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Intellectual Property Bulletin - October 2010

In this issue: Our intellectual property lawyers and patent and trade marks attorneys provide an update on the latest cases and legislative developments regarding copyright, trade marks, patents and anti-counterfeiting. 

Copyright – There is no copyright in this headline

In brief: A recent Federal Court decision has held that online abstracts of articles from the Australian Financial Review do not infringe copyright in any component of the newspaper. This is the first Australian decision to consider the subsistence of copyright in newspaper headlines and also deals with other significant areas of copyright law.

By Miriam Stiel, Partner, and Joel Barrett, Lawyer

How does it affect you?

  • Media and publishing companies should be aware that an individual newspaper or magazine headline is unlikely to attract copyright protection.
  • This case1 confirms the importance of being able to identify the author or joint authors of a work when claiming copyright protection. Companies that are involved in the production of materials by a slow process of accretion, or involving a large group of people, should keep clear records detailing who was involved in the creation process and when.
  • When copyright subsists in a compilation such as a newspaper edition, the form of the compilation rather than its contents is protected. This means that a third party might not be infringing copyright by taking factual information from a compilation, even if the purpose is to develop a competing product or service.

Background

As a service to its online subscribers, Reed International Books Australia (Reed) creates abstracts of newspaper articles from various Australian publications, each containing the following information:

  • certain facts about the article, including its source, date and page number;
  • the article headline and by-line; and
  • a summary of the article written by Reed employees.

In July 2007, Fairfax Media Publications commenced proceedings against Reed, alleging that many of the abstracts infringed copyright in various components of its newspaper, the Australian Financial Review (the AFR). Since the abstracts did not reproduce the body of any article, Fairfax argued that each abstract infringed copyright in one or more of the:

  • article headline;
  • combination of the article and its headline (the article/headline combination);
  • compilation of all articles in that particular edition of the AFR (the article compilation); and
  • compilation of all components in that particular edition of the AFR, including articles but also non-journalistic material like advertisements and photographs (the edition work).
Can there be copyright in headlines?

Interestingly, this decision is the first time an Australian court has determined whether copyright can be claimed in a newspaper or magazine headline.

For copyright to subsist in a written composition like a headline, the composition needs to be an 'original literary work' within the meaning of the Copyright Act 1968 (Cth).2 The classic definition of a 'literary work' is something that provides 'information, instruction or pleasure in the form of literary enjoyment'.3 To satisfy the requirement of originality, the composition must have originated from an author or joint authors. In other words, they must have used a degree of skill or labour to produce the composition, not just copied existing material.

Fairfax claimed copyright in 10 headlines from June and November 2007. These ranged from mundane descriptions, like 'Fund managers reject Telstra chief's $11m pay deal', to more imaginative ones, like 'Blackout probe sheds little light'. Fairfax contended that its headlines satisfied the classic definition of a literary work because they were charming, informative, carefully designed to attract attention, and included literary techniques such as the use of puns, alliteration and double entendres. Headlines are generally original, Fairfax argued, because the art of headline writing requires a great deal of judgment and ingenuity from experienced sub-editors.

Although Justice Bennett accepted that at least some of the AFR headlines satisfied the classic definition of a literary work, her Honour ultimately decided that this was not enough to qualify them for copyright protection: a literary work must also be sufficiently substantial, and the AFR headlines were simply too short and trivial. They were better characterised as 'no more than a combination of common English words'.4 Justice Bennett was also swayed by the argument that it would be against the public interest to grant copyright protection to headlines when it is a common and accepted practice for academics, students and others to reproduce headlines in bibliographies and other reference systems.

Although this is the first time an Australian court has decided the issue of copyright in headlines, the outcome is not terribly surprising. The judgment is consistent with a long line of Australian and English cases that have refused to find copyright in book titles, marketing slogans and other short phrases. Justice Bennett did leave the door open for copyright to subsist in headlines of exceptional character and length, but it is difficult to imagine what type of traditional headline could meet this high threshold, given that they are supposed to be succinct and attention-grabbing.

