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Intellectual Property

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What's happening in intellectual property

December 2017

In this issue: we look at how you can protect yourself against ambush marketing; a new mandatory data notification regime coming into effect; big data challenges for the healthcare and pharmaceutical sectors; a Full Federal Court decision on preliminary discovery in patent infringement proceedings that will be welcomed by IP owners; some examples of trade mark infringement; and issues presented by the use of brands in video games.

Ambush marketing: traders beware!

In brief: Everyone knows the famous adage that 'the enemy of my enemy is my friend'. But can the friend of my friend be my enemy? In the context of ambush marketing, the answer can be yes. Associate Julia Kovarsky explains.

What is ambush marketing?

Ambush marketing is a tactic used by a trader to associate themselves with an event or other trader without having any legitimate rights to such an association. By drawing a connection in the consumers' minds between themselves and (for instance) an event, a trader can capitalise on the brand value of the event without paying for official sponsorship. A common example of ambush marketing is the sale of branded merchandise outside a venue where an event is being held, where this merchandise has been produced without the consent of the event organiser. For the organiser, this cuts into their own ability to profit from merchandising and it devalues the sponsorship rights of the official sponsor.

What's happened?

While the practice of ambush marketing is sometimes associated with small operators of dubious character, it is also used as a tactic by big businesses. However, ambush marketing does not necessarily involve illegality. Sometimes it is about skating as close to the line as possible, without actually crossing it. Think Holden's Big Red Blimp at the 2006 AFL Grand Final, Bavaria beer at the 2010 FIFA World Cup, and Stella at the 2011 US Open, among others.

A recent example of an ambush marketing-style campaign is Telstra's 'Rio' themed advertising during the lead -up to the 2016 Olympic Games in Rio de Janeiro. Telstra had previously been the official sponsor of the Australia Olympic Committee (AOC), but in 2016 this role went to Optus. Telstra instead entered into a sponsorship agreement with Channel 7 (the official broadcaster of the Rio Olympics in Australia), which made it the 'official technology partner' of the official broadcasting partner of the Rio Olympic Games. Telstra then ran a campaign focused on Australians watching the coverage of the 2016 Olympics on their Telstra devices, and featured Peter Allen's well-known song 'I Go To Rio' in its television advertisements. The AOC naturally took issue with this, and commenced proceedings in the Federal Court alleging that Telstra had breached the Olympic Insignia Protection Act 1987 (Cth) (OIPA) and engaged in misleading or deceptive conduct in contravention of the Australian Consumer Law (ACL) by suggesting a sponsorship-like connection between Telstra and the AOC or the Olympic Games. Telstra defended the proceedings on the basis that it was in fact just promoting its role as the official technology partner of Channel 7's coverage of the Olympic Games. Despite a finding by the primary judge that some of Telstra's advertisements were borderline', his Honour found against the AOC on both the OIPA and ACL claims, concluding that consumers would understand Telstra's advertisements to be promoting its sponsorship of Channel 7's Olympic Games coverage, rather than sponsorship of the Games or AOC. While acknowledging that reasonable minds may differ, the Full Court did not overturn the primary judge's decision on appeal.

Could this set a dangerous precedent? Would ordinary consumers necessarily be aware of the multiple layers of commercial arrangements if they saw an advertisement for the official grass sponsor of the official dairy farmer of the official milk sponsor of the AFL? (The milk sponsorship was a real thing, by the way).

What next?

Live sport is one of the few things Australians watch as it happens, meaning there are plenty of opportunities to have your business or product seen (both at the stadium and during the TV coverage). With the Rugby League World Cup just finished, the Ashes Tour starting, and the FIFA World Cup in Russia and the Winter Olympics in South Korea just around the corner, big sporting events could mean big business. Based on the Federal Court's latest decision, it would be wise to make sure that the sponsor of a sponsor (a friend of your friend) does not end up cutting your grass. Followings these tips for protecting against ambush marketing is a good start:

  • register your trade marks, as an important step in brand protection generally;
  • ensure tight controls in your sponsorship agreements, avoiding the 'sponsor of a sponsor' scenario as far as possible; and
  • be vigilant in checking what is happening in the market both in the lead-up to and during your event.

What you need to know about mandatory data breach notification

In brief: In response to the rising number of cyberattacks, new legislation has been introduced that proposes a mandatory notification regime that will take effect from February next year. Lawyer Mohamed Khairat reports.

