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Intellectual Property Bulletin – June 2006

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, domain names and related developments.

 

Asia - Intellectual Property in Greater China and Taiwan

In brief: With the rapid growth of business in the People's Republic of China, many foreign corporations are discovering that they have not adequately protected their valuable brands in the three separate territories that constitute this increasingly integrated market.

By Ted Marr, Lawyer, Hong Kong

Following the handover of Hong Kong in 1997 and Macau in 1999, many people assume that there is only one China, but the Mainland, Hong Kong and Macau continue to be separate legal jurisdictions in most respects, and especially for the protection of intellectual property rights. Separate protection (registration, licensing, renewal, etc.) of trade marks, patents, designs, and increasingly domain names must be arranged in each place.

Hong Kong, like Australia or the UK, is a common law jurisdiction where trade mark rights are acquired and protected by extensive use (reputation). It is, however, a good idea (as in Australia) to register a trade mark so that it can more easily be protected. Designs for articles can be registered in Hong Kong, and since many infringing goods are shipped out of China via Hong Kong, it can be very useful to register important product designs. Patents in Hong Kong can be registered if the owner of the invention has applied for a patent in China or the UK, but strict time limits apply: six months after publication of the patent application in one of those countries.

Macau – booming as the new Las Vegas of Asia – is a civil law jurisdiction, where law and procedure derive from its Portuguese colonial heritage. Macau operates separate local systems for the registration of trade marks, designs and patents. Since Macau is still a small market, many rights owners do not register their intellectual property there, but increasingly, with the growth of Macau's economy, unscrupulous traders are using it as a base or transit point for counterfeit goods. Since, in Macau's civil law system, trade mark rights only arise through registration, it is a very good idea to register important brands as trade marks in Macau.

Mainland China is also a civil law jurisdiction, with its own nationwide (apart from Hong Kong and Macau) system of registration for patents, designs (known as patents for designs) and trade marks. Chinese law now states that it will protect famous trade marks even if they are not registered, but in practice it is very difficult to prove that a mark is sufficiently famous to be defended against a mark that someone else has already registered in China. It is, therefore, essential to register all important brands in China as early as possible.

Taiwan, while politically estranged from the Mainland, is a key part of the Greater China economy and a major engine for its growth. It is also a separate jurisdiction for intellectual property purposes. Like the Mainland, Taiwan adheres to a civil law system where trade mark rights are secured by the act of registration. Businesses manufacturing or sourcing in Taiwan, or marketing their goods and services to Taiwan, should always register their trade marks (and if applicable their designs and patents).

Allens Arthur Robinson has offices in Hong Kong, Shanghai and Beijing. Ted Marr (Ted.Marr@aar.com.au) manages our Greater China intellectual property practice out of the Hong Kong office, and assists clients with the registration, exploitation and enforcement of intellectual property rights in all the territories of Greater China.

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Patents – Changes to Australian patents and trade marks law

In brief: The House of Representatives is considering the Intellectual Property Laws Amendment Bill 2006, which makes substantial changes to Australian patents and trade marks law that will affect patent and trade mark owners. The changes were discussed in detail in AAR's Focus: Intellectual Property, April 2006. 

By Jacky Mandelbaum, Senior Associate

Key patent changes
  • Scope for an award of additional compensation for patent infringement ('exemplary damages') in appropriate circumstances (for example, flagrant infringement).
  • Clarification and expansion of the prior use defence (a defence to patent infringement where a third party can show they were secretly using the invention before the priority date of the patent). The changes limit the defence to prior use in Australia, but allow the third party not only to make the invention, but to exploit it (for example by selling), and to assign the entitlement to rely on the defence.
  • Expansion of the circumstances in which springboarding by generic pharmaceutical companies is permitted in Australia. Springboarding will be allowed in relation to any pharmaceutical patent, regardless of whether an extension of term has been granted. This provision will be the subject of AAR's next Focus: Intellectual Property.
  • Additional ground for seeking a compulsory licence, where a patentee has engaged or is engaging in 'anti-competitive conduct' in connection with the patent.
Key trade mark changes
  • Expansion of the Registrar of Trade Marks' ability to revoke acceptance of a trade mark, if the Registrar is satisfied that the application should not reasonably have been accepted, taking into account all of the circumstances existing at the time of acceptance (whether or not they were known to the Registrar at the time).
  • Authorise the Registrar to revoke a trade mark registration. Previously, only the Federal Court had this power in the absence of an application by the owner.
  • Broader public access to documents lodged with the Australian Trade Marks Office, without the requirement for an application under the Freedom of Information Act (Cth).

