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Intellectual Property Bulletin

12 December 2007

In this issue: Our intellectual property lawyers and patent and trade marks attorneys provide an update on the latest cases and legislative developments affecting patents, designs, trade marks, copyright, trade practices and litigation. 

Patents – Issue estoppel in patent case

By Alexia Mayer, Lawyer

E I Du Pont de Nemours & Co v Imperial Chemical Industries Plc [2007] FCAFC 163

In brief: The Full Federal Court has recently considered whether a finding that a parent application lacked novelty necessarily encompassed a finding that a specific dependent claim within that application also lacked novelty, so as to raise an issue estoppel in subsequent proceedings relating to a claim of that scope in a divisional application.

How does it affect you?

  • An estoppel only covers the actual ground upon which the finding of novelty was made.
  • Where there is ambiguity about what was decided in the earlier action, a court may not only consider what was decided but what was legally indispensable to the decision.
  • Where it is not clear whether a court has given separate consideration to the validity of a particular dependent claim and the finding of invalidity can be explained as following from the finding that the claim on which it depends is invalid, there will be no identity of issue between the earlier action and an action regarding a claim of the same scope as the particular dependent claim in a divisional application.

This case has a rather complex procedural history. Du Pont had previously opposed a patent application by ICI (the parent application) relating to refrigerants. On appeal, Justice Branson held that the parent application was invalid for lack of novelty because it had been anticipated by an earlier patent (the Lubrizol patent).

The only independent claim of the parent application was claim 1. Essentially, integer A of claim 1 of the parent application was for a mixture of at least two liquids, selected from a group of three liquids. Dependent claim 4 of the parent application was to the fluid composition of claim 1, comprising the mixture of all three. There was no discussion in Justice Branson's judgment of the dependent claims. Du Pont's application for leave to appeal Justice Branson's decision was dismissed by the Full Court.

ICI filed a divisional application (the divisional) from the parent application. As originally filed, the divisional was identical to the parent application. An examiner's report concluded that the divisional lacked novelty by reason of Justice Branson's judgment. ICI then sought to amend the divisional to make the dependent claim 4 of the parent application the new claim 1 of the divisional. However, a delegate of the Commissioner of Patents (the delegate) refused the divisional and rejected the proposed amendments. Justice Crennan allowed ICI's appeal.

Du Pont filed a notice of opposition to the divisional as amended. In dismissing Du Pont's application for injunctive relief, Justice Gyles held that no issue estoppel arose.

Du Pont's appeal from the decision of Justice Gyles was unanimously dismissed by the Full Court. The key issue was whether Justice Branson, in finding that the Lubrizol patent anticipated the parent application, effectively held that the divisional was also invalid for lack of novelty.

The Full Court held that, in circumstances where it was not immediately clear from Justice Branson's reasons, it was 'appropriate to consider not only what Justice Branson decided but also what was legally indispensable to her Honour's decision'. As the finding of lack of novelty could be explained by a finding only directed to claim 1, it could not be said that Justice Branson's decision was directly on the novelty of claim 4 as if it were an independent claim. The Full Court held that it was not 'necessarily and directly decided' that the combination of claim 4 of the parent application was anticipated. For this reason, there could be no issue estoppel.

The Full Court further held that the Full Court on the leave application had approached the matter of the invalidity of the parent application in the same manner as Justice Branson.

Patents – Court grants interlocutory injunction in patent case

By Alexia Mayer, Lawyer

GenRx Pty Ltd v Sanofi-Aventis [2007] FCA 1485*

In brief: The Federal Court has recently granted an interlocutory injunction to restrain infringement of a pharmaceutical patent.

How does it affect you?

  • A delay by a generic in commencing revocation proceedings until the launch of the generic product is imminent may increase the chances of a patentee obtaining interlocutory relief.

GenRx Pty Ltd (now known as Apotex Pty Ltd) made an application for revocation of a patent covering clopidogrel bisulfate products. The patentee, sanofi-aventis, cross-claimed for infringement and sought an interlocutory injunction to restrain GenRx from infringing the patent, pending the determination of the case.

