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Intellectual Property Bulletin

7 May 2008

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, trade marks, copyright, design and trade practices.

Patents – Australia: a resting ground for bad patents?

By Richard Hamer, Partner, Josh Budin, Lawyer, and Harry Evans, Articled Clerk

Ajinomoto v NutraSweet [2008] FCAFC 34

In brief: Technical developments are often made at global research centres. Although information about these developments is available in Australia, in many fields there is no actual research being carried out in Australia. In these fields, Australian patents filed before 1 April 2002 have a relatively good chance of surviving an obviousness attack.

How does it affect you?

  • The decision in Ajinomoto v NutraSweet has been described by the judges involved as 'making Australia a resting ground for bad patents' and as 'parochial and unwise'.
  • For patent owners, however, it offers greater confidence in the validity of many Australian patents.

Decision

In Ajinomoto v NutraSweet, the Full Federal Court considered the construction of section 7(3) of the Patents Act 1990 (Cth) as it applies to patents filed before 1 April 2002. This includes the majority of current granted patents in Australia. Section 7(3) permits certain additional documents to be added to the common general knowledge for the purpose of assessing if an invention is 'obvious', if the document would have been ascertained, understood and regarded as relevant to work in the relevant art in Australia.

The case arose after Ajinomoto obtained a patent for a blend of artificial sweeteners. NutraSweet sought to have the patent revoked on the grounds that, when compared with the prior art base as defined, it lacked an inventive step.

NutraSweet relied on the common general knowledge plus information contained in a 1993 French patent (Nofre Tinti) describing a new sweetener molecule. The only basis upon which the Nofre Tinti specification could be considered as part of the art base was if it fell within s7(3).

Ajinomoto argued that Nofre Tinti was not part of the prior art base because there was no 'work in the relevant art in Australia'. No-one in Australia was actually working on discovering new sweetener molecules at the relevant time. NutraSweet contended that 'work', when read in context, meant nothing more than the work that might hypothetically have been undertaken. The expertise to do the work in Australia, if asked, was available.

At first instance, Justice Finkelstein did not consider the requirement for information to be 'relevant to work in the relevant art in Australia'. However, he commented that information widely circulated in Australia should not be ignored just because there was no work done in the relevant industry in Australia as at the priority date. His Honour said that if such information was ignored, 'Australia would become a resting ground for bad patents'.

On appeal, the Federal Court favoured Ajinomoto's construction of s7(3), noting that their construction gave effect to the statute's 'ordinary and natural' meaning. The court commented that this interpretation may be a 'parochial, and unwise, approach to the establishment of a prior art base' but concluded that that was what Parliament had intended.

Such an outcome can serve to protect the owners of Australian patents filed before 1 April 2002 from a challenge to the inventiveness of their patent, if they can show that no work in the relevant field was carried out in Australia at the relevant time.

Ultimately, the Court of Appeal went on to find for NutraSweet. The 'relevant art' in this case was the blending of artificial sweeteners, not the discovery of new artificial sweetener molecules. Since artificial sweeteners, including new artificial sweeteners, had been blended in Australia for many years, the Nofre Tinti specification constituted information 'relevant to work in the relevant art' in Australia.

Patents – Construction of patent claims by reference to examples

By Chris Bird, Partner, and John Landells, Patent Attorney

Nufarm Ltd v Jurox Pty Ltd [2008] FCA 178

In brief: The Federal Court in Nufarm Ltd v Jurox Pty Ltd found for non-infringement of an Australian patent essentially on the basis of reference to the specification, and particularly the example formulations, to determine the scope of two claim terms deemed ambiguous by the court, namely 'emulsion' and 'phase'.

How does it affect you?

  • Technical terms used in patent claims – even those that at first glance appear unambiguous – are often subject to clarity arguments, and it is therefore essential to clearly define in the specification the meaning intended by such terms. When using a range of examples within the specification to highlight and support inventive step of claimed features, care must also be taken not to make any further limiting statements that may be read as undesirably narrowing the scope of the terms used in the claims.