What the changes mean

Under the Privacy Amendment (Notifiable Data Breaches) Act 2017 (the Act), from 22 February 2018, Australian entities who have suffered an actual or suspected 'eligible data breach' will be required to notify the Office of the Australian Information Commissioner (OAIC). The consequences of not notifying range from reputational damage to a civil penalty of up to $2.1 million per breach. It is therefore vital for companies to be aware of what they need to do, how to do it and when.

What is an eligible data breach?

An eligible data breach includes incidents of unauthorised access, disclosure or loss of 'personal information' that is likely to result in 'serious harm' to any of the individuals to whom the information relates.

The definition of 'personal information' is taken from the Privacy Act 1988 (Cth) and covers names, addresses, health information, tax file numbers, credit information and sensitive information.

'Serious harm' is defined in the Act broadly to encompass anything from physical and psychological harm to economic and reputational harm. The extent of harm should be determined by the nature and sensitivity of the affected personal information, whether the personal information is encrypted and who possibly has access to the personal information.

Responding to an eligible data breach

Once an entity suspects an eligible data breach, it has 30 days to assess and determine whether or not there are reasonable grounds for it to believe the relevant circumstances amount to an eligible data breach. An entity must notify the OAIC as soon as reasonably practicable after it determines it has reasonable grounds to believe that an eligible data breach occurred. That notification must describe the data breach, the type of information concerned and recommendations about the steps that individuals should take in response to the data breach.

As soon as reasonably practicable, the entity must also notify the contents of the statement to any individuals affected, or at risk, by the eligible data breach.

Mitigating risk

If your organisation collects personal information (which it almost certainly does), these changes will affect you. Given the serious consequences of having to notify an eligible data breach, it is prudent to consider taking steps to mitigate the risk of such an event occurring, such as through technical measures (such as limiting access rights, regular password changes and ensuring computer systems and programs are up to date), training staff and conducting regular security audits.

The Act also underscores the need for appropriate action plans to deal with data breaches when detected. If a breach occurs, acting quickly can prevent it from escalating into an eligible data breach, for example, by limiting the harm caused such that a reasonable person would not consider the harm to be 'serious'.

Room for Improvement? Big Data challenges in Health

In brief: 'Big data' is revolutionising approaches in all major industries, including the health sector, but Australia's current privacy framework lacks flexibility, and there is insufficient guidance to support compliance. Associate Nick Li looks at the challenges in improving patient care and research outcomes through big data in the healthcare and pharmaceutical sectors.

The data revolution

The healthcare and pharmaceutical industries have been actively gearing themselves for the data revolution for some time. This isn't surprising, as the potential benefits offered by big data analytics are substantial, including:

  • using aggregated de-identified data from multiple clinical studies to identify new treatments and therapies;
  • data-matching to create tailored treatments and improve patient care;
  • analysis of real -time patient data to monitor the safety and efficacy of treatments, including the occurrence of adverse events, and
  • analysis of consumer and market data to inform strategic and marketing decisions.

Accordingly, there exists a strong commercial incentive for businesses within the pharmaceutical and healthcare sectors to leverage their data. Leveraging health and clinical data is also in the public interest of improving patient care and access to effective treatments.

There is no authoritative definition of what constitutes 'big data', but it is commonly accepted that it relates to high-volume, high-velocity and/or high-variety information assets that require new and innovative processing to reveal insights.

With big data comes big challenges. Taking privacy law as an example, Australia has long been grappling with the right regulatory balance. The collection, use and disclosure of personal information is regulated by the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs), under which consent is generally required for the collection, disclosure and use of health information, although other Commonwealth, state and territory privacy and health information laws can also apply. The consent sought must be current, specific, informed and voluntarily given. The consent can also be withdrawn at any time, at which point the entity must cease using the relevant information. The challenge is that it can be difficult to obtain specific consents where the data may be used for multiple (secondary) purposes, not all of which are apparent at the time information is collected. One solution to this problem may be to expand the scope of the permitted health situation exceptions under the current Privacy Act. An alternative would be for the legislation to permit 'bundled' consents (ie consents for multiple purposes) in some carefully-considered circumstances. It is in Australia's interests to shift to a privacy framework that facilitates data sharing.