The importance of authorship

Justice Bennett also emphasised the importance of identifying the author, or joint authors, of copyrightable material. As her Honour stated, authorship is 'crucial for establishing copyright because it is essential to prove that the work originated from an author who expended independent intellectual effort to create the expression in the work'.5

Therefore, Fairfax also needed to identify the authors of the four AFR components in order to establish subsistence of copyright. This case highlights the problems associated with trying to identify the author, or joint authors, of a piece of work when a large number of people were involved in its creation. Fairfax did not provide any evidence of who wrote the headlines, possibly because its records did not allow it to. This gave Justice Bennett another reason to deny the headlines copyright protection.

Justice Bennett also explored the concept of 'joint authorship' in relation to the article/headline combinations, since articles are written by journalists, whereas headlines are written by sub-editors. Under the Copyright Act, joint authorship is defined narrowly, to cover only collaborations where the contributions of each author cannot be separated.6 According to Justice Bennett, the evidence indicated that the processes of writing articles and writing headlines for the AFR are very discrete tasks, and it was irrelevant that the same sub-editor who edited an article might also, in some circumstances, write its headline. There was insufficient collaboration between journalists and sub-editors to find that the article/headline combinations were works of joint authorship.

Although it may be intuitive to think of a newspaper or magazine article as the combination of its headline, by-line and body, Justice Bennett made it clear that is not always the case for copyright purposes. Where the editorial process is similar to that at the AFR (which is likely to be the case for many media and publishing companies), copyright will only subsist in the body of an article.

Infringement of copyright in compilations

In contrast, Justice Bennett had no problem accepting that the article compilations and edition works were original literary works protected by copyright. Her Honour characterised them as 'compilations' of various materials, which the Copyright Act expressly designates as 'literary works'.7 The compilations passed the originality test, her Honour added, because the AFR editorial staff obviously used a considerable amount of skill, judgment, knowledge, labour and expense to select, co-ordinate and arrange the content of each AFR edition.

However, to prove that Reed infringed the copyright in either the article compilations or edition works, Fairfax needed to demonstrate that Reed reproduced or published the whole or a substantial part of the compilations. Justice Bennett clarified that to establish infringement of a compilation, Fairfax needed to prove that the abstracts reproduced the form, rather than the content, of the compilations. As such, Fairfax could not rely on the fact that Reed took parts of the compiled material (which, in any case, consisted of headlines and factual information that did not attract copyright protection). Since the abstracts did not have the same appearance or order as the pages of an AFR edition, Reed did not infringe copyright in the article compilations or edition works.

Fair dealing defence

Although Justice Bennett decided that there was no copyright in the headlines and article/headline combinations, and that Reed did not infringe the copyright that did subsist in the article compilations and edition works, her Honour still examined the defences to copyright infringement Reed raised. Relevantly, Reed argued that its abstract service did not constitute copyright infringement because it was a 'fair dealing ... for the purpose of, or is associated with, the reporting of news'.8 Given the nature of the service, Justice Bennett, unsurprisingly, held that the abstracts possessed the requisite connection to reporting news. The question remained, however, as to whether this dealing was 'fair'.

Fairfax contended that the dealing could not be fair, since Reed used the headlines and other information for 'directly competitive purposes':9 namely, to draw readers away from the AFR with its own substitute content. Justice Bennett disagreed, finding that the abstract service also enabled subscribers to 'scan in a comprehensive and efficient manner across a wide range of publications for news items of interest and then go to the original publication to read those items in full'.10 This was supported by the fact that the abstracts included, where possible, a hyperlink to the article on the AFR website.

So, even though the abstracts were part of a commercial service that Reed provided to paying subscribers, Justice Bennett held that the dealing was essentially 'fair'. Presumably, the outcome would have been different had the abstracts contained substantial extracts of the articles rather than summaries written by Reed employees.

Copyright – YouTube finds safe harbo(u)r in US copyright law

In brief: Viacom and several other entertainment companies launched a US$1 billion copyright infringement claim against YouTube's owners in 2007. This year, in a summary judgment,11 the US District Court for the Southern District of New York decided that YouTube was protected from liability by the 'safe harbor' provisions of the Digital Millennium Copyright Act.

By Jackie O'Brien, Partner, and Joel Barrett, Lawyer

How does it affect you?

