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IP & IT Bulletin no 8, March 2001

In this issue: This roundup discusses new laws on petty patents, looks at websites that use trade marks in a misleading way, and more.

Last post for petty patents

In brief: The Patents Amendment (Innovation Patents) Act 2000 (Cth) which comes into effect on 24 May 2001 will replace the petty patent system with new innovation patents.

The Commonwealth expects innovation patents to contribute positively to the protection of lower level or incremental inventions and plans to review their effectiveness before May 2006.

Although they will provide the rapid, relatively inexpensive statutory monopoly offered by petty patents, there will be significant differences in the:

  • term of protection offered;
  • number of claims allowed;
  • novelty and inventiveness thresholds; and
  • examination and opposition procedures.
Term and number of claims

Where petty patents provided up to six years protection with a three-claim limit, innovation patents will last for a maximum of eight years and include up to five claims.

The current standard patent, which provides up to 20 years of protection and an unlimited number of claims, will remain unchanged. Petty patents granted before the innovation patent system begins will remain under the current law.

Novelty and innovation

Innovation patents must meet the same level of novelty that applies to standard patents, which is significantly higher than that applying to petty patents.

They must also include an 'innovative step'. This means that the invention must vary from what is already publicly available in a way that contributes substantially to its working. The concept is new and differs from the 'inventive step' requirement for petty and standard patents. Only time will reveal how significant it will be.

No examination before grant

Unlike petty and standard patents, innovation patents will not be examined before grant. After a formalities check, innovation patents will proceed to grant and to publication. They will be granted if the forms are correctly completed and official fees paid.

Post-grant examination permitted

Any party, including the applicant, can require an innovation patent to be examined post-grant to determine whether the statutory requirements such as novelty and innovative step are satisfied. If so, the innovation patent will be 'certified'.

Importantly, an innovation patent must be certified before the applicant can bring an action for infringement, or even issue a letter of demand. However, a letter of demand issued on an uncertified innovation patent would almost certainly constitute an unjustified threat (see 'Letters of demands – unjustified or groundless threats' in IP/IT Bulletin, No 7, December 2000)

Although controversial, post-grant examination will speed up the grant of innovation patents and limit examination to the minority, mainly those likely to be subject to litigation. On the other hand, pre-grant examination can alert a patentee to patent validity issues and avoid grant of patents that are clearly invalid.

Granted but unexamined innovation patents will be of questionable value. It is conceivable that an innovation patent for the wheel could be granted if the application complied with formalities and official fees paid. However, certification would certainly be refused, and the patent could not be enforced. It is also worth noting that post-grant examination must be completed before action can be brought to revoke the patent or a compulsory licence to it is sought.

Opposing an innovation patent

An innovation patent can be opposed at any time after it is certified. Petty patents and standard patents can only be opposed in the three month period following advertisement of acceptance. After this period the opponent can only remove the patent by applying for revocation which is a more cumbersome and expensive proceeding.

It is theoretically possible to apply to have an innovation patent revoked, but the simpler mechanism of opposition is more likely to be used.

For further information on innovation patents or patents in general contact Carolyn Rolls, Wayne McMaster or Andrew Butler.

Carolyn Rolls is Special Counsel in the Intellectual Property and Information Technology Department and practises in patent drafting and prosecution.

Safe in cyberspace? Misleading websites, foreign consumers

In brief: Do you have protection if another site uses your trade mark?

Here is a scenario that we may be seeing played out in our courts in the next few years: Kevin Dotcom is a website owner in Australia. His site has just been published here and he is looking forward to reaching a huge international audience.

Katya Copyright is a trade mark owner located overseas. She has no relevant trade mark registration in Australia and there is little reputation associated with it here.

Kevin is using Katya's trade mark on his website without seeking her authority to do so. Even worse, she can prove that overseas consumers are being misled or deceived by the content of Kevin's website.

Given that she is based overseas, what can she do to bring an action against Kevin in Australia?

