineering of spare parts for “complex products”. Section 72(1) provides that a registered design is not infringed if the product in relation to which a design is registered is a component part of a complex product, and the use of the design (or authorisation of use) is for the purpose of the repair of the complex product so as to restore its overall appearance in whole or part. “Complex product” is defined in s 5 as a “product comprising at least two replaceable component parts permitting disassembly and re-assembly of the product”. For example, a part that is custom-designed to fit one make and model of car is usually “new and distinctive” enough to gain design protection. However, since this in fact allows monopolisation of the market for that part, the Designs Act 2003 (Cth) creates space for competing manufacturers. The background to the defence is discussed further below in the context of the design/copyright overlap debate, an area in which the legislature and the courts have long grappled with issues of how to prevent domination of the marketplace by individual manufacturers.

JURISDICTION AND REMEDIES [14.210] Jurisdiction to hear matters arising under the Designs Act 2003 (Cth) is given to the prescribed courts by s 73(2), being the Federal Court (s 83), the Federal Circuit Court (s 83A) and State and Territory Supreme Courts (s 84). Remedies for infringement may include injunction, damages or account of profits, but are not limited to these forms of relief (s 75(1)). The court may reduce or refuse to award damages or refuse to make an order for an account of profits if the defendant was “innocent” in the sense of being unaware that a design was registered and had taken all reasonable steps to find out (s 75(2)). Additional damages are available for flagrant infringement (s 75(3)).

INTERNATIONAL PROTECTION [14.220] Australia is a party to the Paris Convention for the Protection of Industrial Property

(1883) (Paris Convention), which applies to industrial designs that are protected by countries in the Paris Union (established by the Paris Convention) and provides for a “national treatment” of designs registered in member countries. There is provision under the Hague Agreement Concerning the International Deposit of Industrial Designs (1925) (Hague Agreement) for an international application for designs protection to be regarded as equivalent to a national application. Australia is not a party to the Hague Agreement, but following the Singapore–Australia Free Trade Agreement (2003), whereby both countries agreed to comply with the powers of the Geneva Act of the Hague Agreement, the Designs 756 [14.200]

Designs and Circuit Layouts

CHAPTER 14

Regulations 2004 (Cth) provide for recognition of an international deposit made pursuant to the Agreement to be treated as an application made in Paris Convention countries which are party to the Agreement. Similarly, under the Australia–United States Free Trade Agreement of 2005, each party committed itself to making its best efforts to comply with the provisions of the Hague Agreement. ACIP has gone no further than recommending that Australia should commence an investigation into the implications of joining the Hague Agreement, including consulting with WIPO, and should monitor usage of the Hague system including whether usage of the system increases as a result of recent expansions of its membership. 11

OVERLAP WITH COPYRIGHT PROTECTION Introduction [14.230] An important issue in the area of design protection is its relationship with copyright

protection, since both regimes could potentially protect the same subject matter, particularly where a “drawing” may be considered a design. Copyright Act 1968 (Cth) s 10 provides: artistic work means: (a) a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not; (b) a building or a model of a building, whether the building or model is of artistic quality or not; or (c) a work of artistic craftsmanship whether or not mentioned in paragraph (a) or (b); but does not include a circuit layout within the meaning of the Circuit Layouts Act 1989.

In combination with Copyright Act 1968 (Cth) s 21(3), which provides that a version of an artistic work in another dimension will be deemed a reproduction of that work, the owner of copyright in an artistic work would have, without the controls imposed by the Designs Act 2003 (Cth), the power to control a large range of commercial applications of that work. This protection would arise at an indefinite point of time, and continue for the relatively long term given by the Copyright Act 1968 (Cth), instead of the maximum 10-year period (dating from the date of application for registration) allowed by Designs Act 2003 (Cth) s 46. The sort of item which arguably begins life as an “artistic work” under the Copyright Act 1968 (Cth) could include anything that can be registered as a design, including manufactured articles which are of use and importance in everyday life. The current policy in relation to protection of such articles under the designs and copyright regimes is based on the view that copyright protection is inappropriate for them. This is because of the low innovation threshold for copyright; the relatively long duration of copyright protection when compared to the maximum term of a design registration; and the absence of a public register of copyright. 12 Allowance of long periods of protection for mass-produced articles may stultify progress and inhibit other designers and manufacturers from producing articles and new product lines. 13 11 12 13

Advisory Council on Intellectual Property, Review of the Designs System (March 2015), Recommendation 2 (accepted by the Australian Government). See the discussion in Janice Luck, “Section 18 of the Designs Act 2003: the neglected copyright/design overlap provision” (2013) 23 Australian Intellectual Property Journal 68. See the discussion in Vacuum Cleaner Parts Dyson Ltd v Quiltex (UK) Ltd (2005) 65 IPR 188. [14.230]

757

Intellectual Property: Commentary and Materials

Spare parts and copyright protection [14.240] Criticism of the effects of copyright law in protecting mass-produced items began with the House of Lords in British Leyland Motor Corp v Armstrong Patents Co Ltd [1986] FSR 221, where the majority decided that copyright protection should not be available for car exhaust systems. The original manufacturer of the exhaust systems had been able to ensure a lucrative market in spare parts by challenging the right of any other manufacturer to provide car owners and repairers with reverse-engineered exhaust systems to fit Leyland cars. The reasoning of the Law Lords in British Leyland circumvented, rather than applied, the letter of copyright. The Australian courts have not had a “spare parts exception” to copyright infringement case to decide, but the arguments are explored in Warman International v Envirotech Australia Pty Ltd (1986) 6 IPR 578 ([14.210]). In that case, a sales engineer working for a pump manufacturer had copied and used plans and information for pumps contained in certain publications, including the Warman Data Book and the Warman Slurry Pumping Manual. It was argued that any copyright in the drawings and manuals would not be infringed on the basis of British Leyland Motor Corp v Armstrong Patents Co Ltd [1986] FSR 221. The court’s response is set out below.

Warman International v Envirotech Australia [14.250] Warman International v Envirotech Australia Pty Ltd (1986) 6 IPR 578 Federal Court of Australia WILCOX J: [598] In relation to the merits of the copyright claim, counsel for the first, second and third respondents refer to the British Leyland case. That was an action by a manufacturer of motor cars to restrain the production by the defendant of replacement exhaust pipes designed to fit the plaintiff’s cars. It was not suggested that the defendant had copied the original drawings, apparently it had followed a process of reverse engineering but it was said that the reproduction of the shape and dimensions of the original exhaust pipes indirectly infringed the plaintiff’s copyright in the drawings from which they were produced. The exhaust pipes were not registered under the Registered Designs Act 1949 (UK) – the members of the House of Lords apparently regarded the pipes as non-registrable because of lack of originality. The House proceeded upon the basis that the exclusion from copyright protection effected by the equivalent of our s 77 applied only to registrable designs. None the less, the defendant’s appeal succeeded. By majority, the House upheld a submission that there was what Lord Edmund-Davies called a “spare parts exception” to the general rule protecting the copyright of a manufacturer. The exception was described by Lord Bridge of Harwich (2 WLR at 414) in these words: The owner of [599] a car must be entitled to do whatever is necessary to keep it in running order and to effect whatever repairs may be necessary in the most economical way possible. To derive this entitlement from an implied licence granted by the original manufacturer seems to me quite artificial. It is a right inherent in the ownership of the car itself. To curtail or restrict the owner’s right to repair in any way may diminish the value of the car. Lord Templeman (at 421), with whom Lord Scarman expressly agreed, accepted a submission “that Parliament did not intend the protection afforded by copyright to a drawing should be capable of exploitation so as to prevent the reproduction of a functional object depicted on a drawing”. But [he commented] there is a good deal of legislative and judicial history to be considered. As Lord Templeman made clear, the problem confronting the House in British Leyland arose because of judicial decisions to the effect that it was an infringement of the copyright in a plan indirectly to copy that plan by the making of an article, combined with the failure of the UK Parliament to carry into 758 [14.240]

Designs and Circuit Layouts

CHAPTER 14

Warman International v Envirotech Australia cont. effect a view expressed in 1952 by an expert committee – the Gregory Committee – that “it should not be possible to protect under the Copyright Act more in the constructional or functional field than is protectable under the Registered Designs Act.” His Lordship regarded it as anomalous that the owner of copyright in a drawing of a non-registrable article – perhaps non-registrable because of the absence of novelty -– should be protected against the marketing by a competitor of a copy of that article, whilst the law denied copyright protection in a drawing of a registrable article. One method of eliminating this anomaly would have been to hold that the UK equivalent of s 77 of the Copyright Act 1968 (Cth) applies to all unregistered articles, whether registrable or not. But the majority of the House took a different path, eliminating the anomaly within a limited area by creating an exception in respect of spare parts for durable goods. The result achieved in British Leyland may fairly be described as remarkable; representing as it does a major qualification upon the scheme laid out wisely or unwisely under the UK copyright and designs legislation. If the relevant UK decisions commencing with King Features Syndicate Inc v O & M Kleeman Ltd [1941] AC 417, running through to LB (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 and including Dorling were followed in Australia, the anomaly perceived by Lord Templeman would arise in this country. But it may be another matter whether there would be judicial intervention along the lines of British Leyland; especially having regard to the fact that parliament has dealt with the interrelationship between the Copyright Act and the Designs Act as recently as 1981. Whatever one may think of the adequacy of the solutions then adopted – as to which see my comments in Hutchence v South Sea Bubble Co Pty Ltd (1986) 64 ALR 330 at 342-343 – it cannot be denied that this interrelationship is a matter to which Parliament has given its attention in recent times. For present purposes it is not necessary to pursue this speculation. There is a major factual difference between British Leyland and the present case. In the former case the plaintiff sought to restrain the manufacture by the defendant of articles. In the present case the applicants seek to restrain the creation of copy documents. Nothing that was said in British Leyland suggests that the House of Lords would, in the name of the provision of spare parts to vehicle owners, have sanctioned the copying by a competitor of the plans of a copyright owner. The whole context of the decision is that the result operates as a qualification upon the principle, authoritatively established by King Features Syndicate, that a person may infringe the copyright in two-dimensional drawings by making a three-dimensional object.

Legislative developments [14.260] Despite the reluctance of Australian judges to apply a “spare parts exception”, the

Australian legislature has attempted to effect such a policy by eliminating the possibility of copyright protection for mass-produced articles. This has resulted in an arcane, complex and uncertain legal regime due to the interaction of copyright and design law in preventing “dual protection”. The issue of trying to remove copyright protection for the three-dimensional form of a design is highly relevant to the issue of spare parts. During its examination of designs law the ALRC initially recommended a simpler regime, with provision for referring potentially anti-competitive designs to the Australian Competition and Consumer Commission (ACCC) that would then assess whether the granting of design rights would have the effect of substantially lessening competition in a market. Potentially anti-competitive designs would have been identified by a number of characteristics, but basically they would be construed as components of a durable product-in other words, a spare part. These recommendations did not survive the public comment and government response following publication of the [14.260]

759

Intellectual Property: Commentary and Materials

ALRC’s Designs report. In any event, the Designs Act 2003 (Cth) introduced the “spare parts defence” (see [14.160]), while retaining the attempt to prevent dual protection through the interaction of designs and copyright concepts.

Prevention of design/copyright protection overlap [14.270] Copyright Act 1968 (Cth) ss 74 – 77 are provisions introduced to curtail what may

be considered excessive copyright protection for artistic works that are mass-produced in three-dimensional versions. The Designs (Consequential Amendments) Act 2003 (Cth) was passed with the Designs Act 2003 (Cth) to amend the Copyright Act 1968 (Cth) as necessary. The provisions apply mainly in the context of drawings that become the designs for manufactured articles, whether they be a hot water system pump, a spare part, a Harry Potter figurine, or any other manufactured item.

Copyright Act 1968 (Cth) [14.280] Copyright Act 1968 (Cth) s 74 74 Corresponding design (1) In this Division: corresponding design, in relation to an artistic work, means visual features of shape or configuration which, when embodied in a product, result in a reproduction of that work, whether or not the visual features constitute a design that is capable of being registered under the Designs Act 2003. (2) For the purposes of subsection (1): embodied in, in relation to a product, includes woven into, impressed on or worked into the product.

Where corresponding design is registered [14.290] Under Copyright Act 1968 (Cth) s 75, but subject to Copyright Act 1968 (Cth) s 76, where copyright subsists in an artistic work and a corresponding design is or has been registered under the Designs Act 1906 (Cth) or the Designs Act 2003 (Cth), it is not an infringement of that copyright to reproduce the work by embodying that, or any other, corresponding design in a product. Section 76 in effect causes a registered design to be disregarded for the purposes of s 75 (except in certain circumstances) if the registration was done without the knowledge of the copyright owner, and the registered owner(s) of the registered design are not entitled persons in relation to the design.

Where corresponding design is not registered

Copyright Act 1968 (Cth) [14.300] Copyright Act 1968 (Cth) s 77 77 Application of artistic works as industrial designs without registration of the designs (1) This section applies where: 760 [14.270]

Designs and Circuit Layouts

CHAPTER 14

Copyright Act 1968 (Cth) cont. (a) copyright subsists in an artistic work (other than a building or a model of a building, or a work of artistic craftsmanship) whether made before the commencement of this section or otherwise; (b) a corresponding design is or has been applied industrially, whether in Australia or elsewhere, and whether before or after the commencement of this section, by or with the licence of the owner of the copyright in the place of industrial application; and (c) at any time on or after the commencement of this section, products to which the corresponding design has been so applied (the “products made to the corresponding design”) are sold, let for hire or offered or exposed for sale or hire, whether in Australia or elsewhere; and (d) at that time, the corresponding design is not registrable under the Designs Act 2003 or has not been registered under that Act or under the Designs Act 1906. (2) This section also applies if: (a) a complete specification that discloses a product made to the corresponding design; or (b) a representation of a product made to the corresponding design and included in a design application; is published in Australia, whether or not paragraphs (1)(b) and (c) are satisfied in relation to the corresponding design. (3) It is not an infringement of the copyright in the artistic work to reproduce the work, on or after the day on which: (a) products made to the corresponding design are first sold, let for hire or offered or exposed for sale or hire; or (b) a complete specification that discloses a product made to the corresponding design is first published in Australia; or (c) a representation of a product made to the corresponding design and included in a design application is first published in Australia; by embodying that, or any other, corresponding design in a product. (4) This section does not apply in relation to any articles or products in respect of which, at the time when they were sold, let for hire or offered or exposed for sale or hire, the corresponding design concerned was excluded from registration by regulations made under the Designs Act 1906 or the Designs Act 2003, and, for the purposes of any proceedings under this Act, a design shall be conclusively presumed to have been so excluded if: (a) before the commencement of the proceedings, an application for the registration of the design under the Designs Act 1906 in respect of those articles, or under the Designs Act 2003 in respect of those products, had been refused; (b) the reason, or one of the reasons, given for the refusal was that the design was excluded from registration under that Act by regulations made under that Act; and (c) when the proceedings were commenced, no appeal against the refusal had been allowed or was pending. (5) The regulations may specify the circumstances in which a design is, for the purposes of this section, to be taken to be applied industrially. [14.300]

761

Intellectual Property: Commentary and Materials

Copyright Act 1968 (Cth) cont. (6) In this section: building or model of a building does not include a portable building such as a shed, a pre-constructed swimming pool, a demountable building or similar portable building. complete specification has the same meaning as in the Patents Act 1990. design application has the same meaning as in the Designs Act 2003. representation, in relation to a design, has the same meaning as in the Designs Act 2003.

[14.305] In s 77, “applied industrially” is not defined, but according to Copyright Regulations 1969 (Cth) reg 17, a design is taken to be applied industrially if it is applied to more than 50 articles or to one or more articles (other than hand-made articles) manufactured in lengths or pieces. The Regulation, however, does not provide an exhaustive definition of “applied industrially”: Re Press-Form Pty Ltd and Kelrit Investments Pty Ltd v Henderson’s Ltd [1993] FCA 46.

Summary [14.310] In summary, Copyright Act 1968 (Cth) ss 74 – 77 set up the following regime: If a

design is registered, the drawing or other artistic work that relates to the design will lose copyright protection when used as a design (s 75). If a design is not registered, but is “industrially applied” or if it is published in a patent specification or a design application, the corresponding artistic work will have neither design protection nor copyright protection (when used as a design) unless the artistic work is a building or a model of a building, or a work of artistic craftsmanship (s 77). If an application is made for registration of a design, then the fact that there has been a publication or use of a corresponding artistic work in which copyright subsists does not destroy the novelty of the design for the purposes of the Designs Act 2003 (Cth), unless the use of the artistic work included the sale, letting for hire, or exposing for sale or hire, products to which the design had been applied industrially by, or with the consent of, the owner of copyright in the artistic work: Designs Act 2003 (Cth) s 18. In addition to “overlap” with copyright, another issue that affects the scope of design protection is the “gap” in protection created when certain products are excluded from registration as designs, and are also excluded from copyright protection in respect of the underlying drawings (corresponding design). This is due to the operation of Copyright Act 1968 (Cth), which disallows copyright protection for unregistered designs in circumstances set out in s 77(3). If those designs are also unregistrable, no formal IP protection is possible. Functional innovations not sufficiently inventive or innovative under the patent system to warrant protection may fall into this category. However, there is no prohibition in Australia against copying another’s product as such: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 42 ALR 1; see also Koninklijke Philips Electronics v Remington Products Australia Pty Ltd (2000) 48 IPR 257.

762

[14.305]

Designs and Circuit Layouts

CHAPTER 14

CIRCUIT LAYOUTS What is a circuit layout? [14.320] A further form of intellectual property which shares some of the characteristics of both copyright and designs is that which relates to the layout of integrated circuits. Such layouts can be extremely complex and valuable, and typically result from considerable intellectual activity. An integrated circuit usually consists of one or more layers of semiconductor material, each of which contains multiple regions having specific electrical properties. The three-dimensional inter-relationship of these regions, together with their various interconnections, confers the desired functionality on the integrated circuit as a whole, whether it be as a CPU, memory, graphics processor, signal processor or something more specific. A circuit layout, therefore, is a representation of the arrangement of the various regions and interconnections in the various layers, from which representation an integrated circuit may be fabricated. Statutory protection for the intellectual property embodied in circuit layouts has been provided in Australia since 1 October 1990 by the Circuit Layouts Act 1989 (Cth). The legislation confers automatic protection for a limited period of time, without the need for registration, to the owner of rights in an eligible circuit layout, against a person who exploits the circuit layout without authorisation.

Definition of eligible layout Circuit Layouts Act 1989 (Cth) [14.330] Circuit Layouts Act 1989 (Cth) s 5 circuit layout means a representation, fixed in any material form, of the threedimensional location of the active and passive elements and interconnections making up an integrated circuit.…. eligible layout means an original circuit layout: (a) the maker of which was, at the time the layout was made, an eligible person; or (b) that was first commercially exploited in Australia or in an eligible foreign country.

[14.340] An eligible foreign country is, according to the Circuit Layouts Act 1989 (Cth) s 5 and Circuit Layouts Regulations 1990 (Cth) reg 3 essentially any member of the World Trade Organisation. An eligible person is a citizen or resident of Australia or an eligible foreign country, or a body corporate incorporated in Australia or an eligible foreign country.

Eligible layout rights [14.350] Circuit layout law confers on the owner of rights in an eligible layout the exclusive right, subject to certain rights reserved for the Commonwealth for the defence or security of Australia, to copy the layout directly or indirectly in a material form; to make an integrated circuit in accordance with the layout or a copy of the layout; and to exploit the layout commercially in Australia (Circuit Layouts Act 1989 (Cth) s 17). The period of protection depends on when the circuit layout was first exploited commercially. [14.350]

763

Intellectual Property: Commentary and Materials

[14.360] Circuit Layouts Act 1989 (Cth) s 5 protection period, in relation to an eligible layout, means the period beginning on the day on which the layout was made and ending: (a) if the layout is first commercially exploited within 10 calendar years after the calendar year in which the layout was made-at the end of the tenth calendar year after the calendar year in which the layout was first commercially exploited; and (b) in any other case-at the end of the period of 10 calendar years after the calendar year in which the layout was made.

Commercial exploitation [14.370] Both the conferral of rights by the circuit layouts legislation, and the duration of

those rights, depend on the meaning of the expression “exploit commercially”. [14.380] Circuit Layouts Act 1989 (Cth) s 8 8 Commercial exploitation (1) For the purposes of this Act, a circuit layout shall be taken to have been commercially exploited if the layout, a copy of the layout, or an integrated circuit made in accordance with the layout (whether or not the integrated circuit is incorporated in another thing) is: (a) sold, let for hire or otherwise distributed by way of trade; (b) offered or exposed for sale or hire, or other distribution by way of trade; or (c) imported for the purpose of sale, letting for hire, or other distribution by way of trade. (2) For the purposes of this Act, a copy of a circuit layout or an integrated circuit made in accordance with a circuit layout shall be taken to have been commercially exploited if it is: (a) sold, let for hire or otherwise distributed by way of trade; (b) offered or exposed for sale or hire, or other distribution by way of trade; or (c) imported for the purpose of sale, letting for hire, or other distribution by way of trade.

Originality of circuit layout [14.390] Circuit Layouts Act 1989 (Cth) s 11 11 Originality Without otherwise limiting the meaning of the word original in this Act, a circuit layout shall be taken not to be original if: (a) its making involved no creative contribution by the maker; or (b) it was commonplace at the time it was made. [14.400] This definition of originality appears to incorporate an element akin to the

requirement in patent law that a patentable invention involve an inventive or innovative step. There has been no case law in Australia, however, which clarifies or explains the expressions “no creative contribution” and “commonplace”. [14.410] Circuit Layouts Bill 1988 (Cth) Explanatory Memorandum [27] The purpose of paragraphs 11(a) and (b) is to ensure that the degree of skill and labour required is appropriate to layouts. Paragraph 11(a) is intended to indicate that there must be a degree of individual human creative effort by the maker. Mere expenditure of time and non-creative effort - for example, by doing no more than feeding into a computer the electrical characteristics the circuit is intended to possess - is not intended to be sufficient. Clause 11(b) takes account of the fact that layouts are plans for functional products in wide use. Accordingly, 764 [14.360]

Designs and Circuit Layouts

CHAPTER 14

it is intended that a maker may prevent others from copying his or her layout only if there is something out of the common about the layout, in that its features - either individually or as they are arranged in the layout - are more than what is ordinarily or commonly used in many layouts. This test of originality is very similar to that applying to copyright protection of architectural plans. [28] However, the provision is not intended to require that a layout be “new” or “novel” to attract protection. It is quite possible for a layout to be other than commonplace yet not contain any features which are developments on known prior art.

Overlap of circuit layouts with designs and copyright [14.420] As might be expected from the fact that simultaneous design and copyright protection is (at least in broad terms) prohibited by the respective statutes, the existence of an eligible layout right broadly precludes the existence of protection under the Designs Act 2003 (Cth) or under the Copyright Act 1968 (Cth). In the case of designs, this is achieved by Designs Act 2003 (Cth) s 43, which prevents design registration for (inter alia) a design in relation to a product that is an integrated circuit (within the meaning of the Circuit Layouts Act 1989 (Cth)), part of such an integrated circuit, or a mask used to make such an integrated circuit. For the position with regard to overlap of copyright and circuit layouts, see [4.510] – [4.520].

[14.420]

765

CHAPTER 15 Confidential Information [15.10]

INTRODUCTION .................................................................................................... 768

[15.20] [15.30] [15.40] [15.50] [15.60] [15.70] [15.80]

NATURE OF CONFIDENTIAL INFORMATION ...................................................... Advances in technology ........................................................................................ Client and supplier lists, and business strategies ................................................ Formulae and recipes ............................................................................................ Plans and machinery ............................................................................................. Entertainment industry ......................................................................................... Celebrities and personal relationships .................................................................

[15.90]

ELEMENTS OF THE MODERN ACTION ............................................................... 776 [15.100]

771 772 773 775 775 776 776

Coco v AN Clark (Engineers) .................................................. 777

[15.120] Element 1: information must be of a confidential nature ................................. 779 [15.130]

Thomas Marshall (Exports) v Guinle ....................................... 779

[15.140] Degree of secrecy ................................................................................ 780 [15.150] [15.170]

[15.180]

[15.200]

Ansell Rubber v Allied Rubber Industries .................................. 781 Falconer v Australian Broadcasting Corporation ....................... 784 Element 2: circumstances importing an obligation of confidence ................... 787 [15.180] Contractual .......................................................................................... 787 [15.190] Ansell Rubber Co v Allied Rubber Industries ............................. 789 Specific nature obligations ................................................................................... 792 [15.200] Statutory .............................................................................. 792

[15.210] Privacy and confidence: statutory basis ............................................ 792 [15.220] Proprietary ........................................................................................... 793 [15.230] Equitable obligation ............................................................................ 793 [15.240]

[15.260] [15.270] [15.290] [15.300]

Attorney-General (UK) v Heinemann Publishers Australia ............................................................................... 794 Misappropriation of information/third party users ............................................ 797 Scope of the obligation of confidence ................................................................ 797 [15.280] Smith Kline and French Laboratories v Secretary, Department of Community Services and Health ...................... 798 Element 3: unauthorised use of the information ................................................ 801 Partly confidential information – the springboard doctrine .............................. 802 [15.310] Seager v Copydex Ltd ............................................................ 803 [15.320] Coco v AN Clark (Engineers) Ltd ............................................. 804 [15.340] National Surgical v McPhee ................................................... 806

[15.350] DEFENCES AND EXCEPTIONS .............................................................................. 808 [15.350] Statutory and judicial ............................................................................................ 808 [15.360] Employment and restraint of trade ...................................................................... 809 [15.370] [15.390] [15.400]

[15.410]

Faccenda Chicken v Fowler .................................................... 809 Del Casale v Artedomus ......................................................... 811 National Surgical v McPhee ................................................... 812 Disclosure in the public interest ........................................................................... 813 [15.420] Castrol Australia v EmTech ..................................................... 815 [15.440] Attorney-General (UK) v Heinemann Publishers Australia ............................................................................... 818 [15.450] Smith Kline and French Laboratories v Secretary, Department of Community Services and Health ...................... 821 767

Intellectual Property: Commentary and Materials

INTRODUCTION [15.10] Confidential information encompasses or is otherwise referred to as “know-how”,

“undisclosed information” or “trade secrets”. Confidential information can be described as personal, commercial or practical information that may give an individual or company a competitive advantage. When known only by a very limited number of persons, such information can be legally recognised and protected as a trade secret even though it may otherwise fail to fulfil the criteria for copyright, patent or other forms of intellectual property (IP) protection. Neither copyright, patents nor other industrial property legislation provide protection through confidentiality. They all provide protection against unlawful exploitation and then only for a specified and limited period of time. A claim for protection of confidential information as a trade secret requires that efforts be made to prevent disclosure. While taking a trade secret without permission may constitute an illegal act, the discovery by proper means – such as by independent discovery, accidental or actual disclosure – or by reverse engineering, is not illegal. Valuable information may be difficult to protect unless it is packaged in a form that is recognised as intellectual property, given that Australian courts have resisted inventing new torts to protect privacy, personality or other rights not distinctly acknowledged as within the boundaries of copyright, patent or design law. However, an action based on confidential information may be available to protect a range of material, whether that is a “trade secret” or personal or otherwise sensitive information. Although it is true to say that the bulk of confidence cases involve trade secrets such as manufacturing techniques, customer lists, engineering designs and marketing procedures, the action has developed around the protection of personal information rather than a positive right to privacy. However, recent developments overseas – for example, the introduction of human rights legislation in Europe – have required existing causes of action to evolve to embrace rights such as privacy not previously recognised by common law. Apart from personal or business information, an action for breach of confidence may be used to protect government information and group interests such as sensitive or sacred knowledge. Beginning in the 1970s, legislation to protect “cultural heritage” was passed by some States to protect heritage beyond that embodied in archaeological sites or artefacts. 1 However, this and other legislation has been found to be inadequate in dealing with essential aspects of indigenous culture, such as the need for consultation with Aboriginal custodians of knowledge, the restrictions on information that is part of the preservation of the cultural heritage, and the aspects of spirituality and belief which require confidentiality. 2 Despite this, in Foster v Mountford (1976) 14 ALR 71, the law of confidence was used to protect oral Aboriginal tribal secret knowledge when protection under copyright law was unavailable in the absence of a recognised “work in material form”. There are some international obligations in respect of the protection of information, although they are framed in terms of existing protection and do not extend to “ideas” as such;

1 2

For example, Aboriginal Heritage Act 1972 (WA). E Evatt, Review of the Aboriginal and Torres Strait Islander Heritage Protection Act 1996, cited in R Sackville, “Symposium: Traditional Knowledge, Intellectual Property and Indigenous Culture: Legal Protection of Indigenous Culture in Australia” (2003) 11 Cardozo J Int & Comp Law 711 at 728.

768 [15.10]

Confidential Information

CHAPTER 15

these generally fall under a general prohibition on “unfair competition”. The World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), to which Australia has acceded, requires at Article 39 that members provide protection against unfair competition as provided in Article 10bis of the Paris Convention for the Protection of Industrial Property (1883) (Paris Convention) by protecting undisclosed information. TRIPS Article 39(1) provides that undisclosed information and trade secrets are deemed to be protectable under the rules of unfair competition. The protection does not confer any exclusive right, but provides the right (and the obligation) to prevent practices contrary to honest commercial practices with respect to both the disclosure and acquisition of undisclosed information. Persons and legal entities must be able to prevent information lawfully within their control from being acquired by, or disclosed to, others without their consent in a manner contrary to honest commercial practices, provided that such information: • is secret in that it is not generally known, either as a whole or in its various parts, to persons who would normally deal with that kind of information; • has commercial value because of its secret state; and • has been subject to reasonable steps by its owner to keep it secret. 3 TRIPS Article 39(3) makes it a particular requirement to provide protection against unfair commercial use of undisclosed test or other data submitted as a condition for gaining market approval for new pharmaceutical or agricultural chemical products or for products that utilise new chemical entities. It requires members to protect such data against disclosure, except where it is necessary to protect the public or unless steps are taken to ensure that the data is protected against unfair commercial use. The Paris Convention 4 Article 10bis (“Unfair Competition”), prohibits conduct that would be described as passing off. Article 10bis requires members to provide effective protection against unfair competition. Any act of competition contrary to honest practices in commercial or industrial matters is an act of unfair competition. In particular, the following are prohibited: • all acts which create confusion by any means in respect of the establishment, goods or activities of a competitor; • false allegations in the course of trade which discredit the establishment, goods or activities of a competitor; • indications or allegations the use of which is liable to mislead the public in respect of the nature, manufacturing process, characteristics, suitability of purpose, or quantity of goods. Australia considers that it meets these obligations through a combination of a range of federal and state and territory laws and the common law. Countries belonging to the English common law tradition generally provide protection for valuable information through a mixture of judge-made legal doctrines. A combination of the equitable action for breach of confidence, breach of fiduciary obligation and breach of contract together with a number of other secondary actions are used. Recognition of a general tort of unfair competition was rejected by the High Court in Moorgate Tobacco Co Ltd v 3

4

A note to TRIPS Article 39 describes “a manner contrary to honest commercial practices” as at least: “practices such as breach of contract, breach of confidence and inducement to breach, and includes the acquisition of undisclosed information by third parties which knew, or were grossly negligent in failing to know, that such practices were involved in the acquisition”. The industrial property elements of TRIPS are largely derived from the Paris Convention. [15.10]

769

Intellectual Property: Commentary and Materials

Philip Morris Ltd (1984) 156 CLR 414; however, Australia’s unfair competition laws include the common law actions of passing off, injurious falsehood, defamation (including what used to be called slander of goods and slander of title), unconscionability and the statutory enactments that prohibit misleading and deceptive conduct. The Competition and Consumer Act 2010 (Cth) (which contains the Australian Consumer Law as Schedule 2 to the Act) also has a number of sections dealing with corporate conduct in these areas of business dealings. In the United Kingdom, the leading case of Prince Albert v Strange (1849) 47 ER 1302 helped to establish the modern basis for breach of confidence. The case involved the etchings made by Queen Victoria and Prince Albert of their dogs and other family characters and scenes for their own entertainment and intended for their own family or occasionally close friends. While they were being printed and bound for this use, Strange acquired extra copies with the intention of using them as part of a public exhibition and including them in a published catalogue. Strange acknowledged that Prince Albert and Queen Victoria had “property” in the etchings, but not in the information about the etchings that Strange intended to publish. The Lord Chancellor held that the plaintiffs did indeed hold property in the information and that Strange’s acquisition of the etchings originated in a breach of trust, a breach of confidence and a breach of contract. Accordingly an injunction was granted preventing the exhibition and publication of the catalogue. In a series of more recent decisions, the UK superior courts have examined the interaction between the action for breach of confidence and the requirements of the Human Rights Act 1998 (UK), which seeks to implement obligations under the European Convention on Human Rights. These cases include Douglas and others v Hello! Ltd (No 1) [2001] 2 All ER 289 (CA); Venables and Anor v News Group Newspapers Ltd and Ors [2001] 1 All ER 908; A v B [2002] 3 WLR 542 CA; and Campbell v MGN [2002] EWCA Civ 1373. In Douglas v Hello! Ltd (No 1) [2001] 2 All ER 289, two celebrities objected to publication of “unauthorised” photos of their wedding. Selby LJ doubted that the surreptitious obtaining of personal information would always be protected by the action for breach of confidence even if the information were of a confidential nature. He was concerned about the requirement that an obligation of confidence should exist between the parties and, reflecting upon the artificiality of finding such a relationship in cases of snooping, paparazzi photographs or by way of found material, speculated that a more general tort of interference with privacy might be required. His Lordship stated: I would conclude, at lowest, that [counsel for the plaintiffs] has a powerfully arguable case to advance at trial that his two first-named clients have a right of privacy which English law will today recognise and, where appropriate, protect. To say this is in my belief to say little, save by way of a label, that our courts have not said already over the years. … What a concept of privacy does, however, is accord recognition to the fact that the law has to protect not only those people whose trust has been abused but those who simply find themselves subjected to an unwanted intrusion into their personal lives. The law no longer needs to construct an artificial relationship of confidentiality between intruder and victim: it can recognise privacy itself as a legal principle drawn from the fundamental value of personal autonomy.

The existence of such a tort was rejected in Wainwright v Home Office [2003] 4 All ER 969. A majority in the House of Lords in Campbell v MGN Ltd [2005] UKHL 61 found that where private or personal information was of a confidential nature, it could indeed be protected from unauthorised publication even where it had been obtained in a surreptitious 770 [15.10]

Confidential Information

CHAPTER 15

fashion. This was in keeping with the broad formulation of the equitable obligation by Lord Goff in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 281. In Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2002) 54 IPR 161, the High Court of Australia declined to grant a remedy purely on the basis that information had been obtained through what might be considered “unconscionable actions” that even involved allegedly unlawful conduct. In this case, the plaintiff was attempting to prevent the ABC from broadcasting a film of the process used to slaughter possums for game meat. The film had been made by animal rights activists, and it was alleged that their activities were surreptitious and involved trespassing on and breaking into the plaintiff’s property. However, the High Court found that there was nothing that was clearly information of a confidential nature to protect, and so the action for breach of confidence did not apply. The judges observed that the plaintiff would need to ground an action in a general tort designed to protect against the invasion of the privacy – the case contains some speculation that it might be time for the common law to recognise such an action. It is now generally accepted that the action to restrain breach of confidence has borrowed from a number of areas to become a sui generis action, the basis of which is the principle that [a] person ought to keep a secret if he has said that he will do so. In recent decisions English courts have translated this simple moral precept into a legal principle of considerable breadth. 5 The elements of the “moral precept” in the form of the action for breach of confidence are dealt with in this chapter, which also sets out how the law will provide protection against unauthorised use or disclosure of personal and private information where all of the traditional elements of the cause of action can be proven. However, the law of confidence does not operate as a general common law action against all invasions of privacy.

NATURE OF CONFIDENTIAL INFORMATION [15.20] The majority of cases before the courts that involve confidential information tend to

involve actions seeking the protection of trade secrets or other confidential commercial information against their threatened or actual alleged improper use by former employees or by other companies with whom some form of contractual arrangement has been entered into. However, whatever its nature in specific instances, the Australian courts have tended to treat all such information equally in respect of the legal principles relating to the treatment of confidential information. A classic example of commercially valuable information that has maintained its secrecy as a trade secret is the formula for Coca-Cola. Originally created in 1886 as a patent medicine by John Pemberton, an American pharmacist, the formula was originally subject to patent protection. Following its further development and successful commercialisation as a soft drink, the formula became a closely guarded corporate secret in the 1890s, and has remained so for well over a century. In February 2011, the United States media again reported that Coca-Cola’s secret formula had been inadvertently published in a local newspaper in 1979. The published formula basically matched the formula found in Pemberton’s diary (as distinct from the formula for the 5

W Cornish and D Llewellyn, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (6th ed, Sweet and Maxwell, London, 2007), Ch 9. [15.20]

771

Intellectual Property: Commentary and Materials

commercialised product), leading to a rash of speculation and attempts to duplicate the drink, and denials by Coca-Cola that the secret real formula had still not been uncovered. 6 Some of the more common categories of confidential information include advanced technology, client and supplier lists, business strategies, formulae and recipes, plans and machinery, entertainment industry, and celebrities and personal relationships. These are discussed below.

Advances in technology [15.30] A number of industries have little physical infrastructure but rely heavily on IP as the

main business asset; this is true of the biotechnology and computer industries. “Biotechnology” refers to the use of biological material having functions in industrial applications. Animal and plant cells, enzymes, plasmids and viruses as well as the use of genetic information provide the basis of many advances in safeguarding human and animal health and in agriculture. A type of monopoly right with regard to new plant varieties not used for food or animal fodder crops is allowed for in the Plant Breeder’s Rights Act 1994 (Cth), but application of patent law to biotechnology has proven to be fraught for reasons ranging from questions of basic patentability to “concerns about exclusive licensing of patents related to genetic tests … impact on costs, access to testing, the quality of testing, and innovation in the development of new or improved testing techniques.” 7 Similarly to the biotechnology sector, key employees in computing industries often obtain access to an employer’s confidential business information, and form a skilled and highly mobile work force sought after by competing firms to whom the previously acquired knowledge may be invaluable. Apart from the uncertainties of the operation of the Copyright Act 1968 (Cth) in protecting software, the industry to date has relied upon innovation and development to retain a competitive lead. In such an environment rules protecting confidentiality are of greater importance than the clumsy operation of a statutory regime which is expensive to engage with and may even operate to destroy the IP it is intended to protect. Disclosure of a claimed invention is a feature of the patent system. Patent protection requires that there be the revelation of a beneficial secret in exchange for a period of monopoly protection. The Patents Act 1990 (Cth) s 40(3) and (5) provide that where an invention involves the use, modification or cultivation of a micro-organism, and a person skilled in the art could not reasonably be expected to perform the invention without having a sample of the micro-organism, then the organism must be lodged with a prescribed depository institution, along with all relevant information about the characteristics of the organism known to the applicant for the patent. Such disclosure is regarded by some as too extensive –“super disclosure” in fact – leaving the owner of the micro-organism nothing to sell in the form of “know-how”. Costs to second entrants to industries where know-how rather than equipment 6

M Geller, Coca-Cola says secret of its recipe still intact, Reuters, 15 February 2011. Available on http:// www.reuters.com/article/2011/02/15/us-cocacola-idUSTRE71E68720110215 [http://www.reuters.com/ article/2011/02/15/us-cocacola-idUSTRE71E68720110215] (cited 1 July 2011). In the 1990s, the US media reported that a disgruntled employee had obtained a copy of the formula and offered it to Coca-Cola’s major competitor, Pepsi–Cola. Pepsi, appreciating that it could not realistically gain commercial advantage from either utilising the formula or making it publicly known and thereby exposing itself to litigation, reportedly informed the federal authorities.

7

Australian Law Reform Commission (ALRC), Genes and Ingenuity: Gene Patenting and Human Health, Report 99 (June 2004), p 21.

772 [15.30]

Confidential Information

CHAPTER 15

is a major ingredient are only a small percentage of the original developer’s costs. This makes the information a valuable asset and requires firms to protect it, while at the same time exploiting it and training personnel in the “secret” art. The action for breach of confidence may be used to ensure that rivals do not obtain information that gives them an unfair competitive advantage, and also to restrain employees that set themselves up in their own business from using information “owned” by their former employer. Contractual provisions based on an understanding of confidentiality will be enforceable as long as the provisions do not amount to a restraint of trade. The dimensions of a permissible “non-compete” clause in a contract of employment are established by the principles discussed below in Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 (Sup Ct Vic): see [15.150].

Client and supplier lists, and business strategies [15.40] It is not only high-tech industries that have secrets to protect. Historically, the most

commonly litigated trade secret issues have involved client lists, starting with cases in the 19th century: see, for example, Robb v Green [1895] 2 QB 315. Companies commit effort and resources in developing and maintaining client lists, and obviously do not want departing employees to take these lists and use them in competition with their former employer by poaching its clients: NP Generations Pty Ltd v Feneley (2001) 52 IPR 563. Other types of protectable business information may overlap with client lists – for example, details of sales volume – but may also be independently valuable. A list that is supplied by one company but then added to through the efforts of another company’s marketing campaign may become the property of the second party: see American Express v Thomas (1990) 19 IPR 574; Blackmagic Design Pty Ltd v Overliese (2010) 84 IPR 505; National Surgical Pty Ltd v McPhee (2010) 87 IPR 602. Prices, sales forecasts, supply sources, merchandising data and relevant financial information may all be protected as trade secrets. The classic case on this is Robb v Green [1895] 2 QB 315, where the defendant copied a list of clients’ names and addresses from his employer’s order book, intending to use the list, and then using it to solicit orders from those clients after he set up his own business. That case was decided on the basis that it was a breach of the obligation to observe good faith towards the employer under the contract of service not to copy out a customer list while still employed. Neither does it matter that the list (or other information) is not written down but simply remembered as long as a conscious effort is made to retain the information. In Coral Index Ltd v Regent Index Ltd [1970] RPC 147, the plaintiff company alleged a former employee had wrongfully used lists of the company’s clients to solicit business for his new employer. Stamp J found that the names and addresses of a number of clients had become lodged in the defendant’s memory as a natural result of having been the plaintiff’s office manager for several years, and no conscious attempt to make a mental list of them had been made; the information had become part of the defendant’s own knowledge and skill. Even when information in a list could have been obtained from other sources, the rule is that former employees may not make use of the convenient compilation provided by the employer’s business records: see Roger Bullivant v Ellis [1978] FSR 172; Dowson & Mason Ltd v Potter [1986] 2 All ER 418.

[15.40]

773

Intellectual Property: Commentary and Materials

Sophisticated versions of “customer lists”, such as marketing techniques and procedures or names of suppliers and supply chain strategies may also be trade secrets: see Woolworths Ltd v Olson (2004) 63 IPR 258. In Thomas Marshall (Exports) Ltd v Guinle [1978] 3 All ER 193, the plaintiff company was a manufacturer and marketer of textiles and clothing for supply to large chain stores in the United Kingdom. The defendant was the managing director of the company, who had solicited orders from the company’s clients while filling those orders with goods from the company’s suppliers, but none of the profits from these transactions had gone to the company. This behaviour amounted to gross and repeated breaches of the contractual obligation of fidelity owed to the company as a consequence of its service agreement with the defendant that prohibited the disclosure of confidential information. Although he had “used” but not necessarily “disclosed” confidential information and was, therefore, not in breach of the express terms of the contract, Megarry V-C identified various forms of information that were capable of being confidential (at 210): They are the names and telex addresses of the company’s manufacturers and suppliers and their individual contracts; the negotiated prices paid by the company; the names of some overseas buying agents through whom the company deals; the company’s new ranges, actual or proposed; information as to the requirements (such as styles) of the company’s customers; details of the company’s current negotiations; negotiated prices paid by customers to the company; the company’s samples; and the company’s current “fast-moving” lines. … Even in the Eastern European countries with state monopolies, a knowledge of the particular officials with whom business can most satisfactorily be done may be an important and confidential matter; and in the Far East, with many rival sources of supply, a detailed knowledge of the cheapest, most reliable and most efficient sources must be something that a skilled buyer would firmly keep to himself as a valuable asset.

In recent years, the courts have been called upon to distinguish between so-called “marketing strategies” for which trade secret status has been claimed, and a mere method of doing business that is not protected. This distinction is illustrated by the case of Independent Management Resources Pty Ltd v Brown (1986) 9 IPR 1. In that case, the Victorian Metropolitan Fire Brigade (MFB) hired a public relations consultant (the plaintiff) to help persuade companies to install an improved fire alarm system. The plaintiff set out its “marketing strategy” and employed two “project detailers” to implement the strategy. After some months, the MFB decided to call for tenders as the plaintiff’s plan was overly expensive. The defendant had been a “project detailer” under the plaintiff’s scheme. She left her job with the plaintiff and successfully tendered for the contract, upon which the plaintiff sued her for breach of duties of fidelity and/or confidence. It was held that she had not undermined her position of trust towards her employer, and the so-called confidential information lacked the necessary quality of confidence, being no more than the application of common sense to the tasks at hand, constituting only general knowledge, which could be used in competition against the former employer. Marks J commented thus about the marketing strategy (at 3–4): [T]he plaintiff’s plan, although dressed up in the language of the public relations industry and stretched out with double spacing over several pages, amounted in its bare essentials to no more than personal contact by two persons with the MFB clients, diplomatic explanation aided, where appropriate, by … visual aids … and obtaining signatures to a contract. The so-called “strategy” was thus of the simplest kind and required little or no expertise, merely selection of personable employees, supervision and monitoring per media weekly reports of progress. It was such an employee, which the defendant became, who received the somewhat fancy nomenclature “project detailer”. 774 [15.40]

Confidential Information

CHAPTER 15

The dividing line between confidential information and the employee’s natural accretion of knowledge and understanding will be discussed below.

Formulae and recipes [15.50] As information becomes available on the internet and the formula for most things is

easily obtained, the ingredients themselves may not be secret but the effort in thinking up and trialling the possible uses to which familiar components can be applied may require a period of market exclusivity for the originator in order to recoup their investment. For example, see Aquaculture Corp v New Zealand Green Mussel Co Ltd (No 1) (1985) 5 IPR 353, Aquaculture Corp v New Zealand Green Mussel Co Ltd (No 2) (1986) 10 IPR 319 and Aquaculture Corp v New Zealand Green Mussel Co Ltd (1990) 19 IPR 527, involving extensive litigation over an arthritis cure using green mussels. This may be regarded as a case protecting the technique (for making a preparation from freeze-dried mussels to treat rheumatoid arthritis), as well as the “formula” (information about the process concerning the identification and isolation of the active ingredient). One of the first English trade secret cases seems to have been Newbery v James (1817) 35 ER 1011, which concerned a secret formula for pills for the treatment of gout and rheumatism, as well as certain pills known as “Analyptic Pills”. This formula was thought so valuable that the plaintiff tried to restrain the defendant from revealing the “secret, art or mystery of making or preparing any of the said medicines” (at 1011). In the event, no relief was granted as the pills had previously been the subject of a patent that had expired, and since the patent specification revealed details of the invention, there was no secret to protect.

Plans and machinery [15.60] Improvements to machinery for making rubber gloves were protected in Ansell

Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 (see [15.150]) even though they may not have been patentable, being too slight an advance on the existing art to satisfy the requirements of patent legislation as to “novelty” and “non-obviousness” of inventions. However, confidential information that may lead to patentable inventions may also be protected as trade secrets. For example, in Seager v Copydex [1967] 1 WLR 923, the defendants applied for a patent for a new type of carpet grip based partly on information provided by the plaintiff. In Speed Seal Products Ltd v Paddington [1986] 1 All ER 91, the defendant Paddington, an engineer, had been employed by the plaintiff company on its coupling design committee. After leaving and setting up his own company, Paddington applied for patents for couplings for use on pipes installed on oil rigs and jetties. There was no doubt that he was using confidential information acquired in the course of carrying out his duties on the committee. Business manuals and drawings are prima facie suitable material for protection, particularly if the applicants for an injunction regard them as valuable and confidential: see Warman International v Envirotech Australia Pty Ltd (1986) 6 IPR 578. In that case, there was the possibility of copyright protection for drawings and manuals, as well as a serious question to be tried as to conduct contravening the Trade Practices Act 1974 (Cth) s 52 (now the Australian Consumer Law s 18), which prohibited corporations in trade or commerce engaging in misleading or deceptive conduct. Even if there are no other avenues of protection available, however, an obligation of confidence may arise from the delivery of drawings to a defendant for a particular purpose. In Saltman Engineering Co Ltd v Campbell Engineering [15.60]

775

Intellectual Property: Commentary and Materials

Co Ltd (1948) 65 RPC 203, the plaintiffs had given the defendants drawings of tools so that the defendants could manufacture the tools for them. The defendants began making and selling these tools on their own account, breaking the obligation of confidence by using the drawings for purposes other than those that were confided to them.