  • Under Australian and US law, an Internet service provider that infringes copyright, by doing certain online activities such as storing infringing material on its system or network at the direction of a user, may be entitled to 'safe harbo(u)r' protections that limit its copyright infringement liability. This case confirms the US position that an Internet service provider or facility operator will lose 'safe harbor' if it knew, or should have known, of the specific and identifiable infringements but took no action. General awareness of widespread infringement on its system or network is insufficient to deny 'safe harbor' protection.
  • Although this is an American ruling, the Federal Court of Australia indicated earlier this year that it will consider judgments on the American 'safe harbor' protections to be persuasive when deciding on the Australian equivalents in the Copyright Act 1968 (Cth).12
  • This decision also reflects a global judicial trend in favour of Internet service providers, suggesting that copyright owners may need to consider alternative methods of protecting their content from online piracy.

Background

YouTube, now owned by Google, is a popular video-sharing website that has been operating since 2005. It allows users to upload video files that YouTube then copies, reformats and makes available online to viewers around the world, free of charge. Viacom and several other entertainment content providers, including Paramount Pictures and the English Premier League, commenced copyright infringement proceedings, claiming that they owned copyright in tens of thousands of videos that were available on YouTube without permission having been sought.

YouTube moved for summary judgment that it could rely on the 'safe harbor' provisions of the Digital Millennium Copyright Act (the DMCA) as a 'protection' against all of Viacom's allegations of copyright infringement.

Safe harbor

The American 'safe harbor' protections in section 512 of the DMCA are designed to limit the copyright infringement liability of Internet service providers and facility operators, but only if certain conditions are met. The relevant condition in this case was s512(c), which provides that where a service provider infringes copyright by storing content on a system or network that it controls or operates at the direction of a user, the service provider will avoid liability if it:

  • does not have actual knowledge that the material or an activity using the material on the system or network is infringing copyright;
  • in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing material is apparent; or
  • upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material.13
Standard of knowledge or awareness

According to Judge Louis Stanton, the critical issue in this case was determining what level of knowledge or awareness of copyright infringement was required under s512(c) before YouTube was obliged to disable the infringing videos.

Viacom argued that YouTube was aware that flagrant copyright infringement was a common activity on its website. Even though YouTube may not have known about specific and identifiable infringements, its general awareness of widespread infringement was sufficient to deny 'safe harbor' to YouTube. YouTube argued the opposite: that since it possessed no knowledge of specific infringements and there were no 'red flags' that made specific infringements apparent, YouTube was still entitled to 'safe harbor' protection.

Judge Stanton agreed with YouTube. After reviewing the relevant case law, the wording of s512 generally and the legislative history of the DMCA as reflected in various Senate and House Committee reports, he decided that 'mere knowledge of prevalence of [copyright infringement] in general is not enough'.14 This is because the DMCA does not impose investigative duties on Internet service providers, and the onus is on the copyright owner to notify them of copyright infringement. It would be unfair, Judge Stanton argued, if YouTube were required to examine every video uploaded onto its website, identify every potential infringement and determine whether the content had been licensed by the copyright owner, whether the user was entitled to a 'fair use' defence to infringement, and whether the copyright owner objected to its presence on YouTube.

YouTube was entitled to 'safe harbor' protection because when it was finally made aware of specific and identifiable examples of copyright infringement (by a takedown notice sent by Viacom on 2 February 2007), it disabled almost every offending video by the next day. Judge Stanton acknowledged that he may have reached a different conclusion had Viacom established that YouTube exists 'solely to provide the site and facilities for copyright infringement', like peer-to-peer file-sharing networks such as Napster or Grokster, but this was obviously not the case.15

This is not the last word on the issue: Viacom filed a notice to appeal in the US Court of Appeals on 11 August 2010, and it is possible that the case could reach the US Supreme Court.