The Bill also makes changes to the Plant Breeder's Rights Act 1994 (Cth), the Olympic Insignia Protection Act 1987 (Cth) and the Designs Act 2003 (Cth).

 

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Trade marks – Cadbury: colour purple trade mark registration

In brief:  Does the consistent use of a particular colour give you an exclusive right to that colour?

By Tanya Vaysman, Lawyer

Cadbury Schweppes Pty Ltd had filed an application to register a trade mark for the COLOUR PURPLE in class 30 (chocolate). Darrell Lea Chocolate Shops Pty Limited was successful in opposing this application on the basis that Cadbury failed to establish that the colour purple was distinctive of all of its chocolate products. The Trade Marks Office, however, allowed Cadbury to proceed to register a particular shade of purple in relation to the specific Cadbury's goods, boxed chocolate and block chocolate. We report on this decision in AAR's Focus: Patents, Designs and Trade Marks.

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Trade Marks – Opposition to BP's green trade marks: Woolworths granted leave to appeal

In brief: Still on the subject of colour trade marks, Woolworths Ltd appeals a Federal Court decision that allows BP plc to register the colour green as a trade mark.

By David Yates, Senior Associate

Brisbane Woolworths Ltd has been granted leave (by a 2:1 majority) to appeal to the Full Federal Court  against orders made by a single judge that applications by BP plc to register the colour green as a trade mark proceed to registration – even though since those orders were made the Australian Registrar of Trade Marks registered the trade marks. While the appeal itself was not heard, the basis upon which leave was granted gives some insight into the view of the majority of this Full Court about the registrability of BP plc's green marks under Australian law.

The particulars of BP's first application (as amended) are as follows:

The trade mark consists of the colour GREEN as shown in the representation on the application applied as the predominant colour to the fascias of buildings, petrol pumps, signage boards – including poster boards, pole signs and price boards – and spreaders, all used in service station complexes for sale of the goods and supply of the services covered by the registration.

The second application is in similar terms with the following additional words: 'as exemplified in the representation attached to the application form'. The particulars for each application were amended twice during prosecution.

Woolworths opposed registration of these trade marks, and in Australian Trade Mark Office proceedings a delegate of the Registrar of Trade Marks upheld that opposition, finding that the marks were not capable of distinguishing BP's goods and services: (2000) 52 IPR 192. BP exercised its right to appeal this decision to a single judge of the Australian Federal Court. The primary judge allowed BP's appeal and ordered that the applications proceed to registration: (2004) 62 IPR 545. The primary judge concluded that the colour green in the shade depicted in the applications had become distinctive of BP's goods and services.

Woolworths filed its application for leave to appeal to the Full Federal Court on 16 December 2004. The Registrar of Trade Marks subsequently indicated, however, that the trade marks would be registered. Woolworths did not apply for a stay of the primary judge's orders and BP's trade marks were registered on 17 February 2005.

At the hearing of the leave to appeal application, BP said that leave should be refused because the appeal would be a 'nullity' as the marks had now been registered. The majority of the Full Court did not agree with this submission. If Woolworths' appeal is successful, the presence of the marks on the Register will be an error and can be corrected by the court. Woolworths' failure to seek a stay was not, in the majority's view, a basis for exercising its discretion against the application for leave.