Entertainment industry [15.70] Ideas, concepts and format or script ideas in the entertainment field may need

protection at the concept stage, before they are reduced to a material form that attracts copyright protection. This applies particularly to instances where ideas for programs or prototypes (for various media, whether free-to-air television, subscription services or computer streaming) are developed. Formats are increasingly being regarded as a form of valuable property that can be sold or licensed around the world, for example, game shows, soap operas, and reality game shows such as “The Block” and “Survivor”. 8 A number of cases have found for plaintiffs whose ideas have been promoted to a media proprietor and subsequently used without their permission; see Talbot v General Television [1980] VR 224; Fraser v Thames Television [1984] QB 44; Wilson v Broadcasting Corp of New Zealand (1988) 12 IPR 173.

Celebrities and personal relationships [15.80] The recognition of a form of commercial “property” has been slower to develop than

the concept of protection for individual secrecy, and, to a large extent, the elements of that action for breach of confidence have been framed in terms of personal relationships: see Argyll v Argyll [1967] Ch 302, discussed in Coco v AN Clark (Engineers) Ltd [1968] FSR 415 (see [15.100]). This approach does not see information as a form of property in itself, but stresses the impropriety of using or disclosing information learnt in the course of a relationship between the parties without the permission of the person who is entitled to keep the information secret. In most of the cases in this model, the courts are concerned with enforcing the conditions of the relationship between the parties. The issue of preventing publication of surreptitiously obtained material (such as photographs of celebrities in private or compromising situations) is discussed in the UK cases Douglas and others v Hello! Ltd [2001] 2 All ER 289 (CA), Venables and Anor v News Group Newspapers Ltd and Ors [2001] 1 All ER 908, A v B [2002] 3 WLR 542 (CA) and Campbell v MGN [2002] EWCA Civ 1373, and also in Australia by the High Court in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2002) 54 IPR 161.

ELEMENTS OF THE MODERN ACTION [15.90] Perhaps because of the wide range of communication that is protectable by the action

for breach of confidence, the courts have had difficulty in framing an equitable action for breach of confidence according to the classification of information by type (although some general outlines can be drawn up to identify the sort of information which may be “confidential”), and have looked instead to the behaviour of the parties. The leading authorities on the formulation of the conditions to be satisfied before an action can succeed are the UK cases of Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All 8

See J Roscoe and G Hawkins, “New Television Formats” (2001) 100 Media International Australia 1.

776 [15.70]

Confidential Information

CHAPTER 15

ER 413 (CA), Coco v AN Clark (Engineers) Ltd [1968] FSR 415 (Ch D), and AttorneyGeneral v Guardian Newspapers Ltd (No 2) [1990] AC 109 (HL). The elements have gained general acceptance in the Australian courts, and applied equally in commercial, personal and governmental contexts. In the leading case of Coco v AN Clark (Engineers) Ltd [1968] FSR 415, Megarry J drew upon the principles initially laid down in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All ER 413 to enunciate three elements or requirements that needed to be established if a case of breach of confidence was to succeed.

Coco v AN Clark (Engineers) [15.100] Coco v AN Clark (Engineers) Ltd [1968] FSR 415 High Court of Justice, Chancery Division (United Kingdom) [The plaintiff entered into negotiations with the defendant for the production of a moped, designed by the plaintiff, on a joint venture basis. In the course of negotiations, the plaintiff supplied the defendant with a prototype, drawings, information and other aids towards construction. The negotiations broke down over design, construction and financial issues, the last never being agreed on or concluded. The defendant proceeded to produce mopeds on its own account, while the plaintiff’s machine did not get into production. The plaintiff sought an injunction restraining the defendant from continuing to manufacture and sell any moped in which the defendant had used any of the plaintiff’s confidential information.] MEGARRY J: [418] … The argument before me has fallen under two main heads: first, whether there has been any breach of the obligation of confidence, and, secondly, whether the case is one where an injunction ought to be granted. I will consider these two heads in turn. [419] The equitable jurisdiction in cases of breach of confidence is ancient: confidence is the cousin of trust. The Statute of Uses 1535 is framed in terms of “use, confidence or trust;” and a couplet, attributed to Sir Thomas More, Lord Chancellor avers that: Three things are to be helpt in Conscience; Fraud, Accident and things of Confidence. See I Rolle’s Abridgement 274. In the middle of the last century, the great case of Prince Albert v Strange (1849) 2 De G & Sm 652; 64 ER 293 reasserted the doctrine. In the case before me, it is common ground that there is no question of any breach of contract, for no contract ever came into existence. Accordingly, what I have to consider is the pure equitable doctrine of confidence, unaffected by contract. Furthermore, I am here in the realms of commerce, and there is no question of any marital relationship such as arose in Duchess of Argyll v Duke of Argyll [1967] Ch 302. Thus limited what are the essentials of the doctrine? In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene MR in the Saltman case (at 215), must “have the necessary quality of confidence about it.” Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use if that information to the detriment of the party communicating it. I must briefly examine each of these requirements in turn. First, the information must be of a confidential nature. As Lord Greene said in the Saltman case (at 215): “something which is public property and public knowledge” cannot per se provide any foundation for proceedings for breach of confidence. However confidential the circumstances of communication, there can be no breach of confidence in revealing to others something [420] which is already common knowledge. But this must not be taken too far. Something that has been constructed solely from materials in the public domain may possess the necessary quality of confidentiality; for something new and confidential may have been brought into being by the [15.100]

777

Intellectual Property: Commentary and Materials

Coco v AN Clark (Engineers) cont. application of the skill and ingenuity of the human brain. Novelty depends on the thing itself, and not upon the quality of its constituent parts. Indeed, often the more striking the novelty, the more common-place its components. Mr Mowbray demurs to the concept that some degree of originality is requisite. But whether it is described as originality or novelty or ingenuity or otherwise I think there must be some product of the human brain which suffices to confer a confidential nature upon the information: and, expressed in those terms, I think that Mr Mowbray accepts the concept. The difficulty comes, as Lord Denning, MR pointed out in the Seager case (at 931), when the information used is partly public and partly private; for then the recipient must somehow segregate the two and, although free to use the former, must take no advantage of the communication of the latter. To this subject I must in due course return. I must also return to a further point, namely, that where confidential information is communicated in circumstances of confidence the obligation thus created endures, perhaps in a modified form, even after all the information has been published or is ascertainable by the public; for the recipient must not use the communication as a springboard: see the Seager case (at 931, 933). I should add that, as shown by Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293; [1966] RPC 81 at 1309-1310 (WLR), the mere simplicity of an idea does not prevent it being confidential. Indeed, the simpler an idea, the more likely it is to need protection. The second requirement is that the information must have been communicated in circumstances importing an obligation of confidence. However secret and confidential the information, there can be no binding obligation of confidence if that information is blurted out in public or is communicated in other circumstances which negative any duty of holding it confidential. From the authorities cited to me, I have not been able to derive any very precise idea of what test is to be applied in determining whether the circumstances import an obligation of confidence. In the Argyll case (at 330) Ungoed-Thomas J concluded his discussion of the circumstances in which the publication of marital communications should be restrained as being confidential by saying “If this was a well-developed jurisdiction doubtless there would be guides and tests to aid in exercising it.” In the absence of such guides or tests he then in effect concluded that part of the communication there in question would on any reasonable test emerge as confidential. It may be that that hard-worked creature, the reasonable man, may be pressed into service once more; for I do not see why he should not labour in equity as well as at law. It seems to me that if the circumstances are such that any reasonable [420] man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable obligation of confidence. In particular, where information of commercial or industrial value is given on a business-like basis and with some avowed common object in mind, such as a joint venture or the manufacture of articles by one party for the other, I would regard the recipient as carrying a heavy burden if he seeks to repel a contention that he was bound by an obligation of confidence: see the Saltman case (at 216). On that footing, for reasons that will appear, I do not think I need explore this head further. I merely add that I doubt whether equity would intervene unless the circumstances are of sufficient gravity; equity ought not to be invoked merely to protect trivial tittle-tattle, however confidential. Thirdly, there must be an unauthorised use of the information to the detriment of the person communicating it. Some of the statements of principle in the cases omit any mention of detriment: others include it. At first sight, it seems that detriment ought to be present if equity is to be induced to intervene; but I can conceive of cases where a plaintiff might have substantial motives for seeking the aid of equity and yet suffer nothing which could fairly be called detriment to him, as when the confidential information shows him in a favourable light but gravely injures some relation or friend of

778 [15.100]

Confidential Information

CHAPTER 15

Coco v AN Clark (Engineers) cont. his whom he wishes to protect. The point does not arise for decision in this case, for detriment to the plaintiff plainly exists. I need therefore say no more than that although for the purposes of this case I have stated the propositions in the stricter form, I wish to keep open the possibility of the true proposition being that in the wider form.

[15.110] In Smith Kline and French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 in the Federal Court, Gummow J extended Megarry J’s elements in Coco v AN Clark (Engineers) Ltd [1968] FSR 415, above, by adding a fourth requirement relating to specific identification of the confidential information in question. His Honour opined at 86: A general formulation apt for the present case of an equitable obligation of confidence has four elements: (i) the plaintiff must be able to identify with specificity, and not merely in global terms, that which is said to be the information in question, and must be able to show that; (ii) the information has the necessary quality of confidentiality (and is not, for example, common or public knowledge); (iii) the information was received by the defendant in such circumstances as to import an obligation of confidence, and (iv) there is actual or threatened misuse of that information, without the consent of the plaintiff. The authorities from which these elements are drawn are collected in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443.

Element 1: information must be of a confidential nature [15.120] The sort of information in the “trade secret” category was reviewed earlier in this chapter. However valuable it is, the information must be actually confidential in order to be protected, although secrecy may be “imperfect” in relation to a communication given in confidence (Interfirm Comparison Pty Ltd v Law Society of NSW [1975] 2 NSWLR 104 at 118, 119). If “relative secrecy” (Franchi v Franchi [1967] RPC 149) is maintained, the confidence will still be protected. In deciding whether information is in the public domain or still confidential, the level of information, practices and usages in the relevant trade or industry will help determine the issue, and the plaintiff’s own efforts to maintain secrecy may be a guide as to what attitude to take towards the information: see Print Investments Pty Ltd v Art-vue Printing Pty Ltd (1983) 1 IPR 149; Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37; Printers & Finishers v Holloway [1965] RPC 239; Mense v Milenkovic [1973] VR 784; IF Asia Pacific v Galbally (2003) 59 IPR 43. In the English case of Thomas Marshall (Exports) v Guinle [1979] Ch 227 (Ch D) ([15.130] below), the knowledge subject to protection was said to be names and addresses of manufacturers and suppliers and the terms of their contracts with the company, prices paid by and to the company, names of overseas agents, the company’s new ranges, information as to the requirements of customers, details of current negotiations, and sales figures for successful products.

Thomas Marshall (Exports) v Guinle [15.130] Thomas Marshall (Exports) v Guinle [1979] Ch 227 High Court of Justice, Chancery Division (United Kingdom) MEGARRY V-C: [248] If one turns from the authorities and looks at the matter as a question of principle, I think (and I say this very tentatively, because the principle has not been argued out) that [15.130]

779

Intellectual Property: Commentary and Materials

Thomas Marshall (Exports) v Guinle cont. four elements may be discerned which may be of some assistance in identifying confidential information or trade secrets which the court will protect. I speak of such information or secrets only in an industrial or trade setting. First, I think that the information must be information the release of which the owner believes would be injurious to him or of advantage to his rivals or others. Second, I think the owner must believe that the information is confidential or secret, ie, that it is not already in the public domain. It may be that some or all of his rivals already have the information: but as long as the owner believes it to be confidential I think he is entitled to try and protect it. Third, I think that the owner’s belief under the two previous heads must be reasonable. Fourth, I think that the information must be judged in the light of the usage and practices of the particular industry or trade concerned. It may be that information which does not satisfy all these requirements may be entitled to protection as confidential information or trade secrets: but I think that any information which does satisfy them must be of a type which is entitled to protection.

Degree of secrecy [15.140] As Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 illustrates below (at [15.150]), it is not necessarily fatal to a claim that the information is known to others, even a substantial number of others. But as the case also shows, information needs to be safeguarded so as not to enter the public domain through carelessness. See Faccenda Chicken Ltd v Fowler (1985) 6 IPR 155; IF Asia Pacific v Galbally (2003) 59 IPR 43. The question is whether there is still sufficient secrecy to give commercial value to the plaintiff from the difficulty of acquiring the information without the use of improper means. The value of a “trade secret” depends (in part) upon the extent to which the information may be kept secret. A simple mechanical design incorporated into a product will not remain secret for long, as competitors may acquire the product upon its appearance in the marketplace and reverse engineer it (the process of reducing down a completed design or product to its constituent parts, elements or features). On the other hand, determining the nature of a particular process by which an article of manufacture comes into being may be much more difficult. Examples of processes kept secret have included a method of concentrating sulphuric acid, and the General Electric Co’s technique for the manufacture of artificial diamonds. The Pfizer Co reportedly maintained the secrecy of its process for the commercial production of citric acid for many years beyond the term of any patent. The possibility of reverse engineering need not necessarily make the product, information or idea public. It depends on the difficulty and whether others have, in fact, reverse engineered and learned the information through that process: Yates Circuit Foil Co v Electrofoils Ltd [1976] FSR 345. In cases where all information previously secret is revealed in a patent specification open for public inspection, the information has been made public and is no longer a trade secret. The controller of the former secret may rely upon breaches of trade secret until the date of publication of the specification, but after that date they must rely upon the rights given by the patent claims. In the following extract from Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37, Gowans J explores the nature of confidential information and trade secrets.

780 [15.140]

Confidential Information

CHAPTER 15

Ansell Rubber v Allied Rubber Industries [15.150] Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 Supreme Court of Victoria [The plaintiff company, which manufactured rubber gloves, had devised a machine which would produce the gloves in a continuous automated process. The machine had been patented, but some improvements to it, including a dryer-blower and ancillary apparatus for flock lining the gloves, were not patented. The plaintiff had not made public or disclosed to any competitor the design, construction or operation of its non-patented equipment improvements, and had been concerned to keep them private. It had imposed a rule against the admission of unauthorised persons into its factory and its employees were informed of the confidentiality of the machine’s operation. Two of the plaintiff’s employees, Grigg and Ashcroft, who knew of the plaintiff’s secrecy policy and their obligations, joined with two others in a venture to manufacture rubber gloves in competition with the plaintiff. Griggs (a fitter) had been employed by the plaintiff for 12 years in the glove manufacturing department, while Ashcroft (an engineer) had been the plaintiff’s production manager for 15 months. Injunctions were sought by the plaintiff to prevent the defendants from making rubber gloves using the plaintiff’s trade secrets.] GOWANS J: [47] But what are the indicia of a “trade secret” or “highly confidential information” or “objective knowledge” so referred to by the learned law lords, and in particular can the terms be applied, and how do they apply to machines, particularly where there is no express contract of restraint? In the first instance, at all events, I must endeavour to ascertain what English law says about these concepts, and particularly in the latter connection. There is nothing in the way of definition. In Amber Size & Chemical Co v Menzel [1913] 2 Ch 239, the subject matter was a process, and it was found as a fact that the plaintiff possessed and exercised a secret process, but by reference to what criteria does not appear. There were however three observations made by Astbury J, in arguendo (at 241-242), which are of significance: “Surely if the servant is told it is a secret process and is employed on that footing, there is an implied obligation not to use or disclose it?”; and “Possession of tangible materials cannot be a sine qua non in the case of a secret which the employee can commit to memory?”; and again “None of these cases really touch the question of information as to a secret process acquired during the confidential employment. How can it possibly matter whether the servant learns the process by heart or writes it down? It is an equal breach of confidence to use or disclose it in either case?” In BO Morris Ltd v Gillman (1943) 60 RPC 20, it was found that information as to the details of a milling machine were confidential and a trade secret, and the property of the plaintiff, [48] but on what evidence does not appear except that the machine was capable of turning out a variety of products by trifling adjustments in the mechanism, that the plaintiff alone used it in England, and that it had been reproduced by the plaintiff from a machine imported by it from Germany. I have already referred to Saltman Engineering Co Ltd v Campbell Engineering (1948) 65 RPC 203, and to Terrapin Ltd v Builders (Hayes) Ltd [1960] RPC 128. In the latter case the subject matter was a modification of a design for making prefabricated folding houses consisting of a flat roof and a roof made of stressed (wooden) skin. It was held, notwithstanding an attack on its “novelty”, that the conjunction of these two items was “something new if it were workable”, and that the information about it was given in confidence. In Mustad (O) & Son v Dosen [1964] 1 WLR 109; [1963] 3 All ER 416, the subject was information about the construction of a machine perfected by a Norwegian firm whose business was purchased by the plaintiffs. The machine was “an extremely unique and clever arrangement by which fish hooks can be produced at the rate of 75 per minute”. There was an express agreement against disclosing information. Lord Buckmaster observed that “it might well be that, had nothing more happened, the circumstances connected with this case, would have been sufficient to support the claim which the [15.150]

781

Intellectual Property: Commentary and Materials

Ansell Rubber v Allied Rubber Industries cont. appellant put forward”. But it was held, the secret as a secret had ceased to exist by its having been precisely and fully disclosed in a specification for a patent applied for by the plaintiff. In Commercial Plastics v Vincent [1964] 3 WLR 820; [1964] 3 All ER 546, the Court of Appeal, in deciding whether the plaintiffs had any trade secrets or confidential information in relation to the manufacture of sheeting for adhesive tape, held that even though it was difficult to classify any particular item of information in the plaintiffs’ possession as being confidential (other than information contained in documents which could be protected by other appropriate legal remedies), the fact that the defendant could probably remember in general in relation to any matter concerning adhesive tape what was the problem and what was the solution, what experiments were made, and whether the results were positive or negative, meant that the plaintiffs had confidential information capable of being protected by a suitably drafted condition or covenant. … Finally, in Printers & Finishers Ltd v Holloway [1965] RPC 239; [1964] 3 All ER 731, from which I have already set out some of the observations of Cross J, that learned judge observed (RPC at 253) that “not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret [49] which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter on hand”. He gave an example of printing instructions given to the employee, many of which were not “trade secrets” at all, and which, in so far as they would not be called “trade secrets”, and could be carried in his head, he was entitled to use for the benefit of a subsequent employer. … There was held to be a breach of duty by the employee during his employment and although no damages were given against the defendant Vita-Tex, for whose benefit the cyclone had been copied, because no use had been made of it (at 252), an injunction was granted against its use (at 257). On the other hand, an injunction was refused against use or disclosure of information about plant and processes, that was in the employee’s head alone, and which in terms would have prevented him, when employed by others who used plant and machinery similar to the plaintiff’s, from using his recollection of a corresponding piece of machinery of his former employers to resolve some difficulty. There is very little in these English cases to enable one to identify a “trade secret”. But some collation of the characteristics may be attempted, without trying to make it an exhaustive statement. Its subject matter may not be a process in common use, or something which is public property and public knowledge, but if it is the result of work done by the maker upon materials which may be available for the use of anybody, so as to achieve a result which can only be produced by somebody who goes through the same process, it will be sufficient. All of its separate features may have been published, or capable of being ascertained by actual inspection by any member of the public, but if the whole result has not been achieved, and could not be achieved, except by someone going through the same kind of process as the owner, it will not fail to qualify by reason of the publication. It may derive from a maker in another country without losing its character, if it is used, or entitled to be used, by the owner alone in the country in which the owner operates. There is no suggestion of the need for invention. Little can be gathered of the degree of secrecy required beyond what is implied in what is said. But it is a fair inference from what is said that the employer must have kept the matter to himself and from his competitors. The emphasis in the cases is on the confidence. American law is rather more explicit. The Restatement of the Law of Torts (1st ed), Article 757, states in the “Comment”: Secrecy. The subject matter of a trade secret must be secret. Matters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret. Matters which 782 [15.150]

Confidential Information

CHAPTER 15

Ansell Rubber v Allied Rubber Industries cont. are completely disclosed by the goods which one markets cannot be his secret. Substantially, a trade secret is known only in the particular business in which it is used. It is not requisite that only the proprietor of the business know it. [50] He may, without losing his protection, communicate it to employees involved in its use. He may likewise communicate it to others pledged to secrecy. Others may also know of it independently, as, for example, when they have discovered the formula by independent invention and are keeping it secret. Nevertheless, a substantial element of secrecy must exist, so that, except by the use of improper means, there would be difficulty in acquiring the information. An exact definition of a trade secret is not possible. Some factors to be considered in determining whether given information is one’s trade secret are: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Novelty and prior art. A trade secret may be a device or process which is patentable; but it need not be that. It may be a device or process which is clearly anticipated in the prior art or one which is merely a mechanical improvement that a good mechanic can make. Novelty and invention are not requisite for a trade secret as they are for patentability. These requirements are essential to patentability because a patent protects against unlicensed use of the patented device or process even by one who discovers it properly through independent research. The patent monopoly is a reward to the inventor. But such is not the case with a trade secret. Its protection is not based on a policy of rewarding or otherwise encouraging the development of secret processes or devices. The protection is merely against breach of faith and reprehensible means of learning another’s secret. For this limited protection it is not appropriate to require also the kind of novelty and invention which is a requisite of patentability. … [51] The general rule is stated in the Restatement of the Law of Agency (2nd ed), s 396, in these terms: Unless otherwise agreed, after the termination of the agency, the agent (a) has no duty not to compete with the principal; (b) has a duty to the principal not to use or disclose to third persons, on his own account or on account of others, in competition with the principal or to his injury, trade secrets, written lists of names, or other similar confidential matters given to him only for the principal’s use or acquired by the agent in violation of duty. The agent is entitled to use general information concerning the method of business of the principal and the names of customers retained in his memory, if not acquired in violation of his duty as agent. This accords with the English authorities. I have applied these principles of law as I understand them to the facts I have found, and, in my judgment, the design, construction and operation of the plaintiff’s No 2 glove-making machine (including the flocking apparatus) and of the dryer-blower were trade secrets of the plaintiff, and Ashcroft’s knowledge of them acquired during his employment was confidential information, and he knew that that was so. I have not had evidence that Ashcroft deliberately recorded or memorised this information during his employment for his own use afterwards, although I do not exclude it as a [15.150]

783

Intellectual Property: Commentary and Materials

Ansell Rubber v Allied Rubber Industries cont. possibility. But I am not prepared to find that in creating the defendants’ machines, he merely made use of what lay in his recollection. On the other hand, I have found that he had Grigg’s assistance and made use of Grigg’s opportunities in his employment for obtaining information of the plaintiff’s plant, and in particular in relation to the particulars of the batten assembly and the blower-dryer. Ashcroft was, therefore, not merely using his personal skill, knowledge and experience. He used information of a special or particular nature belonging to the plaintiff. He committed a breach of confidence and breach of contract in making use, for the benefit of the syndicate and the defendant company, of trade secrets and confidential information which were the property of his former employer, the plaintiff. Grigg, of course, was party to this. On this basis, they are liable in damages and to be enjoined. So also is Palmer liable to be enjoined for substantially the same reasons as I have given in relation to the first submission. The defendant company is equally liable for the same reasons as before. In my opinion, therefore, the plaintiff has succeeded, on both branches of its submission, in establishing its right to relief against all the defendants.

[15.160] In a somewhat different context, the case of Falconer v Australian Broadcasting

Corporation (1991) 22 IPR 205 examined the issue of protecting the identity of a police informer under the principles of confidential information, in respect of restraining the use of non-confidential information if that use would have destroyed the confidentiality of the plaintiff’s information.

Falconer v Australian Broadcasting Corporation [15.170] Falconer v Australian Broadcasting Corporation (1991) 22 IPR 205 Supreme Court of Victoria [This was the hearing of an interlocutory injunction that was sought to restrain the broadcast of a television program. The facts appear sufficiently from the decision below.] ASHLEY J: [206] The plaintiff, Robert Falconer, seeks an interlocutory injunction which in substance will restrain the defendant, Australian Broadcasting Corporation from broadcasting on television any picture image or description of the person formerly known as Vlado Rajicic which could reasonably reveal the current identity or whereabouts of the person formerly known as Vlado Rajicic or any member of his family. Rajicic was, it appears, a member of a drug trafficking group who turned informer. Over a period of some months he undertook this role of informer. It was very risky work. What he did, according to the police, played a very significant part in the arrest of a majority of the 16 persons who were eventually charged with offences arising out of the investigation. Eventually those charged were sentenced to imprisonment for terms of between three and 18 years. In addition, assets of or controlled by the accused and valued at nearly $2 million were seized, and the Australian Taxation Office raised assessments of over $2 million with penalties of $801,000. Rajicic, his wife and two children were for a period of about one year following the arrest of certain of the accused in February 1988 under 24 hour police protection. Then Rajicic and his family were relocated and given a change of identity. This relocation and change of identity was effected in the course of the work of a group in the Victoria Police Force known as the Witness Protection Unit. Only very few persons in that group know the present identity and whereabouts of the man who was Vlado Rajicic.

784

[15.160]

Confidential Information

CHAPTER 15

Falconer v Australian Broadcasting Corporation cont. The protection afforded Rajicic and his family was in consequence of assurances given him as to the safety of his family and himself if he was prepared to cooperate with the police and give evidence for the Crown. He took legal advice, it appears, before committing himself to the course of co-operation that he undertook. Having account of the role played by Rajicic as an informer and witness, the police hold fears that, if his present identity and whereabouts become known, he and his family will be at risk to their safety. The defendant runs a current affairs program entitled The 7.30 Report. On 11 September 1991 it commenced a series on the activities of the witness protection scheme. As a promotion of what was to be screened on 12 September it showed a photograph depicting three persons. One of them was the former Rajicic. His face was briefy highlighted. Material later filed by the defendant shows that Rajicic was to be the subject of considerable comment on the program of 12 September, had that program gone to air, and that the photo was to be shown in the course of the program on 12 September. According to the affidavit of Sally Anne Neighbour, sworn 17 September: The defendant wishes to publish the segment as it deals with the giving of indemnity in controversial circumstances and the executive producer of The 7.30 Report and I believe it is in the public interest that the subject of indemnities in serious criminal prosecution be the subject of full and informed public discussion. … [208] It was common ground between the parties that equity will intervene to restrain the disclosure of confidential information. That is the way in which the plaintiff frames his case. The restraint which the court will impose in the appropriate circumstances is not auxiliary to the enforcement of a legal right: see, for example, Prince Albert v Strange (1849) 1 N & T 1 at 25; Pollard v Photographic Co (1888) 40 Ch D 348 at 349, 353-4 per North J; Lord Ashburton v Pape [1913] 2 Ch 469 at 457 per Swinfen-Eady J; Argyll v Argyll [1967] Ch 302 at 322 per Ungoed-Thomas J; Attorney-General v Jonathon Cape Ltd [1976] QB 572 at 617-8 per Lord Widgery CJ. It is not relevant to search for an interest protected in law – a task which chiefly occupied the members of the High Court in Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479, a case to which Mr Ruskin referred me. In the present case it is recognised that there is potentially an interest which equity will protect. The question is whether the particular facts call for equity to intervene. Mr Ruskin raised a series of matters which, he submitted, led to a conclusion that the plaintiff’s case was without foundation. But ultimately he made this submission, in answer to a question that I put him: I have conceded, I think, that if (the photographs) had never got into the public domain there would be an arguable case that they arose in confidence, and should not be given out to anybody. It seems to me to follow the fact that as they are in the public domain, that makes the difference. His reference to the photographs being in the “public domain” was a reference to the fact that they were introduced into evidence at the committal hearing of May 1988. … [210] Both counsel referred me to G v Day [1982] 1 NSWLR 24. In that case the plaintiff was a man who believed he had seen, in the US, in 1982 another man named Nugan. The latter was thought to have committed suicide in 1980. He was a man thought to be involved in questionable dealings. The plaintiff communicated his belief that he had seen Nugan to officers of the Corporate Affairs Commission. Before doing so, he said that he feared for his safety and that he would only make a statement if his anonymity was preserved. He was given a suitable assurance. In reliance upon this statement a fresh inquest was held. In fact the plaintiff’s belief was honest, but mistaken. Prior to the second inquest being held, a journalist employed by Truth newspaper contacted the plaintiff and said [15.170]

785

Intellectual Property: Commentary and Materials

Falconer v Australian Broadcasting Corporation cont. that he believed the plaintiff was the mystery witness. The plaintiff denied this. Later he was told by the journalist that the material emanated from the Corporate Affairs Office (there was no evidence of this) at which stage “speaking off the record” the plaintiff asked the journalist not to publish his name. There was evidence that the plaintiffs name had been mentioned on the television briefy. [211] On the television, the connection between the plaintiff’s name and the Nugan affair was less than clear. It was submitted for the defendants that the identity of the informant, as distinct from information conveyed, was not confidential in quality. Yeldham J, at 35, rejected that submission. The present case is stronger again from the plaintiff’s standpoint. Identity is the confidential information. It was argued for the defendants that confidentiality had been lost because the plaintiffs name had been mentioned on television. There, Yeldham J referred to cases dealing with loss of confidentiality by reason of prior disclosure – including Interfirm Comparison (Aust) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104 at 117-8 per Bowen CJ in Equity, Commonwealth v John Fairfax & Sons Ltd (1980) 55 ALJR 45 at 50 per Mason J, and he concluded at 40-1: In the present case the references to the plaintiff on television were transitory and brief. His name was mentioned once only on each occasion. It was not recorded in any permanent form (other than in the script) and there is no suggestion that any reaction from any viewer was conveyed to the plaintiff. Probably his name would not be remembered by any who did not already know him. I regard these disclosures as being of a limited and impermanent nature. Any publication in a newspaper would, on the contrary, be in a permanent form for all its readers to note. Where, as here, there has been a limited publication of the plaintiff’s name without his knowledge or approval, where he is entitled, to the knowledge of a newspaper publisher, to expect anonymity, and where any unauthorised publication of his identity will probably be to his detriment, I do not consider that the court should be astute to deprive him of relief merely by reason of that limited publication. Plainly, if disclosure had been in another newspaper, different considerations may well apply, and if the plaintiff had been party to or consented to any prior identification of himself, then his action would necessarily fail. But I see no reason why, in a case where it is likely that many readers of Truth would not have seen or learned of the telecasts, the plaintiff should not have the protection to which, but for such telecasts, he would have been entitled. G v Day was a case, thus, where the confidential material itself was disclosed to a third party by the plaintiff, he being the party to whom the material was of principal concern. Despite these facts, and despite limited disclosure elsewhere, the court intervened to prevent further disclosure. It may be said that the disclosure there was short, impermanent and effected by television; contrast disclosure by photograph tendered in court proceedings. On the other hand, that case involved prior disclosure of the confidential information itself. And the authorities to which his Honour referred underlined, I think, the need to look at the potential effect of prior disclosure on a case by case basis. In the present case it is true that the photographs were a court exhibit. But that was in 1988, and the litigation in which they were tendered is now long past. None of the photographs were, it seems, published in the press at the time. The extent of their circulation seems likely to have been magistrate, counsel, solicitors and the accused. That is a far cry from the circulation achievable by a national television current affairs program in 1991. In the present case the confidential information existing between Rajicic and a few policemen is his present identity (I continue to assume at this [212] stage that the information contained in the photographs is not and was not itself confidential). The defendant knows that such information is, at least by intention of the parties privy to it, confidential. The defendant wishes to use two pieces of information which are said not to be confidential in a manner which is well capable of destroying the confidentiality of that which is held confidential. Those two pieces of information are: (1) the photographs; (2) the intimation that the photographs depict Rajicic. 786 [15.170]

Confidential Information

CHAPTER 15

Falconer v Australian Broadcasting Corporation cont. In my opinion, where confidentiality attaches to information such that equity would prevent its unauthorised disclosure, equity may also protect that information from disclosure by means of the use of non-confidential material. Particularly that should be so where the use of that material produces, as its inevitable outcome, not by some unintended sidewind, the means whereby the confidentiality of information may be breached. If equity did not give protection in such circumstances, the very thing that equity seeks to prevent would be effectively countenanced. Where equity has been cautious in saying, even where there has been some disclosure of confidential information, that this will destroy the protection which equity gives such material, there appears to me to be a stronger case again for restraining the use of non-confidential information which may well breach the confidentiality of information which has been otherwise carefully protected. The plaintiff has satisfied me provisionally, that the principles of equity extend to prevent disclosure in the circumstances I have outlined. … [213] In my opinion the public policy considerations against disclosure of Rajicic’s present identity are material to the exercise of my discretion, it having been once determined that there is confidential information. That is so whether the confidential information is conceived to include or exclude the photographs themselves. Such public policy considerations tend in favour of the restraint which the plaintiff seeks. There is the need to ensure “a flow of intelligence about planned crime and its perpetrators”. Anonymity of informers, and their [214] protection against those who would later wish them ill, are in my opinion matters of importance in the exercise of my discretion.

Element 2: circumstances importing an obligation of confidence Contractual [15.180] With a developed trade secret law, there would be no need for a contract between the parties to establish the existence of the relationship requiring confidentiality. Cases such as Saltman Engineering v Campbell Engineering (1948) 65 RPC 203 make this clear. However, where a contract exists between the parties the confidentiality provision can be important. The contract may specifically establish that the information is to be treated as secret between the parties, it may shape the scope of the duty, and it may be evidence that there is a relationship of confidence in existence. In many cases, an express term of confidentiality will exist or otherwise it can usually be implied. Obviously, in the context of a contract of service, the existence of a contractual relationship between the parties imposes the obligation of confidence upon an employee. Employees are likely to learn their employer’s trade secrets. A great many cases involving trade secret or breach of confidentiality litigation are concerned with employers seeking to prevent their current or former employees from divulging or using information learnt during employment. There is usually a difference between the obligations owed during employment and those owed after employment ceases. The agreement may be express or implied from the fact of employment: see Robb v Green [1895] 2 QB 315; Lamb v Evans [1893] 1 Ch 218; Amber Size & Chemical Co Ltd v Menzel [1913] 2 Ch 239; Lord Ashburton v Pape [1913] 2 Ch 469; Stevenson Jordan & Harrison v McDonald & Evans [1952] 1 TLR 101 at 107; Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617; Printers & Finishers Ltd v Holloway [1964] 3 All ER 731; Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37; Gilman Engineering Ltd v Ho Shek [15.180]

787

Intellectual Property: Commentary and Materials

On (1986) 8 IPR 313. The obligation of confidence, the second element of the test from Coco v AN Clark (Engineers) Ltd [1968] FSR 415 is thus present: Fiscal Technology Co Ltd v Johnson (1991) 23 IPR 555. Employees and ex-employees present special problems because of the common law principle that it is against public policy to prevent an employee, after leaving employment, from using general knowledge and skill acquired in the capacity of employee. One of the most difficult questions is to define the dividing line between general knowledge and skill – which an employee may legitimately exploit elsewhere – and confidential information. The issue is given prominence in the context of corporate failure or restructuring, where redundant employees use their payouts to set themselves up in the same line of business as their former employers. Employers may attempt to prevent the use of information after employment by the inclusion of specific contractual terms in the contract of employment that bind employees after they have left their employment. These are called restrictive covenants. These covenants may be expressed as agreements not to use or divulge certain information. They may also be agreements employees make to not set themselves up in competition with the employer, or not work for a competitor of the employer for a specified period of time. The extract from Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at [15.150] above concerns the concept of secrecy of information, but some issues particularly relevant to the employment context also arose in this case, including: (i)

the obligation of confidence arising from a contract of employment;

(ii)

the extent to which such an obligation survives the termination of the employment relationship; and

(iii) the general duty of fidelity owed by an employee to an employer. The common law has a general principle of free movement of labour, and covenants, which improperly conflict with this principle, may be found to be void and unenforceable. Generally, a restrictive covenant may be justified only if it can be shown that the employer is seeking to protect a trade secret or relations with customers. The covenant must not be wider than is necessary to protect the employers’ interests. Thus there will be a testing of which information is within the covenant, the length of time for which the restriction applies and the geographical area of the restriction. The kind of information that an employee would learn while working in the industry at large must be regarded as part of the employee’s general stock of skill and knowledge that they may take to another employer. Such information cannot be regarded as a trade secret and will not be protected by the general law of confidence. Nor can express contractual restriction of such information be justified. Not only is it not a trade secret, but it cannot be fair to enforce the contractual term that would restrict the free flow of labour. Important cases illustrating these principles are Printers & Finishers Ltd v Holloway [1965] RPC 239; Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617; ANI Corp Ltd v Celtite Australia Pty Ltd (1990) 19 IPR 306 and Wright v Gasweld Pty Ltd (1990) 20 IPR 481. See also the recent case of Labelmakers Group Pty Ltd v LL Force Pty Ltd (No 2) [2012] FCA 512, discussed further in [15.230]. These issues are addressed in the following extract from Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 ([15.190]) and in Print Investments Pty Ltd v Art-vue Printing Pty Ltd (1983) 1 IPR 149. Another extract from Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 follows, and sets out important principles as to the duty of confidentiality 788 [15.180]

Confidential Information

CHAPTER 15

during employment and the duty that survives the end of an employment relationship. For a similar situation set in the Australian mining industry, see AIM Maintenance Ltd v Brunt (2004) 60 IPR 572.

Ansell Rubber Co v Allied Rubber Industries [15.190] Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 Supreme Court of Victoria GOWANS J: [40] …The starting point is said to be the equitable doctrine laid down in Keech v Sandford (1726) 2 Eq Ca Ab 741; 22 ER 629, that a trustee cannot be allowed to make a profit out of his trust, and its expansion to all persons standing in a fiduciary relation to another: Keith Henry & Co Pty Ltd v Walker (1958) 100 CLR 342 at 350. It has been applied to many different kinds of such relationships whether created by contract or otherwise: Argyll v Argyll [1965] 2 WLR 790, and to many different conceptions of property. It has been applied to rights in respect of the publication of works of art: Prince Albert v Strange (1849) 64 ER 293; and rights in secret formulae: Morison v Moat (1851) 68 ER 492. It has been extended to breaches of confidence as well as breaches of trust or contract: Abernethey v Hutchinson (1825) 2 LJ Ch 219; 47 ER 1313, and the obligation of confidence may be express or implied: Argyll v Argyll (at 801). That obligation may come into existence by reason of the terms of an agreement, or what is implicit in them, by reason of the nature of the relationship between persons, or by reason of the subject matter and the circumstances in which the subject matter has come into the hands of the person charged with the breach. At this stage I turn more particularly to the first way in which the plaintiff’s claim to relief is put, and the law relating thereto. It is concerned primarily with Grigg’s conduct during his employment. The doctrine I have referred to has been applied to the position of a servant [41] in relation to his master and his property, and to the obligations of the servant in relation to information obtained in the employment. “And where a person is by virtue of his employment charged with the duty of furthering his employer’s interest, he is also charged with the duty of not using the information obtained by him as their employ to their detriment”: Prebble v Reeves [1910] VR 88 at 108. What the obligation really involves is that the employee must not take advantage of his own profit of what he has learned confidentially in the service of his employer: Fridman, The Modern Law of Employment, p 455; and see Halsbury (3rd ed), Vol 25, p 462, s 894. In Merryweather & Sons v Moore [1892] 2 Ch 518; [1891-94] All ER Rep 563 at 524 (Ch), Kekewich J, used the language: “an abuse of confidence necessarily existing between him and his employers – confidence arising out of the mere fact of employment, the confidence being shortly this, that the servant shall not use, except for the purposes of service, the opportunities which that service gives him of gaining information”, and (at 522) “perhaps the real solution is that the confidence postulates an implied contract; that where the court is satisfied of the confidential relation, then it at once infers or implies the contract arising from that confidential relation a contract which thus calls into existence the jurisdiction to which I have referred”. See also Robb v Green [1895] 2 QB 315; [1895-99] All ER Rep 1053; Measures v Measures [1910] 1 Ch 336; British Reinforced Concrete Engineering Co v Lind (1917) 34 RPC 101; Reid & Sigrist Ltd v Moss & Mechanism Ltd (1932) 49 RPC 461; Wessex Dairies Ltd v Smith [1935] 2 KB 80; [1935] All ER Rep 75 Vokes v Heather (1945) 62 RPC 135 at 141-142, and Bent’s Brewery Co Ltd v Hogan [1945] 2 All ER 570. These were cases concerned with conduct during employment in breach of the duty of fidelity which a servant owes to his master, and in breach of contract or confidence. In many of them the confidential nature of the information was apparent from the nature of the subject matter, eg names of customers, weekly sales, total wages; or from the circumstances in which it came into existence, eg a private conference. In most cases it was recorded in some tangible form the use of which could be enjoined and required to be delivered up. Where it was not, difficulty was sometimes felt and [15.190]

789

Intellectual Property: Commentary and Materials

Ansell Rubber Co v Allied Rubber Industries cont. expressed as to what effective form of injunction could be granted against its use. But in Amber Size & Chemical Co v Menzel [1913] 2 Ch 239, Astbury J, considered that the use of a memorised secret process could not be restrained, and in Printers & Finishers Ltd v Holloway [1965] RPC 239; [1964] 3 All ER 731, an injunction was granted against the use of a machine improperly copied at the instance of a servant for the benefit of another. In that case Cross J, said (at 255): There mere fact that the confidential information is not embodied in a document but is carried away by the employee in his head is not of course, of itself a reason against the granting of an injunction to prevent its use or disclosure by him. If the information in question can fairly be regarded as a separate part of the employee’s stock of knowledge which a man of ordinary honesty and intelligence would recognise to be the property of his old employer, and not his own to do as he likes with, then, the court if it thinks that there is a danger of the information being used or disclosed by the ex-employee to the detriment of the old employer, will do what it can to prevent that result by granting an injunction. Thus an ex-employee will be restrained from using or disclosing a chemical formula or a list of customers which he has committed to memory. Then after referring to the facts in [42] Reid & Sigrist Ltd v Moss & Mechanism Ltd (1932) 49 RPC 461, he added: It appears, indeed, that after the discussions, and while he was still in the plaintiff’s employ, the defendant made and later took away with him drawings embracing the matters discussed. But even if he had not done so and relied simply on his memory of the confidential discussions I think that an injunction would still have been granted. Given the kind of information described by Cross J, I think it is immaterial that it is not recorded in a tangible form. The cases also show that anyone who aids, abets in or procures the breach of contract of confidence may be enjoined together with the servant against the use of the information. The American Restatement of the Law of Agency (2nd ed), Ch 13, s 395, states the principle in terms which accord with the English authorities: Unless otherwise agreed, an agent is subject to a duty to the principal not to use or to communicate information confidentially given him by the principal or acquired by him during the course of or on account of his agency or in violation of his duties as agent, in competition with or to the injury of the principal, on his own account or on behalf of another, although such information does not relate to the transaction in which he is then employed, unless the information is a matter of general knowledge. The “Comment” says: “The agent also has a duty not to use information … acquired by him through a breach of duty to the principal, for any purpose likely to cause his principal harm or to interfere with his business.” And again: The rule stated in this section applies not only to those communications which are stated to be confidential, but also to information which the agent should know his principal would not care to have revealed to others or used in competition with him. It applies to unique business methods of the employer, trade secrets, lists of names, and all other matters which are peculiarly known in the employer’s business. It does not apply to matters of common knowledge in the community nor to special skill which the employee has acquired because of his employment. I have applied these conceptions to the detailed knowledge of the plaintiff’s batten assembly, and the knowledge of the dryer-blower, which I have found made its way through the medium of Grigg to use in the defendants’ company plant, and have reached the conclusions that it does not represent the kind of skill which Grigg had acquired because of his employment, while it does represent a matter particularly known in the plaintiff’s business, and that it was used by him in violation of his duty. The conduct in which Grigg engaged, even if no confidential information had been shown to have been disclosed and used, would, having regard to his position with the plaintiff and the opportunities 790 [15.190]

Confidential Information

CHAPTER 15

Ansell Rubber Co v Allied Rubber Industries cont. he possessed for passing on particular and detailed information of a confidential nature, constitute a breach of his duty to his employer not to act contrary to its interests. In Hivac Ltd v Park Royal Scientific Instruments Ltd [1946] 1 Ch 169; [1946] 1 All ER 350, that was held to be the position in a case which concerned a production engineer and his wife, a forewoman, and other skilled manual workers, who employed their spare time in helping a competitor of their employer make scientific instruments. The case (as reported) concerned the position of the manual workers, the production engineer and his forewoman wife having been summarily dismissed. The breach of duty on the part of those two could hardly have been in doubt. Conduct which in respect of important matters is incompatible with the fulfilment of an employee’s [43] duty, or involves an opposition, on conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal: per Dixon and McTiernan JJ, in Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81. In that case the learned justices went on to say that if a finding had been made that in all he did the manager concerned was actuated by one design, namely, to prepare a position to which he could retreat with a considerable part of his employee’s [sic] business, the court would have been entitled, if not bound, to hold he had been guilty of misconduct. Such misconduct must create a liability in damages. … [46] I turn now to the second way in which the plaintiff’s claim for relief is put. In its formulation, it places emphasis on the conception of “trade secrets”. But this is only a particular subject matter to which the principles relating to breach of confidence have been applied. It is a subject matter associated with what is loosely called “trade”, and it might, as aptly, have been called “commercial confidence”. The English authorities are more disposed to refer to “confidential information” and not to resort to definitions of the term “trade secret”, while the American authorities tend to use the expression “trade secret” as a term of art. This submission of the plaintiff is better understood as placing emphasis primarily on the conduct of Ashcroft after his employment with the plaintiff had ceased. Because his activities occupied a wider field than Grigg’s, the scope of the matter dealt with is enlarged. In Helmore v Smith (1887) 35 Ch D 449 at 456, Bowen LJ, said he could not “countenance the doctrine that the confidential information received by a servant to advance his master’s business may be used afterwards by him to advance his own business to the injury of his master’s interests. It is part of the implied contract between the master and the servant that such confidential information is not to be used to the master’s disadvantage.” See also Kirchner & Co v Gruban [1909] 1 Ch 413; [1908-10] All ER Rep 242 at 422 (Ch). But since the implied contract concerns the use of the servant’s labour skill or talent, it is subject to the rule of public policy that a man is not to be restrained, either by contract or without it, from using after his employment his personal skill, knowledge and experience. That conception includes “the skill and knowledge in his trade or profession which he had no right to reveal to anyone else matters which depend to some extent on good faith … it would be a breach of confidence to reveal trade secrets, such as prices etc or any secret process or things of a nature which the man was not intended to reveal”: per Farwell LJ, in Leng v Andrews [1909] 1 Ch 763 at 774. This was approved by Lord Atkinson in Herbert Morris v Saxelby [1916] 1 AC 688 at 704; [1916-17] All ER Rep 305, and he also (at 702-703) spoke of “trade secrets such as secret processes of manufacture” and “documents highly confidential” and “drawings of special machines”, as being protected. Lord Parker (at 709) also referred to “such an acquaintance with his employer’s trade secrets as would enable him, if competition were allowed, to take advantage of his employer’s trade connection or utilise information confidentially advanced”. Lord Shaw (at 714) said: [15.190]

791

Intellectual Property: Commentary and Materials

Ansell Rubber Co v Allied Rubber Industries cont. Trade secrets, the names of customers, all such things which in sound philosophical language are denominated objective knowledge these may not be given away by a servant; they are his masters property, and there is no rule of public interest which prevents a transfer of them against his master’s will being restrained. On the other hand, a man’s aptitudes, his skill, his dexterity, his manual or mental ability all those things which in sound philosophical language are not objective, but subjective they may and ought not to be relinquished by a servant; they are not his master’s property they are his own property; they are himself. It is in this way that the concept of “trade secrets” comes into the English authorities.