Implications for Australia

The facts of this case are broadly similar to those in a recent Australian case in which several television and film companies alleged that an Internet service provider, in providing Internet access to its users, was liable for authorising them to infringe copyright via BitTorrent.16 Although the Australian 'safe harbour' provisions did not play a major role in the decision, Justice Cowdroy noted that they were introduced due to the Australia–US Free Trade Agreement and were modelled on s512 of the DMCA.17 Therefore, the United States 'safe harbor' protections and its Australian equivalents are very similar. For example, much like s512(m) of the DMCA, the Copyright Act provides that nothing, except a relevant industry code, 'is to be taken to require a carriage service provider to monitor its service or to seek facts to indicate infringing activity'.18

Given these similarities and the fact that Australian courts have thus far provided very little guidance on the application of the 'safe harbour' provisions, Justice Cowdroy held that 'US authorities can provide significant assistance in the interpretation of the Copyright Act safe harbour provisions'.19 Therefore, Judge Stanton's ruling, unless overturned on appeal, may inform future decisions on the Australian 'safe harbour' regime.

Copyright – ISPs in the spotlight again: iiNet copyright infringement appeal

In brief: We provide an update on the appeal in the iiNet copyright infringement case.

By Andrew Wiseman, Partner, and Amanda Parks, Lawyer

Background

In February this year, we reported on the first instance decision given by Justice Cowdroy of the Federal Court of Australia in Roadshow Films Pty Ltd v iiNet Limited (No 3)20 (see Focus: ISPs off the hook – for now; this case is also mentioned in the above article). This widely publicised case involved 34 applicants, representing major film and television companies, who, at the end of 2008, brought copyright infringement proceedings against iiNet, Australia's third-largest Internet service provider (ISP). The key issue in the case was whether, by failing to take steps to stop the copyright infringing conduct of certain of its users, iiNet had authorised the copyright infringing conduct of those users. In a lengthy judgment totalling almost 200 pages, Justice Cowdroy found in favour of iiNet. On 25 February 2010, the film and television companies filed an appeal against that decision.

The appeal

The appeal was heard over four days, 2-5 August 2010, before a full Federal Court bench consisting of Justices Emmett, Jagot and Nicholas.

The vast interest in this appeal is demonstrated by the fact that, aside from the parties' competing submissions in relation to issues such as whether or not iiNet provided the 'means' for its users to infringe copyright (as opposed to a mere 'precondition' to infringement), and whether or not iiNet had the relevant power to prevent infringement, three interested third parties also applied for leave to make additional submissions as amicus curiae or 'friends of the court'. The Australasian Performing Right Association and the Media Entertainment and Arts Alliance constituted the two interested Australian parties, while the involvement sought by America's Screen Actors Guild demonstrates the international significance of this case.

Also of interest to practitioners and litigants was the request the judges made at the conclusion of the hearing for the parties to produce a so-called 'decision tree'. It was envisaged that this document should be a roadmap of the key issues in the appeal, and that those issues should be agreed between the parties, but in the end each party produced its own document.

What next?

The Full Court's decision is expected to be handed down early next year. It will undoubtedly be eagerly awaited by ISPs, copyright owners and other interested parties anxious to learn whether iiNet will remain off the hook, or will have to answer for the copyright infringing conduct of its users.

Trade Marks – The 'Luscious Lips' decision: sweet lessons for product labelling

In brief: Blurbs on product labels can slip undetected through a new product's trade mark infringement risk assessment. A recent Full Federal Court decision is an important reminder for manufacturers to assess the legal risk of product packaging.

By Richard Hamer, Partner, and Isaac Lowrie, Lawyer 

The 'blurb' is a common 'hook' included on product labels to attract customers by telling them what the product is and why they want to buy it. This can be an effective marketing strategy. However, the blurb's descriptive purpose means that it can easily slip undetected through a new product's trade mark infringement risk assessment. 

The recent Full Court decision on whether the Allen's Retro Party Mix packaging blurb infringed Nature's Blend's 'LUSCIOUS LIPS' trade mark provides helpful guidance on when use of a descriptive phrase will be use as a trade mark but, importantly, also reminds manufacturers to methodically assess the legal risk of product packaging.21

The Retro Party Mix manufactured by Allen's (owned by Nestlé) was released in May 2007 with the following text (the court happily adopted the description of the text as a 'blurb'):

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. [emphasis added]

 

Nature's Blend commenced proceedings for trade mark infringement in late 2009. 