The case

The Federal Court proceedings in Nufarm Ltd v Jurox Pty Ltd concerned the alleged infringement by Jurox of Nufarm's Australian Innovation Patent No. 2003101020, relating to a sheep drench formulation for controlling ovine intestinal parasites.

The court had postponed determination of issues regarding validity of the claims until a decision on infringement had been made, the infringement question essentially coming down to whether the infringing product was within the scope of composition claim 1.

The claimed formulation included a combination of an aqueous-stable active agent and an organic-stable active agent for treating intestinal parasites in sheep. The aqueous-stable active agent was carried in an aqueous phase and the organic-stable active agent was carried in a separate 'organic liquid phase', the two phases capable of being mixed together to form an 'emulsion'.

Jurox's allegedly infringing sheep drench product, Q-Drench, utilised a dual carrier system that included an aqueous-stable active agent carried in an aqueous phase but with an organic-stable active agent carried within the aqueous phase by use of micelle formation. In the micelle, the molecules of the organic-stable active agent, when in the aqueous phase, were encapsulated and surrounded by an outer layer of molecules having a water-soluble end and an organic-soluble end, the water-soluble end facing and interacting with the water/aqueous phase, and the organic-soluble end facing and protecting the organic-stable active agent from the aqueous phase.

The primary issue concerned the interpretation of the meaning of terms 'organic liquid phase' and 'emulsion', and in particular whether Q-Drench, and the micelle formation, was indeed a form of emulsion.

Not surprisingly, expert evidence from either side differed as to the precise meaning of these terms, and in particular the minimum number of molecules required of a substance for it to be said to constitute a separate phase (and thus for an emulsion system to result). The court deemed the terms ambiguous and turned to the specification – and particularly the formulation examples 1-18 – to determine what a skilled addressee would have understood to be the scope of these terms.

Examples 1-4 covered compositions very similar to that of Q-Drench. Unfortunately, these example formulations were described as being unsuccessful, for reason of being either too thin, or having pH levels too low for long-term stability. Critical to the court's decision, the specification stated that, 'These completely aqueous approaches (Examples 1-4) were then stopped ...', with an alternate approach being taken to provide successful formulations (Examples 5-18) by use of a further oil component to achieve an organic liquid phase.

The court concluded that a skilled addressee would have understood Examples 1-4 as being no more than a reference to the process of development of the invention, and outside the scope of claim 1. Because of this implicit disclaimer, the very similar Q-Drench also fell outside the scope of the patent.

Conclusion

This case reminds us that technical terms that might otherwise appear crystal clear can prove ambiguous in certain contexts. It is therefore essential to ensure that the specification fully supports the intended scope of meaning of all terms used in patent claims.

Moreover, when using examples to support the claims, great care must be taken as to how those examples are related to the subject matter of the claims.

Trade Marks – Leave to appeal refused in GLENN OAKS trade mark case

By Tim Golder, Partner, and Peter Ryan, Senior Associate

Scotch Whisky Association v De Witt [2008] FCA 73

In brief: In the recent Federal Court decision of Scotch Whisky Association v De Witt, leave to appeal against an unsuccessful opposition to registration of GLENN OAKS as a trade mark for various alcoholic beverages, including bourbon and scotch whisky but excluding whisky not produced in Scotland, was refused.

How does it affect you?

  • Applicants who have been unsuccessful on previous occasions who seek leave to appeal should be aware that a court may exercise its discretion to refuse such leave, unless refusal would give rise to a substantial injustice.

The facts and decision in brief

The Scotch Whisky Association (the SWA) had unsuccessfully opposed registration of an application for the trade mark GLENN OAKS in the name of De Witt, on the basis that the words 'GLENN' or 'GLEN' were descriptive of alcoholic goods namely whisky, and that use of the trade mark would be likely to deceive or cause confusion under section 43 of the Trade Marks Act 1995 (Cth) (the Act). A delegate of the Registrar of Trade Marks directed that De Witt's application proceed to registration for goods including bourbon and scotch whisky, except whisky not produced in Scotland. The SWA appealed the Registrar's decision to the Federal Court on the basis that bourbon should have been treated in the same way as whisky and that bourbon should also be excluded. The SWA was unsuccessful.