Specific nature obligations Statutory [15.200] There may be legislative sources of the obligation of confidence apart from the contractual or general one, for example, in corporations law: see AG Australia Holding Ltd v Burton (2002) 58 IPR 268. The Freedom of Information Act 1982 (Cth) ss 43 and 45 protect from disclosure certain documents if the information contained therein is confidential or commercially valuable. The statute provides no definition of these concepts, however, and it is left to the Administrative Appeals Tribunal and the Federal Court to identify or define what is confidential or commercially valuable. Corporations seeking to safeguard trade secrets from competitors (not necessarily ex-employees) will want to know the limits of a request for information made pursuant to freedom of information legislation: see Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 10 IPR 53. It should also be noted, as discussed in Ansell Rubber Company Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37, that the relevant features of a “trade secret” are codified in the American Restatement of the Law of Torts (2nd ed) (US) Article 737. In some jurisdictions, the basic obligation to protect confidentiality comes primarily from a statute. One such model law is found in the United States approach. In 1980, the National Conference of Commissioners of Uniform State Laws proposed a Uniform Trade Secrets Act (US) which has been adopted in all US States except New York and North Carolina. This Act provides that information is property. A trade secret under the Act is information (including a formula, pattern, compilation of data or information, program, device, method, technique or process), which derives economic value from not being generally known and is the subject of efforts to keep it secret. A full range of civil remedies, including injunctions, accounts damages and delivery up, is available. The similarity between this Act and the description in the TRIPS Agreement is obvious.

Privacy and confidence: statutory basis [15.210] While the common law has not yet formulated enforceable privacy obligations,

there is a statutory regime, although it also does not create a general statutory tort of invasion of privacy. The Privacy Act 1988 (Cth) applies to private sector organisations and Commonwealth agencies, and establishes a number of principles that will apply unless the organisation has developed a privacy code that is approved by the Privacy Commissioner (also established by the Act). The Act provides principles relating to a range of privacy issues, including collecting, storing, disclosing, securing and being accurate about private information, rights to anonymity in certain situations, and, in particular, attention to information relating to political, religious or philosophical beliefs, membership of associations or trade unions, 792 [15.200]

Confidential Information

CHAPTER 15

criminal records, health status and sexual preference. A person aggrieved by an infringement of these principles may lodge a complaint with the Privacy Commissioner seeking either a restraining order or compensation. An important development is the introduction of the European Convention on Human Rights Articles 8 to 10 and the Human Rights Act 1998 (UK) s 12, which establish the right to respect for a person’s private and family life, albeit allowing for “jurisprudence which acknowledges different degrees of privacy” (Douglas v Hello! Ltd [2001] 2 All ER 289 at 329). In the appeal of Douglas v Hello!, which concerned the publication of unauthorised photographs of a celebrity wedding where the newlyweds had sold the rights to another magazine, Phillips, Clarke and Neuberger LJJ reluctantly formed the following view (Douglas v Hello! Ltd (2005) 65 IPR 449 at 465): We conclude that, in so far as private information is concerned, we are required to adopt, as the vehicle for performing such duty as falls on the courts in relation to Convention rights, the cause of action formerly described as breach of confidence. As to the nature of that duty, it seems to us that ss 2, 3, 6 and 12 of the Human Rights Act all point in the same direction. The Court should, insofar as it can, develop the action for breach of confidence in such a manner as will give effect to both Art 8 and Art 10 rights.

Proprietary [15.220] The issue of whether confidential information attracts proprietorial rights in the same manner as that enjoyed by other forms of IP rights is a contentious one. This has been the cause of much vigorous and ongoing debate. In the United States, in those States where a statute makes information property, there have been numerous prosecutions under the National Stolen Property Act (US). The Federal Courts have construed the words “goods” and “things of value” to include intangible trade secrets. An example is US v Bottone 365 F 2d 389 (2nd Circuit 1966), where the information was in documents. The documents were taken and copied, and the originals returned. The charge was transporting stolen goods (ie, the copies) worth $5000 or more interstate or in foreign trade. The case depended on the value. The court found that the physical form of the goods was secondary to the matter recorded on them and that the information was “goods” that had a value of more than $5000. There are limits to this, since the court stated the rule would not apply to information that was memorised. In Australia, the High Court in Breen v Williams (1996) 186 CLR 71 confirmed that “there can be no proprietorship in information as information because, once imparted by one person to another, it belongs equally to them both” (at 71). The general approach, then, is to consider the rights of a party to bring an action for breach of confidence on the grounds that they were owed by others a duty of confidentiality as distinct from who might be deemed to have owned or possessed the information. In the employment context, the proprietorial rights and duty of confidentiality may be established under contracts of employment, but as the case of University of Western Australia v Gray [2009] FCAFC 116 demonstrates, in such circumstances the contractual provisions must be both specific and comprehensive. Equitable obligation [15.230] In Coco v AN Clark (Engineers) Ltd [1968] FSR 415 ([15.100]), Megarry J

proposed that the reasonable person be asked whether, in the shoes of the recipient of information, it should have been realised that the information was being given in confidence. The precise circumstances in which communication imports an obligation of confidence have not always been easy to state. [15.230]

793

Intellectual Property: Commentary and Materials

Subsequently, in the High Court of Australia, Dean J in Mooorgate Tobacco Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 438, stated that a general equitable jurisdiction to grant relief against an actual or threatened abuse of confidential information lay “in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained”. The issue of equitable obligations in the employer/employee context was examined in a recent case before the NSW Supreme Court. In Labelmakers Group Pty Ltd v LL Force Pty Ltd (No 2) [2012] FCA 512, Tracey J considered the interaction between express and implied terms of contract, breach of confidence as well as breach of both equitable fiduciary duties and statutory fiduciary duties. The second to sixth respondents had conspired to establish within the printing industry a label making business in competition with the plaintiff, while still employed by the plaintiff. The first respondent had been incorporated with the second, third, fourth and fifth respondents, registered as the shareholders, and a business name registered. The issues in this case concerned the manner in which respondents’ new business venture came into existence and whether, in establishing it, they had acted consistently with the fiduciary and statutory obligations they owed to the two applicants. Tracy J noted [at 111] that while fiduciary and contractual obligations do not provide an absolute bar to taking preparatory steps to establish a competitive business while remaining employed, they do provide strict limits to what directors and employees might do in pursuing that objective. The weight of restrictions will fall more heavily the more senior the standing of the employee. In response to the respondent’s contention that their actions were largely undertaken outside normal business hours, his Honour stated that “whilst it is permissible for some preparatory work to be undertaken outside normal business hours, fiduciary and contractual obligations can, and do, continue to bear on employees when they are not engaged in work for their employer. Such obligations cannot, routinely, be cast aside at the factory or office door” [112]. His Honour also opined [366]-[368] that the respondents’ actions also had implications for the liability of the new company they established, being the first respondent, citing Palmer J in Digital Pulse Pty Ltd v Christopher Harris [2002] NSWSC 33 at 25: Where the employee who is in breach of the fiduciary duty of loyalty incorporates a company in order to take the benefits of the breach, then the company itself will be held to have participated in the breach so that it will be liable to the employer to the same extent as the employee.

The liability in this particular arose for three main reasons: firstly because the individual respondents are the directing minds of the company, secondly because a third party who participates knowingly in the dishonest conduct of a defaulting fiduciary is itself accountable as a constructive trustee, and thirdly because the first respondent received the benefit of the corporate opportunity which the individual respondents’ conduct denied to the applicants. The issue of equitable obligation in respect of the protection of government secrets was further examined in the case of Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 75 ALR 353, as the following extract illustrates.

Attorney-General (UK) v Heinemann Publishers Australia [15.240] Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 75 ALR 353 Supreme Court of New South Wales [This was an appeal by the UK Government from a decision of Powell J in the Equity Division of the Supreme Court of New South Wales (Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd 794 [15.240]

Confidential Information

CHAPTER 15

Attorney-General (UK) v Heinemann Publishers Australia cont. (1987) 8 NSWLR 341) that the information that Peter Wright, a former MI5 employee, wished to publish in his book Spycatcher was no longer confidential information.] MCHUGH JA: [453] Independently of contract, an enforceable equitable obligation of confidence may arise if confidential information is imparted in circumstances imputing an obligation to keep it confidential: Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203; Prince Albert v Strange (1849) 2 De G & Sm 652; 64 ER 293; Coco v AN Clark (Engineers) Ltd [1969] RPC 41. Sometimes the information may be conveyed with the express statement that it is confidential. But perhaps more frequently the obligation of confidence is to be deduced from the circumstances. In a business context, relevant circumstances will include the extent to which the information is known inside and outside the business, the measures taken to guard the secrecy, the value of the information to the person disclosing the information and his competitors, the amount of effort and capital invested in acquiring the information and the ease with which it can be acquired by others: see Ansell Rubber Co Pty Ltd v Allied Rubber Co Pty Ltd [1967] VR 37 at 50 per Gowans J. But that list is not exhaustive: Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 193 per Fullagar J. In other cases the obligation will arise simply from the common expectations or understandings of people in general. For this reason communications between husband and wife are confidential in respect of matters to whose publication either party might reasonably object: Argyll v Argyll [1967] Ch 302. In some cases an obligation of confidence is imposed to give effect to a more general obligation owed by the confidee. An employee owes a duty to act in good faith in the interests of his employer: Robb v Green [1895] 2 QB 315. Many statements can be found in the cases which indicate that this general obligation of fidelity imposes a specific obligation not to reveal information which is confidential: Robb v Green (at 10); Measures Bros Ltd v Measures [1910] 1 Ch 336 at 343. However, not all information which the employee obtains or receives in the course of his employment is impressed with an obligation of confidence. An employee is not precluded from disclosing employment information which did not have or has now lost the quality of confidentiality: cf Bent’s Brewery Co Ltd v Hogan [1945] 2 All ER 570 at 576-577. Moreover, an employee may be entitled to publish or use employment information because, although the employer regarded the information as confidential, he has so acted that the employee was entitled to assume that he could use it or publish it: cf Worsley & Co v Cooper [1939] 1 All ER 290 at 306-310; Aveley/Cybervox Ltd v Celltech Ltd [1982] FSR 92 at 99-102. In these cases the implied duty of good faith is displaced, although it may be that it is displaced only to the extent that publication or use does not harm the employer’s interests. Finally, it is well settled that an obligation of confidence owed by an employee does not cease with the termination of the employment: Amber Size & Chemical Co Ltd v Menzel [1913] 2 Ch 239. Once it is established that a person without authorisation is proposing to publish confidential information imparted to him in confidence during a private or business relationship, little more need be proved for equity to restrain the publication. If [454] information imparted in confidence retains the necessary quality of confidence “in the sense that the preservation of its confidentiality of secrecy is of substantial concern to the plaintiff”, then, subject to any special defences, equity will invariably restrain the publication: cf Moorgate Tobacco Co Ltd v Philip Morris Ltd (1984) 56 ALR 193; 156 CLR 414 at 438 per Deane J. Private concern or embarrassment is prima facie sufficient detriment to ground an injunction to restrain the threatened publication of confidential information acquired by one citizen in the course of his or her relationship with another. However, when a question arises as to whether a person owes an obligation of confidence to a government in respect of information acquired in the course of his relationship with that government or a question arises as to whether a government or one of its departments or agencies owes an obligation of confidentiality to a citizen or employee, the equitable rules worked out in cases [15.240]

795

Intellectual Property: Commentary and Materials

Attorney-General (UK) v Heinemann Publishers Australia cont. concerned with private relationships must be used with caution. This is especially so when the issue is whether the publication of information will be detrimental to the interests of the government in question or one of its agencies. Courts of equity will protect the confidentiality of information imparted in confidence by governments: Attorney-General (UK) v Jonathan Cape Ltd [1976] QB 752; Commonwealth v John Fairfax & Sons Ltd (1980) 32 ALR 485; 147 CLR 39 at 50-52. The doors of the Chancery are not closed to governments or their agencies. Courts of equity will also protect the confidentiality of information given by citizens to governments and their departments and agencies: Castrol Australia Pty Ltd v EmTech Associates Pty Ltd (1980) 33 ALR 31; Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133 at 189 per Viscount Dilhorne. But the relationship between the modern state and its citizens is so different in kind from that which exists between private citizens that rules worked out to govern the contractual, property, commercial and private confidences of citizens are not fully applicable where the plaintiff is a government or one of its agencies. Private citizens are entitled to protect or further their own interests, no matter how selfish they are in doing so. Consequently, the publication of confidential information which is detrimental to the private interest of a citizen is a legitimate concern of a Court of equity. But governments act, or at all events are constitutionally required to act, in the public interest. Information is held, received and imparted by governments, their departments and agencies to further the public interest. Public and not private interest, therefore, must be the criterion by which equity determines whether it will protect information which a government or governmental body claims is confidential. In the absence of a claim based on a contractual or statutory obligation, equity will not protect the disclosure or use of what I shall call government information unless, at the time when the information was acquired, it was or would have been regarded by the government and the confidant as confidential, that it was imparted in circumstances which imposed an obligation of confidence, that it retains its confidentiality, and that it is in the public interest to treat it as confidential. In Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39; 32 ALR 485 at 52 (CLR), at 493 (ALR) Mason J said that: The court will not prevent the publication of information which merely throws light on the past workings of government, even if it be not public property, so long as it does not prejudice the community in other [455] respects. Then disclosure will itself serve the public interest in keeping the community informed and in promoting discussion of public affairs. If, however, it appears that disclosure will be inimical to the public interest because national security, relations with foreign countries or the ordinary business of government will be prejudiced, disclosure will be restrained. There will be cases in which the conflicting considerations will be finely balanced, where it is difficult to decide whether the public’s interest in knowing and in expressing its opinion, outweighs the need to protect confidentiality. A decision by a judge sitting alone in the original jurisdiction of the High Court is probably not binding on this court. But binding or not, the views expressed by Mason J are in my opinion correct and should be followed. The law of England is the same: Attorney-General (UK) v Jonathan Cape Ltd (at 770-771). I therefore reject the argument of the Attorney-General that, in an action by a government to restrain the breach of confidential information, it is enough that the publication of the information is a matter of “substantial concern” to the government or one of its agencies.

[15.250] The British Government appealed to the High Court from the finding of the majority of the New South Wales Court of Appeal, Kirby P and McHugh JA (Street CJ dissenting) in Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 75 796 [15.250]

Confidential Information

CHAPTER 15

ALR 353, that the appeal from Powell J’s decision should be dismissed. The nature of the equitable obligation of confidence was not discussed in the High Court (see Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd [1988] HCA 25) (nor by Street CJ in the Court of Appeal). See Minister for Mineral Resources v Newcastle Newspapers Pty Ltd (1997) 40 IPR 403 for a further discussion of confidential government information. For comments on the law of confidence as compared with the law relating to fiduciary obligations, see Lac Minerals Ltd v International Corona Resources Ltd (1989) 16 IPR 27 at 45–46.

Misappropriation of information/third party users [15.260] The second aspect of Megarry J’s classic formulation, in Coco v AN Clark (Engineers) Ltd [1968] FSR 415, of the elements of an equitable action for breach of confidence requires that the information in question has been received in circumstances importing an obligation of confidence. Difficulties arise where a third party uses trade secrets originally divulged in confidence to employees or others. If the third party is aware that the trade secret has been improperly obtained, then liability appears to be uncontroversial: see Printers & Finishers Ltd v Holloway [1965] RPC 239 at 253. Where a trade secret is innocently obtained but the acquirer subsequently comes to learn that it was obtained in breach of confidence, that knowledge will impress that secret with the obligation of confidence in the hands of the third party: see Stephenson, Jordan & Harrison Ltd v McDonald [1952] 69 RPC 10. Information may be simply misappropriated rather than communicated, but the person obtaining it may still realise its secrecy and be placed under an obligation not to use it: Franklin v Giddens [1978] Qd R 72; see also discussion in Douglas v Hello! Ltd (2005) 65 IPR 449. Problems arise where an innocent third party obtains a purloined trade secret without knowledge of its theft. Kearney J in Print Investments Pty Ltd v Art-vue Printing Pty Ltd (1983) 1 IPR 149 at 153 suggested that the authorities left it an open question as to whether an injunction would lie against an innocent third party. The possibility of a bona fide purchaser’s defence has been canvassed in a number of dicta. However, this possibility was strongly criticised by Helsham CJ in Eq in Wheatley v Bell [1982] 2 NSWLR 544. Statute-based systems that make information “property” may be able to deal with this issue more easily. Interestingly, the courts have found that unconscious use of information will be a breach of the duty to keep information confidential. An example of this is Seager v Copydex Ltd (No 1) [1967] 1 WLR 923.

Scope of the obligation of confidence [15.270] The fundamental principle espoused by Lord Denning MR in Seager v Copydex Ltd

(No 1) [1967] 1 WLR 923 is that “he who has received information in confidence shall not take unfair advantage of it” (at 931). Where a duty to maintain confidence exists, that confidence is breached where some or all of that information is disclosed or used without consent (see Deta Nominees v Viscount Plastic Products Pty Ltd [1979] VR 167). On the other hand, where confidential information has been communicated to another party with the confider’s consent, it is reasonable to presume that the disclosure will carry [15.270]

797

Intellectual Property: Commentary and Materials

with it a limited right of use for a specific purpose, so that any disclosure other than for that specific purpose will constitute a breach of confidence. However, in Smith Kline and French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1991) 20 IPR 643 in the Full Federal Court, the court considered the Department’s use of information supplied by the appellant for the purposes of a patent extension, for other purposes. The court held that the Department’s duty in respect of public safety entitled it to use that information when considering applications by other pharmaceutical companies, particularly manufacturers of cheaper and competing generic pharmaceuticals, for marketing approval in respect of similar products.

Smith Kline and French Laboratories v Secretary, Department of Community Services and Health [15.280] Smith Kline and French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1991) 20 IPR 643 Federal Court of Australia [The case concerned the drug cimetidine, a patented synthetic compound widely used for treating gastro-intestinal ulcers. Since its invention in the United Kingdom some 20 years before, it had gained a worldwide market. The drug was sold in Australia as “Tagamet” and “Duractin”. The Australian patent expired on 15 February 1988. Alphapharm, the respondent, markets “generic” forms of drugs and applied for approval of its version of cimetidine. This dispute concerned a variety of information contained in material sent by the appellant (SK and F) to the federal Department of Community Services and Health, which was responsible for allowing marketing approval in Australia. These two appeals, which were heard together, are against judgments of Gummow J [Smith Kline and French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 17 IPR 545]. His Honour dismissed an application by members of a group of such companies (the SK and F application), whose purpose was to restrict official use of such information. He granted an application by another pharmaceutical company (Alphapharm), which claimed declaratory relief affirming the authorities’ right to use the confidential information in question. The appellants sought to support the proposition, rejected by Gummow J, that confidential information furnished to obtain governmental approval of the use of a pharmaceutical substance may not be resorted to in considering an application by another applicant, for approval of a version of the same substance.] SHEPPARD, WILCOX AND PINCUS JJ: [645] The appellants say that even if, as Gummow J held, the use of the appellants’ confidential information in considering applications for approval by others generally operated to the detriment of those others, making their purpose of obtaining approval for their version of the drug more difficult to fulfil, still the appellants’ confidential information cannot be so used. The appellant which supplied the information is that first named in the proceedings’ title (SK & F). The drug in question is cimetidine, a patented synthetic compound which has proved to be of great value in treating gastro-intestinal ulcers. Since its invention in the UK about 20 years ago, it has been used around the world for that purpose and has earned large sums for the patentee (the second appellant) or companies associated with or licensed by the patentee. The drug has been sold in Australia under the trade names “Tagamet” and “Duractin”. Many millions of dollars have been expended on the drug in this country. The Australian patent expired on 15 February 1988, but is the subject of an application for extension which has not yet been heard. In July 1988, Alphapharm applied for approval of its version of the drug, but that application has not been dealt with, in consequence of an interlocutory injunction granted on 10 November 1987 in the proceedings in which the present appellants were applicants, and of Departmental reaction to that injunction. Alphapharm did not, of course, invent cimetidine, nor has it a licence from the patentee. Alphapharm took advantage of the expiration of the patent to attempt to introduce a formulation of 798 [15.280]

Confidential Information

CHAPTER 15

Smith Kline and French Laboratories v Secretary, Department of Community Services and Health cont. cimetidine differing from the SK & F formulations; such a drug is called “generic” in the industry. The word “generic” implies in this context not merely that the drug is of the same kind as the patentee’s, but also that there is no licence from the patentee, the patent having expired. [646] The patentee does not, of course, seek to protect the information with respect to cimetidine disclosed in its patent specification. The dispute concerns a variety of other information, contained in material sent in support of a number of successive applications made for approval of cimetidine and compounds containing that substance. Those applications were made to the respondent Secretary of the relevant Department. As amended, the SK & F application sought certain declarations and, as well, injunctions restraining the respondent from using certain confidential information for any purpose other than the exercise of statutory powers in relation to versions of cimetidine submitted by SK & F… [654] Gummow J found that when SK & F furnished the B1 data between 1975 and 1987, it did so on the implicit understanding that it would be: kept [655] confidential in the sense that it would not be disclosed to any other pharmaceutical company lest use be made of it to the commercial disadvantage of the company which had supplied the information. But if the submission on behalf of the appellants as to the test of the extent of confidentiality is accepted, that finding as to what was implied is of no consequence; for the appellants say that all that counts is the confider’s purpose and that could not have gone beyond Departmental consideration of its own applications. There is indeed some authority which, at least superficially, supports that view. One learned commentator has remarked: The test which has found widespread acceptance is whether or not the information was disclosed for a limited purpose. If the information was disclosed for a limited purpose, the confidence crystallises around that limited purpose. The confidant will be bound by an obligation the content of which is not to use or disclose the information for any purpose other than the limited one for which the information was imparted: F Gurry in Finn, Essays in Equity (1985) at p 118. In many circumstances, that suggested test will produce a proper result, but the circumstances in which confidential information is supplied may vary widely. To determine the existence of confidentiality and its scope, it may be relevant to consider whether the information was supplied gratuitously or for a consideration; whether there is any past practice of such a kind as to give rise to an understanding; how sensitive the information is; whether the confider has any interest in the purpose for which the information is to be used; whether the confider expressly warned the confidee against a particular disclosure or use of the information – and, no doubt, many other matters. confidential information is commonly supplied without payment: for example, by a prospective employee (or his referee) to support an application for employment. The understanding ordinarily would be that the prospective employer would not disclose the information to any third party; but it would hardly be expected that its use would necessarily be confined to the employment application itself. If that application were successful, the employee would not act on the assumption that material in the relevant file would be destroyed. He would surely be inclined to assume that it might be resorted to later to assist the employer in making decisions relevant to the employee – for example, as to whether the employee (rather than another) should be promoted, or dismissed. The test of confider’s purpose will not ordinarily be appropriate where each party’s interest is quite different, and known to be so. Here, the confider’s purpose is simple and narrow, the confidee’s much broader. SK & F had only the purpose of having its applications approved. A person supplying confidential information to the government for the purpose of obtaining a licence (or a permission or [15.280]

799

Intellectual Property: Commentary and Materials

Smith Kline and French Laboratories v Secretary, Department of Community Services and Health cont. concession) would ordinarily assume that the government would not destroy the application file after the confider had attained his purpose. The confider would probably expect that the information would be kept against the day when it might be needed to serve the government’s legitimate interests: for example, to provide a record in case the decision is challenged as improper; to enable statistical information to be collected; or, acting directly against the interests of the confider, to compare the information supplied with the confider’s subsequent [656] performance, in determining whether to cancel the licence. Gummow J referred to the reasons of McHugh JA (as his Honour then was) in Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 NSWLR 86 at 191; amongst other things, McHugh J said: But the relationship between the modern State and its citizens is so different in kind from that which exists between private citizens that rules worked out to govern the contractual, property, commercial and private confidences of citizens are not fully applicable where the plaintiff is a government or one of its agencies. Private citizens are entitled to protect or further their own interests, no matter how selfish they are in doing so … (b)ut governments acts (sic), or at all events are constitutionally required to act, in the public interest. Megarry J has suggested a broad test to determine whether an obligation of confidence exists. In Coco v AN Clark (Engineers) Ltd [1969] RPC 41, Megarry J said: It seems to me that if the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable obligation of confidence. However, this test does not give guidance as to the scope of an obligation of confidentiality, where one exists. Sometimes the obligation imposes no restriction on use of the information, as long as the confidee does not reveal it to third parties. In other circumstances, the confidee may not be entitled to use it except for some limited purpose. In considering these problems, and indeed the whole question, it is necessary not to lose sight of the basis of the obligation to respect confidences: “It lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained”. This is quoted from Moorgate Tobacco Co Ltd v Phillip Morris Ltd (No 2) (1984) 156 CLR 414 at 438 per Deane J, with whom the other members of the court agreed. A similar broad view has been taken in the US: EI Dupont de Nemours Powder Co v Masland (1917) 244 US 102: Therefore the starting point for the present matter is not property or due process of law, but that the defendant stood in confidential relations with the plaintiffs, or one of them. These have given place to hostility, and the first thing to be made sure of is that the defendant shall not fraudulently abuse the trust reposed in him. It is the usual incident of confidential relations. Similar expressions recur in other cases: Seager v Copydex Ltd [1967] RPC 349 at 368: “The law on this subject … depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it”. To avoid taking unfair advantage of information does not necessarily mean that the confidee must not use it except for the confider’s limited purpose. Whether one adopts the “reasonable man” test suggested by Megarry J or some other, there can be no breach of the equitable obligation unless the Court concludes that a confidence reposed has been abused, that unconscientious use has been made of the information. [657] Here, SK & F supplied, in pursuit of its commercial interests, a mass of information, part of which was confidential. It did not trouble to identify that part when furnishing the information. Nor did it, until very late in the piece, make the assertion that was so much pressed upon us in this Court, namely that the Department could not make purely internal use of the information other than for SK & 800 [15.280]

Confidential Information

CHAPTER 15

Smith Kline and French Laboratories v Secretary, Department of Community Services and Health cont. F purposes, not even when public health and safety made that necessary. In those circumstances, it appears to us that the primary Judge was correct in concluding as he did that no equitable obligation was breached, except as to the use of the sample for the government of Papua New Guinea. We would add that, in our opinion, courts exercising equitable jurisdiction should not be too ready to import an equitable obligation of confidence in a marginal case. There is the distinction between use of confidential information in a way of which many people might disapprove, on the one hand, and illegal use on the other. Not only the administration of business and government, but ordinary communication between people, might be unduly obstructed by use of too narrow a test, such as that which the appellants put forward here. This is amply illustrated by the facts of the present case in which the evidence clearly showed the substantial interference with vital functions of government, in protecting the health and safety of the community, which could ensue if the appellants’ primary submission were accepted. It is our view that the “blanket” protection of the SK & F B1 data which the appellants sought, as well as the rather more limited protection suggested during the hearing in this Court, would go well beyond any obligation which ought to be imposed on the Secretary. This conclusion is at least consistent with that arrived at in the High Court in New Zealand in 1988 and in the House of Lords in 1989: Smith Kline & French Laboratories Ltd v AG [1989] 1 NZLR 385, In Re Smith Kline & French Laboratories Ltd [1989] 2 WLR 397.

Element 3: unauthorised use of the information [15.290] The third aspect of Megarry J’s classic formulation of the elements of an action for breach of confidence is that there must be an unauthorised use of the information to the detriment of the person communicating it. While Megarry J suggested that detriment should be present if equity is to be induced to intervene, his Honour also conceived of cases where a plaintiff might have substantial motives for seeking the aid of equity and yet suffer nothing that could fairly be called detriment; for example, when the confidential information showed him in a favourable light but gravely injured an associate whom he sought to protect. Hence the detriment requirement is not absolute, and positive proof of actual detriment is not always required. The common law courts have taken a very flexible attitude to what might constitute detriment. In trade secret cases, factors such as loss of exclusivity, loss of custom, having to face commercial competition, effect upon reputation and, indeed, anything that impinges upon the interests of the plaintiff will justify the granting of an injunction. Where the plaintiff seeks compensatory damages, the actual harm or loss will have to be proved, and this may be a narrower requirement than mere detriment. As Megarry J pointed out, the detriment, if necessary, need not be financial, but could be personal or social. The detriment does not necessarily need to be major or to have the form of loss, injury or damage. It could be emotional stress or embarrassment (see Prince Albert v Strange (1849) 64 ER 293), or, as suggested by Mason J in Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39, disclosure of information relating to an individual’s affairs that exposed the individual’s actions to public discussion and criticism. Detriment may be necessary if the plaintiff is a government seeking to restrain publication of information: see Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 IPR 153 at 219–220 per Kirby J. Where the plaintiff is a “governmental plaintiff”, the disclosure may need to result in probable prejudice to the workings of government before [15.290]

801

Intellectual Property: Commentary and Materials

sufficient detriment is found: see Minister for Mineral Resources v Newcastle Newspapers Pty Ltd (1997) 40 IPR 403. See also Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39.

Partly confidential information – the springboard doctrine [15.300] It is not always the plaintiff’s information alone that is used, nor is the use

necessarily fraudulent or unconscionable if a defendant mistakenly “mixes” the secret with his or her own ideas or expertise to achieve a certain result. The rule has emerged, however, that information obtained in confidence may not be used as a “springboard” for activities detrimental to the plaintiff, even when all the information has reached the public domain or some of the information was not confidential to the plaintiff. The “springboard” doctrine was formulated in Terrapin Ltd v Builders Supply Co (Hayes) Ltd [1967] RPC 375 by Roxburgh J at 391–392: As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication and spring board it remains even when all of the features have been published or can be ascertained by actual inspection by any member of the public … It is, in my view, inherent in the principle in which the Saltman case rests that the possessor of such information must be placed under a special disability in the field of competition in order to ensure that he does not get an unfair start.

This doctrine does not mean that information which has reached the public domain is still a trade secret. It means that care must be taken to determine whether the defendant is relying on the information which has already genuinely reached the public so that the public could equally use it, or whether the defendant is relying on the advantage of access to the secret information prior to its public revelation and is now making unfair use of that prior access. Consider the examples of Terrapin Ltd v Builders Supply Co (Hayes) Ltd [1967] RPC 375, Aquaculture Corp v New Zealand Green Mussel Co Ltd (No 1) (1985) 5 IPR 353 and Aquaculture Corp v New Zealand Green Mussel Co Ltd (No 2) (1986) 10 IPR 319. This approach strongly reflects unfair competition principles rather than any notion of “property rights”. The usual remedy in cases where a defendant has used confidential information as a “springboard” to gain unfair advantage will be a temporary injunction against the defendant to cover the period of the advantage unfairly gained, or damages to deprive the defendant of the fruits of the advantage. However, in its practical application the springboard doctrine has limited tenure. If the defendant does not utilise the information obtained confidentially until such time as a person without the benefit of confidential access is able to determine and utilise the information from the public domain, then no advantage has been obtained, and no liability ensues. In Titan Group Pty Ltd v Steriline Manufacturing Pty Ltd (1990) 19 IPR 353, O’Loughlin J said (at 377): The start (and finish) of a springboard cannot be determined from the cases, except by analogy, for the determination of the duration of the springboard is “a question of degree depending on the particular case”: Franchi v Franchi [1967] RPC 149 at 153 per Cross J. But in every case the period of the springboard will always be “one of limited duration”: Harrison v Project & Design Co (Redcar) Ltd [1978] FSR 81 at 87 per Graham J. 802 [15.300]

Confidential Information

CHAPTER 15

See also British Franco Electric Pty Ltd v Dowling Plastics Pty Ltd [1981] 1 NSWLR 448; Ackroyds (London) Ltd v Islington Plastics Ltd [1962] RPC 97; Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167; Speed Seal Products Ltd v Paddington [1986] 1 All ER 91; Aquaculture Corp v New Zealand Green Mussel Co (No 3) (1990) 19 IPR 527; US Surgical Corp v Hospital Products International Pty Ltd [1982] 2 NSWLR 761. The springboard doctrine was examined at length in the UK cases Seager v Copydex Ltd [1967] 1 WLR 923 (CA) and Coco v AN Clark (Engineers) Ltd [1968] FSR 415 (Ch D). Extracts from both cases follow.

Seager v Copydex Ltd [15.310] Seager v Copydex Ltd [1967] 1 WLR 923 Court of Appeal (United Kingdom) [The plaintiff and the defendant had discussed the possibility of the defendant manufacturing and distributing carpet grips from a design developed by the plaintiff. After a breakdown of negotiations between the parties, the defendant produced an alternative grip that the plaintiff alleged imported aspects of his design.] LORD DENNING MR: [931] I have no doubt that Copydex honestly believe the alternative was their own idea; but I think that they must unconsciously have made use of the information which Mr Seager gave them. The coincidences are too strong to permit of any other explanation. I start with one sentence in the judgment of Lord Greene MR in Saltman Engineering Co v Campbell Engineering Co (1948) 65 RPC 203; [1963] 3 All ER 413 at 213 (RPC), 414 (All ER), CA: If a defendant is proved to have used confidential information, directly or indirectly obtained from the plaintiff, without the consent, express or implied, of the plaintiff, he will be guilty of an infringement of the plaintiff’s rights. To this I add a sentence from the judgment of Roxburgh J in Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1960] RPC 128 at 130, CA, which was quoted and adopted as correct by Roskill J in Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293, 1319; [1964] 3 All ER 289 at 1317 (WLR): As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and springboard it remains even when all features have been published or can be ascertained by actual inspection by any member of the public. The law on this subject does not depend on any implied contract. It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it. He must not make use of it to the prejudice of him who gave it without obtaining his consent. The principle is clear enough when the whole of the information is private. The difficulty arises when the information is in part public and in part private. As, for instance, in this case. A good deal of the information which Mr Seager gave to Copydex was available to the public, such as the patent specification in the Patent Office, or the “Klent” grip, which he sold to anyone who asked. If that was the only information he gave them, he could not complain. It was public knowledge. But there was a good deal of other information he gave them which was private, such as the difficulties which had to be overcome in making a satisfactory grip; the necessity for a strong, sharp tooth; the alternative forms of tooth; and the like. When the information is mixed, being partly public and partly private, then the recipient must take special care to use only the material which is in the public domain. He should go to the public source and get it; or, at any rate, not be in a better position than if he had gone to the public source. He should not get a start over others by [932] using the information which he received in confidence. At any rate, he should not get a start without paying for it. It may not be a case for [15.310]

803

Intellectual Property: Commentary and Materials

Seager v Copydex Ltd cont. injunction or even for an account, but only for damages, depending on the worth of the confidential information to him in saving him time and trouble. Applying these principles, I think that Mr Seager should succeed. On the facts which I have stated, he told Copydex a lot about the making of a satisfactory carpet grip which was not in the public domain. They would not have got going so quickly except for what they had learned in their discussions with him. They got to know in particular that it was possible to make an alternative grip in the form of a “V-tang,” provided the tooth was sharp enough and strong enough, and they were told about the special shape which would produce this result. The judge thought that the information was not significant. But I think it was. It was the springboard which enabled them to go on to devise the “Invisigrip” and to apply for a patent for it. They were quite innocent of any intention to take advantage of him. They thought that, as long as they did not infringe his patent, they were exempt. In this they were in error. They were not aware of the law as to confidential information. They were not at liberty to make use of any confidential information he gave them without paying for it.

Coco v AN Clark (Engineers) Ltd [15.320] Coco v AN Clark (Engineers) Ltd [1968] FSR 415 High Court of Justice, Chancery Division (United Kingdom) MEGARRY J: [421] … Before I turn to the second main head, that of interlocutory relief, I should mention one point on the substantive law that caused me some difficulty during the argument. This is what may be called the “springboard” doctrine. In the Seager case [1967] 1 WLR 923 at 931, Lord Denning quoted a sentence from the judgment of Roxburgh J in the Terrapin case [1960] RPC 128 at 130, which was quoted and adopted as correct by Roskill J in the Cranleigh case [1965] 1 WLR 1293 at 1317. It runs as follows: As I understand it, the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public. [422] Salmon LJ in the Seager case (at 933) also states: “The law does not allow the use of such information even as a springboard for activities detrimental to the plaintiff.” Quite apart from authority, I would recognise the principle enshrined in those words as being salutory. Nevertheless, I am not entirely clear how it is to be put into practical effect in every case. Suppose a case where there is a confidential communication of information which is partly public and partly private; suppose that the recipient of the information adds in confidence ideas of his own, improving the initial scheme; and suppose that the parties then part, with no agreement concluded between them. How is a conscientious recipient of the ideas to comply with the requirements that equity lays upon him? For in the words of Lord Denning (at 931) in the Seager case, he must take special care to use only the material which is in the public domain. He should go to the public source and get it: or, at any rate, not be in a better position than if he had gone to the public source. He should not get a start over others by using the information which he received in confidence. Suppose that the only confidential information communicated is that some important component should be made of aluminium instead of steel and with significant variations in its design and dimensions. The recipient knows that this change will transform a failure into a success. He knows that, 804 [15.320]

Confidential Information

CHAPTER 15

Coco v AN Clark (Engineers) Ltd cont. if he had persevered himself, he might have come upon the solution in a week or in a year. Yet he is under a duty not to use the confidential information as a springboard or as giving him a start. What puzzles me is how, as a law-abiding citizen, he is to perform that duty. He could, I suppose, commission someone else to make the discovery anew, carefully abstaining from saying anything to him about aluminium or the design and dimensions which will achieve success, but this seems to me to be artificial in the extreme. Yet until this step is taken and the discovery made anew, he cannot make use of his own added ideas for the further improvement of the design which he had already communicated in confidence to the original communicator, ideas which would perhaps make a success into a triumph. He cannot build his superstructure as long as he is forbidden to use the foundations. Nor is the original communicator in a much better case. He is free to use his own original idea, which converted into success; but he cannot take advantage of the original recipient’s further ideas, of which he knows, until such time as he or someone commissioned by him would, unaided by any confidence, have discovered them. For those who are not law-abiding and conscientious citizens there is, I suppose, a simple answer: ignore the duty, use the information, and then pay damages. This may be the course which Lord Denning envisaged in the Seager case: for after stating that the recipient should not get a start [423] over others by using the confidential information, he continued on (at 932): “At any rate, he should not get a start without paying for it. It may not be a case for injunction or even for an account, but only for damages, depending on the worth of the confidential information to him in saving him time and trouble.” I also recognise that a conscientious and law-abiding citizen, having received confidential information in confidence, may accept that when negotiations break down the only honourable course is to withdraw altogether from the field in question until his informant or someone else has put the information into the public domain and he can no longer be said to have any start. Communication thus imposes on him a unique disability. He alone of all men must for an uncertain time abjure this field of endeavour, however great his interest. I find this scarcely more reasonable than the artificiality and uncertainty of postponing the use of the information until others would have discovered it. The relevance of this point, I think, is this. If the duty is a duty not to use the information without consent, then it may be the proper subject of an injunction restraining its use, even if there is an offer to pay a reasonable sum for that use. If, on the other hand, the duty is merely a duty not to use the information without paying a reasonable sum for it, then no such injunction should be granted. Despite the assistance of counsel I feel far from assured that I have got to the bottom of this matter. But I do feel considerable hesitation in expressing a doctrine of equity in terms that include a duty which law-abiding citizens cannot reasonably be expected to perform. In other words, the essence of the duty seems more likely to be that of not using without paying, rather than of not using at all. It may be that in fields other than industry and commerce (and I have in mind the Argyll case) the duty may exist in the more stringent form; but in the circumstances present in this case I think that the less stringent form is the more reasonable. No doubt this matter may be canvassed and resolved at the trial; but on motion, in a case where both the probabilities and the evidence support the view that the fruits of any confidential communication were to sound in monetary compensation to the communicator. I should be slow to hold that it was right to enjoin the defendant company from making any use of the information.

[15.330] The “springboard” doctrine was more recently restated in National Surgical Pty Ltd

v McPhee (2010) 87 IPR 602, in which additional interlocutory relief was sought. [15.330]

805

Intellectual Property: Commentary and Materials

National Surgical v McPhee [15.340] National Surgical Pty Ltd v McPhee (2010) 87 IPR 602 Federal Court of Australia [The applicant was a distributor of specialist surgical equipment. The respondent had tendered his resignation before taking up employment with a direct competitor of the applicant. The applicant sought interlocutory and substantive relief on the basis that the respondent had a duty of confidentiality to the applicant under Corporations Act 2001 (Cth) s 183, as well as a duty of confidence in equity and obligations under a previous contract of employment with the applicant. The court had already made a consent order restraining the respondent from using confidential information. The applicant brought these proceedings on the basis that the consent order was not sufficiently adequate to safeguard the applicant from damage it would suffer by the applicant’s employment in any capacity with the competitor. The court considered whether there was a serious question to be tried as to whether the consent order was insufficient to protect the applicant such that further interlocutory relief restraining the respondent from working in any capacity for a competitor of the applicant was warranted. In addition, the court considered whether the confidential information the subject of the consent order could be used by the respondent as a “springboard” into a position of advantage he would not have had but for possession of that information. The court dismissed the application.] COLLIER J: [611] 27. The springboard principle is clearly of particular relevance in circumstances where a competitor gains confidential information and proposes to use that information to the disadvantage of the party from whom the information was obtained. It is less clear whether this principle is also applicable to, in effect, restrain a previous employee of a party being the owner of confidential information, from working for a competitor on the basis that the employee may misuse confidential information to which he has had access. Unfortunately the cases considering this specific issue are few. 28. One case on point is Wilson. In Wilson the applicant and the third respondent were competitors in the business of the commercial operation of car parks. Mr Rush and Mr Sherriff were management level employees with the applicant. Both Mr Rush and Mr Sherriff left employment with the applicant to take up new positions with the third respondent. The applicant claimed, inter alia, that Mr Rush and Mr Sherriff took from the applicant confidential and commercially sensitive documents, data and other information, and used that material in their employment with the third respondent, to the benefit of the third respondent and to the detriment of the applicant. Accordingly – and similarly to the case presently before the court – the applicant sued by reference to the equitable obligation of confidence, ss 182 and 183 of the Corporations Act, the Copyright Act 1968 (Cth), and to the confidentiality provisions of the contracts of employment which existed between each of Mr Rush and Mr Sherriff and the applicant. The applicant sought declarations, orders for delivery up, temporary and permanent injunctions, damages and an account of profits, as well as interlocutory orders. … [612] 32. Relevantly for the purposes of these proceedings, his Honour observed (at 44): … undertakings proposed by the respondents would not go far enough, since the restraint on “use” of the information in question proffered in the undertakings, though valuable so far as it went, lacked the precision necessary to give practical effect to Wilson’s objective that it should, for the interlocutory period, be unaffected by the circumstance that Messrs Rush and Sherriff had, as the court should provisionally find, taken Wilson’s confidential information. If it should transpire that, over that period, S & K secures the contract for a car park presently contracted to Wilson, the practical task of demonstrating, with the rigour required in a contempt application, that Mr Rush and/or Mr Sherriff “used” some of Wilson’s information in the relevant context would be of some difficulty, to say the least. 806

[15.340]

Confidential Information

CHAPTER 15

National Surgical v McPhee cont. [613] 33. In making this submission the applicant relied on the “springboard doctrine” as explained by Roxburgh J in Terrapin. As Jessup J noted (at 145): In the submission of Wilson, it having been established prima facie that Messrsnbsp;Rush and Sherriff took confidential information, the court should go further than to impose upon them an obligation which corresponds with the general equitable duty. There needed to be an order which would exclude, as completely as may be, any prospect that Wilson’s confidential information might be used to the disadvantage of Wilson during the interlocutory period. 34. Critically in respect of this submission, Jessup J held as follows (at [46]-[47]): 46 I accept the broad thrust of the submissions made on behalf of Wilson in this respect. I do so because of the nature of the interlocutory evidence to which I have referred, and because of the absence of any evidence in response. It is established prima facie not only that Messrs Rush and Sherriff had access to Wilson’s confidential information, but also that they intended to use it for the specific purpose of advancing S & K’s position to the detriment of Wilson’s. I am much influenced by the evidence of Mr Varvaris in this respect. Although that evidence dealt with only a small part of the area that would be covered by the order proposed, it clearly showed the apparent disposition of Messrs Rush and Sherriff to use this confidential information in their now employment with S & K. The nature of the “comments” column in the document listing the Wilson-operated car parks fairly obviously bespeaks an intention to use the Wilson information to the detriment of Wilson, and to the advantage of S & K. Although it is not apparent who expressed that intention, no submission was made on behalf of Mr Rush or Mr Sherriff to dissociate themselves, or either of them, from this document, and I consider it reasonable provisionally to infer that the intention was theirs. Against this evidentiary setting, I am persuaded that the restraint contained in the undertakings of Messrs Rush and Sherriff would provide insufficient interlocutory protection for Wilson. I consider that the prohibition on “use” of the information, while broad, lacks the practical focus necessary in an interlocutory restraint. The scope for those being restrained to wonder whether particular conduct or activity was covered by the restraint should, in my view, be minimised. The approach embodied in Wilson’s par 9(b) as amended would be more likely to achieve that objective. …[614]… 36. There are however, significant, possibly critical, factual distinctions between the facts of Wilson and those before me. In particular: • In Wilson, the evidence was clear that Mr Ruff and Mr Sherriff had copies of confidential information belonging to the applicant in both hard and electronic form. On the material before me, while Mr McPhee has previously been the recipient of confidential information from the applicant in the course of his employment, there is no clear evidence before me that Mr McPhee has retained any copies of that information. • In Wilson, Mr Ruff and Mr Sherriff had commenced work for their new employer and, on the evidence, had clearly provided a considerable amount of information, confidential to the applicant, to the new employer. On the material before me it appears that Mr McPhee has not commenced work for Life Healthcare because of the litigation before the court. Further there is no evidence before the court that he has provided copies of the applicant’s information to Life Healthcare. • In Wilson, the applicant abandoned its claim for its former employees to be restrained from working for competitors. This is in stark contrast to the case before me. • In Wilson, the additional interlocutory relief sought by the applicant was defined specifically in relation to particular car park sites and customer details relative to those sites. In the case before me the applicant seeks a broad restraint in respect of employment of Mr McPhee by competitors including not only Life Healthcare but any other relevant person or entity in Queensland and [15.340]

807

Intellectual Property: Commentary and Materials

National Surgical v McPhee cont. Northern New South Wales down to and including the city of Lismore. The relief sought is not qualified by, for example, reference to particular customers of the applicant. [Case citations omitted.]

DEFENCES AND EXCEPTIONS Statutory and judicial [15.350] Certain statutory defences or exceptions are available to claims of breach of confidence. For example, the various State and federal Freedom of Information Acts may compel the governments and statutory bodies within their scope to disclose information (although this does not cover information that would give rise to a private, rather than a government, claim for breach of confidence). Provisions exist in the Income Tax Assessment Act 1936 (Cth) for disclosure to the Commissioner of Taxation of confidential bank documents relating to financial transactions. That disclosure may be permitted or mandated by statute in such cases supersedes any general equitable rights to bring actions for breach of confidence. Emerging “whistleblower” legislation in several state and territory jurisdictions, while it may eventually move to broaden the narrow statutory and judicial position on disclosure of otherwise confidential information, does so only within the confines of the respective statutory limitations. This legislation is most unlikely to protect whistleblowers who generally publicly revealing information concerning corruption, illegal activities or merely inefficiency, irregularities or technical breaches of the law. 9 Australia’s first federal whistleblower legislation, the Public Interest Disclosure Act 2013 (Cth), came into effect on 15 January 2014. The stated objectives of the Act at article 6 are: (a) to promote the integrity and accountability of the Commonwealth public sector; and (b) to encourage and facilitate the making of public interest disclosures by public officials; and (c) to ensure that public officials who make public interest disclosures are supported and are protected from adverse consequences relating to the disclosures; and (d) to ensure that disclosures by public officials are properly investigated and dealt with.