At first instance, Justice Sundberg ruled that there was no infringement, as 'luscious Lips' was descriptive and, in the context of the packaging also featuring prominent Nestlé and Allen's marks, the expression was not used as a trade mark.22

This decision was upheld by the Full Court on appeal. The phrase 'luscious Lips' was, in the court's judgment, a 'light and amusing' way of describing one of the mixed lollies in the product. The prominent placing of Nestlé's registered marks on the front of the pack meant that the consumer was 'left in no doubt as to the commercial origin of the product by the time he or she has read the relatively long discursive and humorous description referring to one of the lolly varieties as being "luscious Lips".' 23

In making this decision, the Full Court provided a very helpful 'checklist' to evaluate whether use of a descriptive phrase will be 'use as a trade mark' for infringement purposes.24

How does this affect you?

The Full Court's decision presents two key lessons.

First, that owners of well-known marks should take comfort in the Full Court's view that prominent placing of well-known marks can cure potentially infringing uses of descriptive terms.

Second, manufacturers should ensure product blurbs are properly scrutinised as part of the new product trade mark infringement risk assessment process. An interesting side note to the case was that, in August 2008 (long before Nestlé was even aware of Nature's Blend's trade mark), Nestlé decided to change the Retro Party Mix blurb to read 'Up to seven lolly varieties including pineapples, cola bottles, racing cars, honey bears, teeth, lips, ripe raspberries'. While Nestlé was ultimately successful in both cases and was awarded costs, if it had properly assessed the risk of the labelling and stuck with the simpler language in the first place, it may well have avoided the cost and distraction of litigation. Whether the simple language would have been as attractive to consumers is another question.

Trade Marks – To co-exist or not to co-exist? The Omega case

In brief: A recent English High Court decision highlights the need for careful consideration of the long-term legal and commercial consequences before entering into a trade mark co-existence agreement.

By Partner Philip Kerr and Senior Associate Alison Beaumer.

How does it affect you?

  • The Omega case is a reminder to trade mark owners to take care when entering into trade mark co-existence agreements.
  • Assume that a trade mark co-existence agreement will be enforceable over the long term (subject to any express terms in the contract) and make sure that you can live with each of its terms. If you have any concerns, raise them with the other party well before the agreement is finalised.
  • Take care with the definition and classification of goods and services. Don't assume that a court will imply restrictions to particular classes and bear in mind that the scope of classes can change over time.
  • Always consider whether a trade mark co-existence agreement is the best outcome for your brand. It may avoid the costs and uncertainties of litigation in the short term, but what are the likely future consequences?
  • When defining the territory carved out for each party by the agreement, consider the impact of likely technological change in your industry, and possible brand extension plans in light of new technologies.
  • Consider whether agreeing to co-exist presents any commercial opportunities. Is the other party capable of exploiting your brand in a way that you might be prepared to license on terms advantageous to both sides?

Background

Omega Engineering Inc v Omega SA & Ors [2010] EWHC 1211 (Ch) is the latest chapter in a long-running dispute between the US company Omega Engineering Inc (Engineering) and the Swiss watchmaker Omega SA (Swiss). In 1984, following a series of disagreements, the parties entered into a trade mark co-existence agreement. Under that agreement, Swiss agreed not to object to the use or registration by Engineering of the word OMEGA in respect of certain 'excluded goods', defined as 'instruments and apparatus intended for a scientific or industrial application in measuring, signalling, checking, displaying or recording heat or temperature (including such having provision to record heat or temperature over a period of time and/or to display the time of day)'.

The dispute

In 2007, Engineering applied to register OMEGA as a UK trade mark in classes 9 and 14, using the description of the 'excluded goods' as it appeared in the co-existence agreement. Swiss opposed Engineering's application in respect of class 14 (which includes watches and timepieces), but not class 9. The hearing officer dismissed Swiss's opposition because of the co-existence agreement. Swiss appealed. Engineering then commenced proceedings for breach of contract and sought summary judgment.

The decision

Justice Arnold of the English High Court upheld the terms of the co-existence agreement as a matter of contract law, and granted Engineering's application for summary judgment.

Swiss had argued that, on the correct construction of the agreement, its consent was limited to an application by Engineering in Class 9, not Class 14. The court rejected this argument, holding that the 'excluded goods' meant the goods as listed in the agreement, regardless of their class.

What about Australia?