The majority of the Full Court said that it would be rare to grant leave to appeal in the absence of a clear prima facie case of error on the part of the primary judge. However, the majority accepted Woolworths' submission that the primary judge had not considered the marks sought to be registered at their broadest scope (including the interaction between the representations and particulars) and thus the decision 'is accordingly infected with a lack of precision as to the scope of the trade marks under consideration'. It is expected that the appeal itself will be heard in the next few months.

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Trade marks – What rights are you really acquiring? Beware the purchase of an IP licence!

In brief: The recent Full Federal Court appeal decision in Pacific Brands v Underworks [2006] FCAFC 40 emphasises the need to think (and draft) carefully before attempting to acquire or assign intellectual property rights.

By Tim Golder, Partner,(view CV) and Rosie Hooper, Articled Clerk

(For a review of the original Federal Court decision in Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 go to AAR's Intellectual Property Bulletin, July 2005.)

Overview

The Pacific Brands decision concerns the fallout from a sale of Sara Lee's Australian apparel business to Pacific Dunlop. As part of that transaction, the benefits under a sub-licence of the well known 'King Gee' and 'Stubbies' trade marks to Underworks were purportedly assigned to Pacific Brands (so that Pacific Brands would be sub-licensing Underworks).

Underworks was a competitor of Pacific Brands. Following the sale, the relationship under the sub-licence between competitors Underworks and Pacific Brands did not prosper. Dealings between the parties continued for two-and-a-half years, during which time attempts to have the sub-licence novated failed. Finally, Pacific Brands purported to terminate the sub-licence for breach, alleging Underworks had not complied with its obligations under the contract. Underworks challenged in the Federal Court this purported termination on the grounds that the purported assignment to Pacific Brands of the right to terminate the sub-licence, without its consent, was invalid.

The primary decision

At first instance, Justice Finkelstein of the Federal Court provoked a degree of commercial uncertainty by finding that the right to terminate was 'incapable of assignment'. Previously, the understanding had been that rights are capable of assignment while obligations are not (with the odd exception, where, for example, the rights are personal).

Justice Finkelstein assessed each right under the sub-licence on an individual basis and found that while certain benefits could be assigned, such as the right to receive royalties, others (including the right to review a marketing plan and the right to conduct audits) could not. Reservations in relation to this element of the decision were reflected in Justice Finkelstein concluding that, even if he was not correct on this point, the rights in question were personal and therefore incapable of assignment.

Pacific Brands was granted leave to appeal the decision.

The appeal decision

The Full Federal Court, in contrast to Justice Finkelstein, found that rights under ordinary commercial contracts are not to be assessed independently. Instead, a contract is to be treated as a 'bundle of rights', all of which are prima facie assignable. Assignment of certain rights will only be precluded where, for example, there is a contractual or statutory prohibition, a public policy reason, or the identity of the parties is material to the contract. 

Here, the court held that without consent certain rights could not be assigned because a precluding factor did exist: the sub-licence was intended to create a 'personal and enduring' relationship in which Sara Lee's identity as sub-licensor was material to the contract. Sara Lee was specifically referred to throughout the contract and had not been defined to include its 'assigns' and the sub-licence required significant cooperation between the parties, which would be difficult to procure between competitors.

In dismissing the appeal, the court held that Pacific Brands was not in a position to complain about the alleged breaches of the sub-licence by Underworks or to terminate the contract.

Implications of the Pacific Brands decision

The Full Federal Court decision leaves Pacific Brands in an unwelcome position. Pacific Brands now owns the 'King Gee' and 'Stubbies' trade marks (through a different transaction with the previous owner), but is dependent on Sara Lee to oversee unassignable aspects of a competitor's licence of the marks. Underworks is the sole party to have generated a 'win' by distancing itself from its competitor, Pacific Brands, in relation to important aspects of the sub-licence.

The key implications of the decision are as follows.

  • If a contract does not specifically deal with assignment of rights, parties could find similar problems arising as those in the Pacific Brands decision.
  • According to the Full Federal Court, a specific provision in a contract allowing for the assignment of rights will be effective.
  • Such a provision, however, will not solve all the problems for a party wanting to terminate its entire involvement in a contract. Although rights can be assigned pursuant to a specific provision, obligations can not.
  • If the intent is to transfer all rights and obligations, the contract must include a right to (or the parties must otherwise negotiate) a novation whereby in effect the original contract is replaced by a new contract with the 'assignee'.