The SWA sought leave from Justice Jessup to appeal the Federal Court's decision, under s195 of the Act.

De Witt submitted that recent patent and trade mark authorities on the issue of leave to appeal stood for the proposition that, where a party is twice unsuccessful in opposition, it is only in clear cases of error that leave should be granted. Here, the SWA had had two full hearings of its case, and had the option of applying for cancellation of De Witt's registration under s88 of the Act.

Justice Jessup considered the recent Federal Court decision of Pfizer Corporation v Commissioner of Patents (2006) 155 FCR 578, which 'made it clear that there were no rigid rules which might restrict the exercise of the court's discretion' under s195 of the Act. As to the exercise of discretion, Justice Jessup applied Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 and the two limbs of the discretion, namely:

  • whether there was sufficient doubt about the correctness of the decision being appealed by the SWA; and
  • whether substantial injustice would result to the SWA if leave to appeal was refused.

As to the first limb, Justice Jessup was of the view that the grounds on which the SWA was unsuccessful were arguable and might therefore be the subject of an appeal, including the issues of descriptiveness of the trade mark for bourbon and whether the trade mark would cause confusion because of the connotation the mark may have. Even though the first limb was established, there would not be substantial injustice to the SWA if leave were refused. This was because the SWA would have a right to apply for cancellation if leave were refused, and Justice Jessup was not convinced that the SWA would be in an inferior position in any such cancellation proceedings, merely because De Witt might be able to resist cancellation if deception or confusion arose through no fault of its own.

The SWA's application for leave to appeal was therefore refused.

Trade Marks – Orders preventing release of goods seized by customs

By Miriam Stiel, Partner, and Ben Strate, Articled Clerk

Chanel Limited v Kim [2007] FCA 2076 (20 December 2007)

In brief: The Federal Court has held that it may make an order restraining the Australian Customs Service from releasing goods seized under section 133 of the Trade Marks Act 1995 (Cth) at any time, provided Customs still holds the goods when the order is made.

How does it affect you?

  • IP owners should remain diligent in complying with the time frames imposed under the customs provisions of the trade marks and copyright Acts.

The Australian Customs Service seized a shipment of scarves bearing the CHANEL trade mark under s133 of the Trade Marks Act 1995 (Cth) (the Act). Chanel commenced proceedings for trade mark infringement within the relevant time allowed under the Act and subsequently sought an order restraining Customs from releasing the goods.

Section 137(5) of the Act provides that:

If, after 20 working days from the day on which the [infringement] action was brought, there is not in force at any time an order of the Court directed at the Customs CEO preventing the goods from being released, the Customs CEO must release the goods to their designated owner. (emphasis added)

Customs did not release the goods at the expiration of the 20-day period, although there was no court order in force at that time preventing the release of the goods. Chanel subsequently sought an order restraining Customs from releasing the scarves, but not until 51 days after bringing the action. The issue was whether the court can only make an order preventing release of the goods within 20 days of the action being brought.

In construing s137(5), Justice Sackville held that the words 'at any time' must be given meaning. He held that Parliament could have expressly limited the period in which a court order could be made to 20 days if it had intended to do so. Accordingly, the order was granted.

Although Customs is obliged to release seized goods once the 20-day period has expired and there is no court order preventing their release, that obligation is terminated when a court order comes into force. It remains important for trade mark owners to be prompt in securing an order to prevent the release of the goods, because, while a court order may be made after the expiration of the 20-day period, Customs may well have released the goods in the meantime.

On 3 April 2008, Justice Sackville ordered that the seized scarves be forfeited to the Commonwealth.