While there has not been a similar case in Australia, it is likely that the Australian courts would take the same approach to upholding a trade mark co-existence agreement, provided it was enforceable as a matter of contract law.

Patents – Something fishy about a 'stunning' patent decision?

In brief: An alleged infringer has successfully argued in the Federal Court that their apparatus was outside the scope of a patent claim, even though it used all of the claimed structural features of the patented apparatus. This is despite the fact that the designer of the alleged infringing apparatus agreed in court that his device functioned in the same way as the patented apparatus. The decision is surprising, and the patentee has appealed to the Full Court.

By Chris Bird, Partner, and Lester Miller, Senior Associate

How does it affect you?

  • The decision does not alter the fundamental doctrine that a device or method that has all the features of a patent claim is an infringement.
  • However, applicants and patentees must be aware of the possible defence that if it can be shown that the features of an unauthorised device combine in a way to create a substantially different machine or operating method, there is a risk of the patent claim being circumvented, even though the device has all the structural features of the patent claim and achieves a similar result.
  • This should be kept in mind during the drafting of patent applications, as careful drafting that contemplates potential infringing activities can help minimise risks.

Introduction

The case25 involved two companies supplying competing fish stunning machines that employed a percussive stunning technique to slaughter fish (the kindest-known slaughter method, which produces a higher-quality flesh than do other methods).

Seafood Innovations Pty Ltd (Seafood) obtained a certified innovation patent for their fish stunning apparatus, which they sought to enforce against Richard Bass Pty Ltd (Bass). The patent claims defined an invention that included a pivotally movable floor to retain the fish in the stunning position, the floor then pivoting downwards to allow the fish to pass onwards to be processed further.

Bass had designed an apparatus that Seafood alleged infringed their patent. Bass had applied for their own patent for the apparatus, with claims defining a pivoting chin plate below the fish, as well as cheek plates to the sides and a trigger plate above the fish, so that together they act to hold the fish for striking.

The trial

Mr Bass's written evidence contradicted that given under cross-examination. In answer to questioning in court, Mr Bass argued that his (allegedly infringing) device operated such that: 'in the raised position the plate supports the chin of the fish while, in the lower position, the plate rests flat against the floor of the channel, allowing the fish to be carried on through the channel'. However, his evidence stated that 'if only the chin plate moved, then the fish would not be able to exit...the fish are too large to fit through the small space created by the chin plate folding down'.  The judge discounted Mr Bass's oral evidence but accepted his written submission. 

The judge also accepted the evidence of witnesses for Bass, who agreed with Mr Bass's written evidence that all the plates in the Bass apparatus, including the chin plate, had to move simultaneously to allow passage of the fish through the machine.

Seafood argued from well-established case law that a party cannot avoid infringement by adding a new feature to the claimed features, even if the result is an improvement. They further submitted that it is not legitimate to narrow the scope of a claim by adding to a claim a gloss from another part of the specification.

Bass submitted that their machines required the movement of all plates in unison to allow the fish to move along after being struck, such that movement of the floor by itself in the Bass machine did not allow the fish to move, and that this necessity of function was outside the ambit of the Seafood claim.

The decision

The judge decided that the word 'allow' in the claim was to be understood to mean 'permit', rather than 'aid, assist or afford', and that the scope of the claim was limited to devices in which the floor plate was the only thing permitting movement of the fish. He concluded that the interconnected movement of the chin, cheek and trigger plates to permit the movement of a fish in Bass's device was outside this monopoly.

Comments

This decision appears to be anomalous, as it runs against well-established concepts of patent law. Seafood clearly felt the same way, having lodged their appeal to the Full Court.

The inclusion of additional features to a claimed combination does not avoid infringement, particularly so if the added feature is properly characterised as not essential to the invention, or if it does not make a new working of the combination of features.26 Indeed, the Bass device, which linked the chin, side and top plates to form a surrounding opening, still used the essential characteristic of the Seafood invention: that of dropping the floor to allow the fish to pass.

However, the decision does underline that care should be taken when using functional terms in claim drafting. The word 'allow', for example, should be used with caution, as it may be interpreted narrowly. As ever, careful, strategic patent drafting is essential to minimise the risks to which future litigation may give rise.