Safe so far

When an Australian website contains information that is misleading, or infringes a trade mark overseas, an Australian attorney would normally refer Katya to an agent in the country where her trade mark is registered or where evidence of consumer confusion is strongest.

But by bringing the action overseas, even if Katya's action is successful, it would be extremely difficult to enforce a foreign court injunction against an Australian defendant like Kevin.

Not so safe!

Katya may be better off relying on the Australian Trade Practices Act 1974 (Cth) and taking action in an Australian court.

Section 52 of the Act states that:

A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Because the Act defines 'trade or commerce' as 'trade or commerce within Australia or between Australia and places outside Australia' it is well able to address the situation of an Australian website owner misleading overseas consumers. Even if Kevin is not a corporation as such, each Australian state has enacted legislation mirroring section 52 that applies to 'persons'.

Moreover, there is nothing in the definition of 'consumer' in section 4B of the Act which excludes overseas consumers. In fact, it has been held that Part V of the Act, entitled 'Consumer Protection', is not limited to conduct that may mislead or otherwise injure Australian consumers only.

Under these provisions Katya has a sound basis to bring an action against Kevin in Australia. It would simply be a matter for the court to decide whether Kevin's conduct was actually misleading or deceptive or likely to mislead or deceive.

Website owners beware

The moral is that website owners in Australia should be careful not to include content on their sites which might mislead or deceive overseas consumers. We are able to inform overseas clients of their rights under these provisions, and to advise local clients on whether their website content complies with them.

Frank Azzopardi is a lawyer and trade marks attorney in the Intellectual Property and Information Technology Department. He works predominantly in commercial trade mark and copyright matters and litigation.

A wine by any other name

In brief: Can you tell the difference between a Hunter Valley shiraz and one from Margaret River without reading the label? Regardless of whether you can tell the difference, federal legislation ensures the origins of wine are accurately described. The same legislation also allows wine producers to preserve the characteristics and reputation of wine from their region and to use the same geographical name without fear of infringing any other parties' rights. Sandi Forman reports.

Governing Acts

The use and registration of geographical names for wines are governed by the Trade Marks Act 1995 and the Australian Wine and Brandy Corporation Act 1980 (AWBC Act).

Generally, the registration of a trade mark which includes a geographical name is restricted to wines originating from that place. For example, the trade mark 'Yarra View' is currently registered for 'wines originating in the geographical region of the Yarra Valley'.

The restriction can also be a condition of registration. For example, a current wine label incorporating the geographical term 'Mt Tanglefoot' is subject to the following endorsement:

It is a condition of registration that the trade mark will only be used in respect of wines produced predominantly from grapes grown in the Victorian Mountain Country area.

If a trade mark is used contrary to the scope of its registration, it may become invalid and be removed from the Register.

Geographical Indications

Use of a trade mark is more restricted when the geographical name it contains is a registered Geographical Indication (GI).

A GI is a word or expression that indicates:

  • the country, region or locality from which a wine originates (for example, Coonawarra*); or
  • the particular quality, reputation or characteristic of the wine, attributable to its geographic origin (for example, Moselle).

Following an agreement between Australia and the European Union, Australia introduced the AWBC Amendment Act 1993 which among other things governs the use and registration of GIs.

In Australia, the GI Committee headed by the Australian Wine and Brandy Corporation (AWBC) establishes the name, boundaries and conditions of use of a GI. During this process the committee seeks and considers advice from wine producers in the relevant area. The AWBC then enters the GI on its Register of Protected Names.

GI blues

A wine producer applying for a trademark that consists fully or largely of a registered GI, would not succeed because the trade mark would not be able to distinguish the wines from others originating in the same GI.

An attempt to register a trade mark that contains a GI but which is otherwise distinctive can be successful but may attract objections under the Trade Marks Act as its use could be contrary to law or could deceive or cause confusion. This can be overcome by making the trademark subject to an endorsement, such as the following:

It is a condition of registration that the trade mark will only be used in respect of wines originating in the area in respect of which the geographical indication is registered and that the use is in accord with the AWBC Act.