Copyright – Final decision in project homes case

By Marina Lloyd Jones, Senior Associate

Metricon Homes Pty Ltd, Ross Palazzesi and Adrian Graham Popple v Barrett Property Group Pty Ltd and SRS Property Holdings Pty Ltd [2008] FCAFC 46

In April, the Full Federal Court rejected the appeal by a Victorian project homes builder in Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd1, a case concerning copyright in plans of project homes and houses built to their design. We reported on the first instance decision2 in Intellectual Property Bulletin – December 2007. At first instance, Justice Gilmour had found that the alfresco quadrant feature of Barrett's 'Seattle' and 'Memphis' homes, being the arrangement of the rumpus, family, kitchen and meal areas around the alfresco, all under a single roof line, constituted a substantial part of the copyright works and had been copied by Metricon. The appeal was by way of a rehearing on the evidence adduced before the primary judge, with the Full Court only to depart from Justice Gilmour's findings if they were found to be erroneous in principle, or plainly and obviously wrong. The Full Court rejected each criticism of his Honour's findings in full.

Copyright – Logo is a 'label' and cannot be used to prevent parallel imports

By David Yates, Partner, and Tom Glasson, Lawyer

The Polo/Lauren Company L.P. v Ziliani Holdings Pty Ltd [2008] FCA 49

In brief: In a recent decision of the Australian Federal Court, a copyright owner was unable to rely on its copyright in a logo to prevent the parallel importation of goods to which the logo was affixed.

How does it affect you?

  • If a logo constitutes a label affixed to an article, it may be a 'non-infringing accessory' for the purpose of section 44C of the Australian Copyright Act 1968 (Cth), meaning that the owner of copyright in the logo may be unable to rely on this to prevent parallel importation of the article.
  • An embroidered logo may be considered a 'corresponding design' for the copyright work reproduced in the logo for the purpose of the copyright/design overlap because its method of affixation onto clothing affects the shape of the fabric and can constitute visual features of shape or configuration.

The decision

The Polo/Lauren Company (Polo) alleged that Ziliani Holdings (Ziliani) infringed Polo's copyright in its well known polo player logo (the logo) by importing and selling authentic clothing from the US bearing the logo without Polo's consent. Section 44C of the Copyright Act 1968 (Cth) provides (in the context of this case) that the copyright in the logo, a copy of which is embroidered on, or embodied in, a 'non-infringing accessory' to an article is not infringed by importing the accessory with the article. The term 'accessory' includes 'a label affixed to, displayed on, incorporated into the surface of, or accompanying, the article' (s10(1)). If the logos on the clothing were accessories, each was a 'non-infringing accessory' (s10(1)) because in each case its making in the US was authorised by Polo. The Federal Court determined that the logo, when embroidered on the clothing, was a 'label' and thus an accessory for the purposes of s44C.

Ziliani purchased genuine Polo garments from factory outlets and 'off-price' markets in the US, imported them into Australia and resold them at prices significantly lower than those of Polo's official distributors. Ziliani did not have the consent of Polo to import the clothes into Australia or sell them. Polo is the owner of the copyright in the logo in Australia and in other jurisdictions. The subject matter of Polo's claim for infringement was the embroidered logo on each of the garments (including shirts, scarves and socks).

The court concluded that 'label' in this context included not just material to indicate nature, ownership and instructions, but also a trade mark or brand name. The logo, when applied to the clothing, had the function of labelling the garment as a product of Polo's manufacture. This meant it was an 'accessory' and, accordingly, the defence under s44C was established.

Although it was not necessary to rule on the issue, the court considered an alternate defence that involved the copyright/design overlap. The question arose: was the logo, when applied to the clothing, a corresponding design in relation to the underlying logo, or an artistic work which had been embodied in the clothing (s74)? Polo argued that the logo was entirely ornamental and that it should not be considered a 'corresponding design' simply because the method of its incorporation on the clothing necessarily raised it slightly above the surface of the clothing. The court concluded, however, that the embroidered logo (comprising 'no less than 784 stitches' in each case) affected the shape of the fabric, and that the raising of the logo meant it constituted visual features of shape or configuration and was therefore a corresponding design. The court rejected a submission by Polo that the copyright/design overlap defence was unavailable for a claim of copyright infringement based on acts of importation and sale (s37 and s38).