It should be noted that Seafood's innovation patent had been filed as a divisional application from a standard Australian patent application, in order to pursue the action against Bass. Innovation patents, used in this way, are becoming important litigation tools in Australia. Seafood may use this decision as a valuable lesson during the prosecution of the standard patent application, steering the application to avoid the pitfall they encountered in their initial battle with Bass.

Patents – Invention commercialisation system not patentable subject matter in Australia

In brief: For the first time since the United States Supreme Court prominent decision in Bilski v Kappos, the issue of whether business methods are proper subject matter for patent protection has been the focus of an Australian reported decision, in which a Delegate of the Commissioner of Patents found that a computer-implemented system for commercialising inventions did not constitute patentable subject matter.

By Chris Bird, Partner, and Anthony Selleck, Senior Associate

How does it affect you?

  • In broad terms, developments in computer software that give rise to physical or tangible effects, as opposed to being mere recordings of information, constitute patentable subject matter in Australia. As many software products indeed produce such effects, patents remain a very important means for developers in all fields to protect new concepts.
  • The mere fact that a software invention can be described as a 'business method' does not of itself preclude patentability. As with any software, the crucial question is whether a software-implemented business method gives rise to a tangible or physical effect. However, computer implementation in itself is not necessarily sufficient to satisfy the legal test.

The invention at issue

The applicant in the case27, Invention Pathways Pty Ltd, is an IP consulting firm assisting inventors in protecting and commercialising new ideas. The invention at issue concerned an 'invention specific commercialisation system', and the steps defined in the main claim of the application included filing a patent application, preparing a research and development plan, and conducting prototype testing and determining product positioning and packaging. These steps were to be taken within specific timeframes, so that the commercialisation strategy would coincide with deadlines imposed by international treaties governing the filing of patent applications. Information collected as the steps were taken was to be entered into a computerised checklist programmed to issue reminders of the relevant deadlines. This approach was aimed at helping ensure that sufficient funds were available at critical dates in the patent filing program.

Patentable subject matter

The Australian Patent Office Examiner rejected the patent application as not being directed to patentable subject matter under the Patents Act 1990 (Cth). The applicant requested the matter be heard by a Delegate of the Commissioner of Patents, who upheld the Examiner's rejection of the application.

In its arguments, the applicant pointed to an Australian decision regarding patentability of business methods, Grant v Commissioner of Patents.28  The Grant invention related to a set of legal steps, not limited to implementation on a computer system, and the Federal Court of Appeal decision in the application stated that 'it is necessary that there be some "useful product", some physical phenomenon or effect resulting from the working of a method for it to be properly the subject of letters patent' and that a change in the state or memory of a computer may represent such a 'physical effect'. Invention Pathways Pty Ltd argued that the use of the computerised checklist and its storage in a data storage means provided this required 'physical effect'.

The Delegate noted that the claimed method was, in substance, a scheme to encourage the completion of certain commercialisation assessments within a specified period that related to time limits present in the patent system. To the extent that the method was facilitated by a computer-implemented checklist, the benefit of the invention arose solely from the content of the information stored in the checklist, rather than from any novel processing of that information. As it has long been accepted that mere intellectual information characterised solely by its content is not proper subject matter for patent protection in Australia, the Delegate held that the Examiner was right to reject the application.

The Delegate rejected submissions from the applicant that the storage of the information in a computer-readable medium was a sufficient physical effect to bring the application into the realm of patentable subject matter. In perhaps the first Patent Office decision citing the US Supreme Court decision Bilski v Kappos29, the Delegate approved the rationale behind Bilski, noting that, to be patentable, the physical effect (the data storage) must be central to the purpose or operation of the claimed process or otherwise arise in a substantial way. This was not the case with the invention commercialisation method, in which the physical effect resulting from the storage of information had only a peripheral and subordinate impact on the substance of the claimed method.

As a result of this decision, the Australian Patent Office has recently updated the examination guidelines in its Manual of Practice and Procedure, in respect of both software-related inventions and business methods.

Anti-Counterfeiting – Anti-Counterfeiting Trade Agreement close to being finalised

In brief: After three years of extensive negotiations, the agreement to introduce new international standards for intellectual property enforcement is now close to being finalised.