The fact that consumers are not likely to be misled or deceived by the use of a GI is not always relevant. Southcorp Wines was recently refused registration of the trade mark 'Queen Adelaide Regency' because 'Adelaide' is a registered GI and Southcorp could not agree to use the mark only in relation to wines originating from that GI.

The European connection

Registering a trade mark containing a GI from any of the territories of the European Union is also subject to conditions of use. For example, the word 'Doctor' is a German GI and any trade mark that includes that word cannot be registered unless the applicant agrees to use the mark only in relation to wines originating from that GI.

As always, there are exceptions. One notable exception is the AWBC's recent decision allowing Mildara Blass to use the trade mark 'Wolf Blass' in relation to Australian wines despite 'Wolf' being a German GI.

Under the Agreement, Mildara Blass is entitled to continue using the trade mark on the basis that the trade mark identifies an individual, Mr Wolfgang Blass, who is a well known winemaker and also predecessor in a part of Mildara Blass' business.

The Agreement currently allows Australian producers to use the term 'Champagne' (a French GI) to describe a style of sparkling wine, but this use is being phased out gradually to allow the market to adapt to a new term for champagne.

And don't rely on bad spelling

Restrictions also apply to names that are simply a misspelling of registered GIs, or which are so similar that they are likely to be mistaken for them. While the major wine companies are familiar with AWBC rules there are dangers for the uninitiated. It may seem like good marketing to describe a wine as being similar to a Beaujolais, or to name a vintage after your cousin Victoria, or even to adopt innocuous terms such as 'South Coast' or 'Orange'. Such names may be protected and can cause unexpected problems.

Because we act for a number of clients in the industry, we are well aware of the limitations applying to the use of geographical names. If you have a catchy name for your wine or winery, and want to check if it is available and registerable, contact Sandi Forman or Colin Oberin.

Sandi Forman is a trademarks attorney in the Intellectual Property and Information Technology Department. She has several years' experience in registration and protection of trademarks including advising clients on the registrability of trademarks for wines.

Don't fool around before you file

In brief: Two recent cases, Bristol-Myers Squibb Co v F H Fauldings & Co Ltd [2000] FCA 316 and Old Digger Pty Ltd v Azuko Pty Ltd [2000] FCA 676, remind us what you may do with an invention before you file a patent or destroy its validity, writes Shyama Jayaswal.

An invention must be new and original at the date the patent application is filed. This is assessed by comparing the invention with anything published anywhere in the world or with any prior uses within Australia such as oral disclosures and offers to supply. Secret commercial use of the invention prior to filing the patent application also invalidates that application. This rule is to prevent inventors from extending their 20 year monopoly on their invention by secretly using it first and obtaining a patent later.

The patent in Bristol-Myers Squibb Co v F H Faulding & Co Ltd was held to be invalid because one of the inventors had published an abstract that disclosed the invention before the patent application was filed.

In the case of Old Digger Pty Ltd v Azuko Pty Ltd the patent was held to be valid, but only just. In this case the invention was a type of hammer and a friend of the inventor, who had tested the hammers for the inventor, 'ordered' a number of these. Fortunately for the inventor, the Court held the patent to be valid, but only because the inventor had not accepted the sales order. It also decided that the manufacture of 15 to 20 hammers was reasonable in order to conduct trials and experiments into their commercial viability.

Therefore as a rule, it is worthwhile contacting your patent attorney before you publicly disclose your findings or make any use of a new invention. 

Shyama Jayaswal is a lawyer and registered patent attorney in the Intellectual Property and Information Technology Department. She works primarily in the areas of patents, trademarks and designs.

Genetically modified food gets suitably modified labelling

In brief: Recent amendments to the Australian Food Standards Code mean that, from 7 December 2001, food that contains genetically modified (GM) material must be labelled accordingly. An equivalent standard appears in the recently adopted Australia New Zealand Food Standards Code. For the next two years compliance with either of these Codes will be acceptable. After 21 December 2002, compliance with the latter will be required, writes Fiona Miles.

What has to be labelled?