Design – Design novelty and exhibition displays

By Martin Hecht, Lawyer

Chiropedic Bedding Pty Ltd v Radburg Pty Ltd [2007] FCA 1869

In brief: In Chiropedic Bedding Pty Ltd v Radburg Pty Ltd, the Federal Court examined the circumstances under which a design publicly displayed at an exhibition before an application for registration is filed, is still to be considered novel for the purposes of the subsequent registration application.

How does it affect you?

  • If you have publicly displayed a design at an exhibition, novelty in the design will not have been destroyed, and you will still be able to validly apply for registration of the design, provided:
    • the application is filed within six months of displaying the design; and
    • the exhibition is either: (1) an official international exhibition; (2) an officially recognised international exhibition; or (3) an international exhibition recognised by the Registrar of Designs in the Official Journal.

Details

The case at issue turned on the construction of a little-used provision in the previous Designs Act 1906 (Cth) excusing the publication of a design at an exhibition and for which a corresponding design application had not yet been filed, if the exhibition falls within the definition of an 'official exhibition' or an 'officially recognised international exhibition'.

An exhibition will be 'official' when it is organised by a government (federal, state or local), and hence does not include exhibitions organised by private bodies, such as trade organisations, even where a government may provide funding or other support for the exhibition.

An exhibition will be 'officially recognised' if it is recognised by a government (federal, state or local). Government recognition will be most obvious if: there are public funds provided, particularly if conditions are attached; and there is public participation by one or more ranking government officials at the opening, closing or other formal proceedings of the exhibition.

An exhibition will be 'international' (under the Paris Convention) if it includes foreign exhibitors exhibiting foreign goods ('foreign' meaning a nationality other than that of the host country) and the foreign presence is 'significant'. Whether the foreign presence is significant will depend, generally, on how many foreign exhibitors there are, their geographic spread, and the importance of the particular foreign exhibitors in the relevant industry to which the exhibition relates. An exhibition will also be international (under the Convention Relating to International Exhibitions) when more than one country is invited to take part.

It follows from this case that a slightly broader exemption applies for a design filed within six months of the opening of the relevant exhibition under the previous Designs Act, ie (generally) before 17 June 2004, as there is no need for an official exhibition to be international. This broader exemption may be useful where, as in Chiropedic Bedding, a party against whom an infringement action is brought in relation to a design registered under the previous Act, cross-claims for revocation on the basis of lack of novelty due to prior disclosure at an exhibition.

Design – Damages awarded for infringement of design of fashion dress

By Jim Dwyer, Partner, and Vanessa Kingston, Lawyer

Review Australia Pty Ltd v Innovative Lifestyle Innovative Investments Ltd

In brief: This case involves the infringement of dress design by rival designer and retailer. Damages were awarded on the basis that the respondent failed to cease making sales once notified of their infringement and for 'diminution' of reputation.

How does it affect you?

  • It is important that fashion houses register their original designs in order to obtain protection against infringers.
  • Before using any design, a comprehensive search of the Designs Register should be made to avoid infringement claims.
  • If infringement claims are made against you, you should seek legal advice and consider carefully discontinuing sales of the potentially infringing article.

Background

Review Australia Pty Ltd (the applicant) and Innovative Lifestyle Investments Pty Ltd (the respondent) are engaged in the business of designing, manufacturing and selling ladies' fashion garments in retail outlets throughout Australia.

The applicant commenced proceedings in the Federal Court alleging that the respondent's 'Lili' dress infringed the applicant's registered design.

In their defence, the respondent admitted that they sold, offered to sell or disposed of the 'Lili' dress that was substantially similar to the applicant's registered design; however, they argued that as the 'Lili' dress was made by independent contractors, the respondent had not made or offered to make the infringing dress under section 71(1)(a) of the Designs Act 2003 (Cth).