Potential limitations on assignment should also be factored into an evaluation (ie due diligence) of the true worth of acquiring a business that has IP licences with third parties. Where the third party licences are an integral component of the anticipated acquisition, a novation should be procured before the deal is settled.

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Trade marks – Trade mark use in connection with online retail activities? 'Apple iTunes'

In brief: The UK High Court of Justice recently determined another dispute between Apple Corps Limited and Apple Computers Inc in respect of the use of 'APPLE' trade marks: [2006] EWHC 996 (Ch). While the dispute turned on the interpretation of the terms of a 1991 co-existence agreement, the judgment provides a helpful consideration of the use of trade marks in online retail activities.

By David Yates, Senior Associate and Sarah Longes, Paralegal

The Apple Corps is the record company synonymous with The Beatles, which was founded in 1963. Apple Computer is the successful computer software and hardware manufacturer founded in 1976. Each company's use of APPLE word and device marks has been the cause of dispute for some time. A co-existence agreement entered into in 1981 was the subject of litigation involving allegations of breach of its terms in 1989. That litigation led to another co-existence arrangement in 1991, comprised of two agreements. It was the interpretation of the terms of one of those 1991 agreements, the Trade Mark Agreement, which was the basis of this present dispute.

In April 2003, Apple computer announced the launch of the 'iTunes Music Store' at which users could lawfully purchase sound recordings online to download. The UK High Court of Justice referred to it as an 'electronic shop' and 'notional store'. Apple Corps considered the use of the Apple logo by Apple Computer for the iTunes Music Store would be a breach of the Trade Mark Agreement because, in essence, only Apple Corps was entitled to use its APPLE mark on or in connection with music content. The key issue was that when a user connected with the iTunes Music Store the 'Apple' logo was visible in a panel in the top centre of the screen. The mark remained visible at all times except for when the computer was establishing a connection with the music store or a sound recording was being played. When a recording is being played the mark disappears and the track artist and title is displayed in the panel. Once it has finished, the Apple mark is restored. Apple Corps claimed that the presence of the mark while the user was connected to the iTunes Music Store was a use on, or in connection with, the creative music content, and that this connection was accentuated when the mark was removed and restored from the panel. (Further related breaches of the Trade Mark Agreement were alleged.)

The court noted that a user of iTunes Music Store would be accustomed to the process of buying recorded music from a retailer without finding a connection between the retailer and that music (other than from the sale of the goods). The court concluded that it would be no different in an electronic format. The presence of a mark to advertise a sales service does not imply that the goods for sale originated there. The court held that the display of the Apple mark in the panel did not establish a connection between Apple Computer and the music recordings. It was clear in both the use of the marks and in advertising that the music content was being offered for sale by Apple Computer as vendor. Ultimately, Apple Corps was unsuccessful in each if its claims of breach of the Trade Mark Agreement.

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Copyright – Copyright Tribunal fixes amount to be paid by subscription television operators for retransmitting free-to-air programs

In brief:  The Copyright Tribunal of Australia has determined that Australia's three major subscription television operators should each pay 22 cents per subscriber per month for retransmission of the five free-to-air television channels.1

By Miriam Stiel, Senior Associate

Amendments to the Copyright Act that were introduced in 2001 established a statutory licence for the retransmission of free-to-air (FTA) broadcasts. The legislation now provides that copyright in a work, sound recording or cinematograph film included in an FTA broadcast is not infringed by the retransmission of the broadcast, provided that the retransmitter complies with certain conditions. The most relevant of these conditions is the payment of 'equitable remuneration' to Audio-Visual Copyright Society Limited, trading as Screenrights. Screenrights is the appointed collecting society on behalf of the copyright owners. (Under s122 of the Broadcasting Act, the retransmission of an FTA broadcast does not infringe the copyright in television and sound broadcasts. This exception, however, does not extend to the underlying copyright work, sound recording or cinematograph film, in respect of which the statutory licence applies.)