Justice Gyles followed the approach to the grant of an interlocutory injunction set out in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, as explained by both Martin Engineering Co v Trison Holdings Pty Ltd (1988) 81 ALR 543 and Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57. Under the Beecham approach, there are two inquiries: (i) whether the plaintiff has made out a prima facie case; (ii) and where the balance of convenience lies.

It was not in dispute that GenRx was threatening to import and sell clopidogrel bisulfate products that fell within certain claims of the patent.

Justice Gyles was satisfied that there was a substantial issue to be tried as to the validity of the patent on the grounds of novelty. However, Justice Gyles held that the following factors pointed to the appropriateness of granting an injunction:

  • the longstanding existence and exploitation of the patent;
  • the failure of GenRx to bring revocation proceedings in a timely manner; and
  • the survival of similar patents from challenge in proceedings in Canada and the United States (although Justice Gyles noted that 'not too much could be made of this', because arguably there were differences in the approach taken by the courts in those jurisdictions and because of the differences in the framing of the patent).

On delay, GenRx submitted that the practical workings of the therapeutic goods registration system and, in particular, the Pharmaceutical Benefits Scheme (PBS) meant that GenRx could not prepare to launch its own product on the Australian market until it had obtained registration, because it is only after registration that an application for PBS listing can be made. Justice Gyles stated that those circumstances may explain GenRx's commercial strategy, but were not a reason why GenRx could not have 'proceeded in an orderly fashion free of the complication occasioned by the impending launch of GenRx's product'. Justice Gyles stated that:

Delay of the commencement of the revocation proceedings can only be seen as a deliberate decision for tactical reasons and appears inconsistent with the confidence now expressed by counsel on behalf of GenRx in the merit of its attack.

 

Justice Gyles found that there was no reason why GenRx could not have commenced revocation proceedings from 2003 onwards.

Justice Gyles held that the grant of the patent, combined with the factors discussed above, established a prima facie case sufficient to support an interlocutory injunction, despite the 'substantial issue' as to validity.

Justice Gyles also held that the balance of convenience favoured the grant of the injunction.

Despite an offer by GenRx to provide security of 'a very substantial amount', Justice Gyles was not satisfied that damages would be an adequate remedy if sanofi-aventis were ultimately successful. Justice Gyles accepted that the calculation of damages would be a 'formidable exercise', but did not accept that it would be more complex in principle than calculating GenRx's damages should the revocation action succeed. However, Justice Gyles held that it was not justified to temporarily disturb the status quo, particularly in light of the operation of the PBS. Justice Gyles said:

A new entrant in this field would have an effect which may be both unpredictable and irreversible. There is also likely to be interference with the trade patterns of Sanofi with its customers, both wholesale and retail, that may not be detectable or measurable in money terms. Sanofi has built up a considerable trade since 2003, and the establishment to go with it, as GenRx looked on.

 

(It had been submitted by sanofi-aventis that, because of recent changes to the PBS system, if GenRx applied for PBS listing, an automatic price cut would apply to sanofi-aventis' clopidogrel bisulfate product, which might not be recoverable should sanofi-aventis win at trial.)

GenRx had submitted that there was a public interest in encouraging generic competition in pharmaceuticals. Justice Gyles accepted that that was one statutory objective. However, his Honour stated that encouraging innovation by enforcing monopolies granted to patentees was also a statutory objective, commenting: 'I beware the organisation engaged on a purely commercial enterprise wearing the cloak of public interest'.

Justice Gyles held that an injunction should be granted, subject to the provision of an undertaking as to damages and security by sanofi-aventis.

* Allens Arthur Robinson represented sanofi-aventis in this matter.

Designs – Registered design rights – who is the 'informed user'?

By Anthony Selleck, Patent & Trade Marks Attorney

Apple Computer Inc [2007] ADO 5 (20 September 2007)

In brief: A recent decision by a delegate of the Registrar of Designs to revoke a design registration for a USB connector suggests that the stricter tests for registrability of designs introduced by the Designs Act 2003 (Cth) are being applied by the Designs Office.

How does it affect you?