Findings

The Federal Court did not accept the distinction made by the respondent between a product made by those directly employed by a company and a product made by an independent contractor at the request of the company. As stated by Justice Jessup:

In the policy context of the Designs Act, I consider that the reference to s 71(1)(a) thereof, to a person who "makes" a product includes a reference to a person who directs, causes or procures the product to be made by another, whether or not an employee of the person.

The following are a number of interesting observations that appear in the judgment:

  • As the applicant did not file any evidence to demonstrate that the distribution and sale of the 'Lili' dress had a detrimental impact on its own sales, the court was not in a position to make an informed assessment of the extent to which the applicant's dress suffered as a result of the sale of the 'Lili' dress.
  • The court did not entertain the respondent's argument that damages should be refused under s75(2) of the Designs Act, as 'at the time of the infringement' the design application was pending and not registered.
  • Justice Jessup noted that, even if the design had been registered at the time of the infringing conduct, the s75(2) defence would have still failed as the respondent needed to adduce evidence of the steps they had taken to check the Register of Designs to see whether a design had been registered.

The court awarded damages of $7500 referable to the 'probable diminution of the Applicant's reputation for originality'.

The court also awarded $10,000 in additional damages under s75(3) on the basis that the respondent failed to cease making sales once notified of their infringement of the applicant's registered design.

Copyright/Design overlap – Intersection between copyright and design protection

By Marina Lloyd Jones, Senior Associate

Digga Australia Pty Ltd v Norm Engineering Pty Ltd [2008] FCAFC 33

In brief: The Full Federal Court has allowed an appeal on one of four grounds argued in Digga Australia Pty Ltd v Norm Engineering Pty Ltd3, a case which considers the intersection between copyright and design protection before and after the 2004 legislative amendments.

How does it affect you?

  • Designers and manufacturers should keep in mind that, where features of shape of an article are dictated by functional considerations, those features may still constitute a 'design' and thus copying may not be an infringement of copyright in certain circumstances.
  • If a product is excused from copyright infringement by the copyright/design overlap, the design drawings preceding that product may not be so excused, depending on their date of creation.

Grounds for a successful appeal

In Intellectual Property Bulletin – September 2007, we reported on the decision of Justice Greenwood in the Federal Court in Norm Engineering Pty Ltd v Digga Australia Pty Ltd (No. 2)4. The Full Federal Court recently handed down its decision on the appeal by Digga Australia Pty Ltd, allowing the appeal on one of the four grounds argued. The dispute, the facts of which we set out in our earlier article, related to four drawings (the subject drawings) of components of a '4 in 1' bucket invented by Norm Engineering Pty Ltd, and Digga's reproduction of the subject drawings in both two- and three-dimensional form.

The most significant ground of appeal, and the one in which Digga succeeded, related to the three dimensional reproduction of the 'pivot arm' component of the bucket, and the impact of the overlap between the protection of articles under the Copyright Act 1968 (Cth) and relevant designs legislation. Because of the dates during which Digga's conduct was alleged to have taken place, both the Designs Act 1906 (Cth) and the Designs Act 2003 (Cth) required consideration, as did the copyright/design overlap provisions of the Copyright Act both before and after changes effected by the Designs (Consequential Amendments) Act 2003 (Cth) (the new Designs Act and the changes to the Copyright Act, together the amendments). The amendments all took effect on 17 June 2004.

Pre-amendment, s77(2) of the Copyright Act (part of the overlap provisions) provided that it was not an infringement of copyright to reproduce an artistic work by applying a 'corresponding design' to an article.

Functional designs and the overlap

At first instance, Justice Greenwood held that the features of the Pivot Arm, while they exhibited identifiable features of shape involving some minor element of shape selection, were almost entirely dictated by utilitarian or practical considerations. In his Honour's view, this meant that there was no relevant 'design' in the Pivot Arm5. Therefore, under the pre-amendment s77(2), there was no escape from copyright infringement because there was no corresponding 'design'. The Full Court found that Justice Greenwood had failed to consider amendments effected by the Designs Amendment Act 1981 (Cth), which clarified that the fact that features of shape also served, and were chosen to assist, a functional purpose, did not disqualify those features from falling within the definition of a 'design'.