Businesses would also benefit from further guidance to assist compliance. For example, when is personal information considered sufficiently de-identified? At what stage is de-identified information considered re-identified? If seemingly trivial personal information is subsequently re-identified (eg pet ownership status), should consent be sought from the person on each occurrence, or could this be captured by a single consent from the outset?

Leveraging data analytics in the health sector can mutually benefit businesses and the public, but legislative reform and further practical guidance are needed in Australia to enable the health sector to reap the benefits of big data.

Reasonable belief or a mere suspicion? Full Court lowers the bar on preliminary discovery applications

In brief: The Full Federal Court has handed down a significant decision on preliminary discovery in a result that will be welcomed by IP owners, as the court has clarified the requirements for a successful preliminary discovery application while emphasising the need for such applications to be met with brevity. Senior Associate Jonathan Adamopoulos and Vacation Clerk Bryanna Workman report.

Background

The Full Federal Court handed down its decision in Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCAFC 193 on 29 November 2017

Pfizer is the owner of patents in relation to the process of production of etanercept, a biological medicine marketed as ENBREL. It sought preliminary discovery to assist it in deciding whether to sue Samsung Bioepis in relation to its product BRENZYS, which Pfizer believes may be infringing Pfizer's patents. Pfizer's application was refused at first instance, but succeeded on appeal.

The value of preliminary discovery

Preliminary discovery is a valuable tool to IP rights owners who believe that their rights are being infringed, but require further information in order to make an informed decision about whether to sue for infringement. It is also available to rights owners who have an infringement claim but are unsure of which person to sue. In this case, Pfizer only sought discovery in relation to the issue of whether it had grounds to sue Samsung Bioepis.

The applicant must demonstrate that:

  1. it reasonably believes that it may have the right to obtain relief (eg damages or an injunction for IP infringement) against a potential respondent;
  2. after making reasonable inquiries, it does not have enough information to decide whether to sue; and
  3. it reasonably believes that the potential respondent has or is likely to have in its possession documents relevant to the issue of whether the respondent is infringing the relevant IP right, and the applicant's inspection of such documents would assist in deciding whether to sue for infringement.

The Pfizer case focused on the first element.

'Reasonable belief'

Departing from previous rulings, the Full Court held that applicants seeking preliminary discovery must satisfy the court that they have a subjectively- held belief that they may be entitled to relief. The reasonableness of that belief will be assessed by the court objectively, based on all of the evidence presented to it. This evidence does not necessarily need to be in the form of admissible evidence, nor does the person holding the belief have to have seen the evidence.

The court cautioned against attempting to paraphrase the 'reasonable belief' test, which has tended to overcomplicate the rules.

Not a 'dress rehearsal'

The court held that a preliminary discovery application will not fail just because the respondent contests some of the evidence that the applicant relied upon when forming its belief, or simply because the judge favours the evidence of the respondent more than that of the applicant. The application is not intended to be a fact-finding exercise nor should it be a 'dress rehearsal' for trial. To defeat an application for preliminary discovery, you will need to show either that the applicant does not subjectively hold the belief, or, if it does, that there is no reasonable basis for holding that belief. Put simply, the belief must not be 'outlandish', 'untenable, irrational or baseless'.

Looks can be deceiving: deceptive similarity, substantial identity and trade mark infringement

In brief: One limb of trade mark infringement is that the allegedly infringing mark must either be substantially identical, or deceptively similar, to an existing trade mark registration. What does that mean? Associate Emma Gorrie paints a picture to explain.

Background

A string of recent trade mark decisions involved the following sets of marks:

Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) [2017] FCA 965 (Shape)
Shape Shopfitters   Shape At A Glance
(Allegedly infringing)
Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 (Insight)
Insight Clinical Imaging   Insight Radiology
(Allegedly infringing)
Accor Australia & New Zealand Hospitality Pty Ltd v Liv Lty Ltd [2017] FCAFC 56 (Harbour Lights)
Harbour Lights   Harnour lights2
(Allegedly infringing)

How does the court decide?

For a finding that two marks are substantially identical, a total impression of similarity must emerge from a side-by-side comparison of the marks. For deceptive similarity, the comparison is between the impression left, or recollection of, each of the marks. If either of these can be established (and indeed if the allegedly infringing mark is identical to the registered mark), then there will be a finding of trade mark infringement. If none of these can be established by the trade mark owner, the claim will fail.