The Act provides that public officials reporting wrongdoing within Commonwealth public sector agencies will be guaranteed anonymity, and immunity from liability and disciplinary action. However, the Act has attracted some criticism on the grounds that it has some glaring inadequacies insofar as: • its protection is limited to whistleblowing action by public officials and former public officials, and not the private sector or the public at large; • the role of investigator and protector is rolled into one body, namely the Ombudsman; 9

South Australia, for example, introduced the Whistleblowers Protection Act 1993 (SA), followed by Victoria with the Whistleblowers Protection Act 2001 (Vic), and the Northern Territory with the Public Interest Disclosure Act 2008 (NT)

808 [15.350]

Confidential Information

CHAPTER 15

• it does not extend to wrong doing politicians, intelligence agencies such as ASIO or ASIC, or persons in the private sector. 10 Courts may also order discovery of confidential information in the interests of the administration of justice, and the confidential status of documentary information does not in itself prevent the information being made available. In some cases, confidentiality, or at least the facts giving rise to a claim of confidentiality, may be relevant to a determination of public interest privilege (in which case the public interest must be weighed against the claim of confidentiality to determine which should prevail). An order of discovery permits limited use of confidential information for the purposes of the particular proceedings in which discovery was ordered. It is generally a condition of an order for discovery that the information cannot be used for other purposes: see Mobil Oil Australia Ltd v Guina Development [1996] 2 VR 34; (1995) 33 IPR 82 (CA); see also Hearne v Street (2008) 235 CLR 125.

Employment and restraint of trade [15.360] A former employee, in future employment, is entitled to use the general skills, knowledge and experience acquired during the course of former employment. The former employer’s interests in maintaining confidentiality of his or her trade secrets, or other business information needs to be balanced against the need to ensure there are not unreasonable restraints on the mobility of labour and freedom of competition. However, distinctions can be drawn between information that is little more than general knowledge because of its trivial nature or public availability, information which the employee is expressly required to keep secret but which could still be used after employment has terminated, and specific “trade secrets” which cannot be used after employment even if they are known by heart. Thus, in Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 Neill LJ (at 619) referred to the duty of an employee, as being:

• to act with good faith towards their employer during their period of employment – which Neill LJ termed “the duty of fidelity”; and • not to use or disclose after their employment had ceased any confidential information obtained about the employer’s affairs during their employment. However, at the same time Neill LJ also acknowledged the prima facie right of any person to use and to exploit, for the purpose of earning his or her living, all the skill, experience and knowledge which he or she has at his or her disposal, including skill, experience and knowledge which he or she has acquired in the course of previous periods of employment.

Faccenda Chicken v Fowler [15.370] Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 Court of Appeal (Civil Division) (United Kingdom) [The plaintiff was in the business of marketing fresh slaughtered chickens. It employed the defendant as its sales manager and, at his suggestion, adopted a method of selling fresh chickens from refrigerated vans within a defined area. The defendant left the plaintiff’s employment and subsequently set up his own business selling fresh chickens from refrigerated vans in the same area as 10

See http://www.australiancollaboration.com.au/pdf/Democracy/Protection-of-whistleblowers.pdf. See also http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/ 2013/July/Historic_new_whistleblower_protection_laws [15.370]

809

Intellectual Property: Commentary and Materials

Faccenda Chicken v Fowler cont. the plaintiff, operating his business on the same routes and serving the same type of customers. The plaintiff brought an action claiming (i) damages for breach of the contracts of employment in the defendant using the plaintiff’s sales information to the disadvantage or detriment of the plaintiff; and (ii) damages for conspiracy to injure the plaintiff’s goodwill by the defendant’s abuse of confidential information. The judge dismissed the action. The plaintiff appealed to the Court of Appeal]. Neill LJ: [625] It is sufficient to set out what we understand to be the relevant principles of law. Having considered the cases to which we were referred, we would venture to state these principles as follows. (1)

Where the parties are, or have been, linked by a contract of employment, the obligations of the employee are to be determined by the contract between him and his employer: cf Vokes Ltd v Heather (1945) 62 RPC 135 at 141.

(2)

In the absence of any express term, the obligations of the employee in respect of the use and disclosure of information are the subject of implied terms.

(3)

While the employee remains in the employment of the employer the obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee. For the purpose of the present appeal it is not necessary to consider the precise limits of this implied term, but it may be noted: (a) that the extent of the duty of good faith will vary according to the nature of the contract (see Vokes Ltd v Heather); (b) that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorises such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer (see Robb v Green [1895] 2 QB 315, [1895-9] All ER Rep 1053 and Wessex Dairies Ltd v Smith [1935] 2 KBH 80, [1935] all ER Rep 75).

(4)

The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith. It is clear that the obligation not to use or disclose information may cover secret processes of manufacture such as chemical formulae (see Amber Size and Chemical Co Ltd v Menzel [1913] 2 Ch 239, or designs or special methods of construction (see Reid Sigrist Ltd v Moss Mechanism Ltd (1932) 49 RPC 461), and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret. The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only “confidential” in the sense that an unauthorised disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith. …

(5)

In order to determine whether any particular item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment has ceased, it is necessary to consider all the circumstances of the case. We are satisfied that the following matters are among those to which attention must be paid. (a) The nature of the employment. Thus employment in a capacity where “confidential” material is habitually handled may impose a high obligation of confidentiality because the employee can be expected to realise its sensitive nature to a greater extent than if he were employed in a capacity where such material reaches him only occasionally or incidentally. (b) The nature of the information itself. In our judgment the information will only be protected if it can properly be classed as a trade secret or as material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade

810 [15.370]

Confidential Information

CHAPTER 15

Faccenda Chicken v Fowler cont. secret eo nomine. The restrictive covenant cases demonstrate that a covenant will not be upheld on the basis of the status of the information which might be disclosed by the former employee if he is not restrained unless it can be regarded as a trade secret or the equivalent of a trade secret: see for example Herbert Morris Ltd v Saxelby [1916 1 AC 688, [1916-17] All ER Rep 305 at 710 (AC), 317 (All ER Rep) per Lord Parker and Littlewoods Organisation Ltd v Harris [1978] 1 All ER 1026, [1977] 1 WLR 1472 at 1037 (All ER), 1484 (WLR) per Megaw LJ.

[15.380] In two recent Australian cases, Del Casale v Artedomus (Aust) Pty Ltd (2007) 73

IPR 326 (NSWCA) and National Surgical Pty Ltd v McPhee [2010] FCA 992 (FCA), issues arose as to the determination of an appropriate and suitable distinction between knowledge acquired as part of employment that could be reasonably utilised in future employment, and the parameters of trade secrets or “know-how”. Extracts from both cases follow.

Del Casale v Artedomus [15.390] Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326 New South Wales Supreme Court–Court of Appeal [The first and second appellants had been directors and employees of the respondent company, which was an importer of stone and ceramic products for the building industry. The respondent sold a particular type of modica stone from Italy in Australia as the sole importer of modica stone into Australia. The respondent made efforts to conceal information about the type and source of the stone by giving it only to a few people in the organisation, including the first two appellants. The first two appellants resigned from their positions with the respondent company and subsequently entered into an agreement with the respondent whereby companies associated with the appellants sold their shares in the respondent. In that agreement, the first appellant contracted not to compete with the respondent for the following three years, and to keep confidential any “commercially sensitive information” learnt while the appellant had been in the respondent’s employ. Prior to entering the share sale agreement, the first appellant set up Stone Arc Pty Ltd, the third appellant. Both the first and third appellants then used their knowledge to find a supplier of modica stone to be imported and sold by the third appellant. The respondent claimed that the appellants, among other things, misused confidential information, breached the share sale agreement, and violated the Corporations Act 2001 (Cth) s 183. The primary judge found that the claim of breach of confidence was made out and made orders permanently restraining the appellants from using the confidential information and providing for an account of profits. The appellants sought leave to appeal.] HODGSON JA: [334] 34. … It is clear that there can be terms of an employment contract that continue to operate after the employment comes to an end; but generally that will be because they are express terms which so provide. Implied terms may also operate in that way if the nature of the employment is such as to clearly require a term operating after the end of employment, as could be the case where a person is employed as an in-house professional adviser to whom confidential information is given for the purpose of obtaining professional advice, such as legal advice. Apart from such special cases, in my opinion the difficulty illustrated by the Faccenda Chicken case of determining the extent of any obligation of confidentiality, extending after the end of employment, counts against such obligation being implied, either as an incident of the relationship or a matter of business efficacy. [15.390]

811

Intellectual Property: Commentary and Materials

Del Casale v Artedomus cont. 35. In my opinion, generally questions concerning an employee’s obligation of confidentiality after employment has come to an end, in the absence of an express contract dealing with the matter, are best dealt with as part of the general law concerning confidentiality of information, both because it is very doubtful what, if any, term can be implied into a contract, and also because it is very unlikely that relief obtainable pursuant to any such implied term would go beyond relief obtainable on general equitable principles. There is the theoretical difference that damages may be obtainable for breach of contract; but this is unlikely to make the remedy available in contract more extensive than that based on general equitable principles, because it seems clear that compensation is available for breach of fiduciary duty (and thus probably is available for breach of a duty of confidentiality): … [335] … 37. However, in applying these general equitable principles to the particular case of post-employment use, by an ex-employee, of the confidential information of an employer obtained during employment, there are particular considerations which tend to qualify their operation. They are that very often an employee will necessarily through employment come to have knowledge which the employer would prefer not to have generally known, that often such knowledge will become part of the employee’s know-how (which the employee should be able to use after employment ceases), that very often it is difficult or impossible to isolate from the employee’s general know-how particular pieces of confidential information which the employee is not permitted to use while otherwise being free to use know-how generally, and that competition should not be prevented by preventing ex-employees using their know-how. 38. Considerations such as these have led to a distinction being drawn, in cases such as Faccenda Chicken and Wright v Gasweld, between two classes of confidential information, one of which an ex-employee cannot use (even in the absence of contractual restrictions), and the other of which an ex-employee can use, at least unless there is a valid contractual restraint. There is some variation in the naming of these two classes. For example, there is a question whether both are properly called trade secrets, with the latter being a particular class of trade secrets which is also given the appellation “know-how”; or whether only the former class should be called trade secrets. In either event, the latter class is often called “know-how”. [Case citations omitted.]

National Surgical v McPhee [15.400] National Surgical Pty Ltd v McPhee (2010) 87 IPR 602 Federal Court of Australia [See [15.340] for the facts of this case and earlier discussion and extract on “springboarding”.] COLLIER J: [617] … I am not satisfied at this stage of the proceedings that the applicant has demonstrated a sufficient likelihood that it would be entitled to the additional interlocutory relief it now seeks. The reason for this is three-fold. 53. First, it is common ground that Mr McPhee is not currently subject to a contractual restraint in respect of his previous employment with the applicant. The order the applicant is seeking from the court is, in effect, a broad restraint on Mr McPhee working for any competitor. At the hearing yesterday I asked Mr Spry whether the proposed order would prevent Mr McPhee working for any competitor as, for example, a receptionist, to which Mr Spry replied in the affirmative (contrast in this context the approach of Greenwood J in Australian Insurance Holdings Pty Ltd v Chan [2010] FCA 781 at 116). 54. Second, there is a considerable body of jurisprudence establishing that courts approach even written contractual restraints of trade cautiously, on the basis that traditionally restraints of trade were 812 [15.400]

Confidential Information

CHAPTER 15

National Surgical v McPhee cont. assumed to be injurious to the interests of the state or the community and are therefore contrary to public policy: Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535. While in more recent years restraints of trade in the employment context have been recognised as legitimate, and indeed equity would restrain an employee from breaching his or her equitable obligations of confidentiality as appropriate, none the less restraints of trade in employment contracts are also interpreted more strictly than other restraints (for example, for the sale of a business). The reason for this is that, in the employment situation, the employer has no right to completely prevent the employee from competing with the employer: Lindner v Murdoch’s Garage (1950) 83 CLR 628; [1950] ALR 927, The Laws of Australia (looseleaf) Thomson, Restraint of Trade Ch 30.1, at 30.1.140 and 30.1.420. 55. Third, notwithstanding the “springboard” principle upon which the applicant relies in respect of the confidential information to which it contends Mr McPhee has access, there is no authority of which I am aware where the court has made an order tantamount to a restraint of trade, in relation to an unwritten contract of employment, in circumstances derived from the springboard principle. In Wilson, for example, the applicant abandoned its claim for interlocutory relief in respect of Mr Ruff and Mr Sherriff working for competitors during the course of the hearing. I am not satisfied at this interlocutory stage that the springboard principle supports an order of the type sought by the applicant. 56. In these circumstances, at this stage of the proceedings I am not satisfied that the applicant has demonstrated a sufficient likelihood that it would be entitled to an order imposing a blanket restraint on Mr McPhee working for all competitors of the applicant within Queensland and Northern New South Wales.

Disclosure in the public interest [15.410] In a moral sense, the publication or use of information in breach of confidence may be justified in the wider public interest, to protect society and its common members in respect of issues relating to national security, public health, the administration of justice and the fabric of society. However, in a legal context, the public interest defence is viewed rather narrowly, and there is still contention as to whether there is a general defence or exception to breach of confidence based on the public interest. In Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 IPR 153 at 233 (NSWCA), Kirby J argued for a broad public interest defence: “In order to warrant a restraint, there must be a social need for protecting the confidence sufficiently pressing to outweigh the public interest in the freedom of the press”. Gummow J took a contrary position in Corrs Pavey Whiting & Byrne v Collector of Customs for the State of Victoria (1987) 10 IPR 53 and, further, in Smith Kline and French Laboratories v Secretary, Department of Community Services and Health (1990) 17 IPR 545. His Honour questioned the existence of a public interest defence to breach of confidence and suggested that principles are best developed by reference to what conscionable behaviour demands of the defendant, not by “balancing” and then overriding those demands by reference to matters of social or political opinion (at 583) (see [15.450]). English courts have taken a more progressive approach to the public interest defence and have instead adopted the broader proposition that disclosure should not necessarily be enjoined where the public interest in publication outweighs the public interest in confidentiality. The public interest defence is accepted as having its origin in a statement by Wood V-C in Gartside v Outram (1856) 26 LJ Ch 113 at 114, that the “true doctrine is, that there is no [15.410]

813

Intellectual Property: Commentary and Materials

confidence as to the disclosure of iniquity”. Subsequent English courts have treated the defence as extending to information that should be disclosed in the public interest. This broader approach was illustrated in Lion Laboratories Ltd v Evans [1984] 2 All ER 417. Lion Laboratories manufactured and sold a computerised blood alcohol level-testing instrument for use by the British police. Two former employees believed that there was doubt as to the reliability and accuracy of the equipment, and attempted to supply documents and information to national newspapers. Lion Laboratories applied for an injunction to restrain its publication. The court refused to grant the injunction when there was a public interest in securing proper evidence before the court in drink-driving cases, and in safeguarding the civil liberties of the accused. One feature of this case was the lack of likelihood that the responsible government agency would pursue the truth in an unbiased fashion. The public interest outweighed the interest of Lion Laboratories in preserving secret information about its product. Yet even English law has limits to the public interest defence when used as justification for publication of what defendants may maintain as “the truth”. A distinction needs to be drawn between matters that ought to be disclosed because the public ought to know of them, and matters that the public – or some sectors thereof – might find of interest and, therefore, want to know about them. In Australia, a governmental plaintiff must show that disclosure would result in probable prejudice to the workings of government: see Minister for Mineral Resources v Newcastle Newspapers Pty Ltd (1997) 40 IPR 403. Insofar as confidences of the government are concerned, Mason J in Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39 at 52 explained: The court will not prevent the publication of information which merely throws light on the past workings of government, even if it be not public property, so long as it does not prejudice the community in other respects. Then disclosure will itself serve the public interest in keeping the community informed and in promoting discussion of public affairs. If, however, it appears that disclosure will be inimical to the public interest because national security, relations with foreign countries or the ordinary business of government will be prejudiced, disclosure will be restrained. There will be cases in which the conflicting considerations will be finely balanced, where it is difficult to decide whether the public’s interest in knowing and in expressing its opinion, outweighs the need to protect confidentiality.

Support for this approach is to be found in Attorney-General (UK) v Jonathan Cape Ltd [1976] QB 752, where the court refused to grant an injunction to restrain publication of the diaries of Richard Crossman, which covered his time as a UK Cabinet Minister between 1964 and 1970. Lord Widgery LCJ said (at 770-771): The Attorney-General must show (a) that such publication would be a breach of confidence; (b) that the public interest requires that the publication be restrained, and (c) that there are no other facts of the public interest contradictory of and more compelling than that relied upon. Moreover, the court, when asked to restrain such a publication, must closely examine the extent to which relief is necessary to ensure that restrictions are not imposed beyond the strict requirement of public need.

Although this statement has been criticised on the ground that it is contrary to principle and unduly restricts the right of government to restrain disclosure, his Lordship was correctly elaborating the principle so as to take account of the special character of the government and defining the detriment which it needs to show. 814 [15.410]

Confidential Information

CHAPTER 15

This concept of “balancing” competing interests is illustrated to some extent by the Lion Laboratories case, described in passing above, which was discussed by Rath J in Castrol Australia Pty Ltd v Emtech Associates Pty Ltd (1980) 33 ALR 31 in the extract below.

Castrol Australia v EmTech [15.420] Castrol Australia Pty Ltd v EmTech Assoc Pty Ltd (1980) 33 ALR 31 Supreme Court of New South Wales [For the purpose of developing a new lubricating oil, the plaintiff submitted a number of oils to the first defendant for testing. The first defendant prepared a report for the plaintiff. The plaintiff subsequently consulted the Trade Practices Commission (now the Australian Competition and Consumer Commission (ACCC)) to ensure that its promotional material complied with the consumer protection provisions of the Trade Practices Act 1974 (Cth). The Commission indicated that the plaintiff’s promotional claims might breach ss 52 or 53 of the Act in that it made possibly exaggerated claims as to the performance of the oil. The Commission then served a notice under s 155 of the Act to discover the first defendant’s test report. The plaintiff sought injunctions against the defendants to enjoin disclosure of the report. The defendants responded by arguing either that the report was not protected by the law of confidence or that disclosure of the report was in the public interest. The Court found on the evidence of the report that the promotional material of the plaintiff did not breach the Act. His Honour continued:] RATH J: [53] Secondly, even if I thought that the results stated in the EmTech report did not support the advertised claims, I should not accept this circumstance as a sufficient reason for relieving the commission of its obligation of confidence in regard to the disclosure and use of the report. In taking this position, I am preferring expressions of judicial opinion that have laid stress on public policy in the preservation of confidence to expressions of like opinion that appear to be based on an expanded concept of public interest. In Gartside v Outram (1856) 26 LJ Ch 113, the plaintiffs were suing to restrain the defendant, a former employee, from disclosing any of their dealings and transactions. The defendant in answer to the plaintiffs’ bill said that the plaintiffs conducted their business in a fraudulent way. Wood V-C said (at 114): But there are exceptions to this confidence, or perhaps, rather only nominally, and not really exceptions. The true doctrine is, that there is no confidence as to the disclosure of iniquity. You cannot make me a confidant of a crime or fraud, and be entitled to close up my lips upon any secret which you have the audacity to disclose to me relating to any fraudulent intention on your part: such a confidence cannot exist. In Weld-Blundell v Stephens [1919] 1 KB 520, Bankes LJ (at 527) explained Gartside v Outram as one of a class of cases of confidential communications as to the proposed commission of a civil wrong on a person. Similarly, Warrington LJ said of it (at 534): “The fraud there alleged was a systematic fraud pursued by the plaintiffs in the course of their business, and the disclosure of the evidence in the defendants’ possession would tend to prevent such frauds in the future.” With these observations in mind, I think it is proper to refrain from giving an unduly wide meaning to the word “iniquity” in Wood V-C’s famous dictum that “There is no confidence as to the disclosure of iniquity”. In Initial Services Ltd v Putterill [1968] 1 QB 396; [1967] 3 All ER 145, the defendant, in defence of his breaking confidence as a former employee, sought to plead that the plaintiff was a party to an agreement to keep up prices, which agreement had not been registered under the Restrictive Trade Practices Act 1956, and that the plaintiff had issued a circular to its customers that was misleading in its explanation of the plaintiff’s increased charges. Thus the plaintiff’s conduct, as alleged by the defendant, was similar to the “systematic fraud pursued by the plaintiffs in the course of their [15.420]

815

Intellectual Property: Commentary and Materials

Castrol Australia v EmTech cont. business” that Warrington LJ had found in Gartside v Outram. Lord Denning MR said of the exception to [54] confidence referred to in Gartside v Outram the following (at 405): The exception should extend to crimes, frauds and misdeeds, both those actually committed as well as those in contemplation, provided always and this is essential that the disclosure is justified in the public interest. The reason is because “no private obligations can dispense with that universal one which lies on every member of society to discover every design which may be formed, contrary to the laws of the society, to destroy the public welfare”: see Annesley v Anglesea (Earl) (1743) LR 5 QB 317; 17 State Tr 1139. The “exception” cannot universally be extended to crimes actually committed, as Bankes LJ pointed out in Weld-Blundell v Stephens [1919] 1 KB 520 at 527, 528; but the exclusion from the protection of confidence of designs formed “to destroy the public welfare” expresses a concept which is authoritatively expressed in modern terms in the following way by Viscount Finlay in Weld-Blundell v Stephens [1920] AC 956 at 965-966: It would be startling if it were the law that an agent who is negligent in the custody of a letter handed to him in confidence by his principal might plead in defence that the letter was libellous. There may, of course, be cases where some higher duty is involved. Danger to the state or public duty may supersede the duty of the agent to his principal. In Fraser v Evans [1969] 1 QB 349; [1969] 1 All ER 8, the plaintiff was a public relations consultant of the Greek government. He sought to restrain publication in a newspaper of an article based on a report he had made to the Greek government. His claimed based on breach of confidence failed at the threshold because, in the view of the Court of Appeal, only the Greek government had any standing to complain. Lord Denning advanced a possible additional ground in the following passage (at 362): Even if Mr Fraser had any standing to complain, The Sunday Times say that in any event they have just cause or excuse for publishing. They rely on the line of authority from Gartside v Outram to the latest case, Initial Services Ltd v Putterill. They quote the words of Wood V-C that “there is no confidence as to the disclosure of iniquity”. I do not look upon the word “iniquity” as expressing a principle. It is merely an instance of just cause or excuse for breaking confidence. There are some things that require to be disclosed in the public interest in which event no confidence can be prayed in aid to keep them secret. But Lord Denning felt that it might be difficult for The Sunday Times to make out that case in the circumstances. Accordingly the passage quoted would not appear to be a reason for the decision. It is thus unnecessary to consider the effect of the “entire agreement” of Widgery LJ with Lord Denning and Davies LJ: see, on this point, Malone v Metropolitan Police Commissioner [1979] 1 All ER 256; [1979] 1 WLR 700 at 715-716. The formulation, “just cause or excuse for breaking confidence”, is of course unexceptionable, provided that it is not used to whittle down the obligation of confidence, and introduce exceptions that would not qualify under Viscount Finlay’s “higher duty” criterion. [55] Hubbard v Vosper [1972] 2 QB 84; [1972] 1 All ER 1023, is another decision of the Court of Appeal in which Lord Denning said, in relation to a claim of confidence, that “the information must be such that it is a proper subject for protection” (at 95) and went on to quote from Fraser v Evans: “There are some things which may be required to be disclosed in the public interest, in which event no confidence can be prayed in aid to keep them secret.” The other members of the court agreed with Lord Denning. Wood V-C’s “iniquity” has on this language become simply “public interest”, with no further definition. The application was an interlocutory one, and no final decision on the facts was called for; but Lord Denning said (at 96) that there was good ground for thinking that the alleged confidential material (courses in “Scientology”) contained “such dangerous material” that it was in the public interest that it should be made known. Thus the test actually applied was in effect danger to the public. Megaw LJ said, “there is here evidence that the plaintiffs are or have been protecting their secrets by deplorable means”. He concluded that they did not come to the court with clean hands. 816 [15.420]

Confidential Information

CHAPTER 15

Castrol Australia v EmTech cont. Ungoed-Thomas J in Beloff v Pressdram Ltd [1973] 1 All ER 241, expressed his understanding of Lord Denning’s judgment in Hubbard v Vosper, and the defence of public interest, as follows (at 260): In Hubbard v Vosper Lord Denning MR treated material on scientology published in breach of confidence as susceptible to a defence of public interest on the ground that it was dangerous material, namely medical quackeries “dangerous in untrained hands”. The defence of public interest clearly covers and, in the authorities does not extend beyond, disclosure, which as Lord Denning MR emphasised must be disclosure justified in the public interest, of matters carried out or contemplated, in breach of the country’s security, or in breach of law, including statutory duty, fraud, or otherwise destructive of the country or its people, including matters medically dangerous to the public; and doubtless other misdeeds of similar gravity. Public interest, as a defence in law, operates to over-ride the rights of the individual (including copyright) which would otherwise prevail and which the law is also concerned to protect. Such public interest, as now recognised by the law, does not extend beyond misdeeds of a serious nature and importance to the country and thus, in my view, clearly recognisable as such. This passage, in my respectful view, expresses no more than a reasonable elaboration of Viscount Finlay’s “higher duty” concept, and is an acceptable statement of the law as to the defence of public interest in an action for breach of confidence. In copyright law there may in Australia be a question as to whether there is a place for such a non-statutory defence: cf Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation (1970) 121 CLR 154 at 166. What is particularly important in UngoedThomas J’s formulation of principle is his emphasis on the gravity of the conduct that may give rise to the defence. If there is to be a defence labelled public interest, some such confinement of its vague boundaries is in my view essential. … In Woodward v Hutchins [1977] 1 WLR 760; [1977] 2 All ER 751, the Court of Appeal refused the plaintiffs an injunction to restrain disclosure of confidential information. The plaintiffs had issued a writ for libel against the defendants, and the defendants proposed to plead justification. The plaintiffs were a well-known group of singers, and one defendant was their former press relations agent. Lord Denning said (at 763-764): If a group of this kind seek publicity which is to their advantage, it seems to me that they cannot complain if a servant or employee of theirs afterwards discloses the truth about them. If the image which they fostered was not a true image, it is in the public interest that it should be corrected. In these cases it is a question of balancing the public interest in maintaining the confidence against the public interest in knowing the truth … In this case the balance comes down in favour of the truth being told, even if it should involve some breach of confidential information. Woodward v Hutchins is the spring tide mark of “public interest” as a criterion for refusing relief in confidence cases. If Lord Denning’s quoted statement is taken literally the court will test the legitimacy of breach of confidence by its conception of the balance of public interest in the particular circumstances of the case. As in Woodward v Hutchins itself the balance may weigh down in favour of disclosure even if no “iniquity” either criminal or tortious, is involved. In no previous case has the obligation of confidence been weighed against the “public interest” in “truth being told”. If this new test is right, then Viscount Finley’s concept of “higher duty” no longer expressed the law. In my opinion the court, in considering whether just cause for breaking confidence exists, must have regard to matters of a more weighty and precise kind than a public interest in the truth being told. No doubt the plaintiffs in Woodward v Hutchins had gone to considerable lengths to present a favourable public image. In a sense their image was a matter of public interest, but not in the sense that as a matter of public policy the defendants were entitled, or required, to break confidence. The former press relations [15.420]

817

Intellectual Property: Commentary and Materials

Castrol Australia v EmTech cont. agent to the plaintiffs seems to me to have been in a position comparable to that of the accountant who, in Weld-Blundell v Stephens, was held to be negligent in leaving a libellous letter addressed to him in the office of the defamed persons. [57] The actual decision in Woodward v Hutchins is supportable on the ground, given by the court, that the grant of an injunction on the basis of breach of confidence would frustrate the long standing principle that an injunction will not be granted to restrain publication of a libel where the defendant proposes to plead justification. This was the ground relied upon by Lawton LJ in that case. Bridge LJ in agreeing, as he did, with both judgments, was presumably agreeing with the common ground of decision. … Taking such guidance as I can from the authorities I have reviewed on the principles applicable where a defendant seeks to excuse breach of confidence, I am of the opinion that no sufficient excuse, on the evidence at present before the court, has been shown for allowing the defendants to disclose or use the plaintiff’s confidential information, in particular the EmTech report, and any information in explanation or elaboration of that report that the commission and its officers may have obtained from the second defendant.

[15.430] Following are extracts from Attorney-General (UK) v Heinemann Publishers

Australia Pty Ltd (1987) 10 IPR 153 and Smith Kline and French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73, both on the nature of the confidentiality of government information and the public interest defence on its disclosure.

Attorney-General (UK) v Heinemann Publishers Australia [15.440] Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 10 IPR 153 Supreme Court of New South Wales – Court of Appeal [The second respondent (Wright) had been employed by MI5, the British Security Service. He had retired some 12 years before and, at the time of this hearing, lived in Tasmania. The first respondent sought to publish Wright’s memoirs in a book titled Spycatcher. The appellant commenced an action seeking an injunction to restrain publication of Spycatcher and an account of profits, in part relying upon evidence given by the Cabinet Secretaries of the United Kingdom and Australia that publication of Spycatcher was detrimental to the national security of United Kingdom and Australia. An appeal was brought from the decision of Powell J, which had dismissed the appellant’s claim. Held, per Kirby P and McHugh JA (Street CJ dissenting): The appeal was dismissed because (per Kirby P) Australian courts have no jurisdiction to entertain an action for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State, and (per McHugh JA) Australian courts will not make a judgment on the public interest of a foreign State.] KIRBY P: [230] A further way in which the respondents sought to justify the publication of Spycatcher, was by reference to a suggested defence of the public interest which, it was said, attached in Australia to the book’s content. At various stages, it was suggested that this defence applied generally to the publication or at least to so much of it as might be held still to attract the equitable duty of confidence or the fiduciary duty attaching to the appellant by his relationship with the Crown. … The term “public interest” was used in this context not “in the sense of something which catches the interest of the public out of curiosity or amusement or astonishment, but in the sense of something which is of serious concern and benefit to the public”. 818 [15.430]

Confidential Information

CHAPTER 15

Attorney-General (UK) v Heinemann Publishers Australia cont. Upon one view the “public interest” in the sense just described, is the other side of the coin of the “public interest” in upholding confidences and enforcing fiduciary obligations. Salmon LJ in Initial Services Ltd v Putterill [1968] 1 QB 396 referred to the conceptual basis of the action for breach of confidence. He accepted counsel’s contention in that case that the “duty of confidence” could be described thus (at 408): “First of all, it is said that there is an implied term of the contract of employment that the servant will observe this confidence: alternatively, it is said that this duty of confidence is a duty which is imposed by the law because manifestly in the public interest servants should not disclose to the world what they are confidentially told about their master’s business” (emphasis added). His Lordship stated, in the context of that case, that he was not satisfied that there was a general blanket of confidence surrounding the relationship between employer and employee. He illustrated the limitations by referring to instances where, in his view, courts would not uphold an agreement (or by inference, enforce an equitable duty of confidence or fiduciary duty) on the ground that it was “contrary to the public interest” (ibid, at 410). … There then appear in England two cases which cast doubt on the extent, or at least the operation, of the “public interest” defence to an action for breach of confidence. In the British Steel Corp case in the English Court of Appeal, Templeman LJ (as his Lordship then was) suggested a limitation to the public interest justification for breach of confidence. Unfortunately, it was expressed in terms difficult to apply in practice: “Discussions between members of the staff of BSC about difficult decisions or management problems are truly confidential, and it was unfair for Granada to publish many of the extracts … If information is truly confidential it does not cease to be confidential merely because it relates to matters of public interest. In the present case, the BSC documents and the contents of those documents which were quoted by Granada were truly confidential albeit that they related to matters of public concern …” (emphasis added). The distinction between information “truly” confidential and information which is “merely confidential in the ordinary sense” is one not easy to draw: see Y Cripps, The Legal Implications of Disclosure in the Public Interest, ESC Publishing, Oxford, 1986, p 49. When the British Steel Corp case reached the House of Lords the exception of, or defence for, disclosure in the public interest was considered. Lord Wilberforce appears to have contemplated a broader principle than the iniquity rule from which, historically, it derived: see [1980] 3 WLR 774 at 822. But in England the brakes were most clearly put upon the public interest defence by the decision of the Court of Appeal in Schering Chemicals Ltd v Falkman Ltd [1981] 2 WLR 848. An employee of a staff training company acquired whilst working with a client company, a great deal of information which he then sought to make available for a television documentary allegedly in the public interest. Shaw and Templeman LJJ were prepared to grant the company an injunction, including upon the basis of a breach of the duty of confidence arising out of the trust that had been placed in the employee and the further fiduciary obligation imposed on the recipient of the confidence, unless the giver of it consents to relax it. Shaw LJ declared (at 869): “The law of England is indeed, as Blackstone declared, a law of liberty; but the freedoms it recognises do not include a licence for the mercenary betrayal of business confidences.” Like Shaw LJ, Templeman LJ was unconcerned with the suggestion that the contentious information had already entered the public domain: “As between Schering and Mr Elstein, if Mr Elstein had obtained information from sources other than Schering, then it would of course not have been confidential in his hands but, by agreeing to advise Schering and by accepting information from them to enable him to advise Schering, Mr Elstein placed himself under a duty, in my judgment, not to make use of that information without the consent of Schering in a manner which Schering reasonably considered to be harmful to their cause.” Lord Denning MR dissented. He agreed that Mr Elstein had been under a “duty of confidence” but he did not consider that there was a breach of the duty because Elstein had used information which [15.440]

819

Intellectual Property: Commentary and Materials

Attorney-General (UK) v Heinemann Publishers Australia cont. was available already in the public domain. He said (at 864-5): “If Thames were about to publish important private information which was highly confidential and very properly confined to Schering, I have no doubt that an injunction should be granted … But this information was not highly confidential. It was not confidential at all. It was not private. It was all in the public domain. Any stranger starting from scratch – and studying the old issues of the Sunday Times and so forth – could have got all this information together and published it without breaking any confidence at all … I am clearly of opinion that no injunction ought to be granted to prevent the publication of this information, even though it did originate in confidence. It dealt with a matter of great public interest. It contained information of which the public had a right to know.” This court is not bound by the decision of the majority in Schering. … I find entirely persuasive, and certainly more in harmony with the values of Australian society, the dissenting judgment of Lord Denning in that case: “Freedom of the press is of fundamental importance in our society. It covers not only the right of the press to impart information of general interest or concern, but also the right of the public to receive it. It is not to be restricted on the ground of breach of confidence unless there is a ‘pressing social need’ for such restraint. In order to warrant a restraint, there must be a social need for protecting the confidence sufficiently pressing to outweigh the public interest in freedom of the press.” … Looking at the issue through the eyes of Lord Denning, can there be any doubt that the public interest of Australia (whatever may be the public interest in the United Kingdom) requires or at least justifies the disclosure of the matters in Spycatcher? Quite apart from the issues to which Powell J referred, there is the fact that the very establishment of ASIO drew upon the experience of MI5. Indeed, Sir Roger Hollis, referred to in the book as himself a double-agent, came to Australia for that purpose and had many later connections with ASIO. Though the evidence demonstrates that the personnel then recruited have passed on and the organisations have been the subject of the most thorough investigations by Hope J, legitimate public concerns in Australia remain. They include the need for a society such as ours to reflect upon the dangers which can arise when a security service goes wrong. They include the special dangers which arise when (as is suggested in Spycatcher) the security service or some members thereof may lack a proper measure of loyalty to the government elected by the people. They certainly arise when that service is said to be intent upon undermining the thrice-elected Prime Minister of the nation. None of these allegations, contained in Spycatcher, are new. But they are plainly in the public domain. And they are of the greatest importance for the defences of a democratic society operating under the rule of law. The very intensiveness of the scrutiny to which ASIO and ASIS have been subjected in this country show that we, more perhaps than the United Kingdom, have asserted in recent years – under governments of differing political persuasion – an insistence upon the lawfulness of the operations of the security services, their accountability to the Government and the Parliament and their loyalty to the democratic nature of the country, whose mission it is theirs to defend. In these circumstances, it would be hard to conceive of matters of greater public interest and gravity than those revealed in Spycatcher. I accept and happily apply the definition of “public interest” referred to Sir Robert Megarry VC in the British Steel Corp case, supra. Precisely because of the very high Australian public interest in the disclosures contained in Spycatcher and the relevance of those disclosures to the defences which this country should build against similar treason, deception and error, I regard it as virtually impossible, in the circumstances, for the appellant to overcome the defence of public interest which I would hold to apply and to have been made out. I remind myself again that I am dealing only with the public interest in an Australian context. Subject to a consideration of national security to

820 [15.440]

Confidential Information

CHAPTER 15

Attorney-General (UK) v Heinemann Publishers Australia cont. which I will revert below, our public interest in the open discussion of the matters raised in Spycatcher outweigh the residual equitable duty of confidence or fiduciary duty of silence operating on Wright’s conscience, for the enforcement of which the appellant comes to this court.

Smith Kline and French Laboratories v Secretary, Department of Community Services and Health [15.450] Smith Kline and French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 17 IPR 545 Federal Court of Australia [See [15.280] for facts of the case.] GUMMOW J: [583] … it is not a question of whether there is some “public interest” defence to the alleged breach of an obligation by the Secretary, but rather one of the content of any such obligation in its inception…. My views upon the wisdom of adopting in Australia the English authorities in which the “public interest” defence has been constructed in recent years, from what may be thought inadequate historical and doctrinal materials, have been expressed in Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) at 451-458. Those views are consistent with what was said by Rath J in Castrol Australia Pty Ltd v EmTech Associates Pty Ltd (supra) at 210-216; and by Hutley AP in David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294 at 305-306. They are reinforced by a reading of the latest English decision on the subject, W v Egdell [1990] 2 WLR 471 at 488-489. There, concepts drawn from the law as to discovery, contempt, contract, fiduciary duty, and undue influence, as well as from the equitable obligations of confidence owed to government and between citizens, are mixed to produce a curious melange, without an indication of the significance of what was being done. No doubt the terms “confidence” and “confidential” appear in authorities in all these fields, but it by no means follows that they are used in the same sense across the legal spectrum. One is reminded of similar confusion of thought engendered by the use of “waiver” and “rescind” in various senses: see Beatty v Guggenheim Exploration Co 122 NE 378 at 381 (1919); Wolf Mountain Coal Ltd Partnership v Netherlands Pacific Mining Co Inc (1988) 31 BCLR (2d) 16 at 28; Johnson v Agnew [1980] AC 367 at 394-398. Further, I would accept the submissions by counsel for the applicants in the SK & F proceedings that (i) an examination of the recent English decisions shows that the so-called “public interest” defence is not so much a rule of law as an invitation to judicial idiosyncrasy by deciding each case on an ad hoc basis as to whether, on the facts overall, it is better to respect or to override the obligation of confidence; and (ii) equitable principles are best developed by reference to what conscionable behaviour demands of the defendant not by “balancing” and then overriding those demands by reference to matters of social or political opinion.

[15.450]

821

CHAPTER 16 Plant Breeder’s Rights [16.10]

INTRODUCTION .................................................................................................... 823

[16.20]

GENERAL NATURE OF RIGHTS .............................................................................. 826

[16.30]

DEFINITION OF PLANT AND BREEDING ............................................................. 827

[16.40]

IDENTIFICATION OF VARIETY ............................................................................... 827

[16.50]

REQUIREMENTS FOR REGISTRATION .................................................................. 827 [16.60]

[16.80]

Plant Breeder’s Rights Act 1994 (Cth) ..................................... 828

APPLICATION FOR REGISTRATION OF PLANT VARIETIES .................................. 829 [16.90] [16.110]

Plant Breeder’s Rights Act 1994 (Cth) ..................................... 829 Plant Breeder’s Rights Act 1994 (Cth) ..................................... 830

[16.130] EXCLUSIVE PROTECTION ..................................................................................... 831 [16.140]

Plant Breeder’s Rights Act 1994 (Cth) ..................................... 831

[16.160] INFRINGEMENT AND EXCEPTIONS .................................................................... 831 [16.160] Infringement .......................................................................................................... 831 [16.170] Exceptions .............................................................................................................. 832 [16.190]

Grain Pool of WA v Commonwealth ........................................ 832

[16.200] JURISDICTION AND REMEDIES ............................................................................ 833 [16.210] INTERNATIONAL PROTECTION ............................................................................ 833 [16.220] PBR AND PATENTS ................................................................................................. 834

INTRODUCTION [16.10] Statutory protection of plant breeder’s rights, although economically significant (and

becoming more so, amid increasingly globalised markets for agricultural commodities as a result of agreements such as the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)), has attracted little attention from the intellectual property (IP) community and the public at large. That low profile is attributable to unawareness that Australian law provides patent-style protection for varieties of plants, with many people apparently assuming that protection will or should only be given to hightechnology innovation. It is also attributable to the rarity of litigation under the Plant Breeder’s Rights Act 1994 (Cth) and inattention by civil society groups, whose protests have instead centred on agitation against genetically manipulated organisms and life sciences patents. 1 This chapter outlines the origins, coverage and structure of statutory protection for plant breeders, before highlighting specific elements of the Australian regime. The aim is to assist 1

The salient cases are Grain Pool of WA v Commonwealth of Australia (2000) 202 CLR 479; 170 ALR 111; 46 IPR 51; Sun World Inc v Registrar, Plant Variety Rights (1997) 39 IPR 161; Sun World International Inc v Registrar, [16.10]

823

Intellectual Property: Commentary and Materials

students of IP by providing an explanation of Australian law governing rights in plant varieties registered under the Plant Breeder’s Rights Act 1994 (Cth), in particular to encourage in them an ability to recognise the subject matter and an awareness of registration requirements. Selective breeding of plants and animals predates the emergence of IP law. It has been evident throughout recorded history, with farmers and hobbyists identifying particular heritable attributes – such as sweetness, drought resistance, disease resistance, rapid growth, silkiness, colour, absence of burrs or thorns – and then aiming to breed a plant that more fully exhibits those attributes than other varieties. 2 Australian history, for example, celebrates the achievement of agricultural pioneers John Macarthur and William Farrer in breeding superior varieties of merino sheep and disease-resistant wheat in an era where the national economy rode “on the sheep’s back” (or on exports of grain). Many enthusiasts have devoted much of their lives to breeding the perfect rose, orchid, apple or strawberry. That breeding, involving the manual transfer of pollen from one plant to another or deliberately placing varieties in close proximity to each other in what is typically an iterative process, anticipated the high-technology genetic manipulation that is currently recognised in Australia through gene patents under the Patents Act 1990 (Cth). Statutory protection for plant breeders, although not for animal breeders, emerged in the first decades of last century. American researcher Luther Burbank famously complained in the 1920s that “a man can patent a mousetrap or copyright a nasty song, but if he gives the world a new fruit that will add millions to the value of the Earth’s annual harvest he will be fortunate if he is rewarded by so much as having his name connected with the result”. 3 Recognition of the public goods attributable to investment in the development of improved plant varieties (hence the term “plant variety rights” as a synonym for plant breeder’s rights) and lobbying by the US agricultural sector at the beginning of the Great Depression resulted in the Plant Patent Act 1932 (US), which was extended in the Plant Variety Protection Act 1970 (US). 4 There was subsequent recognition at the international level through the 1961 International Convention for the Protection of New Varieties of Plants (UPOV Convention), 5 to which Australia is a signatory. 6 That convention has been revised several times, notably in 1991. It established the International Union for the Protection of New Varieties of Plants, a Geneva-based intergovernmental organisation analogous to the World Intellectual Property Organization that deals with the Berne Convention and the Paris Convention on copyright and intellectual property.

2 3 4

5 6

Plant Breeder’s Rights [1998] FCA 1260; Cultivaust Pty Ltd v Grain Pool Pty Ltd (2005) 147 FCR 265; 67 IPR 162; Fleming’s Nurseries Pty Ltd v Siciliano (2006) 68 IPR 545; Fleming’s Nurseries Pty Ltd v Hannaford [2009] FCA 884; Elders Rural Services Australia Ltd v Registrar of Plant Breeder’s Rights (2012) 199 FCR 520; 95 IPR 229. Among introductions to this subject, see N Kingsbury, Hybrid: The History and Science of Plant Breeding (University of Chicago Press, Chicago, 2009). N Kingsbury, Hybrid: The History and Science of Plant Breeding (University of Chicago Press, Chicago, 2009), p 382. There is a useful discussion on rationales for protection, the US regime and Australian law in Grain Pool of WA v Commonwealth (2000) 202 CLR 479; 170 ALR 111; 46 IPR 51, which is concerned with the constitutionality of the 1994 Australian statute. The acronym UPOV is derived from the French name of the associated intergovernmental organisation, the Union Internationale pour la Protection des Obtentions Végétales. M Llewelyn, From “Outmoded Impediment” to Global Player: The Evolution of Plant Variety Rights in D Vaver and L Bently (eds), Intellectual Property in the New Millennium (Cambridge University Press, Cambridge, 2005), p 137. The text of the UPOV Convention, to which Australia acceded in 1989, is accessible on the International Union for the Protection of New Varieties of Plants website at http://www.upov.int (cited September 2016).

824 [16.10]

Plant Breeder’s Rights

CHAPTER 16

In Australia, the first statute to establish rights in plant varieties was the Plant Variety Rights Act 1987 (Cth) which was replaced by the Plant Breeder’s Rights Act 1994 (Cth). The constitutional validity of the latter statute was upheld by the High Court in Grain Pool of WA v Commonwealth (2000) 202 CLR 479; 170 ALR 111; 46 IPR 51. The Australian regime was examined in the Advisory Council on Intellectual Property 2010 final report on A Review of Enforcement of Plant Breeder’s Rights. 7 and again in 2016 as part of the Productivity Commission’s review Intellectual Property Arrangements. 8 Major academic assessments include work by Jay Sanderson, which suggest that the 1994 statute is needed and is operating as intended. 9 The Plant Breeder’s Rights Act 1994 (Cth) established patent-style protection, with a national register maintained by IP Australia (the same government agency responsible for administering other IP registers) administered by the statutory Registrar of Plant Breeder’s Rights (s 58). Registration is required for the granting of rights, with the grantee gaining a personal property right for a non-renewable period. In essence, the Act provides plant breeders with exclusive rights to produce or reproduce, condition, offer for sale, import or export the “propagating material” of the plant varieties that are protected by plant breeder’s rights. Breeders are also able to stock the material for those purposes. The rights are subject to exemptions – notably unauthorised private use (ie, for non-commercial purposes), experimental use and for breeding new plant varieties – and for saving seed for the next season. Around 350 applications for protection are made in Australia each year, with IP Australia granting around 200 per year. 10 Applications come in approximately equal numbers from Australian and foreign plant breeders. Prominent examples of varieties which are, or have been, protected include Lilia Weatherly’s colourful “Pink Iceberg” rose, the CSIRO’s drought-resistant “Drysdale” wheat and the “Angel” legume bred by the South Australian Rural Development Institute. Despite the low number of applications, the Productivity Commission attributed the existence in Australia of a system of plant breeder’s rights to stimulation of commercial plant breeding in this country by encouraging competition, facilitating the entry of private-sector plant breeders and improving access to overseas-bred material for use in Australian breeding programs. 11

7 8 9

10 11

Advisory Council on Intellectual Property, A Review of Enforcement of Plant Breeder’s Rights, available at IP reviews on https://www.ipaustralia.gov.au/about-us/public-consultations (cited September 2016). Productivity Commission, Intellectual Property Arrangements Report, Chapter 11, 23 September 2016, accessible at http://www.pc.gov.au/inquiries/completed/intellectual-property/report (cited January 2017). Notably J Sanderson and K Adams, “Are Plant Breeder’s Rights Outdated? A Descriptive And Empirical Assessment of Plant Breeder’s Rights In Australia, 1987-2007”, (2008) 32(3) Melbourne University Law Review 980; J Sanderson, “Back to the Future: Possible Mechanisms for the Management of Plant Varieties in Australia”, (2007) 30(3) UNSW Law Journal 686; J Sanderson, “Intellectual Property and Plants: Constitutive, Contingent and Complex” in K Bowrey, M Handler and D Nicol (eds), Emerging Challenges in Intellectual Property (Oxford University Press, Oxford, 2011). In 2015, the numbers were 359 and 227 respectively: see IP Australia, Australian Intellectual Property Report 2016, available at https://www.ipaustralia.gov.au/ip-report-2016. Productivity Commission, Intellectual Property Arrangements Report, section 13.2, 23 September 2016, accessable at http://www.pc.gov.au/inquiries/completed/intellectual-property/report (cited January 2017). [16.10]

825

Intellectual Property: Commentary and Materials

GENERAL NATURE OF RIGHTS [16.20] The Plant Breeder’s Rights Act 1994 (Cth) s 11 indicates that, subject to various

exceptions, grantees receive the exclusive right to: … do, or license another person to do, the following acts in relation to the propagating material of the variety: (a) produce or reproduce the material; (b) condition the material for the purpose of propagation; (c) offer the material for sale; (d) sell the material; (e) import the material; (f) export the material; (g) stock the material for the purposes described in paragraph (a), (b), (c), (d), (e) or (f).