The new standard requires that all food and ingredients containing GM material are:

  • assessed and approved before sale and use; and
  • labelled accordingly.

The words 'genetically modified' must appear on all packaged GM food in conjunction with the name of the food or in association with specific ingredients in the ingredient list. The same words must be displayed on or in connection with all unpackaged GM food, such as fresh fruit and vegetables.

What doesn't have to be labelled?

The following items are exempt from labelling requirements:

  • highly refined foodstuffs such as oils, sugars and starches in which the refining process removes GM material;
  • food additives such as preservatives and thickeners, and processing aids such as enzymes (unless GM material from the additive or processing aid remains present in the food);
  • flavouring present in a concentration of less than 0.1%;
  • food prepared for immediate consumption, such as food from restaurants and take-away outlets; and
  • ingredients containing less than 1% of unintentionally present GM material.

Labels claiming an absence of GM ingredients must comply with the Trade Practices Act 1974 and the State and Territory Fair Trading Acts and Food Acts; that is, they must not be misleading or deceptive and must be able to be substantiated.

What you need to do

To comply with the new standard, food businesses must take reasonable steps to find out:

  • whether their food is genetically modified or contains GM ingredients by using verifiable documentation or testing for GM material;
  • which GM foods or ingredients are approved under the standard; and
  • what the labelling requirements are for the food.
Helping you comply

To assist food businesses in complying with the new labelling requirements, a Compliance Guide has been developed. For a copy of the guide, visit the Australia New Zealand Food Authority website at http://www.foodstandards.gov.au/ or contact us. The guide is to be read in conjunction with the standard because on its own, it has no legal status.

Contact Richard Hamer or Fiona Miles if you need information or advice on complying with the new labelling requirements.

Fiona Miles is a lawyer in the Intellectual Property and Information Technology Department. She practises predominantly in product labelling and advertising (advice on regulatory, trademark and trade practices issues), trademark/copyright matters, and patent litigation.

Beware the extensive repair

In brief: While a patent for a product gives a patentee exclusive rights to make, use, hire, sell or otherwise dispose of the product, it is generally accepted that the purchaser of that product receives an implied licence to repair it. This implied licence allows the purchaser to prolong the product's life but does not extend to rebuilding or substantially constructing a new article without the patentee's express permission. Recent decisions by both the Court of Appeal and the House of Lords in the UK in relation to the United Wire company have questioned the basis of the implied licence to repair, and challenged its usefulness. It remains to be seen whether Australian law will follow suit. Andrew Goatcher reports.

Setting the screen

United Wire manufactured a sifting screen comprising a robust metal frame with two meshes of differing size and tension. The screens were attached to a vibrating sifting machine used by offshore oil-drillers to filter recycled drilling fluid.

The company was the market leader in the vibrating machines and owned two patents covering the screens. It often supplied replacement screens, as the meshes were relatively fragile and were quickly torn during use.

Screen Repair offered a service that involved removing damaged mesh from the screens, sandblasting the frame, re-bonding fresh meshes (differentially tensioned as appropriate) and then selling these to consumers.

Countering United Wire's claim that this service infringed its patents, Screen Repair argued that United Wire had, in marketing the screens:

  • implicitly licensed anyone who acquired a screen to prolong its life by repairing it; and
  • exhausted any rights on which repair might infringe.

Moreover, Screen Repair argued, a person who repairs a screen does not 'make' that screen within the meaning of the UK Patents Act.

What the courts said

Under the UK statute, making an article and repairing it, are mutually exclusive concepts. Accordingly, a purchaser's right to repair a patented product is not independently conferred by licence but is a residual right to do whatever does not amount to 'making' the product.

The Court of Appeal found the concept of an implied licence to repair unhelpful. It was better to focus on whether Screen Repair made the product within the meaning of the Patents Act. This view was supported by the House of Lords which held that the concept of implied licence to repair had no part to play where infringement by making the patented product was alleged.