  • Section 19(2)(d) of the Designs Act 2003 (Cth) instructs persons who are deciding whether a design is new and distinctive (ie courts and Designs Office examiners) to have regard to the 'freedom of the creator of the design to innovate'. According to the delegate in this decision, the concept of 'freedom to innovate' recognises that informed users are aware that designs for certain products include elements that are dictated by reason of regulatory or market constraints, and will give greater weight in such situations to features that otherwise are not particularly pronounced in the appearance of the product.
  • However, the concept cannot operate to elevate a feature that the informed user would not notice (such as the appearance of the electrical contacts inside the Apple connector) into a feature that provides design distinctiveness.

The facts

Apple Computer Inc. registered a design under the Designs Act 2003 (Cth) (the Act) for a 'universal serial bus (USB) Type-A connector device' (the Apple connector) and requested examination of the design shortly after registration. Novelty in the design lay in the provision of additional electrical contacts interleaved with the electrical contacts found inside existing USB connectors. After three adverse examination reports, Apple requested a hearing of the matter before a delegate of the Registrar of Designs.

Standard of the informed user

Only designs that are 'new and distinctive' are properly registrable under the Act. Whether a design is 'new and distinctive' for these purposes is decided from the perspective of an 'informed user' of the design.

It is important to remember that, under Australian designs law, functional features are not precluded from protection.

For the design in issue, the delegate recognised that a USB port is intended for use by the 'ordinary' computer user. This may be contrasted with certain other computer connectors, such as a LAN port or an external video connector. As such, the relevant 'informed user' was found to be a person with general familiarity with computers, not necessarily an IT expert.

Overall impression of a design

A design is distinctive unless it is substantially similar in 'overall impression' to an earlier design. When considering the 'overall impression' of the Apple connector on an informed user, the delegate only looked to features of which the informed user was actually aware. As the informed user of a USB connector has no awareness of the arrangement or number of contacts inside the connector, the additional electrical contacts in the Apple connector did not contribute to the overall impression of the design.

The fact that all of the other visual features of the Apple connector could be found in a standard USB connector led to the finding that the design was not distinctive, and should be revoked.

The delegate's decision on this issue reinforces the critical importance of the definition of the 'informed user' of a design. If the 'informed user' of the Apple connector was an IT or electronics expert with awareness of the internal configuration of USB connectors, then the result may have been different.

Trade marks – Changes to Geographical Indications coming

By Andrew Butler, Partner, and Peter Ryan, Trade Marks Attorney

In brief: Submissions to IP Australia on proposed new Geographical Indications for wines closed on 1 November 2007 and are currently being considered. Under the current laws, owners of existing trade mark registrations or pending applications were able to object to protection being granted to particular regional names and the like that are not currently protected under the 1994 Agreement with the European Union relating to Geographical Indications.

How does it affect you?

  • The introduction of new Geographical Indications will affect trade mark owners in the wine industry who have existing trade mark registrations or applications for such names, or which incorporate such names, and their ability to use particular names in relation to wines, if protection is granted to the proposed new Geographical Indications.

Background

There are limitations in the wine industry on the use of Geographical Indications (GIs), such as Beaujolais, Champagne, Clare Valley, Coonawarra and Hunter Valley, under the provisions of the Australian Wine and Brandy Corporation Act 1980 (Cth) (the Act) and the existing 1994 Agreement relating to GIs, and how such names are entered on the Register of Protected Names (the Register) administered by the Australian Wine and Brandy Corporation (the AWBC).

Proposed new GIs

Australia is currently in the process of finalising a revised agreement with the European Union (the EU), whereby the EU is seeking protection of certain geographical names that were not previously protected under the original 1994 Agreement.

As part of that process, owners of existing registrations or pending applications for trade marks incorporating names proposed for protection were able to lodge objections to protection of such names with the Registrar of Trade Marks at IP Australia by 1 November 2007.

The new names proposed for protection include GIs or regional names from Belgium, Bulgaria, France, Greece, Italy, Portugal, Romania, Spain and the United Kingdom. From the United Kingdom, proposed new GIs include Berkshire, Buckinghamshire, Cheshire, West Midlands, Wiltshire and others.

IP Australia's official notice in relation to the proposed new GIs can be found at the IP Australia website. A full list of the proposed new GIs is available at the National Wine Centre of Australia's website.