According to the definition provided in s 3, propagating material of a plant is a “part or product from which, alone or in combination with other parts or products of that plant, another plant with the same essential characteristics can be produced”. Those characteristics – ultimately the rationale for the plant breeder’s rights (PBR) statute – are “heritable traits that are determined by the expression of one or more genes, or other heritable determinants, that contribute to the principal features, performance or value of the variety” (s 3). As indicated above, the “features, performance or value” may be attributes such as sweetness, skin texture, colour (important in flowers) or disease resistance. The Act does not impose a commercial threshold: it is concerned with whether the variety is new, stable and distinctive, rather than whether the registrant has sought protection for a variety that will be profitable when taken to market. The PBR may extend to “essentially derived varieties” (ss 4 and 12), dependent plant varieties (s 13), harvested material (s 14) and products obtained from harvested material (s 15). An essentially derived variety is a variety of a plant that is predominantly derived from it, retains its essential characteristics that result from its genotype and does not exhibit any important (as distinct from cosmetic) features that differentiate it from the variety from which it was derived (s 4). The extension of a plant breeder’s right to an essentially derived variety is intended to protect against a competitor, who makes only a cosmetic change to a plant variety, from obtaining part of the benefit of the original PBR. Curiously, however, a PBR only extends to an essentially derived variety if a plant breeder’s right is granted in respect of the derived variety (s 13). The Advisory Council on Intellectual Property recommended that this anomaly in the Act be remedied, 12 but so far the Commonwealth Government has not acted on this recommendation. A dependent plant variety is one which is not distinguishable from the original plant variety, or one which cannot be reproduced except by the repeated use of either the initial variety or a variety that is indistinguishable from the initial variety (s 14). Public interest considerations are reflected in s 19(1), which requires the grantee of PBR in a plant variety to take all reasonable steps to ensure reasonable public access to that plant 12

Advisory Council on Intellectual Property, A Review of Enforcement of Plant Breeder’s Rights, Recommendation 8; available at IP reviews on https://www.ipaustralia.gov.au/about-us/public-consultations (cited September 2016).

826 [16.20]

Plant Breeder’s Rights

CHAPTER 16

variety – this is “taken to be satisfied if propagating material of reasonable quality is available to the public at reasonable prices, or as gifts to the public, in sufficient quantities to meet demand”.

DEFINITION OF PLANT AND BREEDING [16.30] Plant Breeder’s Rights Act 1994 (Cth) s 5 characterises “breeding” of a new plant

variety as including the discovery of a plant and its use through selective propagation (see [16.10] above) to enable the development of a new plant variety. The definition of “plant” in s 3 “includes all fungi and algae but does not include bacteria, bacteroids, mycoplasmas, viruses, viroids and bacteriophages”. That definition is expansive and thus encompasses vegetables, fruit and other trees, vines, grain, legumes and grasses.

IDENTIFICATION OF VARIETY [16.40] The Plant Breeder’s Rights Act 1994 (Cth), along with the UPOV Convention, is founded on standard botanical taxonomy for the identification and classification of plants. Implementation of the Act involves determining whether a variety of plant is new (ie, differs from its predecessors) and is stable (ie, its attributes can be transmitted unchanged through propagation so that there is another plant of the same variety in second and later generations). “Plant variety”, the unique entity protected under the Act, is defined in Plant Breeder’s Rights Act 1994 (Cth) s 3 as: … a plant grouping (including a hybrid): (a) that is contained within a single botanical taxon of the lowest known rank; and (b) that can be defined by the expression of the characteristics resulting from the genotype of each individual within that plant grouping; and (c) that can be distinguished from any other plant grouping by the expression of at least one of those characteristics; and (d) that can be considered as a functional unit because of its suitability for being propagated unchanged.

The definition links the recognition of a variety to one or more characteristics that are identifiable in the plant as a result of being expressed from the genotype. This therefore excludes plants which differ in their genetic makeup but which do not differ in observable characteristics that they exhibit when growing: see also Majestic Selections Pty Ltd v Bushland Flora [2016] APBRO 1. Given the role of the Act as an incentive for innovation, the requirements under Plant Breeder’s Rights Act 1994 (Cth) s 43 ensure that the variety to be protected is new, reflecting the UPOV Convention Article 6.

REQUIREMENTS FOR REGISTRATION [16.50] The registration requirements are prescribed in Plant Breeder’s Rights Act 1994 (Cth) s 43, which includes the following.

[16.50]

827

Intellectual Property: Commentary and Materials

Plant Breeder’s Rights Act 1994 (Cth) [16.60] Plant Breeder’s Rights Act 1994 (Cth) s 43(1) – (6) 43 Registrable plant varieties (1) For the purposes of this Act, a plant variety in which an application for PBR is made is registrable if: (a) the variety has a breeder; and (b) the variety is distinct; and (c) the variety is uniform; and (d) the variety is stable; and (e) the variety has not been exploited or has been only recently exploited. (2) For the purposes of this section, a plant variety is distinct if it is clearly distinguishable from any other variety whose existence is a matter of common knowledge. (3) For the purposes of this section, a plant variety is uniform if, subject to the variation that may be expected from the particular features of its propagation, it is uniform in its relevant characteristics on propagation. (4) For the purposes of this section, a plant variety is stable if its relevant characteristics remain unchanged after repeated propagation. (5) For the purposes of this section, a plant variety is taken not to have been exploited if, at the date of lodging the application for PBR in the variety, plant material of the variety has not been sold to another person by, or with the consent of, the breeder. (6) For the purposes of this section, a plant variety is taken to have been only recently exploited if, at the date of lodging the application for PBR in the variety, plant material of the variety has not been sold to another person by, or with the consent of, the breeder, either: (a) in Australia – more than one year before that date; or (b) in the territory of another contracting party: (i) in the case of trees or vines – more than 6 years before that date; or (ii) in any other case – more than 4 years before that date.

[16.70] The Act provides little guidance as to the meaning of “common knowledge” as it is

used in s 43, except that s 43(8) provides that any variety in respect of which an application for PBR has been lodged in a country that is a party to UPOV, and which has been granted or is proceeding, is to be treated as common knowledge. Registration provides the grantee with exclusive rights for 25 years in relation to trees and vines, and for 20 years in relation to other varieties, such as vegetables (Plant Breeder’s Rights Act 1994 (Cth) s 22). The difference reflects the time required for commercial exploitation of different varieties, with a tree, for example, not bearing fruit for several years in contrast to a new variety of flower or vegetable that may provide the breeder with a commercial return after a single growing season. As with patents, the period of protection is finite and non-renewable, and annual fees are payable to maintain registration of a granted plant breeder’s right. Under s 24, applications for the grant of variety rights are made by the breeder of a particular variety, irrespective of whether the variety was bred in Australia and whether the 828 [16.60]

Plant Breeder’s Rights

CHAPTER 16

breeder is an Australian citizen or resident. 13 Under s 24(3) and (4), the Act provides for joint applications, thus using the same model used for patents registration.

APPLICATION FOR REGISTRATION OF PLANT VARIETIES [16.80] The Plant Breeder’s Rights Act 1994 (Cth) establishes a publicly accessible Register of

Plant Varieties (s 61). A grant of rights under the Act follows what is essentially a two-step application process. Completion of the first step is dependent on compliance with formalities under s 26, with breeders who are seeking protection being required to make an application in writing in an approved form that is lodged in an approved manner. Under s 26(2), that application must contain the following information.

Plant Breeder’s Rights Act 1994 (Cth) [16.90] Plant Breeder’s Rights Act 1994 (Cth) s 26(2) 26 Form of application for PBR … (2) The application must contain: (a) the name and address of the applicant; and (b) if the applicant is using an agent to make the application on the applicant’s behalf – the name and address of the agent; and (c) if the applicant is the breeder of the variety – a statement of that effect; and (d) if the applicant is not the breeder of the variety – the name and address of the breeder and particulars of the assignment, or transmission by will or by operation of law, of the right to make the application; and (e) a brief description, or a brief description and photograph, of a plant of the variety sufficient to establish a prima facie case that the variety is distinct from other varieties of common knowledge; and (f) the name of the variety, having regard to the requirements of section 27, and any proposed synonym for that name; and (g) the name of the location at which the variety was bred; and (ga) the name of each variety (the parent variety) used in the breeding program including, in respect of each parent variety: (i) particulars of the names (including synonyms) by which the parent variety is known or sold in Australia; and (ii) particulars of any PBR granted in Australia or in any other contracting party; and (gb) a brief description of the manner in which the variety was bred; and (h) particulars of any application for, or grant of, rights of any kind in the variety in any other country; and (i) the name of an approved person who: (i) will verify the particulars in the application; and 13

The Plant Breeder’s Rights Act 1994 (Cth) provides for local representation of overseas applicants and grantees. Under s 26, an overseas resident is required (unless that person has appointed an agent resident in Australia to act on the applicant’s behalf) to specify an Australian postal address for the service of notices. Section 72 permits action by an agent on behalf of an applicant or grantee. [16.90]

829

Intellectual Property: Commentary and Materials

Plant Breeder’s Rights Act 1994 (Cth) cont. (ii) will supervise any test growing or further test growing of the variety required under section 37; and (iii) will verify a detailed description of the variety when such a description is supplied to the Secretary; (j) such other particulars (if any) as are required by the approved form.

[16.100] After IP Australia receives an application under s 26, it is examined and accepted if it

complies with the requirements of s 26, establishes a prima facie case for treating the plant variety as distinct from other varieties, the relevant fee has been paid, and if the application has an earlier priority date than any other application in respect of the variety (s 30). Within 12 months after the acceptance of an application under s 26, the applicant must satisfy the second part of the application process, or the application is deemed to have been withdrawn (s 34(1) and (2)). The second part of the process is governed by s 34, which requires the applicant to file a detailed written description of the variety in the approved form. An examination fee is payable also. The requirements of the detailed description are set out in s 34(4).

Plant Breeder’s Rights Act 1994 (Cth) [16.110] Plant Breeder’s Rights Act 1994 (Cth) s 34(4) … (4) The detailed description must contain: (a) particulars of the characteristics that distinguish the variety from other plant varieties the existence of which is a matter of common knowledge; and (b) particulars of: (i) any test growing carried out, including a test growing carried out as required under section 37, to establish that the variety is distinct, uniform and stable; and (ii) any test growing carried out as required under section 41; and (c) if the variety was bred outside Australia–particulars of any test growing outside Australia that tend to establish that the variety will, if grown in Australia, be distinct, uniform and stable; and (d) such other particulars (if any) as are required by the approved form; and must be accompanied by a certificate, in the approved form, verifying the particulars of the detailed description, completed by the approved person nominated in the application as the approved person in relation to that application.

[16.120] Acceptance of an application under s 26 begins a period of provisional protection (s 39), but action for infringement cannot be commenced until PBR have been granted in respect of the plant variety. Grant cannot occur until the detailed description has been filed under s 34 and it has been examined, which may involve test growing of the variety (s 37). Third parties may object to the grant of PBR in respect of any application that has been accepted (s 35). Once the detailed description has been filed, however, if the Registrar 830 [16.100]

Plant Breeder’s Rights

CHAPTER 16

considers that the plant variety meets the requirements for registrability (see [16.50]) PBR must be granted in respect of the variety (s 44).

EXCLUSIVE PROTECTION [16.130] Plant Breeder’s Rights Act 1994 (Cth) s 44 concerns the granting of exclusive

protection under the Act. It is mechanistic, providing that:

Plant Breeder’s Rights Act 1994 (Cth) [16.140] Plant Breeder’s Rights Act 1994 (Cth) s 44(1) 44 Grant of PBR (1) If: (a) an application for PBR in a plant variety is accepted; and (b) after examining the application (including the subsequent detailed description) and any objection to the application, the Secretary is, or continues to be, satisfied that: (i) there is such a variety; and (ii) the variety is a registrable plant variety within the meaning of section 43; and (iii) the applicant is entitled to make the application; and (iv) the grant of that right is not prohibited by this Act; and (v) that right has not been granted to another person; and (vi) the name of the variety complies with section 27; and (vii) propagating material of that variety has been deposited for storage, at the expense of the applicant, in a genetic resource centre approved by the Secretary; and (viii) if the Secretary so requires, a satisfactory specimen plant of the variety has been supplied to the herbarium; and (ix) all fees payable under this Act in respect of the application, examination and grant have been paid; the Secretary must grant that right to the applicant.

[16.150] If an application for PBR in a plant variety is accepted, and the plant variety is a variety of a species indigenous to Australia, under Plant Breeder’s Rights Act 1994 (Cth) s 44(2) the Secretary of the Department that includes IP Australia (and thus administers the Act, including control of the Register) must require that a satisfactory specimen of the indigenous plant variety be supplied to the herbarium that is declared under the Act to be the repository used by IP Australia, which is the Australian Cultivar Registration Authority.

INFRINGEMENT AND EXCEPTIONS Infringement [16.160] Subject to the exceptions highlighted below, Plant Breeder’s Rights Act 1994 (Cth) s 45 grants the registrant exclusive rights. Infringement is identified in s 53 as comprising: [16.160]

831

Intellectual Property: Commentary and Materials

(a)

a person doing, without, or otherwise than in accordance with, authorisation from the grantee of the right, an act referred to in a paragraph of section 11 in respect of the variety or of a dependent variety; or

(b)

a person claiming, without, or otherwise than in accordance with, authorisation from the grantee of that right, the right to do an act referred to in a paragraph of section 11 in respect of that variety or of a dependent variety; or a person using a name of the variety that is entered in the Register in relation to: (i) any other plant variety of the same plant class; or

(c)

(ii) a plant of any other variety of the same plant class. Under s 55, a defendant in an action for infringement of PBR in a plant variety may apply, by way of counterclaim, for revocation of that right on the ground that the variety was not a new plant variety or that facts exist that would have resulted in the refusal of the grant of that right if they had been known to the Secretary before the grant of that right.

Exceptions [16.170] Certain acts done for private, experimental or breeding purposes do not infringe PBR. Under Plant Breeder’s Rights Act 1994 (Cth) s 16, there is no infringement through: Any act done in relation to a plant variety covered by PBR that is done: (a) privately and for non-commercial purposes; or (b) for experimental purposes; or (c) for the purpose of breeding other plant varieties; …

Section 17 provides that conditioning (ie, cleaning, coating, sorting or packaging) and reproduction of farm-saved seed or other propagating material does not infringe PBR if: (a)

a person engaged in farming activities legitimately obtains propagating material of a plant variety covered by PBR either by purchase or by previous operation of this section, for use in such activities; and

(b)

the person subsequently harvests further propagating material from plants grown from that first-mentioned propagating material. In practice, use of the variety might be restricted by contract. 14 [16.180] The scope of the Plant Breeder’s Rights Act 1994 (Cth) is identified by the High

Court in Grain Pool of WA v Commonwealth of Australia (2000) 202 CLR 479; 170 ALR 111; 46 IPR 51, in the extract from the case below.

Grain Pool of WA v Commonwealth [16.190] Grain Pool of WA v Commonwealth of Australia (2000) 202 CLR 479; 170 ALR 111; 46 IPR 51 High Court of Australia 65. A plant variety can only be registrable if the variety has not been exploited or has only been “recently exploited” (s 43(1)(e)). A plant variety will be taken not to have been exploited if, at the application date, there has been no sale by or with consent of the breeder of propagating or harvested material of the variety (s 43(5)). Sub-section (6) of the same section gives content to the notion of 14

Note also Plant Breeder’s Rights Act 1994 (Cth) s 18, which provides that there is no grounds for action by a grantee where a person is authorised by or under a law of the Commonwealth or of a State or Territory to do an act referred to in a paragraph of s 11 in relation to propagating material of a plant variety.

832 [16.170]

Plant Breeder’s Rights

CHAPTER 16

Grain Pool of WA v Commonwealth cont. “recent exploitation”. It requires an inquiry as to whether more than one year before the application date “propagating or harvested material of the variety” has been sold in Australia to another person by or with consent of the breeder. A period of four years applies (and six years in the case of trees or vines) where the sale takes place in the territory of a foreign State or intergovernmental organisation that is a party to the Convention as that term is defined in s 3(1). 66. Further, the plant variety must be “distinct”, that is to say “clearly distinguishable from any other variety whose existence is a matter of common knowledge” (s 43(1)(b), (2)). The plant variety for which application is made must have a “breeder” (s 43(1)(a)) and the application must be made by the breeder (s 24(1)) or an assignee (ss 25, 26(2)). 67. In that regard, s 5(1) states: A reference in this Act to breeding, in relation to a new plant variety, includes a reference to the discovery of a plant together with its use in selective propagation so as to enable the development of the new plant variety. In addition, there is a definition in s 3(1) of “breeder” which is stated to be “in relation to a new plant variety”. At its simplest level, the definition means that, if the variety was bred by one person who was not acting as a member or employee of a body, that person is the breeder. 68. The defendant in any infringement action may seek revocation on the ground that the variety was not a new plant variety (s 54(2)(a)). There is no definition of the phrase “new plant variety”, although it appears in this section as well as in s 5(1) and in the definition of “breeder” in s 3(1). However, these provisions are drawn into the requirements for registrability found in s 43(1). This is true, in particular, of the requirement in par (a) of s 43(1) that the variety have a “breeder”. This plus the requirements in par (b) of s 43(1) that the variety be “distinct” and that it not have been exploited or have only recently been exploited (par (e)) are sufficient for the constitutional requirement of “novelty”.

JURISDICTION AND REMEDIES [16.200] Jurisdiction to hear matters arising under the Plant Breeder’s Rights Act 1994 (Cth)

is given to the prescribed court by s 56, being the Federal Court of Australia. Remedies under s 56(3) may include injunction, damages or account of profits, but are not limited to these forms of relief. Under s 57(1), the court may reduce or refuse to award damages if the defendant satisfies the court that, at the time of the infringement, he or she was not aware of, and had no reasonable grounds for suspecting, the existence of the right. 15

INTERNATIONAL PROTECTION [16.210] Australia is a member of the 1961 International Convention for the Protection of New Varieties of Plants (UPOV Convention). Article 4 of the UPOV Convention provides for “national treatment”, whereby nationals of a party to the Convention shall, insofar as the grant and protection of plant breeders’ rights are concerned, enjoy within the territory of each other party to the Convention the same treatment as is accorded to its own nationals. 15

Note, however, Plant Breeder’s Rights Act 1994 (Cth) s 57(2), which provides that if the propagating material labelled so as to indicate that PBR is held in the variety in Australia has been sold to a substantial extent before the date of infringement, the person against whom the action is brought is taken to have been aware of the existence of PBR in the variety, unless the contrary is established [16.210]

833

Intellectual Property: Commentary and Materials

PBR AND PATENTS [16.220] The Plant Breeder’s Rights Act 1994 (Cth) coexists with the Patents Act 1990 (Cth),

with a plant variety, in principle, being capable of gaining protection under both statutes; for example, because breeding involves innovation, it could be protected through a gene patent. The definition of “plant variety” (Plant Breeder’s Rights Act 1994 (Cth) s 3) specifically includes genetically modified and transgenic plant groupings, with s 6 indicating that: For the purposes of this Act, an organism may be treated as constituting a plant grouping within a single botanical taxon despite the fact that the genome of the plants in that plant grouping has been altered by the introduction of genetic material that is not from plants.

834 [16.220]

SPECIAL TOPICS PROPERTY

IN

INTELLECTUAL

PART6

CHAPTER 17 Indigenous Cultural and Intellectual Property [17.10]

INTRODUCTION .................................................................................................... 837

[17.20] [17.30] [17.40] [17.50] [17.60] [17.70]

THE CURRENT LEGAL PROTECTION ENVIRONMENT ....................................... 839 Copyright and neighbouring rights ..................................................................... 840 Statutory Recognition ........................................................................................... 842 Trade marks and designs ...................................................................................... 843 Patents .................................................................................................................... 847 Case law involving Indigenous cultural intellectual property rights ................. 848 [17.80] [17.90] [17.100] [17.110] [17.120]

[17.180] [17.190]

Foster v Mountford and Rigby Ltd .......................................... Yumbulul v Reserve Bank of Australia ...................................... Milpurrurru and Ors v Indofurn Pty Ltd ................................... Bulun Bulun v R & T Textiles Pty Ltd ........................................ Australian Competition and Consumer Commission v Australian Dreamtime Creations ............................................ [17.140] ACCC v Nooravi .................................................................... [17.160] The Wandjinas Case .............................................................. [17.170] Patents, biodiversity and access to genetic resources ................ Convention on Biological Diversity ...................................................................... The Australian Context .......................................................................................... [17.200] Environment Protection and Biodiversity Protection Act 1999 (Cth) ........................................................................... [17.210] Northern Territory Biological Resources Act 2006 (NT) ............. [17.220] The Kakadu Plum Patent ....................................................... [17.230] Compositions Comprising Kakadu Plum Extract Or Acai Berry Extract .........................................................................

848 850 851 851 855 856 856 857 858 859 859 859 860 861

[17.240] WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO) ........................... 862

[17.270] [17.280] [17.290] [17.300] [17.310] [17.320]

[17.250] World Intellectual Property Organisation ................................. 863 [17.260] Sui Generis laws v Amendments to Current Laws ..................... 864 Trade Marks ............................................................................................................ 866 Certification marks ................................................................................................. 867 Geographical indications ...................................................................................... 867 Patents .................................................................................................................... 867 Native Title and Cultural Heritage ....................................................................... 867 Concluding remarks: where to from here? ......................................................... 869

INTRODUCTION [17.10] This chapter examines the extent to which Australian law protects expressions of

traditional knowledge, cultural heritage, Indigenous cultural rights, folklore, traditional cultural expressions (or by any other name they might be known and acknowledged). In the international context, traditional knowledge and cultural heritage are arguably the terms more commonly used.

[17.10]

837

Intellectual Property: Commentary and Materials

A number of descriptions for traditional knowledge, folklore and cultural heritage have been advanced, but there are no universal definitions. 1 This is as much a reflection of the broad scope of what may be encompassed within their bounds, as well uncertainty what might constitute “protection” and its purpose. What seems a common consensus is that “protection” in the narrow intellectual property sense does not address the needs or scope of these concepts, even allowing for differences in their possible definitions. In Australia, the term “Indigenous cultural and intellectual property rights” (ICIP rights) has become the generally accepted term of use, since “traditional knowledge” is not regarded as sufficiently encompassing and descriptive. Consequently, that is the term that is used in this chapter when referring to the Australian context. Terri Janke defines Indigenous cultural and intellectual property as the rights of Indigenous Australians to their heritage. 2 Heritage consists of intangible and tangible aspects of the whole body of cultural practices, resources and knowledge systems developed, nurtured and refined by Indigenous people and passed on by them as part of expressing their cultural identity. Further, indigenous cultural and intellectual property rights have been characterised as including the right of Indigenous people to: • define what constitutes Indigenous cultural and intellectual property; • own and control Indigenous cultural and intellectual property; • be recognised as the primary guardians and interpreters of their cultures; • authorise the use of Indigenous cultural and intellectual property according to indigenous customary law; and • be given full and proper attribution for sharing their heritage. Whatever precise terminology employed in differing arenas, there nevertheless is broad consensus that traditional knowledge, folklore, cultural heritage or ICIP are complex, multifaceted concepts encompassing many elements. They are characterised by the fact that, generally, they are not produced systematically primarily with an exploitative or commercial outcome as an objective, but in accordance with the individual or collective creators’ responses to and interaction with their socio-cultural and historical environment. As representatives or expressions of cultural/religious values, they may constitute elements that integrate a vast and mostly coherent complex of beliefs and knowledge. More than likely, ICIP rights are held collectively, being vested in the community rather than in individuals (although individuals as leaders or elders will hold them in trust). Furthermore, most traditional knowledge, folklore and cultural heritage are transmitted orally from generation to generation, and thus remain largely undocumented. What can be sometimes perceived as an isolated piece of artistic creativity literature (a story, for example) or an individual technical invention (the use of a plant resource to heal wounds, for instance) is actually an element that integrates a vast and mostly coherent complex of beliefs and 1

WIPO currently uses the term “traditional knowledge” to refer to tradition-based literary, artistic or scientific works; performances; inventions; scientific discoveries; designs; marks, names and symbols; undisclosed information; and all other tradition-based innovations and creations resulting from intellectual activity in the industrial, scientific, literary or artistic fields. “Tradition-based” refers to knowledge systems, creations, innovations and cultural expressions which: have generally been transmitted from generation to generation; are generally regarded as pertaining to a particular people or its territory; and are constantly evolving in response to a changing environment.

2

See Janke T, “Indigenous Intellectual Property and Indigenous Cultural Heritage”, in McCrae et al, Indigenous Legal Issues: Commentary and Materials, (4th ed, Michael Frankel & Co, 1999).

838 [17.10]

Indigenous Cultural and Intellectual Property

CHAPTER 17

knowledge, the control of which is not in the hands of individuals who use isolated pieces of knowledge, but rather is vested in the community or collective. They are also dynamic in the sense that they are current, possess everyday relevance, and are subject to processes of constant evolution. There are a veritable host of treaties, conventions and protocols which impose moral or legal obligations upon their signatory member states to acknowledge and protect the states’ Indigenous cultural heritage, traditional knowledge, folklore and natural resources, and to respect the heritages of signatory states. Australia has acceded to some of these treaties, but to others it has taken no action or has declined to accede. The United Nations Declaration on the Rights of Indigenous Peoples, for example states at article 11 that: (1) Indigenous peoples have the right to practise and revitalize their cultural traditions and customs. This includes the right to maintain, protect and develop the past, present and future manifestations of their cultures, such as archaeological and historical sites, artefacts, designs, ceremonies, technologies and visual and performing arts and literature.

It also requires signatory states to provide redress through effective mechanisms, which may include restitution, developed in conjunction with indigenous peoples, with respect to their cultural, intellectual, religious and spiritual property taken without their free, prior and informed consent or in violation of their laws, traditions and customs. Article 31 declares in similar vein that: (1) Indigenous peoples have the right to maintain, control, protect and develop their cultural heritage, traditional knowledge and traditional cultural expressions, as well as the manifestations of their sciences, technologies and cultures, including human and genetic resources, seeds, medicines, knowledge of the properties of fauna and flora, oral traditions, literatures, designs, sports and traditional games and visual and performing arts. They also have the right to maintain, control, protect and develop their intellectual property over such cultural heritage, traditional knowledge and traditional cultural expressions.

It also requires signatory states to take effective measures, in conjunction with indigenous peoples, to recognise and protect the exercise of those rights. As the first and still primary multilateral benchmark on intellectual property rights, the WTO’s TRIPS Agreement still determines the characteristic nature of intellectual property protection and is still incorporated into regional and bilateral agreements with intellectual property chapters. The dominant feature of the TRIPS Agreement is that, to be protectable as intellectual property, a right must be private in nature and ascribable, identifiable, and commercially exploitable. Issues or rights that do not fit within this framework – notably traditional knowledge in the broadest sense – enjoy little, if any, of the protection offered by TRIPS, the TRIPS-plus treaties and the bilateral agreements. In essence, they suffer a TRIPS-minus protection environment. Accordingly, existing intellectual property mechanisms, which are intended to function in a trade-related, private protectionist context, do not fully respond to the essential nature of traditional knowledge, folklore and cultural heritage.

THE CURRENT LEGAL PROTECTION ENVIRONMENT [17.20] The main obstacle militating against effective and just protection of Indigenous

knowledge is that the creative work, invention or knowledge must still fit in with western conceptions of IP in general and copyright in particular, and the legislative structures which [17.20]

839

Intellectual Property: Commentary and Materials

develop from it. In short, these conceptions and legislative structures are fixated on personal property rights, which are often incongruous with the communitarian conceptions underlying traditional knowledge and cultural heritage. For instance, copyright mechanisms which are intended to function in a trade-related, private protectionist context, do not adequately respond to the essential nature of traditional knowledge and cultural heritage. The Copyright Act 1968 (Cth) and other intellectual property protection laws still require a copyrighted work or creation to be in material form, to belong to an identifiable individual or group of individuals, and to be independently created rather than derived.

Copyright and neighbouring rights [17.30] The Copyright Act 1968 (Cth) provides a specific set of rights to creators of literary

and artistic works in a range of mediums, such as written, performance affixed, electronic and so forth. However, to enjoy those rights and to obtain protection for the work from unauthorised exploitation by others that those rights bring, a work must meet certain criteria. It must also accept certain limitations to those rights. The Act does not make any special provision for recognition of the unique characteristics that pertain to Indigenous intellectual property creations or to grant them special attention. They are in effect not distinguished in any way from creative works of art from artists or creators from society at large. So while the Act protects the creative works of Indigenous artists and craft practitioners and performers to the same extent and in the same way that it protects material created by non-Indigenous artists. However, there are gaps between the protection given to cultural material under the Australian legal system, and the rights and obligations in relation to cultural material under Indigenous customary law. Some of these gaps include: Originality

For copyright to exist in a work, the work must be original. This may pose problems for Indigenous art works. As a continuing expression of culture, many Indigenous people draw on their cultural heritage by, for example, painting pre-existing clan designs which have been handed down from their ancestors. It is this nature of Indigenous art that has raised the question of whether a new Aboriginal work, based on, or derived from, a traditional pre-existing theme, could satisfy the copyright requirement of originality. Material form

A work must be written down or recorded in some permanent, tangible form. Some forms of Indigenous art are ephemeral such as body painting and sand paintings. These may not be protected under copyright. Identifiable author

There must be an identifiable author, or authors, for copyright to exist in a work. Given the nature of Indigenous art an individual person or persons may not always be identifiable. For example, in rock art painting it may not be possible to identify a single artist or group of artists for which copyright can be claimed. Styles, methods

Copyright protection does not protect styles, methods or ideas. By way of contrast, Indigenous communities generally recognise ongoing rights in relation to particular images and styles. Duration

The duration of copyright protection in Australian is generally the life of the artist plus 70 years. The Act does not recognise any continuing right of Indigenous custodians to their 840 [17.30]

Indigenous Cultural and Intellectual Property

CHAPTER 17

ICIP rights after the term of copyright protection has expired. Yet cultural works remain part of an Indigenous group’s culture and are of great significance to their traditional custodians in perpetuity. Hence, the current time limit on copyright protection is inconsistent with Indigenous concepts of cultural heritage and traditional knowledge. These requirements mean that some important forms of ICIP have not gained, or cannot gain, IP protection. For example, the traditional custodians of areas in which rock art occurs cannot assert copyright over the rock art because they cannot identify an individual creator or artist; and/or because the art was created so long ago that it no longer fits within copyright protection timeframes. By the same token, orally transmitted folklore or heritage passed down over generations will find it difficult to gain copyright protection because they have not been reduced to fixed, material or reproducible form. Other issues

Other issues arise where a third party is responsible for reducing the traditional knowledge to material form. The operation of copyright law may provide some protection for traditional knowledge custodians where they are also owners of copyright in the work. However, it can also operate to create difficulties over ownership of traditional knowledge. The act of recording in writing or on tape an oral tradition may give the recorder a legally enforceable right to the copyright of that recording, either as the author of a literary work or as a producer or publisher. This though may well create further problems where such transmission may be contrary to tradition and practice. A useful illustration of these difficulties is provided by the case of the Wik Apalech dancers from Cape York. In 1995, a commercial photographer had taken unauthorised photos of Wik Apalech dancers in ceremonial dress at the Laura Aboriginal Dance and Cultural Festival These photographs were then reproduced on CDs, postcards, cassettes, and an associated website. The offence here lay in the fact that only certain members of the Wik Apalech community (namely, those with appropriate status) could authorise the reproduction of these images. Pursuant to copyright law, the Wik Apalech dancers could do little – they had not taken the photo (and thus they were not the owners); the protection offered by performers’ rights most likely does not extend to unauthorised photos (or audiovisual recordings); the dancers’ body painting lack a sufficient degree of permanence to qualify for protection as an artistic work etc. The stronger claim arguably lay in actions for passing off and misleading and deceptive conduct. Despite these limitations in the law, the matter – with the assistance of the Cape York Land Council – was ultimately resolved by negotiation: the sensitive cultural material was removed from the relevant products, the website, and was no longer circulated. In a similar way to the insensitive treatment to the Wik Apalech dancers above, Indigenous art has often been commercially exploited in ways that are particularly offensive to Indigenous peoples, who attach sacred significance to much of their art. In the past, Indigenous artists and communities have had considerable difficulty taking copyright infringement actions. However, there have been a few recent successes by Indigenous communities or their representatives, with the Copyright Act 1968 (Cth) being used by Indigenous artists to stop the misappropriation of their work and of the underlying traditional knowledge embodied in the work. See Milpurrurru v Indofurn Pty Ltd (1994) 30 IPR 209 (the Carpets case), in which Indigenous artists brought legal action against a company that had reproduced their artworks on carpets and sold them without the artists’ permission (below at [17.100]). A particular emphasis of the complainants’ case was that the works were particularly important [17.30]

841

Intellectual Property: Commentary and Materials

expressions of the community’s Indigenous culture and that they had serious responsibilities within their community to ensure that knowledge was only used in appropriate ways. Similar concerns were expressed to the court in Bulun Bulun v R & T Textiles Pty Ltd (1998) 86 FCR 244 (below at [17.110]).

Statutory Recognition [17.40] Australian intellectual property legislation does not formally acknowledge Indigenous

cultural heritage and knowledge. The term “Indigenous”, for example, does not rate a mention in the Copyright Act 1968 (Cth), Patents Act 1990 (Cth), Designs Act 2003 (Cth), or the Trade Marks Act 1995 (Cth). The Copyright Act mentions the generally discarded term “folklore” in the context of being included in the description of “live performance” (ss 22(7)(f), 84 & 248A(1)) as consequences of agreed changes to Australia’s intellectual property protection environment arising out of the Australia-United States Free Trade Agreement. But it does not mention either of the more widely recognised terms in the international context of “traditional knowledge” or “cultural heritage”. The Resale Royalty Right for Visual Artists Act 2010 (Cth), which came into force in June 2010, was espoused by the Commonwealth Government as providing a new level of equitable economic return and protection for indigenous artists as well as visual artists generally. The Act provides for a resale royalty of 5% to be payable on works of art with a minimum qualifying threshold of $1000 (including GST). However, for works already in existence the royalty does not apply until the second time the work is sold after the date the Act came into force. For all future works yet to be created the royalty applies on the first resale. The royalty only applies to commercial resales through art market professionals – that is essentially those conducted through and by art galleries and auctioneers. The Act does not draw a distinction between non-Indigenous and Indigenous art, with the word “Indigenous” appearing only once in the whole of the Act. Nor does it contain special provisions, protections or exemptions to give particular redress to the perceived particular exploitation of Indigenous artists. It was argued before the Parliamentary Committee that, in order to ensure that benefits of the resale royalty are spread as widely as possible across the Indigenous arts community, the first resale exemption of clause 11 should be removed, and the threshold reduced to $500. Both these initiatives would no doubt be beneficial to Indigenous arts communities. Based on auction house sales figures for the first half of 2008, if both these initiatives had been adopted and the resale royalty scheme had been operating during that period, the scheme would have delivered $3 million worth of resale royalties for 800 artists. Of these, 30% of the recipients would have been Indigenous (Coalition for an Australian Resale Royalty (CARR). While the Act has been generally welcomed by the art community, studies conducted by Access Economics and submitted to the Senate enquiry during 2008 on the draft Bill indicated that the average resale turnover rate of works of art on the Australian market is in the region of once every 14 years. However, according to the Copyright Agency Limited, the collection society appointed under the Act to manage the artists’ resale royalty scheme, the scheme has returned benefits to Indigenous artists. Since its commencement in June 2010 until 30 June 2016, the scheme has generated more than $4.3million in royalties from almost 13,000 sales for more than 1,200 842 [17.40]

Indigenous Cultural and Intellectual Property

CHAPTER 17

artists. 3 Most royalties have been between $50 and $500, with the highest royalty being $55,000. Over 65% of the artists receiving royalties are Aboriginal or Torres Strait Islander artists, who have received 38% of the total royalties. Of the top 50 artists who have received most money under the scheme, 22 are Aboriginal or Torres Strait Islander. Most artists have received one or two royalty payments, but some have received multiple payments.

Trade marks and designs [17.50] The limitations to protection of Indigenous culture under the Copyright Act 1968

(Cth) can also be found to a greater extent under the trade marks and designs laws. The Trade Marks Act 1995 (Cth) defines a trade mark as a sign used or intended to be used in the course of trade to distinguish the goods and services of a trader from the goods and services of other traders (s 17). Trade marks must be duly registered to be protected under the Act. Trade marks are personal property (s 21) and can be licensed, assigned and transmitted. Once registered, the trade mark is protected for 10 years, which may be renewed, in sets of 10 years, for as long as the registration is kept current.

Figure 17.1 KYANA ABORIGINAL CULTURAL FESITIVAL mark

Hence, with ongoing registration, trade marks can be used to protect Indigenous cultural material for longer periods of time, even beyond the copyright period – this feature of trade marks law makes it more flexible than copyright, designs and patents for protecting Indigenous rights because the problem of the public domain may be avoided. However, a major limitation is that the protection comes only in respect of goods and services in the course of trade. Generally speaking, goods or services not so used cannot be protected under the Act. There is a growing trend of Indigenous businesses and organisations securing registration of Indigenous words and designs, and Indigenous themes. For instance, since 11 November 1998, the Keringke Arts Aboriginal Corporation has enjoyed registration over the KERGINGKE ARTS device mark (TM No 777943) for various goods in Classes 24 and 25. An endorsement notes that KERINGKE is the Arrente word for “KANGAROO TRACKS”. Though many

3

Copyright Agency Limited, “Resale Royalty”, at http://www.resaleroyalty.org.au [17.50]

843

Intellectual Property: Commentary and Materials

other such marks are now defunct, 4 others, such as the KYANA ABORIGINAL CULTURAL FESITIVAL device mark (Figure 17.1 above) have demonstrated remarkable longevity. 5 The Trade Marks Act allows third parties to oppose the registration of a trade mark. Grounds for opposition include that the trade mark does not distinguish the applicant’s goods and services from the goods and services of others (s 41); is scandalous or contrary to law (s 42); or is likely to deceive or cause confusion (s 43). Indigenous communities may be able to make use of the restrictive provisions under the Trade Marks Act 1995 (Cth) to challenge culturally offensive trade marks that are scandalous or contrary to law, an example of which is drawn from the NSW Colonial Trade Mark Register in the late 19th century (Figure 17.2).

Figure 17.2 A Dry Gin Trade Mark (1897) Class 43 (Fermented Liquors and Spirits)

This device mark is clearly offensive by today’s standards, and has always been so, even if historically this may have not been recognised as such. The word “gin” here not only refers to the trader’s alcoholic drink, but it also refers to the dated, racist and pejorative reference to an Indigenous woman. Although the case law and practice adopts inconsistent and indeterminate standards, it appears as though wider community standards are often considered in respect of 4

5

See, for example, the defunct National Indigenous Arts Advocacy Association’s (now lapsed) word mark SURVIVAL CONCERT in Class 41 (Entertainment services, being an annual National Indigenous concert and fair). TM No 561294 is registered in across all goods in Class 16.

844 [17.50]

Indigenous Cultural and Intellectual Property

CHAPTER 17

what might be constitutes “scandalous” (see more generally Chapter 13). See further Kirby J in Western Australia v Ward (2000) 99 FCR 316. There is a similar prohibition against the registration of scandalous designs under Australia’s design registration system brought about by the combined effect of s 43(1)(a) of the Designs Act 2003 (Cth) 6 and reg 4.06(d) of the Design Regulations 2004 (Cth). The latter provision provides that the Registrar must refuse the registration of “designs that are scandalous, or might reasonably be taken to be scandalous”. This prohibition has long been part of the Australian regulatory landscape, and may even be traced back to first colonial statute affording designs registration. 7 Notwithstanding this history, this prohibition did not attract any significant discussion in the Australian Law Reform Commission’s recent report on Australia’s designs registration system. 8 The relevant jurisprudence and practice manuals also offer limited guidance on the meaning of scandalous designs. The current Designs Examiner’s Manual, 9 for instance, states that the intervention of the Deputy Registrar is required “where the question of the design being scandalous is a serious consideration”; 10 whatever that means. We are also told that designs may fall foul of this prohibition if it contains “material which is shocking, defamatory or offensive to the public or an individual’s sense of propriety or morality”. 11 Historically, much like the situation in trade mark law, the misappropriation of Otherness has not been considered problematic in securing Australian design protection. Indigenous Australians, for example, have once more been the target of commodification as shown in Figure 17.3 below, where one of the relevant representations accompanying the application for Australian Registered Design No 35405 is reproduced. 12 Misappropriation of Others, and the invocation of colonial imagery is unfortunately not yet eradicated in the fashion industry as evidenced by Dolce & Gabana’s 2012 line of earrings which can only be described as a “racist [and dehumanising] caricature of a black woman”. 13

6

7 8

9 10 11

12 13

Specifically, s 43(1) of the Designs Act 2003 (Cth) provides that the Registrar of Designs must refuse to register certain designs if (a) the design is a design, or belongs to a class of designs, prescribed by the regulations for the purposes of this paragraph. See, for instance, the Copyright Act 1869 (Vic), s 51. There was a passing reference to the proposed EC Council Regulation that permitted opposition of a registered design “on the ground that exploitation of the design would be contrary to public policy or accepted principles of morality…”: see Australian Law Reform Commission, Designs, Report No 74 (1995) [11.12] fn 909 (citations omitted). Designs Examiners’ Manual of Practice and Procedure, July 2010 (“Designs Examiner’s Manual”). Designs Examiners’ Manual of Practice and Procedure, July 2010, Pt 2, Ch 5, [D05.6] (emphasis added). Designs Examiners’ Manual of Practice and Procedure, July 2010, Pt 1, Ch 8, [8.3]. The relevant paragraph goes on to advise that, if in doubt, further guidance should be sought from a supervisor. See further Pt 2, Ch 5, D05.6. Australian Registered Design No 35405. A note of appreciation for this reference must go to David Yandell of the State Library of Victoria. S Ilyas, “Did Dolce & Gabbana Send Racist Earrings Down the Catwalk”, The Guardian (online), (26 September 2012) http://www.guardian.co.uk/fashion/fashion-blog/2012/sep/26/dolce-gabbana-racistearrings. See also R Hopkins, “Victoria’s Secret’s Racist Garbage Is Just Asking for a Boycott”, American Renaissance (online) (12 November 2012) http://www.amren.com/news/2012/11/victorias-secrets-racistgarbage-is-just-asking-for-a-boycott. A note of appreciation for these references must go to Kimberlee Weatherall. [17.50]

845

Intellectual Property: Commentary and Materials

Figure 17.3 Abram Miller’s “Costume Jewellery Set” (5 June 1956)

In determining the registrability of scandalous designs, decision-makers borrow heavily from trade mark law. Not only are the form of words that positively define scandalous trade marks relied on here, but the Designs Examiner’s Manual appears to borrow other elements of the [Trade Mark] Manual such as the amorphous “standard of morality or propriety … to be applied” in answering this question. 14 The Designs Examiner’s Manual further stipulates that this ground for revocation is only a matter of concern when: • The design would be viewed as scandalous to the great majority of the Australian community (eg child pornography); • The design would be viewed as scandalous to a minor portion of the community, and it promotes racial or other types of discrimination; or • The design contains material that is likely to be libellous or defamatory. 15 The tautology in the Designs Examiner’s Manual demonstrated above is not helped by the explanatory comment that immediately follows. That comment, for instance, merely expresses the trouble involved in compiling a “comprehensive list of illustrative examples”, especially where the subject design is “ambiguous” or only disturbs a “portion of society”. 16 Attempts to clarify the threshold that triggers the application of this prohibition, such as by emphasising that the prohibition “extends to designs that might reasonably be taken to be scandalous”, 17 only serve to demonstrate further circularity in thought. This puzzling incoherence demonstrates a comparable, and probably worse, degree of indeterminacy than under the official guidance offered in relation to s 42(a) of the Trade Marks Act 1995 (Cth) (see Chapter 13, especially [13.500]). In fairness, however, the Designs Examiner’s Manual

14

15

Designs Examiners’ Manual of Practice and Procedure, 20 September 2013, Pt 2, Ch 5, [D05.6]. For example, it is acknowledged that “a design might be viewed as highly offensive to some sections of Australian society, and quite acceptable to others”. But note IP Australia maintain the unconvincing position in trade mark law that deciding the scandalousness of an applied-for mark is not linked to questions of morality. Designs Examiners’ Manual of Practice and Procedure, (20 September 2013), Pt 2, Ch 5, [D05.6].

16 17

Designs Examiners’ Manual of Practice and Procedure, (20 September 2013), Pt 2, Ch 5, [D05.6]. Designs Examiners’ Manual of Practice and Procedure, (20 September 2013), Pt 2, Ch 5, [D05.6].

846 [17.50]

Indigenous Cultural and Intellectual Property

CHAPTER 17

provides some practical guidance by pointing out that the “informed user” concept 18 is irrelevant in settling the “test of a scandalous design” and that careful attention should be paid to the “nature of the product” as well as its intended use before a determination is made on this ground. 19 More broadly, the Designs Act 2003 (Cth) defines a design as follows: “Design” in relation to a product, means the overall appearance of the product resulting from one or more visual features of the product.

Hence, a design can only be registered in relation to a “product” – it is not possible to register a design itself (although it possible to do so under the Copyright Act 1968 (Cth) as an artistic work). A “product” is “a thing manufactured or hand made”. To qualify for protection as a design, in contrast to a copyrighted work, requires the product to be intended to be produced in commercial qualities. Designs must be registered to be protected and are protectable for a limited period of up to 10 years. Once design protection expires, the registered designs enter the public domain are able to be used by any other party. The laws of designs protect designs as they are applied to products and items. Under Indigenous customary laws, a design or motif belongs to a certain Indigenous cultural group, and there are laws that govern who can access, use and reproduce this material. The designs law applies to Indigenous designs as it does to all designs that meet the requirements for protection. There is, however, no special protection for Indigenous designs or cultural material under the Designs Act 2003 (Cth). Certain Indigenous designs such as clan insignia may not be commercially applied to a product, and therefore are not registrable as a design under the Act (s 18). The limited term of protection for designs limits the rights of Indigenous cultural custodians to control the use of their sacred motifs or clan identified designs outside this period. Once the period has expired, any person, either inside or outside a cultural group, can conceivably use an indigenous motif or design without seeking proper consent under customary law, as far as the Designs Act 2003 (Cth) is concerned. Under the Act, generally, the person who creates the design or a person who employs the creator may register a design. There is no recognition of the communal ownership of the design as belonging to a cultural group or groups which is more applicable to Indigenous groups and communities.

Patents [17.60] A patent is a right granted for a device, substance, method or process that a person

has invented that is new when compared with what is already known. The right so granted is actually a right to exclude others from exploiting or otherwise using the invention. On expiry of the specified time, the protection ceases, the invention falls into the public domain, and others may utilise or exploit it. 18

19

For a useful summary of the attributes of this hypothetical informed user, see M Vitoria et al, Laddie, Prescott and Vitoria: The Modern Law of Copyright and Designs (4th ed, 2011), [60.10]–[60.12] and L Bently and B Sherman, Intellectual Property Law (3rd ed, 2009), 648–9. Designs Examiners’ Manual of Practice and Procedure, (20 September 2013), Pt 2, Ch 5, [D05.6]. The comment clarifies that designs that may appear scandalous if used outside its proper environment (eg medical devices) ought to be registered, whereas designs that have a scandalous appearance for the sole purpose of “provok[ing] a reaction” ought to be denied registration. The Designs Examiner’s Manual also references parallel provisions in trade marks and patent law. [17.60]

847

Intellectual Property: Commentary and Materials

The Patents Act 1990 (Cth) s 18(1) defines a patentable invention as: (a) a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and (b) when compared with the prior art base as it existed before the priority date of that claim: (i) is novel; and (ii) involves an inventive step; and (c) is useful; and (d) was not secretly used in the patent area before the priority date of the claim by, or on behalf of, or with the authority of, the patentee or nominated person …

“Novel” generally means the invention should be recent and original, but most importantly it should not already be in the public domain. “Public domain” is not defined in the Act. The testing of novelty is essentially a quantitative matter (has sufficient information been previously disclosed so as to anticipate the applicant’s invention?), the inventive step requirement demands a more “qualitative judgement”; that is, whether the invention, although new, is sufficiently different from what has gone before to embody an inventive step. “Useful” generally means some form of industrial application. This does not mean that the invention be commercially useful, but that it produces the result which the inventor has claimed in the application. Most importantly in this context, however, is that the Patents Act offers protection for an invention on the “first to file” principle – that is, the person who files an application for patent protection is deemed to be the inventor and the person entitled to the protection that the Act provides. This principle, as we shall see, poses serious difficulties to the protection of ICIP generally.