The House of Lords held that although Screen Repair may have prolonged the useful life of the frame, the relevant patents applied to the screen itself. The patented product ceased to exist when the meshes were removed and the frame was stripped for reconditioning. By adding new meshes, the screens were in fact being manufactured and the patent was being infringed.

Making or mending?

The critical question is, at what point does repair amount to manufacture and infringe a patent?

If a repair is so extensive, or if the article is of such a nature that any repair effectively amounts to manufacture, then the patentee's rights will be infringed.

If the repair merely replaces or corrects a comparatively minor part of the article, it is unlikely to infringe. It is easy to identify the two extremes of simple repair and complete rebuild, but it is difficult to draw the line between the two. If you are in doubt as to which side of the line you fall, contact us.

Andrew Goatcher is Special Counsel in the Intellectual Property and Information Technology Department. He works primarily in the areas of misuse of confidential information and patent-related litigation.

Extensions of patent term for per se pharmaceuticals

In brief: A recent appeal by Boehringer Ingelheim International to the Federal Court sends a clear message to patent applicants that the Australian Patent Office (IP Australia) is likely to apply the requirements for extension of term more stringently than it has in the past.

Why do pharmaceuticals get extensions?

Patentees of pharmaceutical patents can not market their product until it has been registered under the Therapeutic Goods Act 1989. This process can be lengthy and can reduce the effective length of the monopoly period for the patent.

In response to this, under the Intellectual Property Laws Amendment Act 1998, the term of certain patents to pharmaceutical substances may be extended by up to five years. In order to obtain an extension, the patentee must show, amongst other things, that goods containing the substance are included in the Australian Register of Therapeutic Goods and five years has elapsed between the date of the patent and the first regulatory approval date.

An extension can only be sought to the patent claim(s) to a pharmaceutical substance per se. As such, an extension cannot be obtained for claims to methods of making the substance, nor to claims to the use of that substance (for example, to treat a runny nose).

A cure for runny noses

Boehringer requested an extension of term of its patent for a pharmaceutical substance to treat conditions that present with runny noses – 'Atrovent Nasal'. The patent included claims to containers for administering the substance, compositions for treatment and methods of treating the condition.

After the supervising examiner and the Delegate of the Commissioner of Patents refused the extension, Boehringer sought review in the Federal Court under the Administrative Decisions (Judicial Review) Act 1977.

The true meaning of per se

Judge Heerey, who heard the case, sought to determine whether the Delegate misconstrued section 70 of the Patents Act 1990 in finding that 'one or more pharmaceutical substances per se' did not 'fall within the scope of the claim or claims'.

Boehringer argued that the words per se confer no special or different meaning on the expression 'pharmaceutical substance'.

Heerey J rejected this point, stating that words are usually inserted in legislation for good purpose and that the expression per se has an accepted meaning, namely 'by or in itself', 'intrinsically' or 'essentially'.

His Honour then traced the history of the extension of term provisions and referred to the Patent Office Manual of Practice and Procedure to demonstrate support for his interpretation. Boehringer's application had failed because the patent's claims were not directed to the substance in itself.

What about the others?

Boehringer also argued that the Delegate's interpretation of 'pharmaceutical substance per se' was inconsistent with its granting of extensions for at least eight other patents under the present legislation. His Honour held that this was irrelevant to the present case but may mean that those extensions should not have been granted.

It is likely that IP Australia will more stringently impose the requirements for grant of future requests for extensions of terms. Please contact us if you would like more information on this issue or on patent term extensions generally.

Duncan Bucknell is a lawyer and trade marks attorney in the Intellectual Property and Information Technology Department. He practises in licensing, patent drafting and patents and trade mark prosecution. He is also a registered veterinarian.

A bitter battle over a bit of batter

In brief: Basing its case on the prior reputation of its own marks, the international herbs and spices company McCormick & Company Inc has successfully prevented an attempt to register the name 'McCormick's' for an instant batter product. In a landmark decision the court upheld the company's claim on the basis that the 'honest concurrent use' provisions of the Trade Marks Act 1995 are not an exception to a prior reputation. The issue of honest concurrent use only arises if the mark to be registered is similar to a prior registration or application, and the goods or services are similar or closely related. Wendy Burnett reports.