We are aware that objections have been lodged in relation to Vittorio and Montana, and will report on any further developments.

Copyright – Federal Court considers copyright in project homes

By Marina Lloyd Jones, Senior Associate

Barrett Property Group Pty Ltd v Metricon Homes Pty Ltd [2007] FCA 1509

In brief: The Federal Court recently issued a detailed judgment on copyright in project homes.

How does it affect you?

  • Architects and builders seeking to incorporate a feature taken from another building into one of their designs, even if it is only the way commonplace rooms are arranged, should obtain legal advice before proceeding. A feature that is distinctive enough to merit copying may also be original and substantial enough to warrant copyright protection.

Barrett Property Group Pty Ltd designs, builds and sells project homes in Victoria under the name Porter Davis Homes, including the 'Seattle 31' and the 'Memphis 33' homes. It was asserted that Barrett owned copyright in these homes, that SRS Property Group Pty Ltd owned copyright in the underlying plans (the homes and plans together, the copyright works), and that Metricon Homes Pty Ltd, Barrett's competitor in the Victorian project home market, had drawn plans and constructed five project homes in infringement of this copyright. The applicants argued that Metricon had taken its 'alfresco quadrant' feature, being the arrangement of the rumpus, family, kitchen and meal areas around the alfresco, all under a single roof line, and that this formed a substantial part of the copyright works.

At the outset, Justice Gilmour noted that copyright in project homes is a difficult area, mixing familiar ideas and commonplace features with labour, skill and judgment in combining the various features. The plan for a project home will always be partly functional – a kitchen will always be placed near a dining room, for example – and so the 'dividing line between that which is dictated by broad functional requirements and that which is not, is...often unclear'.1 

In considering whether a 'substantial part' of the copyright works had been taken, Justice Gilmour noted that the assessment of substantiality will always be a 'matter of impression' focusing on the quality of the part taken, although his Honour refused to disaggregate from this the fact that the quantity taken was also substantive. Justice Gilmour cited Tamawood, also a project homes case, where the Full Court held:

...Whether there has been an infringement of the whole requires that the originality of the part be considered in relation to the work in suit as a whole. It must be determined whether the part is an 'essential or material' feature of the whole work...[and] represent[s] a substantial part of the labour, skill and judgment of the author that made the whole work 'original'.2

 

The respondents had submitted that the alfresco quadrant was not sufficiently original for it to be considered a substantial part of the copyright works. His Honour disagreed, pointing to the significant labour, skill and judgment that had gone into the development of SRS's plans, the lack of any evidence that they had been copied by SRS, and his view that the alfresco quadrant was 'clearly the distinctive and essential feature of the designs' considered in the context of the prior art. This impression of substantiality was strengthened by his Honour's personal inspection of one of Barrett's homes. Before concluding that the alfresco quadrant was essential and material to the copyright works, his Honour had to assess why its design was not primarily functional. Metricon had argued that there was very little (if any) room for choice as to the placement of rooms in and around the alfresco. His Honour disagreed, finding that the evidence disclosed a number of ways of incorporating the alfresco and that the design chosen was far from obvious.

The respondents had also argued that the alfresco quadrant formed part of the 'common stock' of attributes or designs of project homes. Relying on another project homes case, Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd (1999) 46 IPR 309 at [42], his Honour noted that a building plan may incorporate ideas or features that are 'common stock' to project homes and plans generally, but the original expression of these features may be protected under copyright. The relevant enquiry was whether the combination and arrangement of rooms and features comprising the alfresco quadrant, rather than the rooms and features themselves, formed part of the common stock. The respondents had submitted a list of third-party homes, which they argued demonstrated prior examples of the arrangement of similar rooms around a courtyard or outdoor space in a manner claimed by the applicants. In Justice Gilmour's view, this 'prior art' at most contained expressions of the idea of a home design incorporating an external courtyard or outdoor space, bounded by three or more walls. The applicants had taken the expression of this idea further than that established in the common stock.3

After finding the alfresco quadrant and Metricon's allegedly infringing homes 'strikingly similar', his Honour turned to the issue of causal connection. Metricon had attempted to prove that their homes were developed independently, using their own earlier designs. Justice Gilmour found that that they had, in fact, used the alfresco quadrant to derive their designs: they had access to Barrett's display homes and floor plans, and had demonstrated a general willingness to visit competitors' display homes and collect floor plans to potentially incorporate features into their own designs.