Case law involving Indigenous cultural intellectual property rights [17.70] The Australian situation is made particularly interesting by a number of instances in

which Aboriginal artists and/or communities have sued non-Aboriginal parties for unauthorised use and exploitation of their traditional symbols and artistic works under Australian copyright law. In some of these cases, the dialectic between customary Aboriginal protection and the formal IP system has been at the centre of legal debate and the court’s deliberations. While the following cases illustrate the development of a judicial environment moving towards protection, they also illustrate that ICIP protection parity with TRIPS has a long way to travel.

Foster v Mountford and Rigby Ltd [17.80] Foster v Mountford and Rigby Ltd (1976) 29 FLR 233; 14 ALR 71 Supreme Court of the Northern Territory This is an early case dealing with the protection of Indigenous culture and intellectual property and widely held as an exemplar of the protection of Indigenous secret and sacred business. 20 However, it should be noted that it proceeded under the general law of breach of confidence rather the Copyright Act 1968 (Cth) or one of its predecessor statutes. 20

For a fuller treatment of this significant early case on Indigenous customary rights to cultural secrecy and its intersectionality within the wider Australian legal system, see in particular Christoph Antons, “Foster v Mountford: Cultural Confidentiality in a Changing Australia” in Landmarks in Australian Intellectual Property Law (Cambridge University Press, 2009), 110–25.

848 [17.70]

Indigenous Cultural and Intellectual Property

CHAPTER 17

Foster v Mountford and Rigby Ltd cont. In Foster v Mountford and Rigby, members of the Pitjantjatjara Council on behalf of the Pitjantjatjara, Yankuntjatjara and Ngaanyatjara peoples in Central Australia sought and obtained an interlocutory injunction, based on breach of confidence, to restrain the publication in the Northern Territory of a book entitled Nomads of the Australian Desert, written by the anthropologist Charles Mountford. The book contained details and photographs of secret ceremonies of Central Australian Indigenous Australians that had been revealed to Mountford some 35 years earlier, during anthropological research that he had conducted in the region during the 1940s. The book was prefaced by a caveat that where Indigenous Australians were concerned the contents should be used only after consultation with local male religious leaders. The caveat in full read: “Where Australian aborigines [sic] are concerned, and in areas where traditional aboriginal [sic] religion is still significant, this book should be used only after consultation with local male religious leaders. This restriction is important; it is imposed because the concept of what is secret or may not be revealed to the uninitiated in aboriginal religious belief and action, varies considerably throughout the Australian Continent and because the varying views of aborigines [sic] in this respect must, on all occasions be observed”. The application was heard ex parte.] Muirhead J 3, 6 December 1976, Alice Springs (p 236) (4) The plaintiffs’ concern probably goes basically to the fact that the revelation of the secrets to their women, children and uninitiated men may undermine the social and religious stability of their hard-pressed community. Despite Dr Mountford’s prognosis that their life and beliefs “are so quickly vanishing”, there is still an urgent desire in these people to preserve those things, their lands and their identity, and the existence of the council itself illustrates these objectives. (5) The contention that the plaintiffs as individuals, and their people will suffer damage and dislocation if some sections of the book come into the hands of the uninitiated, is a consequence I cannot now ignore, not only because of one’s lay recognition gained by service in the Territory of the significance and purpose of initiation, but also because of the possible consequences of even accidental acquisition of knowledge of such matters by women and the uninitiated. (6) … The plaintiffs fear, so I am told, that damage may be caused by it coming into the wrong hands, and I find this is not without foundation. I accept the fact that the plaintiffs have a genuine fear that the book may further disrupt their social system, and that this fear is not based on fanciful grounds. Thus I find that the defendant, Mountford, many years ago, was shown things and places, and given information in confidence, by people, and on occasions which perhaps cannot now be identified, save in terms of general community, and in terms of period. I find the plaintiffs have (p 237) made out a prima facie case that these secrets may, by continuing publication of the book in the Northern Territory, be revealed to those to whom it was always understood it would not be revealed, and that continuance of such publication in the Northern Territory and of course perhaps elsewhere, may cause damage of a serious nature, damage of a type to which monetary damages are irrelevant, and which are not, in fact, claimed in this action.

[17.80]

849

Intellectual Property: Commentary and Materials

Yumbulul v Reserve Bank of Australia [17.90] Terry Yumbulul v Reserve Bank of Australia [1991] FCA 332; (1991) 21 IPR 481 Federal Court of Australia This was the trial of an action for damages for copyright infringement of an artistic work and misleading, deceptive or unconscionable conduct. In 1988, the Reserve Bank of Australia released a special $10 bank note to commemorate the first European settlement in Australia. The note incorporated elements of Aboriginal artworks including, in part, a reproduction of the design of a Morning Star Pole made by the applicant Terry Yumbulul in 1986. The court heard that Yumbulul had the right to make the Morning Star Pole for ceremonial purposes and also for sale to places such as museums in order to educate people. However, to do this he needed to make sure that the clan people involved, that is, the traditional owners and managers of the rights to the pole and the ceremony, knew what he was doing. The subject of mass reproduction of paintings and important objects was very sensitive because it took the ability and right to produce and supervise the production of these objects out of the hands of the Aboriginal people. Yumbulul had licensed the second respondent, the Aboriginal Artists Agency Ltd, which in turn had licensed the Reserve Bank to reproduce one of the applicant’s works on the new bank note. He contended that he was induced to sign the licence by misleading or deceptive conduct on the part of the Agency. The applicant alleged that the licence was invalid by reason of misrepresentation to him of the nature and the effect of the licence which he ultimately signed. In dismissing the action, French J held that: (i)

The applicant understood the general nature of the licence and that it went beyond merely conferring the right to inspect his works;

(ii)

There was no basis for concluding that the $1,000 licence fee was inadequate consideration because the licence was terminable by the applicant on three months notice.

(iii)

There was no basis for finding misleading or deceptive conduct or estoppel or unilateral mistake.

His Honour noted that: 23. The secondary case of misleading or deceptive conduct pleaded in paras. 22 and 23 of the statement of claim relied entirely on the proposition that there was no valid licence agreement in force at the time that the Agency entered into the sub-licence with the Reserve Bank of Australia. That proposition is not made out because the primary claims necessary to establish it, have not succeeded. I should add that insofar as any argument that the Agency was not authorised to grant the sub-licence it did to the Reserve Bank is dependent upon a limitation of the exclusive licence by reference to the words, “mechanical reproduction”, I am satisfied that that terminology is sufficiently wide to cover the rights conferred upon the Bank. 24. By its defence, the Agency invoked ss.65 and 68 of the Copyright Act 1968, contending that the Morning Star Pole is either a sculpture or a work of artistic craftsmanship on display other than temporarily at the Australian Museum. On this basis, it was said, the allegation that the Reserve Bank had infringed Mr Yumbulul’s copyright, and that the infringement was authorised by the Agency, could not be made out. In the event, it is not necessary for me to make any finding on the validity of this defence. But if it be correct, then it may be the case that some Aboriginal artists have laboured under a serious misapprehension as to the effect of public display upon their copyright in certain classes of works. This question and the question of statutory recognition of Aboriginal communal interests in the reproduction of sacred objects is a matter for consideration by law reformers and legislators. For what it is worth, I would add that it would be most unfortunate if Mr Yumbulul were to be the subject of continued criticism within the Aboriginal community for allowing the reproduction of the Morning Star Pole design on the commemorative banknote. The reproduction was, and 850 [17.90]

Indigenous Cultural and Intellectual Property

CHAPTER 17

Yumbulul v Reserve Bank of Australia cont. should be seen, as a mark of the high respect that has all too slowly developed in Australian society for the beauty and richness of Aboriginal culture. Yumbulul came under considerable criticism from his community for allowing the Reserve Bank to reproduce the Morning Star Pole on the $10 note. However, the Indigenous community did not have standing to take action in court to revoke the licence to the Reserve Bank because it was neither a copyright owner nor an exclusive licencee. The artist had standing but failed to have the licence revoked on the basis of misrepresentation, deceptive conduct and mistake.

Milpurrurru and Ors v Indofurn Pty Ltd [17.100] Milpurrurru v Indofurn (Pty) Ltd (1994) 54 FCR 240; 30 IPR 209 In Milpurrurru v Indofurn, three bark paintings by internationally known Aboriginal artists were unlawfully reproduced by the defendant for designs on carpets manufactured in Vietnam and imported into Australia. Von Doussa J found that customary and statutory approaches to authorship co-existed in the case before him and that the artists were “authors” for purposes of copyright and that each of the carpets reproduced was an original work. In assessing damages, the court noted that the assessment of damages under the Copyright Act 1968 (Cth) s 115(2) may include compensation for personal suffering, for example for insulting behaviour. The court took account of the personal distress and embarrassment within the applicants’ communities caused by the actions of the respondent (at 277): In the present case the infringements have caused personal distress and, potentially at least, have exposed the artists to embarrassment and contempt within their communities if not to the risk of diminished earning potential and physical harm. The losses arising from these risks are a reflection of the cultural environment in which the artists reside and conduct their daily affairs. Losses resulting from tortious wrongdoing experienced by Aborigines in their particular environments are properly to be brought to account. Von Doussa J accepted anecdotal evidence that Aboriginal law and custom would treat each applicant equally and that the fruits of the action would be shared equally between them. Such treatment would not accord with copyright principles, but his Honour expressed his judgment in terms of the respondent’s aggregate liability to the applicants as a group, and left it to the applicants to distribute the proceeds of the action “to those traditional owners who have legitimate entitlements according to Aboriginal law to share compensation paid by someone who has without permission reproduced the artwork of an Aboriginal artist” (at 273).

Bulun Bulun v R & T Textiles Pty Ltd [17.110] Bulun Bulun v R & T Textiles Pty Ltd (1998) 86 FCR 244; 41 IPR 513 The issue of whether Indigenous community rights to copyright protection and thereby to have standing to pursue infringements of intellectual property rights over works created by members of the community arose in Bulun Bulun v R & T Textiles Pty Ltd (1998) 41 IPR 513. [Bulun Bulun and the second applicant, George Milpurrurru, are both leading Aboriginal artists. Bulun Bulun brought proceedings as the legal owner of the copyright in two artistic works entitled “Magpie Geese” and “Water Lilies at the Waterhole”, pursuant to the Copyright Act 1968 (Cth) for remedies for the infringement, for contraventions of sections of Pt V of the Trade Practices Act 1974 (Cth) dealing with misleading or deceptive conduct, and for nuisance. The defendant, R & T Textiles [17.110]

851

Intellectual Property: Commentary and Materials

Bulun Bulun v R & T Textiles Pty Ltd cont. Pty Ltd, had imported and sold printed clothing fabric into Australia which reproduced the “Magpie Geese and Water Lilies at the Waterhole” artistic works. Bulun Bulun had previously succeeded in proceedings for infringement of his copyright in a painting incorporating ritual knowledge of his clan – the Ganalbingu people – the defendants readily admitting the infringement. George Milpurrurru brought the proceedings in his own right and as a representative of the traditional Aboriginal owners of Ganalbingu country in Arnhem Land in the Northern Territory. He asserted that the Ganalbingu people were the equitable owners of the copyright in the artistic works or, alternatively, that the first applicant’s copyright was held on trust for or created fiduciary obligations in favour of the Ganalbingu people, in that the artwork incorporated subject matter regarded by the Ganalbingu people as sacred and important to them, being derived from the corpus of their ritual knowledge. In this connection, the fiduciary obligation, it was argued, protected the ritual knowledge and sought to ensure that it was not exploited in a way contrary to the customary law of the community. Moreover, the applicants also claimed that the Ganalbingu people had the right to permit and control the production and reproduction of artistic works under the clan’s law and custom.] Von Doussa J held that equity did not automatically impose a constructive trust merely upon the identification of a fiduciary obligation. Equity imposed a constructive trust on property held by a fiduciary where it was necessary to do so to achieve a just remedy and to prevent the fiduciary from retaining an unconscionable benefit. In the event of infringement by a third party, the fiduciary was under an obligation to take action to restrain infringement of copyright in the work. However, the existence of those obligations did not vest an equitable interest in the ownership of the copyright in the Ganalbingu people. The court was prepared to accept that evidence of customary law may be used as a basis for the foundation of rights, but only as those rights were recognised within the Australian legal system. Hence, the court held that to conclude that the Ganalbingu people were communal owners of the copyright in the existing work would ignore the provisions of the Copyright Act 1968 (Cth) s 8, and involve the creation of rights in Indigenous peoples which are not otherwise recognised by the Act. Despite the above treatment, multiple extracts of this case are worth reproducing. In particular, in his opening remarks, von Doussa J, at 247, observed that: These proceedings represent another step by Aboriginal people to have communal title in their traditional ritual knowledge, and in particular in their artwork, recognised and protected by the Australian legal system. The inadequacies of statutory remedies under the Copyright Act as a means of protecting communal ownership have been noted in earlier decisions of this Court: see Yumbulul v Reserve Bank of Australia (1991) 21 IPR 481 at 490 and Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240 at 247…[von Doussa J then quoted the following passage drawn from Stopping the Rip-Offs: Intellectual Property Protection for Aboriginal and Torres Strait Islander Peoples (1994), 6]: “While joint authorship of a work by two or more authors is recognised by the Copyright Act, collective ownership by reference to any other criterion, for example, membership of the author of a community whose customary laws invest the community with ownership of any creation of its members is not recognised”. In respect of the issue of the nature of a fiduciary relationship between the artist and the Ganalbingu people, von Doussa J held (at 263): Central to the fiduciary concept is the protection of interests that can be regarded as worthy of judicial protection: Glover, Commercial Equity - Fiduciary Relationships (1995) para 3.4. The evidence is all one way. The ritual knowledge relating to Djulibinyamurr embodied within the artistic work is of great importance to members of the Ganalbingu people. I have no hesitation in holding that the interest of Ganalbingu people in the protection of that ritual knowledge from exploitation which is contrary to their law and custom is deserving of the protection of the Australian legal system. 852

[17.110]

Indigenous Cultural and Intellectual Property

CHAPTER 17

Bulun Bulun v R & T Textiles Pty Ltd cont. Under the Copyright Act, the owner of the copyright has the exclusive right to reproduce the work in a material form, and to publish the work. The copyright owner is entitled to enforce copyright against the world at large. In the event of infringement, the copyright owner is entitled to sue and to obtain remedies of the kind actually obtained by Mr Bulun Bulun in this case. Having regard to the evidence of the law and customs of the Ganalbingu people under which Mr Bulun Bulun was permitted to create the artistic work, I consider that equity imposes on him obligations as a fiduciary not to exploit the artistic work in a way that is contrary to the laws and custom of the Ganalbingu people, and, in the event of infringement by a third party, to take reasonable and appropriate action to restrain and remedy infringement of the copyright in the artistic work. Whilst the nature of the relationship between Mr Bulun Bulun and the Ganalbingi people is such that Mr Bulun Bulun falls under fiduciary obligations to protect the ritual knowledge which he has been permitted to use, the existence of those obligations does not, without more, vest an equitable interest in the ownership of the copyright in the Ganalbingu people. Their primary right, in the event of a breach of obligation by the fiduciary is a right in personam to bring action against the fiduciary to enforce the obligation. In the present case Mr Bulun Bulun has successfully taken action against the respondent to obtain remedies in respect of the infringement. There is no suggestion by Mr Milpurrurru and those whom he seeks to represent that Mr Bulun Bulun should have done anything more. In these circumstances there (264) is no occasion for the intervention of equity to provide any additional remedy to the beneficiaries of the fiduciary relationship. However, had the position been otherwise equitable remedies could have been available. The extent of those remedies would depend on all the circumstances, and in an extreme case could involve the intervention of equity to impose a constructive trust on the legal owner of the copyright in the artistic work in favour of the beneficiaries. “Equity will not automatically impose a constructive trust merely upon the identification of a fiduciary obligation”. Equity will impose a constructive trust on property held by a fiduciary where it is necessary to do so to achieve a just remedy and to prevent the fiduciary from retaining an unconscionable benefit: Muschinski v Dodds (1985) 160 CLR 385 at 619-620 and Baumgartner v Baumgartner (1987) 164 CLR 137 at 148 By way of example, had Mr Bulun Bulun merely failed to take action to enforce his copyright, an adequate remedy might be extended in equity to the beneficiaries by allowing them to bring action in their own names against the infringer and the copyright owner, claiming against the former, in the first instance, interlocutory relief to restrain the infringement, and against the latter orders necessary to ensure that the copyright owner enforces the copyright. Probably there would be no occasion for equity in these circumstances to impose a constructive trust. On the other hand, were Mr Bulun Bulun to deny the existence of fiduciary obligations and the interests of the parties asserting them, and refuse to protect the copyright from infringement, then the occasion might exist for equity to impose a remedial constructive trust upon the copyright owner to strengthen the standing of the beneficiaries to bring proceedings to enforce the copyright. This may be necessary if the copyright owner cannot be identified or found and the beneficiaries are unable to join the legal owner of the copyright: see Performing Rights Society Ltd v London Theatre of Varieties [1924] AC 1 at 18. It is well recognised that interlocutory injunctive relief can be claimed by a party having an equitable interest in copyright: Laddie, Prescott and Vittoria, The Modern Law of Copyright (1995) at par 11.79-11.81, although as a matter of practice injunctive relief will not be granted without the legal owner of copyright being joined: Performing Rights Society Ltd v London Theatre of Varieties at 19-20, 29, Acorn Computers Ltd v MCS Microcomputer Systems Pty Ltd (1984) 57 ALR 389 at 394. For an example of proceedings brought to establish the existence of an equitable interest in copyright based on a constructive trust imposed in consequence of a breach of fiduciary duty see Missinglink Software v Magee [1989] 1 FSR 361 at 367. [17.110]

853

Intellectual Property: Commentary and Materials

Bulun Bulun v R & T Textiles Pty Ltd cont. I do not consider Mr Milpurrurru and those he seeks to represent have established an equitable interest in the copyright in the artistic work. In my opinion they have established that fiduciary obligations are owed to them by Mr Bulun Bulun, but as Mr Bulun Bulun has taken appropriate action to enforce the copyright, he has fulfilled those obligations and there is no occasion to grant any additional remedy in favour of the Ganalbingu people. However, in other circumstances if the copyright owner of an artistic work which embodies ritual knowledge of an Aboriginal clan is being used inappropriately, and the copyright owner fails or refuses to take appropriate action to enforce the copyright, the Australian legal system will permit remedial action through the courts by the clan. In respect of the issue of an express trust and communal ownership in the copyright of the artistic works, von Doussa J, earlier, at 248, held that “[e]vidence of customary law may be used as a basis for the foundation of rights recognised within the Australian legal system”. But his Honour went on to observe, at 258, that: To conclude that the Ganalbingu people were communal owners of the copyright in the existing work would ignore the provisions of the Copyright Act 1968 s 8, and involve the creation of rights in indigenous peoples which are not otherwise recognised by the legal system of Australia... Do the circumstances in which the artistic work was created give rise to equitable interests in the Ganalbingu people? … It is contended that the customs and traditions regulating this use of the corpus of ritual knowledge places Mr Bulun Bulun as the author of the artistic work in the position of a fiduciary, and, moreover, make Mr Bulun Bulun a trustee for the artwork, either pursuant to some form of express trust, or pursuant to a constructive trust in favour of the Ganalbingu people. The right to control the production and reproduction of the corpus of ritual knowledge relating to Djulibinyamurr is said to arise by virtue of the strong ties which continue to exist between the Ganalbingu people and their land. Was there an express trust? The possibility that an express trust was created in respect of the artistic work or the copyright subsisting in it was not at the forefront of the applicants’ submissions. In my opinion that possibility can be dismissed on the evidence in this case. … (259) In the present case it is suggested that it should be inferred that by creating the artistic work with the permission of those of the Ganalbingu people who had the right to control the corpus of ritual knowledge associated with Djulibinyamurr Mr Bulun Bulun intended to hold the copyright subsisting in the artistic work for the benefit of the Ganalbingu people. The artwork, when completed, was sold by Mr Bulun Bulun to the Maningrida Arts and Crafts Centre. It is not suggested that he did not receive and retain the sale price for his own use. Moreover, the evidence indicates that on many occasions paintings which incorporate to a greater or lesser degree parts of the ritual knowledge of the Ganalbingu people are produced by Ganalbingu artists for commercial sale for the benefit of the artist concerned. On the evidence there is no suggestion that ownership and use of the artistic work itself should be treated separately from ownership in the copyright to the artistic work. The evidence was directed to uses made of the artwork itself that were permissible or impermissible under Ganalbingu law and customs. Notions of copyright ownership have not developed under Ganalbingu law. If it were possible to infer an express trust, on the evidence the subject matter of the trust would be the artistic work itself and all the rights that attach to its creation under the Australian legal system. There is no usual or customary practice whereby artworks are held in trust for the Ganalbingu people. In the present case neither Mr Bulun Bulun’s djungaye or Mr Milpurrurru suggest that the commercial sale of the artwork by Mr Bulun Bulun was contrary to customary law, or to the terms of the permission which was given to him to produce the artwork. In these circumstances, the fact of the sale and the retention of the proceeds for his own use is inconsistent with there being an intention on the part of Mr Bulun Bulun to create an express 854 [17.110]

Indigenous Cultural and Intellectual Property

CHAPTER 17

Bulun Bulun v R & T Textiles Pty Ltd cont. trust. Further, the fact that the artwork was sold commercially, and has been the subject of reproduction, with the apparent permission of those who control its reproduction, in “Arts of the Dreaming - Australian Living Heritage” forecloses any possibility of arguing that the imagery in the artwork is of such a secret or sacred nature that it could be inferred that the artist must have had the intention in accordance with customary law to hold the artwork for the benefit of the Ganalbingu people.

Australian Competition and Consumer Commission v Australian Dreamtime Creations [17.120] Australian Competition and Consumer Commission v Australian Dreamtime Creations [2009] FCA 1545; (2009) 84 IPR 326 [The Australian Dreamtime Creations case, also illustrates both the increasing willingness of the judiciary to provide a measured degree of protection for indigenous intellectual property rights, while at the same time demonstrating the limitations of the current protection regime. The case proceeded not under any sui generis intellectual property protection legislation, but under ss 52 and 53(eb) of the Trade Practices Act 1974 (Cth) which prohibits making a false or misleading representation concerning the place of origin of goods. In this case, the Australian Competition and Consumer Commission (ACCC) alleged that a wooden bird carved in Bali and sold on eBay infringed s 53(3b) by representing not only that the bird was made by an Aboriginal artist but also that it originated in Australia. ADC carried on business as a wholesaler and retailer of Aboriginal artwork, including paintings, prints, boomerangs, bull-roarers, carved wooden animals, carved wooden statues, didgeridoos, emu eggs, and ceramic objects including table platters, vases, wall plates, lidded boxes and bowls (together, artworks).] Mansfield J observed at 336: The use of the description “Aboriginal art” One of the themes running through the case of ADC was that “Aboriginal art” does not convey to a reasonable person who might acquire an artwork so labelled that the artwork is painted or made by an Aboriginal person, but simply describes a style of the artwork. [However, Mansfield J was not prepared to accept that general proposition.] In general, in my view, to a reasonable group of persons who buy or may buy Aboriginal art, to describe a painting as “Aboriginal art” is to convey that it is painted by an Aboriginal person or a person of Aboriginal descent. If that is not explicit, as I think it is, it is clearly implied. Indeed, the pictorial presentation of the opening page of the website, where the words “Aboriginal Art” appear, recognise that general meaning by the depiction of Aboriginal men in conjunction with those words. The name of ADC also appearing there also fortifies that meaning. To those who would place significance on the word “Dreamtime”, or “Dreaming”, they would be people who are aware that the Dreamtime or the Dreaming is, in Aboriginal mythology, the time of the spiritual creation when Aboriginal persons were given their values and symbols and stories, and their laws. Of course, there may be some people who would not have that level of awareness or understanding. Nevertheless, whether the consumer considering buying Aboriginal art from ADC is a resident in Australia, buying for personal enjoyment or satisfaction or for a gift, or an overseas tourist (or an overseas collector), I find that they or a significant class of them would reasonably understand that the presentation of an artwork as “Aboriginal art” would convey the representation that the artwork was painted or made by an Aboriginal person, that is a person of Aboriginal descent. In December 2009 Mansfield J found that Australian Dreamtime Creations had misled consumers by making misleading representations about artworks using Indigenous art styles, and in so doing had [17.120]

855

Intellectual Property: Commentary and Materials

Australian Competition and Consumer Commission v Australian Dreamtime Creations cont. breached s 52 of the Trade Practices Act 1974 (Cth). which prohibits corporations from engaging in misleading or deceptive conduct.

[17.130] The ACCC has power to bring action against corporations involved in misleading and deceptive conduct. The following two cases have been brought by the ACCC concerning fake Aboriginal art and souvenirs:

ACCC v Nooravi [17.140] ACCC v Nooravi [2008] FCA 2012 In July 2008, the Australian Competition and Consumer Commission initiated proceedings in the Federal Court against Farzad and Homa Nooravi, art dealers trading as Doongal Aboriginal Art and Artefacts, for allegedly engaging in misleading and deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth). Through their art gallery and website, the Nooravis offered for sale artworks and related products, representing them to have been painted or made by indigenous artists. On 28 August 2008, Logan J made orders that the Nooravis had engaged in misleading and deceptive conduct by: • representing that products Doongal offered for sale were “Aboriginal Art” or “Aboriginal Artefacts” where some of those products were produced by people not of Aboriginal descent; • representing that certain artists whose work Doongal offered for sale were of Aboriginal descent when in fact those artists were not of Aboriginal descent; and • affixing cards bearing the words “Certificate of Authenticity of Original Aboriginal Art” to artworks painted by persons who were not of Aboriginal descent. The Nooravis acknowledged that they had breached s 52 of the Trade Practices Act 1974 (Cth). The Court granted injunctions by consent restraining the Nooravis, for a period of five years, from engaging in similar conduct, and commended the parties for the manner which they had approached resolution of the matter.

[17.150] But a recent dispute involving the commercial display of Indigenous sacred symbols demonstrates that there are limits on the power of the ACCC when Indigenous cultural property is misused but where the alleged misuse does not appear to contravene established laws. The dispute also highlights the current gaps in protection provided to Indigenous cultural and intellectual property under Australian laws.

The Wandjinas Case [17.160] Tenodi v Blue Mountains City Council [2011] NSWLEC 1183, 21 June 2011 The ArtsLaw organisation relates the case of the claimed inappropriate use of Wandjinas, creation spirits sacred to three Aboriginal tribes in the Kimberley in Western Australia, by a non-indigenous art and crafts gallery in Katoomba, NSW (see the ArtsLaw website at http://www.artslaw.com.au). The Katoomba gallery commissioned a large stone sculpture of its interpretation of the Wandjinas in front of the gallery, and in so doing reportedly caused considerable offence to both Kimberley and local indigenous groups. The gallery owner reportedly did not accept the cultural concerns raised by the traditional owners of the Kimberley region. The ACCC had stated that it was unable to pursue the 856 [17.130]

Indigenous Cultural and Intellectual Property

CHAPTER 17

The Wandjinas Case cont. matter on behalf of the Kimberley Aboriginal elders, there being insufficient grounds under s 52 of the Trade Practices Act 1974 (Cth) prohibiting misleading and deceptive conduct. Under the provisions of the Copyright Act 1968 (Cth), the gallery’s sculpture would be deemed to be an original creation, since the sculpture would have merely been inspired by the original Kimberley Wandjinas rock art, rather than having been copied being copied. Furthermore, as many of the Wandjinas found in rock art are ancient, the copyright period of life plus 70 years has long expired so they would be considered to be in the public domain. Since the gallery owner had made no pretence of passing off the sculpture as an indigenous work, as occurred in Australian Dreamtime Creations, and was not a corporation, the provisions of the Trade Practices Act 1974 (Cth) s 52 could not apply. The matter was eventually resolved, not under IP laws or consumer protection laws, but under totally unrelated local government development planning by-laws. And the resolution related merely to the placement of the statue, rather than its alleged improper usage or exploitation. On 22 June 2011 the Land and Environment Court upheld the decision of the Blue Mountains City Council to refuse permission to the gallery owners to place the stone sculpture depicting Wandjina on the verge of their Katoomba premises (although there was acknowledgement of the possibility to move the statue to satisfy planning requirements). In so doing the Commissioner noted. at [37], that: A large proportion of the concerns raised by objectors relate to the lack of authorisation to use the images. I accept Mr Bernie’s submissions that this is not relevant to my consideration under s 79C(1)(b) [of the Environmental Planning and Assessment Act 1979], however, there are other aspects of the sculpture, including the depiction of the mouth, that are offensive and have an unacceptable social impact. Its prominent location, in clear view from the public domain, is an unavoidable reminder to the affected community of the offence that the sculpture causes.

Patents, biodiversity and access to genetic resources [17.170] Most of the judicial attention in Australia in recent years has primarily focused on exploitation and improper use on ICIP in the area of copyright and neighbouring rights. But of equal, if not of greater concern, is the improper exploitation of biodiversity and access to genetic resources without agreement of, or agreed benefit-sharing on the part of the traditional custodians of the knowledge. Indigenous communities in Australia and other countries have long sought to have recognition and protection of indigenous knowledge systems pertinent to patents included in the global treaty framework. The TRIPS Agreement, which is still the reference point for the multilateral intellectual property framework, does not include words such as “indigenous, biodiversity”, “traditional knowledge”, or “benefit-sharing”, and the like. Similarly, notions of benefit-sharing are excluded from TRIPS Part II, section 5 addressing patents. Indigenous communities have argued that information relating to the origins of a biological invention should become part of the patent application process and that the principle of prior informed consent should be incorporated into the TRIPS Agreement and domestic intellectual property legal framework. In particular, they have expressed concern with the granting of patents and other intellectual property rights over traditional knowledge to parties other than the indigenous peoples/communities who own and control them. They are further concerned that their traditional knowledge is being exploited without their prior knowledge or authorisation and without a sharing of the benefits that accrue from such use. In some instances, the commercial harvesting of the indigenous fauna, as in the case of the Hoodia cactus plant of southern Africa to extract the valuable patented material, threatened the very survival of the plant. [17.170]

857

Intellectual Property: Commentary and Materials

Patents, biodiversity and access to genetic resources cont. The strong position taken by the developing countries on the protection of traditional knowledge, led to its inclusion in the Doha Ministerial Declaration in November 2001. Paragraph 19 of the Declaration instructed the Council for TRIPS – as part of its review of TRIPS Articles 27.3(b) and 71.1 – to consider the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore. The Declaration instructed the Council: …in pursuing its work programme including under the review of Article 27(3)(b), the review of the implementation of the TRIPS Agreement under Article 71.1 … to examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by members pursuant to Article 71.1. In undertaking this work, the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension.

Convention on Biological Diversity [17.180] The Convention on Biological Diversity (CBD), which was agreed in 1992, seeks to

promote the conservation of biodiversity and the equitable sharing of benefits arising out of the utilisation of genetic resources. It asserts the sovereign rights of nations over their national resources, and their right to determine access according to national legislation with the aim of facilitating the sustainable use of these resources, promoting access and their common use. It notes that access to genetic resources should be on the basis of prior informed consent, and on mutually agreed terms that provide fair and equitable sharing of the results of R&D and the benefits of commercialisation and utilisation. Australia acceded to the Convention in June 1993. The Convention calls for the fair and equitable sharing of the benefits derived from the use of traditional knowledge, and states that access and transfer of genetic resources should be consistent with the adequate and effective protection of intellectual property rights. It notes that patents and other areas of intellectual property may have an influence on implementation of the Convention, and governments should co-operate (subject to national and international law) in order to ensure that such rights are supportive of and do not run counter to the Convention’s objectives. 21 The countries which endorse the formalisation of a linkage between TRIPS and the Convention are generally countries which enjoy many of the genetic resources and associated traditional knowledge which have raised concerns over the misappropriation of biopiracy of genetic resources and knowledge, for use in patented inventions. They point to high-profile cases, such as the neem tree, basmati rice and ayahuasca juice, as evidence for the need for an internationally binding, enforceable disclosure requirement that would oblige patent applicants to disclose the source of the genetic materials and associated traditional knowledge used in the invention claimed; evidence of prior informed consent with the original holders of the resource or knowledge; and evidence of a benefit sharing agreement with the original holders. 21

Article 8(j) of the CBD provides that “Members should respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wider application with the approval and involvement of the holders of such knowledge, innovations and practices and encourage the equitable sharing of the benefits arising from the utilization of such knowledge, innovations and practices.”

858 [17.180]

Indigenous Cultural and Intellectual Property

CHAPTER 17

They also argue that the present intellectual property regime is inadequate to address their concerns on the protection of traditional knowledge. They propose that TRIPS be suitably amended or provide a mechanism to require an applicant for a patent on biological material or traditional knowledge to disclose the source and country of origin of the biological resources and traditional knowledge used in the invention as a condition for the granting of a patent. They further propose that, at the same time, the applicant should be required to provide evidence of prior informed consent and fair and equitable benefit-sharing under the relevant national regime.

The Australian Context [17.190] As is the case with other mainstream domestic intellectual property legislation, the Patents Act 1990 (Cth), makes no reference to any form of specific Indigenous ownership, recognition of rights or interest, or benefit-sharing However, other legislation does do this, and two examples – one at commonwealth level and the other at state (or rather, territory level) illustrate this.

Environment Protection and Biodiversity Protection Act 1999 (Cth) [17.200] The Environment Protection and Biodiversity Protection Act 1999 (Cth) came into force in early 2000. The Act implements Australia’s obligations under the Convention on Biological Diversity. It includes specific references to the interests of indigenous communities. The objects of the Act include to: (a)

protect the environment;

(b)

promote ecologically sustainable development through the conservation and ecologically sustainable use of natural resources;

(c)

promote the conservation of biodiversity;

(d)

promote a co-operative approach to the protection and management of the environment involving governments, the community, land-holders and Indigenous peoples;

(e)

assist in the implementation of Australia’s international environmental responsibilities and in relation to Indigenous peoples;

(f)

recognise the role of Indigenous people in the conservation and ecologically sustainable use of Australia’s biodiversity; and

(g)

promote the use of Indigenous people’s knowledge of biodiversity with the involvement of, and in cooperation with, the owners of the knowledge.

In order to achieve its objects, the Act promotes a partnership approach to environmental protection and biodiversity conservation through bilateral agreements with States and Territories, and conservation agreements with land-holders. It also promotes the recognition and promotion of Indigenous peoples’ role in, and knowledge of, the conservation and ecologically sustainable use of biodiversity; and the involvement of the community in management planning.

Northern Territory Biological Resources Act 2006 (NT) [17.210] The Biological Resources Act 2006 (NT) has as its objective the facilitation of bioprospecting in the Territory. It includes provision for establishing a contractual framework for benefit-sharing [17.210]

859

Intellectual Property: Commentary and Materials

Northern Territory Biological Resources Act 2006 (NT) cont. agreements to be entered into between bioprospectors (researchers) and resource access providers (which include indigenous people) for the use of Territory biological resources to ensure the equitable sharing of benefits arising from the use of those biological resources for biodiscovery. The Act formally recognises that indigenous peoples hold a special knowledge about those biological resources. The NT Act requires bioprospectors to enter into a benefit-sharing agreement with each resource access provider in relation to the resources to be taken, such agreement to be based upon prior informed consent about the terms of the agreement (s 27(1) – (3)). The benefit-sharing agreement must provide for reasonable benefit-sharing arrangements, including protection for, recognition of and valuing of any indigenous people’s knowledge to be used, and must include the following: • the resources (including the name of the species, or lowest level of taxon, to which the resources belong, if known) to which access has been agreed to be granted; • the quantity of the resources that has been agreed can be removed from the area; • a statement regarding any use of indigenous people’s knowledge, including details of the source of the knowledge; • a statement regarding benefits to be provided or any agreed commitments given in return for the use of the indigenous people’s knowledge; The Act recognises that, in the context of the Act, that knowledge is Indigenous person’s knowledge if it is obtained from an Indigenous person or Indigenous persons. While the Kakadu Plum patent (below [17.220]) might, for some, be a common illustration of Western corporations misappropriating Indigenous traditional knowledge, what some commentators call “biopiracy”, 22 the Chuulangun Aboriginal Corporation–University of South Australia collaboration – involving the extracting of compounds from traditional medical plants for use as anti-inflammatory creams – demonstrates a more equitable and respectful treatment of Indigenous traditional knowledge in patent law. The latter patent (Anti-Inflammatory Compounds – AAN: 2010317657, PCT/AU2010/001502) recognises Indigenous man, David Claude, as one of the inventors ([17.230]).

The “Kakadu Plum” Patent [17.220] Kakadu plum (Terminalis ferdinandiana), also called Billygoat plum, Gubinge, or Murunga, is a flowing plant from the family Combretacae. Kakadu plum can be found in the tropical woodlands from north Western Australia to eastern Arnhem Land. The fruit has an extremely high vitamin C concentration, and high ORAC value. Kakadu plum reportedly also contains phytochemicals which have antioxidant properties that have been implicated in cancer inhibition. One, Gallic acid has antibacterial, antiviral and antifungal activities, while another, Ellagic acid has anti-carcinogenic effects against a wide range of carcinogens in many human tissues. On 25 March 2010, Mary Kay Inc, a major US cosmetics corporation lodged an patent application with the United States Patents and Trademarks Office (USPTO) for an invention using Kakadu Plum extract as both a product and processes as a key component in skin care applications. The application was with twelve other linked specific applications citing Kakadu plum in skin care and other applications. Mary Kay claimed a priority date of 19 January 2006 on the basis if earlier related applications. 22

See eg Daniel Robinson, “Biopiracy and the Innovations of Indigenous Peoples and Local Communities” in Peter Drahos and Susy Frankel (ed), Indigenous Peoples’ Innovation: Intellectual Property Pathways to Development (ANU Press, 2012).

860 [17.220]

Indigenous Cultural and Intellectual Property

CHAPTER 17

The “Kakadu Plum” Patent cont. Kakadu plum has been used for many generations by the local Indigenous population as both a food source and a traditional medicine. Concerns have been widely expressed in respect of the US patent application (which has included applications in other countries under the WIPO Patent Cooperation Treaty) that it will prevent the communities from continuing to use it in the future if the patents are granted once the as they have done in the past. The concerns are not lessened by argument that the customary uses are not the same or similar as those proposed under the patent applications, and are therefore not affected. Communities and their advocates also stress that there has been no consultations by the company in respect of the issues of rights, ownership, approvals to exploit or benefit-sharing, and thus see it as an Australian exemplar of bio-piracy. As at 8 August 2016 the application is under assignment.

“Compositions Comprising Kakadu Plum Extract Or Acai Berry Extract” [17.230] United States Patent Application 20100074853 ABSTRACT A topical skin care composition comprising kakadu plum extract or acai berry extract, or a combination of both, is disclosed. The composition can include a high oxygen radical absorbance capacity (ORAC) value. The composition can improve the skin’s visual appearance, physiological functions, clinical properties, and/or biophysical properties. CLAIMS 1. A topical skin care composition comprising: (a) Terminalia ferdinandiana [Kakadu plum] extract or Euterpe oleracea extract; (b) a silicone containing compound selected from the group consisting of dimethicone and cyclomethicone; and (c) a moisturizing agent selected from the group consisting of glycerin, butylene glycol, and propylene glycol, wherein the composition is formulated for topical application to skin. 10. The topical skin care composition of claim 1, wherein the composition includes Terminalia ferdinandiana extract. 12. The topical skin care composition of claim 1, wherein the composition comprises Terminalia ferdinandiana extract and Euterpe oleracea extract. 20. The method of claim 13, wherein the topical skin care composition includes Terminalia ferdinandiana extract. 22. A method of reducing or preventing the appearance of a fine line or wrinkle on a person’s face comprising applying the topical skin care composition of claim 1 to facial skin, wherein topical application of the composition reduces or prevents the appearance of a fine line or wrinkle on the facial skin. 23. A method of increasing cellular anti-oxidant defense mechanisms in skin comprising applying the topical skin care composition of claim 1 to skin in need thereof, wherein topical application of the composition increases cellular anti-oxidant defense mechanisms in skin. 24. An anhydrous lipstick comprising: (a) Terminalia ferdinandiana extract or Euterpe oleracea extract; (b) a sunblock agent; (c) petrolatum; (d) paraffin; (e) tocopheryl acetate; (f) aloe-barbadensis extract; (g) squalane; (h) fragrance; and (i) a color ingredient.. 2. DESCRIPTION [17.230]

861

Intellectual Property: Commentary and Materials

“Compositions Comprising Kakadu Plum Extract Or Acai Berry Extract” cont. CROSS REFERENCE TO RELATED APPLICATIONS [0001] This application is a continuation of U.S. patent application Ser. No. 11/624,985, filed Jan. 19, 2007, which claims the benefit of U.S. Provisional Application Ser. No. 60/760,103, filed Jan. 19, 2006, U.S. Provisional Application Ser. No. 60/760,977, filed Jan. 20, 2006, and U.S. Provisional Application Ser. No. 60/760,979, filed Jan. 20, 2006. The contents of these applications are incorporated by reference. BACKGROUND OF THE INVENTION [0002] A. Field of the Invention [0003] The present invention relates generally to compositions that can be used to improve the skin’s visual appearance. In particular, the present invention concerns topical skin care compositions that include kakadu plum (Terminalia ferdinandiana) extract and/or acai berry extract (Euterpe oleracea). SUMMARY OF THE INVENTION [0009] The present invention overcomes deficiencies in the art by providing compositions that can be used in skin treatment applications. The compositions of the present invention can include kakadu plum extract and/or acai berry extract. Further, as shown in the figures and examples (which are incorporated into this section by reference), the inventors have discovered that the combination of kakadu plum extract and acai berry extract produce synergistic and complimentary effects that are beneficial to skin. F. Cosmetic Products and Articles of Manufacture [0055] The composition of the present invention can also be used in many cosmetic products including, but not limited to, sunscreen products, sunless skin tanning products, hair products, finger nail products, moisturizing creams, skin benefit creams and lotions, softeners, day lotions, gels, ointments, foundations, night creams, lipsticks, cleansers, toners, masks, or other known cosmetic products or applications. Additionally, the cosmetic products can be formulated as leave-on or rinse-off products. In certain aspects, the compositions of the present invention are stand-alone products.

WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO) [17.240] During 1998-1999, WIPO conducted a series of fact-finding missions in order “to identify and explore the intellectual property needs and expectations of new beneficiaries, including the holders of indigenous knowledge and innovations, in order to promote the contribution of the intellectual property system to their social, cultural and economic development.” 23 These missions were intended to enable a study of future possibilities for the protection of intellectual property rights of holders of indigenous knowledge, innovations and culture. During the subsequent conferences on the missions’ findings three primary issues emerged, namely:

• the protection of traditional knowledge, innovations and creativity, whether or not associated with those resources (TK); and • the protection of expressions of folklore, including handicrafts (TCEs); 23

WIPO General Assembly, Report of Twenty-Sixth Session, “Matters Concerning Intellectual Property, Genetic Resources, Traditional Knowledge and Folklore”, August 25, 2000, 3 [11] (WO/GA/26/6), http:// www.wipo.int/edocs/mdocs/govbody/en/wo_ga_26/wo_ga_26_6.pdf.

862 [17.240]

Indigenous Cultural and Intellectual Property

CHAPTER 17

• access to genetic resources and benefit-sharing (GRs). In 2000, WIPO established an Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) to explore the above issues, initially as a forum for debate and subsequently charged with the development of an international agreement for the effective protection of GRs, TK and TCEs above. The WIPO General Assembly in 2015 agreed the IGC will “continue to expedite its work, with a focus on narrowing existing gaps, with open and full engagement, including text-based negotiations, with the objective of reaching an agreement on an international legal instrument(s), without prejudging the nature of outcome(s), relating to intellectual property which will ensure the balanced and effective protection of GRs, TK and TCEs”. 24 The IGC has yet to finalise draft legal instruments, reflecting the wide divide amongst its member states on the direction, form and detail of such instruments. While some broad agreement has been reached on scope and definitions, 25 and so-called “gaps” closed in numerous instances, disagreement still exists as to whether provisions of the instruments should be aspirational (as evidenced by the use of the word “should” throughout) or mandatory (or “shall”) within the textual alternatives under examination. For example, the Draft Agreement on the Protection of Traditional Knowledge, as at November 2016, includes the following alternatives in respect of article 7: Term of Protection Rights/Rights: [Member States]/[Contracting Parties] may determine the appropriate term of protection/rights of traditional knowledge in accordance with [Article 3/[[which may] [should]/[shall] last as long as the traditional knowledge fulfills/satisfies the [criteria of eligibility for protection] according to Article [1]/[3].]].

The original mandate for the IGC was for a period of two years from appointment. However the mandate has been extended since its inception and has already been extended beyond its current term of 2016/2017. Perhaps this indicates the difficult task confronting the committee in producing legal instruments that will have a reasonable chance of acceptance and adherence from a significant number of WIPO members and thereby a reasonable chance of being meaningful and effective.

World Intellectual Property Organisation [17.250] Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore: Thirty-Second Session The Protection of Traditional Knowledge: Draft Articles Rev. 2 (September 23, 2016) Document: WIPO/GRTKF/IC/32/4 ARTICLE 1: SUBJECT MATTER OF THE INSTRUMENT [Alt 1: This instrument applies to traditional knowledge.] [Alt 2: The subject matter of this instrument is traditional knowledge, which is knowledge that is created and maintained in a collective context, that is directly linked with the social identity and[/or] 24

25

WIPO, General Assembly, Assemblies of the Member States of WIPO, Fifty-Fifth Series of Meetings Geneva, October 5 to 14, 2015, 22 October 2015, 11 (A/55/INF/11), http://www.wipo.int/edocs/mdocs/govbody/ en/a_55/a_55_inf_11.pdf. For a useful document consolidating recent developments and important terms see, WIPO, IGC Secretariat, “Consolidated Document Relating to Intellectual Property and Genetic Resources”, Thirtieth Session, Geneva, May 30 to June 3, 2016, WIPO Doc: WIPO/GRTKF/IC/30/4). [17.250]

863

Intellectual Property: Commentary and Materials

World Intellectual Property Organisation cont. cultural heritage of indigenous [peoples] and local communities [and nations]; that is transmitted between generations or from generation to generation, whether consecutively or not; which subsists in codified, oral, or other forms.] [Alt 3: The subject matter of this instrument is traditional knowledge, which is knowledge that is created, maintained, and developed by indigenous [peoples], local communities, and [nations/states], whether it is widely spread or not, and that is linked with, or is an integral part of, the social identity and/or cultural heritage of indigenous [peoples], local communities; that is transmitted from generation to generation, whether consecutively or not; which subsists in codified, oral, or other forms; and may take the form of know-how, skills, innovations, practices, teachings or learnings. [Traditional knowledge may be associated, in particular, with fields such as agriculture, the environment, healthcare and indigenous and traditional medical knowledge, biodiversity, traditional lifestyles and natural resources and genetic resources, and know-how of traditional architecture and construction technologies.]] [Alt 4: This instrument applies to traditional knowledge. Criteria for Eligibility In order to be eligible for protection under this instrument, traditional knowledge must be distinctively associated with the cultural heritage of beneficiaries as defined in Article 2, and be created, generated, developed, maintained, and shared collectively, as well as transmitted from generation to generation for a term as has been determined by each Member State, but not less than for 50 years.] ARTICLE 2: BENEFICIARIES OF PROTECTION [Alt 1: 2.1 Beneficiaries of this instrument are indigenous [peoples] and local communities who hold protected traditional knowledge. [2.2 Member States may also designate competent bodies to act as custodians on behalf of beneficiaries, with the [consent]/[direct involvement, and approval] of the beneficiaries, in accordance with national law. The identity of any competent agency [should/shall] be communicated to the International Bureau of the World Intellectual Property Organization.]] [Alt 2: 2.1 The beneficiaries of this instrument include, where applicable, indigenous [peoples], local communities, states, [nations], and other beneficiaries as may be determined under national law. 2.2 States may establish competent national authorities, as appropriate, to determine beneficiaries of traditional knowledge in consultation with indigenous [peoples], local communities, and stakeholders that create, maintain, develop, and exercise rights of traditional knowledge in accordance with customary law and practices.] [Alt 3: 2.1 The beneficiaries of this instrument include, where applicable, indigenous [peoples], local communities, and other beneficiaries as may be determined under national law. 2.2 Member States may also designate, as deemed appropriate, competent bodies to act as custodians on behalf of the beneficiaries in accordance with national law.]