Screenrights applied under s135ZZM(1) of the Copyright Act for a determination of the amount to be paid by Foxtel Management Pty Limited, Optus Vision Media Pty Limited and Austar Entertainment Pty Limited (the retransmitters), each of which retransmits FTA broadcasts to its subscribers, although, as the Tribunal acknowledged, only as a very minor or incidental part of their business. Screenrights argued that the amount of equitable remuneration which should be paid was somewhere between 98 cents and $5 per subscriber per month (pspm), whereas the retransmitters proposed an amount of 10 cents pspm. In fixing the amount of equitable remuneration at 22 cents pspm for the retransmission of all five FTA channels (which, it acknowledged, was not arrived at by a process of mathematical calculation, but rather the result of careful estimation and evaluation), the Tribunal:

  • considered what amount Screenrights, representing the rights owners, and the retransmitters would agree upon if they were engaged in a hypothetical negotiation in which they were 'willing but not anxious' participants. It rejected Screenrights' argument that the retransmission of FTA broadcasts was a significant subscription driver for the retransmitters and found that the benefits to consumers of improved reception of the FTA channels when viewed through their set-top units and being able to use one remote control to switch between the FTA channels and the subscription channels were not significant. As such, Screenrights was held to be in a weak bargaining position;
  • placed no weight on a 'contingent valuation' survey, which Screenrights had carried out to demonstrate that consumers were willing to pay for the retransmission of FTA broadcasts and that Screenrights considered should be reflected in the amount of equitable remuneration to be paid by the retransmitters;
  • concluded that it could not rely upon the remuneration rates paid in the United States, Canada, the United Kingdom and in a number of European countries, because the positions in those countries were not sufficiently similar to the Australian situation to represent truly comparable bargains.

The Tribunal is yet to determine:

  • the amount to be paid when less than five FTA channels are retransmitted;
  • the date from which payments are to be made and the phasing in of payments; and
  • whether the amount will be indexed to the CPI.

A timetable has not yet been set for the hearing and determination of these outstanding issues.

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Copyright – Government announces major copyright reforms

In brief: The Federal Government has announced significant changes to Australia's copyright laws.

By Miriam Stiel, Senior Associate

In a press release issued on 14 May 2006, Attorney-General Philip Ruddock announced that the Federal Government will be introducing a number of significant changes to Australia's copyright regime. Although a draft Bill has yet to be released and the details of the reforms remain unknown, the changes will include the following.

Exceptions to copyright infringement

The Government has announced that it will not be adopting an open-ended 'fair use' exception based on the United States model. It will introduce, however, two new exceptions for private use.

  • A 'time-shifting' exception, which will allow consumers to record television and radio programs to view or listen to once at a later time. The recording must be deleted after it has been viewed or listened to.
  • A 'format-shifting' exception, which will allow consumers to make a copy of copyright material in a different format from the format in which they purchased. The examples given in the press release include allowing individuals to store their personal CD collection in the memory of an MP3 player or home entertainment personal computer and dubbing VHS cassettes onto DVD. The exception will also cover books, newspapers, magazines and photographs. It will be reviewed in two years to see whether it should be expanded to cover digital audio-visual materials.

A new 'flexible dealing' exception will cover:

  • non-commercial uses of copyright material, including:
    • libraries, museums and archives;
    • educational institutions for the purpose of teaching;
    • for the benefit of people with disabilities; and
  • use for parody and satire.

While the scope of this exception is not detailed in the announcement, the Attorney-General has noted that any new use must comply with Australia's international treaty obligations. The exception will likely be subject to the 'three-step test' set out in Article 13 of the Agreement on Trade-Related Aspects of Intellectual Property (the TRIPS Agreement) and will thus be confined to certain special cases that do not conflict with a normal exploitation of the work and which do not unreasonably prejudice the legitimate interests of the rights holder.