By Sebastien Clevy, Lawyer, and Miriam Stiel, Partner

The 11th and final round of negotiations on the Anti-Counterfeiting Trade Agreement (ACTA) was held in Tokyo from 23 September to 1 October 2010. The parties to the negotiations were Australia, Canada, the European Union, Japan, the Republic of Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the United States.

Objectives of the ACTA

The aim of the ACTA is to provide an international framework within which to combat intellectual property rights infringement and the proliferation of counterfeit and pirated goods throughout the world. The draft ACTA includes provisions dealing with civil and criminal enforcement of intellectual property rights, border control measures and enforcement of IP rights in the digital environment. It also aims to increase international cooperation in the protection of IP rights.

Implications of the ACTA in Australia

Since the commencement of the ACTA negotiations in 2007, the Australian Government has made it clear that Australia's involvement will not extend to making any changes to Australia's domestic IP laws. The joint announcement made by the Minister for Trade and the Minister for the Arts following the conclusion of the negotiations in Tokyo described the benefit of the agreement as creating a more secure trading environment for Australia's creative and knowledge-intensive industries by ensuring that copyright and trade marks are enforced in a number of important foreign markets.

What next?

The negotiations are expected to be finalised over the coming weeks. The final ACTA will be subject to full public and parliamentary scrutiny before it is signed by the Australian Government.

Our IP partners

Our IP partners have been very active in the marketplace over the past few months. Some highlights include:

  • Sarah Matheson was elected as one of two Deputy Reporters General of the International Association for the Protection of Intellectual Property (AIPPI). The AIPPI is the world's leading international organisation dedicated to the development and improvement of intellectual property and has almost 9000 members, representing more than 100 countries.
  • Jim Dwyer presented on IP issues in sports and marketing arrangements to the University of NSW (UNSW) Masters of Law students.
  • Miriam Stiel chaired the Australia and New Zealand Sports Law Association's annual conference for 2010.
  • Trevor Davies presented to more than 30 Thai judges on patents (including biotechnology patents and gene patenting) at the Judicial Training on Intellectual Property Law sessions held at UNSW in September.
Footnotes
  1. Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd [2010] FCA 984.
  2. Copyright Act 1968 (Cth) s32(1).
  3. Fairfax v Reed [2010] FCA 985, [30], quoting Justice Thomas in Kalamazoo (Aust) Pty td v Compact Business Systems Pty Ltd (1985) 5 IPR 213, 232.
  4. Ibid [45].
  5. Ibid [80].
  6. Copyright Act s10(1).
  7. Ibid.
  8. Copyright Act s42.
  9. Fairfax v Reed [2010] FCA 984, [35].
  10. Ibid [140].
  11. Viacom International, Inc et al v YouTube, Inc et al, 07 Civ 2103 (LLS) (SDNY, 2010).
  12. Copyright Act 1968 (Cth) Part V Division 2AA.
  13. Digital Millennium Copyright Act, 17 USC ? 512(c) (1998).
  14. Viacom v YouTube, 07 Civ 2103 (LLS) (SDNY, 2010).
  15. Ibid.
  16. Roadshow Films Pty Ltd & Ors v iiNet Ltd (No 2) (2010) 263 ALR 215.
  17. Ibid 340.
  18. Copyright Act 1968 (Cth) s 116AH(2).
  19. Roadshow v iiNet (2010) 263 ALR 215, 343.
  20. [2010] FCA 24.
  21. Nature's Blend Pty Ltd v Nestle Australia Ltd [2010] FCAFC 117 (13 September 2010).
  22. Nature's Blend Pty Ltd v Nestle Australia Ltd [2010] FCA 198, at [38].
  23. Above n 1 at [42] per Justices Stone, Gordon and McKerracher.
  24. Ibid at [19] per Justices Stone, Gordon and McKerracher.
  25. Seafood Innovations Pty Ltd v Richard Bass Pty Ltd [2010] FCA 723 (12th July 2010).
  26. Fresenius v Gambro 67 IPR 230 at para 70.
  27. Invention Pathways Pty Ltd [2010] APO 10 (21 July 2010).
  28. [2006] FCAFC 120 (18 July 2006).
  29. 561 US Supreme Court (28 June 2010).

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