Sui Generis laws v Amendments to Current Laws [17.260] Should Australia adopt a sui generis Indigenous cultural heritage law, or overhaul the current intellectual property regime? Building on the important platform laid by the 1982 UNESCO/WIPO Model Provisions relating to “expressions of folklore”, the WIPO fact-finding missions of 1998-9 recommended, inter alia, the 864 [17.260]

Indigenous Cultural and Intellectual Property

CHAPTER 17

Sui Generis laws v Amendments to Current Laws cont. creation of sui generis laws as the more effective strategy for the protection of traditional knowledge and cultural heritage (being their terms in use). WIPO then established an Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore soon after with the development of a model law on traditional knowledge etc, as one of their objectives. As noted above, the Intergovernmental Committee has yet to conclude its work (see above [17.240]). Recently, there have been a number of proposals for legal change in this area. They include, as mentioned above, the development of a suite of sui generis copyright and other IP laws designed specifically to meet the particular characteristics of Indigenous traditional knowledge and cultural heritage. Another possible proposal might include amending current IP laws to allow for: • extending copyright protection to oral works and non-assigned community works; • protecting traditional knowledge material through original and non-original database protection; • extending the moral rights provisions in copyright to traditional knowledge; Australian groups representing indigenous art and cultural heritage have argued for the introduction of sui generis legislation to protect ICIP. The Arts Law Centre of Queensland (ALCQ) argued that attempts to use Trade Marks and Designs laws to protect Indigenous cultural expression “are unlikely to be a suitable means of protection”. The ALCQ argued that the Government should enact a new intellectual property law, separate but complementary to existing intellectual property laws, to provide for Indigenous cultural expression. The National Association for Visual Arts (NAVA) has declared that “in the longer term, sui generis legislation is needed because the whole concept of collective intellectual property is one that is not dealt with well by existing copyright law”. The Arts Law Centre, ArtsLaw, has also argued that sui generis legislation would provide “significant, tailored protection” for ICIP and should legally recognise the following: • communal ownership; • artistic styles; • intangible forms; • time limitations; and • protection against Indigenous cultural materials being used without the appropriate consent of Indigenous custodians. Individual Indigenous lawyers, such as Terri Janke and Michael Frankel, have also argued for the introduction of sui generis legislation. 26 Similar to the Arts Law Centre proposal cited above, they propose that the legislation should provide protection for works that are intangible – there need not be a requirement of material form. Rights should also exist in perpetuity. Any rights granted should ensure that there are no time limits on protection. Under their proposal the legislation would include provisions which prohibit the wilful destruction of cultural material; address misrepresentations of the source of cultural material; and provide for payment to Indigenous owners for the commercial use of their cultural material. Disputes would be mediated through an Indigenous Cultural Tribunal, comprised of Indigenous custodians, specialists in Indigenous law and community elders. The legislation would include offences such as fines for unauthorised use of cultural material and criminal sanctions for more serious offences. 26

Terri Janke, Our Culture, Our Future, Michael Frankel & Co, 1998, ch 19; more recently, see Terri Janke and Robynne Quiggin, Indigenous Knowledge and Customary Law, Law Reform Commission of Western Australia, Project No 94, Background Paper No 12, 2005; Terri Janke and Peter Dawson, New Tracks: Indigenous Knowledge and Cultural Expression and the Australian Intellectual Property System, Issues Paper, 2012. [17.260]

865

Intellectual Property: Commentary and Materials

Sui Generis laws v Amendments to Current Laws cont. They have further suggested that the legislation would also need to consider how the proposed legislation would interact with existing copyright and intellectual property laws. They suggested that the legislation should apply only to cultural works outside the copyright period – where copyright does not exist. The problem with many of the above proposals, to the extent that they provide some protection for traditional knowledge and cultural expressions, is that they still operate with the paradigm of the global convention of copyright as a private economic right. Notwithstanding any recognition of the particular character of traditional knowledge or cultural expressions, the laws are still based on the premise that ownership can be attributed to person, a discrete group, or legal entity. The laws extend protection to an author rather than to an item, work or performance itself; hence works which cannot be clearly attributed to an author are not protected. The above commentary focusses primarily on issues arising from protection, or rather nonprotection in the area of copyright. Below are a summary of suggestions addressing the main areas of intellectual property (otherwise generally known as “industrial property”) derived from the debate in recent WIPO and Australian parliamentary fora on how the current conventions and domestic laws might be enhanced to make some provision for a degree of protection for the intellectual property elements of traditional knowledge and cultural heritage. The suggestions have been proposed as alternative to the introduction of sui generis protection regimes:

Trade Marks [17.270] Existing mechanisms within trade mark law may prove useful in preventing the misappropriation of Indigenous symbols and imagery and the mislabelling of non-Indigenous goods as made by Indigenous businesses. For instance, the unauthorised registration of traditional names, symbols and insignia as “culturally offensive” and, therefore, as being contrary to public order or morality under trade marks legislation (compare Trade Marks Act 1955 (Cth) s 28). Note that in New Zealand, the legislature has responded to Māori lobbying regarding the misappropriation of Māori text and imagery. These concerns are now reflected in the general purposes of the Trade Marks Act 2002 (NZ), which seek to address “Māori concerns relating to the registration of trade marks that contain a Māori sign, including imagery and text”. 27 Furthermore, the operative provision, s 17(1)(c) 28 now states that the Commissioner must not register as a trade mark (or part thereof) any matter the “use or registration of which would, in the opinion of the Commissioner, be likely to offend a significant section of the community, including Māori” 29 (emphasis added). The NZ Commissioner here may, and often does – but is certainly not obliged to –– rely on the advice of the Māori Trade Marks Advisory Committee on the offensiveness or otherwise of applied-for marks referencing Māori text and imagery (s 178). 27 28 29

Trade Marks Act 2002 (NZ) s 3(c). Trade Marks Act 2002 (NZ). Of possible relevance to offensive marks is s 17(1)(b) Trade Marks Act 2002 (NZ), which provides that registration must be refused for any matter “the use of which is contrary to New Zealand law or would otherwise be disentitled to protection in any court”. But see the narrow interpretation of this provision by IPONZ, IPONZ Trade Marks Act 2002 Practice Guidelines (6 December 2013), Part 4.3.

866 [17.270]

Indigenous Cultural and Intellectual Property

CHAPTER 17

Certification marks [17.280] The Trade Marks Act 1995 (Cth) has provisions that allow for the registration of

certification marks. Certification marks are trade marks which are used to distinguish goods or services which possess a certain quality, accuracy or characteristic. A mark or label verifying that a product or service is authentically Indigenous could be registered as a certification mark under the TMA. 30 (See further Chapter 13, [13.790]). Thus, the problem of mislabelling non-Indigenous goods as Indigenous goods, this problem, may, in part, be dealt with by the utilising registered Indigenous collective and certification trade marks establishing that a sign under which goods/services emanating from a particular Indigenous group or collective; or manufactured in accordance with particular methods or standards; or may in fact be sold.

Geographical indications [17.290]

• Registration of local and regional Indigenous names, titles, and place names etc, to be registrable as geographical indications, as well as prohibition on their registration by non-indigenous or non-local entities

Patents [17.300]

• Inclusion in patent applications, which claim traditional knowledge or ICIP and biological resources-based inventions, of evidence that the knowledge and/or biological material has been obtained with the prior informed consent of the country of origin, and acknowledgment of all relevant public domain and community based knowledge; • Where the genetic resources and ICIP form the basis of an application for IPR, the applicant should provide adequate information on the source of the material, including information relating to a material transfer agreement which should include benefit-sharing provisions. Where possible copies of such agreements should accompany the application; • A grace period protecting an ICIP holder against the consequences of disclosure in the context of documentation if that disclosure was made within a specified period before the filing of the application.

Native Title and Cultural Heritage [17.310] In Western Australia v Ward (2002) 213 CLR 1; [2002] HCA 28, in the High Court

of Australia, Gleeson CJ, Gaudron, Gummow and Hayne JJ opined, at 84–5, in respect of cultural knowledge and the spiritual connection: [57]The determination made by the Full Court omitted any provision such as that in par 3(j) of the determination made at trial. The majority of the Full Court took that course saying:

30

See eg the now lapsed certification mark registered by the National Indigenous Arts Advocacy Association (NIAAA). Compare the continued success of Aotearoa New Zealand’s Toi Iho certification mark signifying “quality and authenticity” of Māori-made art, and Māori artists: see generally http://www.toiiho.co.nz/. [17.310]

867

Intellectual Property: Commentary and Materials

Although the relationship of Aboriginal people to their land has a religious or spiritual dimension, we do not think that a right to maintain, protect and prevent the misuse of cultural knowledge is a right in relation to land of the kind that can be the subject of a determination of native title. [58] In this Court, it was submitted that the Full Court erred in this respect and that this Court should restore par 3(j) of the first determination. The first difficulty in the path of that submission is the imprecision of the term “cultural knowledge” and the apparent lack of any specific content given it by factual findings made at trial. In submissions, reference was made to such matters as the inappropriate viewing, hearing or reproduction of secret ceremonies, artworks, song cycles and sacred narratives. [59]To some degree, for example respecting access to sites where artworks on rock are located, or ceremonies are performed, the traditional laws and customs which are manifested at these sites answer the requirement of connection with the land found in par (b) of the definition in s 223(1) of the NTA. However, it is apparent that what is asserted goes beyond that to something approaching an incorporeal right akin to a new species of intellectual property to be recognised by the common law under par (c) of s 223(1). The “recognition” of this right would extend beyond denial or control of access to land held under native title. It would, so it appears, involve, for example, the restraint of visual or auditory reproductions of what was to be found there or took place there, or elsewhere. It is here that the second and fatal difficulty appears. … [61] That is not to say that in other respects the general law and statute do not afford protection in various respects to matters of cultural knowledge of Aboriginal peoples or Torres Strait Islanders. Decided cases apply in this field the law respecting “confidential information, copyright, and fiduciary duties” (See, for example, Foster v Mountford and Rigby Ltd (1976) 14 ALR 71; [1978] FCR 582; Bulun Bulun v R & T Textiles Pty Ltd (1998) 86 FCR 244).

However, Kirby J in dissent argued, at 247–9, that (citations omitted): [580] It has been accepted that the connection between Aboriginal Australians and “country” is inherently spiritual and that the cultural knowledge belonging to Aboriginal people is, by indigenous accounts, inextricably linked with their land and waters, that is, with their “country”. Dreaming Beings located at certain sites, for example, are narrated in song cycles, dance rituals and body designs. If this cultural knowledge, as exhibited in ceremony, performance, artistic creation and narrative, is inherently related to the land according to Aboriginal beliefs, it follows logically that the right to protect such knowledge is therefore related to the land for the purposes of the NTA. … It also follows that the right to protect cultural knowledge is, in my view, sufficiently connected to the area to be a right “in relation to” land or waters for the purpose of s 223(1) of the NTA. [581] This construction is consistent with the purposes of the NTA, as evinced in the Preamble, including the full recognition of the rich culture of Aboriginal peoples and the acceptance of the “unique” character of native title rights. It is further supported by Australia’s ratification of international instruments which expressly provide for the protection of fundamental human rights. In my opinion, such rights include the right of indigenous people to have “full ownership, control and protection of their cultural and intellectual property” … [582] The joint reasons describe the right claimed as “‘akin to a new species of intellectual property’” (715). They state that the general law or statute law may provide avenues for its protection. That may be so. However, it must also be accepted that the established laws of intellectual property are ill-equipped to provide full protection of the kind sought in this case. The Preamble to the NTA expressly states that the Act aims to supplement the rights available under the general law. … [587] Recognition of the native title right to protect cultural knowledge is consistent with the aims and objectives of the NTA, reflects the beneficial construction to be utilised in relation to such legislation and is consistent with international norms declared in treaties to which Australia is a party. It recognises the inherent spirituality and land-relatedness of Aboriginal 868 [17.310]

Indigenous Cultural and Intellectual Property

CHAPTER 17

culture. In my view it is within the scope of s 223 of the NTA. I would therefore disagree with the joint reasons that such a right is not susceptible to recognition under the NTA.

Justice Kirby further suggested that s 116 of the Australian Constitution, which places a prohibition on laws affecting the free exercise of religion, could well provide the basis of a constitutional argument for the protection of indigenous cultural heritage, insofar as cultural heritage is based upon the spirituality of indigenous peoples. While s 116 had not been argued in Ward, it has been the subject of academic comment in relation to the NTA and its impact on indigenous culture and spirituality – and thus ICIP. As Kirby J opined: The full significance of s 116 of the Constitution regarding freedom of religion has not yet been explored in relation to Aboriginal spirituality and its significance for Aboriginal civil rights. Yet there is at least one judicial comment that the “Aboriginal religion of Australia … must be included” 31 in the definition, given that Aboriginal societies ordinarily have a religious basis 32. One thing is certain – the section speaks to all Australians and of all religions. It is not restricted to settlers, their descendants and successors, nor to the Christian or other organised institutional religions. It may be necessary in the future to consider s 116 of the Constitution in this context.

Concluding remarks: where to from here? [17.320] While one must be cautious not to treat the multitude of Australia’s Aboriginal nations as a homogenous group with uniform interests, it is fair to say that Australia’s intellectual property laws have not satisfactorily met the needs of (most) Indigenous Australians. There have no doubt been important initiatives that have, for example, sought to prevent exploitative dealings with Indigenous artists in respect of their arts and crafts. 33 Too often, however, other legislative initiatives targeting perceived lacunae in Australian intellectual property laws simply fall through political cracks. 34 The fundamental problem appears to be the strong dissonance between Western individual creator-centric conceptions of intellectual property as opposed to Indigenous communitarian perspectives of knowledge. Tinkering at the edges, therefore, will not resolve this problem: root and branch – ideally sui generis – law reform is necessary. Despite some convergence on the international sphere as to what it means to speak of ICIP rights, such widespread reform is unlikely in the near future. However, that is not to say that government bodies, such as IP Australia, are not interested in promoting and protecting ICIP, or “Indigenous Knowledge”. Indeed, IP Australia recently encouraged submissions on the interface between Indigenous Knowledge – defined as “traditional knowledge and traditional cultural expressions of Indigenous peoples”, including “stories, dance, languages, symbols, crafts, cosmology, medicinal and environmental knowledge” – and the intellectual property system. 35 Whatever the outcome of IP Australia’s report, or important academic contributions

31 32 33 34 35

Church of the New Faith v Commissioner of Pay-roll Tax (Vict) (1983) 154 CLR 120 at 151. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 167. See eg Indigenous Australian Art Commercial Code of Conduct, http://www.indigenousartcode.org/wpcontent/uploads/2011/06/Indigenous-Art-Code.pdf. See especially the lack of political appetite surrounding the Copyright Amendment (Indigenous Communal Moral Rights) Bill 2003. IP Australia, Indigenous Knowledge Consultation, 2015, https://www.ipaustralia.gov.au/about-us/publicconsultations/indigenous-knowledge-consultation. [17.320]

869

Intellectual Property: Commentary and Materials

to this debate, 36 it is clear that the important issue of inadequate protection of ICIP rights is unlikely to be resolved any time soon, and it is a problem that will regularly resurface in Australia and elsewhere.

36

See eg Kathy Bowrey, “Indigenous Culture, Knowledge and Intellectual Property” in Emerging Challenges in Intellectual Property (Oxford, 2011), 46-67; Susy Frankel, Intellectual Property In New Zealand (2nd edition, Lexis Nexis, Wellington, 2011), ch 3; Jessica Lai, Indigenous Cultural Heritage and Intellectual Property Rights: Learning from the New Zealand Experience?, (Springer, Heidelberg, 2014); Matthew Rimmer (ed), Indigenous Intellectual Property: A Handbook of Contemporary Research (Edward Elgar, 2015); Daphne Zografos, Intellectual Property and Traditional Cultural Expressions (Edward Elgar, 2010).

870 [17.320]

INDEX A

Account for profits copyright infringement, [6.590] passing off, [12.110] trade mark infringement, [13.730] Adaptation computer programs, [4.470], [4.480] definition, [4.470] literary, dramatic or musical works, of, [4.470] translating, by, [4.470] works, of, [4.470]

TPPA, in, [2.170] WIPO, administered by, [2.90] Agricultural/horticultural processes patentability, [9.200] Agrochemicals intellectual property and, [1.30] Algorithms, mathematical use in inventions, patentability, [9.410], [9.430] Animals patentability of methods of generating, [9.270]

Advisory Council on Intellectual Property (ACIP) innovation patents, review, [8.180] trade marks, and, [13.10]

Anti-competitive practices contractual licences, in, TRIPS provisions, [1.30], [2.30] Part II, [2.50]

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) administration, [2.20] Annex 1C of Marrakesh Agreement, [2.20], [2.30], [2.80] Australia acceding to, [2.90] Australian trade marks law, [13.10] basic principles, [2.80] confidential information, and, [15.10] contents, [2.30] coverage, [2.30] dispute settlement, [2.70] enforcement, [2.60] entry into force, [2.30] general provisions, [2.80] goals, [1.40], [2.30], [2.40] implementation, [2.70] infringement, action for, [2.60] intellectual property rights, definition, [1.30] introduction of, [2.20] major international agreement, [2.10] minimum-standards benchmark, [2.20], [2.40] minimum standards treaty, [1.30] mission, [1.40] most-favoured-nation (MFN) treatment of foreign nationals, [2.40], [2.80] national treatment provision, [2.40], [2.80] nature and scope of obligations, [2.80] objectives, [1.40], [2.80] overview, [2.30] Part I, [2.40] Part II, [2.50] Part III, [2.60] Parts IV-VII, [2.70] plant breeders’ rights, [2.30], [16.10] Preamble, [2.30], [2.40] principles, [2.80] public policy objectives, [2.40] significance of, [1.30]

Anti-Counterfeiting Trade Agreement (ACTA) intellectual property provisions, [1.120] Anton Piller orders copyright infringement, [6.520] Arabian Gulf Cooperation Council agreement under negotiation, [3.200] Architects “architect’s plans” cases, [4.320], [6.40] artistic works, as, [5.330] implied licence, [5.330] Artistic craftsmanship mass-produced articles, [4.360] utilitarian features, [4.370] works of, [4.360] XYZ fabric, [4.370] Artistic works copyright in, [3.10] definition, [4.240], [4.310] infringement of, [6.20] list of, [4.240] paintings, [4.250] Part III works, [4.150] protected works, under Berne Convention, [1.20] scope of, [1.15] Asia “tiger-economies”, [2.30] Assignment copyright, of, [3.50], [5.270] effect of, [5.290] 871

Intellectual Property: Commentary and Materials

Assignment — cont form of, [5.270] limited or unlimited, [5.270] partial or total, [5.270] future works, [5.270] licence distinguished, [5.270], [5.280], [5.310] patents, of, [11.460] application, of, [11.460] geographical limitations, [11.460] registration, [11.460] Association of South East Asian Nations (ASEAN) free trade agreement with, [2.130] Attribution false, by another, [5.20] right of, [5.20] Audiovisual works copyright in, [3.10] Australia intellectual property protection in, [1.80], [2.120] TPPA, in, [2.170] Australia–US Free Trade Agreement (AUSFTA), [2.130] contents of, [2.140] duration of copyright under, [4.490] formal negotiations, [2.140] implementation, [2.120], [2.140] intellectual property provisions in, [2.140] international agreements, [2.150] internet service providers, limitations on liability, [7.130] material form, definition, [4.40] national treatment, [2.150] obligations arising, [3.200] WIPO Internet Treaties, [2.140] Australian Consumer Law misleading or deceptive conduct, prohibiting, [1.10], [2.120], [12.120], [12.170], [12.420], [13.680] Australian Law Reform Commission fair dealing and fair usage differentiation, [6.465] Australian Official Journal of Patents patent applications, publications, [8.260], [8.290]

intellectual property, inquiry into, [2.190], [2.200] patent rights, [8.70] Author academic, [5.160] copyright owner, as, [4.50], [5.80] exceptions, [5.80] definition, [3.40] economic rights, [5.10] Part III works, [5.10] Part IV works, [5.10] performers, [5.10] human, as, [3.170] Indigenous cultural and intellectual property, [17.30] reproductions and copyright infringement, [17.100] joint authorship of musical works, [5.70] maker and owner, distinguished, [3.40] meaning, [5.80] moral rights, [5.20] duration, [5.30] non-authors commissioned works, [5.130] community ownership, [5.220], [5.230] employment, [5.160]–[5.210] journalists’ copyright, [5.140], [5.150] photographs, [5.80]

B Ballot papers copyright in, [4.80] Berne Convention copyright provisions, [2.50] major international agreement, [2.10] moral rights, [2.50], [5.20] origins of, [3.20] protected literary and artistic works, [1.20] resale royalty rights, [5.460] TPPA, in, [2.170] TRIPS and, [2.30], [2.80] Berne Union for the Protection of Industrial Property WIPO membership and, [2.90] Bilateral agreements — see Trade agreements

Australian Patent Office Commissioner’s discretion, [9.380] biotechnology inventions, [9.230] contrary to law, [9.100] mathematical algorithms, [9.410] succinctness of claims, meaning, [10.280] support for claims, approach in determining, [10.360] Swiss-style claims, [9.330]

Biodiversity Convention on Biological Diversity, [1.120], [17.180] primary goals, [2.10] higher level of protection, [1.30] Indigenous cultural and intellectual property rights, [17.170] Biological Resources Act 2006 (NT), [17.210] Convention on Biological Diversity, [17.180] Environment Protection and Biodiversity Protection Act 1999 (Cth), [17.200] intellectual property rights and, [1.120]

Australian Productivity Commission copyright term and scope, [3.210] draft report, [2.190], [3.200], [8.70]

Biotechnical inventions animals, methods of producing, [9.270] humans, patentability

872

Index

Biotechnical inventions — cont processes for producing, [9.280]–[9.290] “Swiss-style” claims, [9.330] treatment methods, [9.310] Manual of Practice and Procedure approach, [9.230] micro-organisms, processes using, [9.230], [10.130] deposit system, international, [10.130] non-human higher life forms, [9.270] patentability, [9.210] plants, [9.220] plant breeders’ rights, [9.220] proteins and cells, [9.230] stem cell technology, [9.300]

goodwill, [12.10] consumers, [12.130]–[12.140] prospective consumers, [12.130]–[12.140] injurious falsehood, [12.10] location, [12.180], [12.190], [12.200] foreign website, sales, [12.220] indirect advertising, [12.230] jurisdictional issues, [12.210] negligent misstatement, [12.10] passing off, tort — see Passing off post-trading, [12.290], [12.300], [12.310] pre-trading, [12.290] proving expert evidence, admissibility, [12.240]–[12.260] survey evidence, admissibility, [12.270]–[12.280] source of, [12.170] subsistence, [12.90] trade mark legislation, [12.10] wrongful appropriation, [12.10]

Bit-Torrent protocol, [7.240] authorisation of ISP, [7.270], [7.280] Dallas Buyers Club LLC v iiNet Ltd, [7.300]–[7.310] Maverick Monitor, [7.310] Roadshow Films v iiNet (2012), [7.290] Roadshow Films v iiNet (2011), [7.260] Roadshow Films v iiNet (2010), [7.250]

C Bono, Sonny, [4.490] Brands “world-wide style culture”, [13.40]

Canada TPPA, in, [2.170]

Broadcasts sound — see Sound broadcasts television — see Television broadcasts when made, [4.40]

Caricatures paintings or drawings, as, [4.260], [4.270]

Brunei Darussalam TPPA, in, [2.170] Buildings copyright in, [4.30] definition, [4.350] original artistic works, Part III works, [4.150] Business methods patents for, [9.420]–[9.440] Business names national register, [13.10] trade marks, and, [13.10] Business reputation celebrities, [12.370]–[12.390] “character merchandising”, nature of, [13.90] consumer expectations, [12.100] damages for loss actual damage, requirement, [12.400] common field of activity, confusion, [12.350]–[12.360] celebrities, [12.370]–[12.390] fictional characters, [12.370] likelihood of damage, [12.320]–[12.330] fraud, and, [12.340] trap purchases, [12.410] deceit, tort of, [12.10] establishing, [12.90] fictional characters, [12.370]

Carriage service providers — see Internet service providers (ISP) Certification trade marks registration of, [13.790] Chart drawing, as, [4.320] Chile free trade agreement with, [2.130] TPPA, in, [2.170] China Act, amendments to, [3.200] free trade agreement with (CHAFTA), [2.130], [2.160] intellectual property rights, [2.160] RCEP, in, [2.180] Cinematographic film definition, [4.420], [4.430] material embodiment, [7.320] video games, [4.420] Cinematographic works copyright in, [4.30] Part IV subject matter, [4.160] rental rights, [2.50] when made, [4.40] Circuit layouts commercial exploitation, [14.370], [14.380] copyright, overlap with, [4.510], [14.420] 873

Intellectual Property: Commentary and Materials

Circuit layouts — cont definition, [14.320] domestic laws, [2.120] eligible, definition, [14.330] foreign country, eligible, [14.340] litigation in Australia, [4.520] originality, [14.390], [14.400] nature of, [14.410] person, eligible, [14.340] protection period, [14.360] reported cases, [4.520] rights, [14.350] Circumvention devices definition, [7.80], [7.110] electronic rights management information (ERMI), [7.80] offences, [7.80] statutory provisions, [7.80], [7.140] technological protection measures — see Technological protection measures (TPM) Collecting societies Australian, major, [5.400] Copyright Act 1968 provisions, [5.400] functions of, [5.400] nature of, [5.400] Resale Royalty Right for Visual Artists Act 2009, under, [5.410] Collective trade marks registration of, [13.780] Collocations, mixtures and packages patentability of claims, [9.340] combination claims, [9.350] food or medicine for humans/animals, [9.380] package claims, [9.360]–[9.370] Colour marks trade marks, registration of, [13.470] requirements, [13.470] use, evidence of, [13.470] Commercial information confidential information, types business strategies, [15.40] client and supplier lists, [15.40] entertainment industry, [15.70] celebrities and personal relationships, [15.80] formulae and recipes, [15.50] plans and machinery, [15.60] technology advances, [15.30] Commissioned works copyright in, [5.130] photographs, [5.130] portraits and engravings, [5.130] sound recordings, [5.130] Community ownership copyright of artistic works, [5.220] 874

Comparative advertising trade mark infringement and, [13.670] Competition intellectual property rights and, [1.120] Competition and Consumer Act 2010 (Cth) contributory infringement of patent liability under, [11.240] exercise of intellectual property rights and, [5.290] Competition Principles Agreement Ergas Committee, establishment of, [13.10] Compulsory licences fair dealing distinguished, [5.370] nature of, [5.370] patents, for, [11.500] grounds for granting, [11.500] royalty rates, [5.370] types, [5.380] Computer networks dissemination to public by, and copyright, [3.170] growth of, [1.120] Computer programs adaptation, [4.470], [4.480] copyright in, [4.40] definition, [4.380], [4.390] idea–expression dichotomy, [4.470] language used in, [4.390] literary works, protection as, [2.50], [4.40], [4.170], [4.370], [4.380], [4.390] legislative amendment, by, [4.380] Part III works, [4.150] patentability algorithms, [9.410] manner of manufacture, [9.400] rental rights, [2.50] Confidential information action for breach, [15.90] actual or threatened misuse of information, [15.110] statutory and judicial, [15.350] nature of confidence, [15.100], [15.120]–[15.130] degree of secrecy, [15.140], [15.150] obligation of confidence, [15.100] contractual, [15.180], [15.190] employees, [15.180], [15.190], [15.340] equitable, [15.170], [15.190], [15.230] misappropriation, [15.260] privacy, [15.210] proprietary, [15.220] scope of obligation, [15.270], [15.280] Spycatcher case, [15.240], [15.250] statutory, [15.200] third party users, [15.260] unauthorised use of information, [15.100], [15.290] business strategies, [15.40] client and supplier lists, [15.40]

Index

Confidential information — cont commercial information, types business strategies, [15.40] client and supplier lists, [15.40] entertainment industry, [15.70] celebrities and personal relationships, [15.80] formulae and recipes, [15.50] plans and machinery, [15.60] technology advances, [15.30] common law actions, [15.10] defences and exceptions to breach employment and restraint of trade, [15.360]–[15.400] duty of good faith and fidelity, [15.370] post-employment use of knowledge, [15.380], [15.390], [15.400] judicial, [15.350] public interest defence, [15.410]–[15.430] balancing competing interests, [15.410] government information, [15.450] illegal activity, prevention of, [15.420] Spycatcher case, [15.440] statutory, [15.350] whistleblower legislation, [15.350] entertainment industry, [15.70] celebrities and personal relationships, [15.80] formulae and recipes, [15.50] human rights legislation, and [15.10] international obligations, [15.10] nature of, [15.20] partly confidential information, [15.300] “springboard” doctrine, [15.300]–[15.330] personal information, [15.10] plans and machinery, [15.60] police informer, identity of, [15.160], [15.170] privacy and confidence, [15.210] public interest defence, [15.410]–[15.430] balancing competing interests, [15.410] government information, [15.450] Spycatcher case, [15.440] restraint of trade, [15.360]–[15.400] duty of good faith and fidelity, [15.370] post-employment use of knowledge, [15.380], [15.390], [15.400] reverse engineering, [15.140] “springboard” doctrine, [15.300]–[15.330] remedy for, [15.320] Spycatcher case, [15.240], [15.250] public interest defence, [15.440] trade secrets, [15.10], [15.20] confidence, nature of, [15.120], [15.130] identification of, [15.150] reverse engineering, [15.140] technology advances, [15.30] TRIPs agreement, [15.10] whistleblower legislation, [15.350] Constitution external affairs power, [2.120] “fresh rights”, High Court support for, [1.80], [2.120] intellectual property provision, [1.80], [2.120] construction of, [1.90] interpretation, [1.90] postal and telegraphic power, [2.120] two competing interpretations, [4.390]

Construction patent claims, infringement proceedings, [11.40] essential integers, [11.80], [11.90] improver question variants, [11.70] purposive construction, [11.40]–[11.60] patent specifications, principles, [10.240]–[10.260], [11.30] Catnic Components case, [11.50] Consumer protection breach of provisions, [1.100], [1.110] exercise of IP rights and, [5.290] Contributory infringement of patent Competition and Consumer Act 2010, liability under, [11.240] component part, supply of, [11.220] overview, [11.180] Patents Act 1990 provisions, [11.190] processes or methods, application to, [11.200] supplier is a party to infringement, [11.220] supply of goods, by, [11.180], [11.210] Copyright Act, [2.120], [4.10] amending legislation, [4.10], [7.60] breadth and complexity, [3.160] digital environment, [3.200] organisation of, [3.200] problems with, [3.170] simplification of, [3.160]-[3.190] UK Act, distinguished, [4.10] updating, [3.200] aesthetic considerations, [4.360], [4.370] assignment, [3.50] definition, [5.270] Australian Productivity Commission recommendations, [2.200], [3.210] author, [5.80] author’s exclusive rights, [5.10] buildings, [4.30] categories of protected works, [4.140] changes in law, [7.20] circuit layouts, overlap with, [4.510], [14.420] coincidental, independent creation of same work, [3.130], [3.140] collecting societies, [5.400] commissioned works, [5.130] community ownership, [5.220], [5.230] compilations of factual data, in, [4.80] Constitution, provision in, [1.80], [2.120] construction of, [1.90] Copyright Tribunal — see Copyright Tribunal creativity and, [3.10], [3.30] criteria for copyright protection, [4.20] Crown, [5.240] definition, [3.10] derivation vs independent creation, [3.130] establishing, [3.150] designs, overlap with, [4.530], [4.540], [14.230], [14.310] corresponding design, [14.280] registration of, [14.290] legislative developments, [14.260] prevention of overlap, [14.270] spare parts exception, [14.240]–[14.250] 875

Intellectual Property: Commentary and Materials

Copyright — cont digital environment and, [7.10] music, digital, [7.20] direct derivation, right against, [3.130] domestic laws, [2.120] duration of, [4.490] economic impact, [3.30] economic rights, [3.30], [3.40], [5.10] employment, [5.160]–[5.210] exclusive rights provided by, [5.10] exploitation, [5.260] expression of idea or information, in, [3.100], [3.110] file sharing — see Internet file sharing, infringing fundamental concepts, [3.40] genetically modified organisms, [1.90] historical context, [3.20] human endeavour or application, [4.60] human mental effort, [4.80] ideas — see Ideas incorporeal right, as, [3.40], [3.50] infringement — see Infringement of copyright innovation, fostering, [3.10] “innovation threshold”, [4.80] intellectual property, as, [1.15], [3.10] joint authorship, [5.90] joint ownership, [5.110] journalists’ copyright, [5.140], [5.150] law reform fatigue, [3.200] licensing, 5.260] geographical and temporal limits, [5.260] life-plus term of, [4.490] material form requirement, [4.40] medical records — see Medical records medium in which expressed, distinguished, [3.80] merit, [4.60] moral rights — see Moral rights national differences, [1.120] newspaper headlines, in, [4.120], [4.130] originality, [4.60], [7.50] minimum level of, [4.80] origins, [3.10], [3.20] owner not the author or creator, [5.80] parallel importing, [5.430] Part III Works, [4.140], [4.150] Part IV subject matter, [4.160], [4.400] performers’ rights, [5.10], [5.40] personal property, as, [3.50] published works, [4.30] “qualified person” criterion, [4.30] registration requirements, [3.50], [4.20] Romantic movement, [3.20] social impact, [3.30] sound recordings, in, [4.30] Statute of Anne, [3.20] tangible vs intangible, [3.50], [3.170], [4.20], [4.280] technological developments, [3.170] telephone directories, [4.80]-[4.110] three-dimensional objects, in, [4.310], [4.360] TPPA, in, [2.170] TRIPS, in, [1.30], [2.30] Part II, [2.50] unpublished works, [4.30] what is, [3.10] 876

WIPO Copyright Treaty (WCT) — see WIPO Copyright Treaty (WCT) work, what constitutes, [4.60], [4.130] Copyright Amendment Act 2006 circumvention devices, [7.140] overview, [7.140] TPM, exceptions to liability provisions, [7.140] Copyright Amendment (Digital Agenda) Act 2000 circumvention devices and services, [7.80] key provisions, [7.70] objectives of, [7.70] Copyright Amendment (Online Infringement) Act 2015 overview, [7.145] Copyright Tribunal licence schemes determination of fees, role in, [5.390] Council for Trade-Related Aspects of Intellectual Property Rights TRIPS, established under, [2.70] Counterfeit trade mark goods definition, [2.60] Creative commons licensing, [1.120] public licences, [3.30] Criminal offences copyright infringement, [6.620] Copyright Act 1968 provisions, [6.620] indictable, [6.620] penalties, [6.620] strict liability, [6.620] summary, [6.620] Criticism and review infringement of copyright and, [6.370] Crown use of an invention patent infringement and, [11.370] Crown copyright duration, [5.240] nature of, [5.240] reform recommendations, [5.240] Cultural heritage TPPA, in, [2.170] Cybersquatting dispute resolution policies, [13.10]

D Damages copyright infringement, for, [6.550]–[6.560] aggravated, [6.550]

Index

Damages — cont conversion, [6.550], [6.600] groundless threat of action, [6.630] misrepresentation, for, [6.600] Defensive Trade Mark Registration, [13.800] passing off, [12.110] actual damage, requirement, [12.400] common field of activity, and, [12.350]–[12.360] likelihood of damage, [12.320]–[12.330] fraud, and, [12.340] trap purchases, [12.410] patent infringement exemplary, [11.430] trade mark infringement, [13.730] Databases Part III works, [4.150] Defences to copyright infringement criticism and review, [6.370] fair dealing exceptions to infringement, [6.340] fair usage and, [6.465] judicial reporting, [6.440] non-infringing acts, other exceptions, [6.460] parody and satire, [6.390] private and domestic use, [6.450] professional legal advice, [6.440] public interest, [6.330] research or study, [6.330], [6.350] Copyright Act 1968 provisions, [6.360] factors in determining “fair use”, [6.350] sufficient acknowledgement, [6.330] Defences to patent infringement cessation of patent, [11.360] Crown use, [11.370] experimental use exemption, [11.330] commercial purposes, [11.340] examples of included acts, [11.340] Patents Act 1990 provisions, [11.320] Gillette defence, [11.260] reverse infringement test and, [11.270] innocent infringement, [11.390] lapse of patent, [11.360] onus of proof, [11.250] patent process cases, [11.260] pharmaceuticals, patents relating to, [11.350] extension periods, [11.350] springboarding, [11.350] prior use exemption Australian use, limited to, [11.310] definite steps to make or use, meaning, [11.300] grace period, relevance of, [11.310] operation of, [11.290], [11.310] Patents Act 1990 provisions, [11.280] regulatory approval, invention requiring, [11.350] ships, aircraft, vehicles temporarily in Australia, [11.380] unjustified threats of proceedings, action for, [11.400] patent applications, as to, [11.420] person aggrieved, [11.420] uncertified innovation patents, [11.400]

Delivery up, orders for copyright infringement, [6.600] Department of Foreign Affairs and Trade (DFAT), [2.130] Descriptive terms trade marks, registration of, [13.330] context, [13.330] entirely descriptive, [13.350] Design appearance, protection of, [14.30], [14.70] “applied industrially”, [4.530], [14.310] artistic works industrial designs, as [14.300] copyright, overlap with, [4.530], [4.540], [14.230], [14.310] corresponding design, [14.280] registration of, [14.290] legislative developments, [14.260] prevention of overlap, [14.270] spare parts exception, [14.240]–[14.250] corresponding design, [4.530] definition, [14.20] domestic laws, [2.120] Indigenous cultural and intellectual property, [17.50] informed user standard, [14.140], [14.150] infringement, [14.170] spare parts defence, [14.200] substantial similarity, assessment, [14.190] innovation threshold, [14.70] integrated circuits, [14.160] international protection, [14.220] jurisdiction, [14.210] legislative developments, [14.10] monopoly, obtaining, [1.110] novelty and distinctiveness, [14.80], [14.90] assessment of, [14.120], [14.140] statement, [14.140] prior art base, [14.80], [14.100] comparison of application with, [14.140] prior publication, [14.100]–[14.110] prior use, [14.100]–[14.110] private property rights, Act creating, [1.110] product, definition, [14.20] protected “look”, [14.10], [14.70] protection period, [14.70] publication, [14.160] rationale for protection, [14.10] registered owner, rights of, [14.180] registrable design, definition, [14.80] registration, [14.10], [14.160] application for, [14.160], [14.310] certificate of, [1.110] priority date, [14.160] revocation, [14.160] remedies, [14.210] scandalous, [17.50] Indigenous cultural and intellectual property, [17.50] spare parts defence, [14.200], [14.240], [14.250] statutory protection, [14.10] substantial similarity, [14.130] visual features of, [14.40]–[14.60] 877

Intellectual Property: Commentary and Materials

Design — cont definition, [14.50] registration of design, and, [14.70] Developing countries digital divide, [1.120] intellectual property rights and, [1.40], [1.50] inventions in, [1.40] knowledge gap, [1.120] Development treaties dealing with, [1.120] Development Agenda WIPO, in, [1.120] Diagram drawing, as, [4.320]

Dramatic works adaptation of, [4.470] definition, [4.190], [4.210] infringement of, [6.20], [6.40] public performance, exclusive right of, [6.160] literary works and, [4.190], [4.200] material form, requirement for, [4.190] Part III works, [4.150] public spectacle as, [4.210] sound recording of, [5.80] Drawing “architect’s plans” cases, [4.320] author, [5.80] definition, [4.320] originality in, [4.320] Droit de suite — see Resale royalty rights

E Digital Agenda, [1.120] amendments, [4.380] Digital environment — see also Copyright Amendment (Digital Agenda) Act 2000 copyright and, [7.10] Copyright Act, updating, [3.200] emergence of, [1.30] file sharing — see Internet file sharing, infringing film industry, issues, [7.20] music, issues, [7.20] Digital technology international discussions, [1.120] international trade and, [1.120] Digitisation material form requirement and, [4.40] Discoveries patentability agricultural/horticultural processes, [9.200] biotechnical inventions — see Biotechnical inventions principles, [9.180] Dispute settlement mechanisms, [1.30] Distinctiveness trade marks — see Trade marks Doha Development Agenda, [2.20] Doha Rounds failure to conduce, [2.100] Domain names “bad faith” registrations, [13.10] protection for, [1.120] trade marks, and, [13.10] 878

E-commerce trade marks, [13.50] Economic rights copyright holders, [5.10] authors, [5.10] performers, [5.10] Educational institutions authorisation of copying, [6.260] copying under compulsory licence, [5.370] Electronic rights management information (ERMI) definition, [7.80] Employment academic authors, [5.160] contract of service and contract for services, [5.160] copyright in context of, [5.160] employee or contractor distinction, [5.160], [5.200] general rule, [5.160] patents, entitlement to, [11.440] pursuance to terms of, meaning, [5.160]–[5.190], [5.210] Enforcement Australian Productivity Commission recommendations, [2.200] Engraving commissioned, copyright in, [5.130] definition, [4.310], [4.330] Equity treaties dealing with, [1.120] Ergas Committee establishment, [13.10]

Index

Australian, [2.130] China, with, [2.150], [2.160] intellectual property protection standards in, [2.100] Japan, with, [2.150], [2.160] South Korea, with, [2.150], [2.160] “TRIPS-plus” provisions, [2.100]

Ergas Report Final Report, [8.50] parallel importing, [5.450] European Union (EU) duration of copyright, [4.490] global harmonisation, promoting, [2.100] Exclusive rights copyright holders, [5.10] authors, [5.10] performers, [5.10] patentees, [11.10], [11.100]–[11.170] authorise another, [11.170] import, [11.140] make, [11.110] sell, hire or otherwise dispose of, [11.120] use, [11.130] Expert evidence aesthetic qualities, as to, [4.370] External affairs power High Court interpretation, [2.120]

F

G

General Agreement on Tariffs and Trade (GATT), [1.30] Genetic modification copyright protection, [1.90] Genetic resources enfranchisement, claims for, [1.120] TPPA, in, [2.170] Geographic names indications — see Geographical indications trade marks, registration of adaptation of, [13.310], [13.320] not name of place, where, [13.340]

Film directors, screenwriters and producers moral rights and, [5.20], [5.50]

Geographical indications Indigenous cultural and intellectual property, [17.290] intellectual property, and, [1.30] international agreements, [12.10] Paris Convention, [1.30] TRIPS, in, [1.30], [2.30], [2.50] protection for, [1.120], [12.10], [12.60], [12.70], [13.320] TPPA, in, [2.170]

Film script copyright in, [4.190]

Good faith trade mark infringement and, [13.670]

Films cinematographic, [7.20] commissioned, copyright in, [5.130] issues facing industry, [7.20] maker, meaning, [5.50] moral rights in, [5.20], [5.50] duration, [5.30]

Goodwill fraud, and, [12.210] location, role of, [12.180], [12.190], [12.200], [12.210] foreign website, sales, [12.220] indirect advertising, [12.230] jurisdictional issues, [12.210] passing off, and — see Passing off post-trading, [12.290], [12.300], [12.310] pre-trading, [12.290] proprietary rights in, [12.10], [12.30]–[12.40] name, extension beyond, [12.50], [12.210] source, [12.170]

Face painting stage make-up, [4.280], [4.290] File sharing — see Internet file sharing, infringing

Forum shifting, [2.100] Fraud necessary element for damages, [12.210], [12.340] Free for education licences public licences, [3.30] Free software public licences, [3.30] Free trade agreements (FTAs) Australia–US — see Australia–US Free Trade Agreement (AUSFTA)

H

Health intellectual property rights and, [1.120] High Court external affairs power, interpretation, [2.120] 879

Intellectual Property: Commentary and Materials

Human rights inalienable and universal, [1.50] intellectual property rights and, [1.50] Humans food or medicine for, patentability, [9.380] patenting of, [9.280] processes for generation, [9.280]–[9.290] stem cell technology, [9.300] treatment methods, patentability, [9.310] “Swiss-style” claims, [9.330]

I

Ideas Da Vinci Code case, [3.120] established and alleged “historical facts”, [3.120] expression, distinguished, [3.100], [4.40], [4.50] idea–expression dichotomy, [3.100]-[3.120], [3.200], [4.40], [4.60], [4.470], [4.470] no copyright in, [3.100], [3.110] no property in, [3.40] tangible medium, in, [3.40] Implied licence architectural plans, [5.330], [5.340] nature of, [5.330], [5.360] Importation patent infringements, [11.140], [11.160] Saccharin doctrine, [11.140], [11.150] Incentive theories challenges to, [1.120] Independent contractors patent grant, entitlement to, [11.440] India agreement under negotiation, [3.200] RCEP, in, [2.180] Indigenous cultural and intellectual property (ICIP) Aboriginal folklore, [3.40] ACCC, powers of, [17.130] restrictions, [17.150], [17.160] author, identification of, [17.30] reproductions and copyright infringement, [17.100] biodiversity, exploitation of, [17.170] Biological Resources Act 2006 (NT), [17.210] Convention on Biological Diversity, [17.180] Environment Protection and Biodiversity Protection Act 1999 (Cth), [17.200] case law, [17.70] certification marks, [17.280] communal copyright, [17.100], [17.110] equitable obligations, [17.110] express trust, [17.110] Convention on Biological Diversity, [17.180] copyright law, and, [17.30] 880

artistic works, [5.230] collective ownership, [17.110] copyright infringement, [17.90] duration, [17.30] misleading and deceptive conduct, [17.90], [17.140] reproductions, [17.100] ritual knowledge, protection of, [17.110] statutory recognition, [17.40] culture, transmission of, [17.10] customary law, [17.110] definition, [17.10] designs, [17.50] genetic resources, access to, [17.170] geographical indications, [17.290] Indigenous art, [17.120] certification marks, [17.280] copyright infringement, [17.140], [17.160] reproductions authorised, [17.90] sub-licence, [17.90] unauthorised, [17.90], [17.110] Indigenous communal moral rights, [3.40], [5.20] intergenerational, [17.10] legal protection, current, [17.20] material form, [17.30] methods, identification of, [17.30] misuse and misappropriation, [17.10] native title, role of, [17.310] originality, [17.30] patents, [17.60], [17.170], [17.190], [17.300] biodiversity — see biodiversity, exploitation of above “Kakadu Plum”, [17.220], [17.230] preservation of, [3.40] public domain, and [17.50], [17.60] resale royalty scheme, [17.40] rights legal protection, current, [17.20] nature of, [17.10] ritual knowledge embodied, [5.230] secret and sacred knowledge, [17.160] breach of confidence action, [17.80] clan law and custom, [17.110] statutory recognition, [17.40] styles, identification of, [17.30] trade marks, [17.50] cultural expressions, protection, [17.270] traditional knowledge ownership, [17.30] patents, [17.60], [17.170], [17.190] sui generis laws, [17.260] transmission of, [17.10] WIPO draft definition, [17.250] United Nations Declaration on the Rights of Indigenous Peoples, under, [17.10] World Intellectual Property Organisation (WIPO), [17.240] Intergovernmental Committee on Intellectual Property and Genetic Resources, [17.250] “traditional knowledge”, draft definition, [17.250] Indonesia agreement under negotiation, [3.200]