Enforcement measures

The Government will introduce a range of new enforcement measures designed to tackle piracy, including:

  • allowing police to issue on-the-spot fines and to access and recover profits made by copyright pirates;
  • revising the evidential presumptions relating to copyright ownership and subsistence, and introducing a specific presumption in civil cases that recognises international labelling of commercially released films;
  • giving courts the power to award larger damages in cases involving large-scale Internet piracy without requiring the copyright owner to prove every single act of infringement;
  • amending the definition of 'article' to confirm that civil infringement proceedings can be brought in respect of electronic reproductions of copyright material; and
  • new criminal offences in relation to subscription television piracy.
Digital Agenda reforms

Following the Government's review of the 2001 'Digital Agenda' amendments to the Copyright Act, amendments will be made:

  • to permit certain reproductions of copyright materials by libraries and archives to allow them 'to better assist their users in the online environment'; and
  • to clarify the status of temporarily cached copies of copyright material by educational institutions and the use of distributed technologies for classroom teaching.
Cap on broadcast licence fees

The 1 per cent legislative cap on payments by commercial radio stations for broadcasting published sound recordings (which has applied since 1969) will be abolished. If agreement cannot be reached between the copyright owners and the commercial radio broadcasters, the matter can be referred to the Copyright Tribunal to determine the amount payable, as is the case at present.

Jurisdiction of the Copyright Tribunal

The Tribunal will be given wider jurisdiction to deal with disputes concerning copyright licence schemes and transactional licences administered by collecting societies.

Timing

An exposure draft of the Bill is expected to be released in late June or early July, following which there will be a brief consultation period with stakeholders. The Bill is likely to be introduced into Parliament in the Spring sittings. Until then, it remains to be seen whether or not the reforms achieve the Government's stated objective of 'getting tougher on pirates, while making the law fairer for consumers and our educational and cultural institutions'.

The Bill will not include amendments that will be made to the Copyright Act due to Australia's obligations under the Australia-US Free Trade Agreement. These will be covered in a separate Bill.

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Related developments – Security over intellectual property – a government review of personal property

In brief: The Federal Attorney-General's Department is currently undertaking a series of seminars throughout Australia that propose a review of the law on personal property securities.

By Vanessa Kingston, Lawyer

Personal property securities extend security over intellectual property rights, that is, copyright, patents, trade marks, designs, plant breeder's rights and eligible layouts. The proposal is a national online register of all personal property securities. It is thought that such a system will provide greater certainty for the business community by harmonising, codifying and simplifying existing arrangements.

There are presently 70 Acts (Commonwealth, state and territory) related to the protection of personal property securities. These Acts are administered by 25 different departments. The Acts related specifically to intellectual property are the Designs Act 2003 (Cth), Patents Act 1990 (Cth), Plant Breeders Rights Act 1994 (Cth) and Trade Marks Act 1995 (Cth). Many classes of personal property are unregisterable, an example being copyright and eligible layouts. In view of this, existing arrangements often lack consistency in territoriality and legal outcomes. It is anticipated that the introduction of an online registry would solve such problems and result in a faster, simpler and more certain system for taking and registering security interests over most types of tangible and intangible personal property.

Speakers from the legal and finance sectors at the Sydney seminar thought the proposal would provide new opportunities for harnessing intellectual property assets, as the security offered by the registrar would encourage lenders. A number of problems were also identified with using intellectual property as collateral. Problems included identifying the item, verifying ownership and determining the value. For example, under the proposed system it would need to be identified whether for a DVD it is copyright of the film, script, or music that is being used as collateral. There are also valuation issues with using intellectual property, in that it is often difficult to find comparable items, measure actual or likely use and assess existing or potential threats.

Despite such concerns, it appears there is overwhelming support for the proposal from the banking and finance industry and the proposal is being driven by Attorney-General Philip Ruddock. Following a series of workshops over the next six weeks, a concrete proposal will be issued at which point interested parties will have the opportunity to make submissions. Such a system has already been implemented in the United States, Canada, and New Zealand and, if implemented, will change the way security interests in intellectual property is financed and registered.