Under the amendments, the definition of 'corresponding design' in the Copyright Act was amended to remove reference to the requirement of a 'design'. Instead, the focus was on 'visual features of shape or configuration', defined in the Designs Act 2003 to expressly include features serving a functional purpose. According to Justice Greenwood, the amendments did not change his view that designs could not be dictated by functional considerations. Again, the Full Court disagreed, holding that just as the pre-amendment use of 'corresponding design' in the Copyright Act had taken the definition of 'design' from the Designs Act 1906, so the new definition of 'corresponding design' should take the definition of 'visual features' from the Designs Act 2003. Therefore, for conduct occurring both pre- and post-17 June 2004, the design of the Pivot Arm fell within the definition of 'corresponding design', and its manufacture did not constitute a three-dimensional infringement of Norm's copyright in the subject drawings.

Plan-to-plan

In the course of manufacturing the pivot arm, Digga had produced design drawings. Justice Greenwood had held that, pre-amendment, s77(2) did not apply to two-dimensional copying because the article to which the corresponding design is applied must be an 'article of manufacture', which does not include a sheet of paper. The Full Court agreed with that. They acknowledged that it produced somewhat of an anomalous result, in that Digga was entitled to actually manufacture the Pivot Arm, but could not produce the design drawings as a step before manufacture. The court noted that s77A had been specifically included as part of the amendments to address that anomaly. The Full Court held that reproduction of the subject drawing in both two- and three-dimensional form were not a copyright infringement, following the introduction of the amendments.

Trade Practices/Passing Off – No spillover reputation in energy drinks case

By Marina Lloyd Jones, Senior Associate

Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCA 406

In brief: The Federal Court was recently required to consider whether an energy drink that has enjoyed significant global success, but never been sold or directly marketed in Australia, had developed sufficient 'spillover' reputation, such that it would be misleading or deceptive if a local distributor released its own energy drink in Australia under the same name.

How does it affect you?

  • Overseas brand owners who intend to trade in Australia should register trade marks in advance in Australia to ensure protection for the brand.
  • A business seeking to prove sufficient reputation in a market in which it does not yet trade must have strong direct evidence that its product is known to a substantial number of people in that market.

The dispute

The applicant in Hansen Beverage Company v Bickfords (Australia) Pty Ltd6 introduced 'Monster Energy' drink in the United States in April 2002, later expanding to Canada, Central America, South America and Hong Kong. Certain key personnel from Bickfords, an Australian drinks manufacturer and distributor, were aware of Hansen's product and conducted Australian registered trade mark searches for MONSTER and MONSTER ENERGY. Upon discovering that there were no actual or pending registrations for those names in the drinks category, Bickfords lodged the first application for MONSTER in September 2005. Bickfords then attempted to negotiate a distribution licence for Australia and, when Hansen rejected this suggestion, proceeded to develop its own 'Monster Energy' drink, which it launched in Australia in April 2006.

Findings

Bickfords' Monster Energy drink was found by Justice Middleton to share a number of identical features with Hansen's, including its brand name, its extra-large size, the colours of the different cans, and its ingredients. Hansen operated from www.monsterenergy.com, while Bickfords had registered www.monsterenergy.com.au. Bickfords argued that it had independently devised the get up of its 'Monster Energy' drink, an argument which was not accepted by the court. Hansen alleged passing off and misleading and deceptive conduct in breach of the Trade Practices Act 1974 (Cth), with Bickfords cross claiming on the basis that it had developed sufficient reputation. There was no dispute that the similarities between the products could relevantly mislead or deceive for these purposes: the question was whether sufficient reputation had been established by Hansen (or by Bickfords) to make such deception likely.