So what do you make of these marks? Can you pick the infringing marks?

What did the courts say?

The following table gives a snapshot of the decisions involving the trade marks pictured above. Each case was deciding (among other things) whether the marks on the left were infringed by the marks on the right.

Case

Decision

Some key points

Shape

No infringement

  • You cannot have a monopoly in an ordinary English word (without more).
  • Prevalence of a particular word in a particular industry might be relevant to trade mark infringement.
  • For deceptive similarity, details can matter (such as a bottle-cap -shaped border).
  • These cases involve impression and matters of degree.

Insight

Substantially identical

  • When considering whether marks are substantially identical, any comparison must consider the essential elements of the marks.
  • The importance of visual differences must be assessed having regard to those essential elements.

Harbour Lights

Substantially identical or deceptively similar
(depending on which exact marks)

  • A single composite mark may in fact be a combination of individual trade marks, each of which may be infringed.
  • It is potentially risky to rely on the assumption that a trade mark is too descriptive to be protected by trade mark law.

What does this all mean?

While comparing the three cases above might lead to some head-scratching, ultimately they reinforce some well-established trade mark principles, including:

  • it is important to conduct searches before adopting a new trade mark to confirm no one else is using a similar mark already; and
  • it is best to opt for a mark that is distinctive enough to distinguish your goods and services from those of other traders. The more distinctive the mark, the more likely that infringement can be proven.

Using third party brands in video games: issues and opportunities

In brief: One of the emerging battlegrounds for brand owners is video games, particularly with the growth of virtual reality applications. A recent claim made in the US illustrates how having your brand featured in a video game can be a problem - but depending on the circumstances, it could also present a commercial opportunity. Associate Kaelah Ford reports.

Claim against Call of Duty

Vehicle manufacturers AM General, LLC recently made a claim against Activision Blizzard, Inc., Activision Publishing, Inc., and Major League Gaming Corp, the creators of the Call of Duty video game, over the use of Humvees in their games. For the uninitiated, Call of Duty is a first-person shooter video game franchise that has sold over 250 million copies worldwide. Humvees are military vehicles used primarily by the US army. AM General claims that by featuring the Humvee 'trade dress' (ie the visual appearance of the vehicles) and trade marks (HUMVEE and HMMWV) in their games, the creators of Call of Duty have deceived consumers into believing that AM General approves, licenses or sponsors the games.

Causes of action under Australian law

There is a number of different claims a brand owner might be able to make under Australian law in relation to the alleged unauthorised use of their IP in a video game.

Misleading or deceptive conduct

AM General's claim under the US Lanham Act is similar to a claim under s 29 of the Australian Consumer Law, which provides that a person must not make false or misleading representations that goods or services have a particular sponsorship or approval. AM General could also make a claim under s 18 which is the general prohibition against misleading or deceptive conduct. The success of such a claim would likely depend on the prominence of the featured product in the game. By way of illustration, if a can of Dr Pepper is in the background of a film scene, a consumer may not notice it, but if the main character is depicted drinking Dr Pepper, that may suggest to consumers that there is a commercial relationship between Dr Pepper and the film.

Trade mark infringement

To prove infringement, a brand owner would need to show that the relevant trade mark was being used as a trade mark (ie as a badge of origin) to indicate a connection in the course of trade between the goods (the video game) and the person who applied the marks to the goods (the creators). Any use of HUMVEE in Call of Duty would not seem to be use "as a trade mark", as it merely reflects the kind of vehicle that the character is driving.

Copyright infringement

If AM General had (for example) a stylised logo for HUMVEE in which it owned copyright, it could potentially make out a claim for copyright infringement.

If you can't beat them, join them?

Of course, the use of IP in video games can also be seen as an opportunity for brand owners. Product placement in films is widespread and offers benefits both to brand owners (who get their products out to a large audience) and film producers (who receive financial support for the film). The practice has made its way into video games, for example, skateboarding brands were featured heavily in the Tony Hawk series. AM General has in fact licensed its IP to a video game - it just wasn't Call of Duty.

With the increasing level of interaction consumers can have with video games, brand owners should consider whether or not they are open to opportunities to license their IP for these purposes. Similarly, content creators should be mindful of the potential need to obtain consent to feature products in their virtual worlds, particularly where the public might be led to believe that a brand owner has some association with the game.

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