This topic is being monitored closely by the Law Council of Australia's Intellectual Property Committee. 

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Related developments – Anton Piller orders and Mareva orders: amendments to Federal Court Rules

In brief: Two new sections of the Federal Court Rules regarding search orders and freezing orders came into effect in May 2006.

By David Yates, Senior Associate

In May 2006 two new sections of the Federal Court Rules came into effect: Order 25A providing for 'freezing orders' (Mareva orders) and Order 25B providing for 'search orders' (Anton Piller orders). The Chief Justice has also published accompanying practice notes for each of these sections, which include examples of the relevant orders.

Anton Piller orders can be particularly important for parties wishing to enforce their intellectual property rights, in circumstances where evidence such as infringing copies and electronic records can be quickly disposed of by an infringer. The rules specify that the court may make a search order if it is satisfied that:

  • an applicant seeking the order has a strong prima facie case on an accrued cause of action; and,
  • the potential or actual loss or damage to the applicant will be serious if the search order is not made; and
  • there is sufficient evidence in relation to a respondent that he possesses important evidentiary material, and that there is a real possibility that they might destroy such material or cause it to be unavailable for use in evidence in a proceeding.

While these new provisions are said not to diminish the inherent, implied or statutory jurisdiction of the Federal Court to make such orders, practitioners and those instructing them should be mindful of the relevant tests and procedures laid out in the rules and the practice notes.

Related developments – Federal Magistrates Court gets broader jurisdiction

In brief:  An increased jurisdiction sees the Federal Magistrates Court now being able to deal with intellectual property disputes.

By Claudia Wallman, Senior Associate

The Jurisdiction of the Federal Magistrates Court Legislation Amendment Act 2006 (Cth) (the Act) increases the jurisdiction of the Federal Magistrates Court (FMC) to deal with various federal law matters, including intellectual property disputes. The Act came into effect on 4 May 2006, but the practical implications of the amendments for IP owners and practitioners remain to be seen.

The FMC

The FMC was established in 1999 with the aim of providing a quicker, cheaper and more accessible forum for dealing with less complex federal law disputes. Since its inception, the FMC has had concurrent jurisdiction with the Federal Court of Australia (FCA) in several areas, including specific jurisdiction to hear disputes commenced under the Copyright Act and various consumer protection provisions of the Trade Practices Act 1974 (Cth) (TPA). Appeals from the FMC's decisions are generally heard by the Full Federal Court.

The Act

The schedules to the Act amend the TPA and the Federal Court of Australia Act 1976 (Cth) (FCAA) by:

  • conferring specific jurisdiction on the FMC in any matter transferred to it by the FCA (Schedule 2, Item 3; s32AB FCAA); and
  • broadening the jurisdiction of the FMC to deal with additional TPA matters, as well as increasing the monetary limit for the FMC in its TPA jurisdiction from $200,000 to $750,000 (Schedule 1, Items 1 & 4; ss86(1A) & 86AA TPA).

The Act, however, does not make any consequential amendments to the provisions in each of the Trade Marks Act 1995 (Cth), Patents Act 1990 (Cth) and Designs Act 2003 (Cth), which confer specific jurisdiction on a 'prescribed court' to deal with matters arising under those statutes. Such matters may still only be dealt with by the FMC in its accrued or associated jurisdiction (that is, where the matter is related to another cause of action within the FMC's specific jurisdiction) or where proceedings have been commenced in the FCA and subsequently transferred to the FMC.

The procedure for transferring a dispute from the FCA to the FMC is dealt with under s32AB of the FCAA and Order 82 of the Federal Court Rules. Such a transfer may be made either on the application of a party to the proceeding or on the FCA's initiative. No appeal lies from a decision of the FCA to transfer a proceeding the FMC.

What does this mean for IP owners?