Index

Industrial designs “applied industrially”, [4.530], [14.310] artistic works industrial designs, as [14.300] Paris Convention, protection under, [1.30] TRIPS, in, [1.30], [2.30] Part II, [2.50] Industrial property Paris Convention, [1.30] Information no copyright in, [4.60] no property in, [3.40], [3.70] Infringement action for, under TRIPS, [2.60] copyright, of — see Infringement of copyright patents, of — see Infringement of patents “piracy”, as, [1.60], [1.70] trade marks — see Infringement of trade marks Infringement of copyright actions for groundless threats of, [6.630] locus standii, [6.470] acts identifying, [6.20] appropriation, onus of proof, [3.140] authorisation carriage service providers, [6.320] educational copying, [6.260] ISPs and file sharing, [7.210] public performances, [6.180], [6.190] copying educational, [6.260] personal use, for, [6.270] criminal offences, penalties for, [6.620] defences to — see Defences to copyright infringement definition, [6.20] derivation from original work, [3.130] direct, [6.100] subject-matter other than works, [6.210] dramatic works, [6.40] establishing, [3.130] Indigenous cultural and intellectual property, [17.90] indirect, [6.100], [6.250] “knowing or having reason to know”, [6.250] internet, material on, [6.320] legislative provisions, [6.10] originality of part allegedly taken, [4.90] P2P, [7.200] Kazaa case, [7.200]–[7.220] public performance, exclusive right of, [6.160] authorisation of, and, [6.180], [6.190] performance, meaning, [6.160], [6.200] places of public performance, [6.160] publication, exclusive right of, [6.150] remedies for — see Remedies reproduction, exclusive right of, [6.110] causal connection, [6.110], [6.120] copying, proof of, [6.120] factors in determining, [6.110]

objective similarity, [6.140] quantitative test, [6.140] rights management information, [6.280] subconscious copying, [3.150], [6.130] “substantial part” factors in determining, [6.80] meaning, [6.50], [6.230] qualitative test, [6.70], [6.90] recognition, [6.60] requirement, [6.50] television broadcasts, [6.220] technological protection measures (TPM), [6.270], [6.280] devices to circumvent, [6.280] television broadcasts, [7.40] re-broadcasts, [7.30] substantial part, [6.220] unconscious copying, [3.150] “what is worth copying is worth protecting”, [6.30] Infringement of patents authorisation, by, [11.170] failure to prevent act, [11.170] claim construction in, principles, [11.40] Catnic Components case, [11.50] improver questions, [11.70] purposive approach, [11.50], [11.60] commencement of proceedings, [11.10] exclusive licensee, by, [11.10] limitations, [11.10] patentee, by, [11.10] contributory, [11.180], [11.220] Competition and Consumer Act 2010, liability under, [11.240] component part, supply of, [11.220] Patents Act 1990 provisions, [11.190] processes or methods, application to, [11.200] supplier is a party to infringement, [11.220] supply of goods, by, [11.180], [11.210] damages for, exemplary, [11.430] defences — see Defences to patent infringement exclusive rights of patentee, [11.10], [11.100]–[11.170] authorise another, [11.170] import, [11.140] make, [11.110] sell, hire or otherwise dispose of, [11.120] use, [11.130] exploit an invention, meaning, [11.10] importation as, [11.140], [11.160] Saccharin doctrine, [11.140], [11.150] innocent, [11.390] injunction to restrain, [11.390] making as, [11.110] commercial purpose, [11.110] overview, [11.10] sell, hire or otherwise disposal as, [11.120] staple commercial product, meaning, [11.200] test for, principles, [11.20] “pith and marrow infringement”, [11.30], [11.40] unjustified threats of proceedings, action for, [11.400] patent applications, as to, [11.420] person aggrieved, [11.420] uncertified innovation patents, [11.400] 881

Intellectual Property: Commentary and Materials

Infringement of patents — cont use as commercial interference, [11.130] trial or experimental, [11.130] Infringement of trade marks comparative advertising, [13.670] deceptive similarity, [13.590], [13.640]–[13.650] definition, [13.590] disclaimed part, use of, [13.670] elements of, [13.590] foreign internet sales, [13.630] good faith, defence of, [13.670], [13.680] non-infringing conduct, [13.670] overview, [13.590] parallel importation, [13.690], [13.700] views for and against, [13.710] prior continuous use, and, [13.670] remedies, [13.730] account of profits, [13.730] damages, [13.730] injunction, [13.730] substantial identity, [13.640]–[13.650] good faith defence, [13.650] use as mark, [13.600] descriptive, [13.610], [13.620] Injunctions block access to online sites, requiring ISPs to, [7.145], [7.300] factors, [7.145] copyright infringement, [6.500] interlocutory, [6.500] Mareva, [6.540] trade mark infringement, [13.730]

Australian Productivity Commission inquiry into, [2.190], [2.200] characteristics, [1.10] Constitution, provision in, [1.80] construction of, [1.90] copyright — see Copyright creativity, intangible, [1.10] domestic legislation, [2.120] exclusive rights, [1.10] expression/manifestation, tangible, [1.10] federal power to enact laws, [1.80] flexibility, need for, [1.30] intangible personal property, as, [3.50] international context, [2.10] new forms, [1.30] patents — see Patents property characteristic, [1.10] rights — see Intellectual property rights scope of protection in Australia, [1.80], [2.120] societal and technological advances, [1.10] special heads, [1.10], [1.15] trade marks — see Trade marks what is, [1.10] WIPO Convention, definition in, [1.30] Intellectual Property Competition Review Committee — see Ergas Committee

Integrated circuits TRIPS, in, [1.30], [2.80]

Intellectual property rights ascribed rights, [1.10] balance between owners and users, [1.120] balancing competing objectives, [1.40] “careful balance”, [1.110], [1.120] commercial exploitation and, [1.60] competition, issues of, [1.120] debate about, [1.40] definition, [1.15] TRIPS, [1.30] Universal Declaration of Human Rights, [1.50] WIPO, [1.30] developing countries, [1.40], [1.50] economic argument, [1.40], [1.50] economic growth, stimulating, [1.40] enforcement, [1.30] future of, [1.120] human rights and, [1.50] moral conception, [1.40] nature of, [1.50] objectives, [1.40] privileges conferred by, [1.50] reasons for, [1.40] societal argument, [1.40] taxation, comparison with, [1.50] time limitations on, [1.50] TRIPS definition, [1.30] world trade and, [1.30]

Integrity right of, [5.20]

Interlocutory orders infringement of copyright, [6.490]

Intellectual property (IP) alternative route for protection, [1.100] Australian context, [1.80], [2.120]

International arena intellectual property as trade issue, [2.10] multilateral and bilateral conventions, [2.10]

Innovation patent — see also Patents certificate of examination, [8.300] formalities check, [8.280] innovative step definition, [9.740] innovation patents, requirement, [9.630], [9.750] no substantial contribution test, [9.750]–[9.760] Patents Act 1990 provisions, [9.740] prior art base, [9.750] nature of, [8.150], [8.180] Innovative step definition, [9.740] innovation patents, requirement, [9.630], [9.750] no substantial contribution test, [9.750]–[9.760] Patents Act 1990 provisions, [9.740] prior art base, [9.750]

882

Index

International Convention for the Protection of New Varieties of Plants (1961), [2.50] International Covenant on Economic, Social and Cultural Rights (1966), [2.10] International Monetary Fund (IMF), [2.10] International registration designs, [14.220] trade marks, [13.810] International trade digital technology and, [1.120] impediments to, reducing, [1.40] increase in, [1.30] International Union for the Protection of New Varieties of Plants (1961) (UPOV), [2.50] Internet creative commons licensing, [1.120] file sharing — see Internet file sharing, infringing infringement of copyright of material on, [6.320] “internet treaties”, [2.90] law addressing material on, [1.120] open source, [1.120] peer-to-peer file sharing systems, [1.120] WIPO “internet treaties”, [1.120] Australia–US Free Trade Agreement, in, [2.140] Internet file sharing, infringing authorisation by ISPs, [7.190], [7.200], [7.210] Bit-Torrent protocol, [7.240] Bit-Torrent system, [7.270], [7.280] Dallas Buyers Club LLC v iiNet Ltd, [7.300]–[7.310] Roadshow Films v iiNet (2012), [7.290] Roadshow Films v iiNet (2011), [7.260] Roadshow Films v iiNet (2010), [7.250] ISPs liability for end-user actions, [7.150] Napster case, [7.160] “Betamax” defence, [7.170] P2P copyright infringement, [7.200]–[7.230] Bit-Torrent protocol, [7.240]–[7.310] Kazaa case, [7.200]–[7.220] Universal Music Australia v Cooper, [7.180]–[7.190] Internet service providers (ISP) authorisation of infringement, [7.190], [7.200], [7.210] Bit-Torrent system, [7.270], [7.280] descriptors of, [7.120] injunctions requiring blocking access to online sites, [7.145], [7.300] safe harbour provisions, [2.170], [6.320], [7.120] AUSTFA provisions, [7.130] Invented words trade marks, registration of, [13.390], [13.400] direct reference to nature of goods, [13.420] foreign words, [13.410], [13.420]

no direct reference to nature of goods, [13.430] obvious meaning, where, [13.420] Inventions — see also Patents definition, [9.30] developing countries, in, [1.40] exploit an invention, meaning, [11.10] manner of manufacture — see Manner of manufacture medical treatment of humans, [9.80] Paris Convention, protection under, [1.30] public policy considerations, [9.70] contrary to law, [9.90]–[9.110] generally inconvenient, [9.80] stimulating, benefits of, [1.40] TRIPS, patentability under, [9.20] Inventive step — see also Innovative step common general knowledge, [9.680] patent specifications as, [9.680] definitions common general knowledge, [9.680] prior art base, [9.470], [9.620] prior art information, [9.470], [9.620] experiments checking and testing, for, [9.700] leading to invention, [9.700] obviousness, determining, [9.700]–[9.710] patents, requirement for, [9.610] Patents Act 1990 provisions, [9.620] person skilled in the art, [9.670] prior art base determining, use in, [9.640] meaning, [9.640]–[9.660] patent specifications, [9.680] unrelated fields, publication in, [9.660] problem-solution approach, [9.720]–[9.730] requirement for, [9.690] non-obviousness, [9.690]–[9.700] routine steps, [9.700] skilled addressee, [9.670] Inventiveness 1900, since, [1.90] future direction of, [1.90] Inventor determining who is, [11.450] Investment definition, in trade agreements, [2.100]

J Japan Act, amendments to, [3.200] free trade agreement with (JAEPA), [2.130], [2.160] intellectual property rights, [2.160] RCEP, in, [2.180] TPPA, in, [2.170] ratification of, [2.170] John Doe orders copyright infringement, [6.530] 883

Intellectual Property: Commentary and Materials

Joint authorship definition, [5.90] material contribution required, [5.90] musical works, of, [5.70] tenants in common, [5.90]

originality, [4.70] Part III works, [4.150], [4.170] protected works, under Berne Convention, [1.20] public performance, infringement of exclusive right of, [6.160] scope of, [1.15], [4.170] sound recording of, [5.80] TRIPS, protection under, [2.50]

Joint ownership copyright works, of, [5.110] Journalists’ copyright employee journalists, of, [5.140] nature of, [5.140] rights, [5.150] Judicial reporting infringement of copyright and, [6.440] Jurisdiction cross-vesting, in IP matters, [1.100] Justice treaties dealing with, [1.120]

L

Layout designs TRIPS, in, [1.30], [2.30] Part II, [2.50] Licences assignment distinguished, [5.270, [5.280], [5.310] compulsory, [5.370] patents, for, [11.500] copyright rights, of, [5.260], [5.300] exclusive, [5.320] implied, [5.330]–[5.360] licence, meaning, [5.300] non-exclusive, [5.320] patents, for, [11.470] compulsory, [11.500] exclusive, [11.480] registration, [11.470] sole, [11.480] tying arrangements with, [11.490] Limitations infringement of patents proceedings, [11.10] Literary works adaptation of, [4.470] compilations as forms for business systems, [4.170], [4.180] computer programs — see Computer programs copyright in, [3.10] definition, [4.60], [4.70], [4.170] dramatic works and, [4.190], [4.200] exam papers, [4.60], [4.70] function of, [4.170] infringement of, [6.20] literary merit and, [4.60] newspaper headlines, [4.120], [4.130] non-written form, in, [4.170] 884

Locus standii infringement of copyright actions, [6.470]

M

Malaysia free trade agreement with, [2.130] TPPA, in, [2.170] Manner of manufacture algorithms, inventions involving, [9.410] business methods, [9.420]–[9.440] collocations, mixtures and packages, [9.340] computer programs, [9.400] manner of manufacture, [9.400] discoveries agricultural/horticultural processes, [9.200] biotechnical inventions — see Biotechnical inventions patentability, principles, [9.180] improvements, [9.450] meaning of concept, [9.40]–[9.60] medical treatment of humans, [9.80] new use of known things, [9.120], [9.450] newness, assessment of, [9.130] prior art information, [9.160]–[9.170] prior knowledge, threshold test of inventiveness, [9.140] public policy considerations, [9.70] contrary to law, [9.90]–[9.110] generally inconvenient, [9.80] requirement of newness for patentability, [9.30] schemes and programs, [9.390] mere working arrangements, [9.390] Maps drawing, as, [4.320] Part III works, [4.150] Mareva injunctions copyright infringement, [6.540] Marketing signs, politics of reading, [13.40] social, [13.40] Marrakesh Agreement WTO, establishing, [2.20] Medical records copyright in, [3.80], [3.90] patient’s right to access, [3.70] property in, [3.70]

Index

Mexico TPPA, in, [2.170] Micro-organisms Budapest Treaty, [8.250], [10.130] international deposit system, [10.130] deposit requirements, [10.130] life form, meaning, [9.230] meaning, [9.230] nucleic acid molecules, [9.240]–[9.260] processes using, patentability, [9.230] specification for inventions involving, [8.250] Misleading or deceptive conduct conduct of traders, regulating, [1.110] Indigenous cultural and intellectual property copyright infringement, [17.90] passing off consumers, [12.130]–[12.160] elements, [12.90] identified individuals, representations, [12.160] intent, [12.160] prospective consumers, [12.130]–[12.140], [12.180] public at large, representations, [12.150], [12.160] unfair, distinguished, [12.120] prohibition, [1.100], [1.110], unfair, distinguished, [12.120] Monopolies consideration moving to the public, [8.30] historical background, [8.10] Moral rights attribution rights, [1.10], [5.20] Berne Convention, [2.50], [5.20], [5.260] consent provisions given by authors, [5.260] copyright in, [3.30], [3.40] creator integrity, [1.10] duration, [5.30] external affairs power, [2.120] Indigenous communal, [3.40], [5.20] individuals only may possess, [5.20] integrity, right of, [5.20] meaning of, [3.40], [5.20] secondary consideration, as, [3.30] TRIPS, exclusion from, [5.20] waiver of, [5.260] Multimedia entity copyright and, [3.170] Musical works adaptation of, [4.470] communal ownership, [5.70] definition, [4.220] file sharing — see Internet file sharing, infringing Hadley v Kemp, [5.70] infringement of copyright of, [6.20], [6.130] causal connection, [6.120] objective similarity, [6.140] public performance, exclusive right of, [6.160] quantitative test, [6.140]

subconscious copying, [6.130] joint ownership, [5.70] material form principle of, [5.70] requirement for, [4.190], [4.220] Part III works, [4.150] performer’s moral rights, [5.70] sound recording of, [5.80] words and music, authorship, [5.110] Myer Report indigenous communal moral rights, [5.20]

N

Names of persons trade marks, registration of, [13.360] legendary or historical characters, [13.380] represented in a special or particular manner, [13.370] Search for Australian Surnames (SFAS) database, [13.360] signatures, [13.360] Napster case “Betamax” defence, [7.170] facts and decision, [7.160] New Zealand free trade agreement with, [2.130] RCEP, in, [2.180] TPPA, in, [2.170] Newspaper headlines copyright in, [4.120], [4.130] definition, [4.130] Novelty anticipation, prior publication as, [9.550], [9.580] commercial use of test product, [9.590], [9.800] definitions document, [9.480] patent area, [9.470] prior art base, [9.470] prior art information, [9.470] experimental use, [9.590], [9.800] grace periods, [9.590] consent of patentee, permitted disclosures with, [9.590] defence to infringement claims and, [9.590] publication without consent of patentee, [9.590] making information available publicly, [9.500]–[9.510] combination of documents, [9.500], [9.520] doing an act, by, [9.560] patentability and, [9.460] Patents Act 1990 provisions, [9.470] prior art base definition, [9.470] reverse infringement test, [9.570]–[9.580] revocation of patent for lack of, [9.490] selection patents, [9.600] 885

Intellectual Property: Commentary and Materials

Novelty — cont want of, test, [9.570] reverse infringement test, [9.570] whole contents, [9.530]–[9.550] origin of concept, [9.530] Nucleic acid molecules patentability, [9.240]–[9.260]

TPPA, in, [2.170] TRIPS and, [2.30], [2.80] Paris Union for the Protection of Industrial Property WIPO membership and, [2.90] Parody and satire infringement of copyright and, [6.390]–[6.430]

O

Online service providers “safe harbour” provisions, [6.320] Open source challenges posed by, [1.120] public licences, [3.30] Originality copyright protection, for, [4.60], [7.50] literary works, [4.70] minimum level of, [4.80] telephone directories, [4.90], [7.50] Ownership trade marks — see Trade marks

P

Painting artistic works, [4.250] caricatures as, [4.260], [4.270] face make-up as, [4.280], [4.290] portrait commissioned, copyright in, [5.130] Parallel importation books, [5.450], [6.250] computer software, [5.450] copyright owners’ rights, [5.430] Ergas Committee, [5.450] meaning, [5.430] Productivity Commission (Draft Report), [13.690], [13.720] recorded music, [5.450] trade mark infringement, [13.690], [13.700] case studies, [13.720] reforms and recommendations, [13.720] Review of Intellectual Property Legislation under the Competition Principles Agreement, [13.710] considerations, [13.710] recommendations, [13.710] Trade Marks Act, and [13.710] views for and against, [13.710] Paris Convention Australian trade marks law, [13.10] industrial property, protection of, [1.30] major international agreement, [2.10] patent applications under, [8.230] patent system, impacts of, [8.80] 886

Passing off actions composition of goods, [12.60] development of, [12.60] geographic indication protection, [12.60], [12.70] nature of interests protected, [12.20] reverse passing off, [12.50] common law principles, [1.100] damages for loss actual damage, requirement, [12.400] common field of activity, confusion, [12.350]–[12.360] celebrities, [12.370]–[12.390] fictional characters, [12.370] likelihood of damage, [12.320]–[12.330] fraud, and, [12.340] trap purchases, [12.410] deceit, and [12.90] descriptive terms mimicking success, and [12.110]–[12.115] disclaimer of differentiation, [12.440] elements, [12.10], [12.60] goodwill, subsistence, [12.90] consumer expectations, [12.100] expert evidence, [12.100] extent, [12.100] fraud, relevance of, [12.210] location, [12.180], [12.190], [12.200] foreign website, sales, [12.220] geographical, [12.210] indirect advertising, [12.230] jurisdictional issues, [12.210] outside of jurisdiction, [12.210] property rights, [12.210] source, [12.170] historical origins, [12.10] images, characters and personalities, [12.80], [12.370]–[12.390] instant recognition, [12.80] intent, fraudulent [12.110] interests protected, [12.20] mimicking success, and [12.110]–[12.115] misleading conduct, and [12.80] consumers, [12.130]–[12.160] identified individuals, representations, [12.160] intent, [12.160] prospective consumers, [12.130]–[12.140], [12.180] public at large, representations, [12.150], [12.160] unfair, distinguished, [12.120] misrepresentation, [12.80] name, usage, [12.90], [12.100] proprietary rights in goodwill, [12.10], [12.30]–[12.40]

Index

Passing off — cont name, extension beyond, [12.50] remedies, [12.110], [12.440] orders, complexity of, [12.430], [12.440] reputation, [12.90] consumer expectations, [12.100] expert evidence, [12.100] extent, [12.100] fraud, relevance of, [12.210] location, [12.180], [12.190], [12.200] foreign website, sales, [12.220] geographical, [12.210] indirect advertising, [12.230] jurisdictional issues, [12.210] outside of jurisdiction, [12.210] property rights, [12.210] source, [12.170] reverse, [12.50] secondary branding, [12.80] shape and design, [12.120] suggestive brand advertising, [12.80] trade mark law, and, [12.10], [13.10] Patent attorneys role, [8.190] Patent Cooperation Treaty (1970) (PCT) applications under, [8.230] WIPO administration of, [8.230] Patented drugs compulsory licensing, [1.30] Patentee co-owners, rights of, [11.440] eligible persons for grant, [11.440] exclusive rights of, [11.10], [11.100]–[11.170] commencement, [11.10] exploit an invention, meaning, [11.10] infringement actions — see also Infringement of patents authorise another, [11.170] import, [11.140] make, [11.110] sell, hire or otherwise dispose of, [11.120] use, [11.130] inventor, determining, [11.450] ownership of patent, [11.440] Patents amendments to documents filed, [8.370] applicants, [8.210] applications, [8.220] assignment of, [11.460] Commissioner of Patents, powers, [11.440] divisional, [8.270] examination for a standard, [8.260] international protection, for, [8.230] joint, [8.210] assignment of, [11.460] application, of, [11.460] geographical limitations, [11.460] registration, [11.460] attorneys — see Patent attorneys Australian Productivity Commission recommendations, [2.200], [8.70]

Australian system, overview, [8.90]–[8.150] legislative history, [8.90] biotechnical inventions — see Biotechnical inventions competing interests, balancing, [1.110] compulsory licences, [11.500] Constitution, provision in, [1.80], [2.120] construction of, [1.90] co-owners, rights of, [11.440] date of, [8.340] divisional applications, [8.270] publication, [8.290] domestic laws, [2.120] eligible persons, [8.210], [11.440] employers, entitlement to, [11.440] entitlement to eligible persons, [11.440] employers, [11.440] Ergas Report, [8.50] examinations innovation patent, of, [8.300] standard patent, of, [8.260] exclusive licence, [11.480] extension of term, [8.340] grant, [8.320] historical background, [8.10]–[8.30] improvement or modification, [8.350] independent contractors, entitlement to, [11.440] Indigenous cultural and intellectual property, [17.60], [17.170], [17.190], [17.300] biodiversity and — see Biodiversity infringement — see Defences to patent infringement — see Infringement of patents innovation patent, [8.150], [8.180] certificate of examination, [8.300] formalities check, [8.280] intellectual property, as, [1.15] international agreements, [8.80] international protection applications for, [8.230] international preliminary examination report (IPER), [8.230] Paris Convention, under, [8.230] PCT, applications under, [8.230] inventive step — see Inventive step inventor, determining, [11.450] lapse of, [11.360] legislation Colonial Acts, [8.100] history, [8.90] Patents Act 1990, [8.130] Patents Act 1952, [8.120] Patents Act 1903, [8.110] licences, [11.470] compulsory, [11.500] exclusive, [11.480] registration, [11.470] sole, [11.480] tying arrangements with, [11.490] manner of manufacture — see Manner of manufacture medical treatment of humans, [9.80] novelty — see Novelty opposition to grant, [8.310] overview of Australian system, [8.150], [8.160] ownership of, [11.440] 887

Intellectual Property: Commentary and Materials

Patents — cont co-ownership, [11.440] patent area, [9.470] patent of addition, [8.170], [8.350] patentee, exclusive rights of, [11.10] petty patents, [8.120] plant breeders’ rights, and, [16.220] priority date, [8.200] private property rights, Act creating, [1.110] Productivity Commission review 2016, [8.60]–[8.70] publication, [8.290] re-examination, [8.330] refusal to grant, [8.360], [9.30] revocation, grounds for, [8.360] ineligible person, made to, [11.440] selection patents, [9.600] sole licence, [11.480] specifications — see Specifications standard patent, [8.150], [8.170] examination of application, [8.260] system, evaluation of, [8.40]–[8.80] objectives, [8.50] term of, [8.340] extension, [8.340] TPPA, in, [2.170], [8.140] TRIPS, in, [1.30], [2.30] Part II, [2.50] validity of — see Validity of patents Patents Act 1990 amendments to, [8.130] contributory infringement of patent, [11.190] defences to patent infringement experimental use exemption, [11.320] prior use exemption, [11.280] innovative step provisions, [9.740] inventive step, provisions, [9.620] novelty, provisions, [9.470] patentable inventions, requirements, [9.20] Patents Act 1952 overview, [8.120] Patents Act 1903 historical overview, [8.110] Patient medical records copyright in, [5.110], [5.120] Pay television copyright for, [4.440] Peer-to-peer file sharing systems, [7.200]–[7.230] challenges posed by, [1.120] Bit-Torrent protocol, [7.240] Dallas Buyers Club LLC v iiNet Ltd, [7.300]–[7.310] Roadshow Films v iiNet (2012), [7.290] Roadshow Films v iiNet (2011), [7.260] Roadshow Films v iiNet (2010), [7.250] Kazaa case, [7.200]–[7.220] Penalties copyright infringement, for, [6.620] 888

Performances copyright in, [3.10], [4.30], [4.190], [5.10] live, sound recordings, [4.410] meaning, [5.10], [5.40] Part IV subject matter, [4.160] public performances, [4.190] WIPO Performances and Phonograms Treaty (WPPT) — see WIPO Performances and Phonograms Treaty (WPPT) Performers’ rights 1 January 2005, after, [4.410] commissioned recordings, [4.410] constitutionality, [2.120] copyright provisions, [5.10], [5.40] economic, [5.10] exclusive, [5.10] moral rights, [5.40] duration, [5.30] performance in course of employment, [4.410] Peru TPPA, in, [2.170] Pharmaceuticals excess patent protection, [2.190] exemption to infringement of patent claims, [11.350] extension periods, [11.350] springboarding, [11.350] generic, [1.30] patentability, [9.310] Photograph author, [5.80] commissioned, copyright in, [5.130] definition, [4.340] Photographic works Part III works, [4.150] Piracy infringement as, [1.60], [1.70] notion of, [1.60] “pirated copyright goods”, [2.60] Plan drawing, as, [4.320] Plant breeder’s rights breeding, definition, [16.30] constitutionality, [2.120] domestic laws, [2.120], [9.220] dual protection, [9.220] duration of, [16.70] grant of, [16.120], [16.140] indigenous species, [16.150] infringement, [16.160] exceptions, [16.170] international protection, [16.210] UPOV Convention, [16.210] jurisdiction, [16.200] legislation, applicable, [9.220] nature and purpose, [16.10], [16.20]

Index

Plant breeder’s rights — cont patents legislation, and, [16.220] plant, definition, [16.30] identification, [16.40] Register, [16.80] novel, requirement, [16.40] registration, [16.50] application, [16.80], [16.90] process, [16.100] detailed description, requirement to provide, [16.110] duration of rights, [16.70] form, [16.90] registrable varieties, [16.60] remedies, [16.200] statutory protection, [16.10]–[16.40] constitutional validity, [16.10] exclusive protection, [16.130] scope, [16.180], [16.190] TRIPS, and, [2.30], [16.10] Plant varieties rights constitutionality, [2.120] domestic laws, [2.120] TRIPS, in, [1.30] Part II, [2.50] Poverty reduction, [1.40], [2.110] Privacy intellectual property rights and, [1.120] Private and domestic use infringement of copyright and, [6.450] format shifting, [6.450], [7.140] time shifting, [6.450], [7.140] Productivity Commission Australian intellectual property, review of 2016, [8.60]–[8.70], [13.690] Property nature of, [13.10] Public number of persons, [4.460] Public health intellectual property and, [1.30] Public interest infringement of copyright, defence of, [6.330] Public performance infringement of exclusive right of, [6.160] authorisation of, and, [6.180], [6.190] performance, meaning, [6.160], [6.200] places of public performance, [6.160] Public policy intellectual property rights and, [1.120]

Publication deemed occurrence of, [4.460] infringement of exclusive right of, [6.150] Published editions of works copyright in, [4.30], [4.460] Part IV subject matter, [4.160]

R

Racing form guides copyright in, [4.80] Rebranding trade marks and, [13.30] Recordings copyright in, [3.10] definition, [4.410] sound — see Sound recordings Regional Comprehensive Economic Partnership (RCEP) Australia as party to, [2.180] intellectual property provisions, [2.180] member states, [2.180] TPPA, competing with, [2.180] Register of Trade Marks nature and purpose, [13.140] Registrar of Trade Marks legislative provisions, [13.140] Registration of trade marks administration, [13.140] amendment, [13.740] application Convention, date of lodgment, [13.250] process, [13.240] use or intent to use, requirement, [13.100] authorship and proprietorship, [13.180] cancellation, [13.740] certification trade marks, [13.790] classification of goods, [13.150], [13.160] services, [13.150], [13.160] collective trade marks, [13.780] commencement of protection, [13.200] defensive registration, [13.800] distinctiveness, [13.260] case law, [13.300] colour marks, [13.470] descriptive terms, [13.330], [13.350] geographic terms, [13.310], [13.320], [13.340] invented words, [13.390]–[13.430] legislative amendments, [13.260], [13.270] names of persons, [13.360]–[13.380] repealed provisions, [13.280] shape marks, [13.440]–[13.460] test, [13.290], [13.420] eligibility, [13.170]–[13.180] 889

Intellectual Property: Commentary and Materials

Registration of trade marks — cont examination and, [13.240] international registration, [13.810] opposition grounds, [13.240] notice of, [13.240] proceedings, [13.240] who may oppose, [13.240] ownership authorship and, [13.180] proprietorship through use, [13.210] requirement, [13.170] registrability determination of, [13.240] distinctiveness, [13.260] colour marks, [13.470] shape marks, [13.440]–[13.460] foreign words, [13.410] geographic names, [13.310]–[13.340] not necessarily the name of any place, [13.340] invented words, [13.390], [13.400] personal names, [13.360] special or particular manner, [13.370] principles, [13.330] entirely descriptive, [13.330] removal for non-use, [13.750], [13.760], [13.770] nature of use, [13.760] publicity during non-use period, [13.770] restrictions, [13.480] bad faith applications, [13.570], [13.580] concurrent use, [13.530], [13.550] conflicting reputation, [13.510] reverse confusion, [13.520] deceptive or confusing, [13.510], [13.520], [13.550] aural comparison, [13.520] concurrent use, [13.530], [13.550] imperfect recollection, [13.520] later date, at, [13.540], [13.550] origin of the goods, [13.520] visual impression, [13.520] prior registration, [13.490] prior use, [13.490] scandalous marks, [13.500], [17.50] “prescriptive validity”, [13.560] use contrary to law, [13.500] revocation, [13.740] use or intent to use, [13.170] nature of use, [13.220] proprietorship, establishing, [13.210] removal for non-use, [13.750], [13.760], [13.770] Remedies copyright infringement account for profits, [6.590] actions for infringement courts, [6.470] locus standii, [6.470] Anton Piller orders, [6.520] civil, [6.480]–[6.610] overview, [6.480] time limits for bringing, [6.480] criminal offences, penalties for, [6.620] Copyright Act 1968 provisions, [6.620] damages, [6.550]–[6.560], [6.600] 890

delivery up, orders for, [6.600] ex parte orders, [6.510]–[6.580] injunctions, [6.500] interlocutory orders, [6.490] John Doe orders, [6.530] Mareva injunctions, [6.540] royalties, payment of a percentage of, [6.600]–[6.6100] variation of orders, [6.580] design infringement, [14.210] passing off, [12.110] trade mark infringement, [13.730] account of profits, [13.730] damages, [13.730] injunction, [13.730] Report of the Contemporary Visual Arts and Craft Inquiry (2002) — see Myer Report Reproduction infringement of copyright of, [6.110] causal connection, [6.110], [6.120] copying, proof of, [6.120] factors in determining, [6.110] Indigenous cultural and intellectual property, [17.100] objective similarity, [6.140] quantitative test, [6.140] Reputation business — see Business reputation goodwill — see Goodwill Resale royalty rights Berne Convention, [5.460] Copyright Agency Limited (CAL), [5.410] nature of, [5.460] opt out provisions, [5.460] Resale Royalty Right for Visual Artists Act 2009 (Cth), [5.420], [5.470] enactment, [5.460] sellers’ obligations, [5.470] Research or study infringement of copyright and, [6.330], [6.350] Restraint of trade exercise of IP rights and, [5.290] Rights Management Information systems electronic rights management information (ERMI), [7.80] intentional removal/alteration, [6.280] protection of, [6.280] TPPA, in, [2.170] Romanticism Romantic movement, [3.20] Rome Convention major international agreement, [2.10] TRIPS based on, [1.30], [2.30], [2.80]

Index

S

Sculpture definition, [4.300] Secret use commercial, [9.780] defences to, [9.800] examples of acts which are not, [9.810] illegitimate extension, test of, [9.780] prohibition against, [9.770] reasonable trial and experiment, [9.590], [9.800] Selection patents meaning, [9.600] validity, [9.600] Service marks TRIPS, protection under, [2.50] Shape marks trade marks, registration of, [13.440] context, role of, [13.460] general principles, [13.460] inherent adaption, [13.440] insufficient distinctiveness, [13.450] legislative amendments, impact of, [13.440] registrability criteria, [13.440] Sign definition, [13.30] expressive function, [13.30] legal meaning, [13.50] reading, politics of, [13.40] reputational levels, [13.40] signalling function, [13.30] trade mark, as, [13.20] Singapore free trade agreement with, [2.130] TPPA, in, [2.170] Sound broadcasts copyright in, [4.30], [4.440] Part IV subject matter, [4.160], [4.440] when made, [4.40]

intellectual property rights, [2.160] RCEP, in, [2.180] Specifications amendments to, [8.370], [10.160] best method of performance, disclosure of, [10.140]–[10.160] date at which it is known, [10.150] failure to, [10.160] claims, [10.170]–[10.10.350] clear and unambiguous, [10.210]–[10.220] construction of, principles, [10.240]–[10.260], [11.30]–[11.40] define invention and monopoly, [10.200] fairly based on specification, [10.300]–[10.330] function of, [10.190], [10.200] infringement proceedings, construction in, [11.40]–11.50] Patents Act 1990 provisions, [10.180] succinct, [10.270]–[10.280] support for claims, [10.300], [10.340]–[10.350] construction of, principles, [10.240]–[10.260], [11.30] infringement proceedings, in, [11.40] enabling disclosure, [10.40], [10.90], [10.110] Raising the Bar Bill, explanatory memorandum as to, [10.100] fairly based on specification, [10.300]–[10.300], [10.310] determination of priority dates and, [10.310], [10.320] external fair basis, [10.310] internal fair basis, [10.310] patents applicable to, [10.300] provisional specifications, in, [10.310], [10.320] functions of, [10.10] internal requirements, known as, [10.10] invalidity, grounds arising from, [10.10]–[10.20] micro-organisms, involving, [8.250], [10.130] deposit system, international, [10.130] nature of, overview, [8.240] parts of, [10.10] provisional, function of, [10.320] Raising the Bar Bill, explanatory memorandum enablement, as to, [10.100] full description, as to, [10.160] requirements, [10.30] provisional, as to, [10.30] sufficiency of description enablement, [10.40], [10.90], [10.110] full description, [10.40], [10.50], [10.60]–[10.80] Patent Office practice, [10.120] support for claims, [10.300], [10.340]–[10.350] Australian Patent Office approach, [10.360] meaning of requirement, [10.340] patents applicable to, [10.300]

Sound recordings copyright in, [4.30] commissioned, [5.130] definition, [4.410] file sharing — see Internet file sharing, infringing fitness classes, use in licence fees payable, [5.380]–[5.390] live performances, [4.410] Part IV subject matter, [4.160], [4.410] when made, [4.40]

Speech copyright and, [4.40] sound recording from, [4.40]

South Korea Act, amendments to, [3.200] free trade agreement with (KAFTA), [2.130], [2.160]

Springboard doctrine confidential information, [15.300] case law, [15.310]–[15.340] employees, obligations of, [15.340] 891

Intellectual Property: Commentary and Materials

Springboard doctrine — cont equitable principles, [15.310] publication of information, following, [15.320] Stage make-up copyright in, [4.280], [4.290] Standard patent — see Patents Statutory licences — see Compulsory licences Stem cell technology patentability, [9.300]

T

Taxation intellectual property rights, comparison with, [1.50] Technological Protection Measures authorisation and, [6.270] circumvention devices, [6.280] offences, [7.80] definition, [7.80], [7.110] exceptions to liability, [7.140] implications of, [7.90] purpose of, [6.280] self-help mechanisms, as, [7.90] TPPA, in, [2.170] WIPO Copyright Treaty requirements, [6.280] Technology developments in, [1.90] copyright and, [3.170] “technological protectionism”, [2.30] Telephone directories copyright in, [4.80], [4.90]-[4.110] computerised versions, [7.50] originality, [4.80], [4.90], [7.50] Television broadcasts copyright in, [4.30], [4.440], [4.450] infringement of, [6.220], [7.40] Part IV subject matter, [4.160], [4.440] re-broadcast and copyright infringement, [7.30] “substantial part” and, [6.220]–[6.240] when made, [4.40], [7.30] Thailand free trade agreement with, [2.130] Tobacco plain packaging Australia Hong-Kong BIT of 1993, claim under, [2.230] “Complaints” before the WTO’s Dispute Settlement Body, [2.240] Framework Convention on Tobacco Control (FCTC), [2.210] global interest, [2.250] 892

High Court judgment, [2.220] legislation, [2.210] saga of, [2.210] Trade global, increase in, [1.30] intellectual property rights and, [1.30] international — see International trade Trade agreements arguments in favour of, [2.110] bilateral and regional, [2.100] criticisms of, [2.110] economic growth, [2.110] free — see Free trade agreements (FTAs) intellectual property protection standards in, [2.100] “TRIPS-plus” provisions, [2.100] Trade marks “authorised use”, meaning of, [13.60] authorship, [13.180] bona fide use or intention to use, [13.70] certification, [13.790] collective, [13.780] colour marks, [13.470] requirements, [13.470] use, evidence of, [13.470] Constitution, provision in, [1.80] construction of, [1.90] “dealt with or provided in the course of trade”, [13.130] definition, [13.20], [13.440] descriptive terms, [13.330] context, [13.330] entirely descriptive, [13.350] distinctiveness, [13.110], [13.260] “capable of distinguishing” flowchart, [13.260] colour marks, [13.470] context, importance of, [13.330] descriptive terms, [13.330] geographic names, [13.310], [13.320], [13.340] “inherent adaptability”, [13.260], [13.290], [13.300], [13.420] inherent and acquired, [13.260] “inherently distinctive”, meaning of, [13.40] invented words, [13.390]–[13.430] legislative amendments, [13.260], [13.270] names of persons, [13.360]–[13.380] repealed provisions, [13.280] shape marks, [13.440]–[13.460] test, [13.290], [13.300], [13.420] domestic laws, [2.120] e-commerce, [13.50] expressive function, [13.30] foreign, [13.180], [13.190] foreign words, [13.410] geographic names adaptation of, [13.310], [13.320] geographical indications, protection for, [13.320] not name of place, where, [13.340] goods, [13.120] classification of, [13.150], [13.160] separation from, [13.440] identifiable nature of symbol, [13.30]

Index

Trade marks — cont Indigenous cultural and intellectual property, [17.50] infringement — see Infringement of trade marks intellectual property, as, [1.15] invented words, [13.390], [13.400] direct reference to nature of goods, [13.420] foreign words, [13.410], [13.420] no direct reference to nature of goods, [13.430] obvious meaning, where, [13.420] names of persons, [13.360] legendary or historical characters, [13.380] represented in a special or particular manner, [13.370] Search for Australian Surnames (SFAS) database, [13.360] signatures, [13.360] national icons, [13.50], [13.230] nature and purpose, [13.10] owner, rights of, [13.90] ownership authorship and proprietorship, [13.180] nature of, [13.60] registration of marks, and, [13.170] Paris Convention, protection under, [1.30], [13.10] passing off — see Passing off protected interests, [13.10] registration — see Registration of trade marks services, [13.120] classification of, [13.150], [13.160] shape marks, [13.440] context, role of, [13.460] general principles, [13.460] inherent adaption, [13.440] insufficient distinctiveness, [13.450] legislative amendments, impact of, [13.440] registrability criteria, [13.440] signalling function, [13.30] signs, as, [13.20] definition, [13.30] legal meaning, [13.50] reading, politics of, [13.40] territorial nature of law, [13.50] TPPA provisions, [2.170] trader and consumer interests, conflict between, [13.10] “trafficking”, [13.80], [13.100] TRIPS, in, [1.30], [2.30] Part II, [2.50] Union, constitutionality, [2.120] “used or intended to be used” meaning of, [13.60], [13.100] registration of marks, and — see Registration of trade marks removal for non-use, [13.750], [13.760], [13.770] well-known, protection for, [1.120] Trade names Paris Convention, protection under, [1.30] Trade secrets TRIPS, in, [1.30] Part II, [2.50]

Traditional knowledge custodians, claims for enfranchisement, [1.120] higher level of protection, [1.30] respecting, preserving and maintaining, [1.120], [2.10] TPPA, in, [2.170] TRIPS, exclusion from, [2.30] Traditional owners financial rewards, sharing, [1.120], [2.10] Trans-Pacific Trade Partnership (TPPA) Act, amendments to, [3.200] countries in, [2.170] economic liberalisation, increasing, [2.170] enforcement systems, [2.170] entry into, [2.130] future of, [2.170] goals, [2.170] intellectual property provisions, [1.120], [2.170] internet service providers — see Internet service providers (ISP) overview, [2.170] patents system, impact on, [8.140] US domestic opposition, [1.120]

U

Undisclosed information TRIPS, in, [1.30], [2.30] Undue influence exercise of IP rights and, [5.290] United Nations Conference on Trade and Development (UNCTAD), [2.10] United Nations Development Programme (UNDP), [2.10] United Nations Educational, Scientific and Cultural Organization (UNESCO), [2.10] United States duration of copyright protection, [4.490] erosion of supremacy, [2.30] free trade agreement with — see Australia–US Free Trade Agreement (AUSFTA) global harmonisation, promoting, [2.100] TPPA, [2.170] ratification of, [2.170] US Free Trade Agreement Implementation Act 2004 internet service providers, liability of, [7.120] file sharing, infringing, [7.190] Universal Declaration of Human Rights definition of IPRs in, [1.50] Uruguay Round dispute settlement procedures, [2.70] 893

Intellectual Property: Commentary and Materials

Utility models Paris Convention, protection under, [1.30] TRIPS, exclusion from, [2.30] Utility of invention date of assessment, [9.830] more than one result specified, [9.870] Patents Act 1990 provisions, [9.820]–[9.830] requirement for, [9.820] useful, meaning, [9.830] want of, tests for, [9.840], [9.860]

V

Validity of patents biotechnical inventions — see Biotechnical inventions infringement — see Infringement of patents innovative step — see Innovative step inventions — see Inventions inventive step — see Inventive step manner of manufacture — see Manner of manufacture medical treatment of humans, [9.80] novelty — see Novelty patentability, requirements Patents Act 1990, [9.20] TRIPS, under, [9.10], [9.20] secret use commercial, [9.780] defences to, [9.800] examples of acts which are not, [9.810] illegitimate extension, test of, [9.780] prohibition against, [9.770] reasonable trial and experiment, [9.590], [9.800] selection patents, [9.600] specifications — see Specifications utility of invention, [9.820] date of assessment, [9.830] more than one result specified, [9.870] Patents Act 1990 provisions, [9.820]–[9.830] useful, meaning, [9.830] want of, tests for, [9.840], [9.860] Video games cinematographic films, as, [4.420] Vienna Convention on the Law of Treaties (VCLT) requirements of, [2.20] Vietnam TPPA, in, [2.170]

W

Washington Treaty TRIPS and, [2.30] Wilfulness test for, [2.170] 894

Will unpublished manuscript, entitlement to, [3.50] Wines and spirits higher protection for, [1.30] WIPO Copyright Treaty (WCT) (1996) internet treaty, [2.90] major international agreement, [2.10], [2.90] objective, [2.90] WIPO Performances and Phonograms Treaty (WPPT) (1996) internet treaty, [2.90] major international agreement, [2.10], [2.90] objective, [2.90] Words and phrases adaptation, [4.470] Anton Piller orders, [6.520] “applied industrially”, [4.530] artistic craftsmanship, [4.360] artistic works, [4.240], [4.310] assignment of copyright, [5.270] attribution, right of, [5.20] author, [3.40], [5.80] authorisation of public performances, [6.180], [6.190] bona fide, [13.70] breeding, [16.30] building, [4.340] “careful balance”, [1.110], [1.120] causal connection, [6.120] cinematographic film, [4.420], [7.20] circuit layouts, [14.320] circumvention device, [7.80] commercial sales, [5.460] common general knowledge, [9.680] computer program, [4.380], [4.390] copyright, [3.10] corresponding design, [4.530] counterfeit trademark goods, [2.60] cultural heritage, [17.10] dealt with or provided in the course of trade, [13.130] design, [14.20] direct infringement, [6.100] document, [9.480] dramatic works, [4.190], [4.210] electronic rights management information (ERMI), [7.80] engraving, [4.310], [4.330] exclusive licence, [5.320], [11.480] exploit an invention, [11.10] format shifting, [6.450] “fresh rights”, [1.80], [2.120] headline, [4.130] “highest international standards”, [2.100] “incentive theories”, [1.120] Indigenous cultural and intellectual property rights (ICIP rights), [17.10] indirect infringement, [6.100] inherent adaptability, [13.260] inherently distinctive, [13.40] innovation patent, [8.150], [8.180]

Index

Words and phrases — cont innovative step, [9.740] integrity, right of, [5.20] intellectual property, [1.30] intellectual property rights, [1.15], [1.30] internet service providers, [7.120] internet treaties, [2.90] invention, [9.30] inventive step, [9.620] investment, [2.100] John Doe orders, [6.530] joint authorship, work of, [5.90] licence, [5.300] literary work, [4.60], [4.170] material form, [4.40] micro-organisms, [9.230] moral rights, [3.40], [5.20] multimedia entity, [3.170] musical works, [4.220] parallel importing, [5.430] parody, [6.390] patent area, [9.470] patent of addition, [8.170] performance, [5.10], [6.160], [6.200] petty patents, [8.120] photograph, [4.340] piracy, [1.60] “pirated copyright goods”, [2.60] places of public entertainment, [6.160] plant, [16.30] plant breeding, [16.30] prior art base, [9.470], [9.640], [9.660] prior art information, [9.470] priority date of patents, [8.200] product, [14.20] products of intellectual effort, [1.90] publish, [6.150] pursuance of the terms of employment, [5.160], [5.210] “qualified person” criterion, [4.30] record, [4.410] registrable design, [14.80] resale royalty right, [5.460], [5.470] satire, [6.390] sculpture, [4.300] selection invention, [9.600] sign, [13.30] skilled addressee, [9.670] sound broadcast, [4.440]

sound recordings, [4.410] specification, [8.240] standard patent, [8.150], [8.170] staple commercial product, [11.200] substantial part, [6.230]–[6.240] succinctness, [10.280] sufficient acknowledgement, [6.330] supply, [11.210] technological protection measure (TPM), [7.80] “technological protectionism”, [2.30] television broadcast, [4.440] time shifting, [6.450] trade mark, [13.20], [13.440] traditional knowledge, [17.10] “TRIPS-plus” provisions, [2.100] used or intended to be used, [13.60] useful, [9.830] works of artistic craftsmanship, [4.360] World Bank, [2.10] World Health Organization (WHO), [2.10] Framework Convention on Tobacco Control (FCTC), [2.210] World Intellectual Property Organization (WIPO), [1.15], [2.10] Australia as member of, [2.90] Convention establishing, [1.30], [2.90] “internet treaties”, [1.120] member states, [2.90] membership, [2.90] objectives, [1.30] PCT, administration of, [8.230] predecessor, [2.90] treaties administered by, [2.90] TRIPS, administering, [2.90] WIPO Convention, [1.30], [2.90] World Trade Organization (WTO), [1.15], [2.10] accession to, process of, [2.20] Australia as member of, [2.90] creation, [2.20] leading international body, as, [2.20] members, [2.20] observer status, states with, [2.20] standing in global arena, [2.20]

895