Very similar facts had been considered 15 years before in the ConAgra case, which related to 'Healthy Choice' meals7. The following legal principles were enunciated in ConAgra and applied by Justice Middleton in Hansen:

  • reputation within a jurisdiction does not require actual trade in that jurisdiction but may be proved by a variety of means, including advertising and evidence of the exposure of people within that jurisdiction (as residents or visitors) to the goods of the overseas owner;
  • a plaintiff must prove that, in the defendant's country of trade, there are a substantial number of people who are aware of the plaintiff's product; and
  • a party may validly copy another's get-up not to deliberately create confusion but to replicate the striking success of their brand in another market.

Hansen argued that its global marketing strategy was to 'lay the foundation' in a new market by making the target group in that country familiar with the brand before launching there. It introduced extensive evidence of the exposure of its MONSTER and MONSTER ENERGY marks on clothing and merchandise, on banners at extreme sports competitions (which then appeared in television, DVD and webcasting coverage of those competitions), and in print articles and advertisements. Most of this exposure took place in the United States, with secondary exposure in Australia (for example through the sale in Australia of US-based magazines). Justice Middleton found that such exposure (particularly when it appeared on television and DVD) was typically fleeting, occasional, incidental and not necessarily referable to Hansen's product. If Hansen had made some sales in Australia, the impact of this exposure may have been greater.

While Hansen had introduced extensive evidence describing its marketing strategy, the court found certain key gaps between what this evidence proved and what was required to be proven to establish the requisite reputation. Hansen had not adduced evidence linking extreme sports fans with the relevant demographic of young adult males, nor had it taken steps to prove the success of its marketing strategy. Neither of these could be inferred. Justice Middleton also noted the lack of any expert or survey evidence.

According to Justice Middleton, 'the awareness of the target audience must be one which in a practical and business sense is such that it can be said that the Hansen product is known to the people who are potential customers'. This had not been established. Similarly, Bickfords' evidence on its cross claim was found to fall well below the standard required.

Footnotes
  1. Metricon Homes Pty Ltd, Ross Palazzesi and Adrian Graham Popple v Barrett Property Group Pty Ltd and SRS Property Holdings Pty Ltd [2008] FCAFC 46 (1 April 2008) per Branson, Sundberg and Kenny JJ.
  2. Barrett Property Group Pty Ltd v Metricon Homes Pty Ltd (2007) 74 IPR 52.
  3. [2008] FCAFC 33 (12 March 2008, Lindgren, Bennett and Logan JJ). The lead judgment was delivered by Justice Lindgren.
  4. [2007] FCA 761 (18 May 2007).
  5. Justice Greenwood at [230].
  6. [2008] FCA 406 (31 March 2008) per Justice Middleton.
  7. ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) (FFC).

Media Release – Allens' new China trademark agency

Allens Arthur Robinson (Allens) has continued its expansion in Greater China with the launch of a new locally licensed Intellectual Property business in China – Allens Arthur Robinson Intellectual Property (Beijing) Limited – handling trade mark applications and associated IP issues.

The new Beijing trademark agency is Allens' fourth office in Greater China, with a full service locally licensed practice in Hong Kong and registered foreign law firm offices in Shanghai and Beijing.

Philip Kerr, head of the Allens global Intellectual Property Group, said: 'The opening of our new Beijing trademark agency is a very exciting development for our IP Group as it enables the firm to offer full trade mark services in China, something no other Australian firm can offer clients. I believe this new business will complement the services already offered by our other Greater China offices.'

Ted Marr, Practice Manager for the new business, said: 'This expansion of our Greater China IP practice will mean that we have locally licensed operations for trade mark work in both Hong Kong and China. With the continuing movement of foreign companies into China and the rapid development of legal and enforcement infrastructure for IP in China, this is the perfect time for us to be in China to help our clients protect their trade marks in China.'

Allens' Asia Executive Partner Jim Dunstan commented: 'Allens' point of difference is our ability to service clients across the region. We have the most extensive, integrated legal network of any firm, providing our clients with a seamless service. This latest addition to our network provides clients with the ability to protect their intellectual property in an influential, rapidly growing Asian economy.'

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