As well as Metricon being held to have infringed copyright, its managing director, who knew that designs were derived from the applicants' plans and had power to prevent copying, and its product development manager, who had direction and control over the designer who copied the applicants' plans, were found to have authorised infringement and were personally liable.  

Trade practices – Competition watchdog drops misleading conduct case against Google subsidiaries

By Marina Lloyd Jones, Senior Associate

Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd & Ors (NSD 1323/2007, FCA)

In the widely publicised case brought by the Australian Competition and Consumer Commission (the ACCC) against Google, Inc. in relation to its 'Adwords' sponsored links service, the Trading Post, also a respondent, disclosed at a Federal Court directions hearing on 16 November 2007 that it was exploring settling its part of the case with the ACCC. Google, Inc. will continue with its defence and, at the same directions hearing, Justice Allsop set the hearing down for five days starting 23 June 2008.

The ACCC has alleged that the Trading Post engaged in deceptive and misleading conduct in breach of the Trade Practices Act 1974 (Cth), when the business names 'Kloster Ford' and 'Charlestown Toyota' appeared in the title of Google-sponsored links to the Trading Post's website in 2005. The ACCC argues that the two car dealerships are competitors of the Trading Post in car sales. It also argues that Google, in causing the links to be published on its website, engaged in misleading and deceptive conduct.

In October 2007, the ACCC discontinued proceedings against Google's Australian and Irish subsidiaries, following submissions from Google, Inc. that any outcome of the case against the parent company would be put into effect in Australia. At the time, Justice Allsop stated that correspondence between the parties made it 'tolerably clear' that the ACCC did not have a misleading and deceptive case against the subsidiaries as their pleadings stood. 

Litigation – Federal Court Victoria – Rocket Docket update

By Jonathan Gottschall, Senior Associate

In our Intellectual Property Bulletin – September 2007 issue, we reported on the establishment of the 'Fast Track List' (often referred to as the Rocket Docket) in the Federal Court in Victoria. While the scheme is only in its early stages, anecdotal reports suggest that it is achieving its objective of giving commercial litigants the opportunity to obtain faster and less costly justice.

At the time of writing, there were 16 matters listed for hearing under the Rocket Docket scheme. The majority of these cases concern litigation under the Trade Practices Act 1974 (Cth) in relation to contract disputes or claims of misleading or deceptive conduct. There are also several intellectual property cases on the Rocket Docket, most of which relate to copyright.

The main challenge for litigators and their legal advisers running litigation on the Rocket Docket has been the short time frames involved. For parties commencing litigation, early reports from the operation of the scheme highlight the need to have as much of the case as possible prepared in advance of commencing litigation. Parties defending claims on the Rocket Docket generally do not have the option of preparing their case in advance. Learning to manage the tight deadlines on the Rocket Docket is one of the major challenges facing the lawyers defending claims in this list, and it is also a challenge for the courts responsible for ensuring that the process operates fairly.

Overall, it appears that the fast-paced timetable of the Rocket Docket potentially favours parties commencing litigation.

Leading Australian IP firm – sixth consecutive year

Our world-class IP practice has been named the Leading Australian IP Firm 2008 for the sixth consecutive year by Chambers Global – The World's Leading Lawyers and a number of our patent, trade marks, and copyright partners have been ranked at the top of their field.

'Allens' extensive team contains first-class IP lawyers from both commercial and litigation backgrounds as well as patent and trade mark attorneys. This ability to offer such a broad range of expertise under one roof is what puts the firm streets ahead of most others in the market,' clients told Chambers Global 2008 .

We would like to take this opportunity to thank you, our valued clients from around the world, for your continued support and we look forward to working with you in 2008 and beyond.

Season's Greetings and a happy and prosperous New Year.

Footnotes
  1. Tamawood v Henley Arch (2004) 61 IPR 378 at [56 ].
  2. Wilcox and Lindgren JJ at [55].
  3. At [72] .

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