Mary McCormick makes her mark

In 1992 Mary McCormick applied for the series of marks 'McCormick's' and 'McCormick's instant batter simply add water' for instant batter.

The Trade Marks Office accepted Mary McCormick's application, but McCormick & Company opposed it on the basis that it had prior reputation. The company has used its trade marks since 1962, established a reputation in these marks in Australia, and owns numerous trade mark registrations.

The Trade Marks Office delegate held that, while Mary McCormick's trademarks were deceptively similar to those of the company and the respective goods were similar, Mary McCormick was able to provide considerable evidence of 'honest concurrent use' of her marks in Queensland and NSW. Registration was therefore granted but limited to those states.

Enter the Federal Court

On appeal to the Federal Court, the company argued that Mary McCormick's application should be refused on the grounds that:

  • she had not established honest concurrent use in Queensland and New South Wales and the discretion under the Act should not be exercised in her favour; and
  • the company had a prior reputation in the marks and that reputation should not be subject to the 'honest concurrent use' provisions.
What is honest concurrent use?

In assessing whether 'honest concurrent use' applies, the principal criteria addressed by the Court were:

  • Honesty of the concurrent use. The Federal Court held that Mary McCormick's use of her own name was honest even though she may have known of the company's use of its marks on its products at the time.
  • Extent of the use in time, geographic area and volume of sales. Mary McCormick and her husband started selling 'McCormick's' instant batter in the late 1960s from the caravan in which they operated a fish and chip business. In August 1984, when Mary's husband died, she focused her energies on the batter manufacturing business. Sales grew steadily but were mainly confined to Queensland and New South Wales.
  • Confusion from the resemblance of the marks. The evidence showed that there had been and there was likely to be confusion as to the origin of Mary McCormick's instant batter product.
  • Balance of convenience. Mary McCormick could sell her instant batter under her own name because, under the Act, use of a person's name in good faith does not amount to trademark infringement, provided such use does not constitute misleading and deceptive conduct. The company argued that if Mary McCormick's marks were registered, it would not be able to carry out its plans to introduce a seasoned batter and coating mix under its trademarks.
  • The company argued that the conduct of Mary McCormick and her advisers should be taken into consideration as her evidence contained exaggerated, misleading and untrue statements. The Court could infer that Mary McCormick deliberately engaged in a campaign to generate adverse publicity about the company in order to compel it to abandon its opposition to her registration application.
  • The Court was unable to infer that Mary McCormick's or her advisors' conduct was unconscionable. Mary McCormick's position was that the company had known about her commercial activities since at least the mid 1980s. She assumed that its failure to protest about them indicated acquiescence to her trademark application.
  • The company admitted that it had known about these activities but that the then managing director had believed that Mary McCormick was entitled to use her own name. There were therefore no grounds to challenge Mary McCormick, and as her business was small and limited to North Queensland no action was taken by the company at the time.
Established reputation overrides

In the end, the Court held that evidence of prior reputation was sufficient to override the honest concurrent use provisions. Mary McCormick's application for registration was therefore refused.

Under the predecessor to the Act, the Trade Marks Act 1955, the provision dealing with reputation, (section 28) was subject to the 'honest concurrent use' provisions. However, the Court held that the 1995 Act was structured differently and a prior reputation prevails over 'honest concurrent use'.

The company established that its trademarks had a reputation at the time Mary McCormick lodged her trademark application and that because of that reputation, use of her mark would be likely to cause confusion. This assessment was based on the similarity of the marks and the respective goods.

Owners of trademarks with an established reputation through extensive use can prevent registration of other marks that are substantially identical or deceptively similar – even when the applicant is able to establish 'honest concurrent use', or even if the reputed mark is unregistered.

Wendy Burnett is a lawyer and a trademarks attorney in the Intellectual Property and Information Technology Department. She works predominantly in the areas of trademarks and copyright.

 

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