It is still unclear whether the increase in jurisdiction for the FMC will provide IP rights owners with a more cost-effective and streamlined avenue of enforcement for less complex matters as was intended by the legislature. Given that proceedings under the trade marks, patent or design legislation must still be commenced in the FCA before the FMC's jurisdiction can be invoked, some of the benefits of the FMC (such as lower filing fees) will not be relevant. It also remains to be seen whether the FMC appeals to specialist IP practitioners as a forum with the necessary expertise to handle IP disputes, or whether applications to transfer IP proceedings to the FMC will be resisted.

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Domain names – False statements to a domain name registrar can land you in hot water

In brief: The New South Wales Supreme Court has recently passed judgment on a case involving false representations made to a domain name registrar and the body responsible for allocating Internet protocol addresses and autonomous system numbers in Australia.

By Andrew Fuller, Lawyer

On 22 March 2006, the New South Wales Supreme Court decided in Hoath v Connect Internet Services [2006] NSWSC 158 that certain false representations were made to a domain name registrar and to the Asia Pacific Network Information Centre (APNIC). These false representations, which caused the control of the domain name dragon.net.au to be changed from the plaintiff registrant to some of the defendants, were misleading and deceptive under the Trade Practices Act 1974 (Cth) (TPA) and actionable under the law of passing off.

The court ordered that the domain name and associated data be returned to Mr Hoath to prevent or reduce further loss or damage. Mr Hoath was also entitled to seek damages from four of the six defendants to compensate him for the loss and damage associated with not being able to exploit the use of the domain name as a result of the defendants' misleading and deceptive conduct.

Australian courts have shown a preparedness to make orders under the TPA as they deem appropriate against any company or person found to have engaged in misleading or deceptive conduct in relation to domain names or websites that impact on Australian residents (for example, ACCC v Chen [2003] FCA 897). The Hoath decision demonstrates that commercial entities and their controlling directors found to have made false or misleading representations risk being caught by the wide-ranging remedies provided under the TPA.

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Technology – Federal Court: Clarity1 found guilty in first Spam Act prosecution

In brief: The first prosecution under the Spam Act 2003 has been obtained in the Federal Court.

By Bill Singleton, Lawyer

The Australian Communications and Media Authority (ACMA) has successfully prosecuted Clarity1, a Perth-based email marketing business and its managing director in its first Federal Court prosecution under the Spam Act 2003. Although sentence has yet to be passed, the Spam Act provides for penalties of up to $220,000 per day for first-time corporate offenders and up to $1.1 million per day for repeat offenders.

The prosecution serves as a sobering reminder to those who use email marketing techniques that non-compliance with the requirements of the Spam Act can result in criminal prosecution of both directors and the corporate entity.

The ACMA alleged that Clarity1 had:

  • sent at least 56 million commercial emails in the 12 months since the Act came into force (April 2004), most of which were unsolicited, to recipients within Australia and internationally; and
  • obtained some of those email addresses from harvested address lists.

Clarity1 claimed in its defence that the recipients consented to receiving the emails, because they did not 'opt-out' by clicking the 'unsubscribe' link, even when they received multiple emails over a period of time.

In a judgment handed down in April 2006, Justice Nicholson rejected this argument.

As to the use of harvested email addresses, Clarity1 claimed that it had stopped harvesting email addresses when the Spam Act came into force. Justice Nicholson held that liability arose under the Spam Act when the email addresses were used after the Act came into force, regardless of when they were obtained.

Businesses who market using email should note that, to comply with the Spam Act, commercial emails may only be sent to recipients where:

  • the recipient consents to receive such email; and
  • the identity of the sender is prominently displayed; and
  • there is a functional unsubscribe facility.

Under the Act, consent may be inferred, although email marketers should be extremely careful and seek advice if intending to rely on inferred consent. Consent should not be inferred by a mere failure of a recipient to opt-out via an unsubscribe link. In particular, a recipient's failure to opt out using unsubscribe links in prior emails should not be taken to infer consent to receive later emails. Note that some email marketers may have further obligations under the Australian eMarketing Code of Practice.

 

Footnotes
  1. Audio-Visual Copyright Society Ltd v Foxtel Management Pty Ltd (No 4) [2006]

 

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